House of Commons Hansard Debates for 23 May 1995

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convergence between them, but we are not yet in a world where they are the same, and if we seek to leap into that, we are likely to end up with confused policy objectives.

Mr. John Butcher (Coventry, South-West): Does my right hon. Friend feel that the perpetual and contrived hysteria that now obtains on Radio 1 complies with any definition that he might have of public service broadcasting? Should that sort of stuff be paid for by a more or less compulsory levy on the public? As a result of today's announcement, can he reassure those of us who are fugitives from the four terrestrial television channels that the satellite channels will remain a Melvyn Bragg-free zone?

Mr. Dorrell: My hon. Friend asks an important question about satellite television--a matter to which the hon. Member for Islington, South and Finsbury also referred. I am with my hon. Friend rather than the hon. Gentleman. If we are to encourage the development of the new technologies of cable and satellite, it is important that we do not import into each and every cable and satellite station the same sort of objectives that we define for the mainstream terrestrial broadcasters. To do so would be to limit dramatically the growth of those new technologies, in a way that would serve no public interest and would be undesirable from an economic point of view.

Mr. John Whittingdale (Colchester, South and Maldon): Does my hon. Friend accept that the liberalisation that he has announced will allow the necessary investment to come forward, if we are to take full advantage of the opportunities for technological development in the broadcasting industry? Does he also accept that, as technology allows the further proliferation of channels, it may be possible to relax the rules still further, and that, in due course, the media can be governed by the same rules that govern every other industry?

Mr. Dorrell: My hon. Friend has argued that case for some time, and I am aware of his views. For reasons that I have already given, I do not believe that we are in a world--or likely to be for the foreseeable future- -in which monopoly regulation alone is sufficient control on concentration in the media market. Further restriction is necessary, but I also believe strongly that anyone who advocates further regulation, which is what I am advocating, needs to rejustify that and to retest the proposition regularly.

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VSEL

4.22 pm

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): I would like to make a statement about the proposed acquisition of VSEL.

I released to the House and to the stock exchange this morning my decisions on regulatory approval for the proposed acquisition of VSEL by either British Aerospace or GEC. I shall now make a statement on the basis for my decisions in the two cases.

Because both bids satisfied the turnover criteria of the European Community merger regulation, the question of regulatory approval would normally have been a matter exclusively for the European Commission, but VSEL's facilities for the construction of nuclear submarines and other warships are plainly vital for United Kingdom national security. Accordingly, the Government took action, through the use of article 223 of the EC treaty, to assert UK jurisdiction over the two merger proposals in so far as they related to the military activities of VSEL. That was the first occasion on which the United Kingdom had invoked the procedure. In practice, the civil component of VSEL's activities is very small, but at the end of last year the EC Commission gave its approval for the acquisition of the non-military component by either British Aerospace or GEC. The United Kingdom reserved for itself a judgment on how the Royal Navy's requirements for submarine and warship procurement would be affected by a prospective change in the ownership of VSEL. I referred both bids to the Monopolies and Mergers Commission because, given the nature of the target company, I felt it right to have a comprehensive analysis of the UK public interest in both cases, and because I was conscious of potential competition concerns in relation to the GEC bid.

I am grateful to the MMC for the thorough exercise that it has undertaken. Complex issues are involved, as is shown by the fact that the MMC Group did not reach a unanimous view on the GEC bid. But the reports have provided me with a sound basis of analysis from which I can proceed to make the decisions that fall to me under the Fair Trading Act 1973.

The MMC identified no adverse effects for the UK public interest in relation to an acquisition by British Aerospace. The British Aerospace bid is thus cleared to proceed.

The MMC was unable to agree its view in relation to the GEC bid. The majority, consisting of four out of six members, found that there would be adverse effects resulting from a GEC acquisition. Their view was that those effects would arise from a reduction in competition at both prime contractor and subcontractor levels with consequent risks to innovation and to the Ministry of Defence's ability to achieve the best value for money. The recommendation from the majority was, therefore, that the GEC bid should be blocked.

The minority view taken by the remaining two of the MMC Group was that, because of the Ministry of Defence's skills as a monopsony buyer, the GEC acquisition would make no significant difference to the degree of competition in the industries involved in warship making and would contribute to the ease of an ultimately necessary industrial rationalisation.

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The advice from the Ministry of Defence to the MMC took the same view as the minority report. As the United Kingdom had claimed jurisdiction over those mergers in the light of our defence interests, I also had to give particular weight to the views of the Ministry of Defence as the customer. As will be seen from the report, the Ministry of Defence judged that the imminent bidding process for Trafalgar class submarines and type 23 frigates would be largely unaffected by a GEC acquisition. It was also confident that it had the resources and means to extract the best value for money, whoever acquired VSEL.

In the light of those considerations, I have decided to allow the GEC bid for VSEL to proceed. I take no view on whether British Aerospace or GEC should prevail. I note the assurance given to the Ministry of Defence by Lord Weinstock that, if GEC wins the competition for the next type 23 frigates, those vessels will in any event be built at Yarrow. The Government will of course be ready to use their well-established arrangements to support British Aerospace or GEC, whichever acquires VSEL, in seeking additional exports of warships to buttress declining domestic demand.

I recognise that it is unusual to set aside an adverse finding by the MMC on a prospective merger. But it is my responsibility under the Fair Trading Act to look at the UK public interest in the round, having regard to all relevant factors, including, in this case, the United Kingdom's defence interests. I have concluded that the public interest will be best served by allowing the market to determine the future ownership of VSEL and hence the industrial structure best adapted to meet the UK's foreseeable naval defence needs.

Dr. John Cunningham (Copeland): The President of the Board of Trade is right to assert to the House that those important matters touch on Britain's defence capability and the skills and jobs of many thousands of workers at Barrow-in-Furness, on the Clyde and, for that matter, at Vosper Thornycroft in Southampton. We welcome his decision to make a statement in response to my repeated request that he should do so.

Like the right hon. Gentleman, we have never taken sides in the matter but have pressed for both bids to be referred to the Monopolies and Mergers Commission. The President of the Board of Trade was right to make such a reference. But the first and perhaps central question that he must answer after what is an almost unprecedented decision and statement today is: why has he not accepted the decision of the Monopolies and Mergers Commission? There was little of substance in his statement to justify his decision to reject a clear and emphatic majority decision by the MMC. It is worth asking the right hon. Gentleman what in his arguments can counteract the conclusions and recommendations of the MMC that

"retaining the pressure of competition between prime contractors would be even more effective in promoting change and securing value for money . . . We see no reason to sacrifice the benefits of competition now in the hope that, if the merger were allowed to proceed,"--

this is in respect of GEC--

"there would then be possible benefits . . .

We conclude that the proposed merger may be expected to operate against the public interest."

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Is the right hon. Gentleman aware that those conclusions are emphatic? The MMC also stated:

"As we are unable to identify any appropriate remedies for the detriments we have identified we recommend that the proposed merger should not be allowed to proceed."

That is what the MMC concluded after a long and thorough study. The right hon. Gentleman needs to offer the House more of an argument than that in his statement about why those emphatic, clear and unequivocal recommendations should not be accepted.

What is the status of the assurances that GEC has apparently given? Were they given to the MMC or simply to the Ministry of Defence? Can the right hon. Gentleman specifically tell the House what those assurances are and what they amount to? Will those assurances be legally binding or will GEC be able to negotiate them away as events unfold? Those important questions remain, as yet, unanswered. In allowing the bid from British Aerospace to proceed--and quite rightly--did the President of the Board of Trade or his right hon. and learned Friend the Secretary of State for Defence seek any assurances from British Aerospace about predatory pricing policy? Will there be complete transparency of bids for warship contracts in the future, whoever may emerge as the successful bidder for VSEL?

The right hon. Gentleman and the Government have decided to leave the matter completely to the market--so much for the right hon. Gentleman's apparent commitment to and belief in stringent competition policy in the United Kingdom, which he reiterated to the House yesterday. The right hon. Gentleman has taken no strategic view on the maintenance of jobs or skills in our defence industries nor, apparently, have he or his colleagues taken any strategic view on maintaining our defence capability for the future. Those two requirements are left to the market and could easily be under threat as a result.

Mr. Heseltine: I am grateful to the right hon. Gentleman for some of the generous things that he said at the beginning of his statement.

I do not think that the right hon. Gentleman fully appreciated what I said in my statement. If the MMC had come forward with an emphatic, clear and unequivocal recommendation, unanimously reached, I would, of course, have recognised it as part of the evidence that I had to consider. It is quite apparent, however, that the MMC found it as difficult a decision as it undoubtedly is, and as the right hon. Gentleman recognised. The fact is that the MMC divided 4:2 on the issue--the chairman is a member of the committee. If one comes down to simple numbers, one is talking about one person's view, because if one of the four had changed his mind, the outcome would have been three all. The MMC obviously reached a narrow decision.

Mr. Derek Fatchett (Leeds, Central): If another had changed his mind, it would have been 4:2 the other way--so what?

Mr. Heseltine: That is perfectly right. The division merely reveals that the MMC report does not represent an emphatic, clear and unequivocal set of advice to me. It is a majority-minority view.

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I have also had to take into account the views of the Ministry of Defence. We went to Europe to claim jurisdiction over this particular case because of the essential defence interests as we saw them. The MOD told me--its view was clearly expressed to the MMC--that it believes that both bids should be allowed to proceed, because the MOD, which is the custodian of our defence interests, believes that it could handle the competitive issues involved in the process. I was influenced by its views; I believe that it is appropriate that I should be.

It is not just a question of the assurances given by GEC, because the MOD places the contracts. It is in a position to ensure that any assurances given by Lord Weinstock are honoured. He gave clear assurances that if Yarrow wins the type 23 frigate order, those frigates will be built at Yarrow. The MOD is in a position to ensure that that happens--not that I would like to cast any doubt on the integrity of Lord Weinstock's assurances.

Mr. Barry Sheerman (Huddersfield): What about small and medium-sized contractors if GEC gets the yard?

Mr. Heseltine: The hon. Gentleman asked a question from a sedentary position. If he asks it formally, I shall answer it. The Ministry of Defence has every interest in securing the transparency of the competitive process. The Ministry of Defence is a customer. I know from experience that it does that job with great concern and care, and it has every interest in ensuring that it obtains the best value for money. It will continue to do so, and the minority view clearly made the point that it is expert in doing that.

I hope that the right hon. Gentleman will recognise that, as I said, this is not an easy decision. I take very seriously the opinions of the MMC, but I think that, in view of the fact that it was a split decision, and in view of the fact that the Ministry of Defence had such clear opinions about what the interests of the customer were, it is right to allow either of those two bids to proceed, and right for the market to determine what happens. I have no preferences one way or another. I have no knowledge whether either or both the bids will proceed.

Mr. Peter Viggers (Gosport): Bearing in mind the fact that the market for warships has inevitably shrunk in recent years; that, increasingly, the electronic and support systems of warships are becoming proportionately more important, so the hulls are becoming less important in the manufacture of warships; that there are other yards where warships-- steel ships--can be built, including Vosper Thornycroft, which has been extremely successful in recent years, and indeed Harland and Wolff; and bearing in mind the increasing internationalisation of defence procurement regarding issues such as the Horizon frigate, does my right hon. Friend agree that it would have been unwise and artificial to prevent VSEL merging with the company that eventually emerges as the most successful of those bidding for it, and that that would not have been a wise way to proceed in international competition?

Mr. Heseltine: I am grateful to my hon. Friend, who represents the constituency in which Vosper is based. I have had the pleasure of visiting that company and, as everyone is, I was much impressed by the work that is going on there.

My hon. Friend makes an important argument about the nature of the purchaser of large defence procurement orders of that type. The purchaser will insist on the

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break-up of the contract into very large numbers of individual parts, to ensure that there is competition between subcontractors for specific items, amounting to a very large proportion of the total contract.

The Ministry of Defence is expert at doing that. It must face British Aerospace, which is the only source of our military fighter aircraft. It must deal with Rolls-Royce, which is the key supplier of engines for the defence budget. So the Ministry of Defence is very experienced at ensuring that it obtains value for money compatible with the quality that it wants.

Mr. Nick Harvey (North Devon): The President of the Board of Trade made a statement in the House yesterday about competitiveness, but if GEC should go ahead and acquire VSEL, where will the competition come from for the type 23s or for other future big projects? The right hon. Gentleman rightly paid tribute to Vosper, which will be in a position to bid on some occasions, but if the Government believe in competitive tendering, where will the competitive tenders come from for the big projects?

Mr. Heseltine: The two competitions that are likely in the immediate future--for the type 23 and the batch 2 Trafalgar class submarines--are imminent, so the competitive arrangements are likely to be in place in the event of either of those two bids proceeding. In the longer term--one is talking about, for example, project Horizon, which is the new generation frigate, as my hon. Friend the Member for Gosport (Mr. Viggers) has just said--Yarrow will be a potential competitor, as it is today.

However, I would be the first to recognise that, although in the short term the MMC says that it does not think that there are implications for the existing orders in the existing yards, in the longer term there may be rationalisation, and that has always been the dilemma that has confronted Defence Secretaries or those of us interested in competition policy.

Mr. Phil Gallie (Ayr): My right hon. Friend put great store on the Ministry of Defence's comments about competitiveness and on the three undertakings given by Lord Weinstock if GEC were to take over. How one can split the bids of Yarrow and VSEL to ensure that there is competition when they belong to the same company? When there are bids for subcontractors to supply those contracts, how will the interests of one company be sustained?

Mr. Heseltine: My hon. Friend will realise that the urgent and imminent competitions will involve the continuation of the existing teams that are at work at present and that will shortly submit the tenders that the Ministry of Defence is contemplating. That division exists already.

I do not know what length of time my hon. Friend is thinking about, but there has been a falling order book--a fall in demand--that may well lead to some rationalisation. If one considers project Horizon, the bid does not involve Vosper, which has the capability--albeit one that is perhaps spread over a longer period than other yards--to become involved in the process. Lord Weinstock has given assurances about the existence of the two teams in the immediate future for the competitions that will take place.

Mr. Richard Caborn (Sheffield, Central): Does the President of the Board of Trade believe that his decision

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to reject the Monopolies and Mergers Commission's proposal is sound? Many people are concerned about the basis upon which the decision has been taken--value for money for the Ministry of Defence rather than competition. That is a concern as we downsize the military budget and possibly change the landscape of British industry. Will the right hon. Gentleman assure the House that that decision will not trigger a potential takeover of British Aerospace and leave only one major company to compete in Europe? In rejecting the MMC decision, the President of the Board of Trade has signalled a reorganisation of that part of British industry. Many people are concerned that we shall not receive the value for money that the right hon. Gentleman has said will flow from his decision.

Mr. Heseltine: I understand the difficulties associated with my decision, and many people have agonised over the various choices. That is why I have had to recognise the fact that the MMC was not able to reach a unanimous view about the matter. Therefore, I take considerable note of the views of the customer--the Ministry of Defence--which believes that it is correct to move in the direction that is possible in the light of the two bids.

Mr. Frank Field (Birkenhead): While the House is naturally concerned about the strategic needs of the country and, more specifically, the Government's procurement requirements, is the President of the Board of Trade aware that, when the Government announced their privatisation proposals, his Cabinet colleague, the right hon. Member for Wirral, West (Mr. Hunt), and I tried to persuade GEC to break up the Government's preferred bidding so that it could buy the Cammell Laird yard? Is the President of the Board of Trade aware of our concerns about the long-term future of Laird if VSEL were to acquire it? When the future owners of VSEL emerge and the dust has settled, will he remind the new owners that the people of the Wirral peninsula will be waiting for that company to join with local forces, to try to recreate the skilled jobs that VSEL felt that it had to destroy?

Mr. Heseltine: I know the hon. Gentleman's concern about his constituency and the wider region. I hope that he will understand when I say that I have tried, to the limits of my endeavour, to find a buyer or to find work for Cammell. I have done the same thing for Swan-- [Interruption.] No. The fact is that my Department and I have literally travelled the world trying to find a solution to Swan Hunter's problems. We have not found a solution--I do not like to tell the House that, but I must do so. We have explored every practical suggestion or alternative that we could think of, without success in that case. We all know that demand has diminished.

I have looked up the sorts of speeches that Labour Ministers in my position made in order to justify nationalising the aircraft and shipbuilding industries--I shall not weary the House with the details, unless hon. Members wish me to do so. Nevertheless, Labour Ministers explained to the House as clearly as I have done the need to take difficult decisions in changing circumstances.

Dr. Norman A. Godman (Greenock and Port Glasgow): Many of my constituents who are employed at Yarrow in Scotstoun will be keenly interested in the statement by the President of the Board of Trade. He will not be surprised to hear me say that I sincerely hope that

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Yarrow wins the order for the type 23s. I must point out to him a misleading statement that appears in paragraph 2.10 of the document. It is entirely wrong when it talks about VSEL being the only United Kingdom shipyard that has the capacity to build warships of more than 7,000 tonnes. The President of the Board of Trade knows as well as I do that Kvaerner of Govan is building the hull for the landing platform for helicopters.

Will the right hon. Gentleman assure the House that, if Yarrow and VSEL seek to secure orders for the bigger warships, he and his right hon. and learned Friend the Secretary of State for Defence will remember that Kvaerner, as a subcontracting yard, has the capacity to build such hulls?

Mr. Heseltine: I fully understand the hon. Gentleman's views and his representations on behalf of his constituency. He will have noticed already that my right hon. and learned Friend has heard what he said. I shall make it my business to forward the hon. Gentleman's views to the MMC in the light of his observations about its report.

Mr. Tony Worthington (Clydebank and Milngavie): I obviously also speak on behalf of many of my constituents who work for Yarrow. I invite the President of the Board of Trade to make it absolutely clear what assurances have been given to him or to the Monopolies and Mergers Commission about the future of the Yarrow yard should the GEC bid be successful.

Mr. Heseltine: I think that we have covered that ground. Lord Weinstock has made it absolutely clear that, if his group wins the order, the type 23s will be built at the Yarrow yard. I hope that Lord Weinstock's assurance will be sufficient in those circumstances. The Ministry of Defence is also in a position to insist that the contract be fulfilled at Yarrow.

Mr. Barry Jones (Alyn and Deeside): Does the right hon. Gentleman acknowledge that British Aerospace plc has a magnificent exporting record and that it is the largest employer of skilled labour in this country? Does he also

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know that 2,000 aerospace jobs have been lost in my constituency in the past two years? My constituents would like to know what consequences the statement that he has made today will have for them.

Mr. Heseltine: I am proud to say that I think that I have helped British Aerospace to conclude the largest overseas contract ever won by any company in this country. I was proud to negotiate with British Aerospace the conclusion of the European fighter aircraft deal, which I think was the largest international contract that this country has ever entered into.

I have every sympathy for British Aerospace's position. I do not know whether it will continue its bid or whether it will be successful. British Aerospace has not been prejudiced in any way; it is a matter for British Aerospace to decide how it wishes to expand its activities.

Mr. Tam Dalyell (Linlithgow): Although I do not doubt Lord Weinstock's good faith, the fact remains that he, like the rest of us, is not immortal. The President of the Board of Trade has told us about assurances; is there any way in which such assurances could be made legally binding, even for a limited period? I realise that it is unrealistic to insist that they should be legally binding for ever, but is there not an argument that they should be legally binding at least in the medium term?

Mr. Heseltine: I think that the hon. Gentleman can rest upon the assurances, particularly in the light of the fact that the customer happens to be a Government Department--the Ministry of Defence. Perhaps the House should be aware of another fact. Yarrow already has the first of class of the CNGF, the common new generation frigate, so from the point of view of GEC, there is every interest in filling the work load of Yarrow until it can compete for the common new generation frigate.

Mr. Brian H. Donohoe (Cunninghame, South): What assurances can the President give my constituents who work at Jetstream in Prestwick?

Mr. Heseltine: I am not sure whether it will be affected by the decision of either of the companies to bid for VSEL. I would have to have specific information as to any concerns that exist, but I do not immediately see them.

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Points of Order

4.50 pm

Mr. Jacques Arnold (Gravesham): On a point of order, Madam Speaker. What can be done to protect the House from the incessant and inaccurate torrent of accusations of sleaze from the hon. Member for Neath (Mr. Hain), which has now descended into peddling accusations of sleazy deals against you on "Newsnight" last night? That cannot continue. What should be done about it?

Madam Speaker: I would refer all hon. Members to my short statement yesterday about all of us having to have a great deal of integrity. As I said yesterday, we cannot legislate for integrity and we cannot legislate for human behaviour. We all have to live up to the high standards that people outside the House expect of us, and the time has come when we must all look again at our consciences and address the manner in which we, as individuals, deal with each other in the House.

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Naming Ceremonies and Parental Responsibilities 4.51 pm

Mr. Frank Field (Birkenhead): I beg to move,

That leave be given to bring in a Bill to empower registrars of births to conduct civil naming ceremonies and to require registrars to make available to certain mothers and fathers parental responsibility agreements.

In seeking leave to introduce a naming ceremonies Bill, I assure the House that it is not a panic measure in response to the discovery that certain of our colleagues in the House seem unaware of the names by which most of us know them. It attempts to deal with a much longer-term trend in our society.

Long before we had any sense of nationhood, long before we had any comprehension of what statehood meant and even before we saw signs of government in Britain, parents would present their children for baptism. The Church taught that it was a sacrament. In those days, parents as easily understood what that meant as parents today find it difficult to comprehend the meaning of such events.

As well as celebrating a sacrament, baptism was an event to welcome a child into the community. As we have had a statement today on the remains of our great warship building yards, it is perhaps appropriate that I draw examples from our sea-going power to illustrate what has happened to the numbers being presented for baptism.

When the British expeditionary forces set sail in the first world war, practically every person in that contingent would have been baptised. When the boats left for the D-day landing, again practically every soldier and sailor would have been baptised. When we went down to the sea in great ships to engage in the Falklands war, only one third of those engaging in that conflict had been baptised.

The reasons for such a dramatic change are twofold. All organisations in decline have a tendency to be caught by fundamentalists, and the established Church is no exception. Priests increasingly refuse to baptise children who are presented by their parents. For example, last week a priest refused to baptise a child because the parents were not married, as if the position of the parent were relevant to what was to be discharged to the child. There is also a more important factor that Matthew Arnold described as the great roar as the tide went out on belief in this country. The Bill does not pretend that it can deal with those mighty forces at work in our society, but it is an attempt to put in place an alternative to baptism, which is less frequently used than hitherto. It is a short Bill, which would allow registrars at registry offices to carry out civil naming ceremonies.

First, the Bill lists the powers of the registrar. Secondly, it lists where civil naming ceremonies can take place. Thirdly, it lists the duties and the rights of parents. That is particularly important, as increasing numbers of parents who present their children for baptism are not married. It is crucial that fathers who sign birth certificates know that, should the cohabitation split up, their legal rights would be far inferior to legally married fathers.

Although the Bill does not specify it, such a ceremony would be an occasion for both sides of the family to come together and celebrate the great event of the birth of a child and to welcome that child into the community.

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It is not my idea. In a week when it is important for us all to declare the sources of the information that we use, I am happy to put it on record that the idea comes from Michael Young, who is known in the other place as Lord Young of Dartington. He is the great social entrepreneur of this century. Among his ideas, he thought of the Consumers Association, the Open university and perhaps 1,000 other useful social inventions. He also played a part in bringing forth the Family Covenant Association, whose raison d'e tre is to encourage ideas and make available information about alternative naming ceremonies.

Finally, the Bill is not an attempt to force people to use it as an alternative to baptism. I regret that the Bill is necessary, but it is an attempt to widen choice and, above all, to take the best from the baptismal service into the secular, to ensure that each and every child is welcomed into the wider community and that parents and sponsors are aware of their duties to that child.

Question put and agreed to.

Bill ordered to be brought in by Mr. Frank Field, Ms Angela Eagle, Mr. Greg Pope, Ms Diane Abbott, Mr. Alan Howarth, Mr. Malcolm Wicks, Mr. Hugh Bayley and Mrs. Diana Maddock.

Naming Ceremonies and Parental Responsibilities

Mr. Frank Field accordingly presented a Bill to empower registrars of births to conduct civil naming ceremonies and to require registrars to make available to certain mothers and fathers parental responsibility agreements: And the same was read the First time; and ordered to be read a Second time upon Friday 14 July, and to be printed. [Bill 125.]

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Orders of the Day

Criminal Injuries Compensation Bill

Order for Second Reading read.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): I should inform the House that Madam Speaker has selected the amendment in the name of the Leader of the Opposition.

4.57 pm

The Secretary of State for the Home Department (Mr. Michael Howard): I beg to move, That the Bill be now read a Second time. This is an important Bill which will make statutory provision to pay compensation to people who have had the misfortune to become victims of violent crime. It paves the way for an enhanced tariff scheme, which provides the right balance between providing for the needs of victims and protecting the interests of taxpayers by concentrating on a simple tariff approach for the majority of victims, while ensuring generous compensation for those most seriously injured.

As the House knows, we have had a non-statutory criminal injuries compensation scheme since 1964. It provides payment from public funds to the blameless victims of crimes of violence and those injured in attempting to apprehend criminals or prevent crime.

When the scheme was introduced, the Government of the day made it clear that they did not accept that the state was liable for injuries caused to people by the criminal acts of others, but they believed that the public felt a sense of responsibility for and sympathy with the innocent victim and that it was, therefore, right for that feeling to be given practical expression by the provision of a monetary award on behalf of the community. We remain of that opinion.

For the past 30 years, the scheme has been run by the Criminal Injuries Compensation Board. In the first full year of the scheme's full operation, 1965-66, the board received 2,452 applications and made 1,164 awards totalling £403,000, or about £4 million at today's prices. In 1993-94--the last full year for which audited figures are available--the board received 73,473 applications, and made 65,293 awards totalling over £165 million. That was more than double the cost in real terms only six years previously.

Under the current scheme, awards are assessed by the board on the basis of common law damages--what an applicant could expect to be awarded in a successful civil suit. Calculation of awards on that basis requires finely judged assessments of the degree of suffering and financial loss. That makes speedy decision making more difficult, and makes it hard to predict and control the future costs of the scheme. Under the able and energetic chairmanship of my right hon. and noble Friend Lord Carlisle, the board has made determined efforts to improve the workings of the scheme over the years--efforts that have met with some success. We are very grateful to Lord Carlisle and his colleagues for all that they have done.

None the less, despite those efforts and despite large increases in administrative resources, the number of unresolved eases has risen inexorably, and now stands at

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well over 100,000. At the same time, the costs have continued to escalate rapidly in a way that is unsustainable for a scheme funded by the taxpayer.

Dr. Norman A. Godman (Greenock and Port Glasgow): Can the Home Secretary confirm that the Bill would allow claims to be dealt with more expeditiously? A constituent of mine, Mr. Roberts, has been treated in a disgraceful and dilatory way by the board in regard to his entirely legitimate claim. Would the proposed scheme have provided him with a more expeditious response?

Mr. Howard: That is certainly our expectation. One of the main purposes of the change--although not the only purpose--is to improve the service given to claimants and to ensure that their claims are dealt with more expeditiously.

It was against the background that I have described that we decided to introduce a new, tariff-based scheme in April 1994. That scheme moved away from the one based on individual assessment and provided for payments to be made on the basis of a tariff of awards that grouped together injuries of comparable severity and allocated a financial value to them, based on awards made previously by the board.

The new scheme operated from 1 April 1994 to 5 April 1995, when the Judicial Committee of the House of Lords ruled that the method of the tariff scheme's introduction had been unlawful. That judgment, of course, related solely to the method of the tariff scheme's introduction, not its merits. The tariff scheme was therefore withdrawn immediately and the old scheme reinstated.

However, we remain firmly of the view that a tariff-based approach is the right way forward. Such an approach is easier for applicants to understand and easier to operate, with the result that--as I told the hon. Member for Greenock and Port Glasgow (Dr.

Godman)--applications can be dealt with more quickly. It also enables costs to be controlled and more easily predicted.

We have nevertheless considered very carefully all the concerns that have been expressed in this House, in another place and elsewhere about the effect that a simple tariff approach can have on those who are most seriously injured. We all have immense sympathy for such victims, and it is right that we should do what we reasonably can to help them. We have therefore concluded that the tariff-based approach should be enhanced to provide payment for loss of earnings and special care for those most seriously affected by their injury. We also think it right to add payment for loss of dependency and loss of support to the lump sum award payable to family members when, tragically, the victim loses his or her life. The Bill is accordingly intended to provide the framework for a new, enhanced tariff scheme. It sets the broad parameters for the scheme, making it clear that it is a tariff-based scheme, and leaves the detail to be set out separately. The more important details--those relating to the tariff itself, and other provisions bearing on quantum--will be subject to parliamentary scrutiny, and will require the affirmative resolution of both Houses before they can be included in the scheme.

The Bill will repeal the provisions in the Criminal Justice Act 1988 which would have made the common law damages scheme statutory. It is intended that the Bill should come into force on Royal Assent and that,

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