House of Commons Hansard Debates for 10 May 1995

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and the Department of Health must make a major contribution to the basic planning stage and the perception of the problem.

Hon. Members undoubtedly see many different types of case. It is a healthy sign that there is legislation going through the House now and that there is increasing concern by individual Members arising from work in their constituencies. It reflects a greater public sensitivity to the needs and problems of the mentally ill. The younger generation have a much deeper understanding of the problems of mental illness than some of their forebears. It is that concern, together with the relationships they form and the support they give in the community, that offers the best hope of care for the mentally ill in the future.

10.53 am

Mr. Nigel Evans (Ribble Valley): I congratulate my hon. Friend the Member for Hendon South (Mr. Marshall) on initiating this debate this morning.

I am extremely concerned about the good name of care in the community. We must do all we can to ensure that any deficiencies within the system are corrected as soon as possible. My hon. Friend the Member for Bury St. Edmunds (Mr. Spring) talked about the high-profile cases in which people have fallen between two stools and are not receiving the proper care or supervision in the community. Some are not taking their tablets, are found wandering the streets at all times of the day and night, and are sleeping rough.

Those are the cases that the public see. They are not aware of the 99 per cent. of cases in which patients are receiving proper care. They see only the small number of cases, including the suicides, that make the newspapers. Therefore, the whole concept of care in the community is tainted. I am extremely concerned that we should do everything possible to ensure that the targeting of resources and help is aimed at those who are in need so that they receive proper care in the community.

As I said in an intervention, I had three large mental institutions in my constituency, which must be quite unusual. Brockhall has now closed, and is being taken over. No doubt the site will soon be turned into a housing estate. Whittingham will also close shortly. That institution is what everybody thinks of when they think of an old Victorian asylum. It has superb gardens, where the mentally ill can wander within the confines of the institution. The people outside the community never see those people, because they do not go into the hospital grounds unless they need to do so. Again, planning permission is being sought to turn that site into a housing development.

In a number of years, Calderstones, another large mental institution, will be closing. There will be a small unit on the site looking after those with extreme and difficult problems. Having said that, there are currently 600 people living there, who will all be discharged into the community. If one considers how many people were living in those three large mental institutions and who have now, over a short time, been discharged into the community, one can grasp the task that was before the Government in implementing this policy. Many people have reservations about the speed at which all this has been done. They think that it should have been carried out more slowly. Some people, myself included, think that it has been more cruel than kind to

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take people who have been institutionalised all their lives out of the large institutions and put them somewhere else. Do not get me wrong: I am not a defender of the large institutions; they were a mistake, and we have moved on. However, we must ensure that the resources are there, so that those who are discharged into the community receive the proper care.

Mr. Nicholas Winterton (Macclesfield): I was horrified by what my hon. Friend said about the closure of a number of institutions in his constituency. He said that some of the sites will be developed for housing. He said that Whittingham had superb grounds. Will my hon. Friend accept from me, having taken a deep interest in mental health over almost 20 years, that one of the treatments for those suffering from schizophrenia in particular is found in the environment in which they live and are being treated?

Is it not sad that those wonderful hospital grounds, many of them quite close to cities and town centres, and therefore very much part of the community, are being disposed of merely for the capital gain of housing development? If a smaller and more modern unit could be constructed on those sites to care for the mentally ill, the environment, which is so important for the treatment of some people with mental illness, could be retained.

Mr. Evans: I accept everything that my hon. Friend says. The grounds at Whittingham are large, and it is appropriate in certain circumstances to have that sort of atmosphere and quietude. That institution is on the outskirts of Preston. Some of the high-profile cases involve people who have been in that environment but who are now wandering the streets of Preston. That must be wrong. I know that, with the redevelopment of Whittingham, a new unit will be put on that site. I hope that sufficient grounds are kept aside within the development, so that people are able to enjoy the quietude and the asylum, away from the noise and the grind of everyday living.

Mr. Nicholas Winterton: Get a commitment from the Minister.

Mr. Evans: I know that my hon. Friend the Under-Secretary of State for Health, the hon. Member for Battersea (Mr. Bowis) has been to Calderstones in my company. I was there only a few weeks ago, taking a look at the good work that was being done, particularly with people with learning disabilities. My hon. Friend will know of the good work and commitment of the staff who work at such institutions. One of my concerns is that the spread of people going into the community will mean that there are insufficient numbers of adequately trained experts to deal with the problems.

Lady Olga Maitland (Sutton and Cheam): I thank my hon. Friend for giving way--he has touched on some valuable points.

Does he agree that we should be carefully considering another category of patients? We need to consider not just those who have been sectioned and come out of hospital, but those who are vulnerable and who do not quite qualify for being sectioned, but who desperately need supervision so that they do not harm themselves and others.

Mr. Evans: I agree with my hon. Friend. That is exactly what we need. Those people do not necessarily

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need large institutions; they need smaller institutions, with sufficient grounds, so that they are not any danger to themselves or other people.

Whittingham has a tradition of looking after people with mental illness, to which a stigma is attached. Mental illness is something that one does not talk about. The people in Whittingham have grown up with the institution, and enjoy the fact that it exists in their area. The people with mental illness mix with the people in the village, and the position is a total reversal of the

not-in-my-backyard syndrome--NIMBY. If one tried to set up such an institution in some districts, the residents would fight tooth and nail against it, but the people of Whittingham fought hard to retain the institution in their community, because they know and understand the problems that those people have.

The problem of people with mental illness being referred to prisons because there are insufficient beds available has already been mentioned, and it worries me. One of my constituents, whose son unfortunately has a mental illness, came to seem me a couple of weeks ago. He became involved in a crime; his parents say that he should not be on the streets, but receiving care, because of his problem. He is now in prison. He is not receiving the care that he needs. At the end of his sentence, he will be released back into the community in no better shape--perhaps worse shape--than when he went in. We must ensure that sufficient beds are available for people who might become involved in crimes because of their illness, and we must ensure that those people receive the proper treatment they need.

Lady Olga Maitland: Does my hon. Friend agree that there is another problem: the shortage of longer-term beds? There is a danger that patients who return into the community enter the carousel system. They come out of hospital, after a period they are desectioned, they commit another offence and have to return to hospital. They never receive treatment in hospital for long enough--the required period could be six months, one year or even longer. The problem is that such people are released too soon.

Mr. Evans: I agree with my hon. Friend. Nothing can be more distressing to professionals than to see those with whom they have worked released into the community prematurely and being sent to prison because they have committed a crime, or falling into rough ways because they are not taking the tablets and are not being properly supervised. The process then has to start all over again. I shall bring my remarks to a close, as I know that other hon. Members want to participate in what has been a useful debate. We need to target the resources at those who are not receiving the proper care in the community. Those who receive care in the community benefit from the small cluster homes, where they receive virtually one-to- one attention from the dedicated staff. We must ensure that they can benefit in future, and we must not throw the baby out with the bath water.

11.3 am

Mr. Oliver Heald (Hertfordshire, North): I congratulate my hon. Friend the Member for Hendon, South (Mr. Marshall) on instituting the debate.

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I very much agreed with the hon. Member for Motherwell, South (Dr. Bray) about the change in attitudes in our society in recent years. It is right to start by praising the policy of care in the community and the great strides that have been made in taking individuals who did not enjoy freedom out of asylums, so that they are now able to make their homes in the community. Such people have been de-institutionalised and are free to become part of the community and take up jobs--many of them responsible jobs--due to the new drugs and treatments that have become available. It is a tribute to the House and the Government that the change has been made, and has been largely successful.

When one makes such a change, one also has to manage it and deal with its effects. We must all accept that, in a tiny minority of cases, the failure to take drugs or to follow the care programme have led to disasters such as that involving Jonathan Zito, which has already been mentioned.

We must consider three issues. First, we must ensure that only those who are likely to co-operate with their care programme and with those trying to help them, and who take the drugs they need are discharged from hospital. The people who take the decision to discharge such patients should not be under pressure--be it financial pressure or the pressure to adhere to the convention or dogma that everyone can be treated in the community.

Secondly, we must ensure that everyone who is released from hospital is properly supervised, with proper accommodation and finance for that purpose. When the decision is being made as to whether to discharge a patient, proper account must be taken of the resources available. That may mean that somebody who could be released or discharged into the community purely on the basis of medical science if there were a huge input of resources and supervision, may not be discharged immediately because it is not possible to provide such support and supervision. The available resources must be taken into account when the decision is made as to whether to discharge a patient. There must be adequate supervision to protect the individual and the public.

My hon. Friend the Member for Hendon, South mentioned the Mental Health Task Force report. It stated:

"Patients with severe and chronic mental disabilities are being discharged without adequate supervision, or the provision necessary to meet their housing, social and health needs. This could incur risks not only to public safety but also to the safety of the individuals concerned".

Mr. Nicholas Winterton: My hon. Friend is making an important point. Does he accept that, if someone is discharged from a mental illness hospital into the community, the person who is nominated to be in charge of that case--in charge of that person--should be medically qualified, because mental illness is a disease, not something that a social worker can properly supervise? Does my hon. Friend agree that the person nominated should always be medically qualified?

Mr. Heald: I am grateful to my hon. Friend for making that point. A high level of expertise is needed. I am not an expert in social work and mental health--my hon. Friend knows far more about it than I do. There may be social

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workers who are so highly trained that they have more expert knowledge about care in the community than some of the doctors who deal with the specialty in hospital.

The important point is that hon. Members have responsibility for the public at large. We also have responsibility for those individuals. However, if there is a question of the safety of the public, the House should always err on the side of protecting the public, because the freedom of the public at large is always a high consideration for the House, and more important than an individual's freedom in such circumstances.

The hon. Member for Motherwell, South (Dr. Bray) said that the number of suicides was greater than the number of individuals who are attacked by former patients. That is not the right balance. It is vital that the public are protected.

Lady Olga Maitland: Will my hon. Friend give way?

Mr. Heald: No. I do not have time to give way.

The freedom of many individuals will be less if the public reach the point at which they are completely dissatisfied with the protection available to them.

If individuals are discharged into the community and they fail to co- operate, it is important that they are detained speedily and placed back in hospital. The Mental Health (Patients in the Community) Bill, with its provision for after-care supervision, taking to the House the power to effect a speedy readmission to hospital, is vital if the public are to be satisfied.

I hope that the Minister will tell us the current guidelines on the discharge of patients, and when the guide to co-operative working will be available.

11.10 am

Mr. David Hinchliffe (Wakefield): I congratulate the hon. Member for Hendon, South (Mr. Marshall) on initiating the debate. Other hon. Members have contributed sincere thoughts and concerns about the current situation relating to the care of the mentally ill. In particular, my hon. Friend the Member for Motherwell, South (Dr. Bray) has a deep personal commitment to the issue, as chairman of the all-party mental health group.

As I listened to the debate, I had the feeling that one or two hon. Members were harking back to a golden age of the asylum that, frankly, never existed. Many years ago, as an authorised mental health officer, I had the misfortune, to some extent, to witness the system working. Some people who hark back to that system are thoroughly misguided, and do not appreciate exactly what it was all about. The process of moving from the 19th-century asylum system has rightly had all-party support over the past 30 years.

Public confidence in community care policy has been shaken in recent times. That has been due not only to some of the tragic cases that have been mentioned this morning, but to a much wider belief that the Government are more concerned with running down the existing system to save money than with developing an alternative system of community care.

In responding to public anxiety, the Government have been unable to answer two particularly important questions: first, in halving the number of psychiatric in-patients by 70,000 between 1982-83 and 1992-93, what has happened to the people leaving hospital? I have tabled

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questions but received no answers. Secondly, what has happened to the public resources that have been released by the huge closure programme? They have clearly not been invested in alternative provision within the community.

Immediately before moves towards community care in the late 1950s, 15 per cent. of national health service expenditure was on mental health. Now it is about 11 per cent. Although there have rightly been important developments in community re-provision since that time, it comes nowhere near matching the 4 per cent. drop in expenditure that has occurred. Key elements in community care are missing in many sectors.

The central emphasis of many hon. Members' contributions this morning is to urge the provision of acute beds--urging asylum. I urge them to look at examples of asylum within the community. People do not have to be in parks miles from the public, locked in institutional care. Asylum exists within the community. There are safe houses, supported accommodation and sheltered environments in which people can be enabled to live without being in the old bin system that many of us, unfortunately, knew intimately.

It concerns the Labour party that, within community care, mental health appears to be the poor relation. The Chartered Institute of Public Finance and Accountancy found that only 3 per cent. of the overall community care budget is spent on mental health. The Mental Health Foundation found that, of every pound spent on mental health services, 91p goes on NHS treatment, while the remaining 9p covers all community provision by local authorities and the private and voluntary sectors put together.

The public can see that the Government's mental health policy consists almost entirely of piecemeal initiatives, not a coherent thought-through strategy. That point was made not specifically but in general terms by hon. Members, including the hon. Member for Hendon, South. Each tragic incident, some of which have been referred to--I take them all very seriously-- results in an ad hoc attempt to patch the holes in the care system, when it is clear that the system itself needs a thorough overhaul. I hope that the Government will respond to the points that were made by Conservative Members this morning. The central issue that the Minister must address is the organisational framework of community care. When the National Health Service and Community Care Act 1990 was being debated in the House, I thought that it introduced a fundamental contradiction, especially in planning mental health services. Within the NHS, it introduced a competitive market in health, but alongside that was the requirement at local level to plan community care. The two elements were completely contradictory.

We have seen the result at local level, which has a bearing on some of the tragic cases that have been mentioned. The result has been the fragmentation of local provision, duplication in some instances, and gaps in provision, as has been mentioned by hon. Members. We must add to that the joker in the pack, which was not mentioned this morning--GP fundholding --which is undermining coherent planning in community care. If a fundholder purchases a community psychiatric nurse from outside the immediate area, in such circumstances local collaboration simply does not exist. The Government

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seem to be turning a blind eye to some of the inherent problems in the operation of the market as it applies to community care. The divided structure between the national health service and local authorities adds to such organisational problems. Administrative difficulties undermine attempts at inter-professional and inter-agency working. No doubt the Minister will mention last year's Audit Commission report, which mentioned poor co-ordination, ineffective use of resources, and lack of communication and effective multi-disciplinary team working. Only 25 per cent. of health and social services authorities had actually established the criteria for operating the care programme, let alone actually got it working. I have listened carefully to comments on the Mental Health (Patients in the Community) Bill that will shortly come before the House, but I am concerned that it addresses just one element, despite considerable pressure from a variety of sources for a much wider review of existing mental health provision and legislation. Indeed, the Mental Health Act Commission itself has called for the existing legislation to be updated and to reflect the shift towards care in the community.

There is concern that mental illness is regarded by that legislation primarily as a medical condition. That is where I disagree with the hon. Member for Macclesfield (Mr. Winterton),, for whom I have great respect. Mental illness is a much wider issue than a clinical problem to be dealt with by doctors. I shall deal with that point in a moment.

One matter that the Government must address--in a sense, it was ignored by the hon. Member for Macclesfield--is the clear connection between mental illness and social factors. There are social reasons why people become mentally ill, and they must be looked at in the context of reviewing the policy on the care of people who have mental health problems.

Although "The Health of the Nation" identifies mental illness as a key issue for prevention, there is no acknowledgement of the need to shift towards social remedies to mental health problems. There is no acknowledgement that the deliberate widening of social inequalities has impacted significantly on mental health.

Mr. Spring: Will the hon. Gentleman give way?

Mr. Hinchliffe: I do not have time to give way. I apologise to the hon. Gentleman; I have two minutes left.

For example, a range of studies--I shall happily refer hon. Members to them --have now confirmed the connections between increased unemployment, mental illness and suicidal behaviour. Each year, more than 5,500 people commit suicide--more than those who die in road traffic accidents. We need to consider the social factors that result in such tragic figures.

It is crucial that the Government understand the clear connection between their own core policies and mental ill health. Housing policies result in record levels of homelessness, as people are dumped on the street because councils no longer have the ability to offer them proper accommodation. In areas such as mine, industrial policies that have wiped out entire industries, such as coal, and left people rotting on the dole, influence their mental health. The Government must address those problems.

Economic and social policies that lead to the redistribution of wealth away from poorer people towards those who have money have a bearing on the mental

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health of poorer people in our communities. Until the Government address those points, our debates will be on the periphery of the real issues we have to address.

The most important steps that any Government can take are preventive. Until the Government learn the central lesson that preventive measures are the key element, they will not come anywhere near dealing with the fundamental issues that need to be addressed in respect of the care of the mentally ill.

11.20 am

The Parliamentary Under-Secretary of State for Health (Mr. John Bowis): I congratulate my hon. Friend the Member for Hendon, South (Mr. Marshall) on initiating the debate and raising this subject in the House for the second time. I know that he has provided long and effective support for a number of national and voluntary organisations, and I welcome his involvement and his thoughts. I also welcome the thoughtful contributions from both sides of the House and all sides of the arguments. I should mention those from my hon. Friends the Members for Bury St. Edmunds (Mr. Spring), for Ribble Valley (Mr. Evans) and for Hertfordshire, North (Mr. Heald), and from the hon. Members for Motherwell, South (Dr. Bray) and for Wakefield (Mr. Hinchliffe), and the interventions from my hon. Friends the Members for Macclesfield (Mr. Winterton) and for Sutton and Cheam (Lady Olga Maitland), not forgetting the supervising presence of my hon. Friend the Member for Leeds, North-East (Mr. Kirkhope), who is a founder member of the Mental Health Act Commission.

Mr. Dennis Turner (Wolverhampton, South-East): The Minister should not forget the Whips. He has mentioned everyone else.

Mr. Bowis: I mentioned supervising presences, and hon. Members can read into that what they will.

I congratulate my hon. Friend the Member for Hendon, South on his choice of title for the debate. The element of care, perhaps caritas, is crucial to all health care, but perhaps it is even more fundamental when we are helping people to cope with an illness which, after all, frightens them and other people. It can be invisible and unpredictable, it is widely misunderstood and it produces prejudices in others which exacerbate the problem for the sufferer.

If we start with the concept of care in both its strands--of mattering to us and looking after those who are ill--we begin to build the understanding that will help us do better for people with mental health problems.

We need to care enough to care for the mentally ill. We need to care enough to overcome ignorance, remove stigma and provide the range of services that we all need. It is not just the 10 per cent. of us who currently need those services; it is the one in four of us who will do so during our lives. Mental illness can affect any of us, and will affect many of us.

The hon. Member for Wakefield spoke about prevention. Of course prevention is crucial. That is why our policies put so much emphasis on initiatives such as the "Defeat Depression" campaign and our work with employers, helping people to cope with stress and to lead

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mentally and physically active and fit lives. Everyone can play a part. At work, a flexible employer with a counsellor on board can help people who may be under stress at home or at work and need that additional support.

As my hon. Friend the Member for Hendon, South said, it was Enoch Powell, some 30 years ago, who first advocated moving people from the old institutions back to the community, where many of them could live more fulfilling lives if given proper support. The development of new drugs for treating mental illness means that is possible for many more people. That does not mean that we can simply close down all the old hospitals and walk away. We need a range of facilities for care to work in the community.

It is our policy that hospitals should not close until and unless alternative provision is available. We need residential care--some of it sheltered--in or near communities. We need modern hospital facilities--long -term, medium-term and short-term. I have preached the case for medium-term hospital hostels to providers and purchasers in our health service, and I shall continue to do so. We need 24-hour crisis beds for those who cannot cope in the short term, and we need asylum in the best sense of the word--a place of safety in which to rest and improve one's mental health.

Some patients will need much longer spells in hospitals, and a few, sadly, will need to spend all their lives there. Some will need different levels of security, including medium-secure units, and a small number will need the high-security services in our special hospitals.

We have been concentrating on developing a range of facilities. Let me dwell for a moment on medium-secure provision, which is so important to so many issues that have been raised today. It fills a gap that was perceived and identified in 1974 by the Glancy committee. When the Government came to office in 1979, there was not a single medium-secure psychiatric bed in the country. We have invested £47 million in the programme, and by the end of next year we shall have provided 1,200 of those places. That makes so much more possible. In addition, further places are being developed by regions from mainstream NHS capital allocations, as well as in the private sector.

Reference has been made to enabling people to leave prison. In the past four years, we have enabled 2,500 patients to move from prison to hospital. I understand the impatience of my hon. Friends and the courts, but it is worth bearing in mind the fact that, a few years ago, that option was not available, as medium-secure beds were not being provided. The option has become available only recently, and it will increasingly be the route for the appropriate placement of people.

Reference has been made to the Mental Health (Patients in the Community) Bill, and I welcome what has been said about that. In answer to my hon. Friend the Member for Bury St. Edmunds, we have issued new guidance on hospital discharge. I commend to him the discharge handbook, which is helping people to make the right decision and to ensure that the decision to discharge somebody is made only if the care programme is available and ready in the community, with the key worker in charge, and there are provisions for that individual's needs.

We have introduced through the House the new code of practice to the Mental Health Act, stressing that a person's health, as well as the risk to himself or to others, is

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sufficient to take him for assessment and into hospital. We have introduced supervision registers, identifying those patients at significant risk of causing harm, committing suicide or harming other people if they are not given extra protection and care. Those are now in place in every health authority in the country.

We recognise the point, well made by hon. Members, about the need to have the right person in charge of someone in the community. It is not always a medical person. Sometimes the key need is social functioning. Sometimes-- indeed more often--it is right that it should be a medical person, probably a community psychiatric nurse. We are making sure that those people are properly trained and know their role as key workers.

I am conscious of London's particular problems, which were referred to in the Royal College of Psychiatrists report, which drew attention to the fact that too many people were in the wrong beds. It was not just that there were insufficient beds, but that they were inappropriate beds. The medium- secure programme goes some way towards meeting that, as does the extra £10 million we put in and the mental health task force project, which identified good practice and listed where we needed to do better. It was followed up with a further report showing what had been achieved.

The £20 million homeless mentally ill initiative for London has funded 10 hostels, providing 150 bed spaces. Outreach teams are now taken on by the respective health authorities. In respect of accommodation, where the Housing Corperation agreed initially to 150 supported places, I am pleased to say that approval has now been given to some 162.

The mental illness specific grant is enabling local authorities to develop their community services. It has provided an extra £10 million this year, and £66 million in total. That has already supported 1,000 schemes throughout the country and helped 100,000 people.

The NHS has a role in ensuring that the care programme approach, registers and the priority that we give mental health are effective throughout the country. The beds are there, but we must ensure that they are the right ones. There are 20,000 acute beds and 80,000 long-term beds, as there have been over the past decade, but they are in different places. That is good news--provided that those beds are everywhere, to meet the range of need.

Nobody can be complacent about mental health. We must work together, because there is an inter-agency task ahead for us all. I re-emphasise, in this short response, our commitment to providing effective, appropriate and safe care for people with mental health problems.

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Personal Financial Services

11.30 am

Mr. John Denham (Southampton, Itchen): I am grateful for this debate and, following the recent Personal Investment Authority statement on the mis-selling of personal pensions and the Office of Fair Trading report on the selling of endowment mortgages, I hope that the debate will provide a timely opportunity to examine the serious problems that still exist in the sale of many personal financial services. I declare an interest, as I receive a modest contribution to my office research costs from the National Union of Insurance Workers. That is not a party political union or one affiliated to the Labour party. In fact, I believe that at the last general election it sponsored a Conservative candidate.

That union's sponsorship brings me no personal pecuniary benefit, but taking an interest in personal financial services since becoming a Member of Parliament has brought me personal financial benefit. As I began to take a closer interest in the operation of the financial services industry, I realised that I had been mis-sold a personal pension some time ago. Four years before I entered the House, I chose to become self-employed and acquired a personal pension. The mis-selling that occurred in my case was not one of the spectacular instances that hit the headlines in the past year, but a mundane, everyday example of mis-selling of the kind that collectively waste the savings of too many people. I was sold a regular premium policy even when I had made it clear to the financial adviser that I was most unlikely to continue in a personal pension scheme for more than a few years. I remember making it clear that I hoped to join within a reasonable period the generous occupational pension scheme offered to Members of Parliament.

In those circumstances, I should have been advised to make single premium payments into my personal pension policy, because, with a regular payment scheme, charges in the early years are much higher. Unless the policy is kept until maturity, it is an expensive way of saving. When I raised that matter with the company concerned, the error was admitted without fuss. The recalculation of my personal pension savings over the four-year period showed that, had I made single premium payments, my pension savings would have increased by no less than 50 per cent.--a significant difference.

When I told that story to a colleague in the Tea Room the other day he said, "If I'd been as daft as that, I certainly wouldn't go around telling people about it." That is part of the problem. Many people who are not unintelligent are unsophisticated when it comes to financial matters but are reluctant to admit to the fact. That makes them over-dependent on advice from people who may have a vested interest, and reluctant to ask hard questions or to complain when they fear that things are going wrong. I suggest that that is true of the majority of the people who bought a variety of personal financial services in recent years.

I shall outline some of the steps that need to be taken to minimise mis- selling, avoid wasting hard-won savings and restore public confidence in an industry of immense importance to the country and the British economy. It is important to set the scene.

The problems of mis-selling that came to light over the past couple of years occurred at precisely the time that the Government were urging ever- greater individual

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dependence on personal financial services, savings and insurance. The Government have openly and clearly pursued a twin-track strategy. They have provided financial incentives to leave state provision and to take out personal savings and pension policies, and they have progressively reduced the value and benefits of state provisions. The effect of that for many individuals has been to give them a choice between a rock and a hard place.

Over the past 10 years, the Government have encouraged opting out of the state earnings-related pension scheme, and the Pensions Bill now in Committee will take that further. The Government Actuary suggests that Government measures will reduce the national SERPS bill by nearly 50 per cent. over the next 45 years.

The Government have encouraged pensioners to take out health insurance while reducing access by the sick elderly to national health service beds. The Government are now requiring new mortgage takers to provide their own insurance cover because the Government are removing income support on interest payments on mortgages taken out from October.

The really damning indictment of Government policy is not just the shift from public provision to private insurance but the way that the Government made that shift without ensuring that consumers were guaranteed value for money and financial security from the private provision that they are encouraged to make. The scale and range of problems now facing consumers taking out private insurance and making private savings are daunting.

Half a million people will have their opt-outs and transfers from occupational pension schemes individually reviewed. The cost of restoring lost benefits to them is estimated at between £1 billion and £2 billion. The cost of administering the review is expected to run into hundreds of millions of pounds. The ultimate cost of compensating people who were mis-sold and of conducting the review and paying the fees and other charges will have to be met from the pockets of consumers.

According to the Office of Fair Trading, endowment mortgages--which accounted for 84 per cent. of the home loans market in the late 1980s and which are still the choice of an astonishing 60 per cent. of home owners-- pose a higher risk and frequently are a more expensive option than repayment mortgages. The OFT strongly suggested that the existence of high commissions on endowment policies biased sales advice and distorted the market towards inappropriate policies for many people.

When the Department of Social Security and the Securities and Investments Board report later this year, they will confirm that people on low incomes- -as many as 2 million--were wrongly advised to leave SERPS for personal pensions because their incomes were low, rebates were low and personal contributions over and above the rebate were low or non-existent. Fees and charges are eroding the savings of people who opted out for personal pensions. Some will be left with pensions of a lower value than they would have had under the state earnings-related pension scheme. At the very least, people on low incomes, who can ill afford risky saving strategies, have been exposed to an unacceptable degree of risk in the marketplace.

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