House of Commons
Wednesday 6 April 2005
The House met at half-past Eleven o'clock
Prayers
Mr Speaker in the Chair
Oral Answers to Questions
Wales
The Secretary of State was asked—
Employment
According to the labour force survey, 622,000 people were in employment in south-east Wales over the 12 months to November 2004—47,000 or 8.2 per cent. more than in 1997.
Is my right hon. Friend aware that, in Newport, unemployment has fallen by more than half since 1997 and that, in the last year alone, more than 1,700 new jobs have been announced in Newport by a wide variety of employers, including the Office for National Statistics and the Prison Service? Is that not a tribute to the quality of Newport's work force, as well as to the efforts by Newport city council and Newport Unlimited to attract employers to Newport? Does he share my pride about how Newport's people and economy have grown in strength and confidence in the past eight years under this Labour Government?
I do indeed. Newport is now one of the fastest-growing cities in Britain, with business start-up rates very high, a lot of confidence and more jobs being attracted by the Office for National Statistics, the Prison Service and world-class companies, such as Cogent and others. That just shows that, under Labour, Wales is working—do not let the Conservatives wreck it!
Today's decision by Dairy Farmers of Britain to close the Llangadog creamery, which will also affect the milk bottling plant in Cardiff, shows the difficulty that we have in the dairy industry in Wales at the moment. What can the Secretary of State say for dairy farmers throughout south Wales and about the job losses being experienced by that industry? What steps can he, with the National Assembly Government, now take to ensure that there is a farming co-operative that can take over plants such as Llangadog and continue to run them for the benefit of the dairy industry in Wales?
I understand the problem: the closure notice faced by that creamery is indeed very disappointing and disturbing, although I understand that efforts are being made to find an alternative purchaser and operator. We hope that those are brought to fruition because we want to see a healthy industry in the milk sector, as indeed it is in many other respects.
As someone who represents south-west Wales, may I ask my right hon. Friend to bear in mind that, although unemployment in all three Swansea constituencies has fallen by more than 50 per cent., we stand to lose some jobs because of civil service changes? Will he try to ensure that Swansea and south-west Wales—his own constituency included—stand to benefit from the UK redistribution of civil service jobs?
Indeed. As my right hon. Friend knows, 500 jobs were recently relocated by the national Pension Service. We are looking for more opportunities, as a result of the Government's plans to redistribute jobs from the over-congested parts of England into parts of Wales, such as Swansea, that need more jobs—although, as he knows, Swansea has been doing very well with business start-ups, the SA1 development and the two techniums there. Swansea is now a city that is really buzzing, as the Prime Minister recently saw for himself, and that is partly due to the excellent representation of the two Swansea Members of Parliament, including my right hon. Friend.
The fact is that the Secretary of State for Wales uses one set of statistics but ignores another. He never mentioned anything about manufacturing decline in south-east Wales at all. He talks about going forward, not back, but is it not a fact that anyone who votes Labour at the next election will be going forward to even more manufacturing meltdown in Wales?
That is from a Conservative Member who supported the policies of the last Conservative Government that saw more than 100,000 manufacturing jobs decimated in Wales. What we have seen is that the Welsh manufacturing sector continues to account for 21 per cent. of Wales's national wealth—a higher proportion than in the rest of the United Kingdom—employing 17 per cent. of the Welsh work force. Indeed, Welsh manufacturing output for the past four quarters was 0.3 per cent. higher than in the previous four years. Welsh export orders were up 7.3 per cent. on last year—bigger than the UK rate. Welsh manufacturing is now healthy, expanding and growing, compared with contracting and in a dismal position under the Conservatives.
Child Poverty
My right hon. Friend the Secretary of State and I have regular discussions with colleagues here and in the National Assembly about our shared objectives of eradicating child poverty in Wales. As I told the House on Monday night, I am deeply proud of this Labour Government's historic commitment to halving child poverty by 2010 and eradicating it within a generation.
I thank my hon. Friend for that reply. Does he agree that the issue of child poverty should be at the centre of the general election debate in Wales? Does he recall that, in 1997, Britain had record levels of child poverty and that, in Wales, the situation was even more acute? Do we not need, in the weeks ahead, to contrast that with the situation today when UNICEF can report that Britain is leading the developed world in tackling child poverty? We are on track to meeting the targets that he has just mentioned.
My hon. Friend is quite right. I remember the days when the Tories said that they wanted wealth to cascade down the generations. We know in Wales that it was poverty that they passed down through the generations. The great Scottish socialist MP, James Maxton, said that poverty is man made and therefore open to change. This Labour Government are doing just that.
Given the correlation between higher incomes and better health, can my hon. Friend tell me whether any studies have been commissioned—if not, will he commission them?—to see at which point children can benefit from the prospects of better health and the increase in family income?
My hon. Friend makes an important point: there is a correlation. What is important is that under this Government, we are seeking to make work pay and make families better off. That is why we have had record increases in child benefit; that is why we have the child tax credit; and that is why we have the national minimum wage.
I pay tribute to my colleagues in the Assembly who do a great deal of work to ensure that we end poverty, the problem of child poverty and continue to invest in the health service. Coming from the valleys, there is no doubt in my mind—and as my hon. Friend knows—that poverty has been exacerbated over the years, and ill health has been a consequence of that. It is only by putting in the investment that this Government are putting in—not the £35 billion of cuts that the Tories would put in—that we will do anything about it.
Hospital Trusts
I regularly meet the Assembly First Minister to discuss health and funding matters.
In thanking the Secretary of State for that less than full reply, may I ask him whether he agrees that to improve the health service in Wales, he will have to increase its budget? Why, then, has he cut the health budget for the forthcoming year?
I do not know where the hon. Lady gets her figures from—perhaps from the shadow Chancellor. His figures are about as trustworthy as Mickey Mouse's.
That is an insult to Mickey Mouse.
The hon. Gentleman says that that comment was an insult to Mickey Mouse. In that case, I withdraw it.
The truth is that the Welsh health budget will have doubled under this Labour Government and compares with the situation in which patients lost treatment from NHS dentists under the last Conservative Government, nurses' jobs were cut, hospital jobs were cut and hospitals were closed. I should have thought that the hon. Lady would have got up to apologise for the dreadful Conservative record and to welcome the doubling of the Welsh health budget.
Will my right hon. Friend bring his Cabinet colleagues to the Gwent Healthcare NHS Trust, whose financial position has allowed us to have a new community hospital in Chepstow, a new day surgery unit in Nevill Hall, a new CT scanner and a new coronary care unit costing £2.5 million? We are also about to start work on a new health and social care facility in Monmouth, as well as a new orthopaedic centre at St. Woolas. Does he agree that the people of Wales want that investment in the health service and not the public expenditure cuts promised by the Tories?
Absolutely—that is why the people of Monmouth will re-elect my hon. Friend as their Member of Parliament on 5 May. They will take note of the fact that the Conservatives, as part of their £35 billion of cuts, will rob the health service and public services in Wales of £2 billion. In addition, with their patient's passport, which will charge people to have operations, they plan to take £60 million out of the Welsh national health service and to encourage people to go down the road of having their operations done privately. That £60 million is the equivalent of 2,400 nurses or 660 Welsh consultants. If the Conservatives were elected, such a cut would damage the health service in Gwent and right across Wales.
Can the Secretary of State confirm whether it is true that, according to the Evening Post, Swansea faces debts of up to £15 million, and Neath, Port Talbot and Bridgend £10 million each? The fact that the British Medical Association has passed a vote of no confidence in the Assembly clearly shows how badly it feels it has been let down. Given the headline that appears in The Western Mail today, I could sign that motion. Why could not he?
The hon. Gentleman can sign a pledge in the knowledge that it would be totally worthless, because as a result of the spending cuts that the Conservatives intend to introduce, the Welsh health service would be back to the dismal state that it was in when we began to rescue it in 1997.
As for the deficits in the health budgets, this is the third year running in which the deficit has fallen. The Assembly is on target to achieve financial balance by 2008–09, thus eliminating the deficit, including in Swansea.
Medical Staff
I regularly meet the Assembly First Minister to discuss health matters.
I am grateful to the Secretary of State for his reply. He will be aware that over the past 15 months, Welsh consultants have not been paid for the extra shifts that they are having to work due to the failure to implement new contracts. Is it any wonder, therefore, that there are twice as many empty consultant posts in Wales as in England? Surely the situation is unfair, so how does he intend to resolve it?
There has been a dispute with consultants, but we hope that it will resolve itself sooner rather than later. May I just remind the hon. Gentleman of the facts? There are now 350 more whole-time equivalent consultants than when we came to power in 1997, along with 5,000 more qualified nurses, as a result of which the health service in Wales is improving. Nearly 190,000 more patients are being seen in Welsh hospitals than was the case under the Conservatives and we are performing many more operations. The health service is going from strength to strength with its budget doubled. The Conservatives would attack the health service, and privatise and charge in the way in which they always wanted to do—if they win the election, they certainly will do so.
When the North Wales clinical school opened in Wrexham in January this year, I had the opportunity to discuss with trainee doctors the fact that they were training in north Wales for the very first time. They were complimentary about the National Assembly's policies on bringing forward training for doctors in north Wales. Will the Secretary of State speak to the National Assembly to try to extend that initiative in north Wales to nurse practitioners and other medical staff in the NHS so that the increased provision that is going into the health service can be reflected by more training for medical professionals in north Wales?
I will certainly do so. That just shows how, under Labour, investment in the health service is producing better quality. Since we came to power, the number of medical and nursing students in Wales has doubled and it continues to increase steadily. By 2008, Wales will be producing 360 medical graduates a year, which can be compared with the situation under the Conservatives when we were starved of training places for both nurses and other medical staff.
Will the Secretary of State break with tradition and give me a straightforward answer to a straightforward question? Why is it that so many people from Ynys Môn have to travel three and a half hours to access NHS dentistry in Barmouth in my constituency?
There has been a serious problem with dentistry, but it is a result of the problems that we inherited, which we are trying to put right. [Interruption.] No, no. We did inherit a serious problem: the Conservatives closed two entire dental schools. As far as Ynys Môn is concerned, over the past two years, 10 new dental practices offering NHS dentistry have opened throughout Wales and 26 practices have expanded their NHS dental provision. The number of NHS dentists in Wales has increased by 168, or a fifth, over recent years. Increasingly, we will see more NHS dentists provided under Labour in Ynys Môn. However, if the people of Ynys Môn follow the hon. Gentleman's lead and vote for the nationalists, they will get a Conservative Government and we will see health cuts all over again.
Following on from that, with Wales being governed by the Labour party and Britain—[Interruption.]
Order. There is far too much noise in the House.
With the Labour party in power in Wales and Westminster, the right hon. Gentleman must accept that it has become virtually impossible to access NHS dental provision in Wales. When the Liberal Democrats form the Government of this country on 6 May 2005, we will fix the problem, working with the Assembly. Since the Secretary of State for Wales has had the chance to fix the problem but has failed to do so, why should anyone believe that a re-elected Labour Administration will prevent the effective privatisation of NHS dental services in Wales?
All I can say is that with two Liberal Democrat MPs in Wales, the hon. Gentleman has a long way to go to achieve his objectives. A vote for the Liberal Democrats in key Labour-Tory marginal seats across Wales and Britain will put the Conservatives into power through the back door. That is why Labour supporters and every fair-minded person in Wales should vote Labour on 5 May.
The Secretary of State just told the House that the health service in Wales is going from strength to strength. Can he now tell us why GP registrars have not had the pay rise they were promised in May 2004?
They certainly would not get any pay rises if the Conservative cuts were implemented as part of their plans for £35 billion-worth of cuts. Let us stick to the facts. We have seen significant progress on reducing waiting lists. In the past month, out-patient waits of more than 18 months have been cut by more than 2,000—a reduction of 38.4 per cent. Eighteen months is unacceptable for waits, but in the past year the number of patients waiting longer than that time has been cut by nearly 5,000—a massive 60 per cent. We are bringing waiting times down to 26 weeks within the next few years in Wales, meaning that in Wales people will get world-class treatment. Under the Conservatives, they would go back to the cuts, misery and hospital closures for which they were responsible in Wales last time.
I am not surprised that the Secretary of State did not answer the question. The chairman of the GP committee of the British Medical Association Wales, Andrew Deardon, said that the
"Assembly hasn't given us any reason".
It
"has just not got round to it and there is no excuse."
Dr. Neil Statham, the GP trainer, said:
"Registrars . . . were promised this money and they haven't had it. It is either inept or deliberate."
Why will the Secretary of State not encourage the Assembly to pay up and treat medical staff with the respect that they deserve? No wonder nobody believes a word he says.
I am surprised that the hon. Gentleman pursues the question again when the truth is that the health budget in Wales has more than doubled under Labour. We recruited more nurses and consultants, and waiting times are coming down. Under Labour, the health service is safe, but it would be in a dire position if the people of Britain voted Conservative. [Interruption.]
Order. I appeal to the House again. It is unfair to hon. Members if there is so much noise. Perhaps Ministers could bear that in mind.
Concessionary Fares
My right hon. Friend and I hold regular discussions with Assembly colleagues. The Assembly introduced free travel on local bus services for women aged 60 and over, men aged 65 and over and disabled people on 1 April 2002. This was extended to include men aged 60 to 64 on 1 April 2003.
So the Chancellor's announcement in his Budget was absolutely worthless as far as pensioners in Wales are concerned. How does that compare with the amount pensioners will have to spend in Wales as a result of the 70 per cent. council tax rise and the impending cost of revaluation?
Unlike the plans of the hon. Gentleman's party, pensioners in Wales will get £200 to help offset their council tax. [Hon. Members: "£500!"] Oh yes, £500; I am sure. His party's record on looking after pensioners was appalling. When it was in government, it thought that they could survive on £69 a week. That is what it did for pensioners. Under this Government, we have achieved record support for pensioners. Pensioners in Britain know: Labour delivers for them; the Tories would abandon them.
As one who is shortly to move into the category of Welsh pensioner, may I, on behalf of Welsh pensioners, thank the Government and the Assembly for the tremendous job that they have done and express surprise that the Opposition are playing to our strongest suit—what we in government and in the Assembly have done for Welsh pensioners?
I pay tribute to my right hon. Friend's dedication over many years and wish him well in his retirement. He has represented the people of Wales and of his city well. He is absolutely right: the Labour Government have put at the heart of their policies ensuring that pensioners have dignity in old age and have the support they need. The Labour Government will look after pensioners—he can be certain of that in his retirement. Vote Labour.
Public Transport (Disabled Access)
My right hon. Friend and I have regular discussions with Assembly Ministers on matters affecting Wales. Under the Disability Discrimination Act 1995, transport providers must take reasonable steps to remove physical barriers to making their services accessible.
Interesting words, but if that Act is effective why do 60 per cent. of disabled people in Wales surveyed by Leonard Cheshire say that they have real difficulty accessing public transport? What action has the Minister taken on installing lifts at Bangor, Llandudno Junction, Colwyn Bay and other real stations? Is it not true that the Government are all talk and no action?
Accessible buses are increasingly available in Wales. My Assembly colleagues have pledged a further £250,000 to upgrade buses in the Caerphilly area to make them accessible to pensioners. What is important is that the Government will continue to support and invest in public transport in Wales. The Conservatives have no record of doing that: they are the authors of the discredited rail privatisation, for which some of us are still paying the price.
Does not the introduction of the discretionary fares scheme, including free access to buses for the disabled in Wales, mean that there are more buses than ever and more access for disabled people than ever?
Yes it does. A great many public transport services in Wales have been sustained and supported by the Assembly's policy of providing free transport for pensioners and people with disabilities. We shall continue to do that.
Community Support Officers
In February 2005, there were 156 community support officers in Wales, with funding secured to increase their number to 300.
Does my hon. Friend agree that CSOs are doing an excellent job, especially in combating antisocial behaviour and that it would be an absolute disgrace if their number were cut because of Tory public expenditure cuts?
I most certainly do agree. My hon. Friend and I share the borough of Caerphilly, where the first CSOs were pioneered. CSOs are doing a tremendous job, making a difference in the policing of our streets, and making our towns and communities safer. The investment that the Labour Government have committed compares well with the cuts that the Opposition would introduce.
What does the Minister say to the North Wales police officers who have told me that CSOs are just policing on the cheap? CSOs have no power of arrest, many of them work only 9 to 5 and they are used merely because their area is not being supplied with extra police officers. Will the hon. Gentleman match the Conservative commitment to provide 40,000 extra police officers in England and Wales?
I seem to recall that police numbers fell when the Conservatives were in power. Under the Labour Government, Wales has had more than 850 extra officers. If the hon. Gentleman wants to get up in a pulpit and preach a sermon, may I suggest a text for the day? Matthew 7:16—
"By their fruits ye shall know them."
Under the Conservatives, recorded violent crime increased by 166 per cent., the chance of being a victim of violent crime trebled, the chance of being burgled doubled and convictions fell by a third. Under Labour, crime has fallen by 30 per cent., burglary by 42 per cent. and vehicle crime by 30 per cent. I think that, come the general election, people will vote Labour, and we say amen to that.
Budget
Regular ones. As a result of the Budget, an additional £155 million will be invested in Wales on top of measures to improve skills, productivity and entrepreneurship, as well as council tax support. Indeed, it was a grand-slam Budget for Wales, with a triple crown for Labour on 5 May.
Is my right hon. Friend aware that because of the buoyant Welsh economy achieved by successive successful Budget measures and steady, sustained growth, unemployment in my Cardiff, North constituency and in Wales is at its lowest since January 1975, and is a third of the average during the Tories' 18 years? Does he not agree that the people of Wales need to vote Labour on 5 May?
I certainly do. Wales is working under Labour, and Cardiff is working. Do not let the Tories wreck it. Vote Labour on 5 May.
Prime Minister
The Prime Minister was asked—
Engagements
Before I turn to my engagements, may I begin by extending, probably on behalf of the whole House, our profound sympathies to the Catholic Church on the death of His Holiness Pope John Paul II? The world has lost a religious leader who was revered by people of all faiths and none, and we mourn his passing.
I am sure that the whole House will join me in congratulating the new members of the Iraqi presidency council who have been confirmed today by the Transitional National Assembly, the outcome of the first ever democratic elections in Iraq.
This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I will have further such meetings later today.
Does the Prime Minister recall that when Labour came to office in 1997 in constituencies such as mine the biggest single issue was unemployment? The preferred public spending of the outgoing Tory Government was wasteful, shameful spending to prop up unemployment. As the economy has stabilised and grown, that public spending has been turned into Sure Start schemes, doctors, nurses, teachers, pensions and benefits that people have come to expect from the Labour Government. What advice can the Prime Minister give to my constituents—[Interruption.]
Order. I am looking for briefer supplementaries.
My hon. Friend is of course absolutely right. There are 2 million more people in jobs since 1997. We now have the highest employment rate of any major industrial country. We have low mortgage rates that help home owners, low inflation and a stable economy. It is the Labour party today that is the party of economic competence. It is interesting that in elections the Conservatives used to run on the economy—now they run away from it.
May I begin by associating myself with the Prime Minister's words on the death of the Pope? The world has lost a towering spiritual leader, whose passing truly diminishes us all. I also associate myself with the Prime Minister's words on the Iraqi Government.
At the last election, the Prime Minister promised not to raise national insurance contributions. In their first Budget afterwards, the Government raised national insurance contributions. In the words of the Chancellor, why should people ever believe him again?
We made specific promises on the basic and top rate of income tax, and we have kept those promises. It is correct that we raised national insurance to pay for extra investment in the national health service. We want to keep that investment going into the national health service. The right hon. and learned Gentleman's plans are to take more than £1 billion out of the health service to pay half the cost of operations in the private sector, and there is no policy more elitist than that. We are proud of the investment in the national health service and proud of the work that it is doing. Under this Government at least, the national health service is safe.
Before the last election the Prime Minister was asked specifically whether people should suppose he was going to increase national insurance contributions. He said, "They shouldn't." Now he says that that was not a promise. Does not that tell people everything they need to know about the Prime Minister? In 1997 he said:
"Labour has no plans to introduce tuition fees for higher education".
He then introduced tuition fees. In 2001 he said:
"We will not introduce 'top-up' fees and have legislated to prevent them."
He then introduced top-up fees. In the words of the Chancellor, why should people ever believe a word he says again?
I am very happy to compare our record in government with the record of the right hon. and learned Gentleman. We are proud of the fact that our economy is strong, and that the investment goes into our schools and our hospitals. It is what we promised and what we have done. Let me just remind him of what he did when he was in government. When Minister of State for the Environment, he introduced the poll tax—correct? When he was Secretary of State for Employment, unemployment rose by 1 million. When Minister in charge of labour regulation, he ended up opposing the minimum wage, and when he was Home Secretary he cut the numbers of police. In the end, the judgment that people will make is between our record and future programme, and his. I know what judgment they will make.
The Prime Minister was asked specifically about his broken promises on top-up fees and tuition fees, and he could not bring himself to say a word in defence of those broken promises. In 1997 he promised "firm control" over immigration, but since then net immigration has tripled. In the words of the Chancellor, why should people ever believe him again?
I will tell the right hon. and learned Gentleman about the immigration and asylum system that we inherited. We inherited a situation where, when he was Home Secretary, it took 20 months to process an asylum claim and the number of removals was one in 10. Yes, it is true that we need to control immigration, but the way to do it is not his proposal of halving the immigration budget. Yes, immigration is an issue. Yes, it is important that we discuss it, but it is an issue that should be dealt with, not exploited.
Hear, hear!
Labour Members are cheering the Prime Minister now, but let us find out what they really think of him. How many of them are putting his photo on their election addresses? Hands up! One, two, three, four, five, six. Does not that tell us all we need to know about what they really think of him? [Hon. Members: "More!"] The Prime Minister promised to
"tackle the unacceptable level of anti-social behaviour".
Two and a half years ago he said he would remove housing benefit from antisocial tenants. Antisocial tenants still have their housing benefit and antisocial behaviour has got worse. In the words of the Chancellor, why should people ever believe him again?
Let me just remind the right hon. and learned Gentleman—[Interruption.] I think we know which photograph we certainly do have up. It will probably be the right hon. and learned Gentleman's, to remind people exactly of what they would be going back to. Since he has raised the issue of crime, let me remind him of what the chief constable of North Wales said about the Conservative party policy and its advertisement on crime. He said:
"This misleading advert quite improperly seeks to stir up fear of rising crime when it is a well-established fact that crime has been falling for years, both locally and nationally".
When the right hon. and learned Gentleman was in office, crime doubled under the Conservatives. It has fallen under Labour, so we have the strongest economy, falling unemployment, investment in our health and education services, falling crime and investment in the police. That is opposed to a policy that would put our economic stability at risk and make cuts in public services. Once people know that choice, and they will over the coming weeks, it is very clear how they will choose.
The figures that we use in those advertisements are the police's own figures: the figures that the right hon. Gentleman used just two minutes ago when he was describing the record of the last Government. Let us have no such claptrap.
The right hon. Gentleman talks about his record, but his chief election co-ordinator—where is he? He is not even here today. His chief election co-ordinator says that his biggest fear—there he is; I have spotted him; excellent—has always been that this election will turn into a referendum on the Labour party. Is that what the Prime Minister thinks too?
No, I think that it is a choice. I think that it is a choice between a Conservative party that when it was in office had unemployment at 3 million, had interest rates at 10 per cent. for four years, had boom and bust recession twice, and ended up cutting spending on our NHS and in our schools, and a Labour Government who, over the past eight years, have delivered economic stability, low mortgages, low unemployment, low inflation and record investment in our NHS and in our schools. I think that that is the choice, and I think that when the country comes to consider not just the record of the Conservative party, but the fact that its economic, health and education plans are exactly the ones that it rejected in 1997, yes, I will be very happy that people should compare the choice between the Conservative's record and ours; between our future programme and theirs.
The right hon. Gentleman talks about his record. Let us look at his record. I will tell him about his record: taxes—[Hon. Members: "Up."]; crime—[Hon. Members: "Up."]; immigration—[Hon. Members: "Up."]; waiting times—[Hon. Members: "Up."]; MRSA—[Hon. Members: "Up."]; truancy—[Hon. Members: "Up"]. Let us have a look at what has gone down: take-home pay—[Hon. Members: "Down."]; pensions—[Hon. Members: "Down."]; productivity growth—[Hon. Members: "Down."]; manufacturing employment—[Hon. Members: "Down."]; detection rates—[Hon. Members: "Down."]. After eight years of Labour government, we are locking up teachers not yobs, our voting system resembles a banana republic's, and pensioners who cannot find an NHS dentist are reduced to pulling out their own teeth. Is there not now a clear choice at this election: rewarding this Prime Minister for eight years of broken promises or choosing a Government who will take action on the things that matter to hard-working Britons.
Hear, hear!
Order. Let the Prime Minister speak.
I am going to begin by agreeing with the right hon. and learned Gentleman: I think that it does mean a choice, and the choice is very clear. People remember the years before 1997. They remember the people who lost their homes in the recession, who lost their jobs in the recession, who used to end up with mortgages that they could not afford. They remember the winter crises every year in the NHS. They remember the outside toilets and the creaking classrooms in the schools. They remember when the police officers were cut while the right hon. and learned Gentleman was Home Secretary. They remember all that. And between now and polling day we will remind them of what they have now, and what is therefore at risk. What they have now is economic stability, investment in public services and action on crime.
So the choice is indeed very clear. What I say to the British people is this: "Economic stability is at risk, your job is at risk, your mortgage is at risk, the economy is at risk, and therefore when you come to make that choice on 5 May, realise the fundamental nature of it, realise what you experienced under 18 years of Conservative government, realise the progress that we have made under eight years of Labour government, and then go out and realise too that unless you come out and support Labour, that stability, that investment, will no longer happen, the clock will be turned back, and the very self-same crew that you voted to get rid of in 1997 will come back." Yes, it is a big choice, and I cannot wait for the public to make it.
Prime Minister, could we get back to serious matters? Given that there has never been a war in the history of the world in which the vast majority of victims have not been innocent civilians, does the Prime Minister agree that the time has come to create a world where there is no longer war or conflict? Given his massive international respect, will he join together with other world leaders to create the means of ensuring that there is no longer any war or conflict in the world? Does he agree that the best way of doing that, given that the European Union is the best example in history of conflict resolution, is for a special department of the European Union for peace and reconciliation to be created and to visit all areas of conflict with the principles of the EU, which will create a resolution of conflict anywhere in the world? Will he and his international colleagues make that historic decision as soon as possible?
First, I pay tribute to the work that my hon. Friend has done for peace in this country, and in Northern Ireland in particular. I entirely agree with him that one of the most important things is what we can do to try to spread the type of peace and reconciliation that he pioneered in Northern Ireland throughout the rest of the world. I will certainly use our best offices and the European Union presidency to do so, and also within the G8.
On behalf of my right hon. and hon. Friends, I associate myself entirely, of course, with the opening comments of tribute by the Prime Minister.
After eight years of this Labour Government, the Prime Minister will recognise that most women in this country still do not receive a full state pension in their own right, because they have had to take time out of work to raise children or, in many cases, to care for elderly relatives. Surely women should receive a pension as of right, rather than on the basis of national insurance contributions. After eight years, why has the Prime Minister not put that fundamental unfairness right?
I am sure that the right hon. Gentleman knows that two thirds of the beneficiaries of the pension credit are, in fact, women, and that helps enormously with relieving people in poverty and raising pensioners' living standards. Living standards for pensioners have risen considerably above not just inflation, but earnings over the past few years. Of course, we have always got to try to do more, but when we look back over the record of eight years—the winter fuel allowance, the free TV licences for the over-75s and, in particular, the pension credit, the help for the poorest pensioners in our country and the help that the Chancellor has just announced with the council tax for pensioners—I think that this Government have a record on pensioners of which we can be very proud. Of course, there is always more to do, but we will do it, if elected.
Staying on the issue of fairness, but looking at the other end of the age spectrum, why is it that we are now saddling so many of our young people with thousands of pounds' worth of debt wrapped around their necks because of the policy of imposing top-up fees? The Prime Minister's policy of top-up fees is in direct breach of the pledge that he made in his last general election manifesto, so why should any of us believe any of the promises that he is about to make in the next general election manifesto?
Of course, there are now going to be no fees paid at all when someone goes through university. What is more, the repayment that will be made by people once they graduate will be linked to their ability to pay. There will be no real rate of interest on that loan and there will be special help with the reintroduced maintenance grant for the poorest people. Of course, we believe that we have to get more money into our university system—I think that the right hon. Gentleman does as well—but I do not think that his proposal to take that money out of general taxation by a 50 per cent. top rate of tax is something that will recommend itself to people. It is a proposal that in my view would not raise the money that he thinks it would raise. In any event, it would not be a fair use of resources.
On education, I would just remind the right hon. Gentleman that this country is now investing more each year as a proportion of our national income on education—in Sure Start, nursery education, primary schools, secondary schools, and, yes, universities, and for those taking skills courses as well. I think that we can be very proud of our record in education, but it is true that we have to modernise our system continually to keep up with the new world in which we live.
Iraq War
As I have said before, the Attorney-General himself came to Cabinet, where he explained his view of the legal position and was able to answer any queries that people raised.
The Prime Minister has repeated today what he said on 9 March and again on 16 March, and what the Foreign Secretary said on 24 March—that the Attorney-General took questions at that Cabinet meeting. However, the right hon. Member for Birmingham, Ladywood (Clare Short) is absolutely adamant that members of the Cabinet were not allowed to ask questions. Which is the truth and which is fiction? I know whom I believe—and it is not a man.
The Foreign Secretary has explained the position, and I repeat what he has said. I must say this to the hon. Gentleman and some other Conservative Members—I am happy to debate Iraq with people who disagreed fundamentally with that decision. What I find contemptible, however, is that parts of the Conservative party that agreed with the war in Iraq and that urged it upon us are now attempting to resile from that position. That approach will not command respect anywhere.
Engagements
I pay tribute to my hon. Friend for her work on women's rights and in battling unemployment throughout the long years in opposition and then again in government. She is right to emphasise that the new deal, which the Conservative party has pledged to scrap, has helped more than 1 million people—young people, unemployed people, lone parents and disabled people—into jobs, and it is extremely important that we keep it going.
On unemployment, I can do no better than quote the shadow Foreign Secretary, who said the other day:
"Quite honestly I go to Germany now, and they say to me, 'I wish we had your unemployment.'"
They did not say that during the 18 years of Conservative government, but they do now.
We keep the national literacy strategy under review. I am sure that the hon. Gentleman agrees that major gains have been made in our primary schools in literacy and numeracy over the past few years. When we came to office, something like just over half of 11-year-olds actually passed their 11-year-old tests. Now the figure is about 75 per cent. and rising. We keep all those matters under review, but we can only tackle the issue with the right policy and by keeping investment going into the state education system and not using it to subsidise private education.
Amid the speculation in the press about the progress of negotiations between MG Rover and Shanghai Automotive, does my right hon. Friend agree that we must keep at the forefront of our minds the 6,000 employees at MG Rover, the employees' families, the communities that depend on MG Rover and the businesses whose futures are intertwined with MG Rover? Will he assure me that the Government will continue to do all that they can successfully to conclude those negotiations and that, come what may, this Government will continue to stand by manufacturing in the west midlands and MG Rover workers?
I can certainly give my hon. Friend that assurance. All the members of the Government with an interest in the matter, including my right hon. Friends the Secretary of State for Trade and Industry and the Chancellor, and I, keep in close touch on that issue, and we will do whatever we can to help to achieve a successful resolution. As he has rightly said, the jobs, living standards and livelihoods of those people who work at MG Rover must be foremost in our minds.
I think that although we did pretty well on this score, we could have done with even fewer Tories sitting opposite. But since the hon. Gentleman has given me the opportunity, I will tell him what I do not regret—[Interruption.] It is always important to balance the regrets with the plus points. What I do not regret is the strong economy, investment in public services and falling crime, and I thank him for giving me the opportunity to say so.
May I tell my right hon. Friend that the district of Tendring in my constituency has been named as one of the safest districts to live in; that the local Tory district council makes that clear in the newspaper that it has just released; and that the figures put out by the chief superintendent in my area also say that crime is down? Who does my right hon. Friend think is right—those with the facts or the Leader of the Opposition with the fiction?
I am absolutely sure that the chief police officer and other officers in my hon. Friend's area know exactly what is happening, which is that crime is falling. We still have a long way to go. We must keep up the investment in the criminal justice system and in extra numbers of police and community support officers: that is why we will continue to have a rising police budget. We will not go down the path advocated by the Conservatives—of freezing the Home Office budget, which would cut police numbers.
I can certainly guarantee that there will not be cuts in NHS spending, because we have a proposal that would allow us to keep raising spending on the national health service year on year in the coming years. If we take the whole period of this Government, we have spent far more on our national health service than the Liberal Democrats ever asked us to. The way in which local hospital services are configured is obviously a matter for local people, but I can assure the hon. Gentleman that if we are re-elected the investment that has been pouring into his constituency and others will continue to do so.
My hon. Friend is right to point out that in constituencies such as his, during the 18 years of Conservative government, there were unemployed people and two recessions which hit constituencies in Wales particularly hard. [Interruption.] Conservative Members may yawn, but I think that the public know that the strong economy is the foundation of this country's success, and I can assure him that with this party in government, that economic stability will continue and the investment in public services will continue, not be put at risk.
That is not a very wise thing for the hon. Gentleman to raise. As far as I am aware, in Nottinghamshire there are actually more than 200 more police officers than in March 1997, and more than 100 community support officers. What is more, as a result of our proposals to invest in public services for the future, as opposed to the Conservatives' proposal to take £35 billion in cuts out of our spending programme—[Interruption.] Oh yes, that is their policy. I am afraid that the only way for them to get more police and community support officers in Nottinghamshire is to vote Labour.
On that happy note, I wish everyone well.
It is a serious issue and we are going to study the code of practice very carefully. It is important that it be implemented—after all, that was part of the agreement that we came to with the supermarkets. So I can assure the hon. Gentleman that if we are in a position to do so, we will certainly look at this issue.
Equal Enforcement of the Law
I beg to move,
That leave be given to bring in a Bill to make provision for direction to police forces to enforce the law equally as it applies to settled communities and to travellers; to amend the law on trespass; and for connected purposes.
One of the abiding principles that runs through the development of British democracy and society is that of equality before the law. The peasants' revolt, Magna Carta, the civil war, habeas corpus, the abolition of the Test Acts and many other instances show the development of this principle, and a vital principle it has been. But under this Government, some people have discovered that the law will not be applied to them equally. The terrorists of Sinn Fein are one such group, but I wish to dwell on the current treatment of Travellers in the country.
As far as I am concerned, if people wish to live in caravans and travel around the country that is entirely their own affair. I do not believe in prescribing how people lead their lives, just as long as they do not impinge unreasonably on the lives of others. There is a permanent campsite at Aston Firs, in my constituency, which I have visited in the past and will probably visit during this election campaign. I believe the people there to be law abiding, and while there might not be many votes there for me, I think it important to make myself available to all my constituents.
I was brought up on the romantic notion of Gypsies in attractive and colourful caravans pulled by horses, and of Romany people living their unique lifestyle travelling around the country. This still happens—indeed, only last week, there was a traditional caravan in Swinford, in my constituency. However, in contrast and entirely by coincidence, on Monday my constituency office was deluged with calls from concerned people in Lutterworth about an illegal Gypsy encampment at the Ladywood works. I went to see the site, where half a dozen caravans had moved in on Saturday night. A local garage had been closed because the 17-year-old female cashier said that she had been intimidated by Travellers. When I spoke to the owner, he told me that he had not reported it to the police because the last time he caught a Gypsy on closed circuit television stealing something from his forecourt, the local police had advised him not to press charges because he might be vulnerable to criminal damage in retaliation. What a disgrace!
Another three caravans have now arrived in Lutterworth on the same illegal site, where they are trespassing. When the first ones arrived, one of the Travellers made an offer to the manager of the site, saying that they would leave straight away if paid £350 for a van. When I visited the site, helpful police officers were present. When I pointed out that one car had no road fund licence, the officer explained that although the owner of it was committing an act of trespass, the police had no rights to enforce the law on private land. The phrase Catch-22 comes to mind.
At this site, one of the particular complaints of the businesses based there was that human excrement had been left on their doorsteps. A couple of years ago in Northfield park in Blaby, I saw an astonishing amount of rubbish, including abandoned cars, that had been dumped by Travellers. Local residents were so intimidated that they did not dare use the park. I met some aggressive Travellers who were, shall I say, extremely impolite to me, but the police stood off, not wishing to make trouble. That is a pity, because two issues relating to caravans and the police have been drawn to my attention by people involved in the legal caravanning world.
The first is the width and length of caravans. Photographs published in The Sun and elsewhere show that some caravans have twin or even triple axles and they are too long to be towed legally by anything other than a full-sized commercial vehicle in the UK. At the same time, a maximum-width caravan that can be towed in the UK is just over 7 ft 5 in. Photographs in The Sun on 12 March show a German-made LMC caravan just under 8 ft wide. That is illegal, yet the police very rarely stop those sorts of illegal vehicles. Perhaps the Minister might like to answer the written question that I have already tabled about prosecutions for over-wide or over-long caravans in this country.
The second and enormously important issue for the police is theft. Some 5,000 touring caravans are stolen and not recovered each year—about 20 per cent. of the total UK sales of new caravans. All these new caravans have CRIS identification numbers and generally have transponders in them. If a new caravan is found without such means of identification, the question should be asked, "Why not, and is it stolen?" Unfortunately, when one police officer in Bedfordshire followed such a course of action, he was moved to an office job because he was upsetting Travellers in Bedfordshire. He also upset the local social services, which feared that they might have to find accommodation for families whose caravans were confiscated. Surely it is the duty of the police to make simple inquiries to ascertain whether caravans are stolen.
It is also interesting to note how many brand-new vehicles tend to be pulling these vans, and it might be pertinent for the Inland Revenue and Customs and Excise to be making inquiries about taxation and VAT. Little council tax gets paid and I doubt whether much else gets paid either.
If any hon. Member fails to tax his car, I would expect him to be prosecuted with the assistance of the police. If he or she dumps rubbish on public land or by the side of the road, he or she is committing an offence. Human excrement in a public place should incur the wrath of environmental health departments. Furthermore, we all pay taxes and the overwhelming majority of our constituents pay council tax for the services that they expect to receive.
It is not unreasonable for us all to obey the laws of this country, whether they be planning laws, motoring laws or laws relating to environmental health. Illegal encampments of Travellers have been much in the news recently and one does not have to be a reader of The Sun or the Daily Mail, which I understand have both campaigned on this issue, to believe that it is wrong for people to flout the planning law in a flagrant fashion and then apply for retrospective planning permission.
Sadly, the Government believe, and I am quoting from a Government document:
"Whilst some planners think that treating everyone the same helps to ensure equality, this is not the case. Explicit recognition of difference is needed to ensure that the right action can be taken to deliver a planning service responsive to different needs within the communities it serves".
Similarly, on unauthorised camping, the Government have said:
"Where the occupier of the land is a public body such as a local authority, then every effort should be made to avert forced eviction. Where trespassers are for instance Irish travellers, public bodies are required under the Race Relations Act to have due regard to the need to promote good race relations".
The law does not apply to everyone; the law is not applied equally to all people in this country.
I think that the overwhelming majority of people in this country, faced with casting their votes in a general election, will take the view that everybody should be subject to the same laws. I propose that trespass, where it involves occupancy, be made a criminal offence. That would give the police the certain power to move on trespassing Travellers. The House will know that that is exactly what happened in Ireland under the Housing (Miscellaneous Provisions) Act 2002. That, of course, is why there has been an influx of Irish Travellers into this country, where we are seen as a soft touch.
I further propose that councils be allowed to refuse applications for retrospective planning permission by Travellers or rogue developers who, often advised by disreputable lawyers, are cynically manipulating the planning system. I would allow local councils to ensure that, where planning permission does not exist, caravans are rapidly removed and that large fines or confiscation of assets are imposed on Travellers who are trying to profit from illegal developments.
Police must know that they have not only the power but the duty to stop Travellers of whom they are suspicious and to check their road fund licences and the roadworthiness and provenance of their vehicles. If I am stopped by a police officer, I must be displaying my road fund licence on my car and I may be required to produce my insurance. There is no reason why that law, too, should not be applied to Travellers, but police officers seem wary of doing so because they fear that it may cause trouble.
Finally, the Travellers who are behaving illegally—they are probably a minority of the travelling community—know their rights, but not their responsibilities. I propose a review, or even the repeal, of the so-called Human Rights Act 1998. That Act sounds attractive, but it is used by smart, slick lawyers to drive a coach and horses through the laws that the rest of us have to obey. In particular, the Act has allowed Travellers to break planning laws, but it takes no account of the rights of others whose lives are made a misery by illegal Traveller encampments. When my right hon. Friend the Leader of the Opposition made exactly that suggestion, one person commented that it had
"the whiff of the gas chamber about it".
Only a bitter, twisted and perverted mind could imagine that to say that all people should obey the same laws is in some way wrong. We are all equal before the law, and I propose that that equality should be enforced.
I urge the House to support this Bill.
Question put and agreed to.
Bill ordered to be brought in by Mr. Andrew Robathan.
Equal Enforcement of the Law
Mr. Andrew Robathan accordingly presented a Bill to make provision for direction to police forces to enforce the law equally as it applies to settled communities and to Travellers; to amend the law on trespass; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Thursday 5 May, and to be printed [Bill 106].
On a point of order, Mr. Speaker. About a fortnight ago, 1,600 of my constituents queued for seven hours to register with a national health service dentist. I wrote to the Prime Minister about that immediately afterwards, asking him to take action. I seek your guidance on this matter. Before the forthcoming dissolution of Parliament, what pressure do the rules allow to be brought on the Prime Minister to reply to my letter and reassure my constituents who, as you will understand, are anxious about this crisis? I feel that I owe them a duty to answer their proper questions, and that the Prime Minister owes me a duty to answer me, so that I can answer them. What pressure can I bring to bear on the Prime Minister to deal with the NHS dental crisis?
That is not a matter for me but, as a Member of Parliament in my own right, with my own constituency, I would telephone Downing street. That is what I would do.
Business of the House
I beg to move,
That the following provisions shall have effect—
Sittings on 6th, 7th and 8th April: general
1. At this day's sitting and at the sittings tomorrow and on Friday—
(1) any motion made by a Minister of the Crown may be proceeded with, though opposed, until any hour, and shall not be interrupted under any Standing Order relating to the sittings of the House;
(2) proceedings on Lords Amendments or any subsequent Lords Message in respect of any Bill may be considered forthwith without any further Question being put and shall be brought to a conclusion (unless already concluded) one hour after their commencement (subject to paragraph 3(1));
(3) Standing Orders Nos. 83D to 83H and 83I(2) to (6) (conclusion of proceedings, &c.) shall apply to proceedings to be taken in accordance with this Order (but with the omission of Standing Orders Nos. 83D(2)(c) and 83E(2)(c));
(4) notices of Amendments, new Clauses or new Schedules to be moved in Committee on any Bill may be accepted by the Clerks at the Table before the Bill has been read a second time;
(5) Standing Order No. 41A (Deferred divisions) shall not apply; and
(6) the Speaker shall not adjourn the House until any Messages from the Lords have been received and any Committee to draw up Reasons has reported.
Wednesday 6th April
2. At the sitting this day the following business shall be brought to a conclusion (unless already concluded) at the time after its commencement shown in brackets at the end of each sub-paragraph—
(1) any motion made by a Minister of the Crown for the reading of specified Resolutions of 22nd March, presentation and first reading of any Finance (No. 2) Bill brought in on those resolutions and remaining proceedings on any such Bill (four hours);
(2) any motion made by a Minister of the Crown for the bringing in of an Appropriation Bill, presentation and first reading of any Bill brought in in pursuance of that motion and remaining proceedings on any such Bill, to which Standing Order No. 56 (Consolidated Fund Bills) shall apply (forthwith);
(3) remaining proceedings on the Inquiries Bill [Lords] (one hour);
(4) Committee of the whole House and remaining proceedings on the Disability Discrimination Bill [Lords] (one hour); and
(5) Committee of the whole House and remaining proceedings on the Public Services Ombudsman (Wales) Bill [Lords] (one hour).
Thursday 7th April
3. At the sitting tomorrow the following business shall be brought to a conclusion (unless already concluded) at the time after its commencement shown in brackets at the end of each sub-paragraph—
(1) proceedings on any Lords Amendments to the Serious Organised Crime and Police Bill which may be received (one and a half hours);
(2) remaining proceedings on the Education Bill [Lords] (one hour);
(3) the motion relating to suspension and revival of the Crossrail Bill (one hour); and
(4) second reading and remaining proceedings on the International Organisations Bill [Lords] (one and a half hours).
4. On Thursday 7th April there shall be no sitting in Westminster Hall.
Friday 8th April
5. On Friday—
(1) Standing Order No. 14(4) (Private Members' Bills) shall not apply; and
(2) the Speaker shall not adjourn the House until a Message has been received from the Lords Commissioners.
General
6. If any Finance (No. 2) Bill, or the International Organisations Bill [Lords], is read a second time, it shall stand committed to a Committee of the whole House.
7. The Orders that the Disability Discrimination Bill [Lords] and the Public Services Ombudsman (Wales) Bill [Lords] be committed to a Standing Committee shall be discharged and the Bills shall be committed to a Committee of the whole House.
8. A reference in this Order to proceedings on or in respect of a Bill includes a reference to proceedings on any Money Resolution, Ways and Means Resolution or Order of Consideration motion in relation to those proceedings.
9. The Order of Consideration motion of which Maria Eagle has given notice in respect of the Standing Committee on the Disability Discrimination Bill [Lords] may be moved by a Minister of the Crown in respect of the Committee of the whole House to which the Bill is committed under paragraph 7.
10. Paragraph 2(1) shall have effect notwithstanding the practice of the House as to the intervals between stages of Bill brought in upon Ways and Means Resolutions.
11. If the sitting this day continues after 11.30 a.m. on Thursday 7th April, this Order shall have effect as if any reference to the sitting on Thursday 7th April or Friday 8th April included a reference to the sitting this day.
12. If the sitting tomorrow continues after 9.30 a.m. on Friday 8th April, this Order shall have effect as if any reference to the sitting on Friday 8th April included a reference to the sitting tomorrow.
This is a motion designed to facilitate our business between now and Prorogation, and it may help the House if I say something about its effect.
The motion provides that today, Wednesday, after we have concluded our consideration of this Business of the House motion, we will proceed as follows. First, we will take all stages of the new Finance Bill, for up to four hours. Instead of seeking to amend the original Bill, which would require a complex Committee stage, the Government will—on the advice of the Clerks and with the agreement of the Opposition—withdraw that Bill and reintroduce part of it as a new Bill.
Secondly, we will take all stages of an Appropriation Bill, without debate. Thirdly, we will debate the remaining stages of the Inquiries Bill for up to one hour, followed by Committee of the whole House and remaining stages of the Disability Discrimination Bill for up to one hour. We will then take Committee of the whole House and remaining stages of the Public Service Ombudsman (Wales) Bill for up to one hour. Finally, we expect to take some Lords amendments or messages for up to an hour on each Bill.
Tomorrow, Thursday, we will consider the following, although not necessarily in this order: Lords amendments to the Serious Organised Crime and Police Bill, for up to one and a half hours; remaining proceedings on the Education Bill for up to one hour; the motion to suspend the Crossrail Bill for up to one hour; Second Reading and remaining stages of the International Organisations Bill for up to one and a half hours. During the course of the day, we may consider other Government motions, including motions relating to Lords amendments or messages. I hope and intend that we will conclude our business and be prorogued on Thursday evening.
The motion makes general provision for debate on Government motions to continue until any hour without the need for motions at the moment of interruption. Amendments to be moved in Committee may be tabled before Second Reading. There will be no deferred Divisions and Mr. Speaker will not adjourn the House until any Lords messages have been received and any Reasons Committee has reported.
The motion provides that there will be no sitting in Westminster Hall on Thursday.
I hope that the House will agree to this motion swiftly so that we can proceed to consider the important legislation before us.
Before closing, I would like to thank all the staff and Officers of the House for their hard work during this Parliament. Without them this House would not operate as effectively as it does. I would also like to pass on my thanks for all the work undertaken in Departments, private offices and parliamentary sections. In particular, I thank my two private offices: the Leader's Office and the Wales Office. The hard work, professionalism and integrity of the civil servants in both those offices have served me and my predecessors well.
I commend the motion to the House.
I join the tributes paid by the Leader of the House to all those who work here and help us so much in everything we do. I thank them for their work throughout this Parliament. I also thank the officers at Conservative headquarters who help me with the necessary research in my role.
I join the tribute that the Leader of the House paid yesterday to the hon. Member for North Cornwall (Mr. Tyler), who has had a long career here and is now retiring. We wish him well in his retirement. [Hon. Members: "Hear, hear.]
I thank the Leader of the House for consulting, through the usual channels, on the form of the motion. We agreed that it would be for the convenience of right hon. and hon. Members throughout the House to include everything in one motion, particularly the programmes for the various Bills in so far as they are known. That is acceptable to us as a suitable way of dealing with business only at this stage of a Parliament and not as a wider precedent. I hope that the Leader of the House will confirm that that is his understanding.
I am happy to confirm that the motion does not set a precedent for the general conduct of business. The shadow Leader of the House is aware of the unusual circumstances that always occur at the end of a Parliament. I take this opportunity to thank him and the usual channels for expediting matters and for the constructive approach that meets both Opposition and Government interests and, ultimately, the national interest.
I thank the Leader of the House for his comments. I said yesterday that we would take a constructive approach to the Bills before Parliament. Good progress has been made and the Government have accommodated our requirements on the Bills that are proceeding. However, would the Leader of the House look again at the Inquiries Bill? Two Lords amendments were removed in Committee here, but concern has been expressed throughout the House. When an inquiry touches on ministerial conduct, surely it is right that Parliament should approve the details of the setting up of an inquiry, as happens now under the Tribunals of Inquiry Evidence Act 1921. What is the reason for taking that power away from Parliament unless it is to be able to hold such inquiries in a way that might not be approved by both Houses of Parliament? Surely that is not something that the Leader of the House wants. In the interests of having inquiries that have the support of Parliament and the public, surely the Government could look at the matter again.
I add my thanks on behalf of my colleagues to those that have been expressed. Perhaps I could also be allowed to thank not just the Officers of the House, but right hon. and hon. Members of all parties with whom I have been happy to work for some years. The House is often at its best when we work across party lines for the achievement of better business and a better legislative product. We all regret it when a straitjacket is imposed but, as the Leader of the House said, this is not a precedent for the way in which Parliament usually operates. These are abnormal times and I accept that this is evidence of the way in which constructive consultation behind the scenes in both Houses can achieve a sensible way of doing business in abnormal circumstances.
If I have any reputation at all as I leave this House, I hope that it is that I am capable of making both a brief point and a point briefly, so I hope that by making a succinct contribution this afternoon I do not endanger that reputation. We should get on with the substance of the business so that we have the maximum time for scrutiny.
Finally, I thank both the Leader of the House and his Conservative shadow for their kind remarks about me.
I would not like the House to prorogue without my joining in the tributes paid by the Leader of the House and the spokesmen for the Opposition parties to the staff. This establishment has not always caught up with modern management techniques and, inevitably, it cannot run in the same way as a structured, commercial organisation, nor should it choose to do so. It is thus essential that our staff at every level, whether direct employees or members of associated firms, are not only sufficiently flexible to fit in with the needs of the House of Commons and the Members, but that they also meet the very real need of the general public to know what is happening here and to understand our sometimes arcane procedures.
It is easy to criticise and occasionally to knock those who maintain traditional forms of dress, but who marry with that extremely modern forms of administration. It is important that Members understand what an enormously effective job the House of Commons does in servicing the needs of a Parliament. That goes right the way through, whether it is the Refreshment Department staff, the people who service the building or the industrial or non-industrial civil service. It is essential not only that Members understand that, but that we say firmly how grateful we are to the staff for the way in which they perform their duties day in, day out, and occasionally, even now, night in and night out.
The hon. Member for North Cornwall (Mr. Tyler) and I have west-country connections that go back a long way. He will be missed in this place; he is an individual voice and a very plain one. I shall miss all the other Members who are retiring. Some of them are going far too soon, and I hope that they will regret leaving us so early. Every one of them has contributed in a unique and essential way to the work of Parliament. Long may they enjoy their future careers. Long may we record with affection and respect the work that they have done in this Parliament.
I am always suspicious when the House indulges in an orgy of self-congratulation and mutual admiration. It makes me suspect that something rather unpleasant is going on, and I had only to read the words of the motion that we are being asked to approve for that to be confirmed fully.
In the good old days, I would have looked at the Order Paper, seen the words "until any hour" and been thrilled at the prospect. I am tempted to explore those words to the full, but those days, for the moment, have passed, although I hope they return soon; even I recognise that this is probably not the occasion for a full exploration of the motion, but I want to touch on one or two points.
Given that the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) properly focused on Members who are not seeking re-election, I reassure my right hon. Friend that I certainly shall be seeking re-election, both because I love parliamentary life and, quite frankly, because I am too young and cannot possibly afford to retire. I put it to my right hon. Friend that if it is true that the Government are abandoning the Identity Cards Bill, that is magnificent news. It is a thoroughly bad and obnoxious Bill; it has not been properly considered by the House of Lords, so it is extremely welcome that, despite the breast-beating of the Home Secretary, the Government are ditching that piece of nonsense.
I can give my hon. Friend a little bit of reassurance as I do not see that Bill mentioned in the motion, although it could always be subsumed in some mysterious way into the words "any other motions", to which I may return in a moment.
There is a parliamentary danger—a constitutional danger, even—in the proceedings that we face when we come to Prorogation and Dissolution. Because of our rather unusual parliamentary system, a Prime Minister can call an election at any time, so we are faced with an abrupt ending to our proceedings right in the middle of the parliamentary cycle. The danger lies in the fact that at that point consultations are undertaken between a very small number of people, on both sides of the House, who reach a cosy agreement and then, congratulating each other, present us with a fait accompli. The words of the motion reflect that all too fully.
My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) has said from the Front Bench how delighted he is that we can sign up to everything and the Leader of the House has said how delighted he is that the Government are getting what they want: "We are getting what we want". But the we on this occasion is them. Nobody has consulted me about this at any stage.
May I point out to the former shadow Leader of the House, that if he had been sitting on the Front Bench he would have been absolutely delighted as well?
No, because if I had been on the Front Bench the Leader of the House would have got none of his Bills, and that would have been absolutely proper.
Why was my right hon. Friend offered a pint by the Leader of the House yesterday yet I was not?
I am not sure that I was, but we shall settle that later in the usual way. The Leader of the House is looking very embarrassed and we would not want that, would we?
There is a serious point. I do not want to dwell on it excessively, but merely to put down a marker. It is that we are being asked to legislate—to make the law of the land—in an extremely truncated and restricted way, on the basis that a small number of no doubt senior and eminent people have decided what will be and are then asking the rest of us, as Members of Parliament, to say, "Oh, all right then. You're only giving us an hour to consider an entire Bill". Even worse, we are being asked to sign up to the fact that
"any motion made by a Minister of the Crown may be proceeded with . . . until any hour, and shall not be interrupted".
That exemplifies the degree of control that the Government seek and have been given by the motion. They call the shots and the rest of us have to fall meekly into our places.
When we consider the detail of the motion, we find that the House of Commons is being asked to deal with the entire Finance Bill in four hours, and that other serious measures—on disability discrimination, international organisations or whatever—are to be agreed to in one hour for each. In all reasonableness, that cannot permit any degree of proper parliamentary scrutiny. In what we are told are exceptional and unusual circumstances—although I worry about that—the Government are saying, "Trust me. We the leadership have agreed that this will be the case and the rest of you are expected to fall into place." I have to say that looking around the Chamber it looks as though that is highly likely to happen, but we should be worried about it. It is yet another indication of the extent to which the proceedings of this House have been downgraded that we are being asked to sign up to the motion with a smile.
Of course, everybody's thoughts are on the upcoming election. That is perfectly natural. But it should not mean that we legislate in such a way that we eliminate all possibility of parliamentary scrutiny, with one great exception—the saving of our constitution and our parliamentary process; thank goodness for it—the House of Lords is still not controlled by the Government. Their timetable is still theirs to control. The Government still do not have a majority in the House of Lords.
As a Member of this House for some time, and someone who loves this place and is happy to spend much of my time here, it saddens me to acknowledge that in the motion we are surrendering our role in the legislative process and expecting our colleagues in the House of Lords to do the real work of scrutiny. That has been the reality for some time. It continues to be the reality and the motion reflects that; in fact, it sets it out in words simple to understand.
My right hon. Friend is consistent on these things. Surely, the essence of the matter is ministerial self-importance. Does he agree that the problem is that Ministers are very important, very senior, very respected, very influential, very busy, with very many commitments and very full diaries, so they think that it is a bit undignified to have to find the time to come to the House to explain and justify their legislative measures?
My hon. Friend reflects all too well the current "modern" attitude of the Government and their Ministers to the parliamentary process and to the House of Commons. It comes from the top of course. The Prime Minister has never had any time for the parliamentary process and, sadly, shows that repeatedly.
I do not entirely agree with my right hon. Friend about the motion—in fact, I do not agree with him at all—but on the general point that there is far too much programming and not enough time for scrutiny, has he seen early-day motion 945, which points out that about 40 per cent. of the groups of amendments tabled on Report this Session have not been debated because of severe guillotining?
Sadly, I neither read nor sign early-day motions because I think that they are parliamentary graffiti of the worst and most useless kind, but if my hon. Friend tells me that there is something of value in that early-day motion, I am half inclined to believe him.
Although my hon. Friends keep tempting me and it feels more and more like the good old days, I will soon conclude, but before I do so, I simply want to tell colleagues that I really hope that in the next Parliament—if I have the honour of being returned to it—we will be prepared to look again at what we have done to our House as part of the legislative process, how we have diminished our role and how we have increasingly to rely, ironically, on the unelected, appointed House of Lords to do the real parliamentary work, while we are increasingly expected to act as legislative rubber stamps. The motion reflects that as well as anything that I have seen recently. I regret that, and I wish we did not have to act in that manner.
I am grateful to the shadow Leader of the House for his opening remarks.
Discussions are still continuing on the Inquiries Bill, but I understand that the major issue at stake is the Prime Minister's ability to maintain control over his Government, whom he appoints and Ministers' conduct and behaviour. Perhaps the hon. Gentleman will understand, on reflection, that if he were in my position and the Leader of the Opposition were in the Prime Minister's position, they would take exactly the same view. The good conduct of government is the issue at stake.
As I said yesterday, I pay tribute to the long parliamentary career of the Liberal Democrat shadow Leader of the House. He is a brilliant parliamentarian, as well as a good colleague, despite the party differences, and I wish him all the best in the future. He was indeed very brief, but he is not someone to spin out his points.
Given the long parliamentary experience of my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), I agree with the generous tribute that she paid to the staff. She reminded us of their crucial role. I particularly welcome her reference to the catering staff, who are sometimes called on to perform their duties at very short notice and have their hours extended at short notice. They do so with good fortitude and good cheer, and we are indebted to them.
The same is true of the Doorkeepers, to whom I pay special tribute. Indeed, my only quarrel with them is our serious arguments about rugby—they do not appreciate the value of the Welsh rugby team enough for my liking, although, with the grand slam that we accomplished, they acknowledged, to be generous, the expertise and brilliance of that performance.
I also pay tribute to work of the new Serjeant at Arms, who has settled into his job very well, as has the new security co-ordinator.
Finally, in response to the points made by the right hon. Member for Bromley and Chislehurst (Mr. Forth), I would feel bereft if he had not got up to make them, and he does so with great honour and determination. I was interested to research a previous occasion just before the last general election when one of my predecessors, my right hon. Friend the Member for Derby, South (Margaret Beckett), now the Secretary of State for Environment, Food and Rural Affairs, had an exchange with the right hon. Gentleman in which she pointed out that this wash-up period procedure goes on at the end of all Parliaments and has done so for decades. Indeed, when he was an Education Minister, his own Bill was taken through at great speed in exactly the same way. He did not seem to object to that process then, and I wonder whether he should be objecting now.
I very much wish to echo the tributes that the Leader of the House has paid to the staff of the House. I cannot resist making an effort to elicit from him a statement in his own words that the Government are withdrawing the Identity Cards Bill. Will he please tell us that that is the case? Perhaps he will admit that he is secretly rather delighted that that obnoxious Bill is being withdrawn because, as he has a long track record as a civil libertarian, he cannot seriously believe in that nonsense.
It is not the place to discuss the merits of the Identity Cards Bill, about which I have an honest disagreement with the hon. Gentleman. I am a long-standing civil libertarian and proud of it, and remain so, but I honestly think that the Identity Cards Bill is a common-sense measure in an age when we must supply photographic proof of identity to take an internal flight in Britain. Increasingly, we must come up with the kind of identification to travel abroad that the new identity card will provide on our passports, driving licences and so on. It is a common-sense measure and, no, we have not withdrawn it; we could not get the Opposition's agreement to allow it through, as other Bills have gone through, so it will fall, but it will do so as a result of the express opposition of the Liberal Democrats and Conservatives, who did not give it the passage that it needed and should have had in the interests of security and the safety of all our citizens. I regret that very much.
Will the right hon. Gentleman give way?
I am sorry, but I will not give way.
I am sorry to disagree on that point with the hon. Member for Buckingham (Mr. Bercow) because he is an effective parliamentarian in every other respect. I admire him greatly, but I do not want to diminish the prospects for his future career by adding to that in any way.
Question put and agreed to.
Ways and Means
Ordered,
That, of the Resolutions of the 22nd day of March last, the following be read—
(a) Nos. 1 to 6, 11 to 17, 22 to 27, 30, 43, 47, 48, 50 to 53, 56 and 58;
(b) Procedure (Lorry Road-User Charge);
(c) paragraphs (a), (e) and (f) of Procedure (Future Taxation); and
(d) paragraph (b) of Finance (Money).
Bill ordered to be brought in upon the said resolutions: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Secretary Prescott, Mr. Secretary Darling, Mr. Secretary Reid, Ms Secretary Hewitt, Mr. Secretary Johnson, Secretary Ruth Kelly, Mr. Paul Boateng, Dawn Primarolo, Mr. Stephen Timms and John Healey do prepare and bring it in.
Finance (No. 2) Bill
Mr. Stephen Timms accordingly presented a Bill to grant certain duties, to alter other duties and to amend the law relating to the national debt and the public revenue and to make further provision in connection with finance: And the same was read the First time and ordered to be read a Second time and to be printed [Bill 104].
Finance (No. 2) Bill
[Relevant documents: oral and written evidence taken by the Treasury Committee on 21 and 22 March, HC 482-i and -ii, on the 2005 Budget.]
Order for Second Reading read.
I beg to move, That the Bill be now read a Second time.
This is a somewhat shortened version of the Finance Bill. Owing to the Dissolution of Parliament, it now contains some 106 clauses, compared with the original 172 presented to the House. However, my right hon. Friend the Chancellor outlined in the Budget statement what we will be doing to maintain British stability and growth in the face of a future of intense global competition and the Bill continues to reflect our determination to meet those challenges and to maintain stability, promote fairness and maximise the opportunities for our nation both now and in the future.
For a tax system to be effective, everyone must pay their fair share of taxes and receive the credits that they are entitled to and that is why the Government have already published proposals to prevent the avoidance of tax on capital gains by people using options to sell or buy assets at uncommercial prices and to close a loophole in the controlled foreign company—or CFC—rules that are designed to prevent UK multinationals from diverting profits to low-tax regimes.
We have set out legislation to close arrangements that seek to avoid or reduce income tax and national insurance contributions on remuneration by using employment-related securities. As outlined in the pre-Budget report, we have published proposals to remove annuities and other annual payments from the types of payment treated as charges on income.
The Government are also committed to closing a number of marketed avoidance schemes that involve financial products that have been disclosed under the rules introduced in the Finance Act 2004, and as announced in the Budget, to legislating to counter the exploitation by companies of differences within and between tax codes to get a UK tax advantage.
The Government believe that these measures and others that were included in the original Finance Bill presented to the House are essential for an effective, principled, targeted and fair tax system. It is therefore our full intention to introduce a second Finance Bill after the election—should it be the wish of the British people—in which the measures not included in this revised version will be brought back. We will, of course, aim to ensure that the statutory dates for these measures will continue to apply, as announced in the Budget.
The Chief Secretary has just referred to people receiving the tax credits to which they are entitled. What assurances can he give that every effort will be made to resolving the mounting tide of problems faced by people with payable tax credits and overpayments, particularly during the course of the election campaign when Members of Parliament will clearly not be in the position that they were to argue the case for their constituents? In my case, it is a rising tide of human misery that does not appear to be being solved.
The right hon. Gentleman is, uncharacteristically, indulging in pre-election hyperbole and has gone over the top. He knows that my right hon. Friend the Paymaster General takes any concerns about the tax credit system and its efficient working very seriously. I assure him that the measures are in place that will continue to ensure that the Inland Revenue and those responsible for this issue respond efficiently and effectively in the way that they normally do.
Will the Chief Secretary give way?
I am fond of the hon. Gentleman, but I want to make some headway. I will then, of course, give way. I am sure that he has something interesting to say.
In the meantime, the Bill introduces anti-avoidance measures in clauses 85 and 87 to 91 that seek to prevent avoidance when there are contrived claims of artificially high double tax relief—claims that are made against United Kingdom profits in order to minimise tax liability in the UK.
Alongside that, clauses 59 to 79 will introduce anti-avoidance legislation for film relief. The targeted aim of these measures is to remove opportunities for abusing film tax reliefs and to put matters beyond doubt for the industry in future. That should be seen against the important role that Britain's creative industries now play, comprising 8 per cent. of our national income. To reflect that, clause 58 will temporarily extend existing relief for limited budget films. It provides for the existing relief to continue to apply for films on which principal photography commences before 1 April 2006, so long as they are completed on or before 31 December 2006.
Will the Chief Secretary give way?
I must first give way to the hon. Member for Aylesbury.
Or even for Buckingham.
Given the importance of clause 21(8) on research institution spin-out companies, can the right hon. Gentleman explain why that very important provision is not subject to the affirmative procedure of the House?
I am glad that the hon. Member for Buckingham (Mr. Bercow) raises that point. If he restrains his characteristic exuberance, he will hear me come to that provision in the fullness of time.
If I can make a little headway, I will of course give to the hon. Gentleman. I am sure that he also has interesting points to make.
These measures reflect the Government's ongoing determination to ensure that our tax system is fair and competitive. Just last September, the World Bank ranked the UK first in Europe and seventh of the top 20 countries to conduct business in. In January 2004, the Organisation for Economic Co-operation and Development ranked our economic and administrative regulations as being among the lowest in the OECD. I therefore hope that Members on both sides of this House will surely recognise the need to introduce measures now that enable Britain to maintain that position within the global economy.
Faced with an accelerating pace of technological change and a rapid expansion of global competition, our economic future should not be founded upon low-skill, low-tech enterprise. It depends, instead, on establishing British leadership in skills, science and the knowledge economy, as the hon. Member for Buckingham recognises. After all, developing countries are on course to produce half the world's manufacturing exports and we need to ensure that ours is an added-value economy.
Britain now has one of the most open competition policies in the world and we are the most effective and active advocate of free trade. Today, the enterprise challenge is to enhance the flexibility needed for a successful economy and tackle the regulatory concerns that all industrial economies face while securing the standards required in a successful society.
The Chief Secretary talks about the enterprise challenge. Is he aware of the rising tide of concern among those in the film industry that this is the third Finance Bill in three years that changes the way in which the industry is regulated? They believe that that creates serious disadvantages in locating films in this country. Why did the Government not get it right first time?
The hon. Gentleman makes an interesting point. Indeed, we miss his contributions from the Opposition Front Bench to our debates on the economy. I hope that those who currently occupy that Bench will reflect on the contribution that he might make to a future Opposition Front-Bench team.
I know that the hon. Gentleman takes an interest in the film industry and I would have expected him to recognise the way in which we have listened to the industry and sought to work with it in identifying effectively and in a focused way the undoubted abuse of the system that was taking place and in responding to it. I hope that there is support on both sides of the House for the British film industry. I well remember when I was shadow Economic Secretary, sitting on the Opposition Benches—[Interruption.] I did enjoy those days. Both sides of the House then made common cause on recognising that the film industry needed the support that we are endeavouring to give it. However, we have to be vigilant against the sort of abuse that was undoubtedly taking place.
I will make more headway before I consider giving way to Opposition Members who have points to make.
Enhancing flexibility, tackling regulation and ensuring competitiveness inform the detail of this Bill and I will now turn to those matters. Clauses 10 to 13 mean that, this year, rates of capital gains tax and corporation tax will remain frozen, maintaining the 0 per cent. starting rate of corporation tax for small companies. Clause 144 brings the time-limited stamp duty relief in disadvantaged areas to an end as the new, better targeted local enterprise growth initiative drives forward local business-led regeneration, providing local authorities with the resources and flexibility to target the long-term issues that will promote enterprise in the most deprived areas.
Clauses 20 to 22 will help counteract a tax uncertainty that has proved to be a stumbling block—here, I turn to the point made by the hon. Member for Buckingham—in forming university spin-out companies. This will provide rules that will apply to researchers who acquire shares in spin-out companies created with research institutions to develop intellectual property. The rules ignore the effect on a researcher's shares of the transfer of intellectual property into that company. They will also remove the consequent up-front tax and national insurance contribution charge.
On a point of clarification, did the Chief Secretary refer to clause 144? My copy of the Bill stops at clause 106.
I do not recall mentioning that clause, but if I did, it was certainly in error. The clause that I referred to brings the time-limited stamp duty relief in disadvantaged areas to an end as the new better targeted local enterprise growth initiative drives forward local business-led regeneration.
I will make more headway before I give way again.
I will give way in a moment, because I am sure that the right hon. Gentleman has something interesting to say.
The Bill also sets out key steps to ensuring that our country is prepared for the challenges of the future. For example, it is important that young people—first-time buyers—can have access to the housing market. I know that all of us are concerned about that in one way or another. Therefore, the clauses that double the zero-rate threshold for stamp duty land tax—from £60,000 to £120,000—will be particularly welcome. That means that a purchaser of a residential property who completes a purchase on or after 17 March 2005 will not pay stamp duty land tax if the purchase price is £120,000 or less.
Will the Chief Secretary tell us his estimate of the overall effect on the yield of the measures on stamp duty in the Bill?
We have had this discussion in the past. The hon. Gentleman knows that, as a result of the amendments that we have made, there is an increase in the yield. That is clear in the Red Book and we have never made any pretence otherwise, but we have focused and targeted the relief better. We have ensured that we are assisting first-time buyers. Doubling the threshold means that some 50 per cent. of first-time buyers will not pay stamp duty, and that must be welcomed by all.
Will the Chief Secretary confirm for absolute clarity that, contrary to the impression that the Chancellor of the Exchequer gave in his Budget speech, the benefit of raising the threshold from £60,000 to £120,000 is more than paid for by withdrawing the relief that had the purpose of encouraging non-residential development in deprived areas? That is the effect of the package of measures on stamp duty land tax that the Government have introduced.
We have focused relief where it can do the most good. I should have thought that everyone would welcome that. I do not recognise the presentation of the Budget that the right hon. Gentleman describes. The combined effect of the Budget measures is that revenues from residential property transactions are forecast to fall by £220 million and revenues from commercial property transactions are forecast to rise by £580 million. We have always made that absolutely clear. It has always been clear in the Red Book for all to see. It was always crystal clear in the extensive debates and discussions that my right hon. Friends the Chancellor and the Paymaster General, my hon. Friends the Financial Secretary and the Economic Secretary and I held with Opposition Members in the immediate aftermath of the Budget.
I always enjoy the contributions of the right hon. Member for Charnwood (Mr. Dorrell) because he has extensive knowledge and experience of government. However, it is rich for him to now play the innocent—the shocked maiden—in such a way about the presentation of these matters. I do not think that he can expect us to take his complaints seriously.
I am going to make more progress before once again giving way to Conservative Members.
But my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) knows about this.
I am sure that the hon. Member for Hertford and Stortford (Mr. Prisk) does know about the matter, so it is a pity that he will not be sharing his knowledge with the House from the Front Bench, if he knows so much about it. Several of us who watch such things closely certainly have the view that he deserves to be there.
rose—
With the indulgence of the House, I wish to proceed before I give way again. The Finance Bill—
Will the Chief Secretary give way?
Order. The Chief Secretary has said that he is not giving way at the moment—perhaps he will later.
Thank you, Mr. Speaker.
The Bill sets out the key steps necessary to ensure that our country is prepared for the challenges of the future. For example, it is important for us to use the Bill to build on the progress that we have made on home ownership, which has been not only referred to extensively by ourselves, but recognised by others. As I have said, it will exempt an additional 300,000 buyers each year and more than 50 per cent. of first-time buyers. In regional terms, it will exempt approximately 70 per cent. of buyers in the north and throughout Wales, Scotland and Northern Ireland, and more than 50 per cent. of buyers in the midlands.
Clause 98 focuses on the inheritance tax threshold for each of the next three tax years, with increases above indexation. It sets out the inheritance tax threshold at £275,000 for 2005–06, £285,000 for 2006–07 and £300,000 for 2007- 08. It also ensures that 95 per cent. of estates remain tax free, which is something that we must all bear in mind.
I shall now give way to the hon. Member for Hertford and Stortford.
I am grateful to the Chief Secretary for finally giving way. He mentioned 95 per cent. of estates, but may I return to stamp duty? In the light of his impending house move, will he confirm that in the borough of Brent only 4 per cent. of first-time buyers will benefit from the measures, so 96 per cent. will not?
I do not have the figures for Brent, but I fancy that they will be available to my hon. Friend the Financial Secretary by the end of the debate. I am sure that he will provide a characteristically robust response to the hon. Gentleman's point.
Will the Chief Secretary give way?
No, not at the moment. I intend to make a little more headway before giving way to the hon. Gentleman.
It is important that we protect and support our older citizens, which is why clause 9 is specifically designed to help to reduce pensioner poverty. It will increase age-related personal allowances for those aged over 65 in line with earnings and ensure that more than half of pensioners do not have to pay income tax. In practice, that will mean that for those aged 65 to 74, the allowance will be increased to £7,090. The allowance for those aged 75 and over will be increased to £7,220.
In the Finance Act 2004 we legislated for a radical simplification of the tax rules for pensions. From April 2006, the numerous existing regimes, each with its own set of rules, will be replaced by a single, universal regime for tax-privileged pensions savings. It is important to remember that clause 101 introduces a package of supplementary measures to refine the 2004 Act. The measures will provide additional flexibility for schemes and individuals and allow a smoother transition from the current regime to the new one.
I shall give way first to the hon. Member for Buckingham and then, of course, to the Opposition Front-Bench spokesman.
It is always a pleasure to listen to the Chief Secretary's mellifluous tones—this might be the last time on which we have the opportunity to do so. However, although this might be his last appearance before the House, I would still like to be reassured that he is master of his subject. Given that he glossed rather superficially and inappropriately over clauses 20 to 22, and thus broke his promise to deal with my specific inquiry, will he now tell me why clause 21(8), on research institution spin-out companies, is not subject to the affirmative procedure of the House? That is a straightforward question and I want a straightforward answer.
Why not write to my hon. Friend?
I do not need much temptation to go into detail, but I understood that my brief for this afternoon was to resist temptation. I find the blandishments of the hon. Member for Buckingham absolutely irresistible. What concerns me is why he would favour the affirmative resolution procedure—[Interruption.] Let me finish my point. What concerns me is why he prefers the affirmative resolution procedure to the procedure that we have adopted, which enables us to have this debate. It meets the concerns and the substantive points made to us by academia and those engaged in spin-outs. If he sees a particular advantage in the affirmative resolution procedure, I am sure that the House would be glad to hear what it is.
I shall give way in a moment.
It seems to us that the proposed changes, on which we have extensively canvassed the sector, have been widely welcomed. We received more than 45 responses to the consultation following publication of the technical notes and the partial regulatory impact assessment at the pre-Budget report stage. UNICO, which the hon. Gentleman knows is the University Companies Association, says that feedback to the draft legislation, which we published as long ago as February this year, has been
"Overall, very positive"
and people have found
"very little to complain about."
I fancy it did not take into account the seemingly infinite capacity of the hon. Gentleman to complain. [Hon. Members: "Oh!"] Oh yes, no more Mr. Nice Guy. I was only too happy to approach the debate in a non-partisan way and to be brief, but my patience has been tested.
I congratulate the Chief Secretary on his appointment as British high commissioner in South Africa. He will do a fantastic job in that role, and I wish him well. Frankly, though, that was a ponderous and meandering response to a straightforward question. If he had just said that he did not know the difference between negative and affirmative procedure, the House would have been greatly obliged. The affirmative procedure maximises ministerial accountability to Parliament and the negative procedure minimises it. It could hardly be clearer.
If my memory serves me well, the hon. Gentleman and I have had this debate in relation to other clauses in the course of other Finance Bills discussed Upstairs. Those Conservative right hon. Members present who have had to do what my right hon. and hon. Friends have had to do in Committee know very well that it is to assist the ministerial conduct of business that one prefers the negative to the affirmative. In due course, 20 or 25 years hence, it is possible that the hon. Gentleman might discover why Ministers tend to prefer the negative to the affirmative.
Will the Chief Secretary confirm that he once appreciated the force of the argument that my hon. Friend the Member for Buckingham (Mr. Bercow) advances, not least when the right hon. Gentleman advanced exactly that argument from the Opposition Benches? Does he recall the precise Damascene moment when he was converted to the view always taken by the Treasury Bench?
It was in May 1997. Hands up; it's a fair cop, guv. We all know the reason for that, and there is widespread acceptance on both sides of the House that that is the best way to proceed in the circumstances.
We want to build on the steps taken in successive Finance Bills, which is why clause 101 introduces a package of supplementary measures to refine the 2004 legislation. The measures will provide additional flexibility for schemes and individuals, and smooth the transition from the current regime to the new regime. Moreover, the Pensions Act 2004 legislated for the pension protection fund, which comes into being today. Clauses ensure that the PPF has the same tax privileges as the pension schemes that it protects, but to make our tax system fairer, we must also ensure that it applies equally to all. That is why these clauses are designed to introduce changes to income tax, corporation tax and capital gains tax rules relating to alternative finance arrangements that do not involve either payment or receipt of interest, including those that are designed to be Sharia compliant.
While the Chief Secretary is on the subject of pensioner poverty and measures to deal with pensioners, will he explain why the Government have decided to give a £200 relief for council tax to pensioners for one year only? Will he also explain why the fact that it was for one year only was dropped from the Chancellor's Budget speech?
I do not want to engage in retrospective analysis of the Budget presentation. We made the position clear at the time. [Interruption.] I and all my colleagues made it clear that we were trying to respond to the concerns of pensioners. We introduced the Lyons review to enable us to arrive at a position in which the issues are seen within the context of local government finance overall and the undoubted need for reform, which we have recognised in relation to council tax.
I do not want to get drawn down that road, but if the hon. Gentleman tempts me, I will. We all know that the council tax arose out of the poll tax debacle. We all know that the origins of the poll tax lay with the Conservative party and in particular—I know this because I was in the House at the time—with the contribution to local government finance made by the Leader of the Opposition. We do not want to return to those days because we know what it would mean for local government finance and pensioners, as it would increase pensioner poverty.
Will the Minister give way?
No, I am afraid not. I want to make headway because I have a responsibility to the House to get through today's business so that we give the Bill the proper scrutiny that it deserves.
When two people enter a civil partnership, they make a responsible commitment to each other. Our policy is that civil partners should be entitled to the same legal rights and responsibilities as spouses. This means that our tax system should, where possible, adapt to reflect the changes in society that brought civil partnerships into being. Last December, the Civil Partnership Act 2004 received Royal Assent. It provides a new legal framework that enables recognition of same-sex relationships through the new status of civil partnership. Same-sex couples across the UK will be able to form a civil partnership. That is reflected in the relevant clause, as it provides powers to ensure that civil partners are treated the same as married couples, both for tax purposes and to ensure that tax legislation is compatible with the Human Rights Act 1998.
Will the Minister remind the House of the reason for excluding from those tax benefits or tax reliefs couples who may have lived together for 30 or 40 years, such as siblings, a child and an elderly parent or, for that matter, a very close householder and housekeeper?
We had a full discussion on that when the House was coming to a view on civil partnerships. I know and respect the hon. Gentleman's views on the issue, although I do not share them. I believe that the House came to the right conclusion on how to reflect societal change in the Civil Partnerships Act and the provisions of the Finance Bill.
The immense contribution made by our armed forces, who serve our country so well in peace and in war, is reflected in the clause that will ensure that lump sum awards paid to servicemen and women injured in the line of duty are tax free, whether paid to a serving member of the armed forces or to a person who has left the service. The provision amends the Income Tax (Earnings and Pensions) Act 2003 to ensure that benefits payable under the Armed Forces (Pensions and Compensation) Act 2004 are treated in the same way for tax as the equivalent benefits payable under the armed forces pension scheme. The new lump sum in-service injury awards will be exempted by the clause—a measure that I know has the support, which it warrants, of all hon. Members.
The measures and others like them help to modernise the tax system. They will enable a fairer society to emerge and reflect the new challenges arising from that changing society. Britain also faces new and evolving environmental challenges, in respect of which we have an obligation to future generations. We have therefore provided for the standard rate of landfill tax to increase as part of a principled national policy to reduce the volumes of waste sent to landfill and to encourage more environmentally friendly alternatives. Building on the changes to vehicle excise duty made in 2003 that reflect vehicle carbon emissions, the Bill provides for an increase in VED rates only for the two highest carbon dioxide bands; the four least-polluting carbon dioxide bands will remain frozen.
The Budget lays down measures that will enable our country to respond to and meet the challenges of our changing society in the global economy. The Finance Bill enacts measures to which the House has already agreed in principle. I commend it to the House.
We all enjoyed listening to the would-be high commissioner in what I suppose is his last appearance in the Commons. I am sorry that more of his hon. Friends did not turn up to listen to him, but we Opposition Members enjoyed his speech. In the past few weeks, the right hon. Gentleman has been showered with tributes every time that he has appeared at the Dispatch Box—he has had more farewells than Frank Sinatra, which is appropriate, given that the Cabinet he is leaving is the biggest rat pack of them all. Like any good swan-song, his speech was somewhat theatrical and overblown—true to form for the right hon. Gentleman—but during his 18 years in Parliament no one has ever accused him of being a shrinking violet. I have certainly enjoyed shadowing him in recent months. He has always been courteous and I wish him well in the future—when I suspect he will join many other Labour MPs in the swelling ranks of the economically inactive.
It is a shame that we do not have more time to examine what remains after the extensive deletions on which we insisted of a complex piece of financial legislation. Four hours is wholly inadequate to debate, scrutinise and pass 106 clauses. In 1992, when the Conservative Government called an election immediately after the Budget, the Finance Bill presented to the House was a mere 11 clauses long, those 11 being the essential and wholly uncontroversial revenue-raising clauses that are required each year. Four hours was provided to debate those 11 clauses; even so, the then shadow Chief Secretary, now Secretary of State for Environment, Food and Rural Affairs, proclaimed that it was a constitutional outrage, saying that
"Four hours for all the stages of a Finance Bill from start to finish . . . is a most extraordinary precedent . . . due not to accident or misfortune but to the sheer incompetence and mismanagement of the Government".
Given that he attended that debate and, judging by the Hansard report, got very over-excited during the proceedings, the putative high commissioner must remember the comment made by the present Chancellor's chief lieutenant, the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), that allowing four hours for a Finance Bill was
"a fundamentally undemocratic way to proceed . . . That shows a complete contempt for the democratic process."—[Official Report, 13 March 1992; Vol. 205, c. 1141–52.]
Thirteen years later, we have before us a Labour Finance Bill of 106 clauses, not 11, which is also to be rushed through in four hours. Times have changed and so have the cherished principles of the Labour party.
Although more debate would have been welcomed today, it is fair to say that there is not much in the Bill to which we object. It contains the clauses that set out the various tax and duty rates that are required to maintain the flow of revenue to the Exchequer. We, of course, will reduce that revenue flow by £4 billion when we present our Budget and Finance Bill in two months' time. The Bill also contains more complex provisions that, although they deserve fuller scrutiny, are broadly welcome: they have been consulted on and we felt that it would be wrong to remove them from the Bill.
The point is not whether we in the House object to any of the clauses, but that they will not be exposed to scrutiny and proper deliberation by those outside the House, who may well have views—indeed, some have sent us representations on certain clauses. The travesty of taking more than 100 clauses in four hours means that many items will pass on to the statute book without having been subjected to the proper deliberative scrutiny that they should have and would have received in a Committee.
My hon. Friend is absolutely right. My approach to the washing-up negotiations with the Chief Secretary was to concentrate on removing those clauses on which there had been no consultation with outside bodies and ensuring that those that remained were those on which there had been at least some consultation. I readily accept that that is no substitute for adequate parliamentary scrutiny, going through the Bill in proper detail and at length in Committee—
So why are we allowing it?
Because the negotiations took part as part of the washing-up process covering every piece of legislation that we will discuss today and in the next couple of days. We have let certain provisions through, and I shall explain why.
We have let through the new regime for trusts for vulnerable people, which has been consulted on, which all the disability charities broadly welcome and which we support. We have agreed to the alternative finance arrangements to ensure that people whose religious beliefs forbid them from receiving or paying interest—such as those who adhere to Sharia law—are not discriminated against by the tax system. We think that is fair.
The Chief Secretary unfairly implied that my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) had been dismissed from the Front Bench; in fact, he is an Opposition Whip but he is using his experience to speak in today's debate from the Back Benches. My hon. Friend said that the clauses on film tax relief continue the sorry tale of the Government's increasingly convoluted attempts to give tax breaks to film production without creating huge tax loopholes—a tale of how not to write tax law. As I am sure my hon. Friend the Member for Sevenoaks (Mr. Fallon) agrees, we should consider those clauses in much greater detail, but in the past two days we have received strong representations from the film industry expressing its wish that the relief be extended past July, when it is due to run out. The industry felt that the confusion and chaos caused by the changes that the Government have made in the past couple of years would be increased if the measures were not included in the Bill. Having listened to the representations made by the film industry and by MPs representing film production companies, we are prepared to allow the clauses to pass to enable the extension of the tax relief beyond July.
Can my hon. Friend give me an assurance that when he introduces his first Finance Bill and takes part in the first Conservative Budget after 5 May he will carry out a proper evaluation of the help that has been given to the film industry? Because of the difficulties encountered by the Government it is genuinely difficult to see the wood for the trees, and I would be grateful for an assurance that those reliefs have benefited the British film industry.
My right hon. Friend is right to be sceptical. It is our view, and indeed it is the view of the industry, which has undertaken a review of these issues, that we should move from a tax relief on production to one on the distribution of British films. As I said, the film industry was particularly concerned about the uncertainty caused by the expiry of the relief in July, and made strong representations. Some of my hon. Friends have made strong representations to me on behalf of the film production companies in their constituencies—obviously the film business did a good job—and we are prepared to accept the relevant provisions.
The new schedule on the taxation of pensions includes some sensible provisions, many of which are amendments that I tabled in Committee to the previous Finance Bill. They were rejected then by the Government, but I am glad that with the passage of time and a bit of wisdom the Treasury has accepted that I made a great deal of sense. Last June was therefore not entirely wasted. The Chief Secretary mentioned the clause that ensures that homosexual civil partners are treated the same as married couples for tax purposes. Personally, I support civil partnerships for gay people, and I support the clause. That may help to increase my score of 57 per cent. on Stonewall's score chart of MPs' record on gay equality issues, about which my hon. Friend the Member for Rayleigh (Mr. Francois) is always teasing me. We very much welcome clause 19, which is a sensible provision on the payment of armed forces pensions.
Those clauses are broadly welcome, but doubtless they could have been improved by proper parliamentary scrutiny. On balance, however, we should allow them to pass into law. However, we could not allow to pass into law without any examination the dozens of clauses and hundreds of pages of complex tax legislation, which the Government said were necessary to counter tax avoidance and which appeared in the initial Finance Bill that was published just a couple of weeks ago. We agree with the Government about the need to tackle tax avoidance and we agree on principle with the many measures that they have introduced to close tax loopholes. However, the detail of such measures requires the closest possible examination, to ensure that we do not inadvertently damage the competitiveness of UK industry and further increase burdens on business. Indeed, many anti-tax avoidance measures are retrospective, as they would come into force on the day on which they were announced. There would therefore be no revenue implications if we considered them after the election in a Conservative Finance Bill or, in the unlikely event that Labour wins, a Labour one.
The initial Finance Bill that was published a couple of weeks ago included novel and questionable clauses on tax arbitrage that the CBI and many others fear could seriously reduce the appeal of Britain as a place in which to do business and attract inward investment. Given that inward investment has already fallen under the Government, we should pay heed to such warnings and subject the clauses on tax arbitrage to rigorous scrutiny. Indeed, many people in the industry who approached us, including the Institute of Chartered Accountants, thought that they would be ruled illegal. Given the problems that the Treasury has had at the European Court, I would expect it to look at those provisions more closely. It was never going to be possible to rush through the tax arbitrage clauses in a pre-election period, and it was wrong of the Government even to suggest that they were going to do so. The Chief Secretary described those clauses to me as the flagship of the Finance Bill. Unfortunately for him, like the Mary Rose, his flagship has been sunk, and we must wait to see what happens when it is raised.
Similarly, the Association of British Insurers voiced "very considerable concern" on behalf of the insurance industry about the Inland Revenue's plans to give itself powers to alter the key areas of taxation of life insurance by regulation instead of primary legislation—something in which my hon. Friend the Member for Buckingham (Mr. Bercow) takes a particular interest. I am glad to assure him and others that we have put a stop to those provisions and to schedule 13 of the old Bill, which was causing considerable alarm in financial circles. The Government's initial aim to ram through all those complex tax changes without any scrutiny or consultation rightly caused indignation and outrage in the financial services and business community. The Institute of Chartered Accountants wrote to the Paymaster General on 31 March to say that
"we are strongly of the view that if the provisions in the Finance Bill are not subject to appropriate Parliamentary scrutiny then this will be to the detriment of UK business and will undermine confidence and trust in the Parliamentary process".
We agree. Thanks to our actions, the most controversial and complex provisions will now be subject to appropriate parliamentary scrutiny before they are introduced, and trust and confidence in the parliamentary process has been sustained.
Returning to the Finance (No. 2) Bill before us today—as opposed to the provisions that we have pushed out over the past couple of days—it includes welcome moves on tax, which the Chancellor trumpeted on Budget day, including finally raising the stamp duty and inheritance tax thresholds to take account of the growth of house prices over the past decade, although the Chief Secretary is unaware that that will have little impact in his own constituency. The Chancellor did not mention in his Budget speech—and the Chief Secretary did not mention it today—that the small tax cuts about which he boasted at the Dispatch Box are more than cancelled out by the stealthy tax increases buried in the detail of the Red Book, or, in the Chief Secretary's case, given his answers today, perhaps we should call it the unread book.
Unless I misheard the Chief Secretary, he suggested that there was a £500 million change in disadvantaged areas. Is my hon. Friend aware that the correct figure is a £340 million differential? Is he as concerned as I am that the Chief Secretary is not even aware of how much additional revenue he plans to take?
My hon. Friend is absolutely right. I think that he is referring to table 1.2 on page 12 of the Red Book, which shows that the initial impact of ending stamp duty land tax relief in disadvantaged areas will cost £340 million. As I said, in the Chief Secretary's case, it appears to be the unread book.
As always with the Government, it is not what they say that is real story but what they do. In the Budget, what the Chancellor
"gave with one hand he took away with the other".
Those are not my words, but the words of the much respected independent Institute for Fiscal Studies. As my right hon. Friend the Member for Charnwood (Mr. Dorrell) reminded us, raising the stamp duty threshold from £60,000 to £120,000 in clause 95—a long overdue but none the less welcome measure—is more than cancelled out by clause 96, which removes stamp duty land tax relief for disadvantaged areas. The Chief Secretary has not given us a good explanation of why he is ending that much trumpeted relief for disadvantaged areas. He said that he would replace it with another scheme, but it is worth only £300 million over three years, which is considerably less than the £340 million in the first year—and I think that the figure will rise—that is taken away by the ending of that relief for disadvantaged areas.
The Chancellor said, as though it were a mere technicality, that he was
"aligning the timing of oil companies' corporation tax payments more closely with petroleum revenue tax."—[Official Report, 16 March 2005; Vol. 432, c. 264.]
Who would have guessed that what he really meant was a £1.1 billion windfall tax on the oil industry? The oil industry, I suspect, has learned to live with that tax, but pensioners will be dismayed to discover, as my hon. Friend the Member for Chichester (Mr. Tyrie) reminded us, that the £200 payment that the Chancellor flourished as an answer to his soaring council taxes is a one-off. Page 12 of the Red Book makes that clear, even if the Chancellor and the Chief Secretary have not done so.
Unlike every other measure in the Budget, the £200 payout to pensioners is for this election year only, whereas the hikes in council tax will go on year after year if Labour is re-elected. What a cynical pre-election manoeuvre from a Government who have lost any sense of fair play. What a contrast to the sustained year on year on year council tax discount that we are offering, which will be worth up to £500 for millions of pensioners. What a classic example from this vote now, pay later Budget.
There is a secret tax-and-spend agenda in this election. It just happens to be the Labour party's: a secret agenda to try to conceal from voters the massive tax rises that Labour needs to pay for its spending plans. Even after 66 tax increases on hard-working families, the Government have managed to create a black hole in the public finances. The Chancellor admitted as much when he was forced to concede that the current deficit is £5 billion higher than he forecast last year, and that he will borrow £168 billion over the next five years—more in each year than he forecast even 12 months ago.
It is not just our view that there is a black hole. It is the view of almost every single independent organisation and economic commentator. They are clearly thinking what we are thinking. The International Monetary Fund is thinking what we are thinking when it says that Britain's national accounts have
"deteriorated sharply over the last five years"—
in other words, from the moment that the Labour Government ceased to follow the previous Conservative Government's spending plans. The Institute for Fiscal Studies is thinking what we are thinking when it says that taxes will have to go up £11 billion a year after the election to pay for Labour's spending.
The question for Labour in the election, and for the Chief Secretary, either now or as we encounter each other in the television studios over the next couple of weeks, as we will no doubt do, unless he is already off to his posting and being measured up for his high commissioner's outfit—the ostrich feathers and all that—is not whether taxes will go up, but which taxes Labour will increase in future Finance Bills. Will it be capital gains tax on homes, or council taxes, pushing bills towards the £2,000 mark, or national insurance—Labour's tax of choice? To raise the £11 billion in taxes that the IFS says the Government need, national insurance will have to go up 3p in the pound. That is £1,000 more a year in taxes for a typical hard-working couple.
Before the last election, as my right hon. and learned Friend the Leader of the Opposition reminded us earlier today, the Prime Minister said that reasonable people should not suppose that Labour would raise national insurance, then in the first Budget after the election he put it up. What does the Chief Secretary think reasonable people should suppose before this election about Labour's plans for national insurance? I am not sure whether he will have an opportunity later in the debate to answer the question, so perhaps the Financial Secretary will do so instead.
Taxes will go up if Labour is elected. That is the simple truth at the heart of the election—a truth that, as far as Labour is concerned, dare not speak its name. What will those taxes pay for? More waste, more bureaucracy, more bureaucrats—in other words, more of what we have seen for the past eight years. The Financial Secretary knows that all the money has been wasted, because he famously told us so. He said that
"we're going to have an election. . . when people will say 'we've paid a lot of taxes but what has really been achieved with all that money?' . . . Too often a lot of money has been spent. But very little seems to have been achieved".
What sound words from the Financial Secretary. He is right. A lot of money has been spent, but very little seems to have been achieved. After 66 tax rises and eight years of talk, average hospital waiting times are higher, cancelled operations are up, and more people die of hospital superbugs than die on Britain's roads every year. After 66 tax rises and eight years of talk, one in three 11-year-olds leaves school unable to write properly, and school truancy has risen by a third. After 66 tax rises and eight years of talk, crime has risen, violent crime has almost doubled and the detection rate has fallen.
Even on the economy, which the Chancellor of the Exchequer says he wants to put at the heart of the election campaign, after eight years of boasts and 66 tax rises, we have fallen from fourth to 11th in the world competitiveness league, our trade has gone from a surplus to a record deficit, a million manufacturing jobs have been lost, productivity growth is down by a third, as is the savings ratio, and now we discover that average take-home incomes for families have fallen for the first time in almost 15 years. Labour has taxed, wasted and failed, and hard-working families have paid the price.
So it will fall to the next Conservative Government to sort out the mess in the public finances and to deliver the lower taxes, cleaner hospitals, school discipline, controlled immigration and more police that the people of this country want to see. It will fall to the next Conservative Government to put public spending on an affordable path that avoids Labour's tax rises and delivers tax reductions for hard-working families. We will begin that task in our first Budget and our first Finance Bill in just two months' time.
Much in the Finance Bill is uncontroversial. When the revenue clauses were put to the House a few weeks ago, I do not recall that there was more than one Division, and that was on a Scottish nationalist motion for which only four Members voted, so on the revenue provisions there has not been a great deal of controversy. As I understand it, the implication of the Bill is to tighten the economy by the grand total of 0.02 per cent. in terms of fiscal policy, so we are not talking about great changes in economic policy.
What remains for debate is the way in which the Government have treated some complex provisions. In the Budget debate we had a useful exchange about the stamp duty provisions, which brought out the fact that what sounded like an attractive idea—the idea of giving stamp duty relief on commercial property in disadvantaged areas—turned out not to have been thought through. I am disappointed that the Government have not produced a reasoned research paper of any kind to explain how we got to that point, what the consequences were, who benefited, and what will happen as a result of the local enterprise initiative, which I suspect will encounter the same problems as the previous tax relief. There has been a lack of reasoning and a lack of understanding about a rather complex policy.
We had argued for lifting the threshold for stamp duty and had calculated that it would be possible to lift it to £150,000, giving the scrapping of the disadvantaged area relief. In view of the revenue that the Government have saved through that measure, it is disappointing that they were not able to lift the threshold further. For most of us in the south of England, the provision is useless, but none the less welcome to the limited extent to which it is proceeding.
The spokesman for the Liberals has just created a black hole in a prospective Liberal Budget, not that there ever would be such a thing. He suggested that the money that the Government are raising on stamp duty should go back into stamp duty relief. Could he explain how he would fill that hole?
The commitment to increase the threshold for stamp duty to £150,000 will be in our manifesto. I have already said that publicly. There will be no black hole because it is fully costed. The manifesto with full costings will be published in 10 days, and will explain precisely how the cost is covered. We will not be proceeding with the Government's alternative local enterprise proposals. Our plans have all been fully costed, in contrast with the James initiative, on which I have commented frequently and about which doubts are shared by many of the hon. Gentleman's colleagues, although we will not go into the sad history of the past couple of weeks.
Before we leave the subject of stamp duty, can we be clear what Liberal Democrat policy is? It is to further transfer stamp duty relief from the inner urban areas to the more affluent areas, especially in the south. Will the hon. Gentleman be promulgating that loudly in places such as Sheffield and Newcastle?
I was completely up front in the weeks running up to the Budget, arguing that the disadvantaged area tax relief provision for commercial property should be dispensed with, because the main beneficiaries were not small shops in Sheffield, but large commercial property developers in Canary Wharf and such areas. That is why we argued for getting rid of it and we believe that is the correct thing to do. We remain committed to lifting the stamp duty threshold for domestic properties further to £150,000 a year. That is fully costed and will be fully explained in the manifesto when we present it shortly.
On the specific Budget provisions, I agree with the hon. Member for Tatton (Mr. Osborne) that what has been taken out is appropriate and what remains is sensible and something that we can all support. On the major change, the anti-avoidance measures, we need a great deal more time for reflection. We are all committed to such measures where they are effective, but they are at the core of the Government's budgetary arithmetic, as the Chief Secretary knows. They propose to raise £3 billion over three years, so the ability to make the measures stick is central to the Budget's credibility. For the reasons that have partly been given, it is right that we be given further time for reflection.
On the international provisions, the so-called double no tax agreements, the point has been made, not just by people who currently benefit from these measures in multinational companies but by accountants who deal with them, that by dealing with such matters in too clumsy a way there might be some short-term gain in revenue, but some long-term loss. Equally, I understand that there is an enormous degree of complex argument around the 15 or 20 anti-avoidance measures concerned with financial derivatives, with which the Government propose to deal, and the danger of tackling those in the wrong way or in a clumsy way would simply be to raise the cost of capital for companies, not necessarily to save revenue for the Government. So a great deal of thought is required on the various measures, and I welcome the opportunity to pursue them further in that proper way.
Our main criticism of the Finance Bill was not so much for what was in it as for what was not in it, and we hope that whoever forms the Government in a few weeks' time will address these issues. The first is the transparency of the budget process. It is already very clear, because of the uncertainties surrounding the £3 billion revenue from anti-avoidance measures, that we would have to take on trust much of what the Inland Revenue says about projected revenue. There is also much room for controversy about projected growth rates, and that is one reason why we have argued strongly that there has to be a proper system of independent audits of the Budget's assumptions to give to fiscal policy the same kind of integrity that exists in monetary policy. That is not a doorstep campaigning issue, but I hope that the Government are listening to the arguments and that if they are returned they will address the problem—that we have a proper degree of independence in the appraisal of fiscal policy that a body such as the National Audit Office, properly supported by economic advice, would be able to give.
The Chief Secretary acknowledged the second omission when he said that the Government are responsive to the need for reform of local taxation. I do not know what that is coded language for and how radical the reform will be when we get it, but as he knows we are committed to scrapping the council tax altogether, and the sticking plaster solution of £200 in one year is clearly not satisfactory, although I am not sure that the Conservative's £500 is satisfactory either. I happen to live in a constituency that for the last three years has had a Conservative-controlled council that has raised council tax by £500 per household over that period, so my constituents will derive no benefit from that. In addition, there are many households where one occupant is a pensioner and one is not that would not qualify for the discount, and there are many low-income families without pensioners who would not qualify for that discount either. Therefore, that provision is itself inadequate. It may be sustained, but it is not adequate and it does not deal with many of the injustices that lie at the heart of the council tax. It does not create a system based on ability to pay. If the Chief Secretary is as good as his word and we have fundamental reform if the Government are re-elected, I hope that they will consider income-based systems of taxation, as the Liberal Democrats have suggested.
The third omission relates to pensions. The right hon. Member for Fylde (Mr. Jack) made the point earlier that over the next few weeks many people will be struggling with all the complexities of pension credit and other forms of means-tested benefit without the help that we are sometimes able to give them. That illustrates the much wider point that trying to deal with pensioner poverty in this way excludes many pensioners, it creates high rates of marginal withdrawal or marginal rates of tax for pensioners and is a fundamentally unsatisfactory system. We know that the Government are considering, through the Turner commission, a much wider-ranging reform. We hope that they eventually come out, as we have, with the concept of a citizen's pension payable to at least older pensioners without extensive means-testing and without the complexity and the high marginal rates that currently apply.
Again in a spirit of consensus, it is clear that the three parties among us that are competing at the election, whatever the sound and fury, are agreed on a series of propositions. The first concerns taxation. The simple brutal fact of the matter is, as the Institute for Fiscal Studies, which the hon. Member for Tatton called in aid several times, has pointed out, that all three parties would increase taxation after the next election, and that there would be a minimum £24 billion a year increase under the Conservatives as a result of fiscal drag throughout the next public spending review period. That is common ground.
I am sure that the hon. Gentleman would not want to mislead the House, still less the voters. Is it not true that the Institute for Fiscal Studies has looked at the Government's plans and concluded that there is a structural deficit, and has looked at the plans published by the Conservative Front Bench and said that the arithmetic adds up?
It has said that the arithmetic adds up in a purely mechanical sense. Perhaps it should be more widely known that the IFS has said that it has no competence to judge the credibility of the cuts that were proposed by the James report, and it specifically disclaimed any competence in evaluating those proposals. Yet the whole Conservative taxation and spending programme hinges on that. It has not been independently evaluated. Certainly when the Liberal Democrats have considered it on a purely technical level, probably at least £8 billion-worth of those cuts make no sense whatever.
It is obviously true that any Government who implemented changes in the spending plans would have to accept responsibility for those changes, but the hon. Gentleman was suggesting that a Conservative Government based on those plans would have to increase rates of taxation, which is simply not correct.
I did not use the phrase "rates of taxation". What I said was that taxation in aggregate, the amount raised in taxation, the share of taxation in the national economy, would rise under the Conservatives' proposals. If they were honest and open about that and acknowledged that there would be a rising burden of taxation under their proposals, under Labour's proposals and ours, at least we would start with a sensible common base for debate. Equally, we will all have to accept, on each of our three sets of proposals, that there will have to be a high degree of fiscal discipline in respect of public spending. That is the common basis on which this debate should proceed.
I am happy to support the Bill and I wish the Chief Secretary well in his next job. He will be greatly missed in the House.
I begin by declaring an interest as a director and shareholder of a manufacturing business. Like many others, I would like to echo the closing remarks of the hon. Member for Twickenham (Dr. Cable) in wishing the Chief Secretary success in his new career. We will follow his developing life with interest and we shall miss his bonhomie.
We are discussing a reasonably heavily truncated finance Bill today in the circumstances of the run-up to a general election, but as my hon. Friend the Member for Tatton (Mr. Osborne) reminded us, the degree of change that has been introduced by the Government in the originally published Bill is nowhere near the degree of change that was agreed to in the run-up to the 1992 election. I remember some of that because I became Financial Secretary immediately after the 1992 election and had to pick up a substantial amount of legislation that had been drafted ahead of the election and dropped in the finance Bill in the run-up to the 1992 general election. I congratulate my hon. Friend on securing the Government's agreement to drop some of the most complex aspects of the original legislation, but my hon. Friend the Member for Sevenoaks (Mr. Fallon) was correct to remind the House of the difference between the Finance (No. 2) Bill that we are discussing now and the Finance Bill that was put through ahead of the 1992 general election. It is regrettable, although I am sure that my hon. Friend the Member for Tatton secured the best deal possible, that the Government were not willing to delay the legislation that is included in the Bill in order to ensure that it was subject to proper parliamentary scrutiny after the general election.
The real issue with this Finance Bill is not the measures in it, but those that are not in it, but would be necessary if the Government's plans were in truth to add up. I am interested not in what is in the Finance (No.2) Bill that we are discussing today, but in what would be in the Finance (No.3) Bill that a re-elected Labour Government would have to introduce.
All our constituents know, and every Member of this House knows, that we have been here before. In 2001, ahead of that year's general election, we and our constituents were told by the Prime Minister and the Chancellor that there would be no need for tax increases if a Labour Government were re-elected. At the first occasion after that election the Chancellor came to this place and proposed in the 2002 Budget an £8 billion tax increase—an increase in the national insurance contributions paid by both employers and employees. The argument advanced at the time was that all of that was necessary because the money was all going into national health service expenditure. That always was a dishonest argument—it was just as dishonest today, when the Prime Minister used it at the Dispatch Box during Prime Minister's questions, as it was on the day it was first used in the 2002 Budget.
We all know that the total tax yield that comes out of the tax system goes into the Consolidated Fund and that it is then for the Government to decide priorities on the use of that money. All the Chancellor was seeking to do by labelling that £8 billion tax increase in 2002 as money for the NHS was to sweeten the pill of the extra burden that the Labour Government were imposing on voters.
I am hesitant to interrupt my right hon. Friend's excellent flow, but I want to remind him of what happened after the 1997 election. We were not advised that our pensions were going to be raided, but a £5 billion annual raid was executed then. Does he agree that there is a record of not one election, but two, in which this Government have taxed without warning?
My hon. Friend is entirely right; there was an unheralded tax increase after the 1997 election and another after the 2001 election. Of course, we all now know the effect that was achieved, and I want to focus on the tax increase following the 2001 election, because the Institute for Fiscal Studies published last week an analysis of the effect of that increase on disposable incomes.
It is helpful to us in the run-up to this general election for voters to be reminded of the effect of the tax increase that the Government introduced immediately after the previous general election in order to make the books balance in the early years of this Parliament. Last week, the Institute for Fiscal Studies published a report on the movement of disposable incomes during recent years. It reported that, for the first time since the early 1990s, real disposable incomes fell in 2003–04 compared with 2002–03. Why did they fall? They fell because of the £8 billion tax increase that the Chancellor introduced after the previous general election, having promised beforehand that an increase would not be necessary.
It is not just a matter of the total taxation that the Government have imposed, which has had the effect of cutting real disposable incomes in the last year for which figures are available, which is 2003–04. It is also important to examine the distributional effect of the tax policies that have been pursued by this Government, not just in this Parliament, but throughout the period since 1997, as my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) rightly says.
The Chancellor is very fond of saying that he has not increased rates of income tax. That is a dishonest argument for two reasons. First, it draws a polite veil over the fact that he has increased the rates of national insurance contributions. Most of our constituents and, I suspect, most of us, do not notice the difference in our pay packets between increases in income tax and increases in national insurance contributions. The truth is that marginal tax rates have increased, as one sees if one considers tax and national insurance together. Beyond that, the combined effect of freezing both the personal allowance in 2002 and the higher rate bands, in addition to rising income levels, is that 7.5 million income tax payers are paying at a higher rate than they would have done if the whole system had been fully indexed to earnings in 1997.
So when the Chancellor of the Exchequer talks about tax rates not having gone up, he is wrong on two counts: first, national insurance contributions; and secondly, the unplanned and unfair effect of holding down the allowances and bands in the tax system and not indexing them to earnings. We should do well to remember and to remind our voters of this statistic: the Labour Government since 1997 has meant that 7.5 million—very nearly one third—of all income tax payers are paying at a higher marginal rate than they would have done if the system had been fully indexed to earnings since 1997.
The Institute for Fiscal Studies and an analysis of the tax record of this Government in office have demonstrated that the effect of a Labour Government is to raise the tax burden on income tax payers. The IFS is relevant to this debate not just because of its analysis of the effect of a Labour Government on the tax burden in the past, but because, as we have already mentioned in this debate, it is offering a warning of what a re-elected Labour Government would mean again.
I said in an intervention on the hon. Member for Twickenham that the IFS had examined the Government's published plans and those of my right hon. and hon. Friends on the Conservative Front Bench, and concluded that the Government's plans include what in the jargon is called a structural deficit—that is to say, a black hole or a need to raise taxes in the next Parliament in exactly the same way as they were raised in this Parliament because the Government have not been able to control the growth of Government expenditure.
I wonder whether the right hon. Gentleman saw the point made by Goldman Sachs last month, which was that there is no black hole.
I have seen a wide range of published material on this subject. If the Financial Secretary will allow me to make this point, it is entirely fair to say that the overwhelming majority of published opinions from the IFS and all the other independent commentariat employed in the City, and the overwhelming weight of that judgment, is that there is a structural deficit in the Government's plans. It is not difficult to see why they reached that conclusion. It is because the Government's published plans report a rising share of national income accounted for by Government expenditure and, as the hon. Member for Twickenham pointed out, a rising share of national income accounted for by tax yield, without any plausible explanation of how the money will be produced. I have seen no analysis of the figures for tax yield that supports the Government's view that they can secure the specified level of tax income out of the economy without having to change the tax rates.
The Financial Secretary mentioned Goldman Sachs. He did not mention the Institute for Fiscal Studies, Ernst and Young, the Organisation for Economic Co-operation and Development, the International Monetary Fund, the CBI, the British Chambers of Commerce, the Centre for Economics and Business Research, Numerica, Lehman Brothers, HSBC, Barclays Capital, Gerrard, PricewaterhouseCoopers, Deloitte and Touche or Lombard Street Research.
I am grateful to my hon. Friend. I regret to say that I have not committed that list to memory, but perhaps it might now be obvious to the House why I did not attempt to do so. My memory is failing me and I do not have that ability.
Almost nobody who has examined the Government's financial plans believes that the Government can deliver on tax and revenue through the next Parliament without resorting to precisely the same expedient that they used in 2002—a post-election tax increase. When the Chancellor says that he wants to put the economy at the centre of the election campaign, I say, "Hooray!" Conservative Members must argue to the electorate that the meaning of a re-elected Labour Government is entirely clear—it is clear in the figures and evidence and, if one does not want to look into a crystal ball, it is clear in the Red Book. A Labour Government means a further substantial tax increase.
Labour has delivered tax increases. In recent times, it has also delivered falling living standards, because government has grown faster than the individual's capacity to pay for it. This year, the IFS published two studies, one considering the Government's future plans and the other examining the Government's record in office, which demonstrate that when Labour raised taxes in 2001 and, as my hon. Friend the Member for Hertford and Stortford rightly pointed out, in 1997, it had the effect of cutting living standards. The IFS said that we must expect a re-elected Labour Government to do the same again. The choice for voters in this election could not be clearer, and I cannot wait to explain it to them.
I shall speak briefly, simply to register a complaint. If discussing 11 clauses in 1992 was a constitutional outrage, what is discussing 106 clauses and 203 pages of legislation in four hours?
I do not doubt that my hon. Friend the shadow Chief Secretary was faced by an unenviable choice—he did not have the whip hand in those negotiations—but it is extremely unsatisfactory that more than 100 clauses, and more than 200 pages of financial legislation, will pass into law without their being properly scrutinised. If those clauses are not scrutinised in Committee, they will not be scrutinised in the other place.
As my hon. Friend the Member for Tatton (Mr. Osborne) said, some of those clauses may be welcome and others, which have been subject to consultation, may raise no serious dispute. However, the purpose of the Standing Committee on the Finance Bill is to go through those clauses in detail—the process is familiar to all of us who have served on a Standing Committee on the Finance Bill—and to consider representations that emerge after the final text has been published. Such representations do not always come from bodies that the Revenue or the Treasury have consulted directly. The Chartered Institute of Taxation, for example, has already made representations about a number of the clauses, and the Law Society has sent me, and I am sure other hon. Members, a catalogue of suggested improvements. Such amendments will not even be considered, and we will pass ill-considered and badly judged legislation into law.
If the clauses have already been partially consulted on, there is no rush. I am sure that my hon. Friend the Member for Tatton would be happier to reconsider those clauses and include them in his own finance Bill, which I look forward to his presenting to the House in the summer months. Even in the unlikely event—a catastrophe—of this awful Government being re-elected, it would be perfectly possible for them to seek to re-enact the clauses in just two or three months' time. Even those clauses that the Government claim are necessary to tackle tax avoidance would not lose from being delayed by a matter of weeks, if not a couple of months.
My hon. Friend and other hon. Members know that rushing through legislation is part of this Government's pattern of behaviour. Two Budgets ago, the Chief Secretary himself told us that the Government intended to spend two years correcting stamp duty land tax legislation. Does my hon. Friend share my concern that the Government legislate first and think second?
Having served on the Front Bench in a Standing Committee on the Finance Bill, I believe that the Government legislate far too rapidly on tax. I would like to return to some of the schemes and reliefs to measure their effects—perhaps that is a role that the Treasury Committee should perform—which is a role that no one seems to perform. We simply have the Government's word for it that a particular tax relief is either not working as originally alleged or is being seriously abused and must be stopped at midnight. We need a more considered way to audit tax changes—I am not discussing the re-write process or anything like that—two, three or five years after their implementation, so that all hon. Members can measure their effects.
Given today's situation, however, we must take the wording of the clauses on trust. We are setting a bad precedent by passing so much legislation on to the statute book without proper scrutiny. If it was a constitutional outrage in 1992 to consider 11 clauses in four hours, the outrage is far greater today. In the end, hon. Members and other bodies outside this House will regret what we are doing this afternoon.
I suppose that I can count myself as a Finance Bill veteran. I start by reminding the House of my declaration of business interests, which is properly recorded in the Register of Members' Interests.
In today's debate, my hon. Friend the Member for Tatton (Mr. Osborne), to whom I listened with interest, quickly sped past the question of life assurance taxation. I had hoped that I might hear from him that an incoming Conservative Government would examine that area. I, for one, am disappointed that this truncated Finance Bill contains no measures to re-examine how the internal rates of return and taxation are calculated on life assurance products and to try to improve the rates of return for such financial devices. Those rates of return are particularly important to, for example, pensioners and those on endowment mortgages, who have seen substantial drops in the performance of those products, which are part of their long-term financial security.
One of the many missing themes from this Finance Bill is a lack of attention to detail on long-term savings. One of the interesting features of the current financial press are articles pointing out the slow uptake of ISAs at the end of the financial year, one reason for which is that the Chancellor has slowly but surely stripped out many of the initial starting benefits of ISAs.
If the Chief Secretary decides to go to South Africa, I wish him well. He may decide to go South Africa anyway when he is in opposition, because he will have plenty of time on his hands.
ISAs and other financial products have not closed the savings gap in this country, and savings have fallen substantially under this Chancellor. Although it is entirely correct to examine tax and revenue issues, which I shall discuss in a few moments, savings are important in terms of capital accumulation in this country. Under this Government, savings have fallen, and this Finance Bill contains no measures whatsoever to address that important point.
I want to examine a number of measures in the order in which they appear in the Bill. One of the first measures to which we are invited to agree is the
"Consolidation of current rates of hydrocarbon oil duties".
The Chancellor has had to postpone his revaluation of those rates in the light of turbulent conditions in the oil market. But there is a more important conclusion that comes from the question of oil pricing and upon which the Government should be reflecting. The Prime Minister has made it clear that matters connected with climate change are one of his top priorities, and they lie at the heart of the G8 priorities. As a result of the markets, there has been a substantial increase in the cost of hydrocarbon fuel, but no proportionate decline in the use of motor-powered vehicles. The market price increases, notwithstanding the revalorisation that the Chancellor still has up his sleeve, represent an important challenge to the Government's environment agenda, because they will have to look for other measures to try to reduce the output of greenhouse and other associated gases from motor vehicles if their targets for climate change are to be met. When I asked a question at the last Treasury questions, the Economic Secretary responded by talking about improvements in air quality, which I accept have occurred, but did not wish openly to acknowledge the fact that greenhouse gas emissions from the transport sector have been rising substantially. Government measures have been inadequate in dealing with those issues.
In the same context, I draw the House's attention to the table that goes with clause 7, which deals with the Government's proposals on vehicle excise duty. Ministers have trumpeted the success of the proposals to lower the level of vehicle excise duty for cars with low CO 2 emissions. Picking up on the point made by my hon. Friend the Member for Sevenoaks (Mr. Fallon), the Government have provided no analysis whatsoever of the real-world sales effect of those proposals in terms of the differentials in vehicle excise duty. I am surprised that a Government who have rightly put climate change at the top of their agenda have been so unimaginative and lacking in boldness in terms of looking again at whether their proposed structure for vehicle excise duty rates is the right one to achieve a greater and quicker uptake of vehicles with low CO 2 emissions. Why, for example, is not there a nil rate band for hydrogen-powered cars? Prototypes of those have been tried in the United States; where is the encouragement to bring them into the United Kingdom? Where is the substantial discount for petrol and diesel equivalents for mixed electric and hydrocarbon-powered vehicles? The Bill lacks boldness. If the Government do not address that, they will continue to underperform against their own targets in relation to the Kyoto priorities. I say that as the Chair of the Select Committee on Environment, Food and Rural Affairs, which recently produced a report on the Government's performance in that respect. There is some suggestion that even meeting the Kyoto targets could be in doubt.
Let me move on to air transport. The Bill contains nothing to deal with emissions from aircraft. There is one thing that the Government could have done in relation to aircraft, motor vehicles and any other sources of emissions. As the Chief Secretary and the Financial Secretary are aware, the Government have at their disposal the use of capital allowances, and if they had wanted to accelerate still further the pace of the introduction of more environmentally-friendly systems, they could have introduced an enhanced rate of capital write-down. As you will know, Mr. Deputy Speaker, from your experience of Stansted in your constituency, there is a need to introduce the most modern aircraft as quickly as possible. They pollute less with noise and are more efficient in terms of fuel, yet the Government are silent on providing any mechanism to enhance the write-down rate for aircraft to encourage the uptake of more modern air vehicles. The same principle could be applied right across industry to try to add some carrots to the sticks on which the Government's environmental policy relies.
The Bill moves on to invite us to confirm the rates of income tax. Following the interesting observations of my right hon. Friend the Member for Charnwood (Mr. Dorrell), I want to pose a question to Ministers: can they give an unequivocal guarantee that the 10 per cent. starting rate for tax that is confirmed in the Bill would, if Labour were re-elected, remain for the duration of the next Parliament? I would be interested to know whether that structural configuration of the tax rates remains part of Treasury thinking.
My right hon. Friend the Member for Charnwood rightly drew the House's attention to the work undertaken by the Institute for Fiscal Studies. He could have focused on another factor that affected the institute's findings—the rise in council tax. That is the ultimate stealth tax, which the Government do not overtly increase except by starving local authorities of the necessary resources to meet the mounting costs of the responsibilities that the Government keep putting on them.
When the right hon. Member for Blackburn (Mr. Straw) was a Treasury Front Bencher in opposition, he and subsequent Opposition spokesmen used to ask the Government of the day this awkward question: what is the impact on incomes by decile of all tax changes, both direct and indirect? That was sometimes an embarrassing question to have to answer when we were in government because the news was not always good. It is interesting that when that difficult-to-answer question was first posed to the incoming Labour Government, they refused to answer it, saying that the assumptions did not make for a meaningful answer. The latest findings by the IFS have brought that particular pigeon home to roost, because they provide us with the answer that
"average . . . household incomes after tax and benefit payments fell by 0.2 per cent. in real terms between 2002/03 and 2003/04".
That was, it says,
"the first decline in any single year since the early 1990s."
What a record for the Government to take into the general election. They are able to boast that since the 1990s—the period when they were always criticising the Conservative Government for their economic performance—they have managed to create the first fall in average household incomes.
My right hon. Friend, who is, as always, giving an excellent exposition, mentioned the stealthy nature of the council tax increases. He may not have had the opportunity to consider page 250 of the Red Book, where the third column shows that the council tax revenue that the Government are already planning to draw out from the hard-working families of this country will be 11 per cent. more next year than this year—£20.9 billion. Does he share my concern that they are already planning how to take even more money from people?
I am grateful to my hon. Friend for pointing that out. A 75 per cent. increase in council tax over the lifetime of this Government is testament to their addiction to taxing in this particular way.
The IFS continues with its analysis and makes this telling point:
"The income of the household in the middle of the income distribution—the median—rose by just under £2 a week in 2003/04 to £336 a week. This 0.5 per cent. increase was much smaller than those seen in previous years under this government."
So they are now not only clobbering the average, but hitting the middle. The IFS goes on to say:
"The drop in average take-home income . . . in part reflects measures announced in Budget 2002, Mr Brown's biggest tax-raising budget to date."
It then goes on list the points that my right hon. Friend the Member for Charnwood made.
I just want to make sure that the House did not miss an important point that the right hon. Gentleman slipped past. Even according to the IFS survey, median take-home pay has increased.
Indeed. We can trade statistical minutiae to make our debating points, but the Financial Secretary might also care to interrupt me to explain about Christmas trading on the high street and the subsequent warnings that many retailers have given, showing the squeeze on retail spending. Why is that happening? It is because people have not got the money to spend. The situation can be expressed in very simple terms. The pinch has come and people now understand what a tax-and-spend Labour Government mean to the pocket. It is painful and they do not like it, and at the ballot box they will have the opportunity to express an irrevocable opinion on this Government.
This Government have spent much of their time trying to encourage initiative, but the IFS has observed that the measures in this Finance Bill and preceding Finance Bills have contributed to a
"drop in income from self-employment."
So much for Labour's attempts to boost the entrepreneurial economy.
I hesitate to interrupt my right hon. Friend for a second time, but as someone who used to be self-employed, I have grown despairing of this Government's attitude. Did my right hon. Friend notice that when the Chancellor of the Duchy of Lancaster—rather than of the Exchequer—was interviewed about this very point, he tried to suggest that the self-employed were somehow irrelevant to the figures and could be swept to one side? Is that not wrong?
Not only is it wrong; it also shows blind ignorance of the national insurance class 2 and class 4 payments that self-employed people make. I am surprised that a former Chief Secretary to the Treasury should make such a glaring error, which perhaps underscores a lack of real understanding of what is going on in the economy. That should make people seriously question the credibility of Labour policies as they affect businesses in this country.
Table C5 of the Red Book should be required reading for anybody who wants to see the unexpurgated version of Labour's tax proposals. In the current financial year, current receipts account for 39.3 per cent. of gross domestic product. This Government project that that figure will have risen to 40.6 per cent. by the time that the next Parliament comes to an end, so by their own admission the tax burden is rising. The point is illustrated in visual form in chart C3 of the Red Book, which, interestingly, shows that tax as a percentage of GDP fell in 1994–95. But like a ski-jump in reverse, it has risen and continued to rise under this Government.
I have remarked on many occasions about my disappointment with the Government's level of fiscal encouragement for biofuels. I draw Ministers' attention to a parliamentary answer to me from the Department for Environment, Food and Rural Affairs, which confirmed the dearth of a UK biofuels industry. So far as I can see, the only plant currently manufacturing biodiesel—it uses animal fats as a feedstock, rather than oilseed rape—opened this February in Motherwell. The rest of the plants are under construction and have projected modest production levels. The exception is a UK bioethanol plant, for which a planning decision is pending.
If the Government can give a 40p duty discount for liquefied petroleum gas, they should look again at the duty derogation on biofuels and make a real effort to get the industry moving. If they really want to meet their inclusion targets under the European directive and help us to meet our greenhouse gas emission targets, they must, by definition, have UK-manufactured biofuels. The lack of such biofuels is a notable omission.
Clause 86 deals with double taxation relief. The Chartered Institute of Taxation is concerned about this clause, and I hope that the Financial Secretary is on "receive" mode as I point out to him the following observation on the construct of the clause, which the CIOT made in the briefing helpfully sent to Members before the debate started:
"What this potentially means is that legislation could have a far wider impact than is suggested by the guidance"—
the notes on clauses to the original Finance Bill—
"imposing significant restrictions on the foreign tax credit relief available to most UK companies owning foreign subsidiaries and investments."
I hope that Ministers will deal with that point in the wind-ups, because it is clear that the CIOT feels that in effect, this clause could adversely impact on every company in this country with overseas interests.
I conclude with a brief comment on a tax that I wish had gone up by more, and with some observations on inheritance tax. The increase in landfill tax for which clause 99 provides is not sufficient rapidly to progress the Government's agenda of meeting their European recycling criteria. Although the three-year indexation proposal for inheritance tax is welcome, because of the increase in house prices it will not be welcomed by the many thousands of estates owners. These are people of modest income whose lifestyle is also modest, yet they will be sucked into paying inheritance tax. It amazes me that a socialist Government can allow a tax that people of means can avoid paying some or all of by buying the professional advice that they need, but which those of modest means, or none, end up paying. Is it not about time that the Treasury re-examined the entire structure of inheritance tax? This industry of avoidance is complex and expensive. It benefits only those who can afford the advice, and it does not help those who are innocently caught up in the house price spiral.
For all the Treasury's pontificating about the number of estates that escape inheritance tax, the number paying it has increased. In 1998–99, 6,295 estates in the £300,000 bracket paid inheritance tax, but according to the figures for 2001–02, which were updated in July 2004, the number doing so had risen to 9,661. The tide is running and the wave is getting bigger. It is time for this Government to address some of the iniquities caused by inheritance tax.
We shall have the opportunity during this general election to debate all these matters, but there is no doubt that people are learning exactly what a tax-and-spend Government are all about.
I remind the House of my interest as declared in the register.
There are a number of things that need to be said about this Finance Bill, but the overwhelmingly most immediate and important needs to be said strongly and several times, and I therefore make no apology for following on from the excellent speech on this subject by my hon. Friend the Member for Sevenoaks (Mr. Fallon). The point is that we simply should not be legislating in this fashion in this House—indeed, it is a complete disgrace—and least of all should we be doing so in respect of a Finance Bill, which goes to the heart of the relationship between the legislature and the people whom we represent. We are talking about the process through which we take away their money and property. Of course, it was around the issues of how that could be achieved fairly that Parliament emerged from the constitutional conflicts of the 17th century.
We are now being asked to take a view on a Bill of 106 clauses, yet they have been available for scrutiny for only a few hours. They have been abstracted from another Bill that was printed last week. A few hours is far too short a time to examine the difference between the earlier Bill and the Bill that is now before us. How can we take a view of the merits of the Bill on that basis? Serious scrutiny cannot take place and the tragedy is that no one expects Parliament to do a serious job. That is the extremely sad position that we have reached in this country.
All that is part of the erosion of Parliament's role—not just in the matter of Finance Bills, but more generally—as a result of the bad habits that the Executive have picked up steadily over the years. I admit that there were traces of it during the period of the previous Conservative Administration, but it has become infinitely worse over the last eight years. Parliament just provides a rubber stamp—it has become part of the ceremonial and decorative part of the constitution. Decisions are taken in No. 10 or Whitehall and it is assumed that Parliament will do what it is told within whatever time scale the Executive are gracious enough to grant. Whether it is convenient for the Executive branch to allow us four hours, two and a half hours or two and a half minutes does not really matter. Our role in legislation is no longer taken seriously—[Interruption.] I am not exaggerating at all. That is precisely the situation in which we find ourselves this afternoon.
It has been a convention for generations that, if a general election is called and a Finance Bill is pending after a Budget, Parliament allows the Executive branch some emergency powers required to keep the revenue of the state flowing during that period. That is the convention and, as recently as 1992, when the position arose under a Conservative Administration, the Conservative Government lived up to that principle and brought before Parliament only the minimal Bill necessary to ensure that the Government could go on functioning during the subsequent month or so before a proper Finance Bill could be introduced in the next Parliament. That principle has now been discarded and thrown in the waste paper basket.
The Government have introduced a Bill containing many complex and technical provisions and some new ones. As my hon. Friend the Member for Sevenoaks said, in a way, it does not really matter whether those provisions have been consulted on with the relevant professional bodies. I am glad, of course, that the Government consult in a formalised way but, unfortunately, they tend to consult only on matters that they feel it is convenient for them to consult on. The consultation system is good, but it is in no way a substitute for proper parliamentary scrutiny.
In that light, what we are doing here this afternoon is not that serious. I would not like to describe a parliamentary procedure as a farce, but we are moving down that road. We have not had the time to do the necessary homework and, on this occasion, we have not been physically able to consult all those affected by the Finance Bill or all those who have views on it. That is simply unacceptable.
I am sure that it will soon change, but at the moment, Conservative Members are a small minority in the House. The Government have an overriding majority and believe that they can get away with anything. That is an unhealthy position from which the democratic process in this country has suffered for too long. I would like to appeal to the democratic consciences of Labour Members. I know that many of them do have consciences about these matters and the fact that they are in a position of enormous power with such a great majority should make them very reticent about abusing that power. That, however, is what they have been doing in many contexts and they are certainly doing it this afternoon.
Labour Members should reflect on how far the process will go. What would happen if there were another Labour Government or, God forbid, a Labour Government for another eight years? Where would we find ourselves eight years further down the line when we know that we have already moved from a position where a Government tentatively introduce a minimalist Finance Bill to ensure the continued flow of Government expenditure to one in which the Government feel that they can get away with bringing 106 clauses before the House with four hours to debate them? If we extrapolate from that process, where will we find ourselves eight years later? We might be debating an entire Finance Bill in 10 minutes with no warning at all. In other words, our parliamentary procedures would have become a complete travesty. That is why I invite Government Members to reflect on these matters much more seriously than they have so far.
That is far and away the most important point that I want to make about the Bill, but I have attempted to examine this new Bill as conscientiously as I can in such a limited amount of time and I have noticed some problematic aspects. I have noted the tendency—it started under Conservative Governments but has got steadily worse under the present Government—to use the negative procedure and legislate by order or statutory instrument. More and more taxes find themselves on the statute book on that basis. The Government are giving themselves a blank cheque and we all know how thoroughly inadequate statutory instrument procedure is for examining legislative proposals. We all know that hon. Members turn up for such Committees without any preparation, often not even understanding what issues are at stake. They have no opportunity to amend the orders, so why should they make the effort to understand them? There is little that they can do, which is demoralising and demotivating in itself.
I shall use one particular example to bring the matter home. Let us examine clause 102, which deals with the Pension Protection Fund. It states:
"The Treasury may by regulations make provision for and in connection with the application of the relevant taxes in relation to—"
and it then refers to various pension protection funds. The relevant taxes are subsequently defined in subsection (3) as income tax, capital gains tax, corporation tax, inheritance tax, value added tax and stamp duty land tax—virtually every major tax. Thus the funds will be taxed by the Government in a way that we cannot predict and whenever they want to do it. They will simply write their own tax laws, which is wholly unsatisfactory.
The Committee considering Finance Bills always faces that difficulty and it is getting progressively worse every year. What is more, the Government are not in the least ashamed to proceed in that manner. Instead of producing a minimalist, emergency Bill to deal with the electoral period, the Government have introduced this 106-clause Finance Bill.
I have to say that clause 102, which I have already cited, is a less-than-honest provision. It starts in the way that I have already described and continues with a number of subsections. Being conscientious, I felt that I should read them. When I did, I found that the subsequent subsections in no way constrict the right given to the Government to make whatever tax laws they want for these funds by regulation. They merely state that the power "includes" this or that. For example, subsection (2) states:
"The provision that may be made by regulations includes provision imposing any of the relevant taxes".
Subsection (4) states:
"The regulations may, in particular, include",
and subsection (5) states:
"The exemptions and reliefs that may be given by the regulations include".
Subsection (6) states:
"The regulations may make provision in relation to any time after 5th April".
Clearly, what might seem at first glance to be defining subsections are, in fact, tautologous and unnecessary. They say what the regulations may include, but the provisions are unnecessary because the Government's power to write whatever tax laws they want for these particular funds is already granted in subsection (1).
I draw two conclusions from that. First, the Bill contains a lot of unnecessary verbiage. Finance Bills are always much too long and complex, but there was no need to encumber this Bill with such unnecessary wording. Secondly, there is no intention to make the Bill clear or transparent so that taxpayers can know what the rules are. I can assume only that 90 per cent. of the clause to which I have referred is intended to be obfuscatory. Civil servants and parliamentary draftsman have spent hours and days producing what is completely unnecessary rubbish. The powers granted to the Government require only the first sentence of the clause.
That is another but more minor illustration of the direction that tax law is taking in this country. It is a very bad tendency.
Of course, we know that this Bill is designed to hide the nasty truth of what will happen if there is a new Labour Government. My hon. Friend the Member for Tatton (Mr. Osborne) and all the independent commentators have made it clear that the Government's fiscal policy is out of control and that there is a structural deficit. The Government will have to increase tax revenues and the only question is how they go about it.
Moreover, the Government have a record of promising before elections that they will not increase taxes and then of breaking those promises. At Prime Minister's questions, it was notable that the Prime Minister avoided responding to that accusation and tried to talk about something else. He knows that the accusation is all too true.
There is great concern in the country about the Government's secret tax-raising plans. I hope that we will be able to draw them out on these matters during the election campaign. That is very important and it is better to get an untrue declaration or statement from the Government than nothing at all.
In the interests of an honest election campaign, we should ensure that we ask the right questions. For example, the newspapers have reported considerable concern that the Government have a secret plan to extend capital gains tax to owner-occupied property. That would be a devastating blow to millions of home owners and an economically stupid mistake. It would place an enormous cost on labour mobility, which is an essential part of a successful economy. The labour force is our most important resource and it must be used efficiently. People must be able to move from one part of the country to another to take up new jobs or promotions. They will not do so if that incurs a tax penalty and the economy will suffer enormously.
Another suggestion is that the Government will increase national insurance contributions. We all know that they long ago abandoned the idea that national insurance was anything other than a tax. The Chancellor has increased contributions, contradicting undertakings given before the last election, but without making a corresponding change in benefits. The Government have abandoned the idea that the national insurance fund has any authentic status. They like to work by stealth and dislike being straightforward. They have never said openly that national insurance is a tax and that the fund is merely a fiction, a bogus concept that does not really exist, but it would have been more honest of them to do so.
The Government will try to bamboozle people by raising national insurance contributions and pretend that that is different from increasing income tax. In fact, the only difference is that higher national insurance contributions have no corresponding reliefs. Raising national insurance contributions would be an enormous mistake. The Government think that they got away with it last time and there is no doubt that they will be tempted down that road again if they are returned to power.
It is very important that we expose the Government's record on this matter during the election campaign. We must also make clear the great risks that the country will face if there is a Labour Government after 5 May.
I turn now to pensions. Several Opposition Members have mentioned the enormous damage that has been done to our pensions industry and I spoke on that subject in the Budget debate a few weeks ago. It may be a cliché to say that our pensions system was the envy of the world but, with the exception of the Netherlands, where the system is very similar, all our EU partners used to envy it.
Ironically, in their first few years in office, the Government used to tell our EU partners that they should set up a funded pension system like ours. Until 1997, the system was successful, but that is no longer true. Not one defined benefit pension scheme has been created since this Government came to power. About one third of such schemes have been closed down in that time and another third have been closed to new entrants. That devastating attack on the security of retired people and on the prospects for succeeding generations is due entirely to this Government's policy.
I do not accept that what happened was the inevitable result of rising life expectancy or of the 1998 stock market fall. There have been much more serious crashes in the past 50 years, including the devastating collapse in 1974 and 1975 and the small falls in the early 1980s and early 1990s. Moreover, the increase in life expectancy has been steady—[Interruption.]
I see that the Chief Secretary is leaving the Chamber. I thought for a moment that he was going to defend himself against my complaints, but like the Prime Minister earlier he has no defence. I suppose he is leaving out of shame at the exposure of the record of the Government that he has represented. Whether he goes to South Africa or not, he will have a more comfortable time than has been his experience in trying to defend the Government's fiscal record.
The damage done to our pensions system has caused people to worry that the Government will come back for a second bite, like a shark that bites off a person's leg having previously bitten off his arm.
My hon. Friend sounds as though he has experienced that.
My hon. Friend makes an intervention from a sedentary position that was worth making standing up. I should be happy to give way to him.
indicated dissent.
Not unnaturally, there is great concern that, if we are unlucky enough to have another Labour Government, the Treasury might be planning to tax the so far tax-free lump sum. Another worry is that there is a plan to reduce the level of tax relief for pension contributions up to the new global limit, moving away from an individual's marginal rate of tax to the standard rate of 22 per cent.
Either of those moves would be devastating to the incentive to save and to contribute to a pension scheme and would automatically and immediately result in a further reduction in our already extremely low savings ratio. That would be in conflict with what the Government say about their apparent attachment to improving the savings ratio and increasing the provision people make for their retirement. I fear that the Government will find themselves in a contradictory situation with fiscal policy collapsing. They have been overspending and the only ways to avoid increasing taxes if they return to power would be to revise the spending plans that they are selling to the electorate substantially downwards or to abandon the golden rule, and they would then not be committed to the principle that enshrines considerable fiscal stability and prudence. The Chancellor talks as though the growth of the economy will bail him out, but his projection is that economic growth will be permanently above the trend rate or that the average rate of economic growth over time will be greater than the maximum rate of growth. That does not make sense.
The Government will have to do something desperate unless they agree to adopt our suggestions for some sensible policy changes in the new deal and in asylum and immigration. The next Conservative Government will make some policy changes and save money on administration. The Labour Government's record is appalling. They cannot go a day without setting up a new quango or more bureaucracy. Every time they introduce a new initiative, we hear about a new quango—the latest one will cost £26 million or so to set up. That must stop.
There are greater prospects for administrative savings than were identified in the Gershon review and many were identified in the James report. We have a well-thought-through and reasonable programme for policy changes and administrative savings that will lead to our being able to have £12 billion more available in the second financial year of the next Government than this Government would have on their projections. That will enable us to cut spending by £8 billion and reduce taxes by £4 billion, which will be a modest but significant step in the right direction. It will be the turnaround that this country badly needs.
I thought that Finance Bills might be behind me but the calibre of the speeches today has moved me to make a short contribution. I suspect that this will be the valedictory contribution from the Chief Secretary to the Treasury and I would be upset if I were unable to make at least a short contribution. Before I discuss the details of the Bill before us and of the Bill that should have been before us I want to add my personal congratulations to him, although his appointment is dependent on other matters. He has made unique, sometimes theatrical and often charming contributions to our debates in Committee and in the Chamber. I wish him well.
My right hon. and hon. Friends rightly highlighted one of the most important points of our deliberations—the quality of the scrutiny that the House can undertake. I am still a relatively new Member, having been elected four years ago, and I still believe that it is important to allow for debate and preparation of our thoughts. We have been given just four hours to consider 106 clauses, 11 schedules and, as my hon. Friend the Member for Sevenoaks (Mr. Fallon) rightly highlighted, 203 pages of primary legislation. That is unacceptable. Time for debate is crucial to allow us not, as Ministers may suggest, needlessly to drag the matter out but to probe the what-if questions. That is the point of parliamentary debate. The essence of parliamentary discussion is to identify what Ministers and their advisers may not have anticipated and to use that process to ensure that at the end of our deliberations the legislation is better than when it came before us. That is important.
A second aspect of the quality of scrutiny is preparation time. I hoped to have the opportunity last night to consider the Bill in detail and to compare it with the main Bill, but that was not open to me. I inquired at the Vote Office but the Bill was not available. The Prime Minister's decision to go to the country a year before he needs to has made it necessary to have this debate today. Hon. Members will be restricted in their ability to contribute to the debate in a thoughtful and considered way so one of our functions—to listen to outside experts and to draw on that expertise to better inform the legislation—has been removed.
In the few hours available to them some of my right hon. and hon. Friends have been able to inquire into the concerns of experts in the tax, accountancy and legal professions, but the chances of amending the Bill or debating the benefits of amendments have been negated because we do not have that opportunity. I have contributed to the consideration of two Finance Bills during the past two years and that outside expertise enabled sensible and often non-partisan discussions to improve the legislation. I am disappointed with the Government and that will reflect on them as the legislation is passed later today.
Having put those concerns on the record, I want to turn to more specific matters. I suspect that right hon. and hon. Members will be not entirely surprised that I want to talk about stamp duty land tax. There is undoubtedly something to welcome in the change in the threshold from £60,000 to £120,000 and it would be remiss of me not to recognise that as a positive step forward. It was interesting that the Chief Secretary was unable to identify or confirm the number of households in his constituency that would benefit, although he said that the Financial Secretary would do that for him. In my constituency, which is not a million miles away from the leafy suburbs of Brent, the reality is that less than 3 per cent. of first-time buyers could benefit from the change. That means that the hopes of 97 per cent. for some positive change from the Government have been dashed.
When one considers the total revenue that the Government plan to receive in the coming year, one discovers the reality of the situation. It is not, as one might have gathered from listening to the Chancellor, a benevolent reduction in the tax burden: quite the contrary. If one looks at the Red Book—the Government's own figures—it shows that they anticipate a 9 per cent. increase in the total stamp duty land tax revenue. It would rise from £8.9 billion to £9.7 billion. That 9 per cent. rise is a significant increase in the tax burden.
Experts in the house-buying market do not anticipate that house prices will rise by more than 4 or 5 per cent. in the coming year, so where does that 9 per cent. additional total revenue come from? It may be argued that it will come from the changes in disadvantaged area relief, although those are relatively small figures. What worries me, and it relates to an excellent point made by my hon. Friend the Member for Sevenoaks, is that we have no genuinely independent audit on which we can base our assessment as to whether the total burden of individual taxes is correctly estimated. We see a figure in the Red Book and we have to assume that it is correct. It may be correct, but the problem is that we have no means by which to judge that. I hope that the Financial Secretary will address that concern.
Although the Chancellor has taken a minuscule step forward in increasing the threshold to £120,000, he has missed a great opportunity and I shall explain why that is so. The tax is regressive and unfair. It is not, as in income tax, based on the margins of income; rather, it has what is known as a slab effect. Thus, under the Government's proposals, if one bought a home for £119,999, there would be no stamp duty land tax to pay—not a penny. However, pay a pound more for that house and the tax will be £1,200. That is because the tax rate applies to the whole price, not just the margin. The effect is repeated at the £250,000 threshold. At £249,999, the tax is 1 per cent., but at £250,000 the tax bill trebles, rising from £2,490 to a massive £7,500—a trebling of the tax bill for a £1 price change.
What is wrong with that? First, it is unfair. Secondly, and I hope that the Financial Secretary will address this point as I understand that it is his direct ministerial responsibility, it distorts the house price market. If someone knows that at £250,000 there will be a trebling of their tax bill, it cannot be beyond the wit of the civil service to realise that they will attempt to avoid the price of the house or flat rising to £250,000. I would not necessarily condone or agree with individuals who took such decisions, but they will occur.
The Government's answer was to put in a whole raft of bureaucratic and complex administrative procedures to try to clamp down on the problem, whereas they should have had the temerity and courage to reform the tax and remove the anomaly at source, thereby removing the need for any form of avoidance activity. On numerous occasions, the Opposition have pressed that point on the Government but, sadly, they have been deaf to reason.
The problem is repeated not just at £250,000, but also at £500,000. The Government's tax policies are encouraging tax avoidance. In previous debates with Treasury Ministers, I have tried to understand with them exactly why the paperwork was growing. After all, under the old stamp duty, which had been in existence for 300 years, we could manage with just one piece of paper. Only a one-page form was required, yet under the apparent modernisation of stamp duty what do we have? Twelve pages of forms to fill in, with 43 pages of notes that try to explain them. What nonsense. Why are the Government so firmly set against reforming the tax and so determined to go down that bureaucratic route? It seems anomalous and I am afraid that most first-time buyers will decide that the Government are not interested in the problem and do not care. The Government simply want their 9 per cent. revenue increase and that is all that matters to them.
I want to consider briefly the commercial aspects of stamp duty land tax and the removal of the relief for disadvantaged areas. I recall that we were told when debating the issue with Treasury Ministers that this crucial relief would bring hope and joy to the many urban deprived areas and that it was something that the Chancellor felt passionately about—so he got rid of it, and he did so because he needed somehow to find the money to pay for the tiny increase from £60,000 to £120,000. Of course, he discovered that there was £340 million tucked down the back of the sofa, and he thought that he could use that without anyone noticing. Sadly, for him, they noticed.
I shall correct the figures that the Chief Secretary identified. He said that there was a £90 million difference between the £340 million that the disadvantaged area tax relief changes bring into the Treasury and the £250 million that will go out because of the domestic change. However, another £20 million is tucked away in the Red Book in relation to dealing with tax avoidance. I hope that he will be able to clarify the total figure—I believe that it is about £105 million—by which the Chancellor is ahead.
I am happy for the Chief Secretary to correct his figures.
Let me deal with this. I well remember our debate upstairs on stamp duty land tax. It was a good debate, and there was honest disagreement among hon. Members on both sides of the Committee about the desirability of those measures. We took the view that it was important to introduce the reform. We took the view that a potential could be realised given the contribution to regeneration of the assistance provided by the measures that we proposed. As I said during my speech and as has been said in the debates on the Budget generally, we have reached the view that we can better focus the relief, and that is what we have done.
On the figures, I appreciate the care that the hon. Gentleman takes with such matters. Table C8 of the Red Book shows that stamp duty receipts are projected to increase by about £0.8 billion as result of the forecast effect of the Budget measures from 2004–05 to 2005–06. That includes receipts from residential, commercial and, indeed, share transactions. Hon. Members who were upstairs in Committee at the time—it was a couple of years ago—will remember that we also discussed share transactions.
The Treasury's best estimate is that there will be a £220 million reduction in receipts from residential property and a £580 million increase from commercial property, including the £340 million to which the hon. Gentleman refers in the Red Book that will arise from the measures that we have taken in the Budget and the Bill. Those estimates are approximate.
The hon. Gentleman will know, too—indeed, as I said in my contribution and as he correctly identifies—that those figures are also based on the full package of Budget measures and the forecast effects. I simply say that for the purposes of clarity. He is quite right to point out—in no way do I intend to resile from it—that those sums come from the full package of measures. I hope that that clarifies the situation.
I am grateful to the Chief Secretary for that clarification. He said £220 million; I think that he meant £250 million. That is certainly what is stated in the Red Book for the stamp duty land tax. I am referring to table 1.2, and without wishing to be too pedantic—although I already have a significant reputation for it on this tax—I think that the figure for the domestic change is £250 million.
indicated assent.
That is super. Given the £90 million balance between the two sums and the additional £20 million that relates to tax avoidance, the Chancellor is obviously ahead by about £110 million in revenues because of the various changes. That is an important point to get on to the record.
To return to the principle of the disadvantage tax relief on commercial sites, my instinct and personal preference would be to have fewer little tinkering reliefs. If we had clearer, simpler, lower taxes, we would all be better off. I suspect that we can have that philosophical debate on another occasion. I am not personally wedded to the longevity of that relief. However, given the way that the Chancellor tinkers with such things every year, my concern, as ever, is that companies are put off engaging in the changes in their activity that the Government seek to encourage simply because they do not believe that the reliefs will be around next year, so why should they bother to go through the paperwork and so on? That is a very important point to make in terms of the way in which taxation has been dealt with under this Government.
I always hear from Labour Members how they are not willing to lecture us, but I remember the occasion when they were happy to regale us—indeed, they lectured us—with the fact that they passionately believe in consultation before making changes. Where was the consultation on this? It was done overnight. The Minister may refer to confidentiality and the fact that the Government must not allow anyone to take advantage, but a point of fairness is involved. The large property companies have lawyers and advisers who are able to move quickly. I appreciate that the concept of a lawyer moving quickly is perhaps a strange one, but that is what lawyers have been able to do on this occasion. Given that the provision is about disadvantaged areas, my worry is that small companies—the small fry, the family businesses and the enterprises that were considering the proposal—do not have such resources immediately available to them. They are not able to adjust their arrangements accordingly. The way in which the reliefs are offered, taken away and adjusted, tinkered and meddled with is significantly to the disadvantage of small firms. In principle, it is bad taxation policy.
That leads me on to several other thoughts about smaller enterprises and how the Bill and its larger brother might affect them. The first relates to clause 13 on the charmingly termed "non-corporate distribution rate for small companies". I am told by the Bill that it will remain at 19 per cent. That phrase is far from being as innocent as it appears. It masks a history in which a tax was once promoted by the Paymaster General. Sadly, she is not with us today, but she told us that small businesses should consider the change that the Government were making to try to reduce their tax burden to 0 per cent. It was a gift horse that small businesses should not look in mouth. I forget the exact words, but the point was the same. However, two years later, when the Government discovered that the number of corporates being created was far in excess of what they anticipated and that the poor, old Chancellor was losing money faster than he expected, they needed to change it. Businesses that were previously encouraged to take up the provision—such was the Government's benevolence—were suddenly told that it was wicked and shameful behaviour. It was a form of tax avoidance on which they needed to clamp down. None the less, it was the same policy.
This constant attempt to rotate policies—to try something and, if it does not work, to adjust it—seriously damages small businesses. Sadly, and all too often, the Government do not understand the distinction between a "firm" and a "company", but they have encouraged many firms to become incorporated because that is how the firms thought that they were meant to arrange their affairs. They do that to keep their tax bills at a reasonable level, but they are then told that that is wicked and nasty. They are nasty tax avoiders who must be clamped down on.
Such behaviour by the Government makes most entrepreneurs say, "Forget it. I'll give up setting up my next business to create the next set of jobs and the next tranche of wealth and I'll go and enjoy my villa in Portugal. I wasn't planning to go there now, but I will do so because I'm fed up with the way that the Government treat things." That is one aspect of the way in which the Government deal with small businesses.
The last aspect of the Bill to which I wish to refer is an omission as much as anything else. I refer to the way in which the self-employed—not companies—are dealt with. Earlier, I mentioned the Chancellor of the Duchy of Lancaster. When trying to explain away the awkward figures on the fall in certain incomes, he said that they were irrelevant because they had been skewed by the self-employed, who were less relevant to the central question.
The Chancellor of the Duchy of Lancaster said that the incomes of the self-employed were entirely global, and I appreciate that he was self-employed for only a short time when he was able to spend more time with his family. For those of us who were self-employed for 10 or 11 years and who actually understand the principles behind the figures, the idea that the majority of the self-employed are globetrotting entrepreneurs who are on and off jets each and every hour is complete bunkum. That demonstrates both his economic ignorance and, frankly, the Government's unwillingness to understand the smallest of our entrepreneurs—the self-employed.
I am disappointed that the Paymaster General is not in the Chamber because the classic example of that attitude is, of course, the infamous IR35. When the measure was introduced, we were told that it would deal with wicked practice and tax avoidance that should not take place. We were told that £400 million would come back to the UK Government that was rightly theirs. Here we are, two or three years later in 2005. When we make inquiries of the Inland Revenue to find out how many cases have been brought, we are told that the number is 200 or more. We then inquire how many of the cases have succeeded and how much of that £400 million revenue has actually come pouring through the doors of the Treasury. I am told that roughly two of the 200 cases have been successful, so 198 have failed.
The frustrating aspect of the situation is that all the other self-employed souls who had to try to change their arrangements to comply with the legislation have suffered cost and a waste of their time only to find that the measure does not work. It has not brought in the revenue that we were told that it would and it has created a bureaucratic nightmare for the law-abiding majority who have tried to comply with it. The situation shows that, as is so often the case with the Government, they are all talk and no action.
I have worries about this Bill and the Bill that we should have considered, but I have hopes for the Bill that I know we will consider under a Conservative Government in just a few weeks. The Bill is ill considered and has been poorly drafted in a rush with little care, consideration or consultation, but that is typical of the Government. It is frankly incomplete.
Before my hon. Friend concludes what has been a good speech, may I take him back briefly to stamp duty land tax, on which he is not a pedant, but most certainly an expert? Did he notice the article that appeared in The Independent on the morning immediately after the Budget, which mocked the Chancellor for effectively presenting the measure to reduce the relief for disadvantaged areas as a productivity measure? The article said that even this Chancellor of the Exchequer could not argue that that tax increase was actually a productivity measure. Does my hon. Friend have any sympathy with that sentiment?
I have come to learn that the Chancellor and indeed the Prime Minister can argue anything that they wish. They can certainly have a conviction, but it might be a different conviction today from what it was yesterday. I agree with my hon. Friend that the article is another sign that people are beginning to see through the smoke and mirrors of the current Chancellor. When he gets to the awkward figures, he has a lovely way of rushing through them. When he gets to the tricky parts, one notices that there is a subtext in the clause that one must read an hour later with a wet towel around one's head in a dark room. I am afraid that I must describe his presentation, especially when he speaks in front of his party, as the incomprehensible lecturing the innumerate, and that is all too often the nature of his Budgets.
The Bill has been poorly drafted and ill considered, although not for want of our trying. It was very generous of the Government to leave the open green acres in front of us where their 400-odd Members could have been sitting—sadly they must have something else to do, although I cannot imagine what. We have tried our best to draw out some of the details of the Bill, so we look forward to the full and frank explanation that I know the Financial Secretary will wish to give us.
I refer the House to my entry in the Register of Members' Interests.
Last time there was an attempt to rush through a Finance Bill in one day, which was in 1992—I have had more time to look at that than I have at the Bill itself because it has been produced at such short notice—proceedings were interrupted by a fire.
I remember it well.
I vaguely remember that a Labour Member—it might even have been the Chief Secretary—accused the Conservatives of having started the fire. There has been no such disaster in the House yet, but there has been a huge power cut just south of the river. Disasters seem to accompany attempts to rush through Finance Bills, but so far, so good. We have not had any trouble yet.
I associate myself with the good wishes that have been expressed for the Chief Secretary's proposed career move to South Africa. I hope all goes well, if it goes at all. I note that not a single Labour Back Bencher has felt the need or the urge to say anything about the Bill. I find that pretty extraordinary.
Perhaps I can help my hon. Friend by offering a possible explanation. It has been suggested to me that either Labour Back Benchers do not like the Budget or they are desperate to hold on to their seats. Which does he think is true?
Those are two interesting options, and we can all make up our own minds.
Despite the fact that no Labour Back Bencher has been present, we have not been short of interesting contributions by Opposition Members. We had an interesting speech by my right hon. Friend the Member for Charnwood (Mr. Dorrell), who mentioned the Institute for Fiscal Studies study. He made the relevant point that for the first time since the early 1990s, real disposable incomes have fallen. That is because of the increases in taxation pushed through by the Chancellor since 2001, despite promises not to do so.
My right hon. Friend also correctly alluded to the distributional effects of freezing personal allowances, also mentioned by the IFS. As a result, 7.5 million more taxpayers are paying tax at a higher marginal rate than they would have done had allowances been indexed. That is a crucial point. Of course, the tax burden is going up and up, and it will carry on doing so. Labour used to try to conceal that in the Red Book. Now, the graph just shows the upward trend, which can be found on page 255.
My hon. Friend the Member for Sevenoaks (Mr. Fallon) made an important point about how Finance Bills are inadequately scrutinised. I completely agree. He is a member of the Treasury Committee. This is not the appropriate time to expand on this, but the Select Committee should play a much larger role in the scrutiny of Finance Bills. We should come to this place and debate what needs to be done on the basis of detailed scrutiny produced by the Committee before we go through the Bill clause by clause. We have moved in the opposite direction today, and there has been virtually no time to prepare for adequate scrutiny.
My right hon. Friend the Member for Fylde (Mr. Jack) also made some very important points, in a typically engaging and lucid speech. He mentioned ISAs and the extent to which the Government have eroded the attractiveness of the incentive to save throughout the tax system. Of course, that is only one of the causes of the fall in the savings ratio. There are a number of others. Financial scandals have not helped, especially Equitable Life. The Government have done their best to sweep that under the carpet and to avoid paying compensation for it.
Another cause of the fall in the savings ratio is the fall in the stock market, but that is not separate from the fiscal concerns, because of course one of the causes of the stock market falls was the Government's £5 billion raid on pension funds. When £5 billion is taken from pension funds, what is the effect on share prices? Answer: all things being equal, share prices fall. Therefore the origin of the market fall, often described as a separate cause of the fall in the ratio, lies partly with the Chancellor of the Exchequer.
My right hon. Friend also commented on the fact that the Government have not produced an estimate of the effects on carbon emissions of changing the structure of VED rates. He also talked about biofuels, on which he is an expert—indeed, he is the leading expert on that subject in the House of Commons, a result of his time as a Treasury Minister and a Select Committee Chairman.
My right hon. Friend described the effect on taxpayers of successive Budgets in a pertinent phrase, "the pinch has come on the mass of taxpayers". He is quite right. That pinch has taken some time to come on, for reasons that he and others have explored. The savings ratio has roughly halved, although that is a net figure. The other side of that ratio is the increase in borrowing—people increased their borrowing to maintain their spending, which delayed the onset of the pinch. Now, they are finally beginning to think about how to pay back that borrowing, so the pinch really is coming on. The two points that my right hon. Friend made at the beginning and the end of his speech are therefore closely connected. He also made some excellent points about inheritance tax. I shall not repeat them, but they were important and powerful points.
My hon. Friend the Member for Grantham and Stamford (Mr. Davies) made a characteristically erudite and forceful speech in which he drew attention to the shoddy nature of some of the Finance Bills that we have been expected to consider. When I picked up the Bill this morning, it was described to me by the man who passed it to me from the Table Office, not as the Finance Bill or even as the revised Finance Bill, but as the draft Finance Bill. I replied that as I had to try to speak to it this afternoon, I wanted the final version. It is pretty disgraceful that we have to scrutinise legislation in such a fashion. My hon. Friend made several other trenchant points, not least about the damage done to the pensions industry in recent years and the reasons why final salary schemes have got into difficulties. One of the main reasons is, of course, Government policy.
My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) correctly pointed out that we saw the revised Bill only this morning. He also alluded to the importance of listening to experts before we attempt to scrutinise a Bill in detail. A key part of the Finance Bill process is that we are able to draw on the considered views of others. Presumably, they too have been passed this bundle of papers on a Treasury tag and been told that it is a draft Bill. They are now expected to get their points across in the brief period available to us before the debate ends—indeed, they have been trying to do so.
Next, my hon. Friend talked about stamp duty, and when he talks about stamp duty, I listen. He knows a great deal about the subject. He correctly pointed out that the Government only want their money—the extra revenue—and are not really interested in making stamp duty work better or more effectively. As he said, every time the Government reform stamp duty, the paperwork burden seems to increase. That will almost certainly be the result of the latest proposed changes.
The House and the country have grown accustomed to the way in which these things happen. The Chancellor announces a Budget, then a Finance Bill is introduced, which we discuss in the Chamber. We start with bluff and bluster. There is a firework display from the Chancellor on Budget day that no one can understand, but everyone thinks it sounds okay. We are thrown dozens of statistics in a wholly indigestible form, then we are expected to try to work out what is going on from a Red Book—I have the two most recent Red Books with me today—that increasingly owes more to party propaganda than to an explanation of economic developments in the country. Despite the Chancellor's best efforts to cover his tracks, in most years, although the Budget receives a good reception for a few days, it soon becomes a one-week wonder. The paint starts to peel off as people have an opportunity to study the detailed press releases. As soon as the Finance Bill is published and they have a chance to look at it carefully, they realise that a bit more paint deserves to come off.
This year's Budget was not a one-week wonder, and not even a one-day wonder. It can best be described as a one-hour wonder, because it took only minutes to flip through the Red Book and discover, for example, that the £200 allowance for the over-65s to compensate them for a huge increase in council tax over the past eight years will be implemented for one year only. When the Chief Secretary was challenged on that very point in an interview on, I believe, Budget day, he said, "Well, all our measures are only for one year." [Interruption.] I do not have the transcript with me, but if he would like to deny that that was the purport of his remarks, I am happy to give him the opportunity to do so. He does not seem to want to do so. He effectively said, "Don't trust us to implement any of the later years stuff in the Red Book. It's all for one year only. Don't worry, it's not just the £200 that you can rely on us to implement for one year but everything." Perhaps he did not say so—he is welcome to deny it at the Dispatch Box.
When that £200 was announced in the Budget speech, I was watching members of the Government carefully. The Secretary of State for Work and Pensions formed his fingers into the shape of a gun, which he pointed at the Conservatives, as if to fire a bullet. It made a good image for television for an hour or so—as I said, the Budget was a one-hour wonder—but by the evening the more alert broadcasters had removed it from their clips, because they realised that the £200 was available for one year only. A good number of pensioners in my constituency have already written to me, and like pensioners across the country, they have twigged that the £200 is for one year only. In the coming campaign, I shall make sure that every pensioner knows about that Labour measure. I will tell them that Labour has offered them £200, but that if the party is re-elected, they will lose it next year. It is a spectacular own goal from Labour. To put it another way, the Work and Pensions Secretary would have done much better to point that pistol at his own head.
Nothing better illustrates what has been wrong with Labour over most of the past decade than that measure, which is designed to create a specific impression, and is public relations spin over substance. We have heard the same story on stamp relief—relief for disadvantaged areas will be ended while at the same time in the Budget speech there was a pretence that some extra relief will be given. There has also been a hidden raid on oil companies, and a good deal more.
In a few weeks' time, we will present a Budget that can be trusted. We will publish a Red Book that can be understood, and we will ensure that the Office for National Statistics, made fully independent by an incoming Conservative Government, publishes figures on which we can all rely for the first time in almost a decade. We will use forecasts that have been put together independently of the Government, under the supervision of the Comptroller and Auditor General of the National Audit Office. I have argued for over a decade that we should move in that direction, and I am pleased that in a few weeks we shall have the opportunity to do so.
It is high time that we ended the disgraceful gerrymandering of the statistics that has taken place. The fiddling on the private finance initiative, the attempt to reclassify working family tax credits and much else in the accounts was a scandal, and we ought to bring it to an end. When the tax revenues were pouring in, it did not matter so much, because the Government felt sure that they were well within their fiscal rules. Now the shoe is beginning to pinch. Now it looks as though every little bit is vital to enable the Government to meet their fiscal rules. That is where the Government will come under pressure in the next few weeks.
At the heart of the Finance Bill is the issue of trust. Why should the electorate trust the Chancellor and the Prime Minister when they tell us that there will be no further tax rises after the election, should they win it? There are two overwhelming reasons why the electorate will not trust them. The first is that we have been there before. We have heard it all before. Before the 1997 election the Prime Minister said that he had no plans to raise taxes at all. What happened immediately afterwards? Tax rises for everybody. Then there was the 2001 pledge. The Prime Minister said words to the effect that it would be reasonable to conclude that national insurance contributions would not go up. What happened after the election? They went up. That is the first reason why the public will not trust what the Government are saying about the economy.
The second reason has already been discussed extensively. The Financial Secretary did his best to handle the situation by plucking Goldman Sachs out of the hat, up against about 20 commentators, including the International Monetary Fund, which is extremely cautious about the statements that it produces. I know how the IMF operates, and I know that it checks its statements with the country's Finance Ministry before putting them out, and invites the Finance Ministry to challenge the detailed methodology that lies behind its calculations. Even the IMF concluded that there is a black hole in the accounts, which will have to be filled somehow. The Government's history shows that if they get the chance, they will fill it through higher taxation.
The Government have consistently overestimated corporate tax revenues. The Institute for Fiscal Studies asked the right question the morning after the Budget when it said:
"The key question confronting whoever is Chancellor after the election remains the same . . . is it plausible to expect the current budget balance to improve by 2.2 per cent. of national income . . . by 2009–10? . . .is it prudent to expect revenues to go up by £27 billion over the same 5-year period without fresh tax raising announcements?"
That was the correct and crucial question. As I pointed out in the Budget debate, the IFS answered its own question. It said:
"We think that to achieve these forecasts requires the Chancellor to raise taxes . . . by £11 billion a year."
The Opposition are not in the forecasting business, and we do not intend to get into it, but we are listening to outside forecasters. They tell us there is a structural deficit—a black hole in the accounts. The choice for the electorate is clear. If people vote Labour, the black hole will be filled by higher taxes, but there is much more at stake than merely a tax rise.
The Bill, even though I have not had a chance to read it properly—I do not think that any Opposition Member has, because we have had it for only a few hours—illustrates the bigger problem. Successive Finance Bills have ended up reducing wealth creation—complicated, difficult to understand, loading enforcement costs on a range of wealth creators in the country. I cannot do better than to end with the words of the Prime Minister's former chief economic adviser on exactly that point. [Interruption.] Someone shouts "Who?" across the Floor of the House, as if by doing so they can somehow expunge this fellow from history—a sort of latter-day painting-out of Trotsky from the photograph of those who did all the hard and dirty work in Nos. 10 and 11 these past days. I am referring to the former chief economic adviser to the Prime Minister, who said:
"Britain's economic arteries are slowly being furred up by a higher and more complicated tax system, excessive regulation and . . . endless micro-management."
I could not have put it better myself.
We have had an interesting debate and I am pleased to be able to respond to a number of the points that have been made.
The key to this year's Budget is the remarkable stability that we have seen in the British economy since 1997. In the 18 years from 1979 to 1997, the UK had the least stable economy in the G7, with the single exception of Canada. Since 1997, the UK has had the most stable economy in the G7, bar none. That has been a remarkable transformation, benefiting every aspect of Britain's economy and of our society.
National debt is down. Since 1997, no G7 country has had lower debts and deficits than we have had. Inflation since 1997 has been half on average what it was before. Interest rates and mortgage rates have been halved. Disposable income has grown faster than it did under the previous Government. Unemployment is the lowest that it has been for a generation and there are 2 million more people in work. Every week, another 125,000 men and women find new jobs, and an additional 50,000 new vacancies are advertised.
We have had 50 consecutive quarters of growth in the economy for the first time since quarterly records began.
How many of those were under a Conservative Government?
There was a period of growth under the previous Government. What is remarkable, however, and what was never achieved under any Conservative Government, was the securing of 50 consecutive quarters of growth. It is the transformation from the short booms and then the busts that characterised the previous Government to this long period of stability and steady growth that has been so remarkable and so important and valuable to our economy and society.
The economy grew by over 3 per cent. last year for the second year running, hitting, incidentally, precisely the forecast that my right hon. Friend the Chancellor had made and for which he was attacked by Opposition Members for being far too optimistic. We have had some discussion today about forecasts and projections. My right hon. Friend was entirely vindicated over that issue and will be over the other matters that we have discussed as well.
The hon. Gentleman draws attention to the Chancellor's record in forecasting growth in the economy, and he is right to say that the Chancellor's record in forecasting the growth of GDP is not bad. Would he like to address his attention to the Chancellor's record in forecasting the public sector deficit, which is under his direct control, and would he remind the House that in every year of the last five, the Chancellor has projected that that will turn down, and none of those five forecasts has been correct?
I am grateful to the right hon. Gentleman for rightly paying tribute to my right hon. Friend for the accuracy of his forecasts on growth. We have not heard much about that today from Opposition Members and one understands why, but it is important and right to put that on the record.
As to the other issues that the right hon. Gentleman raises, as he knows, my right hon. Friend the Chancellor set out in 1997 the fiscal rules, including the golden rule and the sustainable investment rule, and we have kept to them. We have set out the figures in the Red Book showing that we will keep to those rules on the basis of cautious assumptions. That is the basis on which the economy has been managed and on which this new stability has so successfully been built. It is the basis on which we need to continue to go forward and maintain this new, transformed record of stability and growth in the economy.
The Financial Secretary has shifted the terms of the argument. He was inviting the House to applaud the Chancellor's forecasting record. When one looks at the Chancellor's record in forecasting the public sector deficit, one sees that he has got it catastrophically wrong, with the result that we are landed with more debt and more interest costs going forward than he planned or promised in his last Budget before the previous general election.
The national debt is down and we have the lowest debt in the whole G7. There has been an extraordinary record of success under this Government and Chancellor. It is essential for the future that we lock in that record of stability that has been so important and valuable. The new confidence that has come from that stability has been of immense importance. We have 300,000 more business in the UK than in 1997, and every week there are 4,000 more. There has been a 50 per cent. increase in net household wealth and 1.5 million more people own their homes. Those are just some of the gains from the transformation that has occurred in the British economy since 1997. We and the country know that our first priority must be to hold on to that prize of stability, and not to put it at risk by policy lurches or by £35 billion-worth of reductions in public spending commitments. Stability has been a massive prize for Britain, and the Bill helps to ensure that it will be maintained and locked in for the future.
Let me take the Financial Secretary back to the point made by my right hon. Friend the Member for Charnwood (Mr. Dorrell). The Financial Secretary has not answered the central question as to what factors in the forecasting performance of the Chancellor have led to the fact that, since the 2001–02 financial year, the deficit has grown by about two and a half times in real terms compared with the original forecast figures. At a time when the economy has been growing at such a rate, we should be accumulating balances, not increasing deficits. He talks about the structural soundness of the economy, so will he explain why the economy is not doing what it should do?
The right hon. Gentleman is focusing on the difference between two very large numbers. The fact is that we have the lowest debt in the whole G7 and a remarkably successful record. The IMF has been referred to, and it has repeated that point recently. We must now ensure that we maintain that record of stability, which has been so valuable to us.
The Bill builds on Britain's new-found economic stability. It helps to prepare us for the challenges of the future, supports innovation and investment in new technologies and helps to ensure that the tax system is fair and that everybody pays their share. It safeguards the environment, recognising our responsibility for long-term stewardship of the earth's resources. I am pleased that that topic was raised.
The Financial Secretary quoted the IMF with approval. Does he therefore accept its judgment that the national accounts have "deteriorated sharply" in the past five years?
The key to the success that we have seen in managing the economy over the eight years since 1997 is stability and the fact that we have published and kept to the fiscal rules, the golden rule and sustainable investment rule. We have published the figures in the Red Book showing how we will do that in the future, in this cycle and the next, on the basis of cautious assumptions. Our record is enviable—it is 1 million times better than that of the previous Government, and the hon. Gentleman should pay tribute to it.
I will not give way for a little while, because I must make some progress. I have been extremely generous to Conservative Members.
The Bill provides much-needed help to children, pensioners and home buyers. The increase in the child element of the child tax credit means that the effective income tax rate for a family with two children earning £25,000 a year will be just 6 per cent. At £30,000 it will be 10 per cent., so it is a family tax cut that targets the hardworking low and middle-income families who will benefit from it most.
The Bill includes important changes to remove the tax impediments to Sharia-compliant Islamic finance products. Last year's Bill fixed a problem with the way in which stamp duty affected Sharia-compliant mortgages. This year, the Bill extends the benefits of that change and alters the rules for income tax, corporation tax and capital gains tax to remove impediments to Sharia-compliant saving and loan products. It is important that everyone in our society has access to financial services that meet their needs, so that everyone can be included and benefit fully from the strength of our economy.
The measures in the Bill to simplify pensions taxation will provide more flexibility and choice as people plan for retirement. They will help employers and pension providers, and they have received very wide support from pensions providers, employers, and individual pension savers. The assurance that people will receive a meaningful proportion of their pension saving in the event of their employer becoming insolvent provides an important boost to confidence in pension saving.
I want to respond to a number of points raised in the debate. The hon. Member for Tatton (Mr. Osborne) helpfully explained to the House why the Opposition accepted the clauses in the Bill. He also mentioned representations on behalf of companies in the film industry. He spent a good deal of his time objecting to things that are not in the Bill, however, and I look forward to debating those matters with him after the election.
The hon. Member for Twickenham (Dr. Cable) made several points with which I agree, but I did not agree with a number of his other points. He discussed his party's plans for local income tax. Under Liberal Democrat plans, a couple on average earnings with a combined income of £41,000 would see their income tax increase by £1,170, which, on average, would make them more than £260 worse off compared with council tax. Once people realise that if two people are working in a household, that household will have pay its local income tax twice, the apparent attractions of that proposal rapidly disappear.
The hon. Member for Twickenham mentioned the pension credit. The Financial Services Authority has stated that pension credit means that
"for most people, most of the time, it will pay to have saved."
The pension credit has been extremely effective in addressing pensioner poverty, which was a big problem in 1997.
The Financial Secretary has just said that there will be some benefit in saving for most people, most of the time. What about the rest of the people?
It is certainly worth while for the great majority of people to save for their retirements. At the time of the 1997 election, large numbers of people had an income of £69 a week. From this month, all of those people are entitled to an income of at least £109 a week, which is a massive change for the better. We have focused on addressing pensioner poverty in an extremely effective way through the pension credit.
On the specific point raised by the hon. Member for Chichester (Mr. Tyrie), the pension credit gives credit for savings. It removes the problem of large numbers of people being on 100 per cent. withdrawal rates, which was a result of how income support arrangements worked under the previous Government, and many more than 1 million people were affected by those 100 per cent. withdrawal rates.
I should like to spend time responding to many of the points that have been made, but I must be a little briefer than I would have been because of the interventions that I have taken. I need to comment particularly on the comments of the right hon. Member for Charnwood (Mr. Dorrell), who talked about the way in which tax thresholds have changed. Listening to him, an innocent observer would have believed that under his stewardship—as he told us, he was Financial Secretary after 1992— thresholds went up in line with earnings. Helpfully, I have been able to dig out what actually happened to the higher rate threshold in the period that he discussed. It is true that in 1991–92—the period leading up to the 1992 election—the threshold was over-indexed; one cannot deny that that occurred. However, in 1992–93, when the right hon. Gentleman was Financial Secretary, the threshold was not only not increased in line with earnings, but not increased at all—and, blow me down, it was exactly the same the following year and the year after that. It was frozen for three years in a row.
I compared the record over the period of this Government from 1997 to 2005, during which time 7.5 million people have seen their marginal rate of tax increase. For the period from 1979 to 1997, will the Financial Secretary confirm that the Conservative Government cut marginal rates of tax for all income tax payers during those 18 years?
The right hon. Gentleman is shifting the goalposts somewhat. He chided me about uprating thresholds, which we have done consistently; under his stewardship, those thresholds were frozen. Incidentally, the hon. Member for Chichester accused us of freezing the threshold, but we have not—we have consistently uprated it in line with inflation. Under the stewardship of the right hon. Member for Charnwood, the thresholds were completely unchanged for three years in a row; in this Budget, we increased them.
Will the Minister give way?
No, I will not.
I want to come on to the other issue that the right hon. Member for Charnwood raised. Of course, it is true that nowadays people are earning more. More than twice the number of people are earning more than £30,000, more than £50,000 and more than £100,000 than in 1997. It is absolutely right that as people's real income rises so does the average tax that they pay. That is the basis of a fair, progressive income tax system, and that is the system that we have ensured that we have in place.
The right hon. Member for Fylde (Mr. Jack) made an interesting speech. I can tell him that we certainly are going to achieve our Kyoto targets. On vehicle emissions, we have a good record compared with other European Union members. For example, box 7.3 in the Red Book provides information about how the changes to company car tax have affected CO 2 emissions; that work will need to continue.
The right hon. Gentleman talked about biofuels, which is a subject of great interest to him. We have been very supportive of the growth in biofuels sales—that is why we introduced the 20p per litre level for biodiesel in 1992. I think that he will be aware, although he did not mention it, of the work that is going on in relation to a renewable transport fuels obligation. Good progress has been made on the feasibility study, and we are continuing discussions with industry on a possible enhanced capital allowance for the cleanest processing plants. That directly addresses the point that he made.
We have had an interesting debate, throughout which one point of consistent unanimity was the warm praise and generous tributes accorded to my right hon. Friend the Chief Secretary. It is clear from what everyone has said that the whole House wishes my right hon. Friend well in the future. To those tributes to him that have already been expressed, I add my own.
The Bill before the House builds on the stability that has been achieved in the past eight years, takes that stability forward and addresses the priorities of fairness and sustainable growth. I commend it to the House and I commend the values that underpin it to the people.
Question put and agreed to.
Bill accordingly read a Second time.
Motion made, and Question put forthwith, pursuant to Standing Order No. 63 (Committal of Bills),
That the Bill be committed to a Committee of the whole House.—[Mr. Heppell.]
Question agreed to.
Bill immediately considered in Committee.
[Sylvia Heal in the Chair]
Clause 1 — Rates of Tobacco Products Duty
Question proposed, That the clause stand part of the Bill.
I will make a few brief remarks on the clause, but before doing so I also want to refer to the Chief Secretary to the Treasury. I paid tribute to him when I wound up for the Opposition on the evening of Monday 21 March during the Budget debate, and the House will be pleased to hear that I do not propose to reprise all of that now. But I should point out briefly that the shadow Paymaster General, my hon. Friend the Member for Chichester (Mr. Tyrie), reminded the House a few minutes ago that a major power cut has taken place in south London today. To paraphrase Lord Grey, the lights are going out all over Britain for this Labour Government, so the Chief Secretary—
Order. The clause under discussion is actually "Rates of tobacco products duty".
Thank you, Mrs. Heal. I was simply going to say that I wish the Chief Secretary to the Treasury all success in the future, and he has clearly picked the right time to get out.
We are now in Committee and in the curious position of having to deal with 106 clauses, in what is still a 1 inch thick Bill, in barely half an hour. Given our constrained circumstances, I will make just a few quick points on each of the clauses that we Conservatives wish to highlight.
On clause 1, I want to press Ministers on what actions they are taking to combat tobacco smuggling. That issue has been raised with me on a number of occasions, particularly by small retailers, who are seriously suffering from the effects of such smuggling. I am thinking of organisations such as "Retailers Against Smuggling", which have made several representations on that point. I also have a letter from the chief executive of the Tobacco Manufacturers' Association, who wrote very promptly—as recently as yesterday—about the matter. He said:
"I write to you with some urgency, as I understand that certain sections of the Finance Bill including the clause on increased tobacco tax, are soon to be debated in the House. We were disappointed that the Chancellor proposed increases in taxation, particularly the rises on hand rolling tobacco, where 73 per cent. consumed in the UK last year were non duty paid i.e. they avoided UK taxes.
The Treasury sub-committee warned in their recent report that the smuggling of hand rolling tobacco was 'out of control'. Furthermore we estimate that 28 per cent. of cigarettes consumed avoided UK duty . . . The Treasury sub-committee also reported that one in four shopkeepers were considering closing down as a result of the impact tobacco smuggling was having on their business . . . In the limited opportunity left to you because of the restricted time I would urge you to question Her Majesty's Government's thinking on this subject, and speak up for the small retailers whose livelihood is severely threatened as a result of these Budgetary proposals."
On that basis, I would like to ask the Financial Secretary—[Interruption.] Oh, I see that the Economic Secretary, who has direct responsibility for these matters, is now in his place—[Interruption.] He was in his place only for part of the debate, but has just re-entered the Chamber. Perhaps he will listen to my three questions and either he or the Financial Secretary will reply to them.
First, what further actions does the Treasury propose to combat tobacco smuggling in general? Secondly and more specifically, what measures are proposed to combat the smuggling of hand-rolled tobacco, which has become a particular problem? Clearly, small retailers are suffering disproportionately from the smuggling of that form of tobacco and Conservative Members want to know exactly what the Government propose to combat it. Thirdly, how will the Government ensure that controls remain in place, given the impending merger of Her Majesty's Customs and Excise and the Inland Revenue? I ask that question because, with any merger, it is sometimes the case that important measures can fall between two stools during the period of transition. That cannot be allowed to happen. I hope that the appropriate Minister will answer those three specific questions in a specific manner.
I was hoping to speak when we reached stamp duty land tax, but perhaps I have an opportunity to say a few words now. We have in the House, though unfortunately not for much longer, the world's greatest living expert on stamp duty land tax—the Chief Secretary to the Treasury. He took the brief at the last minute and, as usual, he acquitted himself with great style and verve. He is unfailingly courteous and I view his leaving the House as a very sad loss, indeed. I want to pay tribute to him for his courteousness, his expertise and his pleasant convivial demeanour. He has added greatly to the proceedings of this place.
I should like to say a few words about tobacco products duty. I may be somewhat jumping the gun because clauses 2 and 3 refer to alcoholic liquor duties. The Economic Secretary and I have discussed at length the problems of London City Bond and Mr. Justice Butterfield's report on the hundreds of millions of pounds lost through liquor duty fraud. I am anxious to hear that Ministers have got a grip on this situation; we cannot allow such fraud to continue.
We shall reach clauses 2 and 3 after we have finished debating clause 1, so the hon. Member will have an opportunity to comment further then.
I am grateful: I believe that the smuggling involved cigarettes as well as liquor, but I could be wrong and stand to be corrected. I shall give Ministers ample advance warning—about a minute—that I hope to hear what they have done in respect of the Butterfield report and its recommendations. We cannot allow any recurrence of this sort of fraud when hundreds of millions of pounds are lost to the Revenue. When that happens, who picks up the Bill? It is our fellow citizens and taxpayers of this country.
I rise briefly to follow up the point made by my hon. Friend the Member for Rayleigh (Mr. Francois) about the report of the Treasury Sub-Committee on excise duty fraud. Given how little time remains for the Government to reply, it would be helpful if a Minister clarified whether we will receive a full Government response to our recommendations, which are very relevant to the three questions that my hon. Friend proposed. Before the House dissolves on Monday, perhaps we could have such a reassurance.
The inflation increase in clause 1 maintains the high real price of cigarettes. The aim is to encourage people to smoke less or to quit, and to discourage children and young people from taking up the habit. The organisation Action on Smoking and Health has welcomed the proposal.
The hon. Member for Rayleigh (Mr. Francois) is right to raise the issue of smuggling. The Government have acknowledged that that is a pressing and important problem, and we have taken effective action over an extended period to address it. As a result, tobacco smuggling is being contained. In the past four years, Customs and Excise has succeeded in halting the previous rapid growth in cigarette smuggling, and in reducing the market share for illicit cigarettes to the current level of 15 per cent. That is still too high, but it is significantly lower than previously.
The total number of cigarettes smuggled into the UK each year has been reduced by more than 5 billion sticks, a fall of more than a third. In the same period, when cross-channel passenger smuggling was cut by more than three quarters, there has been a rise of 33 per cent. in legal cross-border shopping for alcohol and tobacco. That clearly shows that an effective balance has been struck between maintaining the rights and opportunities of shoppers and cracking down on smuggling.
The hon. Member for Rayleigh mentioned hand-rolling tobacco specifically. As he will know, the Budget statement acknowledged explicitly that the pattern of smuggling for such tobacco is different, and made it clear that the Government are responding accordingly. I can reassure him that the very effective focus on tackling smuggling will be maintained through the forthcoming merger of the Customs and Excise and the Inland Revenue. I agree that it is important that that focus is not lost, and assure him that it will not be.
I heard what the Minister said, and do not wish to detain the House for long, given the present circumstances. He acknowledged the specific problem in relation to hand-rolling tobacco—on behalf of the industry, I thank him for that—but made no specific suggestions for further Government action to combat it, which will disappoint retailers around the country. With an election pending, it is only fair to warn him that we intend to do what we can to warn retailers that the Government do not take their concerns seriously.
That is a very unfair response. The Government have brought about a very dramatic reduction in the smuggling of tobacco and cigarettes. The problem is being contained, and that certainly was not the case under the previous Conservative Government. That is a reflection of the vigour with which we have pursued the problem, and we will ensure that we continue to apply the same vigour in the future.
Question put and agreed to.
Clause 1 ordered to stand part of the Bill.
On a point of order, Mrs. Heal. I have been asking all day for a copy of the regulations governing inheritance tax on pre-owned assets, which were published a week or two ago. Vote Office staff have been unable to get hold of those regulations, even though they will be debated in connection with clause 98. I should be grateful if you would do all that you can to ensure that a copy of those regulations is made available to the Committee.
Ministers on the Treasury Bench will have heard what the hon. Gentleman had to say, but I am afraid that there is nothing that I personally can do. However, I think that the message will have been conveyed.
Clause 2 ordered to stand part of the Bill.
Clause 3 — Rates of Duty on Wine and Made-wine
Question proposed, That the clause stand part of the Bill.
I call Mr. Michael Fallon—I mean Mr. Michael Jack.
That is the second time today that my name has not been called correctly, but perhaps it will be third time lucky.
Can the Minister satisfy my curiosity about the relative rates of duty per hectolitre on the wines described in the clause. The table in the clause starts with a reference to the percentage of alcohol by volume of the wines that are subject to the tax, so I conclude that the principal purpose of the clause is to tax the alcoholic content of the wine. However, I note that the duty rate on still wine—
"Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent"—
is £167.72 a hectolitre. I also note that within that category a wine that might be partially fermented—it would have the name frizzante, for example, if it was Italian—would be taxed at that rate and not at the much higher rate of £220.54 a hectolitre on wine that is fully sparkling.
It might be argued that that covers the majority of champagnes, for example, which are more expensive and could stand a higher rate of duty. However, the spumante-type sparkling wines and the cremant de Loire are lower-priced wines but have an alcoholic content of around 12 per cent. and seem to bear a disproportionately high rate of duty compared with the more expensive champagne-type wines and certainly more expensive than a wine with a higher alcoholic content in the first category that I mentioned. The rate of duty per hectolitre seems to be irrational if the duty rate relates to the alcohol content of the wine.
Those of us who enjoy wine and occasionally venture to sparkling wine—I am thinking of those of us who will want to celebrate the Conservative victory in the election on 5 May—would like a clear explanation of the duty rate differentials.
The Bill uprates the duty on still wine by 2.6 per cent., but there is a freeze on the duty on sparkling wine. The industry has argued for the differential between sparkling and still wine to be eliminated and by uprating the duty only on still wine we have narrowed that differential because the rate of duty on sparkling wine is unchanged. The hon. Gentleman's point is a reflection of historic development over an extended period. We believe that it is right to narrow the differential and that is why there is an increase in the duty on still wine but not that on sparkling wine.
Question put and agreed to.
Clause 3 ordered to stand part of the Bill.
Clause 4 — Consolidation of Current Rates of Hydrocarbon Oil Duties etc.
Question proposed, That the clause stand part of the Bill.
I make no apology for rising again to discuss biofuels for a moment or two. I acknowledge at the outset the Financial Secretary's helpful comments when he wound up on Second Reading. Although discussions are taking place on the obligations, the emergence in the United Kingdom of a biofuels manufacturing industry still seems to be some way off, notwithstanding the observation in box 7.3 of the Red Book which states that
"Since 2002, 43 million litres of biodiesel have been sold."
I acknowledge that there is an embryo sales industry, but there is an almost non-existent manufacturing source.
I continue to be worried by the representations made to my Committee, the Select Committee on Environment, Food and Rural Affairs, that the current duty derogation rate is not of sufficient attraction to start an industry using UK-sourced oilseed rape as raw material. A parliamentary answer, to which I referred earlier, indicated that some manufacturing capacity was coming on stream, but not enough will come from UK sources to meet the target of 2.5 per cent. of biofuels included in hydrocarbon fuel sources which we must meet by 2006, and which rises to 6 per cent. in 2008. I apologise to the Committee if those figures and dates were slightly wrong; I do not have my detailed notes with me so I am speaking from memory.
It is argued that if we increased the duty beyond the derogation rate of 20p a litre, the UK would attract overseas sources of supply. Indeed, I am certain that Brazil could supply all our bioethanol needs. That seems to dodge the issue, however. At a time when UK agriculture is going through a singularly important process of change, as it adapts to the revised common agricultural policy, I should have thought that Ministers would want to encourage home-grown sources, in both the bioethanol and biodiesel industries, so that UK agriculture could be involved. The Minister will be aware that British Sugar, which is pioneering work on bioethanol in the UK, has at least submitted a planning application for a plant, but only subject to the conclusion of discussions with the Government on some form of aid. The long and the short of it is that if we do not have duty derogation rates, or possibly capital allowances, of such an order as to get that embryo industry off the ground, we shall have to import our biofuels if the Government want to achieve the European targets for the incorporation of biofuels in the hydrocarbon fuel supply.
It is illogical not to encourage that industry at the outset, because there are precedents. When the liquefied petroleum gas industry sought help, especially for investment in the necessary fuel station infrastructure, the Government provided a generous 40p per litre discount, which is gradually being unwound because the infrastructure has been established. One stage back, when we were moving from leaded to unleaded fuel, there was also a generous initial discount that was gradually unwound. I have not yet received a cogent explanation from the Treasury as to why, if we want to get our manufacturing industry off the ground, we are not being more generous in the first stages, so that economies of scale in biofuels production will eventually take over and enable the price to come down.
In debate on a previous Finance Bill, I pointed out to the Treasury that they could have all that for nothing, simply through an obligation of inclusion. They could say that there will be 2.5 per cent. biofuel, with the balance of 97.5 per cent. being hydrocarbons, and that the price will be such and such. That would exactly mirror and match what happens under the renewable fuels obligation in electricity generation. So far, Treasury Ministers have shied away from that, although I think that the Energy Act 2004 contains such a provision to solve the biofuels conundrum.
Ministers' colleagues in DEFRA show great enthusiasm and have even produced a beautiful, coloured booklet to tell us about the benefits of biofuels and the 5,000 jobs that will be created in rural Britain, yet sadly the Treasury is still camping on the ground that 20p is sufficient. However, the facts, as confirmed to me in a parliamentary answer from DEFRA, tell a different story. Will Treasury Ministers tell us when we shall actually get our UK biofuels industry?
The right hon. Member for Fylde (Mr. Jack) will have heard me refer earlier to the continued discussions with industry about the possibility of providing an enhanced capital allowance for the cleanest processing plants, which would directly address the issue that he raises. However, he would agree that the key prerequisite is to have an attractive market for suppliers to address. So, as we confirmed in the pre-Budget report, we are carrying out a feasibility study on the renewable transport fuels obligation, and good progress has been made in that study. That is the reason why we introduced the 20p a litre incentive for biodiesel in 2002, and the same differential for bioethanol from 1 January this year.
The right hon. Gentleman was a little dismissive, but early indications of the impact of the support for bioethanol show encouraging signs. We expect sales to increase from zero to 60 million litres a year by the end of this year, so a substantial market is starting to emerge. In addition—again, to address another of the specific points that he raised—those duty rates are guaranteed until 2008, under our commitment in the alternative fuels framework to provide industry with certainty and a three-year rolling guarantee for rates. So we are putting in place the building blocks for what I, too, hope will be a successful and sustainable industry in the future.
First, will the Financial Secretary confirm for the record where the 60 million litres of bioethanol will come from? Secondly, will he clarify whether he envisages a regime of twin-track fiscal help that combines the duty derogation with the capital allowances to which he refers? Will the two operate simultaneously?
Of course, the right hon. Gentleman is right to suggest that this is extremely early days for the industry and to make the point about the paucity of plants in the UK currently. Yes, I can confirm that we are simultaneously undertaking work on both the duty issues and the possibility of providing an enhanced capital allowance arrangement as well.
To comply with a self-denying ordinance that I announced a few minutes ago, I shall keep my remarks on the clause extremely brief, but I was attracted by the argument made by my right hon. Friend the Member for Fylde (Mr. Jack). He referred to the fact that the duty differential for liquid petroleum gas has allowed LPG to spread relatively widely over the past few years. Slightly fewer than 1 million LPG vehicles or dual-use, petrol or diesel-LPG vehicles are now in use in the United Kingdom. The duty differential has been important in persuading oil companies, for example, to invest in the technology necessary to make that fuel available at petrol stations around the UK. So an example is already extant of how such things can work, and my right hon. Friend is right to raise it.
The farmers in my constituency would be willing to invest in that type of product if and when they believed that it was truly economically viable. The feedback that I have had from them in informal meetings with my local branches of the National Farmers Union is that we are not quite there yet and that the tipping point has not been reached, although I take note of the 60 million litre figure that the Financial Secretary recounted to the Committee.
Part of the problem is that something of a lively debate has been going on behind the scenes between DEFRA on one hand and the Treasury on the other, and to some extent, DEFRA has been looking for movement in this realm and, to some extent, the Treasury has been resistant. So I should like briefly to press the Financial Secretary, on behalf of my right hon. Friend and UK farmers, on whether he has anything else to offer in the few minutes of the debate that remain that may be of comfort to them and positively affect the investment decisions that they must make in the next year or so.
Question put and agreed to.
Clause 4 ordered to stand part of the Bill.
Clauses 5 to 9 ordered to stand part of the Bill.
Clause 10 — Corporation Tax
Question proposed, That the clause stand part of the Bill.
This and the following clauses set the rates of corporation tax. In many ways, they are unexceptional. However, a number of issues are worth probing. The mainstream corporation tax rate of 30 per cent. has remained at that level for a long time. When it was brought down to that level, it was proudly boasted for a spell that it was the lowest in Europe. The small further fall took place after the main and very important reforms that were taken in the mid and late 1980s, which transformed the tax and the corporate environment in the United Kingdom. Incidentally, those reforms were vigorously opposed by Labour Members.
The current rate of 30 per cent. certainly is not the lowest in Europe. Ireland has a rate of 12.5 per cent., Germany is announcing plans to bring its rate below 30 per cent. and a good number of accession countries have extremely attractive rates that are well below 30 per cent. I am a little concerned that the Government do not appreciate that the UK's rate is beginning to look a bit high. In a few weeks, we will be on the other side of the Committee and will be able to sort that out and start pointing a way towards further reform of the tax. We have already outlined one or two suggestions. I am particularly concerned that the Government do not appear to have a clear view about where they want to take corporation tax. I would be grateful if they said something about that and the competitive environment.
Another concern is that corporation tax is only one of a number of tax burdens on business that companies are expected to pay. Its yield constitutes only about a quarter of the total yield that comes from businesses, and that excludes pay-as-you-earn, national insurance contributions, salaries and VAT.
Can the Financial Secretary say a little about the recent European Court of Justice decisions that are coming through? What is his estimate of the likely losses to the UK's yield from those decisions? It is an important issue that we will have to address when we are on the other side of the Committee, but I shall be interested to hear whether the Government have made an effort to think it through.
I shall be brief given the time constraints that we are under. Our corporation tax rate—at 30 per cent.—is lower than in any other major European country. The hon. Gentleman implicitly stated, and I shall make it explicit, that this Government reduced the rate to 30 per cent. from the higher rate that it had been under the previous Government. In addition, in the Budget of 2002, we cut the starting rate of corporation tax from 10 per cent. to zero, and the lower rate for small companies from 20 per cent. to 19 per cent. I have no doubt at all that that is one of the reasons that the World Bank in September last year ranked the UK first in Europe and seventh of the top 20 countries to conduct business in and why the Organisation for Economic Co-operation and Development last year put the UK's economic and administrative regulations among the lowest in the OECD.
It is important that we continue to maintain a competitive and attractive tax environment in the UK for businesses. The fact that we have such an attractive environment is the reason that we continue to be the most attractive destination in Europe for inward investment. We are determined that that should continue.
Question put and agreed to.
Clause 10 ordered to stand part of the Bill.
Clauses 11 and 12 ordered to stand part of the Bill.
Clause 13 — Non-corporate Distribution Rate for Financial Year 2005
Question proposed, That the clause stand part of the Bill.
I would like to speak briefly to clause 13 because it makes well a point that several of my hon. Friends raised on Second Reading. The Bill is being rushed through without the opportunity to consider fully the practical effect that it will have. Of course, clause 13 is in the Bill only because there was an ill-considered proposal to introduce new arrangements to encourage incorporation by businesses that were previously incorporated in an earlier Finance Bill. The Chancellor himself introduced an unnecessary complexity into the tax system, so we are now being asked, at the run, to agree to the clause, which I think has the practical effect of dealing with one of the consequences of the Chancellor's earlier rushed and ill-advised legislation.
The clause is a good example of a measure that would have been better dealt with after mature reflection in the summer following the general election when it would have been available to hon. Members—
It being four hours after the commencement of proceedings on the Ways and Means motion, The First Deputy Chairman put the Questions necessary to dispose of the business to be concluded at that hour, pursuant to Order [this day].
Question put and agreed to.
Clause 13 ordered to stand part of the Bill.
Clauses 14 to 106 ordered to stand part of the Bill.
Schedules 1 to 11 agreed to.
Bill reported, without amendment; read the Third time, and passed.
Appropriation Bill
Ordered,
That leave be given to bring in a Bill to appropriate the supply authorised in this Session of Parliament for the service of the year ending with 31st March 2006.—[Jim Fitzpatrick.]
Bill ordered to be brought in by the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Paul Boateng, Dawn Primarolo, Mr. Stephen Timms and John Healey.
Appropriation
Mr. Stephen Timms accordingly presented a Bill to appropriate the supply authorised in this Session of Parliament for the service of the year ending with 31 March 2006: And the same was read the First time; and ordered to be printed [Bill 103].
Order for Second Reading read.
Question, That the Bill be now read a Second time, put forthwith, pursuant to Standing Order No. 56 (Consolidated Fund Bills), and agreed to.
Bill accordingly read a Second time.
Question, That the Bill be now read the Third time, put forthwith, and agreed to.
Bill accordingly read the Third time, and passed.
Orders of the Day
Inquiries Bill [Lords]
As amended in the Standing Committee, considered.
Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]
I beg to move, That the Bill be now read the Third time.
One of the fundamental principles in our democracy is accountability to the public. They rightly expect that, when something goes wrong, it will be investigated and put right. We have a long tradition of establishing formal independent and open inquiries into matters that have caused public concern. We have seen how valuable inquiries are at getting to the truth and learning lessons to prevent the same thing from going wrong again. In that sense, they serve to restore public confidence by doing just that. We have also seen the significant impact that they have had on our public services.
The Stephen Lawrence inquiry brought about profound and important changes that continue to this day in the police force and other public bodies. The Victoria Climbié inquiry into a young girl's tragic death in my constituency is another example of an inquiry that was instrumental in bringing about reform to public services and, in this case, children's services.
The Bill has a simple purpose: to enable the people who conduct inquiries to do their job and to get to the truth in the most open way possible more effectively. It contains new measures to ensure that the three vital principles of independence, transparency and accountability of those inquiries are achieved. It is essential that any inquiry is independent and is seen to be so.
The Bill strengthens the independence of an inquiry by creating a new statutory requirement to ensure that inquiry panels are impartial. It also gives the inquiry chairman full legal powers to seek whatever evidence he needs within the inquiry's terms of reference. It does not, as some have suggested, give Ministers free rein to control inquiries in a way that suits their interests. It clearly sets out the respective roles of Ministers and those conducting the inquiry. It clearly spells out in statute what has been regarded as good practice in many inquiries.
The Bill will lead to greater accountability to the public, bringing new requirements to publish and contain costs. The chairman must have regard to costs as well as fairness when planning and conducting proceedings. The procedural rules to be made under the Bill will also aid decision making and strengthen the chairman's hand in controlling costs.
Many hon. Members made valuable contributions to the Bill's scrutiny and we had the opportunity to examine key aspects in debates on probing amendments. My hon. Friend the Member for Cannock Chase (Tony Wright) and his colleagues on the Public Administration Committee merit particular credit for their work. The Committee produced a thorough report on many aspects of the inquiry system and helped to inform debates. It will no doubt be a valuable source of best practice. I also express my thanks to my hon. Friend the Member for Cambridge (Mrs. Campbell), who contributed her useful experience from the Select Committee to the work of the Standing Committee.
Of great concern to the Select Committee and to other hon. Members is the proper role of Parliament in inquiries. The hon. Member for North-East Hertfordshire (Mr. Heald) raised the matter earlier. The Committee made a number of recommendations that led to much interesting debate.
The Government accept that there is an important role for Parliament in all types of inquiry. We have introduced the requirement for Ministers to make statements to Parliament about the establishment of every inquiry under it so that Parliament can scrutinise those decisions. The Bill builds Parliament into the process for every inquiry conducted under the legislation and provides a framework for an appropriate amount of parliamentary involvement in each case. Under most of the legislation that the Bill will replace, there is no provision for any parliamentary involvement.
We were interested in the Select Committee's ideas about a wider role for Parliament in inquiries outside the Bill. As we said in our response to the Committee's report:
"There is no reason why the good work done by members through the present Select Committee system cannot be translated into a commission equipped to conduct a public inquiry."
We also said:
"The Government can see some merit in a formal channel for considering representations made via Members of either House of Parliament concerning whether an inquiry should be set up on a particular issue."
That is clearly for Parliament to consider, but the Government would be supportive of any work that Parliament wanted to do on developing parliamentary mechanisms of inquiry. From this point, we head out into a general election, but I have no doubt that my hon. Friend the Member for Cannock Chase will play a part in that work after the election.
May I put on the record my appreciation of the way in which my hon. Friend has handled this matter? He has acknowledged the specific question about Parliament's role in relation to a certain category of inquiry that is not caught by the Bill and I am grateful for his comments. I hope that, when we return after the election, he and the Government will be prepared to give the matter further thought, so that the House can reach a view on how it wants to carry it forward.
I am grateful to my hon. Friend.
The Bill is important and I am pleased that we have been able to see it through. This is an historic moment for families, for people who use our public services and for people who are experiencing problems. The shining of public light on such problems that the Bill enables is fundamental to our democratic arrangements and we have brought the system into the 21st century. On that basis, I commend the Bill to the House.
We agree that new legislation is required to initiate and regulate public inquiries. There is a pressing need to consolidate the many statutory and non-statutory bases for public inquiries and we need universal procedures that can be applied with certainty to such inquiries. Those procedures must allow sufficient powers to call witnesses and evidence while maintaining safeguards and minimising red tape and costs. It is important that we retain the appropriate level of independence, openness and parliamentary involvement to ensure public confidence in any conclusions drawn by a public inquiry.
The Government introduced the Bill in the other place at the end of last year. Although it dealt with some of the deficiencies of the present hotch-potch of rules, the Bill was fundamentally flawed. First, it removed all parliamentary involvement and thus democratic legitimacy from the public inquiry process. Secondly, it over-extended Ministers' powers to interfere in an inquiry at the expense of the inquiry's chairman, which would compromise an inquiry's independence, effectiveness and credibility. Thirdly, the Bill failed to address our concerns, due not least to the Saville inquiry, regarding the proper control of costs. In its original form, the Bill was wholly unacceptable to the Conservative Opposition.
I acknowledge that, since then, we have made great progress in amending the Bill to meet those concerns. First, through a compromise position reached in another place, we have ensured that Parliament has some involvement in public inquiries. Under the Bill as it is now, a Minister must inform Parliament of his intention to set up an inquiry, the extent of its terms of reference, who will chair it and how many will serve on the inquiry panel. Further clauses provide that a Minister must lay before Parliament any decision, supported by reasons, to suspend an inquiry or to bring it to an end before it has fulfilled its terms of reference. Those provisions will ensure parliamentary scrutiny and, I hope, debate. They will also facilitate public scrutiny of Ministers' central decisions relating to an inquiry.
Secondly, following the strong and eloquent argument of Lords Kingsland and Howe of Aberavon in the other place, we have boosted the chairman's involvement in key decisions relating to an inquiry. The chairman must now be consulted before a Minister decides who serves on the inquiry panel and when their appointment may be terminated; the extent of the inquiry's terms of reference and any modifications to them; whether it is appropriate to appoint assessors; when an inquiry is suspended; and when an inquiry may be terminated before the publication of its report. The added involvement of the chairman will help to promote the independence and effectiveness of inquiries. I hope that the chairman will not be political but have intimate knowledge of the progress and detail of the inquiry which, in turn, will help to improve public confidence in its conclusions.
It should be said, however, that those changes do not go as far as we had hoped in reining back the Government's extensive powers. In Committee, we proposed several further amendments to ensure the greater involvement of Parliament and chairmen in the inquiry process. Unfortunately, the Government rejected all our amendments, despite wide-ranging support from numerous human rights groups and parliamentary Committees. I certainly mirror the Minister's congratulations to the Public Administration Committee, which has done much work on the Bill, but its recommendations have been largely ignored by the Government.
In addition to obstructing our positive amendments in Committee, the Government pushed through two unfortunate amendments of their own, which removed the compromise positions reached after much debate in the other place that allowed parliamentary involvement in inquiries into ministerial conduct and gave a veto to the Lord Chief Justice on the appointment of a judge to an inquiry panel. The amendments undo the efforts of our noble Friends and are of particular concern to the Conservatives. Like the original version of the Bill, the current post-Commons Committee version does not allow for any special procedure to be used to investigate ministerial misconduct. It will now be a Minister who sets up such an inquiry, determines its scope, the members of the panel and public access. A Minister will also decide whether it is to be terminated and whether a report will be published. It does not require a great leap of faith to realise that a Minister may have little or no interest in launching an investigation into conduct by himself or the Government. If the inquiry discovers an embarrassing or incriminating fact, he may be tempted either to restrict its scope or public access, or to interfere with the timing, form or publication of the report.
It is Parliament's role to hold the Executive to account and we maintain that Parliament should be involved in any inquiry into the Executive's actions. We proposed appropriate amendments in both Houses that would have ensured such involvement. The other place made some headway in cutting the democratic deficit by providing the option of laying a resolution before Parliament, but that progress was reversed by the Government in Committee. The Opposition have noted that the hon. Members for Cannock Chase (Tony Wright) and for Cambridge (Mrs. Campbell) proposed a new amendment to address the issue, although I hear that it has since been withdrawn. It is worth considering it, however, as it would require a resolution by both Houses where public concern focuses on the conduct of Ministers or Government Departments and where other forms of inquiry are not appropriate. The drafting of the amendment is not clear, but I interpret
"the conduct of Ministers or Government Departments"
to mean ministerial misconduct. Where Government Departments are under investigation, one or more Ministers would have to take responsibility. The amendment went some way towards introducing the necessary parliamentary involvement in inquiries into ministerial misconduct. However, in the eyes of the Conservative Opposition, it would not have gone far enough. A parliamentary resolution should be required for every public inquiry into ministerial misconduct, not just in those cases where other forms of inquiry would not be appropriate.
The provision is not only limited, but uncertain, which further restricts its usefulness. Who would decide whether other forms of inquiry were appropriate? Furthermore, there is no specific mechanism through which to debate the matter in Parliament. It may be the Minister who decides whether another type of inquiry is appropriate, which removes the benefit of taking the matter out of the Minister's hands. Also, there are no set criteria by which to judge whether another type of inquiry would be appropriate. That removes both certainty and consistency. The amendment was by no means perfect and did not adequately cure the deficiencies of the Bill in relation to inquiries into ministerial misconduct, but we recognise that it would have been an improvement on the Bill as it stands.
The second matter that causes great disappointment to the Conservative Opposition is the limited involvement of the Lord Chief Justice when a judge is asked by a Minister to serve on an inquiry panel. The current version of the Bill requires only that the Minister consult the appropriate judge, usually the Lord Chief Justice. That was the case in the original draft Bill but, following the compelling arguments of the Lord Chief Justice and other noble Lords, the other place divided against the Government to ensure that the Lord Chief Justice consents to a judge's involvement in an inquiry. Unfortunately, the Government used their majority in the House to reverse the good work done in the other place.
It is important that the Lord Chief Justice can veto the use of a judge on an inquiry panel. If not, the Bill will remain inconsistent with the concordat agreed between the Lord Chief Justice and the Lord Chancellor that only days ago became embodied in the Constitutional Reform Act 2005. Only the Lord Chief Justice retains the necessary independence and knowledge of the courts' resources to judge whether it would be appropriate to use a particular judge for an inquiry. Finally, the current situation could leave a judge in a difficult situation where a Minister and the Lord Chief Justice disagreed about his appointment. Could he refuse the Minister? It is unfortunate that the Government did not accept the Lords amendment.
In conclusion, the Conservative Opposition support the legislation to regulate public inquiries. We are encouraged by the many positive amendments that were secured in the other place but remain disappointed that so many amendments were rejected by the Government, particularly on the two key issues relating to parliamentary involvement in inquiries into ministerial misconduct and the Lord Chief Justice's involvement in the appointment of judges to inquiry panels. I ask the Minister to consider those issues carefully and note that, as they arise from amendments introduced in another place, the Bill must now return to the other place for further consideration. We shall observe with interest what progress may be achieved by their lordships.
I shall be brief. I welcome the Bill, which in some ways took us by surprise. Those of us who were investigating the matter of inquiries were surprised when the Government decided to legislate during the same period. It is good that they should, for two reasons.
One is that the Bill focuses attention on the importance of inquiries. We take them for granted, but inquiries play a hugely important role in our public life. Usually in the context of something bad having happened that needs to be investigated, they enable us to take a step backwards, to subject a part of our public life to microscopic investigation and, hopefully, to learn lessons for the future from whatever has happened. It is a crucial part of our tradition of public life and public administration, and it is right that we should therefore focus on it in the way that the Bill forces us to do. We owe a huge debt to those who undertake inquiries and we have an obligation to learn from them. That is the first reason.
The second reason is that the effect of having this Bill is that many more inquiries will now be conducted on a statutory basis. At the moment, they are conducted on a variety of bases, many of them on an ad hoc basis. The effect of the Bill, contrary to some of the suggestions that have been made, is that it will bring far more inquiries within the orbit of statute, and so equip them with the powers contained in the Bill. Therefore, it is to be welcomed as a strengthening of the inquiry tradition as a whole.
Having said that, I want to put on record why some anxieties remain, to which I hope that we can return on another occasion. My hon. Friend the Member for Cambridge (Mrs. Campbell) and I tabled an amendment to explore some of those. As I have acknowledged already, the fact that the Government have been able to say something positive on the parliamentary issue has enabled us to withdraw that, but the matter still sits there and two issues connect.
One issue concerns the role of judges in inquiries and the role of the Lord Chief Justice in assenting to a judge serving on an inquiry. Having heard the evidence of the Lord Chief Justice on that point, it is clear that the judges take seriously what we invited them to take seriously, which is a move further down the road towards a separation of powers in this country. In the context of inquiries, they say that, if that is to be case, we must not think in the future, as has been the case in the past, that we can simply summon up a judge to conduct an inquiry in politically contentious areas, because that raises particular problems for the judiciary. That is well known in other systems. Over the years, it has become massively fudged in our system, but the judges now want to take that more seriously. We should be alert to that. It is not the case that judges are universally the best people to undertake inquiries. Some of the best recent inquiries have been undertaken by people other than judges.
A particular issue has arisen there that connects directly with the second outstanding issue. There is a category of inquiries that only Parliament should properly undertake. There is always difficulty in finding the words to describe those inquiries, but we know which they are and we heard evidence on the matter from many recent inquirers who said that there is a whole category of inquiry that it would not be proper for people such as them to undertake, because they are politically contentious inquiries that turn on the conduct of Ministers and on what happened in Departments. These are matters that Parliament must consider.
If we are honest with ourselves we will accept that Parliament is good at many, many things, but it is not well equipped to undertake forensic fact-finding inquiries. That is not what it does. It used to be so equipped in another age, but it is not any longer and we have had some recent examples of the difficulties that it gets into if it tries to undertake such inquiries. We have a choice here. Either we simply say that Parliament cannot undertake such inquiries any more and we must contract them out to somebody else, or not do them at all or we can say that there is a category of inquiries that only Parliament can properly undertake, so we must find a mechanism within Parliament for undertaking them. Some of us have been exploring what such a mechanism might be. That is the clear choice. The reason I was happy to withdraw my amendment was because I was and am confident that the Government have at least accepted our analysis, even if on this occasion they have not accepted our conclusion. However, it is an important issue and I hope that we can return to it early in the next Parliament, because if we do not, Parliament's standing will be diminished further. We either have to abandon formally this territory or reclaim it. There is no other choice in the matter. I hope that, after the election, the Government will enable Parliament to reclaim this inquiry territory.
I am delighted to follow the hon. Member for Cannock Chase (Tony Wright) for two reasons. First, he speaks with great authority on this issue and has experience and eloquence that I cannot match. He has given much attention to the subject both in his Committee and elsewhere. Secondly, I agree with the concerns that he expressed. At this stage, it will not be possible in a matter of a few minutes to address them in the Bill, but I hope that what the Minister said about unfinished business in this respect will be held to when Parliament meets again after the general election.
I and my colleagues in both Houses welcomed the opportunity of this Bill—an opportunity that I hope we have used for constructive improvement. As the hon. Member for Huntingdon (Mr. Djanogly) said, the Bill has improved since the Government introduced it. One issue of principle is extremely important, particularly, but not exclusively, in relation to the issues raised by the hon. Member for Cannock Chase. His Select Committee, the Public Administration Committee, gave a great deal of attention to the issues that are now before us and were before us in Standing Committee. Yet, the cross-fertilisation of that detailed inquiry into inquiries was not treated with the serious attention that it deserved.
As has been mentioned, the hon. Member for Cambridge (Mrs. Campbell) sought to introduce some major principles from that previous investigation by our Select Committee, which, after all, has a Government majority. As far as I recall, its recommendations were virtually unanimous, as the hon. Member for Cannock Chase may confirm. Yet the cross-fertilisation of that Select Committee work into a Standing Committee on the Bill simply did not take place.
There are wider issues that go beyond this Bill. A great deal of the most important work in this House is now done in Select Committee. If we cannot at least guarantee a clear channel to a Standing Committee of information, instruction and guidance from Select Committee work specific to a Bill such as this, there is something wrong with one Committee or other, or with the communication between the two. I suggest that the problem lies in the Standing Committee.
There is unfinished business, and not just in relation to the role of the Lord Chief Justice. I agree with the point made by the hon. Member for Cannock Chase, but I suggest that the issue is more specifically about the parliamentary role. The Minister referred to that, but I do not find the reassurance that he gave us wholly adequate. I hope that there will be a return to the issue. Much careful thought was given in Select Committee and in the other House to how inquiries that touch on the conduct of Ministers could be effectively set up. That involved terms of reference and how the inquiries were to conduct themselves while taking note of the fact that there was a ministerial component.
I regret that we have not made more progress on that matter. I have had experience of inquiries of various sorts, both statutory and non-statutory. To fail to address the problem and to have made so little progress on that thorny issue is unfortunate, given that we have only rare occasions on which legislation can improve such matters and that there may not be another such occasion for some years. As I said before, that is unfinished business. The integrity, independence and efficacy of inquiries is at stake if we do not get this right and it is unfortunate that we have not made more progress.
I pay tribute to the work of the hon. Member for Cannock Chase and his Committee, as, indeed, the Minister did, but I think that it would have been even better if the words that we have all expressed had been reflected in action and if the Committee's recommendations had been taken to heart and put into the Bill.
Question put and agreed to.
Bill accordingly read the Third time, and passed, with amendments.
Disability Discrimination Bill [Lords]
Considered in Committee.
[Sir Michael Lord in the Chair]
I beg to move,
That the Bill be considered in the following order, namely, clause 18, clauses 1 to 17, new clauses, new schedules, clause 19, schedules 1 and 2, clause 20 and remaining proceedings on the Bill.
The proposed order of consideration will ensure that we can deal with the reasons why the Government are amending clause 18. I know that it is a remaining area of concern, and I want hon. Members to have a chance properly to consider the detailed reasoning behind our decision to remove the "depression amendment", as it has become known, which was introduced by the other place. That explains the somewhat strange order of consideration in terms of the numbering of the clauses.
I hope that that is sufficient explanation for the Committee to agree to the order of consideration.
On Second Reading, I asked the Secretary of State whether we would have time to consider the Bill in Committee and on Report, and he replied that he was confident that we would. That confidence has proved to be misplaced, and the proceedings before us are truncated. The Minister is right to want to provide a full opportunity to discuss what I shall describe in shorthand as the "depression amendment" and to devote some time to the matter. Although the proceedings are truncated—we are not happy about that—the Minister has set out a sensible basis on which we can proceed.
My hon. Friend the Member for Chesterfield (Paul Holmes) raised similar concerns on Second Reading. Hon. Members from both sides of the Committee fully support the Bill and do not want to see it obstructed, although Liberal Democrat Members have raised concerns about its late arrival in this Parliament. If we are to make the best of a bad job today by using the time as effectively as we can, the Minister's proposal is probably the best way, so we can at least get on the record some of the remaining concerns that exist around the difficult issues.
Question put and agreed to.
Clause 18 — Meaning of "Disability"
I beg to move amendment No. 1, in page 46, line 1, leave out subsection (3).
This is the "depression amendment", which is a useful shorthand description that we are all using. It reverses the amendment introduced in the other place by removing clause 18(3), which inserts new sub-paragraph (2A) into schedule 1 to the Disability Discrimination Act 1995. The Government firmly believe that that amendment of the definition of disability is not the right thing to do.
I assure the Committee that we have thought long and hard about the new sub-paragraph (2A), but we have concluded that we cannot accept it. Fundamentally, it undermines the most basic principle of the DDA—that a disability must be a long-term or permanent condition. Under the new provision, a person with depression could qualify under the legislation as disabled after experiencing unrelated depressive episodes totalling little more than six months, and it constitutes a special arrangement for one form of mental impairment, which I believe to be unwise. It introduces the arrangement with arbitrary boundaries, which are both unfair and confusing to those trying to understand its operation, either because they have depression and want to see whether they meet the definition or because they have obligations under the law and want to see whether a particular person to whom they have those obligations qualifies.
To be absolutely clear, new sub-paragraph (2A) would extend the DDA to people who have recurrent but unconnected short-term episodes of depression in a way that would be confusing, complicated to administer and potentially unfair to other disabled people and other people with depression.
The Minister would confirm, would she not, that the clause includes new, radical and sensible arrangements from the point of diagnosis for those who have HIV and cancer? She therefore finds herself in the difficult position of arguing that there should be a departure in those cases but not in this one.
I am not arguing against all extensions or changes to the definition, and we have thought long and hard about whether this one can be incorporated. Our difficulty is that the fundamental requirement of the Bill is that in order to be a disability a condition or impairment must be long term. We do not believe that short episodes of up to only just over six months could possibly qualify, particularly given that this relates to just one type of mental impairment. I will come on to say something about recurrence of short-term conditions; I hope that that may be helpful.
We believe that the amendment from the other place would be confusing and burdensome because everyone with duties under the 1995 Act—and the Committee should recall that we have just extended those obligations to cover 1 million small employers—would find it difficult to determine, without making extremely detailed inquiries, exactly who is covered by the new provision. It would be complicated to administer because there would be different rules to be applied depending on whether a person has depression or some other impairment. Employers, service providers and others with duties under the Act would have to keep detailed records in order to establish whether a person has met the "six months in the last five years" rule that the amendment would insert into the definition.
The amendment would be unfair to other disabled people. The majority of disabled people do not have special provisions enabling them to meet the long-term condition of the definition, and would have to prove that their impairment has lasted, or is likely to last, for at least 12 months. Creating a separate and more advantageous rule for some people with depression, but not all such people, is not fair on those other people. Moreover, people with other forms of mental illness would not be covered by the new rule. It would be unfair on other people with depression. Someone with a six-month episode followed by a one-month episode would find themselves within the definition, whereas someone with two five-month episodes would find themselves outside it. That is what I mean by saying that the amendment would impose arbitrary boundaries. It does not really make sense and therefore would not make sensible law.
It is important to recognise—people sometimes forget this—that the 1995 Act already provides protection if an impairment has recurring effects. Where an impairment ceases to have a substantial adverse effect on a person's ability to carry out normal day-to-day activities, it is treated as continuing to have that effect if the effect is likely to recur. Conditions with substantial adverse effects that recur only sporadically or for short periods will therefore qualify for protection under the existing legislation, provided that they are part of the same underlying impairment. That will include mental illnesses such as depression.
Let me make it clear to the Committee and to those who have supported the amendment's remaining in the Bill, that our seeking to reverse it does not indicate that we take the matter of mental illness lightly. On the contrary, we have demonstrated that we are willing to listen to concerns about mental health conditions and to amend the Bill where that is appropriate and desirable. That is why we have agreed to remove the requirement that a mental illness must be clinically well recognised, thus putting mental illness on a par with other, physical, impairments in the way that they are recognised in the definition. We have promised to consider whether the statutory guidance on the definition can be improved to show more clearly how mental illnesses, including depression, are already covered by the 1995 Act.
We are committed to taking forward a wide agenda to help people with mental health impairments. Last year, the social exclusion unit published its report on mental health and social exclusion and made several very important recommendations that are now being implemented. For example, Jobcentre Plus staff are being provided with improved training on mental health issues so that they can offer a better service to clients with a mental health impairment; and the National Institute of Mental Health in England has been tasked with taking forward recommendations in the social exclusion unit report that will tackle the stigma and discrimination that people face.
Does the hon. Lady not accept that, whereas it is easy to predict that some conditions are likely to recur, the problem with depression is its unpredictability? That is the mischief that the Lords were trying to tackle. Is she really satisfied that what she has said so far would tackle the problem? It does not seem to me that it would.
I do not seek to suggest in any way that the current definition is perfection personified and should be defended against any suggested amendment for all time. However, I do not believe that we are in a position to make a sensible amendment that is fair and proper and which achieves what is wanted by those who are trying to do something useful for people with depression. Our difficultly with the subsection is that the arbitrary nature of its drafting means that it is not useable in practical law. I will shortly make a suggestion about a potential future way forward that might satisfy the hon. Gentleman.
We certainly do not have closed minds on this issue, but I do not believe that putting impractical law on to the statute book is a way of dealing with the stigma and difficulty that those with mental ill health face. We are fully committed to improving the lives of people with mental health conditions, but this measure is not right and would go too far. If proposed new sub-paragraph (2A) is allowed to remain, it will seriously undermine one of the Act's basic tenets and the integrity of the definition of disability.
In moving the amendment, I seek the Committee's agreement on ensuring that the definition meets one of the fundamental policy objectives of the 1995 Act. The Bill is not the end of the road on disability rights. We will consider whether short-term conditions should be covered, but we believe that we should cover them strategically and across the piece, rather than covering just one type of condition. The Disability Rights Commission is reviewing whether the social model of disability can be incorporated into our legislation. We believe that that is the right and proper forum in which to consider the matter further.
I listened to the Minister with care and I note that she said that the Government do not take depression lightly, which I am sure they do not. She also said that the Bill is not the end of the road, which I am sure it is not, and that, were the Government to be re-elected—I must add that that is extremely doubtful—they would consider the social model in detail. However, it is extremely regrettable that they are seeking to remove subsection (3), and I want briefly to explain why.
As the Minister acknowledged and as the shadow Leader of the House, my hon. Friend the Member for North-East Hertfordshire (Mr. Heald), pointed out a moment ago, it is widely recognised that depression can recur. It is also widely recognised that spells of depression often last for not more than six months, which is how the six-month period was arrived at. So someone who had an episode of depression would not be covered under the 1995 Act, which, in essence, stipulates that the effect of an impairment is a long-term one that has lasted, or is likely to last, for at least 12 months. As we all acknowledge, people who have had depression are sometimes discriminated against by employers. Such people are often hesitant to disclose previous episodes of depression when making job applications. Indeed, they may be deterred from applying at all.
The Joint Committee that considered the draft Bill, on which I served, recommended that people who experienced separate periods of depression totalling six months over a two-year period should be considered as meeting the long-term requirement. The Minister's colleague in the other place—Lord Carter, I believe—tabled an amendment to that effect, which the Government rejected. My noble Friend Lord Skelmersdale later tabled an amendment to protect any person with depression who had experienced during the previous five years an episode of depression lasting six months or so. Such a person would have received cover, but the Government opposed it. The other place considered it and passed the amendment.
My colleagues and I feel that the Government have somehow boxed themselves into a corner on this matter. As the Minister acknowledged when I intervened a few moments ago, there are some modifications—very welcome modifications in respect of cancer, HIV or multiple sclerosis—to the definition of disability in the clause. It would have been sensible for the Government to leave the provision in the Bill, not seek to remove it. MIND, an organisation intricately involved in working with people with depression, described the amendment as
"a step in the right direction".
The organisation also said:
"The Government's insistence on removing the amendment makes it look like it is ignoring the problem in the vain hope that it will go away. It sullies what is, in most other respects, an excellent piece of legislation."
We agree and we believe that disabled people will be puzzled by the Government's insistence on removing this provision from the Bill. I hope that they will take note of that intention in the next few weeks and beyond. If the Government press ahead and insist on removing the excellent amendment tabled by my noble Friend Lord Skelmersdale, we will divide the Committee on the issue.
The amendment tabled in the other place also received the support of my colleagues as we felt that the circumstances of people with depression should be acknowledged more clearly in the Bill. We accept that helpful progress has been made, as the Minister said, in the context of people with mental health conditions. It has been accepted that mental illness no longer needs to be clinically recognised if it is to form the basis of mental impairment, but in a sense, that is a different point. That broadens the scope of the conditions that can be brought within the framework, but depression is clinically well recognised and we are considering whether the Bill would, without the amendment, provide sufficient protection for people who suffer from depression. The hon. Member for North-East Hertfordshire (Mr. Heald) referred to the patterns that depression may take and there remain genuine concerns about whether people with depressive illness who suffer discrimination will be sufficiently protected by disability discrimination legislation.
The Minister made helpful reference in her introduction to the fact that further guidance may be necessary. If the Government have their way and the amendment proposed by the other place is removed, we would certainly want further discussions on the matter. That could be an alternative to having binding time limits set out in the Bill. Guidance could be sent out to the relevant public bodies, employers and so forth to inform them about the pattern of depressive illness that falls within the definition of a disability against which discrimination may occur.
That could provide a helpful way forward, but as we stand at the moment, there remains the potential for people with serious depressive illness to be discriminated against. They could find that when they turn to the law, they do not have sufficient protection. That is our motivation for seeking to maintain a provision directly in the Bill. If that falls, I hope that the Minister will be able to advise us of alternative routes to the same objective, perhaps through guidance. As the Minister said, different forms of mental illness have different patterns of recurrence. We do not wish to discriminate between them, but want to ensure that they are all properly covered.
I would like to make a few brief comments. I am sorry that I missed the opening of the debate, but I was delayed and proceedings moved a little quicker than I had expected. This will probably be my last opportunity to make a short contribution to a debate in this place.
I listened carefully to what the Minister said. Her most important comment was when she said that this was not the end of the road. Clearly, the Government's record— and that of the Labour party—on the whole range of disability issues over the years has been excellent.
I have no doubt that the Government will deliver on their proposals, and that they will make further progress. A few years ago, a member of my family suffered from depression. I know that it is a very difficult problem to deal with, because it is impossible to understand what a person suffering from depression is really thinking, or how much it gets on top of them. It is very easy to tell someone that they should snap out of it, but that serves no useful purpose. In fact, it has the opposite effect.
Depression presents a real problem for medical people, as do myalgic encephalomyelitis and chronic fatigue syndrome. We are making progress on those matters, but we still have a long way to go when it comes to understanding how sufferers are affected.
I want the Bill to achieve Royal Assent, and if the amendment is forced to a Division I shall back my hon. Friend the Minister. I believe her 100 per cent. when she said that this is not the end of the road and that further progress will be made in the years ahead, after the Labour Government have been re-elected.
Question put, That the amendment be made.
Question proposed, That the clause, as amended, stand part of the Bill.
I do not wish to delay the Committee for long this afternoon because we have a lot of other business to deal with, but I simply want to place on record the concerns that remain among Liberal Democrat Members about another aspect of clause 18: the ability to prevent, by regulation, certain types of cancer from falling within the Bill's scope.
I understand that the issue was debated at some length on Second Reading, but our concerns remain about how such things will be achieved, and in particular about how we can respond to the concerns about the possible exclusion of people who should fall within the Bill's scope that have been expressed by a lot of significant cancer charities and other bodies interested in caring for people with cancer. We are not able to do anything about that today, and it is a source of much regret among Liberal Democrat Members that we did not have the normal long Committee stage to achieve a more significant debate about an issue that is very important to people who suffer from cancer.
As I said in my opening remarks, we do not wish the Bill to fall—we want it to reach the statute book—but we would have preferred such legislation to be introduced a couple of years ago, when we might have had the time to debate such issues at greater length. I do not expect to make progress this afternoon, but I want to ensure that, as the Bill completes its stages, the outstanding concerns about how people with one type of cancer may be excluded remain on the platform for political debate. I hope that the Minister can offer at least an update on her thinking on the issue, although I realise that she would have said something about it on Second Reading and perhaps has nothing to add today, but it would be helpful if she could fill us in on where she has got to with her thinking, as she did with the previous amendment.
Question put and agreed to.
Clause 18, as amended, ordered to stand part of the Bill.
Clauses 1 to 17 and 19 ordered to stand part of the Bill.
Schedules 1 and 2 agreed to.
Clause 20 — Short Title, Interpretation, Commencement and Extent
I beg to move amendment No. 2, in page 47, line 23, leave out subsection (12).
This amendment will remove the privilege amendment that was made in another place. As hon. Members will be aware, the financial powers of the other place are restricted by the rights and privileges of the House and by the Parliament Acts. As the Bill originated in another place and contains financial provisions, a privilege amendment was added before its introduction in the House to ensure that the House's financial privilege was not infringed. The privilege amendment provided that nothing in the Bill should impose or vary any charge on the people or public funds. The amendment is technical, but it is necessary to remove the privilege amendment, thereby reinstating the financial provisions.
I had a number of carefully probing questions about the amendment, but the Minister has assured the Committee that it is purely technical, and I will respond in that spirit.
Amendment agreed to.
Clause 20, as amended, ordered to stand part of the Bill.
Bill reported, with amendments.
Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]
I beg to move, That the Bill be now read the Third time.
Elsewhere in the Palace of Westminster at this very moment, parliamentarians past and present from both Houses are celebrating the 30th anniversary of the implementation of the Chronically Sick and Disabled Persons Act 1970. It was an achievement of Lord Morris of Manchester, who was the first Minister for disabled people, and the first legislative recognition in Britain that disabled people need adjustments to have equality. The passage of this Bill, somewhat more expeditiously than we had all originally expected and perhaps than many of us would have liked, builds on that insight of Lord Morris and is a real and lasting achievement for disabled people in Britain.
The Bill strengthens, deepens and widens the coverage of our anti-discrimination legislation. It extends the law to all functions of public authorities and places a duty on them to promote equality of opportunity for disabled people. It plugs remaining gaps in our existing law by including councillors, political parties and other larger private clubs within its provisions, and it completes the proper coverage of transport by including it under part 3 and setting end dates for existing public transport vehicles to be fully accessible. New vehicles already have to be.
I would like to thank all those who have improved the Bill—in particular, the Disability Rights Commission and organisations of disabled people—by responding to consultations and giving evidence to the Joint Committee. I would like to thank parliamentarians in both Houses who have contributed extensively. Last but not least, I would like to thank very warmly my officials who have worked well and tirelessly for a number of years to get this Bill right.
The House is doing good tonight. This is a Bill of which we can all be proud. It is a stepping stone towards the Labour Members' goal of giving disabled people full opportunities in life to live, work and contribute to our society like anyone else, and to have equal respect and equality. It is also the fulfilment of a manifesto commitment. I commend the Bill to the House.
We have said before that we think it a pity that the House has not had an opportunity to have full Committee and Report stages, which would have enabled the Minister to respond, for example, to the points that were raised by the hon. Member for Sheffield, Hallam (Mr. Allan). However, it is an extremely welcome Bill that has had strong all-party support. It builds on our Disability Discrimination Act 1995, and it is part of a journey that Lord Morris was one of the first parliamentarians to set in progress. The Minister was right to refer to him.
It is a much improved Bill as a result of consideration in the other place, and the Disability Rights Commission has correctly paid tribute to my party and other political parties for helping to bring this happy conclusion about. I pay tribute to my colleagues Lord Skelmersdale and Lord Higgins for improving the Bill. If we had had full Committee and Report stages, I am sure that I would at this point have been able to thank the Minister for guiding us through those proceedings skilfully and with good humour. I do not have a chance to do that, but her role on the Bill should not go without a passing comment. She has worked very hard on it and gave strong evidence to the Joint Committee.
This is an extremely important Bill. It will make a real difference to disabled people, and it passes another milestone in the continuing journey to a society of more equal opportunities and social justice.
I have arrived at the Bill late in the day because of the unavoidable absence of my hon. Friend the Member for Chesterfield (Paul Holmes) who, like many other Members, is elsewhere because of events that appear to be starting in constituencies. I place on record my thanks to him for the work that he has put into the Bill, and his thanks to the Minister, the hon. Member for Wycombe (Mr. Goodman) and everyone else who has worked on the Bill.
The Bill has rightly enjoyed strong cross-party support. It is instructive that the original Bill was introduced in 1995 under a previous Administration, and 10 years later we are amending it with a Bill from an Administration of a different party. Such issues are so important to many of our constituents, irrespective of party, that they rightly achieve cross-party consensus. They perhaps benefit more from consensus than other legislation that is introduced consensually, but does not always have the same positive effect.
We hope that the Bill will become law. As the hon. Member for Wycombe said, it will make a significant difference to many people throughout the country, especially by addressing transport and including people with conditions such as HIV, cancer and multiple sclerosis in the definition of those covered by disability discrimination legislation. We wish it every success on the statute book.
Question put and agreed to.
Bill accordingly read the Third time, and passed, with amendments.
Public Services Ombudsman (Wales) Bill [Lords]
Considered in Committee.
[Sir Michael Lord in the Chair]
Clauses 1 to 45 ordered to stand part of the Bill.
Clause 46 — Short Title
Amendment proposed: No. 2, in page 26, line 33, leave out subsection (2).—[Mr. Touhig.]
I am surprised that there is a Government amendment to the Bill, although I suspect that it is very technical.
I am extremely grateful to the Minister for nodding vigorously because I had suspected that we were going to be considering only one amendment today.
Amendment agreed to.
Clause 46, as amended, ordered to stand part of the Bill.
Schedule 1 — Public Services Ombudsman for Wales: Appointment etc.
I beg to move amendment No. 1, in page 27, line 18, leave out 'seven years' and insert
'five years, renewable for a further five years'.
There was only one aspect of the Bill that I thought required amendment. To achieve the best for the people of Wales, we still think that the most appropriate length of term for the ombudsman is a renewable five-year term. The length of the ombudsman's term of office is of the utmost importance. A concession was made in the other place to reduce the original suggestion of a 10-year appointment to one of seven years, which was clearly preferable, although far from ideal.
A seven-year term for a single post certainly has advantages over one of 10 years, but we want to keep the post invigorated and keep incentive alive, while ensuring that proper performance is key at all times. The greatest merit would be to have a five-year term that was renewable for a further five years. Of course we do not want the term to be too short because the ombudsman must be able to build up experience and expertise and have the time to bring about real change. However, there must be accountability and such qualities must be able to be refreshed as the priorities of the job change over time.
Might there not be more sense in having a seven-year appointment initially because the ombudsman in Wales will have a new role and thus might need a little extra time? However, perhaps the appointment could be made for five years, and renewed for a further five, when the office is well bedded down. Perhaps the hon. Gentleman will think about what he wants to do with his amendment on that basis.
The Government will have heard the hon. Gentleman's sensible suggestion. However, if we pass the Bill, I do not think that we will be able to amend it at a later date to change the length of the term. I suspect that that might become a matter for the Assembly. The important thing today is to clarify exactly why the Welsh Affairs Committee suggested a "five plus five" solution.
The point about an initial seven-year period is valid and helpful. A seven-year term is still too long, but such guaranteed longevity does not provide the ombudsman with the best circumstances in which to operate in the long term. The objections that a five-year term is too short, that it would not attract top-quality candidates and that it could affect the ombudsman's decisions towards the end of his term are particularly cynical. I hope that an ombudsman who is likely to be influenced by the prospect of not having his term renewed will not be appointed to begin with.
If the post does not attract high-quality candidates, what does that say about the people who seek election to this place? Hon. Members are appointed for up to five years. Invariably, some of us are appointed for less time. I can see no reason why five years should not be the time period. Nor do I understand why the difference between a five-year term—in all likelihood to be renewed for a further five years—would make a great deal of difference to the calibre of candidates. That the term of office should be long enough to attract the "right kind of person" to the post, as suggested in the other place, raises the question: what does the "right kind of person" refer to? Surely those deterred by the fact that they may serve only a five-year term instead of seven years might not be the right kind of person in the first place.
The best candidates for the position of ombudsman should be dedicated to the job of being an ombudsman regardless of the length of tenure of office. If he or she is of the highest calibre, in practice they will serve a term of 10 years anyway, which is even better than the seven years. The arguments against that are not sufficient to explain the Government's inflexibility. It is simply a poor argument to suggest that good-quality candidates would be deterred from applying for the office if the term is only five years long.
New Zealand set the precedent for ombudsmen, establishing the first ombudsman in the English-speaking world more than 40 years ago in 1962. Its system is similar to ours and the appointments are made for five-year terms, with the possibility of reappointment. The situation is the same in other Commonwealth countries, and the ombudsman Act in Alberta, Canada states:
"a person appointed as Ombudsman holds office for 5 years . . . until the person is reappointed, or the person's successor is appointed".
Other ombudsman appointments across the UK show a similar pattern. The chief inspector of schools is appointed for five years. No parliamentary and health service ombudsman has served for longer than five years. All appointments to the Independent Police Complaints Commission are for five years, with the possibility of a five-year extension. It does not seem that the length of term of office for such posts has deterred high calibre applicants. Indeed, I wonder why so many other ombudsman schemes would use that pattern if that were the case.
The Scottish public service ombudsman—perhaps the closest model to that proposed for Wales—is an appointment of five years with the opportunity of reappointment. It is clear that the working of the arrangement has been successful as part of the clearly beneficial establishment of a single ombudsman service for Scotland. It achieves what is effectively to be a 10-year term if all goes well, as Mr. Eric Drake, the Scottish deputy public service ombudsman, said in evidence to the Welsh Affairs Committee on 17 January.
Under our proposal, those who consider a 10-year term most appropriate would still achieve that objective, yet the ombudsman would also be accountable at the halfway stage. To achieve the original aim of a 10-year term, while also making the ombudsman accountable and the role reinvigorated, an appointment for five years, with a five-year renewable option, is clearly best. That is by far the most appropriate way to proceed in achieving a balance between an accountable and flexible term of office and the need for stability.
The Welsh Affairs Committee agreed with that, stating that a reduction in the length of the ombudsman's tenure, from 10 years to seven, would not improve the Bill, and it agreed with the renewable five-year appointment. Page 9 of the Select Committee report states:
"we recommend it reconsider appointments on a five year basis with the possibility of reappointment for a further five years."
A recently published report on the Bill by the National Assembly's Local Government and Public Services Committee similarly recommends that
"the bill be amended to make the Welsh Ombudsman's term of office five years with the ability to reappoint for a further five years."
The opinions of those who have debated the issue in the other place, in the Select Committee and in the Assembly are clear. Furthermore, it was clear in our debate on Monday that there was widespread support for a renewable five-year term. As the Chairman of the Welsh Affairs Committee, the hon. Member for Clwyd, South (Mr. Jones), said:
"I believe that the five-year plus five-year appointment plan, which is used for the Scottish ombudsman and thus has the benefit of consistency, represents a better balance between the need for stability in post and the need to reinvigorate the office periodically. It also offers opponents of a 10-year appointment a statutory moment for reflection."
The hon. Member for Brecon and Radnorshire (Mr. Williams) commented:
"I, like other hon. Members, am disappointed that the Government cannot accept that the term of appointment for the ombudsman should be five years, with the possibility of a five-year reappointment . . . Seven years is a halfway time period, but the Bill does not provide the opportunity for reappointment, so that provision has all the faults and none of the virtues."—[Official Report, 4 April 2005; Vol. 432, c. 1146–47.]
I think that the hon. Gentleman was absolutely right.
The Government must accept that a renewable five-year-term appointment is greatly preferable to the proposed seven-year tenure. Although it is clear that there is general consensus in favour of the Bill becoming an Act, were it amended to provide for a renewable five-year term for the ombudsman, it would be even better.
I support the amendment and the arguments of the hon. Member for Leominster (Mr. Wiggin). I draw the Committee's attention to the fact that the evidence presented to the Welsh Affairs Committee was, on the whole, in favour of a 10-year term on the ground that that would result in a stable appointment that would be beyond the reach of political or other external influence and would be truly independent. The Committee weighed up that evidence and decided that it wanted a more flexible approach; it recommended a term of five years, which has been proposed again today in the form of the amendment.
I echo the words of my hon. Friend the Member for Brecon and Radnorshire (Mr. Williams), which the Conservative spokesman quoted a minute or two ago. A seven-year term is neither one thing nor the other: it would provide neither the long-term stability of a 10-year appointment nor the flexibility of a five-year appointment. To pick up the point made by the hon. Member for Bridgend (Mr. Griffiths) in his intervention, when making an appointment for the first time, one might not want someone who will be in the post for a very long time, because if one has made a mistake or the individual in question finds that the nature of the job is different from the one that he or she undertook, one may well want to revisit the decision in five years rather than wait for seven years, which is a long time to carry on with a mistaken appointment.
It seems to the Liberal Democrats that the right approach would be to follow the recommendation of the Welsh Affairs Committee and adopt the five-year appointment with the possibility of renewal for a further term. The proposal in the Bill as it stands is neither one thing nor the other. I hope that the Minister will try to explain the potential benefits of having a seven-year term, bearing in mind that the evidence received was that a 10-year term would have some benefits, as would a five-year term, whereas a seven-year term offers the benefits of neither. Seven years is an arithmetically neat compromise, but it would achieve the objectives of neither of the other two proposed terms of appointment. I hope that the Minister will think again and decide, by accepting the amendment, to accept the proposals made by the Welsh Affairs Committee and by my noble Friends in the other place.
The amendment tabled by the hon. Member for Leominster (Mr. Wiggin) would provide for a fixed-term appointment of five years that could be renewed for a further five years. I am sure that the hon. Gentleman is aware that the tenure of the ombudsman's appointment was the subject of extensive debate in the other place. As I said on Second Reading, our priority is to ensure that the ombudsman is, and is seen to be, independent of government and to protect the office from any perception that that is not the case. At the same time, the Government believe that it is important that there should be regular opportunities to inject new blood to reinvigorate the office. That is not an easy balance to strike, as we are mindful of the need to attract candidates of the highest calibre when vacancies arise.
We are not suggesting that an ombudsman who is subject to reappointment would be swayed by the Executive in the performance of their functions, but we are firmly of the view that a renewable appointment creates the risk of a perceived lack of independence for the office. If the amendment were accepted, decisions about the renewal of the appointment would clearly be a matter on which the Secretary of State would advise the Queen after consultation with the Assembly. However, the Assembly is one of the bodies within the ombudsman's jurisdiction, which is not quite right if we are to attach, as surely we must, considerable importance to the independence of his office.
It is not only the Government who are concerned about that. We consulted widely on the question of tenure of office, and the responses that we received were mixed. Some people argued for a single fixed-term appointment, some for a renewable appointment or even an appointment up to the age of 65. However, all the responses impressed on us an overwhelming concern that the office should retain its independence and should not be seen to be influenced by the Executive. A single fixed-term appointment of seven years delivers that objective. The Government believed that their original proposal for a non-renewable fixed-term appointment of 10 years delivered our objective, but on reflection we conceded that seven years more accurately struck the balance that we sought.
It may assist colleagues if I remind them of what happened in the other place and what was said by Opposition spokespersons on Wales. The Government amendment reducing the ombudsman's term of appointment from 10 to seven years followed detailed and extensive debate. On Second Reading, the 10-year appointment was a cause of concern to their Lordships, who felt that it was too long. In Grand Committee on 25 January, Lord Roberts tabled an amendment on behalf of the Conservative Opposition to introduce a five-year term renewable for five years. Baroness Gale with, the hon. Member for Hazel Grove (Mr. Stunell) may be interested to learn, the support of the Liberal Democrat Lord Livsey and others, tabled an amendment to reduce the term of appointment to seven years. It is sometimes important that we speak with the same voice, even though we are in different Houses.
The Government agreed to table an amendment reducing the period of appointment to seven years on Report. That was welcomed by some peers, including Lord Roberts, who said:
"I am certainly not one to quibble with a compromise. I am very happy to accept the seven-year period."—[Official Report, House of Lords, 25 January 2005; Vol. 668, c. GC 372.]
Quite properly, Lord Roberts returned to the issue on Report on 10 February, as he still thought that a five-year term was the best option. However, the Government amendment, which reduced the term of appointment to seven years, received support from Lord Livsey among others. After listening to the debate, Lord Roberts did not in fact move his amendment for a five-year renewable term.
During the debate, Lord Roberts acknowledged that a seven-year period was an improvement on the original 10-year period. The hon. Member for Leominster said that an ombudsman who could be influenced by the possibility of the renewal should not be appointed in the first place. I entirely agree, but I am trying to make the point that there could be a perception of influence, so it is important that we tackle that. My hon. Friend the Member for Bridgend (Mr. Griffiths) asked about varying the term of appointment at a later stage, but there is no provision in the Bill to allow that, and we would need another piece of primary legislation to do so.
If, at a later stage, the House of Commons gave the Welsh Assembly law-making powers, surely it could amend the Bill on the Floor of the Assembly at an appropriate time?
I shall not be tempted down that road. I have no crystal ball and I would not like to speculate whether there will be any changes to the government of Wales legislation at some time in the future. What my hon. Friend says would be accurate, but I would not wish to be tempted at this stage.
Much has been said in the House and in the other place about the virtue of the public service ombudsman in Scotland being a five-year appointment, with an option of a further five years. But Scotland has not yet reached the end of its first five-year term, so we do not know whether it is a better model than the one that we are proposing.
On Second Reading, the hon. Member for Leominster referred to the Welsh Affairs Committee report and its response to the Bill. The Committee recommended:
"That the Government reconsider its decision to reduce the length of tenure of the Ombudsman in the light of our evidence",
but added:
"Should the Government believe that a balance needed to be made between security of tenure and the opportunity to reinvigorate the office,"
the Committee recommended that the Government
"reconsider appointments on a five year basis with the possibility of reappointment for a further five years."
I formally responded to that report earlier today, setting out the Government's position.
In view of the comments made by the hon. Members for Leominster and for Hazel Grove, I should draw attention to the fact that when taking evidence the Committee did not, to my knowledge, directly pose the question to all witnesses as to whether the appointment should be for a single fixed term or a fixed term renewable. In most instances witnesses were asked whether they thought a fixed term of 10 years was appropriate. If asked again, those same witnesses may be content with a fixed-term appointment of seven years. We simply do not know.
Finally, it is not entirely clear whether the amendment moved by the hon. Member for Leominster is intended to have the effect that, if renewed, the ombudsman's second term would flow straight after his first term. I think that is probably the intention, but if it is not, the amendment would have an unintended consequence. Paragraph 4(4) of schedule 1 provides that any person who has been appointed as an acting ombudsman is eligible for appointment as the ombudsman, unless he has already held office as the ombudsman. That was drafted on the basis that the ombudsman's appointment would be a single fixed-term appointment.
If the amendment does not have the effect that I described, it would mean that a person who had been the ombudsman for five years and who had stepped down and taken up the post of acting ombudsman could not seek a renewal of appointment as the ombudsman for another five years because of paragraph 4(4) of schedule 1.
I hope that, after that brief explanation, the hon. Gentleman feels reassured that we are trying to strike a difficult balance. I believe we have made the right decision. Time will tell. I hope that, in the light of my comments, he will feel able to withdraw his amendment.
I am grateful for the opportunity to respond.
I notice that the hon. Member for Ogmore (Huw Irranca-Davies) is in his place. On Monday, when I was reading Hansard, it appeared that I had said that I had visited his constituency, which I had not. I take the opportunity to set the record straight. I referred to "hon. Members", and the record identified him. That is where the misunderstanding arose, and this is my opportunity to put it right.
I am grateful to the Minister for his clear explanation of the thinking behind the seven-year term. Particularly important is the point that he made about perception, because of the influence of the Assembly and the influence of the ombudsman over the Assembly. I found the Minister's comments helpful.
I pay tribute to my noble Friend Lord Roberts of Conwy, who has been tremendous in his attentiveness and his assiduous appreciation and critique of the Bill. He rightly said that he would not quibble over seven years. Having knocked three years off the period of the appointment, he felt that he had done extremely well, and I am inclined to agree with him. He is a wise man. He had correctly identified the correct term and I should follow his example and not quibble. What helps me further is the point that the Minister made about drafting.
I am not a great draftsman and it is extremely difficult to pen a quick amendment that is perfect in every way. I am sure that the real experts, wherever they may be, are capable of identifying drafting errors, but the point about the ombudsman being able to be reappointed despite his term of office not running concurrently would be singularly unhelpful and undo the purpose of the five-plus-five amendment, as the Minister rightly said. Having made those points and having paid tribute my noble Friend Lord Roberts, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Schedules 2 to 7 agreed to.
Bill reported, with an amendment.
Order for Third Reading read.
I beg to move, That the Bill be now read the Third time.
At the outset, I pay tribute to Members in the other place and in this place, colleagues in the Assembly and officials who have worked hard in a very short time to bring forward this worthwhile Bill. Our consideration of the matter at an earlier stage means that it has widespread support across the House.
The Bill will bring together the offices of the commission for local administration in Wales, the health service commissioner for Wales, the Welsh Administration ombudsman and, when established later this year, the social housing ombudsman for Wales into a unified jurisdiction led by one person, the public services ombudsman for Wales. It will establish a public services ombudsman for Wales for the first time in a unified situation, providing a modern, flexible and accessible service for members of the public who wish to complain about most public service providers operating in relation to Wales.
The Bill contains a number of new provisions. It gives the ombudsman important powers of investigation in his own right, but it also allows him to seek to resolve disputes between complainants and the relevant public bodies without the need for a formal investigation. It provides for him to issue guidance to all bodies within his jurisdiction on the requirements of good administrative practice—a matter on which we touched on Second Reading—a power that only the local government ombudsman had previously. It provides powers to permit him to work jointly with other ombudsmen, including the parliamentary commissioner and the health service commissioner for England, for the investigation of cross-border complaints.
Finally, the Bill makes express provision to ensure that, in the area of health and social care, the ombudsman can look synoptically at complaints about the consequences of decisions made by social care professionals while working alongside clinical colleagues.
This is an immensely worthwhile Bill, which will give Wales a first-class ombudsman service for the 2lst century. I am very pleased that it has had widespread support in the House and in the other place, and with those few remarks I commend it to the House.
Not for the first time this evening, I agree with the Minister. I was concerned that should my amendment have been carried, the Bill would not have made it on to the statute book. As the Minister says, this is a worthwhile Bill, and I, too, pay tribute to the Committee in the Assembly as well to my colleagues and my noble Friends in the other place.
As I stated on Second Reading on Monday, this is a helpful Bill with clear potential to improve the standard of public services for the people of Wales. I have previously raised my concerns over the need for us to be certain that Welsh taxpayers' hard-earned money is spent wisely in the implementation of the changes that the Bill outlines, and through my amendment I have also touched on areas where the Bill could have been improved. However, the Bill is helpful in achieving the best for the people of Wales, and while it might have been more constructive had the term of office been a little shorter, it is still acceptable.
We have also seen considerable improvements as a result of the amendments tabled by my Conservative colleagues in the other place. My noble Friend Lord Roberts of Conwy achieved the inclusion of the provision ensuring that the Secretary of State must consult the Assembly before recommending a person for appointment as the ombudsman. That will assist in securing a more accountable and impartial appointment. I am also thankful that the ombudsman will have a level of political independence because of the fact that he can be removed only on grounds of ill health or misbehaviour, and that he can in the last resort seek the view of the High Court. That gives him the legal power that will remove any possibility of his decisions being ignored by the authorities involved.
In seeking to achieve the very best for the people of Wales, we are happy that the Bill will make it on to the statute book. It is a helpful Bill and I am glad that I have been able to play my very small part, along with all those whom I have mentioned.
I add the support of the Liberal Democrats, who welcome the Bill. When we review the Bill's purpose, we have to say that it is an important tidying-up provision, making it much easier for residents in Wales to understand how they might make a complaint. All of us who serve in this House know that the general public are well aware of the ombudsman service, but are often not well aware of which particular ombudsman they should approach to deal with specific complaints. It is good to see a public service ombudsman Bill before the House, and I hope that it will now complete its passage quickly.
The Bill has been improved in the debates at this end of the building and at the other end. I welcome the fact that the Welsh Assembly will have a role, through consultation, in the appointment of the ombudsman, and I note that it will have the capacity to amend the remit of the ombudsman service, with the social housing provision coming quite soon.
I regret that we have not got exactly what we wanted on length of tenure, but there is no doubt that the Bill as a whole is worth while, deserves the support of the House and will benefit the residents of Wales.
Question put and agreed to.
Bill accordingly read the Third time, and passed, with an amendment.
Commissioners for Revenue and Customs Bill
Lords amendments considered.
Clause 13 — Exercise of Commissioners' Functions by Officers
Lords amendment: No. 1.
Motion made, and Question proposed, That this House agrees with the Lords in the said amendment.—[John Healey.]
With this it will be convenient to deal with Lords amendments Nos. 2 to 9.
I am disappointed that the Minister did not feel that he had anything to say. Some interesting concessions have been made in the other place, where some valuable work has been done by the Earl of Northesk and Baroness Noakes. I am glad that the Government decided not to ignore that, even if they ignored us when we tried to make pretty much the same points in Committee.
It is important to put the amendments into context. Although we did not oppose the Bill on Second Reading, we had a number of major concerns about it. Merging the departments involved is a major change, and we are not convinced that it was given enough consideration by the Government or that its implementation was properly thought through. We are also worried that the measure might prejudice taxpayer confidentiality. Taken together, all those things might put at risk some of the yield.
The Lords amendments go a small way—it is only a very small way—towards assuaging some of those concerns. Lords amendment No. 1 applies to clause 13. It limits the scope for disclosure of information by a Revenue officer. The duty of confidentiality is, of course, extremely important, and it helps to protect the yield. It is why a number of us fought very hard to retain the oath of confidentiality, which the Government had intended to abolish and on which they relented at the last moment in Committee. The amendment provides that Parliament will ensure that commissioners have a measure of control over disclosure, except in very limited circumstances. We will not oppose it, although we would have liked something stronger.
Anybody forming a view on the matter must examine what Lord Goldsmith said about it in another place, where he set out the circumstances in which an officer might feel the need to give specific instructions to disclose information. If that power were to be abused, MPs would hear about it, in which case I hope that they would make a great noise and that we would return to the issue.
We have had long discussions about taxpayer confidentiality, and the provisions in the Bill contain some useful protections in that regard. We share the desire of the hon. Member for Chichester (Mr. Tyrie) and other Conservative Members to see the oath retained.
I have asked Inland Revenue employees about the oath, which not only buttresses taxpayer confidentiality, but strengthens the position of Inland Revenue employees should someone in a superior position ever seek for them to compromise their integrity on taxpayer confidentiality. As the hon. Member for Chichester has said, it is important that we do nothing to erode taxpayer confidence, otherwise the tax yield is surely at risk.
We welcome the limits on disclosure and noted what the Attorney-General said in the House of Lords on 5 April 2005. The case of Pepper v. Hart is instructive, and hon. Members and tax professionals are only too well aware of the protections that the Attorney-General put on the record.
We are happy to welcome the provision, and we hope that the Bill will be a success. We also hope that the Inland Revenue culture will prevail and that Customs, which has been subject to certain criticisms, will become more receptive to taxpayers' interests, fairness and the rule of law, which should be the culture that guides Revenue and Customs once the merger comes into effect.
The hon. Members for Chichester (Mr. Tyrie) and for Torridge and West Devon (Mr. Burnett) have carefully considered aspects of the duty of confidentiality throughout the passage of the Bill.
The duty of confidentiality is a weighty matter for any Revenue department and the officers who work within it. As they know, my right hon. Friend the Paymaster General and I, as well as my right hon. Friend the Attorney-General, have emphasised and re-emphasised that throughout the passage of the Bill. I welcome the comments that both hon. Gentlemen have made on the amendments made in another place. That is in keeping with what has been a full and productive debate on the Bill at every stage in the other place and in this House.
The changes with which the Bill returns to this House from another place amend the provision for disclosure of information in the public interest. They have been made because my right hon. Friend the Attorney-General listened to the arguments in the other place and compiled a package that proved acceptable to all parties there. These amendments place the details of when public interest disclosures will be made in the Bill instead of in regulations in the first instance. They also tighten the circumstances in which commissioners could delegate instructions to make public interest disclosures.
Those changes, together with commitments on matters such as information sharing and governance and changes made by my right hon. Friend the Paymaster General to include the introduction of the declaration to acknowledge the duty of taxpayer confidentiality, make this truly a Bill that has all-party support. The establishment of the new integrated department is a valuable step forward in enhancing revenue and customs administration in this country. Over time, it will produce real benefits for taxpayers and other customers and will improve the effectiveness of the department.
The Minister is talking about the projected effectiveness of the merged department, although it will be somewhat slimmer than the two existing departments. Is he confident that two or three years down the line that new, merged and—as he would say—more effective department will have done more to bridge the tax and revenue gap of around £35 billion that hon. Members on both sides of this Chamber, and indeed people across the whole finance sector, would acknowledge exists? Should not we be doing more on that front, and will the new department be in a better position to do so?
Over the past two or three years, both the existing departments—the Inland Revenue and Customs and Excise—have indeed taken steps to close the revenue gaps that my hon. Friend mentions, and as Customs Minister I have been heavily involved in that. The new integrated department will take further steps to close the gaps that he and I wish to see closed, and in so doing protect revenue that should be coming into the public purse but currently is not.
The Bill creates an independent Revenue and Customs prosecution office. That is an important step that is strongly supported by the hon. Member for Torridge and West Devon in particular, and has been widely welcomed by the legal profession.
When the amendments were tabled by my right hon. Friend the Attorney-General in the other place, they were welcomed by Baroness Noakes and Lord Newby, who speak for the Conservatives and the Liberals. On that basis I commend them to the House.
I want to add only one or two comments. I welcome the Minister's opening remarks—
Order. The hon. Gentleman is allowed to speak only once on this particular amendment: it is not his to introduce.
Lords amendment agreed to.
With the House's agreement I will put Lords amendments Nos. 2 to 9 together. The Question is that this House agrees with the Lords in their amendments Nos. 2 to 9.
Does the hon. Gentleman want to speak?
I asked if the House wanted to take the amendments together. Does the hon. Gentleman want to speak on one of them?
Yes, amendment No. 2.
The Question is that this House agrees with the Lords in their amendment No. 2.
Anybody who looks at these amendments will see that it is very difficult to speak to amendment No. 2 without examining amendments Nos. 3 to 9 at the same time. Frankly, they look to me as if they were originally intended to be grouped together. With your permission, Mr. Deputy Speaker, I will not rise to speak to any of the subsequent amendments—
Order. I trust that the hon. Gentleman's comments will be brief. I should explain that we have already dealt with the entire group of amendments. When we first dealt with them, we debated them as Lords amendment No. 1 plus Lords amendments Nos. 2 to 9. So we have debated them, and having completed the debate we should now be putting them formally only. As the hon. Gentleman has started, I shall let him complete his remarks.
I am very grateful to you, Mr. Deputy Speaker, for allowing me to make pertinent remarks on the remaining clauses. Perhaps I can also get in some more general remarks that might reasonably be made in response to the Minister's points.
The most important element of the remaining clauses was the almost untrammelled power given to the Treasury to make regulations under the original Bill. Their lordships have rightly argued that such power should be circumscribed more tightly. The Conservatives in the Lords proposed that any change to the power of disclosure be subject to what is known as the super-affirmative resolution procedure, which was originally laid down for use in respect of the Identity Cards Bill. Under that procedure, regulations can be amended—in other words, more tightly drawn—which is what is desired in this case.
Of course, that proposal has been around for a long time—the royal commission on House of Lords reform came up with it some time ago—but the Government, having flirted with it, decided that they did not like it. They have rejected that approach in this Bill and have included something else instead, and that is what we are debating now and have to examine. They have established in a reasonably detailed way the conditions that have to be satisfied in order for disclosure to be permissible. Those who are following this debate carefully can look at proposed new subsection (8), where they will find a list of those conditions. As I said a moment ago, they cannot be considered independently of the surrounding clauses.
Having listened to the Minister and, more particularly, having read the Hansard account of the Lords debate on this issue, I worry about the differences and misunderstandings that could develop in the merger of these two cultures. Much of the debate in the other place was at cross purposes. Some peers focused all their arguments on trying to protect taxpayer confidentiality, while others tried to ensure that powers were retained to enable the catching of criminals at the border. It was like two cultures passing in the night: one worry was an Inland Revenue worry, and the other was primarily a Customs worry. In addition to the threat to revenue that we briefly alluded to, a major concern remains about the risk associated with merging these cultures. These amendments and our discussion of them reflect that risk. I note that Lord Goldsmith conceded some ground on this very point in the Lords. The amendments are a step forward, but only a very modest one.
A moment ago, the Minister welcomed our comments on confidentiality. That was a great change in tone compared with the beginning of the debate on this Bill, when we had to struggle to convince the Government to keep the oath. I am very pleased that there has been a change of tune in that regard.
Order. The hon. Member seems to be making a Second Reading debate speech. There are specific Lords amendments before us and I have already given him some leeway. He should have dealt with these matters in the initial debate. He must now deal precisely with Lords amendments Nos. 1 to 9—and he must do so briefly.
I shall end by making one more point, Mr. Deputy Speaker. I am sure that you will permit me that. In response to an intervention by the hon. Member for North-West Leicestershire (David Taylor) a few moments ago, the Minister made a number of assertions about the increased efficiency that will result from the Bill.
I take my hon. Friend's remarks seriously. The merged Departments have picked the name for their building as No. 1 Parliament street, but this House has had a No. 1 Parliament street address on the other side all the—
Order. That intervention and any response to it would be quite out of order. I hope that the hon. Member will bring his remarks to a close.
I obey your ruling in every particular, Mr. Deputy Speaker. I end by referring to the intervention of the hon. Member for North-West Leicestershire, who spoke of the need to close the tax gap. The Economic Secretary responded, but the problem is that he adduced no evidence that there will be any reduction of that gap and provided no evidence whatever that savings might come from the merger. There may be costs, which is why the Conservatives have been so concerned to put down markers to register our concern about the Bill.
Question put and agreed to.
Lords amendments Nos. 2 to 9 agreed to.
Railways Bill
Under the Order of the House made earlier today, any message from the Lords in respect of any Bill may be considered forthwith, without Question put. I have received a message from the Lords. The Lords agree to the Railways Bill with amendments, to which they desire the agreement of the House.
Lords amendments accordingly considered.
Clause 13 — Railway Functions of Passenger Transport Executives
Lords amendment: No. 1.
I beg to move, That this House disagrees with the Lords in the said amendment.
With this we may discuss Lords amendment No. 2 with Government motion to disagree, Lords amendment No. 3 with Government motion to disagree, Lords amendment No. 4 with Government motion to disagree, Lords amendment No. 5 with Government motion to disagree, Lords amendment No. 6 with Government motion to disagree and Lords amendment No. 7 with Government motion to disagree.
I am sure that the House authorities are entirely in order in putting the provisions together in this way, but it makes it sound as if there was a good deal of disagreement with the other place. I want to put on record the fact that I commend the other place for the way in which it has scrutinised and ultimately dispatched the Bill—and with a good deal of agreement.
There is but one real issue on which we disagree in this set of amendments and it is about passenger transport executives and their ability to have co-signatory status. The existence of seven Lords amendments and seven disagreements with them does not mean that there was untold disruption or disagreement with our noble Friends in the other place.
I have said before and it has been explained clearly in the other place that the Government cannot accept these amendments. As the noble Lord Davies of Oldham said earlier today, they raise a matter of principle about which the Government are clear. There is a new role for the PTEs and it is required because the current system was built for a different time and does not fit in with the new framework set out in the White Paper.
Throughout our deliberations, all sides have made it clear that the context for the debate is the rail White Paper, not all of which has necessarily been picked up in the Bill. Central to the new structure set out in that document is the role of the Secretary of State in setting the strategic direction and the amount of national funding that will be invested in the railways. The system that the PTEs are seeking to retain is totally inconsistent with that principle and more reminiscent of another time.
The Government have listened carefully to the concerns raised here and in another place about PTEs. As I have said, we have moved considerably from our original position. In the original citation in the rail White Paper concerning this aspect of PTE functions, we were minded to remove all their ability to have co-signatory status. We have moved away from that and the PTEs, with the agreement of the Secretary of State, can have a role to play.
We considered the proposal made in another place for a 60-day window for PTEs to delay before the signing of a franchise. We are unconvinced that that would deliver anything other than costly delay and an opportunity for PTEs to seek to reopen negotiations at the eleventh hour. Potentially, each month's delay in completing a franchising process could cost hundreds of thousands of pounds of taxpayers' money. Clearly, that would be inconsistent with our strategy to deliver efficiency and value for money in the rail industry.
I want to make it very clear, to this House and to the other place, that we feel that we cannot compromise on co-signing or co-specification. Basically, the amendment would allow PTEs to dictate to the Secretary of State—who is responsible for rail across the whole country—what services should be provided in their areas. The right to co-sign puts the PTEs on an equal legal footing with the Secretary of State, despite the fact that the Secretary of State provides the overwhelming majority of funding, with PTEs merely contributing at the margins. Such a system would not make sense: it would merely encourage confrontation and retain the adversarial approach that has been prevalent since co-signatory status was introduced in 1993.
I wish to reassure the House that the provisions are not about removing the important influence and input that PTEs have into the rail services in their areas. That is why the Bill, as introduced, means that the Secretary of State will be under a duty to consult with the PTEs before issuing an invitation to tender for any franchise that includes services to, from or within a PTE's area. This will be a full and detailed consultation, giving the PTEs a clear opportunity to set out the needs and ambitions of their areas.
Once the baseline specification for a franchise, including services in PTE areas, has been set, the PTEs will also have the right to amend the services in their areas—that is, buying additional services, or reducing services and retaining the savings. That will give them much greater flexibility to make choices about the balance of transport in their areas than currently prevails and allow them to make rational decisions based on financial accountability.
Equally, our proposals will not change the mechanism by which PTEs can secure certain rights, such as rights to information, or the right to insist on the train company's involvement in concessionary fares or integrated ticketing. Such rights and responsibilities will continue to be included in franchise agreements as long as the Government are confident that they are necessary and add value. That will remain the case whether or not PTEs are co-signatories.
Nor will the Government's approach reduce the PTEs' ability to maintain their constructive and beneficial relationships with the train operating companies. Centro, the West Midlands PTE, did not co-sign the Chiltern franchise, but it has managed to build an excellent, productive relationship with that TOC. The Government's approach does not attempt to limit local decision making as has been suggested but merely places that in its proper context.
Does the Minister accept that the amendment's provisions in respect of bus substitution services also affect clause 29, which deals with station closures?
I accept the inference that there is a relation between the two, but I struggle to see any connection with the Lords amendment or the Government's motion to disagree. However, I understand the hon. Gentleman's point, and suggest that he raise it again at another point in the debate.
The new arrangements for PTEs will create a more efficient, more accountable and less adversarial framework for delivering rail services in key metropolitan areas. I am by common consent a man of consensus who seeks compromise when it is available. To graft on to the post-Railways Bill rail industry a power that prevailed from 1993 only in the immediate wake of privatisation does not make sense and I need to say that as clearly as possible.
We are seeking modernisation of the relationship between the powers, local decision making and so on of PTEs and the train operating companies and others. That is not a denigration of local democracy in any way, shape or form. There is confusion about that. Hon. Members should be clear that we have sought compromise but there is no scope for it because the 1993 powers for co-signatory status simply do not fit in with the post-White Paper world.
This is a matter of principle, as my noble Friend Lord Davies explained clearly in the other place earlier today, on which the Government are unwilling and, indeed, unable to move. In that context, the House should be clear that to lose the Railways Bill because of this matter would be unfortunate, not least because of the level of consensus on the Bill in this and the other place.
The speed at which my hon. Friend was moving caught me on the other side of the building. As he is a dear little pussy cat, rather like me, and one of the problems has been misunderstanding, could he make it absolutely clear that the Government have no intention of removing the link with local government and local decision making and that they just want the best solution for everyone concerned?
I agree absolutely with my hon. Friend and endorse every word she said. This is not in any way, shape or form about impinging on PTEs' local decision-making process or a secret agenda—that was suggested at least once in the other place—ultimately to get rid of PTEs. It is about how in the commercial realm passenger transport authorities through PTEs relate to train operating companies and local rail services in their areas. Any decisions they make about much of what they already do are more readily contained in agreements with the ability to add to franchises. None of those abilities is taken away.
This is one of those dangerous questions to which I do not know what the answer will be, so I hope that the Minister can help me, although that may not be helpful to my party. He may know that I am concerned about the impact that the specifications available to the West Midlands PTE can have on services in the peripheral area. The great power of the PTE sometimes means that local authorities such as Worcestershire and Herefordshire do not receive the services they would like to the conurbation because they are outgunned by the PTE. What impact, if any, would the amendment have on that?
The short answer is none in any direct sense, but the wider position to which the hon. Gentleman referred of those parts of the west midlands region that are not part of the West Midlands PTE area would prevail. Nothing that we are doing in seeking to look at the co-signatory, co-specification status of PTEs vis-à-vis franchises would impact on that relationship which, I freely accept, may sometimes be not as satisfactory as those in Hereford, Worcester and areas peripheral to the PTE area would like. I am sorry, but the Bill does not solve that issue.
If we lose the Bill, we will lose the biggest devolution of Executive functions to Scotland since the Scotland Act 1998. We would have continued uncertainty and unnecessary expense in the rail industry for those who depend on it and uncertainty in the financial and commercial markets for investors. The substantial stakeholder involvement throughout the process, from the rail White Paper to the Railways Bill, has been marked by considerable agreement in the rail industry, not only about the direction those documents give us and the certainty it affords, but that there should be a degree of consolidation afterwards, without constant changes to relationships and structures. To have the Bill fall on that item, for it all to come a-crumbling down and start again, would be a matter of regret, not least—if I may return to my opening statement—because this place and the noble Lords have dealt with so much of the Bill in fine order.
I am sure that Members do not want that to happen, so I hope that they will join me in disagreeing with the Lords in this amendment and sending that message back, with thanks for all they have done so far but a gentle disagreement on this issue.
First, may I associate the official Opposition with the Minister's opening remarks? We, too, thank the other place and congratulate the Lords on the way that they dealt with the Bill. The concordat between the Front Benches ends there. I do not agree with the conclusions that the Minister reached about passenger transport executives, as I shall make clear.
Passenger transport executives were created in 1968 by the late Barbara Castle and although they are children of a Labour Government I pay tribute to their work up and down the country over the years. The Lords amendment to which the Minister takes exception seeks only to keep the status quo. I cannot understand why he finds it so objectionable. It seems bizarre that a Government who have been urging us all to embrace regional government and devolved powers want to take away some of the powers and influence of PTEs.
In the past PTEs may, on occasion, have delayed the decision-making process. We accept that, as did Members of all parties in the other place who supported the amendment, because it contains a 60-day limit during which the concerns must be dealt with. Such a delay is not a long period, but it would allow PTEs to have their say and reflection to take place. PTEs should continue to be co-signatories.
The Minister referred to the history and I can confirm that it was the last Conservative Government who, in 1993, gave PTEs that power, even though I think that every PTE was Labour-controlled. That goes to show that the Conservative party, when in office, is willing to be fair and to give people a platform for dissenting views, even if they are members of a different political party. It is bizarre that a Labour Government are trying to take that power away from mainly Labour PTEs.
Members on both sides of the other place spoke in favour of the amendment to which the Minister is asking us to disagree. I hope that the vast army of Labour MPs who are no doubt watching our proceedings on their office monitors as they enjoy their last week as Members of this place will join us in the Lobby to speak up for, and vote for, local democracy.
Many local people give much of their time and energy in the interests of rail services in their region. That local democracy is worth supporting. Of course, we accept that some PTEs are better than others, but overall we believe that they have been a force for good and that the Minister is not being entirely straight with the House when he uses the threat that agreeing with the Lords would put the future of the Bill at risk. The Minister has got the decision wrong. He should think again, so I urge my right hon. and hon. Friends to vote no to give him the extra thinking time that he so clearly needs.
May I say at the outset and by way of very short preface that this is a good Bill? It contains a great many things with which I agree, not least the point that the Minister raised of devolution to Scotland. It is an important piece of devolution that will allow my colleague in the Scottish Executive to deliver good transport solutions on railways for the Scottish people. Therefore, I am with the Minister in the statement that he made that the Bill should not be lost.
I am pleased with some of the compromises. Indeed, I also associate myself with the remarks regarding the way in which the other place has worked on the Bill that have been made by the other two Front Benchers. I am pleased that the Government have seen fit to compromise, where sensible, both in the compromises that have already taken place and the one that may be promised later today. As the right hon. Member for East Yorkshire (Mr. Knight) just said, that does not mean that we should roll over and agree to the Government's view on Lords amendment No. 1. The Government have got this wrong and it would be worth their while thinking again.
I am sorry that the Government have chosen to reject Lords amendment No. 1 and its consequential amendments because the proposal made by my noble Friends and supported by Lords on both sides of the House, not least by those on the Government's Back Benches, is reasonable and seeks to address a deficit in the Bill.
I listened with great care to the Minister's comments. He is always reasonable and he dealt with us very reasonably in Committee. I understand his argument, but he has not persuaded me. I do not understand why, when we are seeking to give people the right to consider decisions locally, it was not possible to find a way in which that expression could be put into the Bill.
The arguments have been well rehearsed in the House throughout all the debates on the Bill and pretty well rehearsed in the other place during most of its stages there. The issue is simple: PTEs in England have a responsibility—I would say, a right—to deliver sound transport solutions in their areas. Rail must be a key part of those solutions and, prior to the amendment made in their lordships' House, the Bill removed from PTEs their involvement in the rail process, taking that entirely to the Secretary of State for Transport—apart from an ability to consult—thus removing rail from the responsibility of PTEs.
Lords amendment No. 1 is reasonable, because it seeks to reintroduce into the Bill some way in which PTEs can fulfil that duty and recognises the Government's right desire to ensure that decisions are made timeously and expeditiously. The Lords put into the amendment a 60-day limit, thus permitting a reasonable compromise between no involvement whatsoever and a far too lengthy system, which is precisely what the Government wish to avoid.
The Minister talked of months of delay in the process. All the processes that I have seen for franchise letting tend to take many months and I really do not think that any franchise process would take less than three to five months to undertake. To give at the beginning of that process a notice that there are 60 days in which a PTE can become involved would not necessarily disrupt that process.
The Minister also said that the proposal would not fit in with the post-White Paper world. I do not accept that. As he knows, I support the provisions of the White Paper and am happy that they should be legislated for, but I do not see why the Lords amendment could not be accommodated in some way. I therefore have to say to my right hon. and hon. Friends that we should vote in favour of the Lords amendment or, at the very least, give the Lords an opportunity to make the Government think again.
I am interested in the provision because it pertains, among other things, to the question of station services and bus substitution services, which are a direct matter of concern in my constituency. I accept that the Minister has not yet taken over the responsibilities of the Strategic Rail Authority, but we had a constructive meeting last Saturday with the SRA about Stone and Norton Bridge stations, the famous station at Wedgwood and the one at Barlaston that are on the line that is now subject to closure. However, the SRA cannot now make any assumptions about what is in mind for those stations.
The problem is that enormous inconvenience will be caused to my constituents if the stations on that line are closed. There is a petition and strong campaign—with which, as you might imagine, Madam Deputy Speaker, I am fully associated—to keep the stations open. I am glad to say that there was a constructive atmosphere at the meeting last Saturday, but the matter needs to be sorted out.
Bus substitution services would come within the framework of clause 13. If a franchise agreement were issued, the Secretary of State would have to consult the executive about a range of matters including station services. I note that station services are defined in clause 13(9) as
"services provided in connection with any such service for the carriage of passengers by railway".
That is an issue of grave concern to my constituents. When the Secretary of State takes over the role, I will want to know for sure that there would be no question, when he consults the executive in that area, about his sticking with what the SRA has clearly indicated at that important meeting: the stations at Stone, Norton Bridge, Wedgwood and Barlaston would be kept open. It is an important matter for my constituents, not least because the service is part of the community in that area.
I looked up this afternoon the private Act that gave rise to the creation of this railway in 1846. It has been pivotal to the community for the whole period since then. In a positive and constructive sense, we would also like to look forward, as I said at the meeting, to cross-country trains—
Order. I have been fairly generous with the hon. Gentleman, but I hope that he will now confine his remarks to the amendments.
Yes, indeed, Madam Deputy Speaker.
The amendment says that the statement to the Secretary of State should specify
"any minimum level of quality with respect to the operation of any station within the area in question which may be required by any such franchise agreement."
In that context, a minimum level of quality would include that stations are kept open. I am anxious to ensure that that happens when there is the transfer from the SRA to the Minister. Of course he will then be directly accountable to the House for the exercise of those functions.
There is a power to close stations in clause 29 and subsequent clauses. If stations were closed, it clearly would not be possible for meaningful consultation to take place under clause 13 between the Secretary of State and the executive of an area, which is why I support Lords amendment No. 1. Proposed new subsection (1A) would specify that there would have to be a statement on the minimum level of quality of the operation of a station in an area that could be required under a franchise agreement.
In a nutshell, I am simply concerned that Stone station and the other stations that I mentioned remain open, that the service of the railway operators to my constituents is maintained and that positive and constructive development of the railway line to Birmingham, Manchester and the locality is continued. I do not in any way resile from the fact that I believe that we will win the general election, but none the less I look to the Minister who has present responsibility for the matter—although not, I hope, for much longer—to maintain the stations for the benefit of my constituents.
Question put, That this House disagrees with the Lords in the said amendment:—
Lords amendment disagreed to.
Lords amendments Nos. 2 to 7 disagreed to.
Clause 35 — Closures Eligible to be Treated as Minor Modifications
Lords amendment: No. 8.
I beg to move, That this House agrees with the Lords in the said amendment.
With this it will be convenient to take Lords amendments Nos. 9 to 13, and 15 to 17.
I do not wish to detain the House. These are either technical amendments that are fully endorsed by the other place or amendments that follow on from the recommendations of the Delegated Powers and Regulatory Reform Committee and, again, are endorsed by the other place. I commend them to the House.
Lords amendment agreed to.
Lords amendments Nos. 9 to 13 agreed to.
Schedule 4 — Reviews by ORR of Access Charges and Licence Conditions
Lords amendment: No. 14.
I beg to move, That this House disagrees with the Lords in the said amendment.
With this it will be convenient to take Government amendments (a) to (e) in lieu.
As with the first group of Lords amendments, in disagreeing with them, we are offering sufficient wording in lieu to meet not just the concerns expressed in the other place but anxieties raised in this Chamber and in Committee.
In the other place and in Committee concerns were highlighted, particularly by the right hon. Member for East Yorkshire (Mr. Knight), about adverse effects on train operators' businesses if an access charges review results in the reduced capacity of the rail network. An amendment was tabled to address those concerns. While the operators' contracts provide for mitigation and compensation for any adverse effects arising from a change to the network's capability, there is no explicit requirement for either the Office of Rail Regulation or the Secretary of State to consider those matters during an access charges review. Both the Secretary of State and the ORR have given public undertakings that issues of mitigation and compensation for adverse effects will form part of an access charges review. However, the other place and some hon. Members do not consider those undertakings to be sufficient, and wish such matters to be enshrined in legislation.
The Lords amendment addresses that concern, and would confirm in statute a commitment already given in the written undertakings. It makes it the duty of the ORR to notify the Secretary of State when it appears that such adverse effects are likely, and to advise the Secretary of State of the mitigation and compensation that would be required, and of the costs of those measures. The amendment gives the Secretary of State the opportunity to revise his specification, or budget, or both, to mitigate those adverse effects. It also requires the ORR, in conducting an access charges review, to have regard to any adverse consequences for train operators, and in particular any need for mitigating measures, or compensation, or both. Of course, such adverse consequences may not arise from an access charges review, but the amendment ensures that if they ever do arise, both the ORR and the Secretary of State will be obliged to take full account of the consequential need for mitigation or compensation.
It is not possible to concede everything that is proposed in the Lords amendment, because it would allow legislation to interfere in matters already treated wholly and properly within contracts. Further, it commits the Secretary of State and Scottish Ministers to find additional public money to fund any shortfall in adequate compensation, leaving the determination of what is adequate with the ORR. The amendment from the other place therefore undermines two important points of principle, to which we have adhered during the passage of the Bill: the primacy of the contract, and Ministers' ability to control their own budget.
By offering the words in lieu, we recognise the concerns expressed in the amendment from the other place and raised by the right hon. Member for East Yorkshire and the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) in our proceedings, without impinging on the contractual relationship. We think that that is the right and proper approach. I am grateful to their lordships for raising these issues. The words offered in lieu do what they require of us, but in a way that preserves the primacy of the contract. I commend to the House the Government motion to disagree and our words offered in lieu.
I am grateful to the Minister for the out-of-Chamber discussions that we were able to have on the matter earlier today. There is an important point at issue which, as the Minister said, we raised twice, once in Committee and once on report, because we were concerned not about the threat to the independence of the Office of Rail Regulation, but about the scope of the powers—the jurisdiction. It seemed to us that that was at risk.
We were deeply concerned that the Bill could undermine the sanctity of contracts entered into voluntarily. That was why my party in the other place tabled the Lords amendment that is before us, in an attempt to protect investors against any Secretary of State putting the network into decline, making changes to access contracts and reducing the value of contractual rights. The amendment would provide protection for existing contractual rights. It was our view that if the Government were indeed acting in good faith, they should not have any difficulty in accepting the Lords amendment. Whatever budget is set for our rail network, it must surely take account of existing legal commitments. The amendment would therefore come into effect only in certain limited circumstances.
We accept that the Minister has been responsive to the concerns that we expressed and, dare I say it without his blighting his career, has shown his reasonable side. The amendment in lieu is not perfect. It is not ideal, but it is a move in the direction that we were urging the Government to take, and it is an acknowledgement of the force of the arguments that we adduced in Committee and on Report. It would be churlish of us to reject the Minister's overtures. We do not reject his welcome hand of compromise. We accept his suggestion that the House should adopt the amendment in lieu. I give him this pledge: next month, when I am sitting on the Treasury Bench with my colleagues, we will think of at least part of his time as Minister with affection.
I concur with the comments of the right hon. Member for East Yorkshire (Mr. Knight). The amendment in lieu that the Minister proposed in his new reasonable guise gives sufficient assurance and should be accepted. The matter should no longer be a point of conflict between us. I concur that the primacy of the contract is at the heart of the matter. The concern shared by the right hon. Member for East Yorkshire and myself was that, as drafted, the Bill could override a previously written contract. We agreed with the principle that the Minister advanced, but had a different interpretation. The words put forward by the Minister are not all that I would have wished to see, but they are certainly acceptable, and therefore I believe that the House should agree to them.
I am slightly worried that the Minister might have been altogether too reasonable. Although I do not naturally recognise him in that guise, perhaps he will reassure me that the clause, rewritten as it is, does not underwrite all the financial obligations of the contract holders, and, as usual in the privatisation of British Rail, leave the taxpayer having to underwrite any changes that may come about. Is it not truly absurd to have the situation that has obtained hitherto where the regulator, who has had no responsibility to the taxpayer or anybody else, has been able to agree certain basic charges and changes without any regard to the cost in the long run?
I can certainly give my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) that assurance. As I said, the Lords amendment far more readily offered an open and blank cheque in those terms, and took away from Ministers the ability to control budgets, as ultimately they should, as well as impacting on the primacy of the contract, which is why I am grateful for the agreement of both Front-Bench spokesmen. Without pursuing the point, the words that we have offered in lieu far more readily and in a neater and more efficient way address the concerns raised, with the caveat from my hon. Friend, rather than the existing words, and in that context, I commend them to the House.
Lords amendment disagreed to.
Government amendments (a) to (e) in lieu of Lords amendment No. 14 agreed to.
Lords amendments Nos. 15 to 17 agreed to.
Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments Nos. 1 to 7: Mr. Greg Knight, Mr. Khalid Mahmood, Gillian Merron, Mr. Tony McNulty and John Thurso; Mr. Tony McNulty to be the Chairman of the Committee; Three to be the quorum of the Committee.—[Gillian Merron.]
To withdraw immediately.
Reasons for disagreeing to certain Lords amendments reported, and agreed to; to be communicated to the Lords.
Sitting suspended.
On resuming—
Clean Neighbourhoods and Environment Bill
Under the Order of the House made earlier today, any message from the Lords in respect of any Bill may be considered forthwith without any Question put. I have received a message from the Lords. The Lords agree to the Clean Neighbourhoods and Environment Bill, with amendments to which they desire the agreement of the Commons.
Lords amendments considered.
Clause 3 — Exposing Vehicles for Sale on a Road
Lords amendment: No. 1.
I beg to move, That this House agrees with the Lords in the said amendment.
I shall be brief, because the amendment refers to issues that were raised by right hon. and hon. Members during the latter stages of our discussion in this House and by peers who raised a number of issues in another place.
The amendment delivers the intention that has always existed in the Bill that no one should sell vehicles on a road, but it clarifies the situation at a junction where there might be four roads, or even more at a complicated junction, and ensures that the fact that a provision refers to "a road" cannot be used to avoid the intention of the Bill.
I am grateful to Members of the other place who raised the matter and enabled my noble Friend Lord Whitty to move an amendment. With those few words, I commend the Lords amendment to the House.
I join the Minister in paying tribute to Members of the other place. The amendment seems to be eminently appropriate and recognises a gap in the Bill that we did not have the opportunity to discuss in Committee. We agree with the amendment, which was discussed and analysed in the other place.
We are keen to see the Bill on the statute book because it includes some important environmental protection measures. Its passage was a little dubious earlier, but it now seems that it will get there tonight. The Minister said that the Government are happy to accept the amendment, and we too support it. My hon. Friends also pointed out the problem, and I am sure that the residents of Seven Dials, Covent Garden and similar places with complex junctions with many roads will be pleased to know that there will be no loophole. The sort of people who sell vehicles from the road look for a loophole, and it is important that we plug it with the amendment.
I celebrate the agreement on the amendment. This is an important Bill which will play an important part in creating clean neighbourhoods. I am delighted that despite the imminence of an election we can agree.
Lords amendment agreed to.
Clause 20 — Litter Clearing Notices
Lords amendment: No. 2.
Motion made, and Question proposed, That this House agrees with the Lords in the said amendment.—[Alun Michael.]
The official Opposition welcome the thrust of the amendment, as we debated the issue under the limited scrutiny provision available to us in Committee. We support the provision of guidance on fly-tipping, one of the key aspects of the Bill, but before we give the amendment our formal agreement I would like the Minister to respond to a few questions.
What instruction has been given to relevant Departments on the issuing of guidance relating to clause 20 and what is the time scale for that? What formal consultations will be held on that guidance? What is the time scale for full implementation of the Bill, especially the fly-tipping provisions? Recently, I was delighted to initiate an Adjournment debate on the subject, to which the Solicitor-General replied, but I was alarmed when she revealed that a new offence was to be created whereby the non-occupying landowner will be charged with the physical removal of waste or rubbish illegally tipped on their land.
The information was revealed only during limited discussion during an Adjournment debate, but if there is to be such a new offence, guidance would be appropriate, so will the Minister consider producing guidance on how non-occupying landowners are to be alerted to that provision, as it is not evident in the Bill? Furthermore, will he ensure that the guidance encourages local authorities, wherever possible, to help landowners—whether occupying or non-occupying—to remove fly-tipped waste? If he can address those points, it would be most helpful.
I hope that I can satisfy the hon. Lady on all those points. Commencement is intended to be April 2006; it will be by order and will be accompanied by guidance, which will be available in good time.
Clause 50 will not apply to the victims of fly-tipping, only to culpable landowners. I am sure that the hon. Lady will agree that that distinction is appropriate. I can confirm that the guidance will alert local authorities to the concerns to which she referred. As in many situations, we need to ensure that the balance is right. Those points were covered by my noble Friend, Lord Whitty, when dealing with the amendment in the other place. He pointed out that section 59 of the Environmental Protection Act 1990 enables the enforcement agencies to require an occupier who knowingly allows his land to be used for fly-tipping to remove the fly-tipped waste.
Clause 50 will extend that power to landowners, but only where there is no occupier. In addition, the occupier, and now the landowner, will still have the defence that they did not knowingly cause or permit deposit of the waste. That change will help the enforcing authorities to bring irresponsible landowners within the remit of legislation, without penalising the victims of fly-tipping. I agree with the hon. Lady that we do not want to penalise the victims of such offending.
The amendment will help to deal with the problems that have occurred, especially in urban areas where there is no occupier and an absentee landlord allows his land to be used as an illegal waste dump. I am sure that most Members know of such cases in their constituencies. It has certainly been my experience and that of my hon. Friend the Minister for the Environment and Agri-environment.
The discussion in the other place and the amendment agreed there have enabled the Government to be slightly more precise about what was always our intention, and to address the issues raised, as the hon. Lady rightly says, during our proceedings and those that took place in the other House. I commend the amendment to the House.
Lords amendment agreed to.
Clause 101 — Statutory Nuisance: Insects
Lords amendment: No. 3.
I beg to move, That this House agrees with the Lords in the said amendment.
With this it will be convenient to take Lords amendment No. 4.
The Lords amendments will exclude most farmland, woodlands, reedbeds, osier beds, market gardens, nursery grounds, orchards, other land on farms designed in regulations by the Secretary of State or, of course, by the National Assembly in relation to Wales, and any land included in a site of special scientific interest, plus most forms of water—rivers, lakes, ponds and so on—from the application of the statutory nuisance regime to insects that emanate from them, thus meeting the concerns that clause 101 would adversely affect biodiversity by incurring action against concentrations of naturally occurring insects on farmland.
I am sure that it is generally agreed by hon. Members on both sides of the House that we want to encourage biodiversity, and it was never the intention that the Bill should apply in those circumstances. Organisations, such as Buglife, expressed some concern that there could be an unintentional misuse of what is generally agreed to be a positive measure in the Bill. I am happy that the Lords amendments improve the Bill and deal with that concern, and I am therefore happy to commend them to the House.
I congratulate the right hon. Gentleman on listening to the concerns of what is a very important industry to the UK. As my constituency is probably substantially more rural and agricultural than his, the fact that, without these Lords amendments, set-aside would otherwise have been introduced would not have been very well received, so I congratulate him and those in the other place for taking action. The Lords amendments will be most warmly received by the bugs industry, and indeed its beneficiaries—the producers and growers.
These Lords amendments were very much welcomed by my colleagues here and in another place. The issue was of concern to us, so the fact that the Government have accepted its substance is important. I have come late to the Bill, so I have been given briefings on what has gone on before, and they tell me that the statement that I need to make is that we are very grateful on behalf of all rare invertebrates to the Government for agreeing to amend the clause. Given the forthcoming election, we are electioneering and the next bit is the best bit of all: few people have time to think about insects, but for our six-legged friends, we are the effective Opposition. We believe that a success has been achieved on behalf of our six-legged and, I assume—to classify spiders as insects—our eight-legged friends as well. These Lords amendments are useful and helpful, and we are glad that the clause has been adjusted to take account of some very genuine concerns that were expressed.
Lords amendment agreed to.
Lords amendment No. 4 agreed to.
Sitting suspended.
Drugs Bill
Lords amendments considered.
Clause 3 — Drug Offence Searches: England and Wales
Lords amendment: No. 1
I beg to move, That this House agrees with the Lords in the said amendment.
With this it will be convenient to discuss Lords amendments Nos. 2 and 3.
I should like the House to consider a group of three technical Government amendments, which remedy the fact that by error the Serious Organised Crime and Police Bill and the Drugs Bill were drafted to insert new paragraph 35B into schedule 4 of the Police Reform Act 2002. The amendments ensure that the Drugs Bill inserts new paragraph 35C after paragraph 35B inserted by the Serious Organised Crime and Police Bill and no longer inserts a second paragraph 35B.
I thank the Minister for her constructive amendments. In due course, on another occasion, we will want to return to the subject of drugs in order to press for tougher sentences for those dealing drugs to schoolchildren and to look again at the reclassification of cannabis to category B. However, we accept that the Bill takes matters a step forward, and on that basis I am happy to thank the Minister for the amendments.
It would not make sense to oppose amendments that seek to correct an error that unfortunately crept into the Bill. Like the Conservatives, Liberal Democrats have not sought to oppose the Bill. We believe that it helps to take the law forward in respect of drugs, although we may have some disagreements about where we should go with drugs policy thereafter. However, the amendments make perfect sense, and I hope that the Bill is able to proceed on to the statute book.
This Bill was conceived in prejudice, written in ignorance and is being enacted with incompetence. Those who are supporting it will come to rue the day when this piece of legislative garbage went through the House. It is the worst Bill in my parliamentary experience since the Dangerous Dogs Act 1991. As parliamentarians, we should at least ensure that our decisions do not do harm, but this Bill will do harm. It will ensure that a legal trade that causes no problems and is conducted by many businesses will end and be replaced by an illegal trade. We are banning psilocybin—a natural product that will disappear from the market possibly to be replaced by drugs such as fly agaric, which we are not banning but which is a far more dangerous drug.
This sorry Bill is the latest in a series of Bills since 1971 supported by Governments and Oppositions. It has even been supported by the Liberal Democrats, who should know better, do not have anything to gain by it and should oppose it. Every organisation of people who are knowledgeable about the drugs world has opposed the Bill. The Government have had no support for it. They did not even go to their advisory counsel to ask him for an opinion.
The Bill will go down as one of the worst Bills enacted in Parliament in recent times. It will come back to haunt us, because it will do a great deal of harm. Part of its populist, tabloid nonsense is the attempt to restrict people who are selling drugs near schools. That is a laudable aim—of course we want drugs to be kept out of the reach of children—but the Bill has developed that as it has gone on. Starting with the idea of trying to cure a problem that does not exist, it has built up the absurdity by putting in special penalties against those who sell drugs not only near schools but in other areas where children might be—youth clubs and so on. Then it moved on to routes to schools, and then even short-cuts on those routes. Our urban areas will be cobwebbed with a series of places in which restrictions will apply throughout, when in fact only special restrictions should apply.
The Bill was considered in the other place on Monday and today, and all the very knowledgeable Lords opposed it; indeed, I know of no one who has taken an interest in these issues over the years who supports it. It will close down the "magic mushroom" business, which has carried on with very few problems and pays, so I understand, about £1 million a year in VAT. We are repeating the same old mistake in believing—
Order. I remind the hon. Gentleman very gently that we have before us three very technical amendments and he is ranging rather wide of the mark.
You have been very generous to me, Mr. Deputy Speaker, but I should point out that the three amendments were presented to us at three minutes' notice, when the bells started to go.
My observations are general ones. We know that a deal has been done between the Government and the Opposition parties. It is deal made between people who were afraid to take an intelligent view on this issue. Again, we have a so-called tough policy. Oh, that we as a legislature could one day have an intelligent policy on drugs.
Question accordingly agreed to.
Lords amendments Nos. 2 and 3 agreed to.
PETITIONS
Supermarket Site
For many years now, the residents of Hodge Hill have campaigned against Tesco concreting over local playing fields while the city council takes the money to spend elsewhere in the city. So, following my recent Adjournment debate and questions to Ministers, I am now pleased to present this petition.
The petition states:
The Petition of the residents of Hodge Hill and the surrounding area
Declares their opposition to the proposed development of a Tesco supermarket on the site of the Brockhurst road playing fields.
The Petitioners therefore request that the House of Commons urge the Government to strengthen the planning laws relating to the sale of non-school playing fields to enable the development to be stopped.
The Petitioners further request that if the development cannot be stopped, the House of Commons urge the Government to ensure that 100 per cent. of the proceeds of the sale of this development be spent on upgrading facilities for young people in Hodge Hill.
And the Petitioners remain, etc.
To lie upon the Table.
Mobile Phone Mast
I present a petition from my St. Albans constituents, which, I am proud to say, is, I believe, the last of this Parliament.
The petition states:
The Petition of the St. Albans residents
Declares that Vodafone has breached the mobile phone industry's code of best practice in its application to construct a phone mast in London road, St. Albans.
The Petitioners therefore request that the House of Commons urge the Government to introduce legislation ensuring that local residents are consulted, and that the needs of children living in residential areas are taken into account before masts are constructed in such areas.
The Petitioners further request that the Government introduce legislation to force mobile phone network providers to use existing masts where such masts already exist.
And the Petitioners remain, etc.
To lie upon the Table.
101 Bus Service
I am sorry to disabuse the hon. Member for St. Albans (Mr. Pollard), but this is the last petition of this Parliament. The petition is urged by more than 700 of my constituents and it represents their protest about the removal of the 101 bus service from Walton corner along the A34 to Aston island.
The petition states:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The Humble Petition of the residents and bus passengers of Walton, Stone, in the Staffordshire sheweth
That the Petitioners are against the removal of the 101 Bus from Walton Corner along the A34 to Aston Island.
Wherefore your Petitioners pray that your Honourable House will urge the Government to use their influence to persuade First PMT to reconsider, and to restore the 101 bus service to local residents.
And your Petitioners, as in duty bound, will ever pray.
To lie upon the Table.
Acute Hospitals (Funding)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Watson.]
I am delighted to have secured what may well be the last Adjournment debate of this Parliament, particularly on such an important issue as acute hospital funding. It is a serious issue for many MPs, but I want to speak about particular concerns in my own constituency in the far west of Cornwall and the Isles of Scilly.
At the outset, I declare an interest in that my wife is a nurse working in the NHS—unfortunately, only in a nursing bank at the moment. She has worked all her working life in the NHS. A second declaration of interest is that I was a patient last week at one of the hospitals that I shall mention in the debate. I was there for day surgery just over a week ago, and I must say that an excellent service was provided.
I also want to say at the outset—the Minister will be pleased to hear me say it—that I appreciate the dedication and professionalism of NHS staff. I say that not because my wife works in the NHS, but because I genuinely appreciate those characteristics of the NHS. The Liberal Democrats campaigned at the last general election for increased taxation and investment in the NHS, so I am also pleased to welcome the additional resources that the Government have invested in the NHS in recent years. The funding is much needed and much appreciated.
The title of the debate is "Acute Hospitals (Funding)", but I recognise that such funding does not come in a separate silo from other funding going via primary care trusts into primary and general health care. The Minister will no doubt refer in his response to the extra funding going into Cornwall's three PCTs and health trusts. Certainly, substantial additional amounts of money are going into Cornwall PCTs, but my first main point is about how that money compares with funding in other parts of the country.
The Minister will know that the three Cornwall PCTs are in significant deficit and have been over the past three or four years. They are working hard to achieve a recurring balance, but the Minister will also be aware that the National Audit Office produced a report on 28 April last year that identified the fact that only three PCTs in the UK had overspends of more than £5 million in 2002–03. All three were, of course, the Cornish PCTs.
That raises the question not of management failure in Cornwall, but of whether the funding formula properly reflects the challenges presented to those who have to manage the budgets and meet national targets for NHS spending and care in an area such as Cornwall.
The task of providing health care in Cornwall and the Isles of Scilly is especially challenging, and the formula does not take full account of what I call the geographical challenges that the area faces. Some people ascribe those difficulties to peripherality, rurality or peninsularity but, unlike other parts of the country, Cornwall cannot call on emergency services to the north, west or south. The ambulance funding formula takes account of geography to a small extent, but PCT funding does not do so at all.
Another challenge to the provision of health care in the area is posed by demography. Cornwall's population tends to be much older than is the case with other areas, and the county also has more tourists than elsewhere. I understand that the Department cannot write off the debts incurred by the local PCTs, which are trying incredibly hard to achieve recurring balances in their budgets, but perhaps we should look at the appropriateness of the levels of funding made available to them.
For example, the West Cornwall PCT anticipates a deficit of only £5.9 million this year, a significant reduction from last year. Ultimately, that debt must be recovered and paid off, but the market forces factor is already critical and will become even more important in the future. That factor involves an assessment of external labour market costs, but wage levels in Cornwall have been the lowest in the country since records began. This year, the market forces factor will kick in much harder than has been the case since its introduction in 1976, and it will come as no surprise that the impact will be very significant. In fact, funding for West Cornwall PCT will be the lowest in the country as a result.
Is the Minister satisfied that it is right that the market forces factor should have such a substantial impact on available funding, given that it will leave Cornwall and the Isles of Scilly seriously short of money, in comparison with the rest of the country? That will happen even though the area faces obvious additional costs—as a result of the geographic, demographic and other challenges that I have set out—that are not reflected in the formula. Moreover, as I said, the PCTs must also tackle the requirement to balance the crippling deficits that they face. In addition, will the Minister say which Departments funding locally delivered services—such as social services, police and education, whose staff are primarily paid according to national pay scales—use the same market forces factor in their funding formula?
I come now to the impact of funding on acute services. Cornwall's main district general hospital is the Royal Cornwall at Treliske. It serves some 400,000 of the county's population of a little over half a million people, and it has just over 1,000 acute beds and 174 consultants. The two other acute hospitals in the county are St. Michael's in Hayle, and the West Cornwall hospital in Penzance, which deal primarily with elective and day care work. In the past, the Penzance facility has taken a lot of blue light and emergency admissions, although that happens less nowadays.
The lowering of the protocols mean that more blue light incidents and emergencies pass West Cornwall hospital's front door on their way to Treliske, and that the emergency services are under increasing pressure. I shall return to that matter, but before this debate I sent the Minister some information about the services available in the county. As I said earlier, it is not possible for us to seek additional services in areas to the north, west or south, and the situation in the area covered by the Royal Cornwall Hospitals Trust contrasts with what happens in Northumbria and Calderdale. Those areas have three and two DGHs, respectively, and their populations are roughly the same as Cornwall's. There should be a serious review of whether putting all the eggs—emergency and acute services—into one basket is appropriate. That can be dangerous. On 9 March, less than a month ago, there were 30 patients on trolleys and on the days before and afterwards ambulances were queuing outside unable to offload patients into the hospital. The bed managers were trying desperately to discharge 95 patients to community hospitals only a year after 100 beds in those community hospitals were closed.
The desperate situation has been caused by a funding crisis and because most acute emergencies are brought into one hospital. It is unacceptable that beds in the primary sector have been removed when there are layers of chief executives and boards. Thirteen chief executives run services in Cornwall and it is impossible to have a strategic view when there are three primary care trusts, two delivery trusts, two social services departments—one in Cornwall and one on the Isles of Scilly—an ambulance trust, the strategic health authority and replication on the south-east and north-east borders of Cornwall. Instead of all that bureaucracy, we need a clear strategic view and a focus on the care provided in the acute sector.
The proposal for West Cornwall hospital—I have been working for it with the strategic health authority and others—is for a rebuild with perhaps a doubling of the number of beds. The strategic health authority, the acute trust and the PCT agree that that is a desirable objective and we will work together to try to achieve that new build so that the hospital can take more patients and emergencies. But how can the money be found for new build when capital building programmes require the money to be repaid from revenue and the revenue is insufficient?
I am encouraged that after my hard work and that of many others in the local community, the Labour prospective parliamentary candidate—none of us has heard of him—has issued a leaflet saying that we need a 24-hour accident and emergency unit based in Penzance. That is encouraging—I presume that he was given permission to say that by the Minister—because we have campaigned for that for a long time. I hope that the Minister will confirm that the Government support that.
I had a helpful meeting with the Minister's colleague in June last year when those proposals received broad support and recognition that they need to be taken forward. I have an easy question for the Minister. Can he assure me that if the strategic health authority, the PCT and the Royal Cornwall Hospitals NHS Trust want that his Department will provide all the assistance it can?
My third and final point concerns the impact of Government proposals for independent sector procurement. I understand that the intention for wave 2 funding under the NHS improvement plan published in June 2004 is to set a target of about 15 per cent. elective activity from private sector providers. I also understand that a number of targets will be set to lead to that overall target during the forthcoming years, but as well as elective procurement, additional announcements have been made for targets for budgets for diagnostic and pathology procurement from the private sector.
The problem is that in a place like Cornwall it is not appropriate to seek elective work from the private sector because of the challenges of our geography. Furthermore, if we have to plan for obtaining diagnostic services from the private sector, it will undermine our attempts to build up the critical resources and capacity of the small hospital in west Cornwall; for example, by installing a CT scanner. It would be helpful if the Minister will reassure me that the Government will step back from those targets, especially in places such as Cornwall. The Department seems to be indicating that previous intentions and targets may not be pursued with the vigour that was suggested last year. Will private sector procurement plans be pursued according to the targets set in the NHS improvement plan?
These issues are important to many of my constituents, who are concerned about the difficulties relating to the funding formula in Cornwall and the impact on NHS services, especially the acute sector. I am sure the Minister accepts that the area presents some significant challenges. The geography is challenging and a high number of tourists visit the area. We must ensure that we have the capacity to cope.
I congratulate the hon. Member for St. Ives (Andrew George) on securing the debate. I know that he feels strongly about the national health service and he is right to congratulate NHS staff throughout the country and in Cornwall on their excellent work—his wife included, no doubt. I am pleased that he acknowledges the funding that is going into the NHS. I reply to many Adjournment debates and usually—certainly when Conservative Members are raising these issues—one would think that we were spending less than in 1997 rather than about double.
The latest round of revenue allocations to primary care trusts, covering 2006–07 to 2007–08, represents further investment in the NHS of no less than £135 billion: £64 billion to PCTs in 2006–07 and £70 billion in 2007–08. That is equivalent to an average increase of 9.2 per cent. for 2006–07 and 9.4 per cent. for 2007–08, and an average of 19.5 per cent. over the two years.
The hon. Gentleman said that I would give him lots of figures and he is quite right. With an election under way, I am not likely to let anybody forget that the Labour Government are responsible for a huge reinvestment in the NHS. His constituency has benefited, too. PCTs in Devon and Cornwall will receive cash increases of more than £368 million for the two-year period. The West of Cornwall PCT, in the hon. Gentleman's constituency, will receive an increase of £37.4 million or 19.9 per cent. for the two years. Those are considerable increases in funding, however we cut it.
The hon. Gentleman raised issues about the funding formula specific to his constituency. I have been a Health Minister for two years and have thoroughly enjoyed it. Electorate and Prime Minister willing, I shall be delighted to carry on for another years. In that time, I have answered an awful lot of Adjournment debates and have heard reasons from every Member of the House as to why his or her constituency is a special case and needs special additional funding. The hon. Gentleman's argument is the first that I have had real sympathy with, because my constituency, too—albeit in east Kent—has land to only one side and it had never occurred me to use that as an excuse for trying to wheedle some more money for the health service. Now that the hon. Gentleman has done that, I shall bear it in mind, but I fear that I cannot be too helpful to him tonight.
The formula that the Government inherited was not getting health services to the areas of greatest health need, so we undertook a wide-ranging review of it before the allocation rounds. The new formula provides a better measure of health need in all areas. In calculating health needs in rural areas, it takes account of the effects of access, transport and poverty. It uses better measures of deprivation that are capable of being updated regularly.
The market forces factor of the allocations formula is not a new concept. In fact, all versions of the allocations formula for the past 20 years have included a market forces factor weighting to recognise the different costs of labour and land across the country. I hope that the hon. Gentleman would agree that it is right and proper that the different costs of land and labour are reflected in the allocations formula to ensure that funds are allocated fairly, but we did not just pluck the formula from the air. It is not an invention of Ministers or politicians. Its development has been overseen by the Advisory Committee on Resource Allocation, and it is the result of many years of analysis by academics.
We recognise that this is a complex issue, which is why we have sought the advice of experts to ensure that the model used to calculate these costs is fair. To the best of my knowledge, the hon. Gentleman has not made any objective criticism of that factor or challenged the opinions of those experts, other than to say that, because he does not like the result that the formula gives us, the formula must be wrong. It is my view that the market forces factor is the best mechanism available to reflect unavoidable differences in the cost of providing services.
For the latest round of allocations—as I say, those for 2006–07 and 2007–08—changes have been made to that factor also to support the implementation of payment by results: the number of zones has been increased from 119 to 303, and they will match the geography of PCTs. An adjustment has also been made to the weights for multi-site trusts in the land and buildings indices.
I am not trying to wheedle out money, but the fact is that the Minister has not answered the question about why other Departments do not use a market forces factor, or something similar, in circumstances where national pay scales apply. In fact, people on local pay scales cannot undertake operations, for example, or provide the kind of service that those in hospitals provide on their national pay scales. That is why the funding formula does not properly reflect the true costs of providing the service.
I note the hon. Gentleman's opinion. I cannot tell him why other Departments have not used such a factor. I suspect that Ministers from other Departments answer Adjournment debates on other evenings of the week in which they are asked why they do not implement the same formula as the Department of Health. The fact is that an expert advisory panel works out the allocation formula that we use. We believe that it takes account of such factors in as fair a way as we can come up with, but if he can provide objective reasons to that expert panel that would lead us to believe that we have got it wrong—that is why the panel exists— that would help us to refine the formula and to get it right in future years.
Let me deal with some of the issues that relate to payment by results. In fact, I suspect that payment by results will help the hon. Gentleman a little bit, and I shall explain why.
Under the new system, instead of funding based on historical patterns, hospitals and other providers of care will be paid a fixed price for each patient treated. The prices are based on health care resource groups—groupings of treatment episodes that are similar in resource use and in clinical response—thus reflecting the complexity and cost of providing care. The incentives within the system will help to increase the number of treatments provided by rewarding providers for the work done.
The current figures provided to the Department by the Royal Cornwall hospital suggest that, once payment by results is fully rolled out, the hospital would gain about £13 million. For 2005–06, payment by results will cover only elective activity, and to create a smooth transition, a cap of 2 per cent. has been placed on organisations' gains or losses under the system for this year. The Royal Cornwall hospital consequently stands to gain about £1 million on its baseline activity, as a result of the introduction of payment by results. If the trust performs more activity, it will do even better under the new system. So the financial gains that the trust stands to make will be available to it to invest in quality-enhanced local services and facilities.
For primary care trusts, payment by results will support the development of a more effective approach to commissioning. In place of block contracts or service level agreements, primary care trusts will commission the volume and mix of activity needed by their communities. The introduction of a national tariff will remove the need for price negotiation and focus discussion on the quality of care.
As the organisations that control more than 80 per cent. of the NHS budget, primary care trusts will have an incentive to provide as much care as possible in the most appropriate settings and to avoid any inappropriate admissions to hospitals. In this way, the new system will help to support the development of care closer to home, and the emphasis will be on improving the quality of care for people with long-term conditions. I strongly believe that that will help the hon. Gentleman's constituency.
Another factor in his constituency is out-of-area treatments. Central Cornwall primary care trust has received an extra £4.2 million to cover the costs of the out-of-area treatments that it performs. Under payment by results, the system for funding treatment given to people who fall ill away from home will change and hospitals in Cornwall will be able to invoice the home primary care trusts of their visitor patients directly. This will ensure that the funding is received directly by the hospital within reasonable time scales and, by using the national tariff, there will be no need for home commissioners to engage in discussion about costs.
That brings me to the issue of the inherited debts that the hon. Gentleman raised. As for the challenges of achieving financial balance, I am sure that he will agree that the annual expenditure of the NHS must remain within the resources allocated by Parliament. NHS organisations, including those in Cornwall, receive a fair share of resources and have a corresponding responsibility to manage them effectively without relying on financial support from the centre or from other parts of the NHS. There is a finite amount of resources available to the NHS each year. Where an individual NHS body has a deficit, the overspend has to be matched by underspends elsewhere. This debt must be repaid. We cannot just wipe the slate clean as it would send the wrong messages about responsible financial management to others who balance the books year on year.
Achieving financial balance is a key requirement for all strategic health authorities and the Department's recovery and support unit meets every SHA on a monthly basis to discuss their progress against key requirements and performance targets. For the south-west peninsula, the task of achieving financial balance is particularly challenging. Therefore, we advised the South West Peninsula SHA last year that we would allow it two years to repay the debt and return to recurrent financial balance. This means that the SHA as a whole is working to a maximum deficit control of £15 million for 2004–05, but must deliver recurrent balance by the end of next year. The latest information from the SHA shows that it is working towards delivery of this control total.
The Department, in conjunction with the SHA and the local health economy, is committed to delivering an affordable and sustainable financial position, while delivering the necessary and appropriate levels of service delivery to the local population. The PCTs in Cornwall have developed recovery plans, and the director of finance at the SHA meets monthly the local NHS organisations to discuss financial performance, the risks to delivery and the measures being taken to meet the recovery plans. I am assured that the local health community, with the support of the SHA, believes that it can achieve financial balance while delivering key targets.
The hon. Gentleman also asked about the role of the independent sector. As he said, we are committed to working with the independent sector to provide the best possible services to NHS patients. The independent sector treatment centre programme has already benefited more than 17,000 people. ISTCs have helped us to cut waiting times for NHS patients.
I assure the hon. Gentleman that there will be no target for independent sector usage. That is made clear by Sir Nigel Crisp, the chief executive of the NHS, in his recent publication "Creating a Patient Led NHS: Delivering the NHS Improvement Plan". We are committed to delivering a further national procurement valued at £500 million. The Department of Health is working with the NHS to develop proposals that provide the capacity needed to deliver 18-week waiting times, promote innovation and offer more choice to patients across the country.
The independent sector programme is enabling us to offer new and innovative services to patients in more rural communities. In the south-west peninsula, mobile treatment centres performing cataract operations have visited Plymouth, Tiverton, Hayle and Barnstaple and performed more than 1,700 operations. That means patients coming off waiting lists to have their cataract surgery quickly.
In Plymouth, we will be opening a treatment centre in May 2005 to perform the nearly 3,000 operations annually that the NHS has indicated it needs. The majority are much needed orthopaedic operations. In east Cornwall, a new treatment centre will open in October 2005 to deliver more than 4,000 operations annually, again largely ophthalmic and general surgery. Expanding access to independent sectors providers will give NHS patients greater choice, and ensure more contestability for the NHS, driving up standards for all. I hope that the hon. Gentleman will agree that, even in the circumstances that he has described, it is possible for his constituents to benefit from the independent service providers.
The hon. Gentleman also raised issues relating to the configuration of services, and I hear the points that he makes. It is important, however, to recognise that the decisions are not made in Whitehall by Ministers; they are made locally. There are different opinions about the configuration of acute services everywhere, including in Cornwall. I think that it is right and proper that decisions are made in Cornwall, because I do not know the position there. I cannot make the decision in my office in Whitehall that he and his constituents could make. That is why responsibility for commissioning decisions is devolved to the local area.
Cornwall is already served by three district general hospitals at Truro, Plymouth and Barnstaple. Approximately 120,000 people from Cornwall live in the catchment area of the hospitals in Plymouth and Barnstaple, and there are smaller acute hospitals in Penzance and Hayle, as well as an extensive network of community services throughout Cornwall. The local NHS is trying to make services as locally accessible as possible when it is clinically safe to do so. To achieve that, it has increased the number of operations undertaken and clinics run at the two smaller acute hospitals, as well as the number of clinics and minor injury units.
I am pleased to say that the hon. Gentleman engages with his local NHS. That is not true of all hon. Members who secure Adjournment debates to which I respond, because they sometimes seem to debate such matters before even raising them with their local PCT. I congratulate him on being prepared to engage in the matter, but the debate must take place in Cornwall. I am sure that there will be an opportunity for people to engage in that debate over the next few weeks.
Does the Minister accept that the three PCTs in Cornwall have an exceptional deficit in comparison with those in the rest of the country? Is he saying that that is a result of financial mismanagement and incompetence, or is he prepared to accept that it is worth reviewing whether the funding formula in the past, and the proposals for the future, are adequate for the circumstances, which, as he admits, he does not properly comprehend?
There are all sorts of reasons why some PCTs have built up deficits, such as structural reasons. I would hesitate to suggest that incompetence is ever such a reason because if incompetence is suspected, the chief executive usually gets fired and someone who knows what they are doing is brought in. PCTs are relatively new organisations, so they are going through a learning curve. They are learning how to balance budgets and achieve the financial stability that they need. The deficits that are constantly reported in the newspapers represent a tiny proportion of PCTs' budgets. Indeed, most private companies would give their right arm to have the sort of financial management of most PCTs by ending up with a balanced budget at the end of the year.
I am certainly not accusing the hon. Gentleman's local PCTs of incompetence, but neither am I going to leap immediately to the conclusion that the formula allocation is wrong. The fact is that prior to 1997, the health service was dramatically under-funded, so a huge range of pressures subsequently had to be addressed. It is rather like the pothole in the road syndrome: one cannot start to invest in new roads until the potholes caused by a lack of maintenance for years have been fixed. That is the situation in the national health service. The new investment that we have been putting in has met the ever-building pressure in the system. Of course the situation has been difficult, but as more money goes in during the coming years, it will become easier to manage the budgets.
The formula is changing over the next few years, so if the difficulties persist in Cornwall, does the Minister agree that the situation could be reviewed?
Labour Members are reasonable men and women, so if it is clear that the formula allocation is not working for some reason, it will be reviewed. The Secretary of State has already demonstrated a great degree of flexibility through the way in which he has been prepared to examine such issues and the way in which the recent PCT allocations have been made—
The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half-past Ten o'clock.