With permission, Mr. Speaker, I want to make a statement on the reforms that we have made, and are making, in the operation of the tax credits system, and to answer point by point the reports from the parliamentary ombudsman and the Citizen's Advice Bureau that were published today, and the adjudicator's report that was published earlier in the week. Those reports deal mainly with the operation of the system in its first year of introduction.

On 26 May, I announced to this House a series of measures to build upon the reforms that we have already made to the tax credits system. Those include measures to streamline procedures for recipients to inform Her Majesty's Revenue and Customs of the changes in their income during the course of the year, and to simplify the information provided to families in award notices. I also announced a review so that we could make changes in the procedures for dealing with disputed awards.

The Department is improving the helpline so that families receiving tax credits can have all their queries dealt with in one go and all their changes processed with one call to the helpline. Where there is a dispute, I have asked HMRC to consider suspending recovery of excess payments until the dispute is resolved. Where there is hardship, I have asked it to ensure that the additional payments in the system are made.

In other words, I have already taken measures to act on each of the major administrative issues raised by the parliamentary ombudsman and the CAB. Two weeks ago, during a debate in the House on these issues, I offered—and have subsequently agreed—to meet a group of MPs to discuss these issues in detail. Today, I will be writing to the ombudsman and the CAB about the changes that we have already made. I will be offering to meet them to discuss the detail of the reforms now being introduced.

I come to the issues of policy. As the CAB report states, tax credits are the best way to deal with society's responsibility to help with the costs of bringing up children and tackling child poverty. The background both to the introduction of tax credits and to the reports out today is that more people than ever before are receiving tax credits to help with the costs of bringing up their children. In total, more than 6 million families—about 20 million people, including 10 million children—benefit from tax credits. Four in 10 families pay no net tax as a result of tax credits, and the take-up in the first year exceeds 80 per cent.—so in each of our constituencies, nearly 10,000 families, on average, are benefiting.

As a result of an economy where people move between jobs more often and their circumstances change more quickly, the challenge is to adjust child tax credits to changing income patterns as quickly as possible. In fact, 3 million people now change jobs every year, and their income changes are often substantial. Some 700,000 children are born every year and receive different rates of child tax credit, according to their families' circumstances.

The fast-changing nature of the economy is such that around 300,000 people who receive tax credits experience very large changes in their family income—£10,000, or more, during a year. In introducing the child tax credit, the big change that we made was to move from a fixed payment based on past income, not on actual income, which was recognised as unresponsive to families' changing circumstances and therefore unfair.

When the new system was introduced, we decided that, during the year, we would be prepared to adjust tax credits to changes in family circumstances. So the issue for the Government and, indeed, for all parties that want to comment on these issues in the House and beyond is whether we return to a fixed system, which is clearly unfair and does not adjust for changes in family income during the year; whether we operate a system whereby we compensate people when their income falls, but do not adjust credits downwards when their income rises, even when it rises substantially by £10,000 a year or more; or whether we retain the principle of getting the balance right between taxpayers and individual family circumstances.

I have always been happy to listen to and to take note of the views of all parties on these issues, but I have to tell the House that, when we consulted widely before the implementation of the tax credit, the overwhelming consensus was that a balance should be struck between the needs of the taxpayer and those of the families who claim and that the system should adjust to any drop in income and therefore compensate the claimant in full and only respond to increases in family income during the year, when the family income increases by £2,500 or more a year. I also have to tell the House that, when these issues were voted on in the House, there was a clear majority in favour of these proposals.

Of course, I will continue to keep the House fully updated on recent developments in the tax credit system, as I have endeavoured to do in debates and statements in the past. The ombudsman makes reference in her report to a small part of one sentence of one written answer and suggests that it offers an incomplete picture. I have repeatedly answered questions on this issue. Indeed, in a debate on 26 January, I told the House that there had been problems going back to the introduction of the computer system.

More recently, I issued a statement on 26 May, setting out the situation, the action that has been taken and what more we will do to improve the system. There was an Adjournment debate on 7 June at which I responded to many of the issues raised by hon. Members and, again, outlined the changes. And I will, of course, keep the House updated on the reforms that we are putting in place to improve the system and report back on my discussions with voluntary and community sector organisations.

The reports today from the parliamentary ombudsman and the CAB paint a devastating picture of the administrative chaos, computer errors and political misjudgments at the heart of the tax credit system. The response of the Paymaster General today—that she made a written statement a month ago and replied to an Adjournment debate in the House—is not enough, as the CAB makes clear in its report today, not least because some of the changes that the right hon. Lady was talking about may be 18 months away. That is not good enough for a system that is supposed to help low-income families, but in the words of the CAB has

"plunged many below the breadline and into mounting debt".

Does the Paymaster General agree with the CAB about that?

Does the right hon. Lady agree with the ombudsman, who said today that many families

"have to borrow money from family and friends to support their children, using up their life's savings or running up credit card debts in order to pay for child care costs, buy food and get to work"?

[Interruption.]

Order. The hon. Member for Blyth Valley (Mr. Campbell) should not shout across the Chamber. I know that he does that regularly but he should not be doing it just now.

Thank you very much, Mr. Speaker. I was merely quoting from the ombudsman. It would be interesting to know whether the hon. Member for Blyth Valley (Mr. Campbell), who may make a contribution later, agrees with the ombudsman and the CAB.

The Paymaster General expresses regret for the mistakes that have been made, but she said this morning that for a huge majority of families the system is working. But will she confirm that, of the 6 million families receiving tax credits in 2003–04, 1.9 million were overpaid almost £2 billion and that a further 713,000 were underpaid half a billion pounds. That is more than a third of all the families claiming tax credit, so how on earth can she say that the system is working well for a huge majority of families? How can she say that when in her own constituency in Bristol almost half the 9,200 people who claimed tax credit received an incorrect amount and the taxpayer has had to pay out £3.7 million in her constituency alone in overpayments?

I have five specific questions about the future operation of the system. First, the ombudsman says that from the evidence she has seen the Revenue has yet to adopt a model for dealing with low-income families that takes full account both of the complexities of tax credits and of the vulnerabilities of their lives. Does the Paymaster General agree with that key recommendation of the report? Indeed, will she introduce a human face in the system so that judgments about clawing back overpayments are made by an individual, not a computer?

Secondly, will the right hon. Lady accept the recommendations in the report that families should be made aware of what is happening to their credits, told how they can appeal and informed about the hardship payments available to them, not because they go to their local MP or CAB but as a matter of right, as part of the tax credit system?

Thirdly, will the Paymaster General consider writing off all excess and overpayments caused by official error, not just in the past but as part of the system, so that Ministers do not have to come to the House announcing amnesties every year? She should make that part of the system so that low-income families do not suffer due to the Treasury's mistakes.

Fourthly, will the right hon. Lady suspend with immediate effect plans to move a further 800,000 of the lowest income families who currently receive their tax credits from Jobcentre Plus to the Treasury's chaotic systems? My right hon. and learned Friend the Leader of the Opposition specifically asked the Prime Minister about that point; he did not respond, but it is of enormous interest to every MP. Will the Paymaster General respond and make it clear that she will delay the migration of those 800,000 people to the Revenue until the problems are sorted out?

Fifthly, I turn to the Paymaster General's accountability to the House of Commons. On 7 February, she said of the tax credit system:

"The system has been stable and performing very well in terms of availability and speed for well over a year."—[Official Report, 7 February 2005; Vol. 430, c. 1245W.]

Yet the ombudsman says that

"the cases I have investigated lead me to the conclusion that such reassurances did not give a complete picture of what has been happening."

Is the right hon. Lady saying that the ombudsman is wrong? She did not say that in her statement but if that is so she should say it in her response to me.

Finally, will the Chancellor, who dreamt up the tax credit system, with all its complexities, respond to what the ombudsman calls

"the fundamental question as to whether, for people on modest incomes . . . such inbuilt instability or uncertainty really works"?

The ombudsman says that needs "very careful consideration" by Parliament and the Government. Is not it time that the Chancellor responded to what the ombudsman said today by setting up a far-reaching independent review of tax credits?

The chaotic system of tax credits is having a devastating impact on the lives of some of Britain's poorest families. Do not they and Britain deserve better?

The hon. Gentleman needs to be reminded that his party supported the tax credits, including the flexible system and the way in which that is approached. The ombudsman's report says:

"This report does not suggest that the new tax credits system is in general disarray; on the contrary it recognises that, given the scale of the undertaking, its introduction has been broadly successful."

It goes on to say that new challenges need to be met, however. The CAB's summary says:

"We firmly support tax credits as a vehicle for directing substantial extra money towards lower income families".

The issues thus revolve around administration.

I shall address each of the six points that the hon. Gentleman made. First, he asked about adopting a response to claimants of clearly explaining their entitlement and what that is based on and, as it says in the ombudsman's report, working on a case-by-case basis. That was covered by my statement on 26 May and I reiterated the position at the beginning of my comments today. I have accepted that the ombudsman's point was correct and I have already started acting on that.

The hon. Gentleman said that claimants should be made aware of their entitlement when dealing with disputed claims. Again, my statement on 26 May referred to that and my opening comments today confirmed what I said. I especially made the point about the suspension of disputed claims.

The hon. Gentleman asked about writing off official error. He knows full well that in cases in which either an administrative or information technology error has been made by the Inland Revenue and it would be reasonable to assume that the claimants did not realise that a payment had been made in error, that money has been written off. In my statement on 26 May, I made it clear that we needed to review the procedure and determine not only whether to suspend recovery until a dispute has been resolved, but how we communicate with claimants so that the Department can ensure that they know exactly what their entitlements are.

The hon. Gentleman asked about the transfer of jobseeker's allowance and income support to the system. I have told him that the system is not in disarray, and that is what the ombudsman says. I have told the House repeatedly that we keep the transfer under careful consideration. We plan to start it later this year, but I assure him that if that is not the case for any reason, I will inform him and also the House.

My accountability has been questioned. First, I have answered all questions about the matter, both written and oral. Secondly, I have made statements to the House. Thirdly, I have been involved in debates on the tax credit system in the House. Fourthly, I meet hon. Members and delegations from community and voluntary organisations to discuss exactly these points.

As the hon. Gentleman said, his final question was fundamental. When he talks about the inheritance and the problems that families face, he must acknowledge that the system in place before failed to tackle child poverty, failed to respond to the needs and changing circumstances of families and failed to recognise the changing nature of the labour market. He does not realise that the income change for 300,000 of the people who have received overpayments is in excess of £10,000 per year. Is he seriously suggesting that if an overpayment is not disputed and the claimant is prepared to pay it back, we should not collect it? That is ridiculous.

Is not the truth that the tax credit system has been in chaos and that Ministers have persistently been in denial about the extent of the problems, and that they still seem to be in denial? What is chaos if it is not 1.9 million people overpaid £2 billion of taxpayers' money that should not have been paid out, if it is not 700,000 underpayments and if it is not two thirds of the overpaid awards going to households that the ombudsman describes as on modest incomes? Is not the Paymaster General more concerned than the impression she gave about the conclusion in the ombudsman's report,

"that the greatest difficulties"—

as a consequence of these problems—

"are suffered by the core group that the tax credit system is aimed at helping, namely families on low incomes"?

Are not those precisely the people who are losing out as a consequence of the endemic overpayments in the system?

Are there not three questions, in particular, on which we need clear answers from the Paymaster General? First, there is the vital issue of overpayments. Will the right hon. Lady clarify the statement that the Prime Minister made earlier in Prime Minister's questions, in which he appeared to give the impression that overpayments as a consequence of official error are to be written off. That was very different from what the right hon. Lady has told us. She knows perfectly well that there are a multiplicity of cases where the Inland Revenue has made the errors. Yet at the end of the day money is still being clawed back from people. What will be done to tackle that problem? How many of the overpayments due to official error will be written off? Can the right hon. Lady give us an absolute guarantee that from now on the system will be one of investigation first and recovery second, and not what we have had, which has been recovery first and then investigation?

On a point of law, can the Paymaster General tell us whether she has received the legal advice that is referred to by the ombudsman in her report as to whether the Inland Revenue has been acting lawfully over the past year in the way in which the recovery policy has been applied? Can she give us a clear answer on that?

On a second point, what is the right hon. Lady doing about the chaos of the computer system that has generated so many of these problems? When will that be resolved?

On a third point, is the right hon. Lady more concerned than the impression that she gave in her statement about the ombudsman's observation that her report raises

"the fundamental question as to whether"—

a financial support system with such "inbuilt instability or uncertainty" can truly meet the needs of people on modest incomes? If it is so obvious that we should have the system that we now have, why did we have fixed awards under the working families tax credit and why were there fixed awards under the family credit system? Should not the right hon. Lady examine that issue seriously?

On a final issue, I feel almost sorry for the Paymaster General. The system was introduced by the Chancellor and he has been very successful in claiming the credit—taking the credit, as it were—for the system of tax credits. He has left the Paymaster General to mop up all of the difficult issues that we have been discussing. Does the right hon. Lady accept that she is ultimately accountable, and that if these problems, which are affecting some of the most vulnerable families, are not resolved over the next few weeks, she ultimately must accept the responsibility that comes with her office?

I do accept the responsibility, and that is why I am here. I do not need the hon. Gentleman's sympathy for doing my job, although I think that he was offering it rather tongue in cheek. Perhaps I should remind him of his party's policy at the time when tax credits were introduced. I quote from the then Liberal Democrat spokesman:

"we must support giving extra help to lower wage families with children."

The hon. Gentleman said that in the course of the Bill that introduced the tax credit system. He said:

"That is why we need stability"—

when the system is introduced—

"with no major overhauls, no name changes and no complete rewrites. Let us give the system a chance to settle down and give people a chance to get familiar with it. Stepping aside from point scoring". [Official Report, 7 July 2003, Vol. 408, c. 836–838]

That was what the previous spokesperson for the Liberal Democrats said on the issue.

The hon. Member for Yeovil (Mr. Laws) asked five questions. The first was on write-off. I explained today and I have explained in previous debates, in written answers and personally to the hon. Gentleman during meetings how the compensation and the write-offs occur. The hon. Gentleman then said that he wanted a system of investigation first and suspension afterwards. He clearly was not listening—again—to what I said today, to what I said on the 26 May and to what I said on the Adjournment debate on 7 June, at which he was present. I asked the Revenue to suspend recovery while the disputes were being investigated.

The hon. Gentleman asked a technical question about legal advice. If he will forgive me, I need to write to him on that. I will also respond in writing to the hon. Member for Tatton (Mr. Osborne).

The hon. Member for Yeovil reiterates the point that the system is in chaos. It is not. The ombudsman says that it is not; she says that there are particular problems, which I acknowledge. They are important problems and they need to be sorted out. That is why, in making my statement on 26 May, in what I have said in the House at Question Time, in what I have said in written answers and in what I said on the Adjournment debate on 7 June, I have acknowledged all of that. I do that both inside and outside the House when I am asked questions on these matters.

There is a fundamental issue, and that is why the hon. Gentleman must make a choice. I know that that is difficult for Liberal Democrats. They are not keen on making choices because it is much better just to attack everything in sight. The choice is between a flat rate unresponsive system that is unfair, that is fixed and that does not help families to meet the changing needs in the economy, or to have flexibility. Those are the two models. What the House has to decide, what the Government have to decide and what the Opposition parties have to come to a conclusion on is which model they prefer and whether they are prepared to tackle child poverty.

Is my right hon. Friend aware that she does not need the otiose commiserations of the Liberal party and that she should, as we do, repudiate entirely the politically motivated attacks from the official Opposition on her integrity? We on the Government Benches wholly endorse the principle of tax credits, which have brought enormous benefits to working families and low income families throughout the country. In the light of my right hon. Friend's statement on 26 May, will she consider again the possibility of a write-off and starting again so that we have a clean slate, but in no circumstances deviate from the principles that have done so much good to say many families?

I have not been attracted to a complete amnesty. Clearly excess payment has been made. If the claimant accepts that and is prepared to repay the money, there is no dispute. It is a question whether Her Majesty's Revenue and Customs was notified at the time of the change. It seems not to be a good deal for the taxpayer to say, "No thank you. Keep that extra money." That is when the claimant thinks that they should not have had it and we know that they should not have had it. The point that is made in the ombudsman's report and the point that my hon. Friend makes—it is made also by many right hon. and hon. Members on both sides of the House—is that in circumstances where there is a dispute or where hardship would be caused, I have said repeatedly that I want HMRC to suspend recovery while the dispute is settled. I have asked it to adopt that position, and to ensure that those in hardship are paid the additional payments that are already available in the system, and that they are made aware of the fact that those payments are available to them.

Does the Paymaster General accept that problems with tax credits have now displaced problems with the Child Support Agency as the single greatest generator of work for many Members? Does she recognise that those who man the MPs' hotline do a good job in difficult circumstances? Given the complexities of a system that Members and claimants find it difficult to comprehend, given the high percentage of mistakes that are made and given the ongoing problems with the system, does the right hon. Lady accept that many people have come to the conclusion that the present social security and tax credits system is simply unsustainable? Therefore, will she reflect on the suggestion that we should have a review of the financial interface between citizen and state to see whether we cannot come up with a simpler and clearer system than the present one?

I am always happy to listen to the thoughtful points that the right hon. Gentleman makes, and we had this discussion in the Adjournment debate. He suggests that there is a fundamental problem with the system, but I explained in the Adjournment debate on 7 June why that is not the case. I remind him that 20 million people are in the system and that take-up is still increasing. At the beginning of today's statement, and in all the other statements and debates, I have said that I accept the need for improvements, as hon. Members have acknowledged. I have pressed Her Majesty's Revenue and Customs to look at the award notice, as well as communications, explanations given to claimants and advice on their rights, and I have instructed it to streamline procedures. However, the statistics published by Office for National Statistics do not indicate a fundamental problem in the system.

Does my right hon. Friend agree that any policy must meet two tests? First, it must be ambitious enough to address real problems. Tax credits, in seeking to address the problems of child poverty and making work pay, clearly pass that test. Secondly, when implementing policy, Ministers must acknowledge problems and devise strategies to deal with them. Given the way in which she has dealt with the statement and the questions put to her, my right hon. Friend has passed that test with flying colours.

At every point, I have been prepared to acknowledge that there are problems. Indeed, I gave a specific written answer in the context of a particular question about computer problems. Both before and since then, I have conceded that there were problems and explained their nature and extent. I explained the problems that were being caused as well as the need to address them and make changes in the system. Tax credits help the Government to reach their targets on eradicating child poverty, but of course there is substantial room for improvement. That is what the reports say, that is what I am responding to, and that is what I have kept the House informed on.

In her statement, the Paymaster General said:

"Where there is a dispute, I have asked HMRC to consider suspending recovery of excess payments until the dispute is resolved".

Will she make it clear that in all such disputed cases recovery proceedings will indeed be suspended? It is not just a matter of asking HMRC to consider suspending such proceedings. Can she clarify whether it is the Prime Minister's test or the Paymaster General's test that will be applied in cases of overpayment due to official error?

That is precisely what I am saying, and I have instructed Her Majesty's Revenue and Customs accordingly. In case the hon. Gentleman has not seen it, I am prepared to send him a copy of the statement of 26 May, which covers some of those points, and to write to him specifically about issues in Northern Ireland and the tax credits.

May I invite my right hon. Friend to restore a note of balance to these exchanges by reminding the House that the Opposition trebled child poverty and the Labour party has reduced it by a quarter, largely through the tax credits system? As she looks at ways in which she can improve the operation of the system, I invite her to reflect on the cases that I and, no doubt, others have sent her in which her special requests for attention to hardship are plainly not being fulfilled by the Inland Revenue. The system is computerised, so why can we not set a decency threshold of income below which families should not fall, whatever the requirements on overpayment, so that no family suffers hardship as a result of a system that has lifted so many out of hardship?

As I announced on 26 May, there will be a review of the disputes procedure, the code of practice currently operated by the Inland Revenue and the way in which the system operates. All the recommendations in reports by the ombudsman, the adjudicator and the Citizens Advice Bureau will be considered in that context. Opposition parties do not want to address the success of tax credits, because that would require them to come to a decision on the fundamental question of how, in our economy, we ensure that we support families with children and eradicate child poverty.

In the standard form letters that I have received in response to representations made on behalf of constituents who received overpayments, there is a presumption that constituents should have known that they were being overpaid and should be able to demonstrate that to the Revenue in an appeal. Many people struggle with that, so what steps will the Paymaster General take to introduce a ready reckoner or an easy benchmarking system to enable people to identify whether an overpayment has been made? What is she going to do to remove the misery of uncertainty from people who are waiting months, if not years, for adjudication on their representations?

As an ex-Treasury Minister, the right hon. Gentleman will know that the tax system uses the reasonableness test. If there was an error, it considers whether it would be reasonable to have known about it. That issue is being addressed as part of the review of the code of practice. A point that hon. Members have repeatedly made is whether it was entirely reasonable, given the information from HMRC, and its frequency and complexity, for the claimant to assume that it was correct. That is part of the review—I touched on it at the beginning of my statement today and dealt with it in greater detail in my statement on 26 May. The right hon. Gentleman will know from his experience at the Treasury how rights are explained by the Revenue, how information is played back by HMRC and how we ensure that the claimant knows what they should be telling HMRC and that HMRC is acting on it swiftly and correctly.

I urge and plead with the Minister to ignore the Opposition's synthetic concern about poor people in the community. The measure has helped more individuals out of poverty in my constituency than almost anything else we have done. I underline the ombudsman's view that it was broadly successful, but suffered from administrative and computer problems. As a member of the Select Committee on Treasury, I know that the Minister is working hard on those problems. I urge her to continue her efforts to deal with admin and IT complaints, but to leave the policy alone.

My hon. Friend was a distinguished member of the Treasury Committee and no doubt he hopes to serve on it again. If so, I look forward to discussing this with him in Committee. On the question of the tax credits, as I have repeatedly said, there is a fundamental choice. If we are to operate the responsive system that is widely accepted both inside and outside the House as the correct way to support families with children, we must decide how that flexibility is delivered to claimants and we must do so with certainty. I do not wish to give the impression that I am not concentrating on the errors, but I am disappointed that, while millions of families have benefited from tax credits and have good things to say about them, we never hear about that from the Opposition.

The Paymaster General may recall a Westminster Hall debate that I secured three years ago on the implementation of the scheme, in which I listed a large number of problems that real people are facing in the real world in getting the correct level of tax credits. The Paymaster General was full of sympathy, but she was sanguine at the time that the system was running properly. Anyone who heard her this morning on the "Today" programme and this afternoon will recognise the same tone yet again. Clearly, the system has caused real problems to real people. May I quote briefly from a letter from a tax credit office? I am sure hon. Members will savour this—

Order. May I say to the hon. Gentleman that this is a very busy day? Back-Bench speeches for the main business are down to eight minutes, and we have private Bills to be presented, so if the hon. Gentleman will just ask a supplementary question, we can get on with the business.

Thank you, Mr. Speaker. Given the real problems that the system has caused many families in my constituency and throughout the country, will the Paymaster General take responsibility and consider her position?

Quite a lot of people need to take responsibility and remember the role they played in the development of the policy. It was developed in wide consultation with the voluntary and community sector and was discussed extensively in the House. The principle of choosing between a fixed system and a flexible system was part of that debate. If the hon. Gentleman does not want a system that responds to the changing needs of families, his responsibility is to tell them how he would help them instead.

I welcome my right hon. Friend's statement, particularly the part about the hardship test. Very often, regardless of who is at fault, when families suddenly find they have a debt of £1,000 or £2,000, it can seem like the end of the world. For the record, any time I have raised an issue with my right hon. Friend regarding tax credits, she has dealt with it on a personal basis. For the Opposition to attack her integrity today is nothing short of disgusting. The Opposition mentioned the Child Support Agency. Who created that shambles, which we are still dealing with today?

I am grateful for my hon. Friend's comments. All Members will agree that when they have approached me with their constituency problems, I have dealt with them. It is important for me to listen to the comments made in the House and in the reports published today, reflect on what they mean for the administration of the system and take steps to deal with the problems and issues. That is precisely what I have done today in my statement and on previous occasions, and it is what I intend to continue to do.

The Paymaster General said a moment ago that she would like a greater degree of certainty. Is she saying she is minded to agree with the ombudsman in her report, where she questions whether the financial support system, which includes a degree of inbuilt financial uncertainty, can meet the needs of this particular group of families? Is the right hon. Lady saying that she will take that point on board, or will she continue to ignore it?

I am sorry, Mr. Speaker, if this is becoming somewhat repetitive. I have explained a number of times that the system is about flexibility and responding to the changing needs of families. That is the issue that needs to be addressed. The adjudicator in the report published earlier in the week mentioned the need for more flexibility. The ombudsman recognises the need for flexibility. She and the CAB are saying that the administrative issues need to be dealt with, and I agree; that the IT problems need to be finally sorted, and I agree; and that steps should be taken, and I agree and have taken those steps. I will be taking more steps, and the House will be informed of them.

Some of us are not as young as the shadow Chancellor, and we can remember the families who were trapped on benefits when the Labour Government came in. Families in London could not go to work because they were trapped on housing benefit and council tax benefit. There was no national minimum wage, and it would have cost them to go to work. Tax credits have turned that around.

May I tell my right hon. Friend about a case that came to me? A constituent received a statement that gave no indication of the basis on which the calculations had been made. May I suggest that in future every communication contains the facts on which the calculations are based and advises people what to do if they are incorrect?

My hon. Friend may certainly suggest that. It is in line with the recommendations in the ombudsman's, the adjudicator's and the CAB's reports and in line with the statement that I made about how I intend to proceed from my statement on 26 May. That is one of the issues that we need to address.

Back in June 2003 the Paymaster General stated:

"The IT system . . . has not been working as well as expected . . . The Inland Revenue are working urgently . . . to improve the system"—[Official Report, 13 June 2003; Vol. 406 1093W.]

What did she mean by "urgently", and has she secured damages from the IT contractor?

The hon. Gentleman will be aware, as will the House, not only from my statements, but from publicity elsewhere, of the difficulties experienced in the early months of the introduction of the tax credits and, in particular, with the IT system. He will also be aware that the Department's IT partner has changed and that the Department is working closely with its new IT partner to sort out the issues.

Does my right hon. Friend agree that in moving from the inflexibilities and unfairnesses of the old benefits system to what is effectively the integration of tax and benefits through the new tax credits system, it is important that we balance the interests of taxpayers and poor families? That is why, in the original design, if incomes fall, families are fully compensated, but if their incomes go up, they must rise above the £2,500 threshold before they have to make repayments. In looking again at whether that balance has been struck as well as it could have been and whether we need to learn from experience, can my right hon. Friend confirm that she will do nothing to go backwards on tax credit integration or on reducing the unfairnesses or the inflexibilities and that she will do nothing to put at risk a reform for which she deserves huge credit, which has taken a million families out of poverty and which was opposed consistently from the beginning by the entire Opposition?

My hon. Friend is right. As he knows, the integration of the tax and benefits system has removed stigma and enabled people to move from unemployment into work. It has supported families, helped reduce the number of children in poverty and made sure that we have a flexible system that responds to families' needs. The choice is between a fixed, unresponsive, unfair system and a flexible system that responds to family changes. Within that equation, as he rightly identifies, we need to strike a balance on behalf of the taxpayer and define the limits of that flexibility. In the present system, all drops in income are automatically adjusted when we are notified, so that the family does not lose out. If there is any rise in income over £2,500 a year—a sum lower than that is not notifiable—the family should report an increase of income in the year. That strikes a balance of generosity on behalf of the taxpayer and recognises our partnership and the responsibility of society to support children in families, while limiting the cost of the system for the taxpayer.

Labour Members do not have a monopoly on compassion, whatever they might think. Many people live on the very margins of society in Waltham Cross and Cheshunt. I know there is a problem and sincerely believe the Minister will try to resolve it. Can she assure me that none of the hard-working families in my constituency will be disadvantaged by any clawback in future?

That is precisely what I was trying to achieve through the reforms that I announced on 26 May, and I am gratified that the hon. Gentleman is prepared to acknowledge that.

I regularly meet constituents who have benefited enormously from the tax credit system, and especially from the child care tax credit, which allows them to get off benefit and into work to advantage themselves and their families. When my right hon. Friend considers families who are in need because of decisions about their entitlement, will she examine the child care tax credit, without which many parents would not be able to stay in work?

I reassure my hon. Friend that the child care tax credit will be considered when we examine the need for reform on disputed excess payments. She is right that payment assistance with child care costs has liberated hundreds of thousands of families by allowing parents to choose whether to return to work. That payment did not exist until we started our tax and benefit reforms, which have provided huge improvements for parents in particular.

Is the Paymaster General aware that her complacency does not reflect the distress and hardship that so many families have experienced? Even if the incompetence were ironed out of the system, the flexibility of which she is so proud still means overpayment and clawback, which causes intense hardship for poorer families.

The hon. Gentleman's criticism that I have been complacent is not correct. This afternoon, I have provided a catalogue of actions that I have taken over some time, and I have continued to acknowledge that the system contains some problems. The hon. Gentleman should address the complacency of the previous Government in allowing child poverty to rise and the apparent complacency of the current Conservative party in not willing the means needed to tackle and eradicate child poverty.

BILLS PRESENTED

Immigration, Asylum and Nationality

Mr. Secretary Clarke, supported by The Prime Minister, Mr. Secretary Prescott, Mr. Chancellor of the Exchequer, Mr. Secretary Straw, Mr. Tony McNulty, Bridget Prentice and Andy Burnham, presented a Bill to make provision about immigration, asylum and nationality; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. Explanatory notes to be printed [Bill 13].

Employment Tribunals (Representation and Assistance in Discrimination Proceedings)

Mr. Marsha Singh, supported by Peter Bottomley, Mr. Michael Clapham, Mrs. Ann Cryer, Mrs. Janet Dean, Mr. John Grogan, Mr. Fabian Hamilton, Mr. Mike Hancock, Dr. Brian Iddon, Mr. Eric Illsley, Mr. Terry Rooney and Mrs. Betty Williams, presented a Bill to make provision about representation of and assistance to complainants indiscrimination proceedings before employment tribunals and the Employment Appeal Tribunal; to establish and confer functions upon the Tribunal Representation and Assistance Board; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 14 October, and to be printed. [Bill 14].

Rights of Savers

Sir Malcolm Rifkind, supported by Mr. David Heathcoat-Amory, Mr. Nigel Waterson, Mr. Tim Boswell and Mr. Paul Goodman, presented a Bill to make provision about the rights and choices of savers in relation to pensions and pension schemes, annuities and savings; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 28 October, and to be printed. [Bill 15].

Armed Forces (Parliamentary Approval for Participation in Armed Conflict)

Clare Short, supported by Dr. Tony Wright, Mr. William Hague, Sir Menzies Campbell, Mr. Kenneth Clarke, Mr. Alex Salmond, Mr. Douglas Hogg, Mr. Neil Gerrard, Mr. Gordon Prentice, Kelvin Hopkins, Mr. Michael Moore and Adam Price, presented a Bill to require parliamentary approval for the participation of Her Majesty's armed forces in armed conflict and for a declaration of war; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 21 October, and to be printed. [Bill 16].

Climate Change and Sustainable Energy

Mr. Mark Lazarowicz, supported by Dr. Alan Whitehead, Mr. Andrew Smith, Mr. Peter Ainsworth, Mr. Frank Doran, Andrew Stunell, Dr. Desmond Turner, Mr. Mike Weir, Joan Walley, Alan Simpson, Meg Hillier and Colin Challen, presented a Bill to make provision about the reduction of emissions of greenhouse gases, the alleviation of fuel poverty, the promotion of microgeneration and the introduction of a renewable heat obligation; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 11 November, and to be printed. [Bill 17].

Criminal Law (Amendment) (Protection of Property)

Miss Anne McIntosh, supported by David Davis, Patrick Mercer, Mr. Dominic Grieve, Mr. Frank Field, Mr. Mike Hancock, Lady Hermon, Kate Hoey, Dr. Richard Taylor, Mr. Mark Prisk, Chris Grayling and Mr. Roger Gale, presented a Bill to amend section 3 of the Criminal Law Act 1967 and section 3 of the Criminal Law Act (Northern Ireland) 1967 in relation to the use of force in the prevention of crime or in the defence of persons or property: And the same was read the First time; and ordered to be read a Second time on Friday 2 December, and to be printed. [Bill 18].

International Development (Reporting and Transparency)

Mr. Tom Clarke, supported by Ann McKechin, Mr. Nicholas Brown, John Barrett, Angela Browning, Mr. Alex Salmond, Dan Norris, Ed Balls, Lady Hermon, Dr. Hywel Francis, John Bercow and Keith Vaz, presented a Bill to require the Secretary of State to report annually on total expenditure on international development assistance as a proportion of gross national income, and in particular on progress towards the target for expenditure on official development assistance to constitute 0.7 per cent. of gross national income; to require such reports to contain information about expenditure by country, about the proportion of expenditure in low income countries and about the effectiveness of expenditure in each country; to make provision about the transparency of international development assistance; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 20 January, and to be printed. [Bill 19].

Emergency Workers (Protection)

Mr. Alan Williams, supported by Derek Conway, Mrs. Ann Cryer, Mr. Andrew Dismore, Clive Efford, Nia Griffith, Mr. David Heath, Mr. Michael Mates, Ms Emily Thornberry, Jon Trickett, Mrs. Betty Williams and Richard Younger-Ross, presented a Bill to make it an offence to assault or impede persons who provide emergency services; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 24 February, and to be printed.[Bill 20].

Income Tax (Earnings Exemption for Persons Living in Poverty)

Mr. Geoffrey Clifton-Brown, supported by Mr. John Whittingdale, Mr. Iain Duncan-Smith, Mr. Edward Leigh, Mr. Nick Herbert, Mr. William Hague, Mr. Peter Atkinson, Mr. Peter Ainsworth, Andrew Selous, Peter Luff, Sir George Young and Mr. David Curry, presented a Bill to provide that income tax is not chargeable on the earnings of persons living in poverty: And the same was read the First time; and ordered to be read a Second time on Friday 14 October, and to be printed. [Bill 21].

Management of Energy in Buildings

Dr. Alan Whitehead, supported by Mark Lazarowicz, Paddy Tipping, Mr. John Denham, Mr. Peter Ainsworth, Andrew Stunell, Mr. Andrew Robathan, Joan Ruddock, Colin Challen, Annette Brooke, Dr. Phyllis Starkey and Martin Salter, presented a Bill to make provision about the promotion of renewable and sustainable energy, energy efficiency in buildings and the alleviation of fuel poverty; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 11 November, and to be printed. [Bill 22].

Children's Food

Mary Creagh, supported by David Taylor, Helen Goodman, Mark Durkan, Ms Emily Thornberry, Mr. Andy Reed, Mr. Paul Burstow, Vera Baird, Ms Barbara Keeley, Tom Levitt, Mr. Barry Sheerman and Mr. Robert Walter, presented a Bill to make provision about the marketing, sale and provision of food to and for children; to make provision for education and the dissemination of information about children's diet, nutrition and health; to place certain duties on the Food Standards Agency; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 28 October, and to be printed. [Bill 23].

Road Safety and Parking

Ms Sally Keeble, supported by Miss Anne Begg, Mrs. Louise Ellman, Mr. Tom Clarke, Margaret Moran, Dr. Brian Iddon, Mr. David Kidney, Andrew Miller, Bob Russell, Peter Bottomley, Mr. Brian Binley and Andrew Selous, presented a Bill to make it an offence to cause death or serious injury by careless driving; to make further provision about badges for display on motor vehicles used by disabled persons; to make provision about the safety of school transport; and for connected purposes; and the same was read the First time; and ordered to be read a Second time on Friday 21 October, and to be printed. [Bill 24].

Crime Prevention and the Built Environment

Mr. Nigel Evans, supported by David Davis, Mrs. Caroline Spelman, Mr. Robert Syms, Mr. Tobias Ellwood, Mr. Simon Burns, Mrs. Cheryl Gillan, Patrick Mercer, Miss Julie Kirkbride, Mr. Eric Pickles, Mr. James Paice and Richard Ottaway, presented a Bill to make provision about crime prevention and the built environment: And the same was read the First time; and ordered to be read a Second time on Friday 2 December, and to be printed. [Bill 25].

Telecommunications Masts (Planning Control)

Mr. David Curry, supported by Sir George Young, Alan Simpson, Mr. David S. Borrow, Mr. James Gray, Adam Afriyie, Mr. Gary Streeter, Derek Wyatt, Andrew Stunell, Mr. Phil Willis, Mr. Mark Oaten and John Bercow, presented a Bill to amend the law relating to planning in connection with telecommunications masts and associated apparatus; to amend the electronic communications code in connection with telecommunications masts and associated apparatus and make further provision about that code; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 24 February, and to be printed. [Bill 26].

Occasional Sales

Mr. John Whittingdale, supported by Janet Anderson, Dr. Vincent Cable, Peter Luff, Chris Bryant, Mr. Don Foster, Mr. Hugo Swire, Jim Dowd, Pete Wishart, Mr. Nigel Evans, Lembit Öpik and Peter Bottomley, on behalf of Mr. John Whittingdale, presented a Bill to make provision about occasional sales: And the same was read the First time; and ordered to be read a Second time on Friday 14 October, and to be printed. [Bill 27].

Regulation of Laser Eye Surgery

Frank Cook, supported by Dr. Ian Gibson, Mrs. Gwyneth Dunwoody, Dr. Richard Taylor, Mr. Alan Williams, Sir George Young, John McDonnell, Roger Berry, Peter Bottomley, Kelvin Hopkins, Mr. Mike Hancock and Lynne Jones, presented a Bill to regulate laser eye surgery: And the same was read the First time; and ordered to be read a Second time on Friday 21 October, and to be printed. [Bill 28].

European Communities Act 1972 (Disapplication)

Mr. Owen Paterson, supported by Mr. William Cash, Mr. David Heathcoat-Amory, Mr. Frank Field, Mrs Gwyneth Dunwoody, Nick Harvey, Mr. Edward Leigh, Mr. Desmond Swayne, Mr. Richard Shepherd, Angela Watkinson, Mrs. Theresa Villiers and Mr. Robert Goodwill, presented a Bill to provide that Community treaties, Community instruments and Community obligations shall only be binding in legal proceedings in the United Kingdom insofar as they do not conflict with a subsequent, expressly inconsistent enactment of the Parliament of the United Kingdom: And the same was read the First time; and ordered to be read the Second time on Friday 14 October, and to be printed. [Bill 29].

Breast Cancer

Mr. Shailesh Vara, supported by Mr. Stephen Dorrell, Dr. Ian Gibson, Bob Russell, Angela Browning, Miss Julie Kirkbride, Mr. Roger Gale, Vera Baird, Mrs. Ann Cryer, Dr. Doug Naysmith, Annette Brooke and Dr. Richard Taylor, presented a Bill to make provision about the detection and treatment of breast cancer: And the same was read the First time; and ordered to be read a Second time on Friday 20 January, and to be printed. [Bill 30].

Humber Bridge

Shona McIsaac, supported by Mr. Austin Mitchell, David Davis, Ms Diana R. Johnson, Mr. Greg Knight, Mr. Graham Stuart, Edward Miliband, Mr. Phil Willis, Mr. John Grogan and Mr. Edward Leigh, presented a Bill to amend the Humber Bridge Act 1959; to require the Secretary of State to give directions to certain members of the Humber Bridge Board in relation to healthcare; to require the Secretary of State to review the desirability of facilitating journeys across the Humber Bridge in relation to healthcare; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 20 January, and to be printed. [Bill 31].

Professional Football (Supporter Involvement)

Mr. John Grogan, supported by Tony Lloyd, Joan Walley, Nick Harvey, John Mann, Shona McIsaac, Mr. Mike Hall, Dr. Alan Whitehead, Stephen Hesford, Jon Trickett, Mr. Clive Betts and Mr. Marsha Singh, presented a Bill to make provision about supporter involvement in professional football clubs; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 24 February, and to be printed. [Bill 32].

Prohibition of Abortion (England and Wales)

Mr. Laurence Robertson, supported by Mr David Amess, Mr. Julian Brazier and Sir Nicholas Winterton, presented a Bill to prohibit the aborting of foetuses in England and Wales unless the mother's life is at risk, or where conception has been caused by rape; to make it an imprisonable offence for anyone to carry out an abortion other than in those circumstances; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 21 October, and to be printed. [Bill 33].

I have selected the amendment in the name of the Prime Minister.

I beg to move,

That this House believes that special schools play a vital role in meeting the needs of children with learning difficulties, and that parents should have more choice between special and mainstream schools; further believes that the Government should hold a proper review of the provision of special educational needs to cover concerns about the statementing process, the continued closure of special schools, concerns about bias in the law and central government pressure to pursue policies of inclusion when they are not always appropriate; and calls for a moratorium on special school closures until such a review has been published and properly debated.

How we provide education and opportunity for those with complex needs is incredibly important. Those children include some of the most disadvantaged in the country and their families often face enormous stresses and strains in trying to bring them up and in getting what they need.

There is much common ground on both sides of the House about what we should be trying to do. Last week, the Minister for Children and Families, who is not present today, said:

"We need to ensure that the system can deliver as easily and accessibly as possible what individual parents want."—[Official Report, 16 June 2005; Vol. 435, c. 381.]

I agree with that point, but it is not actually happening.

My argument is not with what the Government say about that issue, but with what they do and with what they are allowing to happen up and down this country: special schools are closing, mainstream schools are not coping and statementing has become incredibly bureaucratic and far too much of a battle for all concerned. Inclusion has gone too far and we badly need to stop, think and get this right.

There is concern on both sides of the House on the issue. At last week's Education and Skills questions, the hon. Member for Leeds, East (Mr. Mudie) warned that parents' wishes are being completely ignored, saying:

"The private company that a past Secretary of State put in to run education is closing the "special school, threatening governors and taking no notice of parents".—[Official Report, 16 June 2005; Vol. 435, c. 378.]

How much more serious could the situation be? I am sure that we will hear more concerns today about what is happening on the ground.

The Conservative approach is clear. We are not saying that inclusion is wrong—for many children, it is right and works well—and we are not saying that the concept of statements is wrong. We need a system that recognises and meets needs. However, the Government must recognise three things. First, the inclusion agenda has gone too far. A movement that was about redressing a balance is going beyond achieving that and is now being applied in many cases where it harms rather than helps. Secondly, the statementing system now has serious problems resulting in many children not getting the education and services that they need. Thirdly, as a result, we believe that the whole sector needs to be fundamentally reviewed.

The Government's approach to these issues is simply inadequate and the audit of special schools that is under way is typical of that approach. The Labour election manifesto "Britain forward, not back"—as always, no verbs, but catchy title—said:

"We will undertake an audit of special school provision to give better comparative information to local authorities, head teachers and school governors as they plan future . . . provision."

My hon. Friend will know that I entirely endorse the case that he is presenting. Will he give a categorical assurance that no further special schools will close as far as the Conservative and Unionist party is concerned, and that there will be a proper audit of the resources given to them? The Park Lane special school in my constituency, which is 100 per cent. supported by local people and by parents, is being deprived of the resources that it needs to provide the level of education that these very vulnerable young people require.

As I will explain, our policy is for a moratorium on the closure of special schools because we believe that the policy is biased, as is the guidance, and that is why so many schools are threatened with closure.

Manor Park special school in my constituency is about to be closed and the pupils dispersed to Rose Hill and Thornton House special schools. Would the hon. Gentleman describe that as the closure of a special school or as a reconfiguration of the system? In trying to be helpful to him—I know that he wants to win friends and influence people over the next few months—I should point out that Worcestershire local education authority is Conservative-controlled.

If one has a moratorium, so that one can stop and think and get the Government policy right, then one can stop the closures. The reason why so many authorities are considering closing schools is because of the guidance that goes out from the Government, which I have here. It is called "Inclusive Schooling"—the title is a bit of a giveaway—and says on the front page that it "must not be ignored". On page 9, it says:

"The starting point is always that children who have statements will receive mainstream education."

That is the guidance and that is why we have these problems.

rose—

Hang on; let me go on about Worcestershire for a moment. I have a list of cases from Worcestershire. Here is one:

"John, aged 6, has moderate learning difficulties. He spends most of the school day sat at a desk outside the classroom so he doesn't upset or distract the other children. Mum is now pushing for John to attend a special school for moderate learning difficulty children."

Yet it is moderate learning difficulty schools that are being closed and that the Government's audit does not cover.

rose—

Right, who is next?

The hon. Gentleman is right to raise this important issue, but can he quote the educational research that proves his argument that moderate learning difficulty children do better if they are segregated in special schools?

There is plenty of evidence that special schools lead to very good outcomes. The hon. Gentleman should do what I did in his county of Gloucestershire—get himself to the Alderman Knight school in Tewkesbury. That is a moderate learning disability school that does a fantastic job for the parents and children, with real intimacy and small classrooms, and it is much valued. A Labour and Liberal Democrat-controlled council was going to close it but, because the Conservatives won in May, it will be saved.

rose—

Right, let us try Cheshire.

I want to follow up the point made by the hon. Member for Macclesfield (Sir Nicholas Winterton). Will the hon. Gentleman explain why there is a massive underspend in the education budget in Cheshire, with some £3.8 million unspent by his party, which is in control?

We are discussing special schools. If there is an underspend, clearly the council will have more money available to spend on special needs. I hope that it will spend it carefully—[Interruption.] The hon. Gentleman asked the question, so he might as well wait for the answer. It would probably spend it better if the Government had a less biased law and did not put out biased guidance.

rose—

We have a very limited time for the debate, so I am going to make some progress.

rose—

I have to give way to the hon. Lady.

The hon. Gentleman refers to less biased law. Is he saying that the Special Educational Needs and Disability Act 2001, which applies the civil rights in the Disability Discrimination Act 1995 to education, is biased law that he does not approve of?

That is exactly what I am about to explain. In my view, the 2001 Act does not recognise balance. True balance is about giving parents a choice, with full information, between special schools and mainstream schools. If the hon. Lady is patient, she will find out about it shortly, when I set it out in great detail.

The Government's audit is very limited, even though they told us in their manifesto that it would be a general audit. The Minister for Children and Families told us last week that

"it is a specific audit . . . for the relatively small number of children who have high and complicated needs".—[Official Report, 16 June 2005; Vol. 435, c. 379.]

Why did not they say that in their manifesto? They gave a completely false impression. The audit covers only those schools that deal with the most severe needs, yet it is schools for those with moderate learning difficulties that are closing. The Government's approach is in danger of being both flawed and complacent. It is the anniversary of Nelson's death, and my worry is that the Government are putting the telescope up to their blind eye and saying, "We see no problems; we see no closures." They have to focus on this issue.

I want to do three things: set out the evidence that inclusion has gone too far, explain why that has happened—I shall come on to the bias in the law—and suggest what the Government should do about it.

The hon. Gentleman will no doubt wish to point out to the House that, since Labour came into power, around 13 special schools a year have indeed been closed. Would he also like to put on the record that, during the last 10 years of the Conservative Government, some 27 special schools a year were closed? He wants local people to make local decisions on special education, but is not a moratorium on closure the antithesis of that?

This is rather sad. I am making a speech about the future—about getting it right for the most needy children in our country. The hon. Gentleman is right. Ninety schools have closed since this Government came to power. That is wrong and regrettable, and the fact that we have lost 6,000 places is a problem. I am going to make some suggestions about what should be done about it and if he is patient he will hear them.

There is an overt closure programme, with schools threatened explicitly by the authorities. The Government cannot deny that because the Minister for Children and Families said last week that, if the closures were stopped, as we suggest, there would be "chaos" and "gridlock". We maintain that the closure of these centres of excellence is causing the chaos and that is what the Government need to learn.

There is also closure by slow strangulation, whereby parents are not told about the special schools, fewer children are sent to them, and head teachers are told, "Your rolls are falling and your future's uncertain." Many Members, from Gloucestershire and elsewhere, will be able to tell us about such cases.

The experience of mainstream schools adds to the mounting evidence that inclusion is being taken too far. Many are not coping with the new approach. As the Disability Rights Commission put it:

"Many parents of disabled children have little confidence that mainstream schools will provide a safe environment where their children can reach their true potential."

We should listen to that.

I fully endorse what my hon. Friend is saying about the policy of inclusion, which is forcing parents to put their children into mainstream schools. In my area, special needs schools have falling rolls. That places local councils in an impossible position if they wish to continue providing special needs access in the long term as well as the short term. [Interruption.]

My hon. Friend is absolutely right. I shall tell hon. Members who are shouting, "Who controls the council?", what councils have to plough through. They have to read "Removing Barriers to Achievement"—the Government strategy that is forcing inclusion on them—and the report of the special schools working group, which is doing the same. That is why I am asking the Government for a proper audit and a proper review.

In a previous life, I was a council cabinet member for education in Sheffield, where we embarked on a programme of consolidation and rebuilding for good special schools. We stopped the closure of three schools because we listened to the parents and the professionals and realised that those schools had a longer life. Will the hon. Gentleman recommend that Leeds, a Tory authority, does the same?

I have made my position clear. If there is a moratorium, all the closures will stop and there will be time to think again in the sensible way that the hon. Lady describes. I believe that she said in Question Time last Thursday that the problem in many areas is that local authorities do not listen to the views of special needs teachers in special schools who know the problems so well. I agree with her, which is why I made the point that hon. Members of all parties are concerned about how the law is working and what is happening on the ground.

Will the hon. Gentleman give way?

I am keen to give others time to speak in the debate, so I shall make progress.

When left in mainstream schools, where they are often not dealt with properly, children with special needs can become disruptive. That is not in the interests of the student with special needs, the rest of the class, the teacher or the school. In many cases, parents recognise that that form of inclusion is not working and they vote with their feet. In 2003, more than 5,000 children with statements transferred from mainstream schools to special schools, while only 1,200 went in the other direction.

As hon. Members know, in some cases when children stay in mainstream schools, the schools cannot cope and disaster ensues. One can see that in the figures for exclusions. Two thirds of all exclusions involve students with special needs. One in five people of school age affected by autism is expelled from school and never returns. Those are individual tragedies.

Our view that inclusion has gone too far has received significant support from the words of Lady Warnock. The second Warnock report is a remarkable document. Anybody who is interested in the subject should read it. It is a stunning recantation of the first Warnock report, which began the inclusion campaign. In my view, Lady Warnock deserves credit for candour. She refers to the policy of inclusion as the "most disastrous" legacy of her original report. She says:

"the failure to distinguish between various kinds of need has been disastrous for many children."

The report could not be clearer about current Government policy. It says that

"there is increasing evidence that the ideal of inclusion, if this means that all but those with the most severe disabilities will be in mainstream schools, is not working."

The Government simply cannot ignore such a significant report by so respected a figure. It is no good saying, "But that is not our policy"—I will go on to show that that is precisely the Government's policy. Baroness Warnock understands exactly what the Government's policy is and she says that it is wrong.

Does not Baroness Warnock also say that some of the special schools are inadequate and need to be reorganised? Does the hon. Gentleman support special schools reorganisation when it is sensible?

Yes, absolutely. Baroness Warnock has some interesting things to say. My point is that we should have a moratorium to get the Government policy right. Until we get rid of the document entitled, "Inclusive Schooling", we will not get anywhere. Once the policy is right, there is much more that we can do. In my constituency, there is a combined special school and mainstream school. Springfield school and Madley Brook school are next door to each other. They form two horseshoes, with the special school inside the mainstream school. That is a model for others to follow. However, we must get the law and the guidance right first.

rose—

I want to make progress because the debate is time limited.

I want to consider why we are in the current position and why I believe that it will continue. My next point directly answers the question that the Under-Secretary asked earlier. There is a bias in the law on special educational needs as it stands. The 2001 Act states that, if a statement is maintained, a child must be educated in a mainstream school unless that is incompatible with the wishes of his parent or the provision of efficient education for other children. However, in many cases parents are not told about the existence of special schools. That is not balance. [Interruption.] The Under-Secretary should listen instead of chuntering. Balance means offering parents the choice of a place in either a mainstream or a special school and providing plenty of information and help to make that choice. The Government should conduct a review.

The guidance, as well as the law, is biased. I have referred to "Inclusive Schooling", but the same goes for the document that the Minister for Children and Families mentioned last Thursday, "Removing the Barriers to Achievement". The strategy states:

"The proportion of children educated in special schools should fall over time".

That is the Government's approach. The guidance goes on to stress that only a

"small number of children . . . have severe and complex needs that will continue to require special provision."

Perhaps the Minister will claim that I am somehow misinterpreting the guidance, but it is not only my view. In her new report, Mary Warnock states:

"Government thinking is set on immovable tracks. Special schools are a place of last resort, only, we are told, for children with severe and complex disabilities. But for other children we must keep them out of special schools by hook or by crook to educate them in mainstream schools."

The Government need to be aware of what is happening. Local authorities are interpreting Government policy in a particular way because special schools are expensive. Class sizes are small—indeed, it is that sense of intimacy that often enables them to get so much done. The equipment all costs money. An alliance is therefore being formed between those who favour inclusion on ideological grounds and those who want to achieve it on financial grounds. If Ministers do not realise that that is happening, they are not in touch with what is going on on the ground.

Will my hon. Friend give way?

I shall not give way again. [Interruption.] I have been tempted into giving way.

I am grateful to my hon. Friend for giving way so graciously. On the point that he has just made and the interpretation of Lady Warnock's report, does he agree that special schools are not only schools for the pupils who happen to be in them at any particular time, but centres of excellence that help teachers in mainstream schools who need to learn about special education for those with mild learning difficulties who can benefit from inclusion? We must not lose those centres of excellence.

I suspect that my hon. Friend would expect me to say that I agreed with her anyway, but I genuinely agree with her. Baroness Warnock says that Ministers are partly responsible for the rather condescending view that people have of special schools. My hon. Friend is right that we should view them as centres of excellence.

I want to be positive. We need a full audit of special schools, which must cover every special school in every part of the country and take account of the views of parents, which are often ignored. It must examine the law, which restricts choice and inculcates a bias against special schools. At least until the audit is completed, published and discussed, there should be a moratorium on the closure of special schools.

The hon. Gentleman has been generous in giving way, for which I am grateful. Is he in favour of repealing the Special Educational Needs and Disability Act 2001?

No. I have said that it should be reviewed to provide balance. I shall not redraft the Act at the Dispatch Box, but the minimum for which it should provide is giving parents of special needs children a choice between a mainstream or a special school, and the support and information that they need. That is balance.

They do get a choice.

The hon. Gentleman should examine the law and the way in which it is drafted, talk to parents who have not been told about special schools and read the guidance. He will then realise that I am right and he is wrong.

Does my hon. Friend accept that part of the problem is that the Government want it both ways? They want to close special schools and deny mainstream education the necessary resources to make a success of integration. Does my hon. Friend know that a primary school in my constituency faces the indignity of pupils with special needs having to use the school staff room from which the staff are turfed out, while the Government claim that provision is reasonable. Is not there a mismatch between the definition of "reasonable" by the Department for Education and Skills and that which would appear sensible to most reasonable people?