House of Commons Hansard Debates for 26 Jul 1993

Mr. Robin Cook (Livingston) : I congratulate my hon. Friend the Member for Sunderland, North (Mr. Etherington), on the dawn of the last day on which the

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House will sit before the summer recess, on giving the House an opportunity to return to a matter that has concerned it throughout the parliamentary year.

My hon. Friend drew attention to one of the effects of the decline of the coal industry which may have been insufficiently noted in our debates. While some of us have dealt with the economic and social impact of closure on local communities, my hon. Friend rightly and properly drew attention to the incalculable impact on the environment and, specifically, on the water supply.

I hesitate to follow my hon. Friend in talking about the water supply of his area or the impact of the closure of the pits on that supply, because he has shown such great knowledge. Having visited some pits, however, I was extremely impressed by the complexity of the charts and maps of the underground workings. I visited Markham, which has now closed. A chart of the underground workings covers an entire wall of the manager's office, going back 120 years. Each successive decade is represented in a different colour, one on top of the other. It is an extraordinarily graphic representation. Indeed, it entered my mind that the Tate gallery might pay enough for the objet d'art to keep the pit in operation for another six months. When one examines such a chart, what comes across is the fact that no one knows what the final impact of ceasing to pump in such areas may be on the water supply and water flow. My hon. Friend is right to draw attention to the wide-ranging, and to a large extent unknown, consequences which may have a permanent impact on the environment, just as the closure of the pit will have an immediate impact on the area's economy and employment prospects.

The debate takes place in the wake of the publication of British Coal's annual report, which highlighted the cost to British Coal of ceasing work at some pits. It was clear from the bottom line losses in the report that, in the past year, it has proved much more expensive for British Coal to try to close mines than to keep them in production. My hon. Friend highlighted one of the additional costs of the closure of pits, which could well flow to the Government. It is a cost that has not hitherto been reflected in considering whether it would be profitable or costly to close the pits.

My hon. Friend had the good sense to make the terms of the debate wide, and he has thereby attracted to the Dispatch Box two spokespersons on the energy rather than the environmental side. I congratualte him on that, because it gives us the opportunity to explore some of the questions on which we have attempted to press the Government in previous debates.

May I therefore invite the Minister to update us on the answers to some of our questions? I say "update", but to be honest that is rather charitable, because, when we last debated the matter three weeks ago, we received no answers to our questions. May I tempt the Minister by saying that I understand why the Secretary of State, addressing a crowded House in prime time and in a fevered atmosphere, may overlook the need to answer questions posed by the Opposition, but we are speaking frankly, openly, in sober terms and in a modestly attended Chamber. If the Minister needs further temptation, may I

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point out that Hansard will not be printed until the House has risen and that he can therefore risk being more frank with us? The Minister will be aware that it is now almost four months since the Government published their White Paper on the coal review. He will be aware that the central solution that they adopted was a subsidy on coal from the 12 allegedly reprieved pits. None of those 12 pits has yet seen extra contracts signed for its coal between British Coal and the generators ; nor is there an immediate prospect of a contract being signed.

I want to press the Minister on some of the background against which the negotiations took place and to put to him three points on which I should be grateful for his guidance and which would help British Coal and the 10 remaining reprieved pits in seeking extra contracts. I am aware that this is a late hour, and I notice that the Minister is not supported by his entire private office. He may wish to write to me rather than reply to my points today, but it would make a refreshing contrast from our previous debates and it would send me off to the summer recess in a sweeter mood if I could have an answer to the questions that I am now going to put.

The first question is, what is now happening between the Government and the generators about stock drawdown? The most immediate reason why the two generators do not wish to place extra contracts for coal is that they have 35 million tonnes of it on their doorstep. They have taken the view that it is cheaper for them to burn the coal that they have already paid for than to place contracts, however competitively priced, for more coal. My judgment is that that may be in the short-term interests of the generators but it is not in their long-term interest, and it most certainly is not in the long-term interest of energy supply in Britain. The short-term effect of not purchasing that extra coal could be permanent closure of the extra pits that are looking for those contracts.

The White Paper promised action and committed the Government to entering into a dialogue with generators about the rate at which they draw down stock. If I recall correctly, during the debate the Minister for Energy said that talks were now proceeding. It is not immediately obvious from the impact on the rate at which generators are drawing down or attempting to draw down stock that those talks are having a significant effect.

May I therefore press the Minister to tell the House whether talks have taken place with the generators? What is the Government's objective in those talks, and to what extent do they hope, within the immediate future, to secure an agreement that might then concentrate the minds of generators on buying extra coal from British Coal? My second point arose in previous debates. If the Minister can conclude this matter the debate will have had the happy effect of drawing together some of the unanswered threads of previous debates. When we debated the White Paper, the President of the Board of Trade was pressed from his own Back Benches about the interconnector with FraItaly, Switzerland and other countries that might wish to purchase our electricity.

We recognise that it is difficult to get the French to purchase our electricity. They do not need it, and even if they did they probably would not buy it. However, they

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have no right, under European legislation, to deny us common carriage across their grid to neighbouring countries that need our electricity and might be tempted to purchase it, and in doing so facilitate the export of coal in the form of electricity. I and many of my hon. Friends find it incomprehensible that we continue to import such large volumes of electricity from France, meeting base load need in the south of England, when France will not even accept the common carriage of our electricity to third countries for sale--for no other reason than that such common carriage would provide them with competition on the sale of French electricity to those countries. It cannot be right that there is a Community obligation on us to import French electricity when there is not a parallel Community obligation on the French to provide that service of common carriage.

In reply to the hon. Member for Romford, the President of the Board of Trade said that he was aware of the issue. He gave the impression--after all, a tense vote was approaching--that action was being taken on that front. I very much hope so. I press the Minister to share with us details of what negotiations are now proceeding with the French, and what progress there may be on obtaining common carriage across the French system. If we could secure that, there is every possibility that Britain could significantly enhance its coal burn for electricity that it could provide to countries where it would be extremely competitively priced.

My third question to the Minister on which I would be grateful for his guidance either this morning or in the next few days by letter is : what has happened to the nuclear review? The White Paper said that it would be brought forward from 1994 to this year. The nuclear review has a close and immediate impact on the subject that we are debating this morning.

The White Paper followed the report of the Select Committee, which clearly spelled out the extent to which the nuclear levy is more than sufficient to meet the cost of decommissioning nuclear power stations, and the excess is providing a subsidy to the operating costs of Nuclear Electric, which confers on it a substantial competitive advantage against coal, and results in the rather odd economic outcome that, although electricity from nuclear power is more expensive than electricity from coal-fired power stations, it is cheaper for the electricity companies to buy it.

I may have missed something in the past few days, but I have not seen any announcement about the nuclear review--I confess that I have been unable to reach any of my research staff in the past hour as I have been thinking about the debate--but I am aware that there was an expectation that it would be announced before the House rose. Could the Minister guide us on when we can expect that the nuclear review will be announced and what its remit will be? In particular, could he remove the anxiety among those who want to see a broad-balanced strategy towards energy policy and those who are particularly concerned about the place within that of the coal industry? Could the Minister also remove the anxiety that the nuclear review, when it comes around, will be narrowly focused on how the Government will manage to achieve their ideological objective of privatising the nuclear industry? Will he assure us that, as well as looking at that question, which I am sure that the Government will look at, the nuclear review will also look at the issues of the

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economic evidence of the nuclear industry and the extent to which the nuclear levy may provide it with a competitive edge against the coal industry which works against the interests of the most efficient use of fuel mix in British power stations?

There is one specific issue on which it would be helpful if the Minister could remove anxiety and concern from the minds of those in the House before we rise for the summer recess--or, in our case, before we adjourn for breakfast. Twelve pits were "reprieved" in the White Paper. The closure of two of those 12 pits has already been announced. That leaves 10 pits for which, as yet, no extra contracts have been signed. Without extra contracts, the future of those 10 pits remains deeply insecure, and the stability of their reprieve is under a major question mark.

Does the Minister have any information to suggest that any of those 10 pits will close during the recess? The future of those pits is an issue to which the House will have to return. I press the hon. Gentleman for an assurance that that issue will not arise while the House is not sitting. I would not wish a circumstance to arise in which hon. Members' summer holidays were interrupted by the need to recall the House to discuss further pit closures.

It would be extremely helpful if the Minister could give an assurance that, if it turns out that our fears are well founded and that the future of some of those pits is in doubt, that issue will not arise while the House is not sitting, and that the House will have the opportunity to return before there are any further additions to the long list of pit closures that has studded this parliamentary year.

5.45 am

The Parliamentary Under-Secretary of State for Trade (Mr. Patrick McLoughlin) : I congratulate the hon. Member for Sunderland, North (Mr. Etherington) on securing this slot in the Consolidated Fund debate. I, like him, was under the impression that we might not reach this subject--but fortune has possibly shone on him. I shall deal with the matters raised by the hon. Member for Livingston (Mr. Cook) in a moment ; first, I want to deal with the speech of the hon. Member for Sunderland, North.

A number of the hon. Gentleman's points are really matters for my hon. Friend the Under-Secretary of State for the Environment. I cannot add too much to what he said during an Adjournment debate on 20 July, in which the hon. Gentleman participated. My hon. Friend said--I endorse his remarks--

"The consequences of mine closures are complex. It is clearly an offence for mine owners, such as British Coal, to cause pollution of water courses, regardless of whether a mine is active or abandoned. I do not think that there is any dispute about that, and there need be no argument about it. Responsibility for avoiding pollution rests with the discharger. Discharges from active mines are covered by the system of discharge consents that are operated by the NRA. We are aware of the issues that have been raised about the legal provisions causing discharges from mine workings. The question was referred to in last year's report from the Royal Commission on Environmental Pollution on freshwater quality, which recommended"--[ Official Report, 20 July 1993 ; Vol. 229, c. 332.]

My hon. Friend then outlined what was particularly recommended. There is no doubt that these matters are being continuously considered. The hon. Gentleman said that he

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wanted to ensure that the debate would continue, and he has shown us tonight that it will continue and will be watched carefully. That is only right.

The hon. Gentleman made a rather strange comment, which I felt was both inaccurate and out of place. He said that the trouble with privatisation was that the consumer has to pay for investment. That has always been the case. Both before and after privatisation, whether as a taxpayer or directly, the consumer has always had to pay for investment. It is wrong to think that, before the water authorities were privatised, people did not have to pay for investment. Since privatisation, the water companies have made substantial investment, which will lead to improved quality in our drinking water. I should have thought that that would be welcomed by everybody.

The hon. Member for Livingston referred to the recent debate in which my hon. Friend the Minister for Energy made it clear that the conclusions of the White Paper were reached only after listening to a wide range of opinions, not only from Her Majesty's Opposition, but from the Select Committee on Trade and Industry. We listened to what people said to us and took into account all the evidence that we received. We considered the independent reports which were commissioned and, in particular, we listened to the Select Committee's recommendations.

Many different opinions were expressed, even among the experts, but the main common theme from many people was that there was the prospect of an increased market if coal could be made available at world-related prices. The estimates of the size of the market varied. The Select Committee suggested in its report that the overall market might be as large as 313 million tonnes over the next five years. Our consultants suggested figures- -based on high and low scenarios--of between approximately 200 million and 260 million tonnes. Figures from others were different again, as we made clear in the White Paper. We responded to those views. We accepted the main recommendation of the Select Committee and offered a subsidy to help coal obtain the extra market.

My right hon. Friend the President of the Board of Trade made it clear when the House voted in favour of the White Paper's conclusions that we could give no gurantees, and that remains the case. There can be no guarantees of the precise market for coal--that is not within our control or the control of private coal producers or British Coal. We have given the coal industry a fresh opportunity to compete, backed by public subsidy, for the extra market that so many commentators believed existed. British Coal is continuing to pursue that market vigorously.

I also remind the House of the second message that came through during the coal review : that British Coal would be better placed for a long-term, viable future if it could be given time to build on improvements in efficiency and cost reductions already achieved. The hon. Member for Livingston referred to his visit to Markham Main colliery, where he saw the coal workings. I accept that the hon. Members for Sunderland, North and for Barnsley, Central (Mr. Illsley) will have seen many such maps--as I have. Therefore, the detailed workings that have taken place underground do not come as a surprise to us.

Reference was made to the maps going back more than 100 years. We are dealing with an extraction industry

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which has seen many changes. One of my memories stems from the early 1960s, when I walked over a large area of disused coal mines where the West Cannock site used to be. Over a number of years, coal mining districts have experienced radical changes in their make -up and in the availability of work in the coal industry. That is not new to the industry or coal mining communities.

British Coal is continuing its efforts to improve productivity and efficiency and cut down costs. We are giving the industry the prospect of an increased market for coal by providing a subsidy. British Coal is also committed to making available to the private sector pits which it no longer wishes to operate. The recent letter from the chairman of British Coal to Members of Parliament shows that the corporation has been honouring its commitment.

British Coal has now advertised 19 pits for sale. Whether or not those pits ultimately find a successful home in the private sector will depend on the market, which it is not for the Government to determine. However, I understand that British Coal has received numerous expressions of interest in the pits advertised. That suggests that there are private companies which believe that there is a market for the coal which they could produce from the pits. Indeed, many of them, as well as independent analysts, said as much to us in their evidence to the coal review. They argued that private sector companies could substantially increase efficiency and reduce costs and therefore find additional markets.

The hon. Member for Livingston asked a number of questions. First, he asked about the French interconnector. I will give him the latest position. If I miss out any points, I will write to him, because I am keen for him to have a good recess, which he asked for.

On electricity trade with France, the Government have published a summary of their legal advice which is clear. Action to cut off imports through an interconnector would be a breach of Community law. The non-levy status of Electricite de France could not be removed without giving it the benefit of levy payments. That would mean that British consumers would end up paying more for their electricity. There are a number of positive developments. Following earlier discussions with the then French Government, EDF recently reviewed and changed its bid price to supply into the pool for England and Wales to bring them more closely into line with its short-term marginal supply costs.

Last month, my hon. Friend had useful discussions with Mr. Longuet, the new French industry Minister. In the light of that meeting, officials are pursuing the issue of trade across the interconnector and EDF's non- leviable status. The future pattern of trade across the interconnector will depend on the operation of commercial contracts. The White Paper noted the evidence to the Committee that net exports from France to the United Kingdom could progressively but significantly reduce after 1995.

A United Kingdom generator has signed a contract for £100 million to export electricity to France over the next eight years at periods of peak demand in France during the winter. That shows in the clearest and most practical way that there are opportunities for United Kingdom generators.

The hon. Gentleman asked about the review of the nuclear industry. I am afraid that what I say to him today will not take us much further forward from the questions that he has asked in the past. The Government will bring

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forward the review to later this year. Draft proposals for the scope, timing and format of the review have yet to be made. The Government will make further announcements in due course. I know that that will not bring much favour to the hon. Gentleman but I will draw his questions to the attention of my hon. Friend the Minister for Energy.

Mr. Cook : I raised another matter which the Minister may wish to pursue in writing, if not in this debate. I hope that he does not lose sight of it either way. The rate at which the generators draw down coal stocks on site is critical to the immediate prospects for any extra contracts for British Coal. Unless the generators can be persuaded--the Government have the power to do this--to moderate the rapid rate at which they propose to run down the stocks, there is little prospect of extra contracts, which would provide a permanent and secure future for the 10 pits to which the Government claim to have given a reprieve.

Mr. McLoughlin : I apologise to the hon. Gentleman. Since the publication of the White Paper, action has been taken to review the level of the stocks necessary for security purposes. Discussions with the generators are continuing. Coal stocks will continue to be the mainstay of security for the electricity system. We will not allow them to fall below a level that would put supplies of electricity in jeopardy.

My hon. Friend must use his powers under the Electricity Act in a rational and defensible manner for their intended purpose. We cannot use them as a means merely of covertly subsidising British Coal. The Committee recommended that stocks should be kept at 20 million tonnes of coal, although it did not explain the rationale behind that figure. The figure is irrelevant to the debate, because stocks held at power stations at that time were more than 30 million tonnes. At present, stocks at the pithead are more than 13 million tonnes. The whole question of stocks is rightly being addressed. It is obvious from the figures I referred to that substantial stocks already exist. I therefore do not see our stocks falling to a basically unacceptable level. Obviously, I take the hon. Gentleman's point.

As I said, in this parliamentary year--the end of which we are approaching- -coal has featured strongly in the political arena. I hope that what I have said in the debate and on other occasions shows that we are concerned about the future of the coal industry and that we rigorously question the way in which we can best ensure its future and a market for coal. Those have been our guiding principles in taking forward the discussions that we have had in the past year, and they will also guide us in the future.

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Limited List Prescribing

5.59 am

Mr. James Couchman (Gillingham) : I declare an interest in the pharmaceutical industry, and it is contained in the Register of Members' Interests. The hon. Member for Makerfield (Mr. McCartney), who is on the Opposition Front Bench, would remind me if I did not make such a declaration. I am an adviser to the Kent company and major pharmaceutical manufacturer Pfizer Ltd., and I have been a friend of the industry since coming to the House.

I have no regrets about inviting the Minister to join me at this early hour in the morning to debate this important topic. However, I greatly regret that it should be left to me to bring this topic to the House on the last morning before the House rises for the summer recess, so that we may discuss a proposal made as long ago as 12 November last year, the day of the autumn statement, by my right hon. Friend the Secretary of State for Health.

Since that time, apart from an Adjournment debate initiated by my hon. Friend the Member for Basingstoke (Mr. Hunter), the Government have contrived to keep the issue out of the House. I regret that the debate is not taking place in prime time when the House is packed with hon. Members who are outraged by the Government's proposals. In her statement on 12 November last year, my right hon. Friend made much of the fact that the drugs bill was at its highest ever in 1991-92, that in England it was £2.317 billion, and the increase in 1991-92 was 11.5 per cent. She also made much of the fact that that growth could not be sustained, and she said that she would take measures to restrain the increase in the drugs bill. Those measures would include renegotiation of the voluntary pharmaceutical price regulation scheme by which the Government and the industry have decided price for many years, and she said that the negotiations would be with the aim of restraining companies' profits from sales to the national health service.

My right hon. Friend also said that the selected list scheme was to be extended. Under that scheme, particular drugs in specified therapeutic categories may not be prescribed under the NHS where effective alternatives are available at lower cost. In making regulations, Ministers act on the advice of the Advisory Committee on NHS Drugs and rely for their legal base on schedules 10 and 11 of the General Medical Services Regulations 1992, which list banned drugs. Implementation is based on the advice of the advisory committee, the chairman of which is hardly independent as he is none other than the deputy chief medical officer in the Department of Health. The terms of reference have been amended for the new round of restrictions, and membership has been extended to take account of the new categories. It would not be of great advantage to list the terms of reference in detail, but they are quoted as

"to advise the UK Health Ministers about the composition of schedules 10 and 11 to the NHS (General Medical Services) Regulations 1992, and the corresponding schedules in the Regulations in Scotland and Northern Ireland (except those items which are in Schedule 10 because the Advisory Committee on Borderline Substances has advised that they are not considered drugs in the circumstances of general practice) in order that drugs to meet all real clinical needs at the lowest possible cost to the NHS are available in the

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following categories : mild to moderate pain -killers, indigestion remedies, laxatives, cough and cold remedies, vitamins, tonics and benzodiazepine sedatives and tranquillisers."

That list of seven categories arose from the original institution of the limited-list process in 1985, at the behest of the then Secretary of State for Social Services, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), ably assisted by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), then Minister for Health.

I well remember the row provoked by the original proposal to limit the number of drugs that might be prescribed in those categories on the NHS. A doomsday scenario of sorts was set up by the British Medical Association, the royal colleges, the pharmaceutical industry, various patient groups and so forth. We were visited by the godfathers of the American pharmaceutical industry, who came over to intimidate us into accepting that this was a very bad idea ; however, the intimidation backfired. It was just the sort of thing that my right hon. and learned Friend the Member for Rushcliffe enjoys in his usual adversarial manner.

What really stiffened the resistance of those of us who were inclined to take the industry's part at that time was a disgraceful campaign by the United Kingdom subsidiary of Hoffmann La Roche, which was busy trying to defend its high-priced tranquillisers. The year 1985 was about tranquillisers, and about

remedies--frequently quack remedies--for minor ailments with self-limiting symptoms : coughs and colds, and mild and moderate pain. Eventually, the original list that the Government put up--involving some 30 drugs in those seven categories--was increased, as a result of the hastily contrived advisory committee, to 129 products. I believe that some 150 products are now included in the seven categories. The position relating to minor ailments has persisted to this day.

We were originally told that there would be savings of £100 million ; that was later revised downwards to £75 million. Somewhat evasive answers were given to questions within a year of the institution of the limited list, and since then it has been impossible to find out whether any savings have been made. However, one thing definitely has happened as a result of the seven categories : in those categories, no new chemical entity--no new significant product--has been produced since 1985. I shall say more about that later, because it is very important.

My right hon. Friend the Secretary of State intends to develop 10 new categories of ailment for which there will be limitation. I think we should list them for the record, because this is effectively the first debate that we have had on the issue. My right hon. Friend proposed that the 10 new categories should be anti-diarrhoeal treatments, appetite suppressants, treatments for allergic disorders, hypnotics and anxioytics, treatments for vaginal and vulval conditions, contraceptives, treatments for anaemia, topical anti-rheumatics, treatments for ear and nose conditions and skin treatments. Perhaps three of those areas are more significant than the others. I think that the areas that are particularly worrying are skin treatments, contraceptives and treatments for vaginal and vulval conditions, which include quite serious illness.

There has been an outcry from patients' organisations, individual patients, doctors and, predictably, the industry.

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I should like to remind my hon. Friend the Minister just how important the pharmaceutical industry is. It is one of our most successful industries. It has £7 billion-worth of sales a year. Almost 50 per cent. of that produce is exported. A trade surplus of £1.3 billion is produced by the industry.

The industry is also good at reinvesting its profits into research and development. It searches for new and better products. About 18 per cent. of its United Kingdom turnover--£1.4 billion--is invested in research. That compares favourably with other areas of manufacturing industry, which spends an estimated 2 to 4 per cent. of its turnover on research. The pharamaceutical industry employs 100,000 people in high-grade jobs. It does much to improve the esteem of British science throughout the world. We have some extremely good research workers in the industry, and we should cherish it for them. Medicines produce an economic remedy for many ailments. The House will not be surprised to hear that the industry contrasts pharmaceutical remedies with invasive techniques such as surgery and other advanced technological treatment of patients. Five of the world's 20 most prescribed medicines were discovered in the United Kingdom. That includes the No. 1 product in the world. That gives an impression--I am sure that my hon. Friend the Minister does not need reminding of it--of just how important the pharmaceutical industry is.

I now wish to deal with the effect that the proposal of my right hon. Friend the Secretary of State will have on patients. It is worth saying that the reason why the drugs bill continues to increase is not simply because pharmaceutical companies put their prices up. Rather, it is because many more people are living to a much greater age. It is without doubt that the elderly, particularly those between 75 and 85, are substantial consumers of pharmaceutical products. The Government have encouraged doctors to hold screening clinics, which have identified many hundreds of additional patients who require medicines--for example, for high blood pressure, late onset diabetes and asthma.

The other fact that has increased the prescribing costs of general practitioners is the increasing tendency for hospitals to prescribe the minimum quantity of products to patients who are being discharged from hospital. The Government themselves have suggested that pharmaceutical treatment can be cost-effective. I pray in aid Lady Hooper when she was junior Minister for Health in 1989. She said : "High-cost medicines can be very cost-effective in raising the quality of patients' lives and are under no threat from this Government."

In 1989, when the National Health Service and Community Care Bill was going through the House, my right hon. Friend who was then the Minister for Health and is now Secretary of State for Health said : "Our interest lies in cost-effective prescribing, not cheap prescribing. We are quite prepared to pay the price for innovative new medicines which will significantly improve the quality of patients' lives."

The much-quoted former Secretary of State for Health, my right hon. and learned Friend the Member for Rushcliffe, said :

"we have repeatedly made it clear that every patient will be entitled to the drugs which, in the general practitioner's opinion, the patient requires."-- [Official Report, 23 January 1990 ; Vol. 165, c. 732.]

In the working paper "Promoting Better Health", the Government outlined their commitment to increasing the

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emphasis on preventive care, recognised that that might result in increased expenditure on drugs in general practice, and said that they are committed to meeting such an increase--should it occur. During the progress of the Bill which became the National Health Service and Community Care Act 1990, there was much debate about the effectiveness of high-cost drugs as opposed to low-cost drugs. The Oxford region was particularly prone to high-cost prescribing, but in terms of the overall cost of health care, it was seen as very beneficial.

Of particular concern is the fact that 85 per cent. of prescriptions are dispensed free of charge to those on low incomes, the elderly, the chronically sick, pregnant women and children. They will, in the main, be directly affected by the Government's proposals. Doctors are already told by their family health services authorities how much they may spend through their indicative prescribing scheme--a scheme which costs the taxpayer a good deal of money to administer.

One aspect of the debate on pharmaceutical products is that we pay little regard to the fact that pharmaceutical products can be an effective and cost-effective form of treatment for many patients. Later, I shall return to the recent report on sufferers from heart disease. It is extremely worrying that many people suffering from undiagnosed heart conditions are taking no medication--and even those who are now face limitations on their drugs.

Substantial concern has also been expressed by the Family Planning Association, which points out that, of the 35 brands of contraceptive pills, 22 have different formulations. It is a matter of general knowledge that the best pill for one woman may be the worst for another. There is general concern in family planning circles that, because the newest formulations--which might be the best for younger women--may be more expensive, some women will be forced to accept a less satisfactory treatment or method of contraception. That seems to fly in the face of the Government's "Health of the Nation" strategy, which the FPA strongly supports in giving priority to reducing the number of unplanned pregnancies.

The director of the National Eczema Society, Tina Funnell, highlights the concerns of patients with skin diseases, some of which can be extremely debilitating and very unpleasant. She states : "Extending the selected list will increase demand for expensive hospital treatment. One in five of the population suffers from skin disease at some time, and responses to treatment are enormously variable. Our concern is that to reduce patient choice to two or three products in each therapeutic area will mean poor compliance with treatment. Exacerbations can quickly become acute, and these will require far more expensive in-patient care."

That is a worrying comment from a society dedicated to those who suffer from eczema. Similar concerns have been expressed by the Psoriasis Association, the Acne Support Group,porosis Society. All these important consumer groups have expressed their worries about my right hon. Friend's proposals for two basic reasons. First, they say that it will lead to a limitation of existing medicines currently supplied by doctors. Secondly, and more importantly, they say that it

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will lead to a blight on further advances and improvements in treatments that are desperately needed in all the therapeutic areas, but particularly for skin complaints.

Patient groups realise and recognise--better, it seems, than my right hon. and hon. Friends the Ministers and their civil servants--that companies simply will not risk investing up to £200 million and 12 years of time in developing a new treatment that wins the approval of the Committee on Safety of Medicines, only to have the product blacklisted by the Advisory Committee on NHS Drugs, which is now known, I believe, within the industry as the price control committee for NHS drugs.

Innovative companies based in this country will go on developing new treatments, but many of them will not necessarily seek to make them available in this country. New British-made medicines will continue to treat millions of patients throughout the rest of the world, but NHS patients may be denied access to those advances simply because they will not be licensed or marketed here.

There will be an important knock-on effect on clinical trials, which currently are carried out by our good scientists in this country. Traditionally, companies carry out clinical trials in the countries where they aim to seek licensing approval. If companies cease to seek licences for new products in this country, it is bound to lead to a curtailment of clinical trials carried out by clinicians in our major teaching and university hospitals. That brings me back to the £1.4 billion worth of research moneys that are put in each year by the companies for research into new products.

The medical profession has expressed profound disquiet about the proposal to extend the selected list. Surveys show that 70 per cent. of general practitioners want these proposals to be withdrawn. They follow Dr. Alistair Donald, president of the Royal College of General Practitioners, who recently told a meeting of my colleagues in this House that he and the college are opposed in principle to the limited list concept and a resolution condemning the proposals was carried at a recent meeting of British Medical Association local medical committee representatives.

Doctors are worried about it ; patients are worried about it ; and the doctors find other senior representatives to express these concerns for them. For example, Mr. David Bromham, consultant gynaecologist at St. James's University hospital, Leeds, and chairman of the National Association of Family Planning Doctors, has expressed his concern quite vividly, as have dermatologists at the Hammersmith hospital and gynaecologists at the John Radcliffe maternity hospital, Oxford.

According to the industry, it would appear that the Government want to renegotiate the pharmaceutical price regulation scheme as though the limited list did not exist, and that they want to extend the limited list as though the PPRS did not exist. That seems to fly in the face of reality. Companies believe that if the Government expect them to come to terms with reality, the Government should be expected to do the same.

Health Ministers have repeatedly justified extending the limited list by pointing to the 12 to 14 per cent. annual increase in the drugs bill over the past two years. That increase, they say, is unacceptable. But why is it unacceptable? As I said earlier, the growth is due in the main to the ageing population and to the Government's

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encouragement of doctors to identify new patients who require treatment for high blood pressure, the late onset of diabetes and asthma.

The Government's "The Health of the Nation" survey, published just two weeks ago, shows that almost 75 per cent. of over 7 million United Kingdom adults who are suffering from raised blood pressure, at levels that expose them to the risk of premature death from a heart attack or a stroke, are not receiving any medication. For those patients, and their families, it could be argued that the growth in the drugs bill is unacceptably low, not unacceptably high. By spending money now on medicines to prevent or delay heart attacks and strokes, the Government will save millions of pounds in the longer term in hospital and disability costs associated with those two conditions.

No doubt when my hon. Friend the Minister replies he will claim that the price control committee--or the Advisory Committee on NHS Drugs if he prefers it--will always look favourably on advances in treatment that may emerge in future. Sadly, the industry has lost all faith in Government assurances because only last July my hon. Friend the Minister for Health assured three large companies that the Government had no plans to extend the limited list. That assurance proved worthless within a very few weeks.

In the 10 new therapeutic categories to be covered by the limited list, there are currently 200 projects in research and development, no fewer than 56 of which are for skin complaints like psoriasis and eczema and 14 of which are aimed at bringing about improvements in contraception. There is a real prospect that some of those projects will be abandoned. Perhaps more significantly, if they do reach fruition, they may not necessarily be submitted for licensing in this country. As I have said, patients in other parts of the world will benefit from advances and advantages from which NHS patients will not. That is entirely unacceptable.

At a recent public meeting in London, a senior Department of Health official, Mr. Melvyn Jeremiah, said that it is the Government's intention to ensure that new products do not elbow out tried and trusted products. I do not believe that that remedy is acceptable to this House or to patients. We might sum that up as, "Long live leeches." It will not give any reassurance to the innovative companies that the Government will, in future, look favourably on newer, more expensive products.

The implementation of the limited list this time is vastly different from what happened in 1985. The Advisory Committee on Drugs--the price control committee--comprising expert consultants, doctors and pharmacists, is using most peculiar tactics. It is telling companies that they must agree to bring their prices down to a reference which the committee will determine arbitrarily, or it will recommend to Ministers that their products should be blacklisted.

That seems to be stretching United Kingdom and EC law to the very limits. I suspect that it may be challenged at some stage. It is no better and no worse than blackmail. Companies may not be screaming "blackmail" in public, but they are certainly communicating that message back to their parent companies in various parts of the world and that is having a disastrous effect on investment decisions.

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I will not weary the House with too many quotations. However, Mr. Michael Bailey, a director of Glaxo, our largest national pharmaceutical manufacturer, said that

"curbs could mean companies scrapping research rather than invent new products which never make it on to the limited list.

What is the point of me spending millions of pounds researching a product that the Government will just blow away?'"

Mr. Bailey asked that question at the annual meeting of the Welsh executive of the Royal Pharmaceutical Society. That is an authoritative voice from within the industry to which we should pay some heed.

There is also some doubt about how precisely the committee is determining its reference prices. Reference prices are viewed with grave suspicion throughout Europe because they can be quite arbitrary. For instance, I am told that for some topical skin products the committee is fixing a reference price for a 100 g tube of ointment, irrespective of the potency of that ointment. Potency can vary by a factor of 1 : 3. That means that a tube of 100 g of one product is really equivalent to a 33 g tube of another product. That is extremely worrying. The matter is summed up by Mr. Paul Mason, another official at the Department, who, at a recent meeting, was heard to say that the committee

"does give some indication where it can of"

what might be a reasonable price reduction, basing its calculation on "comparative average prices". When asked to define more clearly the criteria it used to determine acceptable prices for reimbursement, he conceded that the committee found the pricing issue "very difficult to handle", noting that

"it is not an exact science by any means".

That gives Mr. Behrendt, director of the United Kingdom pharmaceutical subsidiary of Bayer, according to a recent article, every good reason to say, as he did recently, that

"The Government has, in effect, introduced a system of reference pricing [paying for a drug at the price of the cheapest product in its area]"--

that is his definition--

"through the back-door. This is very unfair. If innovative products can no longer create a premium, there is little point launching new products on the market."

My hon. Friend the Minister and his colleagues at the Department would do well to heed those warnings. Any savings that the Government hope to achieve by the proposed measures will be vastly outstripped by the costs of lost inward investment and the consequential losses of employment and export opportunities. It is economic madness. A senior executive who has worked in the industry for nearly 30 years recently told me :

"I have never known companies in the industry so angry with what is currently happening in the UK. They cannot understand why an industry that has contributed so much to patient care and to the UK economy over so many years is being treated in this way."

In a recent letter to a chief executive of a major German-owned company, I believe that my hon. Friend the Minister wrote : "We do not believe that the PPRS and the Selected List Scheme are inimical. The Selected List Scheme covers only a small proportion of the total pharmaceutical market".

A small proportion? The categories in the extension to the limited list alone cover almost 25 per cent. of all NHS prescriptions, not to mention those seven categories in the original list that must account for at least another 5 to 10 per cent. We are probably talking about a third of all NHS prescriptions, and that blows out of the water the claim that the PPRS and the selected list scheme are not inimical.

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