Commons Sitting of 22 January 1976

Preamble
The House met at hall-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
NORTHERN IRELAND

  Security
  Mr. Michael Latham1. Mr. Michael Latham asked the Secretary of State for Northern Ireland whether he will make a further statement on the security situation.
  Mr. Marten2. Mr. Marten asked the Secretary of State for Northern Ireland if he will make a statement about the security situation in Northern Ireland.
  Mr. Beith4. Mr. Beith asked the Secretary of State for Northern Ireland if he will make a statement on the security situation.
  Dr. Glyn10. Dr. Glyn asked the Secretary of State for Northern Ireland whether he will make a statement on the security situation in the South Armagh area.
  Mr. Michael McNair-Wilson17. Mr. Michael McNair-Wilson asked the Secretary of State for Northern Ireland if he will make a further statement about the security situation in the Province.
  Mr. Carson21. Mr. Carson asked the Secretary of State for Northern Ireland if he will make a statement on the security situation in Northern Ireland.
  The Secretary of State for Northern Ireland (Mr. Merlyn Rees): During the course of 1975, there was a marked change in the nature of violence, much of it being of a sectarian nature. There were fewer explosions, but more deaths as compared with 1974. The security forces met with great success and during the course of the year 1,197 persons were charged with terrorist-type offences.
  Since the New Year, there have been some particularly horrific events, notably the murder of five Catholics at Whitecross and near Lurgan, and the murder of ten
  1514
  Protestants near Bessbrook. In addition, a soldier was killed in Londonderry and a policeman near Toome.
  As regards the special situation in County Armagh, I would refer to the statement made by my right hon. Friend the Prime Minister on 12th January 1976—[Vol. 903, c. 27–30]. The security forces there have been reinforced and maintain an increased level of activity.
  The security forces continue to meet with success in bringing suspected terrorists before the courts. Since the beginning of the year, 38 persons have been charged with terrorist type offences, including five with murder and one with attempted murder.
  Mr. Latham: Is it now clearly established that the security forces are not simply reacting to the level of violence, a policy which arguably leaves the initiative to the enemy, but are finding terrorists at every opportunity, not simply depending on the IRA's profile from day to day?
  Mr. Rees: The security forces are well aware of their task. The fact that so many people are going through the courts is an indication of the success of the security forces. Arising from the events of the last few weeks, about 20 men are being looked for in South Armagh. It is wrong to believe that the situation would be dealt with by the Army using greater numbers. We needed a greater Army presence there and have got it. However, it would be playing into the hands of the Provisional IRA to believe that finding a small number of people who are difficult to discover would necessarily be made easier by having more soldiers.
  Mr. Marten: Although it is essential to have a firm political decision on Northern Ireland, is the right hon. Gentleman satisfied that there are sufficient troops in that area to carry out the surveillance role promised by the Prime Minister to take the follow-through role necessary in respect of those who are being rounded up? Will the right hon. Gentleman clear up the SAS question?
  Mr. Rees: I am satisfied, as are my security advisers, that there are sufficient troops in the area. The hon. Gentleman mentioned the follow-through procedure and, obviously, the nature of the area needs to be borne in mind. The fact that a small number of men can travel

  1515
  backwards and forwards across the border and the fact that there is support for them in the community generally—perhaps "hostile community" is too strong a phrase—indicates the nature of the problem. We must face the fact that over many decades, not just in the last year or two, South Armagh has been a problem for the Irish authorities as well as for the United Kingdom. Indeed, the problem has existed for the last 200 or 300 years and the situation is peculiar in that sense. The IRA would be pleased if we were to draw more troops into that area and away from the urban areas.
  Mr. Carson: In view of the recent increase in the amount of violence in north Belfast, will the right hon. Gentleman ensure that the border RUC station at Fort William, to replace the station blown up by the IRA, will soon be reestablished and occupied?
  Mr. Rees: I appreciate the hon. Gentleman's proper concern for north Belfast. That area is a different type of area from South Armagh. In north Belfast there are violence and terrorism by Protestant para-militaries. In the recent past there have been some nasty murders in the area mentioned by the hon. Gentleman, and we are discussing the problem of Fort William with the Chief Constable.
  Mr. Beith: As the border cannot be continuously manned or sealed, does the Secretary of State agree that the search operation cannot be pursued successfully unless the maximum amount of random searching takes place on the border on both sides? From a manpower point of view, is it not important that the Irish Government should reconsider their attitude to the use of troops and police on their side of the border? Would it not be better if the Irish Army could undertake separate searches in addition to the police rather than having to operate together, thus avoiding the waste of valuable manpower?
  Mr. Rees: I know that the hon. Member for Berwick-upon-Tweed (Mr. Beith) has recently visited both sides of the border, and I appreciate his comment about random searches. A few days ago, a vast supply of explosives, amounting to six months' supply, was found by the Army. That find will obviously save the lives of large numbers of people. I agree that random searches are important.
  1516
  Since the meeting that I had at Baldonnel a year ago last September, there has been close co-operation between the Garda and the RUC. There is no co-operation with the Army except through the police. The Irish Government, for constitutional reasons and for reasons of their law, as they put it, are prepared to co-operate to the full police to police, but not army to army.
  Mr. Flannery: Does my right hon. Friend agree that although he is doing everything in his power to help within the framework of the security situation, it is the hope of all people on both sides that when the Convention is recalled, political arrangements can be made between the two main sides, because that would reduce the necessity for security forces, at least in time?
  Mr. Powell: No.
  Mr. Rees: I have little doubt that until the minority community and its representatives, not just politicians, are prepared to work for Northern Ireland and to feel that they belong to Northern Ireland, security will be very difficult. On the other hand, I also have no doubt—and this is not contradictory—that if there were agreement among politicians in the North tomorrow morning, it would spark the Provisional IRA to even greater violence, because it does not want a political solution. However, if the two communities were working against the Provisional IRA, it could be defeated.
  Dr. Glyn: The Minister has said that the security forces are searching for only about 20 people in South Armagh, so will he not reconsider sealing the border completely? This would be an expensive operation to begin with, but might it not save a number of lives in the end? Will the right hon. Gentleman re-emphasise that although there may be sympathy for the IRA in South Armagh, there is no question of Great Britain doing a deal with Southern Ireland to swap South Armagh for something else?
  Mr. Rees: There would be great difficulty about doing a swap of South Armagh with anybody. It is no good hon. Members talking about sealing the border as if we were discussing East or West Germany. I have discussed this

  1517
  matter with my security advisers. The manpower required and the nature of the border require action to be selective. As has been shown recently, arms as well as terrorists come across the border. If I may say so to the hon. Member, for whom I have great respect, sealing the border is a pipe dream. In politics we hear many simple answers that are wrong; there are no simple answers to military problems, either.
  Mr. Kilfedder: Does not the right hon. Gentleman accept that it was purely by chance that 21 tons of explosives were seized at the border? Does not that indicate that the IRA believes that it can carry explosives on the main road from Dublin to Belfast with impunity? While he may not be able to close the the border entirely, could not the right hon. Gentleman increase the number of patrols, so that all traffic can be stopped and properly searched?
  Mr. Rees: The fact that the explosives were found shows that the IRA cannot move them with impunity. The statistics of the amount of arms found in the course of a year show a remarkable story. I am advised that random searches and spot checks are far better than having traffic on the main road stopped constantly. The para-militaries would then move in from other directions. It is far better to entice them on to the main road and then to impede them. That is the firm advice that I get. It is not a political but a military judgment. I believe that it is right.
  Mr. Neave: In his original reply the Minister referred to the incident when a soldier was shot at a checkpoint in Londonderry. Does he not agree that this is a very disturbing incident? I know that an Army investigation is taking place, but can the right hon. Gentleman give an assurance that precautions will be taken to prevent this sort of incident, in which two soldiers were also injured, happening again? Does the recent seizure of explosives form part of the subject of the Government's representations to Dublin at the present time?
  Mr. Rees: I would not say that we were making representations, because that assumes that there is no contact. There is, in fact, daily contact about our arms finds and information, particularly
  1518
  about Frangex, which is made in the South. In the past year co-operation about identification has been excellent.
  The Army will be investigating the incident in which young people who, it seems, went back to the Bogside, were able to fire at three British soldiers at a checkpoint. There has been a disturbing feature in the past three weeks. Just as sectarian murders emerged as the major factor last year, explosions in Belfast and Derry, one of which my hon. Friend the Member for Belfast, West (Mr. Fitt) knows about, because his wife was nearly involved, are showing up the youth of those concerned and the education that they have recently completed. A girl of 14 carrying weapons was recently stopped by soldiers at two o'clock in the morning.
  The involvement of young people in Northern Ireland terrorism has been one of the most disturbing features in the early part of the year. It is easy to talk about education in youth clubs, but the problem is much deeper than that. It is about these young people belonging to a cause. They must believe in it or they would not put themselves in the position of a girl of 17 recently, who was blown to Kingdom come when a bomb she was planting went off.
  Mr. Hardy: A greater harmony and will for peace appears to exist in Londonderry and the north-west of Northern Ireland. Does my right hon. Friend feel that this latest outrage in Londonderry represents an unfortunate turning point in this situation?
  Mr. Rees: I am glad that my hon. Friend has mentioned that. Northern Ireland is relatively small and it is easy to make trite remarks and say that Deny is different from Belfast, but there is far less secretarianism in Derry. There has always been co-operation between the communities in the past. Whether through trade unions or the clergy, there has always been a drawing together and a condemnation of what has gone on. This is excellent. But the fact that young kids can come in and kill is a development that mere words will not stop, and we must find a means of stopping it.
  Mr. McNair-Wilson: I welcome the success of the security forces, but is it the Secretary of State's judgment that

  1519
  the overall security situation is improving? Can he confirm whether one infantry battalion is part of the temporary reinforcements sent to Northern Ireland? Will he also comment on what success there has been in handing the security role from the Army to the police?
  Mr. Rees: I would not want to be drawn into using the word "improving". I learned early, before I had my present responsibilities, that a statistical improvement is of little comfort to those who may be suffering from a different form of violence. There has been a change in the nature of violence.
  I must rely on the GOC to decide the number of soldiers he wants. It would be wrong to fix the number of soldiers in the Province and say that it will not be changed. One must be flexible.
  There has certainly been a remarkable change in the success of the police. It would be idle to pretend that the police are the major force in South Armagh, although certainly the major force in North Armagh, where there have been some ghastly murders by Protestants. There are some parts of Belfast where the police are not the major force, but I am sure we have to achieve primacy of the police.
  What matters is the acceptance of the police. We have some acceptance from the minority, who have given support and information, but there is still not general acceptance of the RUC, for reasons of history, and we must overcome that if we are to succeed.

  Secondary Schools (Selective Entry)
  Mr. Gow3. Mr. Gow asked the Secretary of State for Northern Ireland how many secondary schools in Northern Ireland have a selective entry; and whether he will make a statement about Government policy towards these schools.
  Mr. McCusker7. Mr. McCusker asked the Secretary of State for Northern Ireland when he hopes to announce the ending of the 11-plus selection procedure in Northern Ireland.
  The Minister of State, Northern Ireland Office (Mr. Roland Moyle): Of the 260 grant-aided secondary schools in Northern Ireland, 80 are grammar schools, and
  1520
  about 75 per cent. of the pupils admitted to these grammar schools each year have received scholarships as a result of the selection procedure.
  It is my view that Northern Ireland's secondary schools should be reorganised on comprehensive lines. As I told the House on 3rd December 1975 the senior chief inspector is engaged in a feasibility study of the practicalities of reorganisation and is expected to report next March. Consultations will then be necessary with the various education interests concerned. The speed with which reorganisation can be effected and the future of the selection procedure will be determined when this exercise has been completed.—[Vol. 901, c. 1890.]
  Mr. Gow: Bearing in mind the answer by the Secretary of State about the involvement of young people in violence in Northern Ireland, what contribution does the Minister think can be made in secondary schools towards eliminating that very disturbing trend? May we take it from his reply that the Government have no intention of introducing in Northern Ireland that policy of coercion in relation to the abolition of selection in secondary education that was announced for England and Wales in the Queen's Speech?
  Mr. Moyle: The reorganisation of secondary education is not at such an advanced state in Northern Ireland as it is in England and Wales, and it is not therefore intended that legislation comparable with the Bill recently placed before this House will be introduced. The schools in Northern Ireland have a commendable record of protecting and guiding their pupils through the very nasty situation that often exists in the districts in which they live. The pressures for young people to take part in violent activities come from mostly outside the school and are to some extent counteracted by the dedicated work of the Northern Ireland teaching profession.
  Mr. McCusker: Many people in Northern Ireland will welcome the Minister's statement about ending the selection procedure. However, apart from the education and social reasons for ending it, is he aware of the grave disquiet which exists and which resulted in abandonment of this year's selection procedure? Statistics the Minister gave me showed

  1521
  that cheating and abuse of the examination system in Londonderry had resulted in more than 200 pupils unfairly securing places in grammar schools, and the only people who have sufffered as a result are their co-religionists in rural areas who do not take part in this practice.
  Mr. Moyle: As a result of our holding a new 11-plus selection examination tomorrow and on 6th February, no one not entitled to get into a grammar school will do so unfairly. I welcome the hon. Gentleman's support for the reorganisation of secondary education and the abolition of the 11-plus. The incidents to which he drew attention show the difficulties in operating the present 11-plus selection scheme and the serious practical forces operating against such a test.
  Mr. Wm. Ross: Is the Minister aware that there are some primary schools in which over a period of years no pupil has passed the 11-plus? I refer to the school of St. Peter's and St. Paul's, Muldonagh, Claudy.
  Mr. Moyle: It is not the practice of my Department to comment on the 11-plus results of any particular school.
  Mr. Biggs-Davison5. Mr. Biggs-Davison asked the Secretary of State for Northern Ireland if he will make a statement about the future of Harland and Wolff.
  The Minister of State, Northern Ireland Office (Mr. Stanley Orme): Since 1st August, when I gave hon. Members a review of the position at Harland and Wolff, I have been in close touch with the company's affairs. When it became clear by the end of September that the company had fallen further behind in meeting its production targets, I initiated discussions with representatives of management and trade unions and emphasised the consequences of failure to improve performance. This led to the establishment of a joint productivity action group and I am glad to report that over the last three months there has been a noteworthy improvement in the throughput of steel.
  This improvement will have a bearing on the review and updating of the company's corporate plan, which is in course of preparation. It would clearly be wrong for me to comment on the future of the
  1522
  company until I have had time to study the results of the review and to discuss them with representatives of management and the trade unions. It will be my intention to make a statement to the House as soon as possible thereafter.
  Mr. Biggs-Davison: Is the Minister of State aware that we appreciate his efforts for Harland and Wolff, particularly for worker-management co-operation, since the company means so much to Northern Ireland, where unemployment is above 11 per cent., this also being a company in which so much public money has been invested? Will he confirm that in recent months the production targets have been hit and that new equipment has been adopted? How is research proceeding into new types of vessel? The order book appears to be full until 1978, but have there been new orders since the new system was announced and adopted?
  Mr. Orme: The hon. Member may be interested in the figures for the throughput of steel. When I raised this problem with the company last September the throughput was as high as 65 man-hours per ton. Last December it had been reduced to 45 man-hours per ton. That is a considerable improvement but in itself it does not resolve the problem. The throughout of steel does not include the finishing trades, and these must also be looked at.
  The present orders will keep the company going until 1978. However, we must start taking new orders in 1976, based on the criteria laid down by my right hon. Friend. The company is competing in a difficult world market and it is against that background that we must examine the position. I can assure the hon. Gentleman that all aspects of diversification and other alternative forms of production are being examined.
  Mr. Bradford: The Minister has referred to the productivity rate. Will he join me in congratulating the workers of Harland and Wolff on achieving such a dramatic improvement in recent months? Does he accept that the trade unionists involved in Harland and Wolff and in other industries in Northern Ireland insist upon the yard being included in the Government's proposals for the nationalisation of shipbuilding? Does he accept that failure to do so will be interpreted in Northern Ireland as a

  1523
  deliberate attempt by the British Government to divorce the economy of Northern Ireland from that of the United Kingdom?
  Mr. Orme: In my initial reply I paid tribute to the noteworthy improvement in productivity. I am extremely pleased that this aspect has developed as far as it has.
  As for the hon. Gentleman's second question, if he wants to see the yard close down, he should continue to advocate the policy that the yard should be included in the Government's proposals for nationalisation. It is a reality that we are trying to save the yard. We are trying to maintain the largest employer in Northern Ireland, and we are doing it against an extremly difficult background. The sort of argument put forward by the hon. Gentleman does not assist the situation. The yard is already fully publicly-owned. It is accountable to Parliament—I am answering today for it—and it employs a form of democracy that I should have thought the House would welcome.
  Mr. Cryer: Will my right hon. Friend comment on industrial democracy in Harland and Wolff? Does he realise that many Government supporters welcome his pamphlet on industrial democracy and feel that the development of industrial democracy in Harland and Wolff might be a useful example for Northern Ireland to set the rest of the United Kingdom? Will my right hon. Friend comment on whether the AEUW rule book applies in Northern Ireland all its United Kingdom standards?
  Mr. Orme: As an AEUW member, I had better not answer that question. I am sure that AEUW members will note what my hon. Friend has said. On the subject of industrial democracy, I am pleased to tell my hon. Friend and the House that at a mass meeting of shop stewards in the yard this morning the Government's proposals for full participation in industrial democracy were accepted. They are now prepared to accept five worker-directors on the board, and that is an issue that they have been discussing for some time.
  I am greatly encouraged by this information. The trade unions have not found the discussions easy, but they have
  1524
  now grasped the nettle, and what they have agreed to do will be in the interests of not only industrial democracy but also Harland and Wolff.
  Mr. Powell: Is the right hon. Gentleman aware that his reply to my hon. Friend the Member for Belfast, South (Mr. Bradford) implied that a nationalised shipbuilding industry would take no account of the prospects or conditions in the various areas in which shipbuilding plant and firms are situated? As I cannot believe that that is his intention, will he correct that impression?
  Mr. Orme: The necessary restructuring which we have already undertaken would have been set back by the Government's proposals and the yard would have been made more vulnerable. The yard has its only chance of survival in a Northern Ireland context. I have devoted a great deal of time to getting an understanding and an agreement with the work people and management within the yard. That is why we have gone for full industrial participation. The Government have already committed money to Harland and Wolff and if Harland and Wolff had been brought into the ambit of a shipbuilding board that development would have been retarded, and that could only have been harmful to the company.

  Military Forces (Withdrawal)
  Mr. Hooley6. Mr. Hooley asked the Secretary of State for Northern Ireland what contingency plans are being worked out for the phased withdrawal of military forces from Northern Ireland in the context of a political settlement.
  Mr. Merlyn Rees: As I announced to the House on 12th January, I am examining with ministerial colleagues from other Departments the action and resources required for the next few years to maintain law and order in Northern Ireland with the aim of achieving the primacy of the police.—[Vol. 903, c. 57.]
  Mr. Hooley: Assuming that there can be some progress towards a political settlement—which is a large assumption in view of the mentality that seems to prevail in Northern Ireland—would it not be sensible to envisage the association of the forces of some friendly Powers with the British Army to relieve it of

  1525
  some of the burden of the odious task it now has to perform?
  Mr. Rees: It is not a task that can be done by friendly Powers. Northern Ireland is not like the Gaza Strip. It is a question of policing. I do not believe that anyone else could have done what the British Army has done in the last five years so calmly. I see it on a day-to-day basis, and I do not say that out of false patriotism. It is our responsibility, and we must carry out the task. It would be wrong to give any sign that we were shuffling off that responsibility.
  Mr. Neave: Is the right hon. Gentleman aware that his answer has the full support of the official Opposition? Is he also aware that any suggestion of a phased withdrawal at present would cause dangerous tensions, would not lead to a political settlement, and would not prevent civil war?
  Mr. Rees: The subject of a phased withdrawal is not involved. What we must think about and not leave to chance is a return to the primacy of the police in a civil situation. I have paid my tribute to the Army. The fact that the Army takes the lead—I am glad it does—as it has to means that the police lose a certain amount of leadership. It is important that the police should get back that leadership. It is not a question of withdrawing the Army in the sense in which that phrase is sometimes used. We have to get back to the primacy of the police.

  Local Authorities
  Mr. Molyneaux8. Mr. Molyneaux asked the Secretary of State for Northern Ireland what investigations he has undertaken with a view to ascertaining how the responsibilities of local authorities in Northern Ireland might most effectively be extended.
  The Under-Secretary of State for Northern Ireland (Mr. J. D. Concannon): I am not contemplating any radical change in the present responsibilities of district councils which have been in effect for only two years and are as yet comparatively untried.
  Mr. Molyneaux: Does not the Minister agree that the complexities and growing frustrations being experienced warrant an
  1526
  early start to consultations to tackle the restoration of local government to elected representatives? Does he not further agree that such a review will become urgent if it is decided to continue the government of Northern Ireland from Westminster?
  Mr. Concannon: The Association of Local Authorities of Northern Ireland has put certain proposals to me. Some minor changes might be justified, but I do not wish to comment further at this stage.
  Mr. Budgen: Is not the only hope for a solution to the constitutional problem of Northern Ireland, first, an extension of the responsibilities of local authorities and, secondly, a return to permanent direct rule?
  Mr. Concannon: Local government in Northern Ireland has only recently been reorganised. The new arrangements have been in existence only for two years and are virtually untried. We must give them a fair crack of the whip.

  Repartition
  Mr. Stonehouse9. Mr. Stonehouse asked the Secretary of State for Northern Ireland if he will make it his policy to consider the repartition of Northern Ireland.
  Mr. Merlyn Rees: No, Sir. This would not contribute to the solution of the problems of Northern Ireland and is not supported by either part of the divided community in Northern Ireland.
  Mr. Stonehouse: Is the Secretary of State aware that there is general admiration for the patience with which he approaches his responsibilities, but that there is a limit to patience? If his initiative in calling for the Convention to reach a form of power-sharing agreement fails because of the intransigence of certain groups, would not all other options have to be considered, including the voluntary emigration of the population?
  Mr. Rees: What my right hon. Friend suggests falls into the category of the easy solution, which will not work in Northern Ireland. The Irish Government, the Northern Ireland Protestants and the Northern Ireland Catholics are not interested. The ethnic map is such that no computer, let alone any person, can redefine the border. That is the wrong approach.
  Mr. Townsend: I accept that the redefinition of the border is out of the question, but has the Secretary of State recently requested the Government of the Republic to set up a strip on the Republic side of the border that could be used for the hot pursuit of terrorists by forces on both sides, and, if not, why not?
  Mr. Rees: The Government of the South would not be prepared to allow forces of another country to cross into their territory. That is plain. I do not think that it is necessary. What matters is co-operation between the forces in the North and South. I do not mean paper co-operation but co-operation that enables the Army in the North, when someone is seen crossing the border, to get that information quickly to the security forces in the South. That, I believe, is most important.
  Mr. Fitt: After having served two difficult years in Northern Ireland, does my right hon. Friend agree that the vast majority in Northern Ireland will bitterly resent the gross impertinence and arrogance of the intrusion of the right hon. Member for Walsall, North (Mr. Stonehouse) into the affairs of Northern Ireland? They have had to live there and see their relations killed. They could not evade their responsibilities by going to Florida or Australia. Does my right hon. Friend further agree that it was the original partitioning of Ireland that led to the present troubles, and that any further attempt to interfere with the border would lead to further trouble? Will my right hon. Friend take it upon himself to advise the right hon. Member for Walsall, North of the realities of life in Northern Ireland and to give him some literature, because, if predictions are right, he will have plenty of time to read it in the coming years?
  Mr. Rees: I have been to and from Northern Ireland frequently in the past two years and I understand some of the views expressed there. It is not the Government's policy to alter the border.
  Mr. Biggs-Davison: Does not the argument of the right hon. Member for Walsall, North (Mr. Stonehouse) rest on the assumption, which has been proved false time and time again in elections and in the border poll, that Protestants as a whole are necessarily in support of the
  1528
  Union and that Catholics as a whole are necessarily in support of a Republican United Ireland? Is not this a dangerous assumption, which has been proved false by events, elections, and the border poll?
  Mr. Rees: It is extremely difficult to draw conclusions from polls or anything else. There are two sections of the Northern Ireland community and our aim must be to get them to work for Northern Ireland.

  Convention
  Mr. Farr Mr. Farr asked the Secretary of State for Northern Ireland if he will make a statement on the reconvening of the Northern Ireland Convention.
  Mr. Merlyn Rees: As I told the House on 12th January the Constitutional Convention will meet on 3rd February to consider the matters referred to it: these are set out in the letter which I sent to the Chairman of the Convention on 14th January published as a White Paper on 16th January.—[Vol. 903, c. 61.]
  Mr. Farr: I am grateful to the right hon. Gentleman for that information. Will he assure the House that if he feels that the Convention is near agreement after the four weeks set for the reconvened Convention, he will take it upon himself to have the powers, if necessary, shortly to extend its sitting?
  Mr. Rees: I think the time has now come for there to be no flexibility for the Convention. It has had a long period to discuss the issues. I shall call it back for a month. In my view, that is sufficient. Of course, if it is necessary, I shall extend the time, but, whether successful or unsuccessful, the Convention will soon come to an end.

  Border Security
  Mr. Nicholas Winterton12. Mr. Nicholas Winterton asked the Secretary of State for Northern Ireland if he will now increase the military presence and security on the border between Ulster and Eire, particularly in the counties of Armagh and Fermanagh and South Tyrone, and further press the Eire Government to do likewise.
  Mr. Merlyn Rees: The military presence in border areas is adapted to the needs of the local security situation. That in County Armagh is being increased as

  1529
  the Prime Minister described in his statement to the House on 12th January. I am satisfied that the Government of the Irish Republic, with whom I have recently had talks, will continue to co-operate in response to the needs of the situation.
  Mr. Winterton: I am grateful to the Secretary of State for his answer. Will he accept that I welcome the new military stature and more realistic tactics that seem to have been adopted by the Government? Have the additional troops in the border areas been drafted to those areas from other parts of Ulster, or from BAOR? Is the right hon. Gentleman satisfied with the deployment and numbers of the SAS, because its personnel are the best equipped and best trained to counter terrorism?
  Mr. Rees: I am confident that the GOC knows how to use members of the SAS better than I do. That is his job. A realistic policy must adapt itself to the type of security needed in the area. Although I am sure that it would be easy to answer the hon. Gentleman's question, I think it would be very wrong for me to say where soldiers have come from or where they are going to. In the light of the flexibility that the GOC needs, I think it is best that I say nothing on that matter.
  Mr. McCusker: Does the Secretary of State recall that, following the atrocities at the beginning of September, he introduced the spearhead battalion? There then followed a lull in terrorist activities, which resulted in the spearhead battalion being redeployed. That lull was followed by an upsurge in murder, which culminated in the atrocities at the beginning of this year? Will the right hon. Gentleman assure us that the spearhead battalion will not be withdrawn again if the same pattern emerges?
  Mr. Rees: I point out to the hon. Member for Armagh (Mr. McCusker), who is faced with the emotions in all parts of the country which come from killings, that the spearhead battalion, as its name implies, goes in and out. In my view when the spearhead battalion is being used and other redeployments are taking place, we should avoid its becoming a matter of public concern and comment.
  As far as I am concerned, if the GOC wants extra soldiers, he can have them.
  1530
  The judgment must be his. In the north of the county, where the UVF has been active and about which there has not been the same amount of comment in British papers, for understandable reasons, there has been murder by Protestant para-militaries on a consistent scale. That will not be solved by a larger military force. It will be settled by detective work, and the police are doing very well.

  PRIME MINISTER (ENGAGEMENTS)
  Mr. CanavanQl. Mr. Canavan asked the Prime Minister if he will list his public engagements for 22nd January.
  The Prime Minister (Mr. Harold Wilson): I have held a number of meetings with my ministerial colleagues and others today. This evening I shall be speaking at the annual dinner of the French Chamber of Commerce.
  Mr. Canavan: When my right hon. Friend meets the French Chamber of Commerce, will he discuss the particular advantages of the public ownership of three of the major banks in France? Did my right hon. Friend notice that both the Conservatives and the Scottish National Party voted against any extension of the Post Office banking services, which are used by many ordinary working people throughout the country for receiving pensions, benefits and for paying bills and rents? Is it not becoming clear that the SNP, in particular, is concerned more with representing the interests of Scottish bankers than Scottish workers? Will my right hon. Friend appeal to all workers to put their money into places like National Savings Banks, Giro and the co-operatives?
  The Prime Minister: My hon. Friend will realise that there is no ministerial responsibility for the way in which the Opposition parties vote, althought it is always interesting to observe it from time to time, as clearly my hon. Friend does.
  On the subject of the French banks, I take it that my hon. Friend is referring to the semi-public financial corporations, such as the Credit Nationale and one or two others which channel public and private funds for investment into industry.

  1531
  We have had many exchanges with them about this matter. It is a fact that in certain directions, such as the Commissariat Plan, the French Government have power in respect of individual firms far greater than this House has ever taken, for example, in relation to the National Enterprise Board.

  PRIME MINISTER (VISITS)
  Mr. David SteelQ2. Mr. David Steel asked the Prime Minister when he next intends to visit Scotland.
  The Prime Minister: I hope to do so in the spring, Sir.
  Mr. Steel: That is very good news. In the light of the devolution debate, has the right hon. Gentleman had any further thoughts about the procedure he will use in making progress towards devolution? Is he aware that some of us take the view that, rather than have a quick Bill which has no chance of becoming law this Session, it would be better to have inter-party discussions about improving the proposals for devolution, either informally, or through a pre-legislation Committee?
  The Prime Minister: I shall certainly consider anything that the hon. Gentleman or any other hon. Members may say about the procedure that should be followed. However, now that we have had the four-day debate, I am sure that the House will not at the stage want to go into the issues raised during that debate. The debate was very exhaustive and, indeed, exhausting. The Government will now want to consider seriously the arguments put forward in the debate. As to procedure, timing and so on, if my right hon. Friend the Leader of the House has anything to put before the House, he will no doubt do so.
  Mr. Whitelaw: Following what he has just said in answer to the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), does the Prime Minister fully appreciate how dangerous it would he for the future of the United Kingdom and for the Government in the aftermath of the devolution debate to proceed now with a Bill on the basis of the proposals outlined in the White Paper, which attracted so little positive support and, indeed,
  1532
  aroused so much opposition in all parts of the House? It is important that the Government should fully appreciate the position as it is.
  The Prime Minister: Yes, of course. One always takes note of the weighty words of the right hon. Gentleman, who is experienced in these and other matters. However, I was not aware that when the Divisions were called the Conservative proposals received much support. Nevertheless, we shall study everything that was said from every part of the House, including the very serious speeches made from the Conservative Front Bench, which seemed to me to be sharply divided about which kind of Assembly they did not want.
  Several Hon. Members rose—
  Mr. Speaker: Dr. Miller.
  Mr. Whitelaw: All that is very enjoyable for the Prime Minister—
  Mr. Speaker: Order. I had in fact called the hon. Member for East Kilbride (Dr. Miller) before the right hon. Gentleman got to his feet.
  Dr. M. S. Miller: When my right hon. Friend comes to Scotland, as I hope he will, he will be pitched into the hurly-burly of politics in the area. May I extend an invitation to him to come to Strathavon, where he will be well received and where he will see the benefits that have accrued to little country towns during his Prime Ministership? It is a town that wishes to retain its old-world characteristics and, if he wishes, he may even catch a trout in the River Avon.
  The Prime Minister: I am grateful to my hon. Friend for what he said, and I admire his ingenuity in managing to get in on this Question the supplementary that he would no doubt have put on Question No. Q8. I am sure that what he said will have weighed very heavily indeed with doubting Members in different parts of the House.
  Mr. Whitelaw: I apologise, Mr. Speaker, for having got up at the wrong time. I think that it is only reasonable to return to the Prime Minister, who will not be surprised when I tell him that he did not in any way answer my question. What is far more important is that he

  1533
  should consider seriously and sensibly, as I know he will, what I am saying. We have the Government's proposals before us and the right hon. Gentleman has to account for those and for nothing else. I am saying that as they stand the Government's proposals will not attract support in the House. Does not the right hon. Gentleman realise that on that basis it must be right for him to think again about the whole of the proposals and to decide how we may proceed on a basis that will attract support in the House?
  The Prime Minister: The right hon. Gentleman is too modest. I said that we should want to study not only the Government's proposals and what was said about them but all the proposals put forward from different parts of the House. We want to study them all very carefully indeed, including, as I said, the contributions by the official Opposition, though I indicated that on a first reading I was not very impressed by them.
  Mrs. Winifred Ewing: May I ask the Prime Minister when he comes to Scotland—I am pleased that at last he has accepted an invitation—to meet some fishermen and to give them the bad news that I am bringing to the House from Luxembourg—that, at the end of a serious debate on the fishing industry on Thursday, Commissioner Lardinois said that there was no question of a renegotiation of the common fisheries policy, which is a direct contradiction of what Ministers here have repeatedly said? Ministers have even promised that renegotiation is under way. This is a very serious matter. Will the Prime Minister give that bad news to the fishermen and explain the reasons for it?
  The Prime Minister: I am grateful for the hon. Lady's welcome. I visited Scotland six times last year, and I hope to go there again very soon.
  I was discussing fishing matters with my right hon. Friends the Minister for Agriculture, Fisheries and Food and the Secretary of State for Scotland just before lunch this morning. I take note of what the hon. Lady said about what was said by a distinguished commissioner. I have found it more useful when listening to statements about what is likely to happen to listen to my right hon. Friends than always to accept what is said by the Commission. At the end of the day,
  1534
  these matters are decided by Ministers here and by the Council of Ministers.

  PRESIDENT FORD (MEETING)
  Mr. NewensQ3. Mr. Newens asked the Prime Minister when he next expects to meet President Ford.
  The Prime Minister: The Government are in regular touch with the United States Administration at all levels, Sir, and I myself had several useful discussions with President Ford on matters of mutual interest in the course of 1975. There are no current plans for any early meeting.
  Mr. Newens: When my right hon. Friend next meets President Ford, will he raise with him the appalling record of executions, tortures and abuses of human rights carried out by regimes installed by CIA intervention in Iran, Guatemala, Chile and elsewhere and make it clear that a Labour Government will never tolerate such activities being planned in London? Will he also tell President Ford that all CIA agents attached to the United States Embassy in Grosvenor Square should go home immediately?
  The Prime Minister: I have repeatedly said to my hon. Friend and others of my hon. Friends that if they have any evidence whatsoever relating to the behaviour of CIA personnel in this country that they feel it right to bring to my attention, I will immediately go into it and take any action that may be necessary. My hon. Friend criticised certain activities in other countries. In many cases these are activities that my right hon. Friends and I have criticised both in opposition and in Government. But that is another matter. I have taken the line abroad, in both the United States and the Soviet Union, of not normally raising with them the activities of either the CIA or the KGB in third countries, unless a specific British interest has been involved.
  Mr. Alexander Fletcher: Will the Prime Minister take an early opportunity to express to President Ford the gratitude of the British people for the fact that the American taxpayer continues to foot the major part of the bill for the defence of Europe and the Western world? Will he also explain to the President why the British Government plan to make further

  1535
  cuts in defence expenditure when Russia and her allies are increasing their defence expenditure?
  The Prime Minister: It is not necessary for me to give any explanation to the President of the United States based on erroneous statements made by the hon. Gentleman. I have made clear in the House on a number of occasions—the hon. Gentleman will have the opportunity of studying the figures when they are published in the defence White Paper, on which there will be a debate—that we have not in any way reduced our contribution to the NATO collective arrangement—that seemed to be the basis of the hon. Gentleman's question. The hon. Gentleman, who is no doubt supporting recent authoritative statements on behalf of the Opposition, cannot have it both ways. He wants to add £4,800 million to defence expenditure, as was stated by the Leader of the Opposition, who has explained to me why she cannot be here today, at the same time as he wants to cut Government expenditure.

  TUC
  Mr. Greville JannerQ4. Mr. Greville Janner asked the Prime Minister when he next proposes to meet the TUC.
  The Prime Minister: I refer my hon. and learned Friend to the reply which I gave to my hon. Friend the Member for Bolsover (Mr. Skinner) on 25th November, Sir.
  Mr. Greville Janner: When my right hon. Friend next meets the TUC, will he congratulate those trades unions and their officials who contribute greatly to the good industrial relations that exist in the bulk of our industry and who receive so little recognition? Does he agree that while among some of the industries and plants in economic difficulty industrial relations are bad, there are many others, such as the Decca plant in my constituency, where they are very good indeed and that these plants deserve congratulation and special help?
  The Prime Minister: I believe that my hon. and learned Friend's comments are absolutely justified. It would be good if occasionally, for example, the Opposition were to pay tribute to the great improvements achieved in industrial rela-
  1536
  tions during the past two years. I am sure that they are highly gratified, though very silent, that the number of man-days lost last year through industrial stoppages was the lowest in any year since 1968—I note their cheers. I am sorry if these facts make hon. Gentlemen opposite unhappy. They destroy their whole argument. The loss of man-days through disputes last year showed a fall of 60 per cent. compared with 1974—almost all in the first two months—and a fall of 17 per cent. compared with their record in 1973. The number of man-days lost through disputes, which is the pabulum of the Opposition's whole publicity, has fallen by 75 per cent. compared with their record in 1972. Why cannot they have the guts to acknowledge those facts?
  Mr. Thorpe: Does the Prime Minister agree that when he meets the TUC, it is highly likely that the problem of the current level of unemployment will be raised? We welcome the grant of £70 million to the Manpower Commission to create 15,000 new jobs. However, will the right hon. Gentleman undertake to look at the Canadian experience, where a job creation scheme under a local initiative programme for 150 million dollars has already created 100,000 new jobs, and consider whether we can benefit from that experience?
  Finally, as there are 40,000 additional school leavers on the register, may I ask whether he is satisfied that the recruitment subsidy scheme is as successful as he hoped it would be?
  The Prime Minister: I do not not quite accept the right hon. Gentleman's figures. It is certainly the case that in every meeting we have with the TUC we discuss these important questions. I cannot accept what the right hon. Gentleman said about comparability with Canada, nor, indeed, his figures for this country. He will be aware that for a fairly limited increase in expenditure—for example, on other job creation schemes apart from those he mentioned and, of course, regeneration schemes related to wool textile machinery and so on—there has been quite a marked response.
  I am sure that the right hon. Gentleman is not suggesting—and I do not think that the Conservative Party is suggesting—a major programme of Keynesian-type reflation, which would not

  1537
  quickly reduce the numbers of unemployed, but could endanger the very significant progress made recently in the attack on cost inflation and rising prices.
  Mr. Marten: Does the Prime Minister recall that a few months ago I asked him whether he would consider with the Trades Union Congress the proposition that major pay settlements should be arrived at on one day, certainly in the public sector? Has the Prime Minister discussed this proposition with the TUC? If so, what was the TUC's attitude to it as a method of overcoming leapfrogging?
  The Prime Minister: I have not discussed it with the TUC. It is on all grounds of good theory a consummation devoutly to be wished, but it raises practical difficulties concerning the dates on which there have been previous settlements in individual industries. The hon. Member will know, for example, that in the proposals approved by the House in July or August last—the observance of which has been 100 per cent.—there was a very important clause requiring a whole year to go by before further increases were made. If there were now to be—however desirable in theory—a telescoping of the dates into a single date, it would make it very difficult to enforce the agreement by the TUC, the CBI and the Government.

  NORTHERN IRELAND (OFFICIAL INFORMATION DISCLOSURE)
  Mr. Fitt Mr. Fitt (by Private Notice) asked the Secretary of State for Northern Ireland whether he will make a statement about the disclosure of official information from a Department for which he is responsible.
  The Secretary of State for Northern Ireland (Mr. Merlyn Rees): The Protestant Telegraph which was published in Belfast on 29th November carried an article which quoted from three official documents of the Northern Ireland Department of Housing, Local Government and Planning, two of which were classified "Confidential".
  An official complaint was lodged with the Chief Constable. The RUC is actively investigating the matter. I cannot comment further on the nature of the investigation, which is entirely a matter for the police.
  1538
  Yesterday, according to the Official Report, the hon. Member for Antrim, North (Rev. Ian Paisley) in the debate in Committee made certain references which it is apparent were quotations from a document classified "Confidential" about the appointment by the Minister of the Chairman of the Northern Ireland Housing Executive. This implied a further disclosure of official information.
  I should also inform the House that after the RUC had begun its inquiry a document classified "Restricted", and prepared by Army representatives for the purpose of briefing the Minister in connection with the impact of the security situation on housing questions in West Belfast, was reproduced in full in the Irish Times of 5th December. This also is being investigated by the RUC.
  Certain allegations implying irregularities in housing matters for which the Northern Ireland Housing Executive is responsible were raised with me by the hon. Member for Birmingham, Edgbaston (Mrs. Knight) in a series of letters beginning in September last year. As I informed the hon. Lady at the time, these also have been brought to the attention of the RUC.
  I am seriously concerned that the action of any individual in the public service or connected with it may bring into disrepute the high standards of the service as a whole and the name and repute of good and civilised government within the United Kingdom. It is essential, therefore, that every possible measure should be taken to eradicate the source of such leaks.
  Mr. Fitt: Does my right hon. Friend agree with me that the recent disclosures cast a real cloud of suspicion on every civil servant at Stormont Castle, and that many of those civil servants are trying to do a very difficult job and are in no way involved with the leakage of information to the particular gentleman named?
  Does my right hon. Friend also agree that it would appear that the hon. Member for Antrim, North (Rev. Ian Paisley) who, by the way, is at a wedding today—and did not think it important enough to come here—has access to Army files, police files, Housing Executive files and every part of the Civil Service administration in Northern Ireland, and that the

  1539
  hon. Member's remarks yesterday were calculated to smear a person who had just been appointed to a very responsible position in the Housing Executive in Northern Ireland?
  Will my right hon. Friend give an undertaking that he will pursue his inquiries with all urgency, and that if it means appointing a Select Committee of this House to inquire into the activities of the hon. Member there will be no hesitation in setting up such a Select Committee?
  Mr. Powell: On a point of order, Mr. Speaker. Is it in order to refer to the proceedings in a Committee of this House which has not yet reported?
  Mr. Speaker: The right hon. Member for Down, South (Mr. Powell) is wrong. It has reported.
  Mr. Rees: The appointment of a Select Committee is not a matter for me. My hon. Friend the Member for Belfast, West (Mr. Fitt) is right in saying that it is a bad thing for the Civil Service in Northern Ireland that documents are leaked with consistency, and that they appear in newspapers—
  Mr. Arthur Lewis: It happens here.
  Mr. Rees: My hon. Friend the Member for Newham, North-West (Mr. Lewis) has seen nothing in that respect unless he has been to Northern Ireland. The hon. Member for Antrim, North, in discussion with my hon. Friend the Under-Secretary, quoted verbatim from the record and said "This is on a file on a piece of paper in your office." There is no doubt that documents are passed, and the harm that this does to the Northern Ireland Civil Service, in a divided community, is really very great.
  I can only assume that any hon. Member who has information that would help to track down any person passing this sort of information—at a time when I was busy dealing with the question of an appointment to the chairmanship of the Housing Executive—will make that information available. It really is indefensible that a quite proper analysis of the character of the person involved
  1540
  should be peddled around. It makes the normal processes of government very much more difficult. Inquiries are, of course, taking place, and I am sure that all men of honour will help the police.
  Mr. Molyneaux: In view of the fact that the disclosures appear to relate solely to housing matters, will the Secretary of State say whether he suspects that the disclosures may have come from the Northern Ireland Housing Executive, from the Department of Housing or, as has been implied, from his own Northern Ireland Office? Secondly, will he say what damage, if any, has been done to the public interest by the disclosure of this information?
  Mr. Rees: Concerning the origin of the document, it would be much better if I were to say nothing as to where my suspicions may lie. I think it is a matter for the police. Whatever its source, however, the fact that someone feels that information of this kind should be passed on is very regrettable. We have had military documents passed on, and it is not a subject of amusement in the security forces that anyone regarding himself as loyal should do that kind of thing.
  I feel that it is much better for me to leave the matter there. I can only repeat that it has done damage to the Northern Ireland Civil Service. I am afraid that too often I hear from different parts of the community, or rather from a particular part of the community, that the Northern Ireland Civil Service is Protestant-dominated. That is not true, but we shall now have it said "What do you expect from the Civil Service?" The Northern Ireland Civil Service is a remarkably fine service. There are bad eggs everywhere—sometimes, perhaps, in the House of Commons.
  Mr. McNamara: Is my right hon. Friend aware that one of the most important of British standards is that the identity of civil servants and the advice they may give to Ministers is highly treasured and kept very secret by all administrations, in order that a civil servant may give advice knowing that it will be treated as his best opinion and not as something which is likely to be leaked or used against him or used to throw suspicion on him and his colleagues in the future?

  1541
  Can my right hon. Friend say whether any of the matters referred to in Committee have been brought to him by any hon. Members representing Northern Ireland constituencies saying where they got any of this information? Thirdly, is this only a phenomenon of the present administration in Northern Ireland or has it occurred in the past?
  Mr. Rees: I am advised that the same thing happened under the previous administration. On the second point about Northern Ireland Members, not as far as I am aware. As for standards, that matter does arise in this respect. While the modern fad is to believe that what is sometimes peddled around is advice and discussion which takes place—I suppose that that is what one has to take in political life and we should welcome it—if documents are handed around and published when it would be very easy for those concerned to come to discuss them so that it can be explained what they are all about, that is a matter of standards which is to be deprecated.
  Mr. Thorpe: While the leak in security is a matter for the police, would the right hon. Gentleman agree that for any hon. Member or civil servant in Northern Ireland the first priority should be to obtain a settlement which alone can end the bloodshed in Northern Ireland, and that anyone who exploits a security leak and, far worse, uses it to gain some temporary political advantage is indulging in action which in all quarters of the House would be utterly deprecated?
  Mr. Rees: I agree fully. As I was coming to the House today I heard a further statement about this matter to the effect that all that had gone on in West Belfast was a deal with the IRA and so on. That is the most worrying aspect. The deductions which are made from documents in Northern Ireland would leave Aristotle gasping.

  BUSINESS OF THE HOUSE
  Mr. Whitelaw: May I ask the Leader of the House whether he will state the business for next week?
  The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): Yes, Sir. The business for next week will be as follows:
  1542
  MONDAY 26th January—Supply [6th Allotted Day]: until about 7 p.m. a debate on the Provision of Services for the Mentally Ill Within The Hospital Service and In The Local Community, and afterwards, a debate on Municipal Trading and Direct Labour.
  Both will arise on a motion for the Adjournment of the House.
  Motion on the Financial Assistance for Industry (Increase of Limit) (No. 2) Order.
  TUESDAY 27th January—Motions on Suggested Amendments to the Trade Union and Labour Relations (Amendment) Bill, and Third Reading.
  WEDNESDAY 28th January—Remaining stages of the Prevention of Terrorism (Temporary Provisions) Bill, and of the National Coal Board (Finance) Bill.
  THURSDAY 29th January—There will be a debate on the Employment situation, on a motion for the Adjournment of the House.
  FRIDAY 30th January—Private Members' motions.
  MONDAY 2nd February—A debate on procedure.
  Mr. Whitelaw: Can the right hon. Gentleman give some information about the form of the debate on Monday 2nd February and on the motion on which it will arise? Second, the Leader of the House gave an undertaking some time ago that, whenever possible, he would avoid bringing forward major Bills late in the Session. Can he therefore say now when the Dock Work Regulation Bill will be set down for Second Reading? Apart from the inconvenience to the House, the delay and uncertainty caused by such waiting in an industry like this is very serious.
  Mr. Short: On the first question, it is proposed that the debate will arise on a motion for the Adjournment. On the second question, the Dock Work Regulation Bill will be brought forward as soon as time can be found in Parliament for it. The undertaking—an informal undertaking in discussions between the two Houses—was that we would try so far as possible not to bring forward any major Bills for Second Reading after Easter.
  Sir G. de Freitas: Shall we have the White Paper or Green Paper on elections to the European Parliament next week or the week after?
  Mr. Short: I am not sure of the date of publication, but I imagine that the week after would be more likely. I will try to give more exact information next week.
  Mr. Cyril Smith: Have the Government any intention of making statements next week on two matters—first, on the price of petrol and the fact that garages can apparently reduce the price by 7p a gallon despite the Government's decision allowing price increases? Second, is there any possibility of a statement before next Thursday's debate on unemployment on the strategy of the British Steel Corporation?
  Mr. Short: I do not know of any Minister who intends to make a statement on the price of petrol, but I will call what the hon. Gentleman has said to the attention of the appropriate Minister. There is no chance of a debate on the steel industry before the debate on unemployment on Thursday, but I said last week that I will try to find time for a debate at some time in the not too distant future. There will be a debate within a few weeks anyhow on the Iron and Steel Bill, which will give an opportunity for the House to debate the industry.
  Mr. George Cunningham: Will the debate on procedure on Monday week be only about my right hon. Friend's proposals for reform of Parliament and setting up a Committee to consider that, or will it be also on the basis of motions relating to any of the outstanding Reports from the old Procedure Committtee?
  Mr. Short: I hope that it will be a very wide debate. I will open it in a short speech and give some of my own views, and I hope that other hon. Members will do the same. It will be a debate on the Adjournment, so it will be wide enough to enable hon. Members to make any speeches they wish about the procedure and practice of the House.
  Mr. Hordern: When can we expect to see the White Paper on Public Expenditure?
  Mr. Short: Somewhere about the middle of next month, I think.
  Mrs. Jeger: In reappointing the Select Committee on Cyprus, why have the Government, apparently without precedent, deprived the Committee of the right to send for persons and papers, which was in the original terms of reference last Session? Does the Leader of the House recall that the Select Committee was appointed very late last Session, that hon. Members worked hard all through the recess but could not send for all those persons and read all those papers which would have enabled the Committee to present a sensible and balanced report to the House? Will he therefore recommend the acceptance of the amendment on the Order Paper to reappoint the Committee with its original terms of reference?
  Mr. Short: I have not deprived anyone of anything because the motion has not been put yet—
  Mrs. Jeger: It is on the Paper.
  Mr. Short: It may be on the Paper, but it has not been put—[HON. MEMBERS: "Why not?"].—As I said last week, because a number of my hon. Friends have been to see me about it. I agreed not to put it until I had had discussions and tried to find a solution to the problem. When I have done that, I will put the motion down, and I hope that it will be aceptable to hon. Members.
  Mrs. Winifred Ewing: May I remind the right hon. Gentleman of the Select Committee Report on Violence in Marriage and of his promise that this matter would be given time for a debate early in the New Year? What is the position now?
  Mr. Short: There is great pressure on parliamentary time. For example, we spent four days on devolution recently. However, as soon as I can find time we shall have a debate on violence in marriage as well.
  Mr. Maguire: Will my right hon. Friend consider, in view of the importance of Thursday's debate, extending the time for at least an hour and a half?
  Mr. Short: It is a whole day's debate, but I will certainly look at that and perhaps discuss it with you, Mr. Speaker.
  Mr. Geoffrey Finsberg: In connection with the debate on procedure on Monday

  1545
  week, will the right hon. Gentleman take into account the fact that there is now no Procedure Committee, which is unusual? From time to time, when matters are raised, we are told that they can be looked at by the Procedure Committee. In addition to the wide-ranging debate proposed, would he consider putting down a motion to set up a Select Committee on Procedure, as is normal?
  Mr. Short: Yes, Sir, I will certainly do that. As for saying that matters can be referred to the Procedure Committee, I do not think that so far I have said that this Session. However, as soon as any individual matters like that do occur, I shall be happy to do that. The purpose of Monday's debate is a much wider review. What I promised the House some time ago was a debate on the Adjournment in which every hon. Member would be free to say what he wished. I will consider the views put in the debate and then bring forward terms of reference for the Committee. This will be a listening exercise so far as we are concerned.
  Mr. Madden: Can my right hon. Friend say when the Secretary of State for Trade will make the statement which the Lord President expected some time before the Christmas Recess? Will that statement include much tougher regulations on dumping?
  Mr. Short: I shall certainly call the Secretary of State's attention to my hon. Friend's observations.
  Mr. Lawson: In view of the special importance of this year's, albeit belated, Public Expenditure White Paper, will the Lord President give an assurance that there will be a two-day debate on that White Paper before the Budget?
  Mr. Short: It will depend on when the White Paper is published. It should be published about the middle of next month. We shall then know the date for the Budget and the amount of time available. I hope that we can debate the White Paper before the Budget. I agree with the hon. Gentleman that that is desirable.
  Mr. Leadbitter: In view of the importance of the oil rig construction industry in this country as a means of exploiting North Sea resources, may I point out to my right hon. Friend that 2.000 men in
  1546
  my constituency, who produced two of the largest oil rigs in the world, are now out of work? Therefore, will my right hon. Friend accept that at this stage we should consider having a debate on the oil rig construction industry and the work of the Offshore Supplies Office so that those who are directly concerned know that the House is sensitive to this urgent matter?
  Mr. Short: I appreciate my hon. Friend's concern about this matter and the concern in the North-East. The North-East Development Council is doing a great deal of work to increase work in the oil industry. I cannot promise any time for a debate on this subject in the near future, but I shall bear in mind my hon. Friend's comments.
  Mr. Peyton: I thank the right hon. Gentleman for his forthcoming answer to my hon. Friend the Member for Blaby (Mr. Lawson). It would be highly desirable this year to have a debate on the Public Expenditure White Paper before the Budget.
  The whole House will welcome Monday week's debate on procedure. I take note of the right hon. Gentleman's answer to my hon. Friend the Member for Hampstead (Mr. Finsberg). Does he have any proposals which he wishes to nut on behalf of the Government? If he has, perhaps a short statement next week to air them might be helpful, so that the House can apply its mind to them.
  Mr. Short: When the Committee has been set up I hope that the Government will submit evidence to it. I hope that individual Ministers will feel free to submit evidence as well as all hon. Members. The purpose of the debate on Monday week is to listen to the views of the House about the kind of Committee that we should have and the extent of its terms of reference.
  I agree with the right hon. Gentleman that last year the White Paper was overtaken by the Budget and there was not time for a debate. I hope that this year it will be published in time and that there will be a sufficiently big gap between the two to enable us to debate it.
  Mr. Skinner: Will my right hon. Friend arrange for a statement to be made or an inquiry to be held into the whole affair of property speculation in which

  1547
  Lord Ryder, the head of the National Enterprise Board, is to some degree, or else, involved? Will he not agree that property speculation is a matter of concern, whichever side is involved, and that we want to be absolutely certain that the judgment of someone who is accountable in the form in which Lord Ryder is accountable is not affected by whatever took place in those land deals? Will he agree that a statement or inquiry is called for? Further, has he seen The Guardian article on this matter today?
  Mr. Short: The answer to the first part of my hon. Friend's question is "Certainly not".
  Mr. Warren: Can the right hon. Gentleman say when the proposed statement on defence cuts will be made? Will he give an assurance that after that statement there will be ample time for us to debate, in particular, the unemployment that will arise?
  Mr. Short: I do not accept in any way the hon. Gentleman's final proposition. The White Paper on Defence will be published a few weeks after the White Paper on Public Expenditure. We shall then find time to debate it.
  Mr. Arthur Lewis: Has my right hon. Friend's attention been drawn to the statement that was made last night but reported this morning by Leslie Male—the President and Chairman of the Police Federation—about the views of the overwhelming majority of our people on the increase in both muggings and violence to the person? If he reads the statement, will he bear in mind that every word is true and can be proved, and that the people of this country are getting worried about the situation? Will he ask his right hon. Friend the Home Secretary to be prepared to make a statement or to have discussions with the Police Federation, because in parts of London women, in particular, will not go out at night, go down certain roads or use the public services as they are afraid of being mugged by those who take the law into their own hands? It is a serious problem. Will he do something about it?
  Mr. Short: I read the statement and I know hon. Members' concern about this matter. The problem is not peculiar to
  1548
  this country. It is even worse in some countries, for example America, and has been for some time. I quite agree that that does not make the situation any better. It is serious. I agree with my hon. Friend and I shall pass his comments on to the Home Secretary.
  Mr. Cormack: Will the right hon. Gentleman take steps to re-establish the Select Committee on the Abortion (Amendment) Bill?
  Mr. Short: There will be a half-day debate in the week after next on the motion which is on the Order Paper to re-establish that Select Committee. There will be a completely free vote on this matter on this side of the House.
  Mr. Faulds: When will the House have an opportunity of discussing the many problems of Southern Africa, for some of which we are responsible, wherein, among the many pressing issues, the need for release from detention of Garfield Todd could be raised?
  Mr. Skinner: And Des Warren.
  Mr. Short: Certainly not next week or in the near future. However, this would be an appropriate subject to raise in a debate on foreign affairs, which we shall, I hope, have some time in the future.
  Mr. Costain: Has the right hon. Gentleman's attention been drawn to the fact that yesterday morning the Standing Committee on Regional Affairs had insufficient time for the Minister to sum up because a number of hon. Members wanted to speak? Has he received my letter and will he make a statement on the situation?
  Mr. Short: I am grateful to the hon. Gentleman for letting me know about this and I intend to table a motion to enable that Committee to sit again. However, I can do that only by referring the matter to the Committee of Selection again. I hope that that Committee will select identical Members and then it can have a second sitting. That is the only way of doing it, but it can be done.
  Mr. Greville Janner: In view of the sad plight of so many firms in the radio, television and audio-manufacturing indusry, can we have a debate on this subject in due course, and in the meantime an appropriate statement from a Minister?
  Mr. Short: Not next week.
  Mr. Michael Latham: Has the Lord President not noticed that the Secretary of State for the Environment has published two circulars on the Government's views on the Dobry Report on Town and Country Planning? Is it not time that we debated the Government's decisions on this matter, because many people consider them entirely unsatisfactory?
  Mr. Short: One of the problems in the House and, I hope, one of the problems that will be discussed next week is the increasing difficulty of finding time for general debates. I agree with the hon. Gentleman that this matter is worthy of debate, but there is simply not time to debate such a matter, at present anyhow.
  Mr. Cryer: Will my right hon. Friend tell the House when the Government will be able to place before the House legislation to amend and clear up the conspiracy and picketing laws on which the trade union movement is pressing for a decision?
  Can he arrange for a statement to be made on the activities of the Potato Marketing Board, because many housewives and small businesses believe that the large potato processors are being dealt with favourably? The price of potatoes has shot up so high that Parliament should now be seen to be tackling this question, or at least discussing the statement.
  Mr. Short: It is the Government's intention to invite the House to amend the laws of conspiracy, which I hope will be before long. I shall certainly pass my hon. Friend's second question on to the appropriate Minister. There is an Adjournment debate next week on the price of potatoes.
  Mr. Watt: Has the Leader of the House seen Early-Day Motion No. 111, and is he aware that there is considerable disquiet throughout Scotland about the fact that this House has seen fit to exclude all SNP Members from examining in Committee a question which is vital to most of their constituents?
  [That this House, noting that the Committee of Selection has consistently given over-representation to the Conservative Party on Scottish Standing Committees beyond the entitlement of that Party in terms of Scottish votes and Members, observes with disbelief that no member of
  1550
  the Scottish National Party has been appointed to serve on the Scottish Standing Committee considering the Freshwater and Salmon Fisheries [Scotland] Bill and declares that it has no confidence in the Committee of Selection.]
  Mr. Short: I must confess that I have some sympathy with the hon. Gentleman and his hon. Friends on this matter. I propose to have discussions with the other parties on this subject—I have not done so yet, but I shall do so—because I think that, in view of the number of parties that there are on the Opposition side of the House now, there is an injustice in this matter. However, the present Committee of Selection is bound to apply the present Standing Orders. Until they are changed, it cannot do otherwise. The Committee must reflect the whole United Kingdom strength, whether or not a Scottish Bill is involved. However, I shall have talks with all the other parties on this matter to see whether we can reach any proposition to put before the House.
  Mr. George Rodgers: When will the House be given an opportunity to debate world trade?
  Mr. Short: As far as I am aware, there is no opportunity for a general debate in the immediate future, but I know that this is a matter that concerns us all and I hope that there will be an opportunity before long.
  Mr. Channon: Reverting to the point raised by my right hon. Friend the Member for Yeovil (Mr. Peyton), if the Government are to put forward specific points for the House to consider in the procedure debate, would it not be much more satisfactory if we had some notice of them, so that hon. Members in all parts of the House could consider what the Government have in mind, rather than come cold to it in the middle of a Minister's speech at the beginning of the debate?
  Mr. Short: No, Sir. This is purely an open debate. I shall be putting forward some of the problems as I see them, and I hope that all hon. Members who have views on the matter will put them forward during this exercise if they wish to do so. When the Committee is set up, I shall certainly give evidence to it, but at this stage the debate is a listening exercise for me. When I have listened

  1551
  to the debate and considered it, I shall bring forward terms of reference for a Committee to the House.
  Mr. Lipton: Has my right hon. Friend yet had an opportunity of deciding what action he should take to reduce the volume of printed material circulated by the Vote Office to hon. Members, to which reference was made last week?
  Mr. Short: There is some scope here, I am sure. I heard this week, for example, of a taxi taking a copy of Hansard to an hon. Member's house very early in the morning, and very often the Member himself was not there, and I just wonder whether that is necessary. I also mentioned last week the point about the orders of hon. Members having gone on for years. I must certainly get down to this matter and see what sensible economies can be made without impairing the efficiency of the House.
  Mr. Wells: May I revert to the question about the price of potatoes and the promise or indication of a debate on the Adjournment next week? We are suffering at present from a series of short specialist debates on horticulture, which makes it very difficult to discuss horticulture in the round. Can the Leader of the House offer us a half-day debate on horticulture in which any horticultural topic would be in order?
  Mr. Short: No, Sir. I cannot do that. However, there are the regular Private Member's motions, and this would be a very appropriate subject for them. The Opposition have a Supply Day almost every week, and they could be invited to take one of those days to debate the price of potatoes or the horticulture industry.
  Mr. Molloy: From time to time, and quite properly, we have debates on economic problems in Scotland, Wales and English regions. Is my right hon. Friend prepared to consider making time available for the House to debate the economic problems of Greater London, wherein one-fifth of the entire population of this nation lives, and which is now facing a serious problem of unemployment among its young people?
  Mr. Short: I cannot promise a debate in the House, but I should be happy to arrange a debate in the very near
  1552
  future in the Regional Affairs Committee if that would help my hon. Friend and other hon. Members.
  Mr. David Steel: Reverting to, and welcoming, what the Leader of the House said about his proposal to have talks about the composition of Scottish Committees, may I ask the right hon. Gentleman to consider looking urgently at the composition of the Committee on the Crofting Bill, which is due to start next week? That Bill applies to only six parliamentary constituencies, two of which happen to be represented by my right hon. and hon. Friends, and neither of them is a member of the Committee. That makes the House of Commons look quite ridiculous.
  Mr. Short: As I said in reply to a previous question, the problem is that the Committee of Selection must apply the present Standing Orders and must reflect the strength of the House as a whole. I personally think that this is unjust in the present situation. However, I shall have talks about this matter and see what we can put before the House on this subject, although I do not think that this would affect the Crofting Bill.
  Mr. Marten: Is the Leader of the House aware that there is growing anxiety in the agricultural community about what is going on in Brussels in the price review, and that we ought to have a statement from the Minister of Agriculture next week on the discussions that he has held this week to keen us un to date about what is going on? Can the right hon. Gentleman assure us that the Minister of Agriculture will make a statement next week?
  Mr. Short: I cannot give an assurance about that, but I shall pass on what the hon. Gentleman has said to my right hon. Friend the Minister of Agriculture and ask him whether he is able to do that.
  Mr. Fletcher-Cooke: Does the Leader of the House realise what he said in response to his hon. Friend the Member for Warley, East (Mr. Faulds) just now? He said that the question of Mr. Garfield Todd's detention was a matter of foreign affairs. Does he really regard Southern Rhodesia as a question of foreign affairs?
  Mr. Short: I always realise what I have said. If the hon. and learned Gentleman

  1553
  had listened to the first part of my hon. Friend's question, he would have heard that my hon. Friend asked about South Africa. That is certainly a matter of foreign affairs—very foreign affairs. I said that this would be a very appropriate subject, the question of South Africa, to raise in a debate on foreign affairs. [An Hon. Member: "Southern Africa."] I thought that my hon. Friend said "South Africa." If he said "Southern Africa" that still applies.
  Mr. Faulds: May I enlighten the hon. and learned Member for Darwen (Mr. Fletcher-Cooke)? If he had been listening to my question, he would have heard me refer to "Southern Africa".
  Mr. Speaker: No, the hon. Gentleman can try to enlighten me or ask a question of the Lord President, but he cannot enlighten the hon. and learned Member.

  BALLOT FOR NOTICES OF MOTIONS FOR MONDAY 9TH FEBRUARY
  Members successful in the Ballot were:

  Mr. Stanley Newens.

  Mr. Ray Carter.

  Mr. Brian Sedgemore.

  STATUTORY INSTRUMENTS
  Ordered, That the Post Office (Rateable Values) Order 1976 be referred to a Standing Committee on Statutory Instruments, etc.—[Mr.
  Edward Short.]

ORDERS OF THE DAY
  SUPPLY
  [5TH ALLOTTED DAY]—considered.

  PUBLIC ACCOUNTS
  4.7 p.m.
  Mr. Edward du Cann: I beg to move,
  That this House takes note of the First, Second, Third, Fourth and Fifth Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute and Northern Ireland Memorandum on those Reports (Command Papers Nos. 6298 and 6286).
  Before discussing the work of the Committee either in general or in the round—as my hon. Friend the Member for Maidstone (Mr. Wells) would say—or in particular, I should like to pay a tribute on behalf of its members to its many willing servants and counsellors, whose reward and justification is its success. I am very proud to be able to pay that tribute on behalf of the Committee as a whole. It is paid first to our Clerk, always patient and willing and so very helpful. It is paid to Mr. McKean, the Treasury witness, whose knowledge has been increasingly available to the Committee. I am sure that the members of the Committee would agree with me when I say that there is great need always for effective evidence from the Treasury and, indeed, a form of partnership with the Treasury is essential for the working of the Committee.
  Then the tribute is paid to Mr. Sythes, in his first year as Comptroller and Auditor General for Northern Ireland. The Committee was most sympathetic to the difficulties that the Civil Service has in operating in that part of the United Kingdom. I think that we were all impressed with the consistently high standard of his work and that of all those who worked with him and the civil servants whom we saw. In the context of the Private Notice Question to the Secretary of State for Northern Ireland which we heard a few moments ago, I am very glad to be able to underline that point and to stress our confidence in those who are serving the community in Ulster.

  1555
  I hope, too, that the Members of the Committee will allow me to pay them a tribute for their conscientiousness, devotion and tenacity. We had a heavy programme of work in the Session to which I have referred. It was a calmer situation than in 1974, when we were so tediously interrupted by General Elections. Parliament is the richer, and the public are well served, by my colleagues' unadvertised and dutiful application. I am grateful to them, too, for their many personal kindnesses to me and for their support.
  As in former years, the Committee has carried on its work in an entirely nonparty spirit. Perhaps I might illustrate this feeling of unanimity of purpose by mentioning that all five of the Committee's Reports were agreed without the necessity for any formal Division on the terms of their wording. The House is never so effective as it is when it is bipartisan.
  As you know, Mr. Deputy Speaker, our responsibility is to expose waste and incompetence by Departments. Ministerial ineptitude is quite another matter. Ministers are vastly more extravagant, whatever Government they belong to, than any civil servants could ever be, and they are more costly to the economy. Our job is to probe and examine and, I hope, thereby to promote efficiency and effectiveness in the public service.
  In the debate on the Reports of the Committee in the last Session, I reminded the House that because of the sound basis for ensuring accounting regularity under the guidance of the Treasury—or, to put the matter in rather plainer English, because there are no longer defalcations on a massive scale, such as we might have been accustomed to a couple of centuries or more ago—the Committee was able to devote its time to examining the wider aspects of departmental control over spending. That has continued to be true. The Committee has again been able to concentrate on seeing whether Departments obtain value for taxpayers' money.
  It is fair to say that the Departments seem to us to be conscious of the need to avoid waste and extravagance, particularly perhaps in these times of financial stringency. But administration
  1556
  is complex—increasingly so—and things do not always go as well as they might. We considered a variety of cases which demonstrated the need for better management or stronger control.
  I can also assure the House that, cordial as the relationship between members of the Committee and the various accounting officers summoned to appear before them may be, an accounting officer does not receive the summons with any feeling of pleasure. A cross-examination of a Department's shortcomings by members of the Committee is an experience which I am certain any accounting officer would willingly forgo whenever possible. I fancy that in practice there is every encouragement to a Government Department to avoid putting him in that position.
  Perhaps I may quote in aid an example which comes to mind from the most recent examination of witnesses. Members of the Committee were very struck by the evidence given to us on behalf of the British Museum. I confess to being an ardent partisan of the British Museum. When I was a Minister at the Treasury I was responsible for introducing legislation which reformed the constitution of that remarkable body, which is such a credit to the nation. We were obliged to be very stern with the witness from the British Museum and to be highly critical in our Report. I have since noticed the concern that this has caused not only to the administration of the British Museum but to many colleagues in the House who, like me, are strong supporters of that institution. I like to think, therefore, that the Committee, its Reports and its criticisms where necessary—sometimes we regret having to make them—undoubtedly have a great effect, perhaps much more widely than is always the case, on the public service.
  The Committee has been fortunate in having members with a wide range of interests which enable them to apply their experience successfully to the many different subjects which come under their consideration, and to probe more deeply when necessary. I believe that that is yet another illustration of the advantage that there always is to the House when its Members have good practical experience outside it.
  The Committee has the responsibility to be critical in its approach, yet to be

  1557
  fair and to seek to make a balanced judgment, recognising that perfection, much as it may be a goal to aim for, is frequently unattainable in practice.
  I hope that when I turn to the subject matters in the Committee's Reports the House will agree that we have sought to be constructive in our criticisms, giving encouragement to the efforts that Departments are making to improve their systems of financial control, yet also being frank in expressing our displeasure when we consider that strictures have been merited, as they were in a number of cases which we had under examination.
  I told the House in last Session's debate that I hoped it would be possible to speed up the dissemination of the results of the Committee's work by publishing our Reports more often. Every member of the Committee is only too conscious that with volumes of this size and nature, covering 10, 12 or 15 different subjects, it becomes difficult for the House and commentators outside easily to digest the work that we are doing. Therefore, we thought that it would be better if we could publish three or four Reports rather than two main ones.
  We made progress by publishing our Third Report in July last year, a Report which covered the evidence taken up to Easter. The balance of our main work was covered in our Fourth Report and our Fifth Report, which related specifically to Northern Ireland. Both those Reports were published in September.
  I hope that members of the Committee who are good enough to be here this afternoon will agree that it might be a good thing if we could make further progress in that direction. But last year we found that printing delays and the need to wait for the proofs of evidence to be checked for accuracy militated against as much speeding-up as we should like. The printing delays and interruptions that the House suffered last year were a positive disgrace and an impediment to democracy. It may be that we are spoilt in the House, because we are so accustomed to a very high standard, but there is no doubt that the work of the Committee suffered, like the work of the House as a whole, as a result of those interruptions and delays.
  I recall that in our last debate on the work of the Committee the hon. Member
  1558
  for Norwich, South (Mr. Garrett) criticised the so-called inferior status of the auditors in the Exchequer because, as he said, most did not hold an external professional qualification. That point needs further consideration. However, members of the Committee may think that the hon. Gentleman's comparisons did less than justice to the professional competence underlying the Reports which came before us or to the specialised training which all the people concerned have undergone. But I know that successive Comptrollers and Auditors General have kept the training arrangements for their staffs under review, and the recently-widened charter of the Chartered Institute of Public Finance and Accountancy has made its qualification more relevant to the needs of Government auditing. The training of new entrants into the Department will now lead to qualification as members of the Institute.
  Finally in this preamble, I pay a particular tribute to the present Comptroller and Auditor General, Sir David Pitblado, who will shortly be retiring. I have had the pleasure of knowing him for many years, both in Washington, where he was Economic Minister, when I was a Minister at the Treasury, and now as one of the chief servants of this House. His whole career has been a distinction. We are deeply grateful to him for his devotion, competence, loyalty and pertinacity.
  He has been an outstanding Comptroller and Audtior General. I am sure that the Committee and the whole House wish him and his wife happiness in their retirement.
  There is another remark I am constrained to make. I noticed some observations of the Prime Minister a short time ago in which he suggested that the format of the PAC might be something that could be applied to Europe. I thought that that was wise advice and in so far as it is appropriate for the European Parliament—I dare say soon to be elected—to exercise an increased budgetary control of European affairs, I hope that some use will be made of what I regard as the quite outstanding British experience.
  I come now to the details of our work in the last Parliament. Our First and Second Reports dealt, as usual, with some cases of excess expenditure in Great Britain and Northern Ireland

  1559
  respectively. Almost inevitably, when Departments are—with the encouragement of Parliament—drawing their estimates of expenditure as realistically and tightly as possible, there are, despite supplementaries, some cases of excess expenditure every year. We shall be looking at some cases in respect of last year in a day or two.
  Dealing with last Session, we recorded that we saw no objections to the sums needed being provided by excess Votes, and the House subsequently voted those sums. We probed more deeply into two cases. One dealt with the National Health Service in England and the other with road services in Northern Ireland where, possibly as a result of reorganisation of duties between local and central Government, estimates were by no means as accurate as usual.
  In Northern Ireland there was some over-enthusiasm in accelerating the payment of accounts at the end of the year and in bringing forward programmes of work which would normally have been done in the next financial year. That is a practice which is wholly wrong. There was no loss of public funds, however, and we were assured that proper controls were now in operation in Northern Ireland.
  I deal now with our Third and Fourth Reports which record the bulk of our work. These were based, as usual, on the examination of witnesses on subjects brought to the attention of Parliament in the Reports of the Comptroller and Auditor General on the 1973–74 accounts and also on subjects where we were following up the comments in the Treasury Minute on the Third Report of the Committee in the 1973–74 parliamentary Session. A study of the contents tables in those Reports, which I dare say many hon. Members have made, shows that we examined a wide range of subjects. There were 35 in all on which we considered it necessary to report. There were others about which we had no need to report. It might be helpful if I indicate the broad aspects of our work by summarising them under six separate headings.
  First, we looked at control over revenue and in particular at the arrangements for introducing VAT from April 1973 upon the abolition of purchase tax.
  1560
  The revenue in the first year was about £1,500 million—a not inconsiderable sum. But it is now running at about double that figure. There are vast sums of public money involved in this one new tax.
  Second, we looked again at various aspects of Government assistance to industry, both in general and in particular in assisted areas, for instance to the shipbuilding industry and Rolls-Royce (1971) Ltd. Once again, large sums of money are involved. This is a continuing and I think worrying responsibility. It seems, if I may say this in parenthesis, that the sooner the House lays down firm guidelines for the way in which this assistance is organised and controlled the better. I hope that the PAC is already playing a part in that.
  Third, we examined a number of different examples of the Government's purchasing arrangements for stores and their placing of contracts for large capital projects. Here again large sums are involved—£1,300 million on non-competitive stores contracts alone.
  Fourth, we spent some time in examining the planning of several different computer projects. As hon. Members will know, either from general or personal experience, although we may live in a so-called computer age, computer projects have to be planned by fallible human beings. How fallible sometimes those human beings can be, even when they are civil servants! The longer I live the more truth I see in that statement by Mr. Patrick Hutber, the remarkable City Editor of the Sunday Telegraph, that only too often improvement equals deterioration.
  Fifth, we looked at a number of aspects of the food and agriculture sector, particularly in relation to the United Kingdom's membership of the European Economic Community and the control of grants and subsidies.
  Lastly, but by no means of least importance, we examined value for money and possible inefficiency, in a number of different types of administrative expenditure which the Comptroller and Auditor General drew to the attention of Parliament. These range over a wide list of matters as diverse as the operating expenses and maintenance costs of Government buildings, the operation

  1561
  of hospital laundry services in Wales and the cost of looking after a small bridge in Scotland.
  I would like to say a short word about that item. This was the Inchinnan Bridge over the River Cart. It used to be looked after, and I dare say owned, by the local authority. In those days it took one man to open it and look after it generally. The maintenance was farmed out by way of contract. It was then taken over by the Scottish Development Department. A total of six men were employed full time looking after the bridge and maintaining it, at a cost of £18,000 a year. The bridge was opened only once or twice a year and the revenue gained from it was 80p, including VAT. It was a scandalous state of affairs.
  The point is that here is a service which the PAC can render the House of Commons—by drawing attention to an apparently small item of this sort and asking the question: "How many other 'Inchinnan Bridge' situations are there under the control of different Government Departments where people are happily engaged in doing very little at public expense?" These are situations which must be exposed and will be exposed if we have diligent command in Ministries.
  Under this general head of different types of administrative expenditure in some cases quite substantial sums of money were at stake while in others relatively small amounts were looked at. It was not just a matter of concentrating on the candle ends side of the economy. We were not concerning ourselves with candle ends as such but, as in the whole area of our deliberations, were seeking to ensure that the country's administrators do not adopt a complacent attitude towards waste and efficiency which, given more attention, could so easily be avoided.
  I turn from that classic case of incompetence to some matters on which I wish to comment in some detail. Tax collection is never a popular activity in any country. In this country we take some pride in the effort which goes into operating fairly the administration of whatever taxes Parliament has authorised. If one individual or firm is able to evade tax—I do not mean avoid tax—the community as a whole is the poorer and there is injustice to the honest taxpayer. I am
  1562
  sure that hon. Members recognise the enormous task which faced the Customs and Excise on the introduction of VAT from April 1973, even allowing for the advantage which was taken of learning from the experience of other countries which had already operated the tax. Nevertheless, it was clear to the Committee that during the first year the controls over collection were less than adequate and that for reasons of policy the Department was deliberately adopting a velvet glove approach towards traders' failures. It relied substantially on the honesty and accuracy of traders in compiling their tax returns. This approach cost money.
  What matters to this House is that it cost a great deal of money. The Customs and Excise Department made a statistical calculation for us showing that its tax losses in its first full year of control measures, 1974–75, were about £35 million to £40 million. We may therefore speculate that in the initial year, 1973–74, losses could have been substantially higher than that. We were deeply concerned about these substantial tax losses and recommended an urgent speeding up of more stringent enforcement measures. Paragraph 7 of our Third Report refers to that. In paragraph 9 we also suggested that more information should be made available to Parliament about the progress made in collecting the tax.
  Quite frankly, we were not impressed with what the Customs and Excise had done under this head. I note that the Treasury Minute gives an assurance that the Customs and Excise Department intends to operate its enforcement procedures more rigorously. I have little doubt that the PAC in this present Session will wish to examine further the effectiveness with which this assurance is being converted into a reduction of losses of tax.
  I am also pleased, incidentally, to see that the Department accepts the need for Parliament to be given more information about progress made in collecting the tax, so that if there were any further serious errors the Committee could inquire into the reasons.
  While dealing with the income side of our finances, I should refer in passing to the Committee's examination of the

  1563
  control exercised over the level of fees and charges made for services provided by Government Departments. In the Home Office, in particular, there were delays in policy decisions on the appropriate proportion of costs to be recovered, so that charges were not being properly reviewed and income was not being increased to recover the full costs where they should have been recovered. We thought that the Home Office had been asleep, and we shall want to see how many other Departments have similarly slumbered and thereby lost revenue to the Exchequer.
  I am pleased to note from the Treasury minute that steps have been taken to ensure that in future there will be a regular review at frequent intervals of the Home Office fees and charges and that action has already been taken to make a sustantial increase as soon as practicable in one matter to which we drew attention—the charge for vehicle removal.
  I want to speak more fully now about Government assistance to industry. As I have said, this has been absorbing an ever-increasing amount of our national resources in recent years, both in general schemes of assistance and in intervention to help particular firms to remain solvent, and thereby—I dare say properly—to try to minimise unemployment. The Committee has continued to show a close interest in the general control arrangements for administering financial assistance under the Industry Act and we shall certainly keep these matters under review. We looked in particular at the progress made by Govan Shipbuilders and Cammell Laird towards attaining commercial viability. We shared the Department of Industry's concern about the unsatisfactory financial position of both these companies. We shall continue to watch the Department's efforts to ensure that they operate the effective financial controls which are a prime essential of good management.
  The Committee also reviewed the current position of the relationship between the Government and Rolls-Royce (1971) Ltd. The Government's commitment here is now £168 million—a very large sum of money indeed. Here again, the Department of Industry is not yet satisfied with the company's organization
  1564
  and performance, and nor were we. In common with much of British industry the firm is experiencing a difficult time and has not yet paid any dividends. We can only wait and see what sort of return is achieved from this tremendous Government investment. I repeat that, on this whole subject of intervention in industry, it is essential that the House should lay down guide lines and that we should learn lessons from past experience.
  One perennial theme flowing through the Committe's Reports is the failure of Government Departments to decide precisely their requirements and to draw up competent plans before placing contracts. As a result it seemed to us that many of the cost benefits of competitive tendering are lost by the subsequent amending of contracts to incorporate second and third thoughts and so on. This is noticeable particularly in the defence sector. No contractor can work with maximum efficiency if his customer keeps changing his mind about what he wants, or does not make up his mind at all on some requirements until work has actually started. That waste and inefficiency and those delays in completion of projects have to be paid for by the customer—in this case the taxpayer—not by the contractor.
  One subject which illustrates this point is the hospital building programme into which we were inquiring. It is a disgrace that it has been necessary for three successive years for the Committee of Public Accounts to report on defects in control over hospital building. We have reported that the situation has been most unsatisfactory. We say so in paragraph 153 of our Third Report. Despite assurances from the Department of Health and Social Security that lessons have been learnt from past errors, I must say—and I am sure that my colleagues will confirm this—that we have yet to be convinced that those assurances have been transformed into achievements. The whole programme of hospital building in recent years has a thoroughly had record of waste and lack of control, and the House should not tolerate the situation any longer.
  In a similar way, the military planners seemed to place production contracts for the main engine of the Chieftain tank—a very good tank—before its development had been satisfactorily completed. It took about eight years. believe it or not, to

  1565
  overcome the faults and failures which dogged each successive version of the engine and I am sure that the House will share our surprise—to put it no higher—that the Ministry of Defence remained satisfied at the end of those eight years—so it is said—that the development had at all times been conducted as efficiently and effectively as possible, and that no one—mark this—could be blamed for the failures. It may not be possible precisely to quantify the cost of these failures, but there can be little doubt that it must be substantial, and, again, it has to be borne by the taxpayer.
  The same theme of inadequacy of planning ran through the various other matters. Lastly, under this head—the last one to which I want particularly to draw attention—the House will find our Report on various computer projects which have been seriously delayed. I give two examples.
  There was the computer project at Swansea for centralising vehicle registration ad licensing and driver licensing. There, I am glad to say, the Department of the Environment recognised that in the formative stages planning had been defective and estimates of cost had been inadequate. That again puts it pretty mildly. It was a scandalous affair. It came on stream five years late. There is a staff now of 8,000, which is some 50 per cent. up on the 1958 estimate, although the number of vehicles with which they are dealing is less than originally estimated. The cost has gone up from £146 million to £350 million, two-thirds of which was made up of staff costs. I repeat that this was a scandalous affair, entirely due to bad planning, lack of planning, lack of proper feasibility studies and so on.
  The second, similar example, although not so bad perhaps, is the Ministry of Defence's computer project at Bath and the Royal Dockyards. There were shortcomings in the system specifications and in the general planning and control arrangements. It was a very complex task—that we acknowledge—but the complexity had been underestimated. As a result, a less ambitious plan had to be devised and substituted, which of itself indicates the way in which the Ministry had embarked upon the project without taking sufficient care over the initial planning.
  1566
  I leave the matter of planning to make another general observation. I hope that the House will not think that the Committee was concerned only with the mistakes of the past, to carry out inquests, autopsies as it were, into the bodies of the deceased. We were very concerned also about the future and, particularly in regard to the subject of computers, about the time when the scientists devise even bigger and better machines in the next generation of computers.
  The work put into developing computer systems and writing computer programmes represents a very substantial investment of public funds. We do not want to see that investment dissipated at the end of the useful life of the existing computers. We want to see that advantage is taken of improvements in computer technology, but we say plainly to the Government that there can be no reason for new developments to be undertaken just for their own sake. If they are to be undertaken, let them meet real needs.
  The Committee examined the subject of departmental control of administrative expenditure and grants. We looked at a number of cases where control on the part of various Departments seemed less than adequate. I regret that in several of these cases it was necessary for us to voice our concern, and in one case even displeasure, at matters which were brought to our notice by the Comptroller and Auditor General I shall not make detailed comments as I know that some of my Committee colleagues may wish to do so during the debate: I wanted to try to give the House a picture of the wide range of activities of the Committee.
  I have already mentioned the Committee's Second Report dealing with Excess Votes required for Northern Ireland. As in the previous two years, now that this Parliament has responsibility for Northern Ireland, the Committee examined the Northern Ireland accounts on the basis of the Reports of the Comptroller and Auditor General for Northern Ireland. It then examined the Northern Ireland accounting offices in the normal way. Apart from the Excess Votes, we took evidence from the accounting officers on five separate matters. I am pleased to say that in spite of the difficulties in Ulster to which I have already referred,

  1567
  we had no serious criticisms to make in our Fifth Report.
  So much for the work done by the Committee in the 1974–75 Session. I hope that the House thinks that what we have done and attempted to do has been useful to it, reflecting on Government expenditure and on our tasks in the House and how we discharged them.
  I have had the honour to be the Chairman of the PAC for two years. It is the senior Select Committee and was founded by Mr. Gladstone over 100 years ago.
  Mr. John Pardoe: Hear, hear.
  Mr. du Cann: Perhaps the hon. Gentleman wishes to intervene.
  Mr. Pardoe: No.
  Mr. du Cann: I shall come back to the credit that he is giving to Mr. Gladstone.
  I have also had the honour to be a Treasury Minister in Mr. Harold Macmillan's Government and the founder-Chairman of the Select Committee on Public Expenditure. From that experience I hope that the House will permit me some short reflections on Government expenditure.
  I state as a fact, and not for the first time, that it is now clear to us all that Government expenditure is out of control. The House of Commons is quite ineffective in establishing command. Indeed, it is against the interests of Ministers and of the Government of the day that the House should establish effective command. I am sure that unless we radically change our approach to this matter Government expenditure must continue to be out of control. So great are the pressures, both political and otherwise, that Government expenditure is almost forced to increase: those pressures are forcing it to increase inexorably. On the part of Ministers I believe that there is inevitably almost a conspiracy against Back-Bench influence.
  It is also a fact that the House is failing in what I regard as its primary duty—namely, controlling the Executive through the control of the purse. In the lectures that we give to sixth forms and to others we state that we are proud of the principle of grievance before Supply. We have a Supply Day today, but this is an
  1568
  exception to the general rule. Most Supply Days are now mere formal debates with pre-arranged conclusions on party lines. The debates which should be most relevant to the control of expenditure—for example, debates on the Reports of the PAC, the Expenditure Committee or the annual White Papers—are tending increasingly to be benefits for the same small knot of specialists and a holiday for the majority. That is if, of course, we can arrange debates in the first place.
  On two occasions as Chairman of the PAC I have had to stand in my place on a Thursday to ask the Leader of the House why we have not been debating the Reports of the most senior Select Committee. There is always trouble about getting time to debate the Reports of the Expenditure Committee. For example, we heard at Question Time today of the delay that takes place in producing the Public Expenditure White Paper. There is no guarantee that time will be allowed to debate it.
  Incidentally, and not least important in this catalogue of matters which I thought it right to state plainly at the conclusion of my Report, the heavy expenditure of the State is increasingly a discouragement to personal or corporate effectiveness instead of the spur or example that it should be. We have only to look at the nationalised industries to understand the truth of that remark. I believe that that opinion will be common ground on both sides of the House. Indeed, on this matter there are not two sides, only one. There should be unanimity among Back Benchers on this matter.
  If that is a matter of common ground, so too is the fact that the increasing and excessive central and local government expenditure that is likely to take place in the next decade is likely to remain the most potent inflationary force in the economy in the years ahead. I hope that I do not have to argue any further the need for better control and better methods of control.
  If we consider the role of the PAC in these matters, I believe that it does excellent and necessary work, although its work is limited. I was pulling the leg of the hon. Member for Cornwall, North (Mr. Pardoe), but he is quite right to take pride in the fact that it was Mr. Gladstone

  1569
  who established the Committee. It was necessary then and it is necessary now.
  I have some small but significant suggestions to put to the House in an attempt to improve our methods of control and to use the PAC more effectively. First, we must adhere to the proposals and forecasts of expenditure presented to the House year by year. In fact, we never adhere to them. Let us consider current experience within the time range of the Reports. The 1971 White Paper forecasts on expenditure were exceeded in 1974–75 by more than £5,000 million. The Public Expenditure Survey Committee system, which I strongly supported, has degenerated into a matter of academic forecasting and mere record keeping.
  Thus it is that the figures are twisted and exaggerated to accommodate policies. Thus it is that policies are no longer made to accord with specific forecasts. The House should say "This will not do in future. It must stop." The basic system should be reinforced. I think that the PAC might well be given the job of acting as a monitoring committee. If that were done, no spending would occur outside the framework of parliamentary control—namely, back-bench control.
  We can no longer allow the budgetary system to be solely concerned with taxes. Ministers' spending policies must have their taxation consequences plainly spelled out when decisions are made, and they must be argued for openly.
  Support for Chrysler was decided by the Government in isolation. No one said "If we put this money into Chrysler it will mean an extra 6p on income tax", or whatever the calculation might be. It seems that we deal with only one side of the equation. We never deal with both sides together. That must change. There must be debates on revenue and expenditure.
  I do not doubt that many civil servants in the Treasury and many officials throughout Government, in Cabinet Committees or in Cabinet, engage in such discussion and debate. I have been present and I have seen such debates take place. However, they should take place on the Floor of the House and not in private.
  I also believe that new spending proposals must be balanced either by new tax proposals, argued at the time at which the spending proposals are made
  1570
  and agreed by the whole House, or by cuts in some other programme, with the Public Accounts Committee as the monitor.
  The very least advantage of such a system—a radical change from the way in which Gladstone saw the PAC, but times change and the day of the inquest alone is over—would be that if public expenditure increases it would be only after the House had made the fullest inquiry and given its clear approval to such a course. Such matters as cash limits, departmental budgets, and so on, might be important parts of this apparatus of control. We must seek to bring control to the Floor of the House, which is where it belongs and certainly where it does not at present reside.
  In addition, the efficiency of public spending could be consistently monitored on behalf of the House as a whole by the Select Committee on Expenditure. That body could examine alternatives in great depth and serve the House in future as well as it is serving us at present. That is what it was designed to do, but it has never been fully allowed to do so.
  I suggest that it would be a good thing if we were to attempt deliberately in this House to popularise the process of control. We must see that what we are endeavouring to do on the Back Benches is better understood by the population as a whole.
  As Members of Parliament, we are rather like icebergs because the public see only one-eighth of our work and the other seven-eighths of it is below the surface. That certainly applies to the PAC. Hon. Members from both sides of the House spend many hours of careful preparation and undertake their work with diligence, but the tonnes of evidence and recommendations produced by the PAC are mostly filed away and the House tends to debate those Reports only once a year. I hope that I am not advancing too radical a proposal when I suggest that the television cameras should be brought into the PAC. It would clearly demonstrate Parliament effectively at work. However, perhaps that proposal goes a little too far. I should like the House as a whole to seek to identify the process of control and to give the population in general more idea of our work. If the method I recommend is not suitable, no doubt the Government can propose others.

  1571
  Perhaps all this is a little wide of the motion before the House, but I hope that the House will regard these reflections and proposals as relevant to the work and responsibilities of Members of Parliament and of the PAC.
  My concern can be simply put. The public trusts us to be effective sentries of public expenditure. We can no longer pace out properly the perimeter of our guard. We must reform the system and the sooner the better. In the meantime, I pray for the blessing of the House on the work of the PAC.
  4.54 p.m.
  Mr. James Lamond (Oldham, East): In supporting the motion, I wish first to be associated with the remarks of the right hon. Member for Taunton (Mr. du Cann), the Chairman of the Public Accounts Committee, in offering congratulations to the Committee's staff for the work which they have undertaken for the Committee, the House and the country as a whole. I wish particularly to be associated with the right hon. Member's thanks to the Comptroller and Auditor General, whom we shall be losing soon and whose patience and helpfulness to the Committee will be sadly missed.
  I have been a member of the Public Accounts Committee for four years. Each year the work becomes more interesting because one becomes more familiar with it. In general, there is continuity of work from one year to another, and I believe that continuity of the Committee's membership is of some significance.
  During my time on the Committee we have had three different chairmen, all of whom have been extremely good in that job because they have been patient and exceptionally keen in cross-examining witnesses. I very much admire the work of the present Chairman who has brought some innovations to the Committee which have been of value. The right hon. Gentleman believes in work-sharing and in giving everybody in the Committee the opportunity to play a leading part in its work. Such an attitude is valuable, and creates more interest for hon. Members.
  The right hon. Gentleman's speech was an exceptionally fine analysis of the five Reports. I support every word he said in dealing with them. However, I part company with him in his conclusions.
  1572
  I do not go as far as he did in his criticism of public expenditure. I do not believe that it is out of control. I concede that it is very difficult to contain, but all of us are in some respects responsible, because we sometimes wear different hats in our demands on one side or the other. I offer this as no criticism of any one section of hon. Members, for demands tend to come from both sides of the House. On the one hand we call for cuts in expenditure and taxation but on the other we privately push for increased expenditure, in our constituencies, on hospital building and improvements, and all the rest of it. I have frequently asked for more money to be spent on such facilities in my constituency. Therefore, I am not critical of the Government on that score. Furthermore, I do not share the right hon. Gentleman's criticisms of local government expenditure.
  It is disappointing to see such a small attendance of hon. Members in this debate, as on previous occasions when we have discussed PAC Reports. One may ask whether debates on these Reports are as important as the work in Committee. The PAC is often referred to as the most powerful Committee in the House, which is always flattering to one's ego when one is a member of such a Committee. I believe that that power, if it exists, derives from our Reports and from the action taken by civil servants following publication of Reports, rather than flowing from debates such as today's.
  I believe that we should still be as powerful were the House to take these five Reports "on the nod". Almost everybody here for the debate today has served on the Committee, past or present. Hon. Members who have come to hear the debate out of interest, having read the Reports, are few and far between. This is difficult to understand because the Reports, despite their sombre and dull appearance, are a treasure-house of information for any hon. Member who wishes to make a name for himself and obtain a little publicity. The Reports contain some marvellous jewels for hon. Members who care to find them. The Press pick up only one or two items from the Reports and much information is there for the choosing, following a little examination of the contents.

  1573
  Therefore, if any young hon. Member who is keen to make a name for himself happens to be reading this debate, perhaps he will take a tip from me and make sure he obtains a copy of our next Report.
  Perhaps the step suggested by the Chairman and welcomed by the Committee, that we should publish our Reports more frequently, would help. It is difficult to encourage interest in a Report that is half an inch thick and deals with many subjects. We must try to make our Reports attractive, so that anyone who sees them is encouraged to read them. Once people begin reading the Reports, their interest will carry them along and, perhaps, encourage them to take part in these debates.
  As a member of the Committee, I have had the opportunity to put my point of view and express my misgivings about various events which have occurred, but we must not get things out of perspective. It is possible to come away from the Committee feeling a little disheartened, because it appears that everything the Government touch turns into a disaster. Of course, many things done by the Government are very successful, but it is no part of our job to go into these in any depth. The Comptroller and Auditor General directs our attention to matters that he thinks we should look at, and we usually consider only things that have gone wrong. In these circumstances, we might get a wrong picture of events and we should bear in mind that the vast majority of work done by civil servants and in local government goes right.
  Unfortunately, things that go wrong sometimes turn out to be disastrous. I have a particular interest in the hospital building programme, because, before coming to this House, I worked for 16 years on the capital building programme team of one of the regional hospital boards. I have seen these problems from both sides and I know there is great difficulty in containing expenditure within estimates. Sometimes this expenditure gets completely out of hand, and I wonder whether we are not inclined to employ consultant architects too frequently. Hospital design is a very specialised job, and perhaps we should try to build up a larger staff in our own teams so that they
  1574
  can become specialised and more knowledgeable in this work.
  Sometimes the Committee considers things that are so tragic they are almost humorous. The Chairman has already referred to the bridge over the River Cart, which has attracted some attention in the Press. Having a cynical turn of mind, I wonder whether it would have been noticed if there had been no income from the bridge. It was the enormous disparity between income and expenditure that attracted our attention. Some other bridges probably cost just as much to maintain, but, because people are not charged for using them, there is no income, and it cannot be said that six men are working to obtain an income of 70p or 80p a year from them.
  If I had been a civil servant anxious to avoid the attention of the Committee, I would have abolished the charges, because no attention would then have been drawn to my activities. Of course, that would not have been proper, but another possibility would have been to waive the charge of 30p to the firm that floated boilers down river every six months or so. The bridge could have been kept open and cars charged 25p each to go across. That would have been a more buoyant source of income. I hope that our Report will at least result in some savings. I think the Chairman was rather hard on the six men involved. An attempt was made to convince us that they were assisting in the upkeep of nearby roads. It would have been far too boring for all six to sit waiting every day for the bridge to be lifted. I am sure that they found something useful to do.
  Another disaster has been the motor vehicle licensing fiasco at Swansea. A little common sense at the outset would have prevented this. One of the great difficulties that computers have in dealing with applications is that many forms contain mistakes, or are not properly completed. Anyone who has had to queue to get a car or driving licence will have seen that almost every second person makes a mistake on the application form. Before this so-called improvement was brought about these used to be ironed out very easily by the clerk at the desk. I have frequently had to wait up to 20 minutes before I could get a licence. Now we hear boasting that the waiting period

  1575
  is down to 10 days—not including the time taken by the post, which could easily add another 10 days. I receive many complaints from my constituents about this service, and I sometimes feel like complaining myself. I bought a new car in December, and I am still awaiting the registration book. I take with a pinch of salt the assurances that we have received about improvements at the centre.
  The work of the Committee is very interesting. I hope it is worth while and that we merit the praise of being the most powerful Committee in the House. I hope that civil servants feel a little afraid when they are called before us to explain a dreadful mistake. If that is the case, there is at least a vestige of power left to Back Benchers, and this is to be welcomed.
  5.9 p.m.
  Sir Timothy Kitson: I begin also by thanking the Chairman of the Public Accounts Committee, my right hon. Friend the Member for Taunton (Mr. du Cann), not only for the way in which he introduced the debate and for the very full account he gave of our work, but for the way in which he helped to organise the Committee and for his encouragement for those of us who are newcomers to it in the work that we have to do. I agree with the hon. Member for Oldham, East (Mr. Lamond) that this is an interesting Committee by any standards, and one feels that the work and inquiry that we are putting in are well worth while. The only point on which I might disagree with my right hon. Friend concerns the possible introduction of television. I can see a number of advantages in introducing it, but I believe it would make it extremely difficult for some of the accounting officers in replying to cross-examination from the Committee, and it might also to some extent inhibit the Committee's questioning if the cameras were present. As we have to sit on hot and stuffy afternoons through June the television lights and cameras might not be so attractive to Members in a small Committee room.
  As my right hon. Friend said, the Reports of the Committee are published regularly. I believe it would be helpful to the House and to the Committee if there were not such a long delay between
  1576
  publication and the debate on the Report. With tonight's debate we have probably incurred the longest delay ever. Members of Parliament are nowadays confronted witth so much material to read, and this long delay may be the reason for such a light attendance in the House this afternoon. As every year passes it seems increasingly difficult for Governments to organise their timetables to cope with the increasing amount of legislation that comes before Paliament. I hope that those responsible for that timetable will arrange for the debate to take place some time before Christmas.. I believe that would be helpful to the Committee and the House.
  Since I joined the Committee only in April and have therefore been concerned only with the Fourth and Fifth Reports, I shall be brief. The impression that I have gained during the short time I have served on the Committee is that since 1861, when it was first set up, central Government expenditure has increased dramatically. Since only 14 Members of Parliament are charged with ensuring that Government Departments obtain the best value for taxpayers' money, it must be appreciated that as each year passes the work of the Committee becomes more formidable. The Comptroller and Auditor General and his staff provide an excellent service to the Committee.
  There are in the Committee's five Reports some remarkable examples of poor management in the spending of public money. It is traditional for hon. Members in this debate to refer in detail to one or two examples that particularly concern them, and I shall do that in a few moments. It is worth noting, however, that these are the only examples which the Committee of 14 has had time to examine in depth, and perhaps we should therefore consider how many instances it has not proved possible to bring to the attention of the Committee.
  This year we have dealt with about 35 subjects. Most people will recognise that the Committee cannot hope to examine any more than a fraction of central Government expenditure, and of course there is also local authority expenditure, where extravagances have been known to take place from time to time and are currently causing considerable public concern. As a member of

  1577
  the Committee for only a short time, therefore, I find myself wondering what has happened to expenditure outside the narrow beam of the Committee's searchlight. How well equipped are we in Parliament and outside to examine and control to the best advantage the spending of taxpayers' money? Quite frankly, when our constituents complain of public expenditure running out of control, can we expect them to be satisfied with the work of the Committee, in view of the magnitude of its task?
  There is, therefore, the wider point to consider. Do the procedures of this House for examining public expenditure amount to an economic reality? Most people would agree that in this country we need far better management information on Government spending programmes and far stricter budgetary control within Government Departments. The hon. Member for Oldham, East and my right hon. Friend the Member for Taunton have both dealt with the Inchinnan Bridge. As the hon. Member said, if the bridge had not had an income of about £1·20 in one year and £1·40 the following year, the situation might never have come to the attention of the Committee. It was explained to us that the manning level was necessary to keep the bridge operative and to protect it from vandals. That argument could be adopted with a lot of other bridges where there is a risk of vandalism, but it is not a very satisfactory argument. The whole affair caused a great deal of concern to all of us on the Committee.
  Another cause of great concern was the hospital laundry reorganisation in Cardiff. The project was subject to many problems from the start. There was the delay in completion of the buildings; there were problems in training the staff; difficulties were encountered in the transfer of work; and the costs of operation escalated. Also, there was obviously something wrong with the design and ventilation of the building. Absenteeism because of the working conditions in this new laundry was running at nearly 30 per cent. The laundry was designed to handle about 2,000 articles a week, yet when it began operations it could take only just over half that number.
  It seems strange that although a well-known firm of consultants had been
  1578
  employed, there had been little consultation with the laundry industry. The machinery cost £282,000. Senior people had visited the makers in Germany to see it working, but after it had been installed the engineers did not remain to see it working with the employees. The laundry service staff was not given time to train on this new and sophisticated equipment, which it had not seen before. Accordingly, the laundry was unable to meet the demands of the area.
  No commercial operation in this country would consider buying new and complicated machinery without insisting upon those responsible for installing it remaining to see it in proper working order and meeting its production specification. The laundry was planned to run at 30 per cent. below average costs of other laundries in Wales, yet its costs were 11 per cent. above the average and, the following year, 6 per cent. above the figure for the rest of the hospital laundry services in Wales. That is a remarkable story. If only normal commercial practices had operated, many of the difficulties would have been overcome.
  The third and final example that I wish to mention is the centralisation of vehicle registration and licensing and the issue of driving licences. I had the same experience as did the hon. Member for Oldham, East. I applied for a licence on 5th December and did not receive it until 7th January. In the 15 years in which I have been a Member of Parliament I have had few queries about the registration and licensing of vehicles, or about driving licences, but I know that all hon. Members are now getting queries about delays. The machinery that was installed is incapable of handling the problems that arise, and the escalation in price is terrifying.
  The Public Accounts Committee could not have worked harder at its task than it did last year, yet in December Supplementary Estimates amounting to £3,160 million were presented to the House.
  In reading the report of our debate on the same subject in 1975 I noticed that the Chairman of the Committee said:
  "In my view, it is time to re-appraise the system of financial control exercised by the House of Commons."—[Official Report, 13th January 1975; Vol. 884, c. 51.]
  The Chairman repeated that remark this afternoon. That must surely be right.

  1579
  In our previous debate my right hon. Friend the Member for Taunton said that our expenditure of the taxpayers' money was not fully effective, and that that was a tragedy. He suggested that we should improve the ways of examining and controlling public expenditure generally. Developments over the past 100 years warrant a general investigation into the size, powers and future programme of the Public Accounts Committee. If the scope of the Committee is widened and if information on Government spending programmes can be more comprehensive, from year to year there will be fewer instances of wasted Government expenditure, and there will be better control over taxpayers' money generally. If we achieved some of those goals, the Public Accounts Committee would provide an even greater service to the House of Commons.
  5.23 p.m.
  Mr. A. P. Costain: I join my hon. Friend the Member for Richmond, Yorks (Sir T. Kitson) in congratulating the Chairman of the Public Accounts Committee on the excellent way in which he has presented the Reports, which is typical of the way in which he conducted the business of the Committee.
  I do not agree that the proceedings of the Committee should be televised. In the Reports which we present to the House of Commons many items are sidelined and cannot be disclosed even to the House. If the proceedings were televised some witnesses might excuse themselves from giving answers which are necessary to enable the Committee to make a sound judgment.
  The hon. Member for Oldham, East (Mr. Lamond) made an interesting speech which contained one regrettable remark. I am sorry that he is not present to hear me say this. He made a comment to the effect that the witnesses who appear before us should feel frightened at being before the Committee. That is a dreadful thing to say. I consider that the Public Accounts Committee and Members of the House of Commons are part of a team which is helping to save the taxpayers' money. As a member of the PAC I do not con-
  1580
  sider that I have been appointed by the House to frighten civil servants. We should feel that we are there to put up a mirror so that the civil servants can see themselves. More important, we put up a mirror so that when he reads the Report the Minister will know what is going on in his Department.
  I have been a Parliamentary Private Secretary in five Government Departments. That means that I acted as a fag or office boy, but the office boy often sees more of the game. I have always been amazed at how little a Minister knows, or can know, about what is going on in his Department. He cannot possibly know, because he is there for too short a time and is surrounded by a team of civil servants. When a Minister takes over a Government Department, during the first six months the Department is weighing up the Minister. During the next six months the Department is carrying out his instructions. The civil servants get to know his favourite subjects and, naturally, tend to concentrate on them.
  The basis of the Report is exactly the same as the basis of an auditor's report of a public or private company. The Comptroller and Auditor-General is the auditor who points out on the Department's balance sheet items which he thinks require attention. The PCA is equivalent to a board of directors which queries with the staff concerned why the auditor has had to put a qualification on the balance sheet. The House of Commons can be compared to the meeting of the public company. There are even fewer present here than there would be at a meeting of a public company. It may be that some public companies serve gin after a meeting whereas the House of Commons does not.
  We should not be critical of hon. Members who are not here. I reckon that I spend 200 hours a year on the work of the PAC. To re-read the Report took me 20 hours, and I knew the subject. The House of Commons probably has to consider between 150 and 200 Reports. Is it fair to criticise fellow Members because they have not had the opportunity to read the Report and, because they have not done so, are wise enough not to speak about it?

  1581
  The Chairman of the Committee should be congratulated on overcoming the printing difficulties of having the Report published in five volumes. He explained to the Committee that he did that because he wanted to get the Report out as quickly as possible and felt that it would be wise that the Press should get an early intimation of what it contained. Unlike other Chairman under whom I have worked, my right hon. Friend had a Press conference. The Press performs a great service for the country, but the Inchinnan Bridge story was the only one that hit the headlines.
  My hon. Friend the Member for Richmond, Yorks said that we should make our Reports more interesting. By all means let us do so, but I sometimes wonder whether, to get more Press publicity, they should be more sensible. I do not want the Committee to have Press publicity, but I want the public to know that the accounts are subject to scrutiny and which people are carrying out their work well and which are not.
  I hesitate to give advice to the Press, but our Reports are full of technical items which should be of interest to the trades. I do not remember seeing any technical paper in which I have a professional interest any serious reports about the work of the PAC. There are a great number of people in industry who should be informed about any day-to-day apparent waste in Government Departments. Members of the technical Press do not know how to draw attention to this matter. After all, probably the Government Department concerned is their client—in many cases their best client—and they do not like to criticise their best client. They know well that if they complain to the Department, with which they must have good relations to enable them to carry on business, their complaint will be taken straight to the senior man and the individual who is responsible for the waste will get a kick and will not remain on friendly relations with them. However, I suggest that if members of the technical Press wish to bring this to our attention more often, they should see their Member of Parliament or a member of the Public Accounts Committee.
  If a constituent writes to a Member of Parliament asking him about what is being done concerning a firm which makes laundry equipment, I am sure
  1582
  that there would not be one hon. Member who would fail to be in his place, however late at night, to raise the matter. One reason for lack of interest in this matter is that it has not been given the highlights which it should have been given. I promise not to speak about the Inchinnan Bridge. However, I shall refer to a subject which has come up for the third time of asking—hospital building. I say "for the third time of asking" because I believe that anyone in a new enterprise or who is opening a new programme is entitled to make one mistake. If he makes a second mistake it is carelessness. If he makes a third mistake it is almost criminal negligence. We have not yet found who is the culprit but I think I know who it is and I shall explain to the House why I think I know who it is. We cannot blame the people who gave evidence to the Committee because when it comes to buildings of great magnitude it is basically the whole political system which is wrong.
  The Report deals with five hospitals. In each hospital there is a common factor which comes out extremely well in the evidence. In the Third Report, page 145, when the Under-Secretary in charge of the Health Building Division of the Department of Health and Social Security gave evidence, he said:
  "I would not pretend that these are the only skeletons in our cupboards. I say "our cupboards" deliberately, because this is something in which both the Department and authorities are involved. We provide the financial resources and lay down procedures, but we are not a building agency. … There is one common feature in all these five schemes on which you in this Committee will shortly cross-examine me. They were not as fully prepared as they should have been when the contracts were let. This is a common feature running through all of them. When they went out to tender the hospital boards were under considerable pressure …".
  They were under considerable pressure from Members of Parliament, from people who have been pressing for hospitals for years. The Treasury suddenly lifted the lid of Pandora's Box and everyone said, "Let's have it." It happens every time. The Under-Secretary then said:
  "… in some cases after long years of planning—to make very early progress in using the financial resources then available for hospital building".
  That common factor runs through all the hospital building programmes. I shall

  1583
  deal with the observations of the hon. Member for Oldham, East about consultants in a moment, but it is a different issue.
  In the hospital plans for one hospital there are 400 variation orders. Those who do not know what the technical term "variation order" means can take it from me that it means that someone has changed his mind 400 times. That is a common factor in the construction of any building. As the building goes up, people see aspects they want to alter.
  Unfortunately, hospitals are built basically by hospital committees. When a committee visits a building under construction everyone wants to change something and no one is strong enough to say, "No, it will cost too much". When I was the managing director of one of the larger construction firms we made the decision to build our own office. We held a board meeting at which every member of the board had a copy of the plans in front of him. The chairman then laid down that no member of the board was allowed to visit the building while it was being constructed except the director in charge. No one, including himself, could ever give a variation order without the whole board being informed of what was happening. He saved us hundreds of thousands of pounds.
  In this instance we are talking in terms of saving a million pounds a hospital, and I shall tell the Treasury how it will be able to save on future hospitals. If it does not accept the advice which I and other hon. Members are humble enough to give it, once again it will waste money. We have a tremendous unemployment situation. Among those out of work at present are skilled workers and technicians. The Treasury should immediately announce that at a specified time in the future it will build some hospitals. If it does not do so, someone will suddenly turn on the tap and say, "Let us get on with it". Therefore, we should be planning those hospitals now. We should spend up to £1 million on planning 10 hospitals, and we should save on every one we built. It would be the greatest investment we ever made. The time to do it is now. The technicians will have more time to carry out their duties. The architects could visit existing hospitals,
  1584
  see the mistakes and benefit from them. Hospital management committees could have some members who have knowledge of big building projects and they should also be told that subsequently they must keep away until the construction is finished.
  Doctors are a peculiar breed when it comes to dealing with hospital building. I have been responsible for building hospitals in Asia, Africa and Europe. The one common factor is that most doctors never have time to look at the plans in detail. Indeed, sometimes I suspect that they do not know how to read the plans. When the construction is finished they become like prima donnas who say, "We shall not operate on that stage", or "The light switch is in the wrong place". They want everything altered. It happens all over the world. It can be stopped by telling them that they cannot do it. However, everything can be made Sensible if the Treasury says Immediately".
  People ask what the Tories are doing about expenditure and they say that the Tories always want to increase expenditure. This expenditure will save money. It is an expenditure which will build up this country's resources.
  The hon. Member for Oldham, East thought that we should employ fewer consultants but have more architects run by a Department. I thoroughly disagree with him. If buildings are designed within a Department we shall lose competition and the variety or mix of architects' ideas. Moreover, if the Department has its own architects we shall not build up a team of architect consultants who can work throughout the world. There are many opportunities in Saudi Arabia and Africa. Indeed, the whole world is crying out for hospitals. We should train and give experience to our architects in designing more hospitals.
  There is one thing fundamentally wrong with Departments dealing with consultants. I have suggested to the Chairman that we must put this matter right in the Public Accounts Committee. So far the only witnesses we have had have been civil servants and others directly employed by the Departments. However, on many occasions the civil servants concerned have said, "It is the consultants' fault". We never get the consultants before us so that we can put

  1585
  to them, "Is it your fault?" It is a one-way trade.
  Another point is that when a Department employs a consultant it seems to think that it has to be the consultant as well. When a great firm wants to build a great building, it generally employs an outstanding architect, having made certain that he has been responsible for similar buildings. It examines the buildings which he has built before selecting him. A private client probably picks an architect because he has seen him playing billiards in the local club. That is not so with a great firm. The Department should do what the large firm does when choosing an architect and then leave it to him, saying, "This is the amount you have to spend. It is up to you to produce the goods." The Public Accounts Committee should be given authority by this House to cross-question the consultants who are employed.
  I do not intend to detain the House any longer. I have concentrated on hospitals, because I know in my heart that this is an area which would help to ease the unemployment situation and hold down the cost of future hospital building. If we can get an assurance from the Minister that he will do what I have suggested, the work of the Committee and this debate will have been worth while.
  5.42 p.m.
  Mr. John Pardoe: The hon. Member for Folkestone and Hythe (Mr. Costain), at the outset, referred to the comments made by the Chairman of the Public Accounts Committee, the right hon. Member for Taunton (Mr. Du Cann), who, turning into radical highways and byways, said that it would be a good thing if we opened up the PAC and other Committees to the television camera. I am familiar with the reasons given by the hon. Member for Folkestone and Hythe for turning down that suggestion. His words, if he cares to look them up, were almost identical with the words he used when answering a similar suggestion which, when I was a member of the Public Accounts Committee, I put forward in the debate which followed the report that year. The hon. Gentleman has not changed his views.
  However, I am glad that the right hon. Member for Taunton has come round to
  1586
  that point of view. I believe that the importance of control over the Executive would be enormously enhanced if we could make this part of the work of Parliament more exciting by giving it—putting it in the vernacular—a little more political sex appeal. If we introduced the television camera—certainly the radio—in order to get more Press focus on this aspect of parliamentary work, we would be doing a great deal for Parliament's effective control over the Executive.
  I congratulate the Chairman not only on the work of his Committee and its Report but on the splendid presentation which he gave with it this afternoon. I should like to join him in congratulating and thanking the staff of the Committee. I am sure that the right hon. Member for Taunton will agree that the staff are the essence of the whole thing. It is not just that they are good staff, but they are very numerous. This is the only Committee of this House which is adequately staffed. That is perhaps why it is the one Committee which gets down to the bits and pieces and under the surface.
  We are all well aware of the dangers of increasing public staffing generally, but I think we should beware of applying that principle to the staff of the Committees of this House on which we are endeavouring to exercise our role as watchdogs over public expenditure. The PAC, as the Chairman indicated, is heavily dependent for the quality of its work on the staff. I wish that the Expenditure Committee—if it focused its attention more on expenditure than on general areas of policy—had the staff to do that job. If it had the staff, we could get better results.
  I should like to follow the right hon. Member for Taunton in his remarks concerning our control over the Executive and its expenditure in particular. I appreciate that he made that reference with respect to all Governments, no matter what their political complexion. Public expenditure has, to a large extent, grown out of control under all Governments.
  The latest manifestation was Wynn Godley's marvellous assertion that the Treasury had somehow mislaid £4·9 billion of our money. I was interested in

  1587
  the reply to that assertion given by the Chief Secretary in a speech to the Association of Health Service Treasurers on 14th November 1975. The right hon. Gentleman said:
  "I am bound to say that my task of cutting public expenditure, and it has to be cut, at any rate from 1977 onwards, is not made easier by bogus talk of public expenditure being out of control. … This ignores the realities of the world in which we live. Parliament changed and the Government changed between 1970–71 and 1974–75."
  According to the Chief Secretary, the major reason for the non-parliamentary expansion of public expenditure is the continual change of Governments. We have it summed up in the philosophy that elections are highly inflationary. Indeed they are, and that might be a good reason for having fewer elections.
  I turn now to some of the details in the Report. I do not intend to wade through the whole lot, nor to touch on many of the points to which reference has already been made. I should like to raise queries on three matters on which I hope there will be some comment from the Treasury Bench.
  The first point concerns the Department of Industry and its control over financial assistance. The Treasury, in its comment, stated:
  "Viability has remained of prime importance in considering applications for assistance, though it is not the sole consideration."
  I should like to know whether that is still the situation following the adoption of the new industrial strategy. I should have thought that viability was, if not the sole consideration, virtually the sole consideration if one were picking winners.
  The second point relates to Cammell Laird Shipbuilders, which is 50 per cent. Government owned. The Government undertook support to the extent of about £25 million in 1972 and £14 million of capital work. The cost of the capital work had already reached £27 million when the Committee investigated the situation and it was likely to reach £32 million. In its comments the Department appears not to regard either of those commitments as open-ended, but apparently
  "felt committed to complete the proposed reconstruction schemes."
  I should like to raise a query on that matter. This House will increasingly be confronted with situations where the Gov-
  1588
  ernment, having put in a first or second instalment, just have to go on because, in the words of the Department's evidence, they
  "felt committed to complete the proposed reconstruction schemes."
  It would appear that, having started, we cannot go back. But it was specifically on that point that the House was reassured by the Prime Minister, on behalf of the Goverment, about injections of public money into British Leyland. We were told that it would be a step-by-step process. I wonder whether this House is in any position at any point, when something has been started, to say, "No, no further". I suspect that we shall get into a Concorde situation. We shall be unable to draw back. This situation will arise with every injection of public cash into industry. I hope that we shall receive some comment on that point, too.
  Again, in the case of Govan Shipbuilders, the further loan to the company, and the extensions of the support period, are subject to certain conditions, according to the Treasury. In the Treasury Minute no specific account is given of those conditions. It may well be that they were given to the Committee and that the Committee did not think it worth while reporting them. But if we are to be assured by the Treasury that there are specific conditions on the extension of support and further loans—and throughout the whole area of financial assistance to industry—those conditions must be laid down and made public.
  Those are just some of the details of the Report. It is a tremendous minefield of information about the way we conduct our public expenditure and our public sector. Earlier in the debate, questions were asked about the rest of the waste that is taking place, the waste that the Committee did not look at, much of which does not even come within its terms of reference. It is helpful for the Committee to look at hospital building programmes and to discover that there has been excess investment, but if we look at another aspect of the Department of Health and Social Security, what do we find? In an article written in Social Worker by the Chairman of the Supplementary Benefits Commission, he mentions the hostility of the public to the handouts to scroungers and layabouts, and the tottering Christmas tree collapsing

  1589
  under its own weight. That is in the latest issue of Social Worker, and it is written by Professor David Donnison. I have always taken him to be a good social democrat in these matters, and not on the side of viciousness towards needy people.
  There is undoubtedly a great deal of this kind of waste occurring, and it is a pity that the Public Accounts Committee cannot turn its attention to those aspects of that Government Department. After two visits to the Department of Health and Social Security in my constituency last weekend, I fear that the offices of the Department all over the country are, unfortunately, presiding over a colossal fraud. They know it, and there is no way in which they can do anything about it. It is undermining the morale of the staff of the Supplementary Benefits Commission, and I was delighted that the new Chairman of the Commission has decided to draw public attention to it.
  Concerning methods of control for the future, I was delighted that the right hon. Member for Taunton turned his attention to this in the latter part of his speech. One of the best surveys of the problem was contained in an article in the November issue of The Banker, on "Public Spending", by Professor Sandford and Ann Robinson, both of Bath University. They discuss not only the growth of public expenditure and Parliament's effective—or ineffective—control over it. They talk about the Supply Day debates, having clearly conducted a survey of them and of what is discussed in them. They state that
  "A close examination of what Members actually talk about during these 26 Supply Days reveals that they do spend a considerable amount of time discussing public spending."
  The authors go on to comment that
  "The general impression conveyed from reading these debates is that when Members make references to expenditure they are generally suggesting to the Government that expenditure on a particular function or item is too low and ought to be increased."
  Later in the article the writers state that
  "the House becomes not a debating Chamber but a stage or platform for a series of unrelated demands."
  We ought to take account of that outside criticism. It is a very fair analysis of what we do. We spend far too little time on those Supply Days, and far too little of our time generally in this House,
  1590
  in considering in great detail the whole question of public expenditure, which has grown so fast. Parliament, indeed, is not now an engine of control over public expenditure, or over the Executive at all. It is, if anything, an engine for the enlargement of Executive power. I suggest that we start to reverse this process from today onwards.
  We have been promised earlier by the Leader of the House, during business questions, a debate on the new Government White Paper on Public Expenditure. We have not yet had that White Paper but we shall have it very shortly. I suggest, Mr. Deputy Speaker, that through the usual channels we might well consider a new experiment this year—joining the debate on the White Paper on Public Expenditure with the debate on the Budget.
  I know that the objection—which I can already see being raised by the hon. Member for St. Ives (Mr. Nott) from the Conservative Front Bench—is that if we do this there will probably be a cut in the number of days allocated to the two subjects. Surely it is not outside the realms of sanity in this House to arrange an extended debate to cover both subjects.
  If we put public expenditure and taxation together we shall be able to get at the essence of the whole problem. If the attention of the public could be focused on those two matters together, we ought to be able to control public expenditure much more effectively.
  The mechanics of public expenditure are in a terrible state. This is partly due to the strain of administering huge additional public projects, but it is mainly due to the absence of scientific cost control in most branches of Government. The Public Accounts Committee's Report draws attention to this in a large number of isolated cases. We need a Department-by-Department examination of expenditure on a properly costed basis. It should be done in much the same way as advocated by the Economist in May last year. That method has now been adopted in a major way by the Liverpool City Council.
  This House neds cost estimates of individual services—the cost per head of every service offered to members of the public as individuals—so that we may have

  1591
  before us the basis on which to take decisions about the allocations of priorities and can see whether we are getting cost-effective value for money out of these services.
  In this context I was amazed recently, in an Answer to a Parliamentary Question, that it transpired that the cost of educating a primary school child in Cornwall in the last fnancial year was around £180. In England and Wales generally the cost was £220 per child. In Inner London it was £330 per child. We all know about teachers' London allowances, but these cannot possibly account for that difference.
  Drawing an analogy between money and quality, is it to be assumed that the quality of primary education in Inner London is 72 per cent. higher than in Cornwall? My own daughter goes to a primary school in London; therefore I can compare the two areas quite easily. The quality of primary education available at the higher figure in Inner London is certainly no better than in Cornwall. Perhaps we ought to draw the conclusion that all English children should be sent to Cornwall for their education, because it offers better value for money.
  This example raises fundamental questions about the value obtained for the expenditure of a certain sum of money. We need to consider why it is costing so much more to educate a primary school child in London than in Cornwall. It would be helpful to have that sort of comparison region by region and area by area.
  I hope that the right hon. Gentleman and his fellow Committee members will not mind my saying that there is no indication in their Report that any international comparisons have been made. Having been a member of the PAC in the past, I am not aware that it is even within the Committee's terms of reference, but it is a pity that we do not have a far better basis for international comparison of the cost effectiveness of our public services. I often wish that we were able to see in much greater detail how the costing is done in other countries, so that we could compare their costs with our own and any increase in costs one way or the other. It would give us a standard of comparison in the
  1592
  areas of public monopoly in which there are no market forces to guide us, and no real choice by the consumer. That kind of international comparison would be helpful.
  It is therefore with pleasure that I again congratulate the Committee on its work. I hope that this debate, poorly attended though it is, will enable the House to think through to the new ways of controlling public expenditure which are so urgently needed.
  6.0 p.m.
  Mr. David Crouch: The House may be poorly attended, but that is not due to the quality of speeches since the admirable standard set by my right hon. Friend the Member for Taunton (Mr. du Cann), the Chairman of the Committee. My right hon. Friend referred to the Reports of the Committee possibly being relegated to the files, hinting that that might be done too quickly. That is not my view. Nor do I think that the report of this debate will be relegated too quickly to the files. At least, I hope that it will not. That certainly should not happen to the report of my right hon. Friend's speech, an outstanding contribution which showed his remarkable grasp of the work of the Committee which he chairs with such distinction. He came to it after having chaired the Expenditure Committee, which succeeded the Estimates Committee, and with experience of the Treasury Bench as well. We are in his debt today for the lead that he has given us. I hope, Mr. Deputy Speaker, that you have not been bored by the proceedings and will not be bored from now on.
  Mr. Deputy Speaker (Sir Myer Galpern): I am obliged for the hon. Member's concern. I have been greatly interested in all that has been said. The only pity is that the television cameras have not been present, since attendance might then have been better.
  Mr. Crouch: Only a few minutes ago there were no fewer than three Treasury Ministers on the Front Bench. I am sorry that two have left, but we are glad that the Financial Secretary is here, because he is closely connected with our Committee.
  My right hon. Friend looked forward almost in an outline of political

  1593
  philosophy to the future of the Committee, which he thought might be changed. One of his proposals was that it should monitor the spending proposals to ensure that they were properly balanced. I agree that auditors normally look at the balance sheet and that it is logical, therefore, to assume that Parliament's auditor, the Public Accounts Committee, should see that the Government's expenditure programmes are properly balanced.
  My right hon. Friend defined balance as the necessity to show how increased expenditure, if proposed, would be met—whether from taxation or from cuts in other expenditure. That is an interesting proposal, but, although without my right hon. Friend's authority and experience, I question whether the PAC should seek to enter into Government forecasting and policy making. Should it not rather stand back and keep its hands clean? After all, for over 100 years it has stood back and criticised and made recommendations. It has never tried to discuss whether the Government's policies were right or whether they were balancing their accounts properly.
  I question whether this proposal is wise at this stage. I should be interested to hear further views on this matter, not only today from the Financial Secretary but at a later stage. I hope that the idea will be developed, here and outside. It is very important for us and people outside concerned with the functioning of our democratic system to consider the efficiency of the balance between the power of Parliament and that of the Executive.
  My right hon. Friend also considered the question of giving Parliament's examination of Government expenditure more popular appeal. Expenditure today is enormous. Expenditure by Government Departments, overseen by the Treasury, is approaching 60 per cent. of the wealth of the nation, the gross domestic product. It is now so huge and complex and distributed over so many departments and agencies that it is difficult to keep track of. Those few hon. Members who work on the Committee have their work cut out to keep pace. We are greatly indebted to the Comptroller and Auditor General and his staff. We could not even face the senior civil servants who come before us if we were not so well served.
  1594
  It would not be a bad thing to popularise the Committee and to introduce radio and television. My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) was cautious, because he felt that it would inhibit witnesses. The Press and public have been admitted to other Committees and when a witness wants to say something in private, he can intimate beforehand that he would like them to withdraw. Surely that would not be impossible if radio and television were introduced. The public would be very interested to know how we try to safeguard their interests and deal personally with those responsible for carrying out this expenditure.
  Something which has not come out today but has been discussed on other occasions in the last few days is the question of who should appear before Committees. There has been some argument about whether certain Ministers should appear before the Expenditure Committee. I will not express a view about that, but I am glad that Ministers do not appear before the PAC, that we concentrate on the accounting officers. At least we can always be sure that civil servants will turn up. In dealing with senior civil servants, we are dealing with the right people at the right level.
  There is a historical reason for this. The PAC has always worked at the level of the Civil Service rather than seeking to bring in the policy makers.
  Mr. Costain: Would my hon. Friend not also agree that this is the ultimate sanction that an accounting officer has against his own Minister? If a Minister tells him to do something that he knows is wrong, he can always report the matter to the Public Accounts Committee.
  Mr. Crouch: I am grateful to my hon. Friend, who has also drawn on his long experience in the Committee.
  I want to refer to one item which is contained in our Report. It concerns the hospital building programmes, which were already dealt with at some length by my hon. Friend the Member for Folkestone and Hythe. I am one of the few hon. Members who are members of a regional health authority. Therefore, I have seen at one stage down the line how the administrative expenditure of the Department of Health and Social Security

  1595
  is conducted. I am a lay member, not an officer.
  When the Public Accounts Committee examined the accounting officer, the Permanent Secretary of the Department of Health and Social Security, I was extremely interested to learn something of what had gone wrong in the case of five hospital building programmes. In those programmes there was a lack of control which resulted in a waste of about £5 million. It is not the Committee's duty to discuss a figure of £5 million in a year when the particular Department spends £4,000 million. It is its duty to show where weaknesses in administration lie and to penetrate and find out why those weaknesses have occurred. The Committee must then make a recommendation to the Department concerned and the Treasury about what should be done. However, the Committee does not have to say precisely how those weaknesses should be corrected. It is up to the permanent official, the executive head of the Department, to take serious note of what the Committee says and not to put its Reports in a file or on a shelf.
  It is the third time that we have had to report our concern about the Department of Health and Social Security to the House. We are talking not about a £5 million extravagance but about a serious case of maladministration. In this case we have discovered that the maladministration is down the line and not in Sir Alexander Fleming House.
  Today the National Health Service is the biggest business in Britain, employing 9,500. It has recently been reorganised. I make a plea in mitigation for those health authorities that are involved. For them to go through the traumatic change which has affected the Health Service in the past two years has been a staggering experience. I speak from my knowledge of those with whom I have worked on the South East Thames Regional Health Authority. It is remarkable that so little has gone wrong. I know that many officials have burnt the midnight oil to enable them to keep pace with change and the problems in their profession and big business.
  The Permanent Secretary told the Public Accounts Committee that in these five hospital building programmes matters had gone sadly wrong. He said that there
  1596
  had been inadequate control, that departmental precepts were not precisely obeyed, and that the Department recognised that a state of confusion and apparent deficiency in the control of hospital building programmes existed. It is as well that that deficiency in the Department should be highlighted today.
  I want to comment on the weakness in the administration of this vast business of health. I hope that you, Mr. Deputy Speaker, will not rule this out of order, because I believe that it is relevant. There are two types of health authorities—the regional health authority and the area health authority. However, for the purpose of my argument we can think of them generally as health authorities. Within those two authorities two types of people are responsible. There are the officials or the civil servants and the members—those who are appointed to represent the public and the patients—the consumers of the Health Service. It is difficult to know how to perform as a member against an official. It is not quite like being on the board of directors of a company and hearing a financial director's report. The relationship is not the same. It is difficult in our public lifetime sometimes to identify the functions and duties of a member appointed to administer in the name of democracy these large sums of money.
  I want to quote part of an answer that I received during the examination of the Permanent Secretary before the Public Accounts Committee last March. I asked him about the relationship of health authorities. At page 156, Question 848 of the Third Report, the Permanent Secretary said:
  "… health authorities are in the strict sense of the term agents of the Secretary of State, accountable to her for what they do financially, and I, as accounting officer, am responsible for what they do."
  That is a perfect description of the function of a public servant in a health authority. I questioned the Permanent Secretary further about the function of that other person, the member, who I maintain also has a part to play in safeguarding the expenditure of public money. I said that I was critical in my understanding of his duties. The Permanent Secretary replied:
  "It is difficult for a member, in the case such as we have before the Committee or the succeeding ones, to operate effectively. I do

  1597
  not think that I would say that it is impossible. I think that it is a matter of the authorities working out the procedures which will enable him to do so, and I would have thought it most important that they should, because otherwise he is put in an impossible position."
  That was a valuable observation and I offer no criticism of it. It is important that it was said.
  There are 14 regions in this country and the members of these health authorities have a responsibility, which they must begin to shoulder, to work with their officials to ensure that they, as the democratic representatives, try to put the matter right. The question of public expenditure is a vast one. It involves great delegation of authority from the centre down the line. It is not the concern only of the officials. In some ways, as we have said, there are democratic representatives, and those also have a duty.
  That was the only detailed point of our report to which I wished to refer. However, in conclusion I want to say something about the function of this Public Accounts Committee, of which I have had the honour of being a member for about a year. It is Parliament's oldest Select Committee, having been established in 1886—I thought that it was established then, but I have heard mention of 1861; we need not argue about that. It has the assistance, as we know, of the Comptroller and Auditor General and the Exchequer and Audit staff, of over 600 people. Very few people realise that this Select Committee has such a powerful staff behind it. It has earned an international reputation wherever parliamentary democracy is studied. It has great authority in this House, and it has been described as the terror of the Departments. That is not a derogatory term; it is one that I have taken from a distinguished civil servant, Sir Richard Clarke.
  The Committee's function is to audit the accounts of Government expenditure. It is concerned—we should not forget this—with ensuring honesty and propriety in the handling of the nation's money—the taxpayers' contributions. As Government intervention in so many sectors of our lives has developed and is now so involved, these days, within the commerce of the nation, we must not
  1598
  relax our vigilance for a moment in seeing that our standards in the administration of the people's moneys are without any taint of corruption. We hardly mention this as a concern. Nevertheless, one of the functions of the PAC is to observe that there is no corruption. I am glad to say that it is not something that features in our Report. Nevertheless, we must never relax our attention to this sort of thing, particularly as expenditure is delegated and devolved.
  Government expenditure is on such a vast scale these days, and so much of it is delegated from Whitehall, that we must satisfy ourselves that the rules are being observed and that the responsible Departments are ensuring that this is so. The independent outside audit is a vital component in our Government system. The operation of the PAC is a linchpin in the structure of our parliamentary democracy. As such, it is widely respected. As I have said, I feel very honoured to be one of its members.
  To be Chairman of this body is one of the most responsible appointments that the House can offer, and it requires a competence no less than that of any Secretary of State. That has been the tradition of the Committee, and our present Chairman has proved that he can fulfil these demands with unruffled ease. He approaches this task in a traditionally English Way, at least as far as his manner shows. He conducts our inquiries in a very gentlemanly fashion. His manners are, of course, perfect, and no civil servant need ever fear that he will not be questioned and listened to in an atmosphere at least as friendly as that in the Reform Club and quite the opposite of that found when a person is summoned to appear before the Stewards of the Jockey Club. But the accounting officers and the Departments should not be deceived by appearances and the quiet dignity of Committee Room No. 16. The Reports can leave them in no doubt about the serious attitude with which the Committee and its Chairman approach the task of watching their affairs on behalf of Parliament and the people.
  It is our duty to examine the efficiency of the Government machine and to make recommendations. A member of the Committee could easily be over-awed and even overpowered by the senior men and

  1599
  women of the Civil Service, who come before the Committee well briefed and well backed up by advisers. They pack the room. These senior people from Whitehall are used to answering and even advising Ministers. On the other hand, a member of the Committee could, if he were so inclined, resort to the rough tactics of bullying and scorn that are easily picked up in this Chamber. I have seen very little of either of these tendencies in our Committee. However, to guard against the first—being over-awed—requires a certain amount of application and reading, while to guard against the second requires a certain amount of understanding and respect. That is certainly present on the Opposition side of the Committee.
  It is Parliament's job to ensure and to encourage the efficiency of Departments. I use my words advisedly—to encourage, as well as to ensure. The PAC can best do this by putting the responsibility for achieving efficiency firmly where it belongs—with the Departments.
  I agree with the comment made some three years ago by that distinguished civil servant, Sir Richard Clarke, who said:
  "The responsibility for this must be riveted on the Departments, and audit is one of the Permanent Secretary's main arms for this purpose. The auditor should be his ally, and not his arraigner and inquisitor in public when some weakness is discovered; the higher management should be trying to find weaknesses, not being criticised in public when weaknesses are found."
  Those are the views of a civil servant, and they sound like them, but to my mind they illustrate the best relationship that should exist between the Executive and Parliament—the best we can attain; perhaps perfection. Parliament must always be watching this kind of relationship, because we do not intend to have a cosy one. Both sides should be seeking ways to achieve better government, rather than one side trying to defend itself while the other side makes sport of the attack.
  I believe that the PAC can enhance its present achievements by pursuing its course as Parliament's auditor. This is a single but vital function in our system of government. Some argue today that we are the Committee that is for ever shutting the stable door after the horse has bolted. I do not agree. The whole pur-
  1600
  pose of our audit is to find weaknesses and to get the Government to put them right. We are not only looking backwards; we are using our past experience to guide us in the future.
  I think that it would be wrong to consider merging the PAC with the Expenditure Committee, as some have suggested. Each has a different function, and to my mind they should be separate and distinct. I regard the Expenditure Committee as an important new arm of Parliament's power to examine and check the Executive, but it should not be confused with the singular and concentrated attention of the PAC, which stands as the guardian of the nation's efficiency in the management and expenditure of what I have termed already as the people's contributions.
  I do not wish to detain the House any longer, Mr. Deputy Speaker, and I hope that you will forgive me for taking a lead from my right hon. Friend the Member for Taunton in philosophising a little towards the end of my speech.
  6.29 p.m.
  Mr. Geoffrey Pattie: It is with some trepidation that I have sought to catch your eye, Mr. Deputy Speaker, because until now the standard of contributions to the debate has been uniformly high and because I cannot speak with the authority of someone who has been a member of the Public Accounts Committee. That means that it is denied to me to make any suggestions about the further development of this Committee. All that I intend to do is to content myself with commenting briefly on two items that are reported on in the Fourth Report. They are the Chieftain tank engine and the bulldozer kit.
  I am not singling out these items because they are necessarily the worst excesses to which the PAC has drawn attention—although, goodness knows, they are bad enough—but simply because I have a certain interest in and a knowledge of defence matters.
  The fantastic story of the Chieftain tank engine is proof of the old adage that truth is stranger than fiction. It reveals a state of affairs in Ministry of Defence procurement that would have failed Marlborough and Wellington. The

  1601
  engine took 17 years—from 1957 to 1974 —to develop. As I read the verbatim reports of the Committee sittings I had to try to keep a balance between horror and suppressed hysteria. At times I could almost hear the voice of the late Gerard Hoffnung intoning some of the comments. At the beginning of the first sitting at which the Committee considered the Chieftain, General Sir John Gibbon set out exactly what had happened. He said:
  "What happened in this case was that we placed two design studies, one with Rovers and one with Leylands, in 1955. That was all part of a co-ordinated plan for the design and development, and eventually the production of a new tank. We did it in that way because we wanted to exploit the previous experience in engine design of the Meteor petrol engine which had been used in the Centurion tank, the predecessor of the Chieftain tank, and a Leyland design which would be a multi-fuel engine based on the conventional diesel engines of that time. Both those approaches failed, and, of course, all the time that they were failing the design of the tank hull was going ahead and the design of all the things that would have to go inside he tank hull was also going ahead. By the time we got to 1958, when it was decided to adopt the opposed piston two stroke engine, the shape of the Chieftain hull was becoming fairly firm. The space available for the engine, when everything else had been taken into account, pointed to a tall and a narrow engine, which in fact, very luckily, exactly suited the shape of the opposed piston type engine … I think that it is probably not quite fair to say that we had to make an engine that fitted into the tank. Of course, if the engine had not fitted in and we had had to re-design the tank and perhaps make it rather bigger, it would have been heavier and we should have had to take much longer over the design of the hull itself."
  It seems that the Ministry discovered project managers some time in 1967, though that sort of management expertise had been known to the rest of industry for several decades.
  The problem facing a Committee examining that kind of case, where the project has gone on for such a long time, is the recurrence in the evidence of the phrase "I was not there at that time, I am afraid." The witnesses, however expert in their own right, often have to refer back—in the Chieftain case, as much as 15 or 16 years. Not surprisingly, they cannot directly account for what went adrift.
  The amazing saga continues. An engine was chosen for the tank—one that had not been used in fighting vehicles before, and then, piling horror upon
  1602
  horror, a decision was made to go ahead before it had been proved in trials or there had been further examination. Sir John Gibbon was asked whether the decision in 1963 could be justified by the military prognostications at the time
  "vis-à-vis our relationship with the Warsaw Pact".
  He replied:
  "I believe that I should take exactly the same decision in those circumstances as somebody did in those days, in that the British Army needed a new tank and needed it as quickly as was reasonably possible."
  Any hon. Member, whether or not he had knowledge of military affairs, would also believe that it would be useful if the tank actually functioned. It is all very well asking for it quickly, but if the engine does not work it will not be a great deal of use, whatever may be the balance of armaments between the Warsaw Pact and ourselves. I found that answer curious.
  Reading between the asterisks, as one must on these top-security matters, I became aware of the export success of the Chieftain. My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) asked about that in the Committee. The export success has been considerable, but there is a sad postscript. It was once hoped that the tank, or a derivative, would be a main contender for a NATO standardised tank. It now seems fairly obvious that in about a year the decision will be made between an American tank, known as the XM1, and the German Leopard II AV. Whichever is chosen will obviously be suitable for the United States Army and the whole of the NATO forces, and it will go right through the 1990s. By then, the Chieftain will be totally obsolete. That will mean that the part of our defence industry building tanks will be producing a foreign design on a subcontract basis. The Public Accounts Committee can look at a series of terrible mistakes, as it has done here, and see what are the consequences for the United Kingdom's export opportunities.
  The Chieftain tank bulldozer kit makes a little story all on its own that bids fair to be a script for a horror film. It would probably not be accepted by the television stations, because it is too farfetched. The kit was approved in 1962 and production started eight years after the project began. The problem seems to have been to fit the kit on to the

  1603
  front of the tank. The Military Vehicles and Engineering Establishment was involved. Sir John Gibbon said:
  "The MVEE at the time were dealing with the main battle tank itself, with the whole family of armoured reconnaisance vehicles and they were also dealing with various logistic vehicles."
  That was suggested in the evidence as a reason why the Ministry of Defence and the MVEE were incompetent in their supervision of the project. The reason is said to be that they had so much other work to do, yet we are told elsewhere in the evidence that the establishment at the MVEE, although the work load was quite heavy, was about right. It is difficult for the Director of the Establishment to have it both ways.
  My right hon. Friend the Member for Taunton (Mr. du Cann)—the Chairman of the Committee—asked the witness about production beginning in 1970. He said:
  "you did not hold a final trial. Was that because the project was already five years behind schedule?"
  Sir John replied:
  "No, I think it was really because they said they had amended all the defects."
  The Chairman continued:
  "Let us go to paragraph 85. There it is stated that you allowed a month before main production started in order to test one complete production bulldozer so as to eliminate minor snags, but those tests, of course, showed that there were, in fact, some pretty extensive faults. Why was not production stopped at that time?"
  A little later he asked:
  "One of those faults—I can appreciate that they were thought to be minor—struck me as perfectly extraordinary, if you do not mind me saying so. Why was it that the bulldozer kits would not even fit about 20 per cent. of the tanks?"
  We are talking not just about incompeence but about monumental incompetence. Sir John's answer was:
  "The point about this is that what was arranged to be done was that these bits of bulldozer kit should be fitted to the two towing eyes which are on the front of every tank so that it can be recovered from the battlefield. The incompatibility between the towing eyes is only a quarter of an inch and it is a perfectly simple matter to chop them off and re-weld them on again. But the real difficulty about this was in the thickness of the armour plating, because as it comes from the foundry it can vary by up to a quarter of an inch."
  1604
  This is an amazing story. I regret that this Report is not likely to be widely read outside the House. I hope that this debate will help to draw more attention to it.
  A little later on the Report says:
  "In this instance, I think that the MVEE probably ought to have spotted the fact that the two towing eyes on the front of every tank had to be manufactured to exactly the same distance from the top of the nose on the plate on the front, so that one could fit this bit of kit on."
  In other words, it would have been a good idea if they had worked. The Report goes on:
  "The other modifications that are required, I think, are just the hazards of doing something new, and it is new to try and put a power pack on the outside of a tank, on the mudguard."
  This is a pathetic story, which gives me little confidence in the Ministry of Defence or the MVEE. My hon. Friend the Member for Canterbury (Mr. Crouch) said that it was not unknown for civil servants, put into this kind of situation, to say, "It was not us, it might have been the contractor." To be fair, there is no question of individual alibis here. Everybody has an alibi. The blame could not be apportioned to anyone. Not only is there no control over these projects; it is not possible to determine, at the end of over 17 years for the engine or eight years for the bulldozers, who was to blame. That is some measure of the sort of competence displayed.
  In the cold, hard world of outside industry this would certainly have led to people being dismissed. I hope that some service has been performed in drawing attention to this small but important part of the Fourth Report. I have been most impressed by the standard and quality of all five Reports and the way in which they were introduced by my right hon. Friend the Member for Taunton.
  6.42 p.m.
  Mr. Robert Cooke: I pay tribute to my right hon. Friend the Member for Taunton (Mr. du Cann)—"the terror of the Departments", as I think he has been described. I cannot give the House as good an example of "Hoffnungery" as that given by my hon. Friend the Member for Chertsey and Walton (Mr. Pattie). However, that gives me the peg on which to hang some brief

  1605
  remarks about the British Museum publications to which my right hon. Friend referred. He did something to put in perspective what has emerged from the work done by his Committee.
  There is no doubt that the British Museum was guilty of technical transgressions in its efforts to improve the services that it could give to the public by means of publications and other things produced in the Museum, such as replicas of exhibits. The Museum found itself with an archaic system. It wished to set up a properly organised company on commercial lines, so as to be able to cope with expanding demand. I am not sure whether the Public Accounts Committee discovered this, but the old system was costing the taxpayer something like £100,000 a year, much of that hidden in departmental Votes. That helps to put in perspective the technical transgressions discovered as a result of the Committee's investigations.
  Under the old system it was quite impossible to keep a proper check on what was going on. The new system was brought in to impose a proper financial discipline. The Treasury accepted the proposal on condition that there should not be any subsidy, open or concealed. The bone of contention was whether there was a concealed subsidy about which the PAC should have been informed, because as a result of its investigations it discovered certain things that could be construed as concealed subsidies.
  I should say that this new company had to cope with problems as they existed. It had to take over the stocks of books and other materials, going back to Mr. Gladstone's day. It was difficult to know how to value these, although their cost—or the figure at which they had "stood in"—I think that is the commercial term—to the Museum was of the order of £300,000. If that had been properly funded the annual cost to the taxpayer would have been considerable. Nevertheless, a bargain was eventually struck and the new company had to pay £182,000 for the stocks, which included publications of an important nature but of somewhat limited appeal.
  Some of these stocks were in large quantities, as a result of over-optimistic printing by the Stationery Office long ago. The taxpayer got £182,000 from the
  1606
  Museum—not from public sources—before this company was allowed to be set up. As a result, it found itself with no working capital. It was difficult to get it oft the ground. This is where it transgressed technically. It is suggested that it did not pay a proper commercial rent for the premises that it got from the Department of the Environment. It could now be argued that it came very near to that, and certainly, with the present rents obtainable, what it is paying is probably right.
  Another matter in which it got involved was the agreement that certain salaries which should have been charged to it should be deferred. The Auditor General strongly disapproved of that, and of the alleged rent subsidy, and referred to them as covert subsidies. That is why the PAC was involved, rightly. Everything has to be properly scrutinised.
  As a result of operations starting in this somewhat unpromising fashion, in the first 17 months of trading the company made a net loss of £17,000. This was after meeting all the initial expenses of setting up the company, absorbing the massive increase in all costs during the period, repaying the Museum the whole of the salaries bill, together with on-cost for superannuation and administration, and paying rent on accommodation at an annual rate of over £40,000. By the end of the period, trading operations had achieved a break-even level and in its second financial year the company expects that it will make a modest net profit.
  While, obviously, any transgression of the rules laid down by the Treasury has to be looked at carefully and pronounced upon—because it is a serious matter—it can be said that the result of what has happened is satisfactory from the point of view of the taxpayer. The future is indeed promising. Further finance can now be obtained from banks at normal commercial rates without pledging the credit of the Museum. The turnover in the materials dealt with is two and a half times up on what it was at the outset.
  There are other great institutions which find themselves in a straitjacket because they have to work under an archaic system. The Stationery Office deals with publications for the Victoria and Albert Museum, with the result that some splendid but little-read publications have been

  1607
  published in enormous quantities. At the same time, many catalogues that should be produced are not available. I instance the case of the wrought iron collection, which is the finest in the world, and which has no catalogues. I believe that greater flexibility within the Victoria and Albert Museum would produce such things.
  There is a domestic point here, too. The House of Commons' own bookstall, despite the help of Mr. Speaker's Art Fund, is, if not hag-ridden by old restrictions, certainly inhibited in indulging in the sort of activity it ought to indulge in. There are only a limited number of souvenirs, and other things available. Probably, in the light of the PAC investigation, we should follow the line of the British Museum.
  I pay tribute to those who have given their lives to the service of the Museum and who are, perhaps, unfamiliar with the workings of the PAC and have sent for what are called accounting officers. They are not always the people who know, or, perhaps ought to. They are not the people who have the day-to-day management of some of the things that the PAC wants to investigate. If the Committee had not had to work by Gladstonian rules it might have been able to discover the full facts from the appropriate Museum officer.
  6.50 p.m.
  Mr. Peter Hordern: First, I should like to thank my right hon. Friend the Member for Taunton (Mr. du Cann), who introduced the debate, and to say what a pleasure it has been to serve on the Committee under his Chairmanship. I have been on the Public Accounts Committee for some time. My right hon. Friend not only gives every hon. Member an opportunity to ask all the questions he wants, but the spirit of the Committee is always cordial to those officers who visit us. It is an extremely harmonious Committee.
  The briefing that we receive from the Comptroller and Auditor General's Department is excellent. When I was a member of a parliamentary delegation to Australia some time ago I was asked about the work of the Committee, and Members of the Australian Parliament heard with envy that we had very
  1608
  thorough briefings indeed; I understand that Members of one or two of the State Parliaments have no assistance from technical briefings of any kind.
  Like my right hon. Friend, I want to philosophise about the Public Accounts Committee and the nature of its work. I say this now, without any particular surprise, but it should be remarked that in this debate at present there is not a single Member on the Government side, except two on the Front Bench. I cannot say that our own Benches are thickly populated, and yet when one reads the newspapers one sees there is a great deal more interest now in the work of our Committee and Sub-Committees. I mention in particular the Expenditure Sub-Committee concerned with Treasury matters and monetary policy and the one which is now examining Chrysler and which earlier wrote an excellent report on British Leyland. These reports have rightly received attention and notice. They are contemporary, well written. The Sub-Committees are able to call upon expert advice and the questioners are clearly well briefed. The reports they produce are of wide and general interest.
  The Report of the Public Accounts Committee land with a thud at one's home during a recess. They are not always read the following day, as perhaps they should be, and a long time goes by before they are debated in the House. They are concerned with affairs that took place at least one or perhaps two years ago. Often, assurances have been given in a friendly way that various things that have gone wrong will not go wrong again. They are reports couched in very good language, but ultimately they are concerned with good housekeeping. I am not saying that the issues are not important and that very large sums of money are not involved, but they are instances of a large Government expenditure machine.
  No political party in Government can ever manage affairs so that there would never be administrative mistakes of the kind we consider in the Public Accounts Committee. That is because of the very size of the Government machine itself. Primarily our debates and reports are concerned with specific things which have gone wrong. That is the purpose of the Committee. It is our historic rôle and

  1609
  I have no doubt that the purpose is served very well. It is an ancient rôle and one which Mr. Gladstone envisaged.
  However, I believe that it is time we tried to extend the rôle of the Committee. I do not mean in a management sense, although this may be what auditors and accountants would advise a public company to do. Certainly, they would suggest it to a company like a Government machine which is grossly swollen and unable to know from one day to another what its cash position is or even to assess it. Such a company would have had its management or advisory team to advise it on how to alter its affairs. We are not equipped in this House, however well-briefed we might be, to manage and advise on the affairs of the Government machine in that way, but we can carry out a much more supervisory rôle on the way in which the Government machine is working. I should like to give some instances of this and the way this could be practically managed.
  I was interested to hear my right hon. Friend say—I think he did—that the system should be changed. I do not know quite how, physically, the system could be changed. Perhaps we could take to ourselves or be given further powers under which we could examine the Government machine on contemporary policy in much the same way as the Expenditure Committee examines Government policy. The rôle I seek for the Committee is one of overall surveillance. We have our own civil servants and we should be able to exercise surveillance. My right hon. Friend has said that we should be given these powers.
  Technically, I see no reason why we should not take them ourselves if we want them. It is our Committee, responsible to the House, and the Comptroller and Auditor General's Department is responsible not to the Government but to the House. If we feel very strongly about the matter I see no reason why we should not have all-party conversations and debate a motion to discuss the rôle of the Public Accounts Committee in the future. It may not even be necessary to have a debate on the Floor of the House. If there is, as I believe, a greater interest in the affairs of the Public Accounts Committee and the Expenditure Committee
  1610
  than there has been for some time, there is no reason why we should not table a motion and vote on it if necessary.
  I guess that no Government would particularly welcome that line of argument, but it seems much better that back benchers of both parties should be properly briefed about the activities of Government Departments. Without having power to change policy, the Committee could at least bring to common attention what is happening in the Government machine itself. What are the effects of Government policy? It lies in our hands to bring about a change, and I believe that public opinion is on our side. We should be prepared to take some such action.
  The PAC spent some time considering the computer programme of the Department of the Environment for vehicle excise licences. My right hon. Friend the Member for Taunton has told the House something about how the programme overran its costs. However, we were never able to ask what the cost would have been if an entirely different programme had been adopted. We were unable to do so because it has been Government policy, laid down by successive Governments for many years, that the Government of the day should support the computer operations of one particular company—namely, ICL.
  That is a perfectly reasonable and proper decision in respect of hardware, but software is a different matter. Software can be purchased separately. The PAC should have been able to establish the cost of an alternative softwear programme offered by an agency or another manufacturer. In fact, the Department told us that it was not even empowered to find out the alternative costs of another programme.
  We are forced to adopt a certain programme because Government policy provides that we must back only one company. The PAC was unable to determine the effective cost of the operation or the alternative cost. That is an operation that is carried out in every civilised country in the world, but we cannot ask or be told. Apparently no one knows how the operation is carried out in other countries, or what the cost might be.
  Another matter which is of contemporary interest is the aid that is given to the shipbuilding industry. Over the

  1611
  years aid to the industry has been given by successive Governments, and ever larger sums have been voted. The Govan undertaking was expected originally to be given £35·3 million over five years in constant terms. That is now what is called "funny money". The Department then told us that the figure had escalated to between £50 million and £60 million. That is what we were told during our proceedings last year. There are 5,000 workers at Govan, so that means that the Government are paying £10,000 per head.
  We also looked into the affairs of Cammell Laird. We were told that modernisation was expected to cost £32 million. I understand that the figure is now considerably higher. Cammell Laird has 5,400 employees. That means that aid has been given to the extent of £6,000 per head. I forget the figures for Harland and Wolff but I believe that they are even larger.
  As a Committee we should not only make these calculations but we should be able to ask the Department for its alternative ideas. Is it sensible to continue giving aid to shipbuilding and ship-repairing yards when they are engaged in what is necessarily a declining market? Is it sensible to keep people in the same job over an extended period merely to keep them working? I have never heard of any discussion on this matter and I believe that it should take place. As time goes on we are getting into an even greater mess.
  Aid has been given to British Leyland and to Chrysler. I believe that the aid to Chrysler works out at about £10,000 a head. What will be the aid given to every person working for Alfred Herbert in Coventry? Enormous sums have been given to heavy industry, but is that the best way in which the money can be spent?
  It could be argued that every person who has received that sort of aid would have been much happier to have been offered the money personally to enable him to move to a part of the country where employment is being offered. That might be one way of meeting the problem. Another method might be to improve the Government retraining centres so as to make them more efficient.
  1612
  That is a problem in itself. When the PAC examined the retraining centres it found that it has been the aim of successive Government to increase their capacity to 100,000 men. I think that they now have a capacity of about 40,000. We were told by the Department of Employment that 30 per cent. of the places at the centres are not even taken up. It seems that 30 per cent. of those who do take up places drop out after a very short time. On further questioning it was discovered that, although they receive some money to attend the centres, the difference between unemployment benefit and the rate that they are paid for attending a centre is only some £5 a week. What sort of differential is that? It would be more worth while to spend more so as to give much more money to those who attend the centres. If they were paid more there would be an incentive. However, that was not a policy that we could discuss although it is something that the Department might like to consider. There was no debate or cross-examination.
  I turn to one particular instance which is what might be called a vignette of what has been going on for a long time. It is an old-established practice that exists over a wide area. I have in mind the overseas aid fund of the Department of Overseas Development. Apparently we have a loan outstanding to Iran of some £2½ million. That loan has been outstanding for 20 years. The money was advanced because 20 years ago Iran was a rather under-developed country. When we asked whether the matter might be put to the Iran Government, that it might be suggested that they consider repaying some of the money, bearing in mind that conditions have changed over the past 20 years, we were told that that would be creating a most undesirable precedent.
  Things have changed a bit in the past 20 years. Iran is no longer poverty-stricken. It is not in the first rank of countries which are to be helped considerably by that sort of sum. We should look at these matters in a more commercial sense even if not in a completely commercial sense. We should negotiate with Iran and ask the Iranian Government whether they might possibly speed up the repayment of this money. The Department's reaction was "Oh, no,

  1613
  that would be creating a most undesirable precedent".
  There is a need to consider the rôle of the PAC and to consider whether there should not be much more active supervision of the Government machine. I give one more example that is inherent in what has happened over many years in the growth of the Government machine. We are about to see the Public Expenditure White Paper. I have no doubt that its publication will be followed by serious efforts in various Departments to cut out services that are very costly or have grown very costly in recent times. It seems that programmes are the first things to be considered and that the provision of services is the first thing to be cut.
  In my constituency I know that discussions are taking place about the closure of one hospital, and possibly the maternity unit of Horsham Hospital. No one seems to put to the Department before the cuts are made the question "What about the size of your administration?"
  In the health service between 1964 and 1974 the number of administrators has risen from 48,000 to 72,000. That was before the reorganisation of the service, so I dare say the number is much higher now. In the same period the number of doctors has increased from roughly 50,000 to 60,000. In considering cuts surely the people whom the Department should consider first are the administrators, not those who provide a service to patients and the general public.
  This morning I heard on the radio an interview with some steel workers. They were asked for their reaction to their jobs being at risk. Their comment was "If we have to go, why should not some of the extra administrators go as well?" This seems to be the last aspect of Government expenditure to be discussed. The number of administrators has grown in every sector of Government. This, too, is a matter that should concern us deeply as a House of Commons, and perhaps we should pay more attention to that matter than we do in the Public Accounts Committee.
  I say with confidence that the work of the PAC will grow. I discern a growing interest from both sides of the House and also from the public that control must return to the House of Commons, as was
  1614
  the case many years ago. The reason why our debates are so ill attended is that we concern ourselves too much with petty details about past expenditure and not enough with the current control by the Government and the Government machine. I believe that that day will shortly change, and I shall be pleased when that happens.
  7.10 p.m.
  Mr. John Nott: I am grateful for the opportunity to intervene briefly in the debate, as Parliament is engaged today on its traditional and perhaps one of its most important functions. Since this debate on the Reports that we have been considering has been conducted, like the majority of our work in Parliament, in a non-party spirit, I doubt whether our proceedings will be very much reported. Nevertheless, the content of the Reports, which are very well presented, touches on subjects that are often much closer to the interests of ordinary people than anything that emerges from some of our better-publicised but more theatrical proceedings, such as the fatuous episode that we have twice a week, called "Prime Minister's Questions".
  As the power of the State and the size of the public sector increase remorsely and impinge more and more upon people's private lives, so the need for Parliament to provide a check on extravagance and waste grows. I shall resist the temptation to talk about public spending generally, because we are concerned today with that efficiency of the public sector. I hope that we shall take the opportunity to have a full two-day debate on the White Paper when that document is published.
  I agree with my hon. Friend the Member for Richmond, Yorks (Sir T. Kitson) that these debates on public spending and on PAC Reports take place far too long after the Reports appear. It would be much more effective if all Governments—and the Conservative Government was also responsible for this habit—could bring forward these debates much sooner after Reports are published.
  Before I deal with some of the interesting matters raised in this debate, not least those concerned with the future role of the PAC, perhaps I may echo the praise already expressed about the work conducted by the Committee. Looking

  1615
  through previous debates on such matters, I believe that the eulogies made in the House about most Select Committee publications can be a little overdone—and indeed are sometimes overwhelming. I take the view that we are spawning more Select Committee and Reports than are good for Parliament. But there cannot be any doubt that the PAC, as our senior Committee, is of overriding importance and that the considerable amount of work that accompanies its deliberations reflects great credit on all its members.
  I join my right hon. Friend the Member for Taunton (Mr. du Cann) in thanking the Comptroller and the Auditor General, the Treasury Officer of Accounts, and the Northern Ireland Comptroller and Auditor General and, all the other officials, for the great dedication with which they conduct their work. May I, as somebody who has served, albeit briefly, on other Select Committees, also say that we owe a great deal to hon. Members for the amount of time and energy they devote to this work. It makes nonsense of those superficial measures of an hon. Member's conscientiousness, namely, the number of Questions asked and the number of Divisions registered.
  Mr. Pardoe: Sour grapes.
  Mr. Nott: The hon. Member for Cornwall, North (Mr. Pardoe) says "Sour grapes". My Division record was not as good as his in the last Session, simply because I did not vote on frivolous matters, as he did.
  I know that the House will join me in recognising the great courteousness, efficiency and diligence that my right hon. Friend the Member for Taunton displays in the many roles that he performs in the House. He is an admirable Chairman. I cannot speak from personal experience of his chairmanship of the PAC, but if he conducts its proceedings as well as he handles his other chairmanships, I am sure that everything, said of him today is well deserved. He is greatly respected on both sides of the House, and he made an excellent speech.
  I turn to rather more controversial matters. It looks as though I shall have to be the person who stirs up the debate a little. I hope the House will forgive me for that.
  1616
  I hope that the retiring Comptroller and Auditor General, who has had a long and distinguished career and who is known widely for his record and reputation, will have a happy retirement, indulging in a little gardening but remaining active. But I should like to comment on the appointment of his successor, whom, unlike Sir David, I have the privilege to know. I served briefly in the Treasury while he was its Second Permanent Secretary, and I believe that Sir David's successor is a man of the highest integrity and intelligence. He will come to the post well equipped to prove and investigate the Whitehall system, which nobody can know better than he as the official in charge of public expenditure.
  But I must say of his appointment—I repeat that this has nothing whatever to do with the individual personally—that I doubt the wisdom and propriety of a senior Treasury official moving directly to this post. Looked at from the higher reaches of the Civil Service, it must seem appropriate and sensible for a gamekeeper to become a poacher, but I think that it reflects slightly on the status of the Comptroller and Auditor General's office if he comes to the post straight from the Treasury.
  I say for the third time that this is meant as no reflection on the individual concerned, whom I greatly admire. However, I believe that we should consider in the future whether an appointment should not be made from outside the Civil Service—perhaps a senior accountant of international repute. Such a gentleman would not understand the system and would need support from those who did understand it, at least in the early part of his career, but he would be seen to come in from the outside and would be totally detached, in his friendships and background, from the Departments that he would be investigating—independent in a way that must be impossible if the appointment is made directly from those working within the system.
  If I may take an analogy, there would be some questions raised if the retiring Finance Director of ICI immediately became its auditor and was responsible for preparing the ICI accounts. It must be the case that people working in the Civil Service develop loyalties and friendships in that role. My own experience

  1617
  leads me to reject the outsider's notion, much propagated in the Press, that Treasury officials are responsible for many of our economic failures. I believe that if the failures of Government are to be laid at any door, it is at the door of No. 10, and around the Cabinet table, in a failure of political will, and not in the quality or impartiality of advice given to Ministers.
  I am sure that my right hon. Friend the Member for Taunton and the Financial Secretary to the Treasury would agree with me that Treasury officials and those responsible for this work are some of the ablest men in this country. I say this only to maintain a proper balance in my criticism of the appointment.
  I come now to some of the comments made by my right hon. Friend the Member for Taunton and other hon. Members about the wide variety of matters in the Reports. I have read all five Reports and do not want to go into these matters again. They have been very thoroughly dealt with in the debate. I listened with particular interest, naturally, to the comments on the hospital building programme, because my hon. Friends the Members for Folkestone and Hythe (Mr. Costain) and Canterbury (Mr. Crouch), and the hon. Member for Oldham, East (Mr. Lamond) have an enormous wealth of experience in these matters. It was very interesting to hear their remarks. I was amused at the comments of the hon. Member for Oldham, East about the Inchinnan Bridge and what would have happened if no money had been collected instead of the pound or so that was taken during the year. Like him. I doubt whether the scandal would have been discovered.
  A number of comments were made about the collection of the revenue, in particular VAT. My right hon. Friend the Member for Taunton will know, as an ex-Financial Secretary, that when a Minister tries to reduce the number of his staff in Revenue and other departments, he is told by civil servants: "No Minister, we cannot reduce the number any more because it is the duty of the Revenue to collect the taxes laid down by Parliament. If we reduce our staff, we may be open to criticism by the Public Accounts Committee." I think the Revenue departments already have an
  1618
  obsession with evasion. In the United States there is a self-assessment system, and if anyone fiddles his tax he gets a massive fine—far greater than anything in this country. While our revenue is still being collected in this detailed, specialist, individual way, we shall never get the number of Inland Revenue staff below 80,000, or whatever it is. Any time we try to reduce the size of the bureaucracy, we shall come up against: "Oh no Minister, remember the Public Accounts Committee." We have to get the balance right.
  I am glad that my hon. Friend the Member for Bristol, West (Mr. Cooke) mentioned the British Museum's bookshop. I know that this has caused a certain amount of distress and I can see how people in the Museum who are genuinely trying to expand the activities and make them more commercial find it hard to understand why they have to be crawled over by accountants. In our various ways, we are all crawled over by accountants, and it is not always something that one really wants. I echo my hon. Friend's remarks about the enormous integrity of that great institution, and I am delighted to hear that the bookshop is doing very well. I know it will prosper even more in the future.
  My hon. Friend the Member for Chertsey and Walton (Mr. Pattie) referred to the Chieftain tank. Of all the items criticised in the Reports, I think the Chieftain tank was just about the worst. Without going too deeply into the matter—and I speak from memories of earlier times—I say that we want Ministers in the Defence Departments to keep a grip on the procurement executive and the staffing of the defence effort. The Ministry of Defence employs overwhelmingly more civil servants than does any other Department. I cannot go into what one hears about productivity in the ordnance factories and the dockyards, but I listened with interest to the comments of my hon. Friend.
  I was also very interested in the comments made about the future rôle of the Committee and the monitoring of the efficiency of the public sector. I have to start with our Cabinet system. Whatever may be the virtues of the system, the Cabinet itself suffers from a number of deficiencies as a final political authority which presides over the

  1619
  Administration. The Cabinet is comprised of individuals who, while primarily intended to represent the general interest, seem traditionally more prone to support the interests of their own Departments. This is not altogether surprising, since the political success of Ministers has traditionally been measured by their ability to extend the activities of their departments rather than contract them.
  The very size of the Cabinet makes it difficult to maintain a high degree of consistent common purpose. When we take into account the fact that Ministers have a short tenure of office and a limited experience of their Department when they arrive, and have to cope with what amounts to a shareholders' meeting in virtual perpetual session—the House of Commons, the Press and television—it is remarkable that the public sector is not more inefficient than it is.
  There has been some debate about one of our Select Committees recently and, while the House of Commons must never abandon its rôle as a critic of the Executive—this is where the Public Accounts Committee is enormously valuable—it is important for us to exercise a certain sense of self-discipline before allowing the chairmen of every sub-committee of every Select Committee endlessly to call upon civil servants and Ministers to attend. The Civil Service has a job to do. It is grossly overloaded in many areas, and there is a limit to the amount that Ministers and civil servants can be called upon to do in the House.
  Our system undoubtedly places enormous responsibilities on senior civil servants to implement the decisions of Ministers. No amount of brave decision-taking and political will can be effective unless the Permanent Secretaries of spending Departments, where all the expertise and knowledge resides, have a real grip on their Departments. Looking in from outside, and having experienced it briefly from the inside, I have doubts. The Public Expenditure Survey Committee mechanism has proved a useful tool for measuring programmes but a total failure in controlling them. The manner in which ongoing operations are continually brought back into the five-year programme, year by year, without a sufficiently full re-assessment of their con-
  1620
  tinuing need, is a major failure in the existing system. Paragraph 19 of the Fifth Report says:
  "The Department further stated that schemes were updated each year for the purpose of preparing its Annual Estimates and Public Expenditure Survey forecast, but not normally for the purpose of reassessing the merits of the schemes. Because of the unchanging relationship between costs and benefits the Department took the view that if a scheme were acceptable when first considered it would remain so even when the estimate was updated."
  We have a major area here in which the House should play a greater part, namely, the investigation of ongoing programmes which find their way back into public expenditure plans year by year. Such preventive control as the Treasury does exercise seems to be directed more to controlling increases in public spending, particularly capital spending, than to the performance control of ongoing expenditure.
  I have to ask just a few questions before I conclude. In doing so, I am giving the Financial Secretary an impossible task and I am not really expecting to answer them all in this debate. But what is going on now about management by objectives in the Civil Service? The Minister was on the Fulton Committee, so he knows something about these things. Is the Civil Service recruiting at the right age, at the right level and at the correct level of experience? We are all conscious that Ministers need specialised knowledge, which is frequently not there in the existing system. This is a particular problem in relation to tax changes when we are hedged in by the problem of Budget secrecy.
  What has happened to the staff review? If officers are now being graded by performance, what happens if their abilities and performance are unsatisfactory. How many PARs are being conducted now? I have doubts whether the system of programme analysis and review is working very well. Most important of all, what is being done to focus accountability more and more on people—not just the Permanent Secretaries but those further down the line? Civil Service pay and promotion must be more related to results if a Civil Service career is not to be just as secure as a parson's freehold in a rural parish with only three parishioners.

  1621
  The Civil Service cannot go on being like that. Why is it that new proposals such as cash limits always seem to have to be thrust into the Civil Service from outside? When I was in the Treasury, discussions were already going on about cash limits. There were protagonists of the idea as early as 1973, but it was not until outside pressure came to be exerted that they were considered seriously.
  My right hon. Friend the Member for Taunton referred to the Supplementary Estimates. If we have a much greater reliance on cash limits with a return, to some extent, to the old estimate procedures, a decision to allow Supplementary Estimates will no longer be just a formality. The Supplementary Estimates for 1974–75 amounted to £4·8 billion. The contingency allowances are another farce. In the Public Expenditure White Paper they were put at £150 million for 1974–75, and the final outturn was £2·5 billion higher than the plans. It cannot be right to have contingency allowances, in those circumstances, of £150 million. Of course, there will be changes in policy which will have to be provided for, but successive Governments have used contingency allowances without ever determining whether they are likely to be as great as the likely needs. The allowance is always kept as low as possible, so that the proportion of GNP and other measurements seems low—lower than is really likely to be the case.
  When the new White Paper is published, if it contains a new regime of some sort on cash limits, the Public Accounts Committee may well have a vital new rôle to play. Ministers and Permanent Secretaries will have to be far more concerned with the pay roll and the expenditure of their Departments under a cash system than they have been with the volume controls employed in the past.
  The financial calendar is nonsense. We must bring expenditure and revenue together. I agree with the hon. Member for Cornwall, North that the Budget and public expenditure must be brought into one. That has been considered before. The problem has always been that there are simply just not enough experienced people to bring these two exercises together. Everyone recognises the need to change the financial calendar. We shall need to do it for EEC purposes, and we
  1622
  shall have to bring ourselves in line with the calendar of the other EEC countries.
  We are grateful to my right hon. Friend's Committee. It has performed an admirable task. We are grateful to all those who have worked hard in the Department of the Comptroller and Auditor General and the Exchequer and Audit Department. I congratulate the Committee on bringing forward these excellent Reports which have served the House and the country exceedingly well.
  7.34 p.m.
  The Financial Secretary to the Treasury (Mr. Robert Sheldon): My pleasant duty must follow upon that which was exercised by the hon. Member for St. Ives (Mr. Nott), and that is to draw attention to the work done by the Committee, and particularly by its very distinguished chairman. We have been well used to distinguished chairmen of the Public Accounts Committee. That is natural, obvious and clearly desirable, but it is not often that we have had someone with the background and experience of the right hon. Member for Taunton (Mr. du Cann). In his wide range of previous activities he has been an important Treasury Minister, Chairman of the Expenditure Committee and Chairman of the 1922 Committee. To find such a person heading the most senior of our Committees shows the wealth of talent and experience from which the Committee, the Treasury and the whole House benefit.
  I pay my tribute to Sir David Pitblado and his staff of the Exchequer and Audit Department for the valuable work they have done, which I have always regarded as essentially allied to the work of the Treasury, presenting as it does a list of those areas where further investigation is required. I look forward to Sir David's successor, Sir Douglas Henley, taking office.
  The hon. Member for St. Ives referred to the problems of a poacher turned gamekeeper. He and I and others here are all poachers turned gamekeepers, and some of us have reverted to poaching before once again turning gamekeeper. These are matters with which we are not unfamiliar, and that kind of familiarity is known within the Civil Service. The fact of having a Comptroller and Auditor

  1623
  General who has been the Permanent Secretary of a Department and investigates that Department presents the problem of operating objectively, which might be considered difficult. But perhaps because of the way in which the Civil Service operates it manages to cope surprisingly well, perhaps to the astonishment of those who are unfamiliar with our procedures.
  We know that the work of the Comptroller and Auditor General and the Public Accounts Committee rests very strongly on the firm basis of information provided from within Departments. That is the enormous strength of the system, a strength that the House of Commons derives from the Public Accounts Committee. A number of hon. Members—the hon. Member for Canterbury (Mr. Crouch), my hon. Friend the Member for Oldham, East (Mr. Lamond), and the hon. Member for Folkestone and Hythe (Mr. Costain)—have described quite clearly the way in which civil servants prepare for their appearances before the Committee. They have explained the care taken in planning appearance, and even the apprehension which they sometimes show. These invariably indicate the importance of the Committee to Government Departments and Whitehall. I have known of accounting officers who have disappeared for a few days while preparing for their appearance before the Committee.
  The success of the Committee's work cannot and should not be measured by the attendance of hon. Members in this House when the Reports are debated, but by the way in which it changes the future of those who appear before it, and changes the way Government operations are conducted. In the past the Treasury had a ritual obsession with candle ends, an obsession which spread to the Public Accounts Committee. For a long time it has been widely recognised that these criticisms are no longer applicable.
  I speak as one who served on the Committee for almost six years. Its main concern now is to obtain the best value for money and the use of the most efficient methods of implementing Government policy—and that should be underlined. The Committee must not concern itself so much with policy. If it were to venture into that area the respect
  1624
  in which it is so widely held could diminish and it could become a political football. There is a fair amount of that already. We do not want more of that, but we need greater efficiency in the carrying out of some of the objectives of Government. The test, therefore, is for it to take for granted what the Government are seeking to achieve, and we have to ask therefore, as the Committee regularly asks, whether it can be achieved more economically and more efficaciously. The strength of the Reports before us lies in their conclusions in that respect.
  The report on the hospital laundry service in Wales, which was referred to by the hon. Member for Richmond, Yorks (Sir T. Kitson), although it is not of great moment compared with others in the Report, suggests one useful technique which could well be considered capable of wider application. An investigation was carried out which showed that the cost of laundering 100 articles was very much more in Wales than it was in England and Scotland. That comparison drew to the attention of the Comptroller and Auditor General, and consequently of the Public Accounts Committee, a discrepancy which was worthy of investigation. Ratios of that kind are extremely valuable as a management tool and are used to a greater extent in industry. One of the great advantages of managerial control comes from the use of ratios for monitoring performance, and I welcome the extension of that method to the Public Accounts Committee.
  The hon. Member for Cornwall, North (Mr. Pardoe) referred to comparisons that might usefully be made. I shall give one or two examples without questioning any particular Department. Some years ago the Treasury published a selection of unit costs in public expenditure, which showed the ratios that were applicable within the public service and the variations that occurred. That selection included prison costs per place, the cost of the police on the basis of the number of policemen in the force and the cost per mile of motorways. The wider use of these ratios could lead to better monitoring and might be worthy of further consideration.
  Several hon. Members expressed interest in government aid to industry and the criteria which are applied. By a decision of the House, Parliament has

  1625
  given to the Government some of its powers in respect of the distribution of funds to industry, and it is right that the Public Accounts Committee should concern itself with the way in which those funds are used. I note from the Report that the PAC will continue to interest itself in this matter.
  I welcome, as did the right hon. Member for Taunton, the use of the Institute of Public Finance and Accountancy. I pay tribute to the increasing expertise of the officers in the Exchequer and Audit Department. I have held in the past that wider qualifications might be thought desirable to increase the expertise, and I have argued for the employment of economists and people with accountancy experience in other areas. I pay tribute to the important work that these officers do and the training that they undergo.
  The right hon. Member for Taunton said that the PAC had reported on 35 subjects on this occasion. I understand that it is necessary to draw attention not only to the most expensive items. One learns a great deal about the control of public expenditure even from the investigation of expenditure on the Inchinnan bridge. Certain principles underlie the proper control of expenditure which are not always best brought out by the most glaring examples of failures. They can sometimes best be illustrated by less important matters.
  I note what is said in the Reports about VAT. To some degree I echo the words of the hon. Member for St. Ives although I do not go as far as he went in asserting the obsession of the Inland Revenue with evasion. One can easily go too far in the direction of trying to obtain the last element of revenue at a disproportionate cost. It is a question where the balance needs to be struck.
  At the inauguration of a new tax it is clearly difficult to get the balance right. I have learnt, and I am sure that Customs and Excise have learnt, from the Committee's Report the methods of control suggested and the monitoring arrangements. That Report is of particular value, but I beg the Committee not to press the question of obtaining the last penny at the expense of a wholly disproportionate cost.
  1626
  I was asked for certain guidelines on Government assistance to industry, and the hon. Member for Cornwall, North pursued this matter to some effect. The criteria for selective assistance were published in a paper on 12th January and there has been a considerable demand for the paper. As a result, a further 200 copies were made available to the Library. The paper goes into the matter in great detail.
  I come to the problems of the licensing centre at Swansea. The right hon. Member for Taunton was right in saying that we need to take account of the new technology that is available to us, and also to have better expertise in selecting a technology to meet given needs. That means that a little more time has to be given to considering the most useful way of applying that technology.
  It is only fair to point out that before the new centre was set up the licensing system was rapidly declining in efficiency. There were those who doubted whether it would be able to carry out the greatly increased volume of work. That led to a greater spirit of urgency and, perhaps, a less exhaustive examination of the method of organising the licensing system.
  The hon. Members for Canterbury and Folkestone and Hythe referred to their experience of National Health Service hospitals. The House knows of the great experience of the hon. Member for Canterbury in these matters, and his carefully thought out remarks will be of value to anyone wishing to take them further. The comments made by the PAC are valuable. An undertaking has been given to provide for the more adequate preparation of schemes and, probably more important and following the line pursued by the hon. Member for Canterbury, to provide better cost control during the operation of the contract. This is a crucial point which was emphasised by the hon. Member for Folkestone and Hythe. He referred to the difficulties of relaying instructions and his point has been fully appreciated.
  The hon. Member for Chertsey and Walton (Mr. Pattie) mentioned the problems associated with the development of the Chieftan tank and the bulldozer kit. I shall refer to the Treasury Minute

  1627
  because it illustrates how well the comments of the Public Accounts Committee have been noted. A number of hon. Gentlemen have quoted examples of the changes which have taken place. On page 15 of the Treasury Minute it says:
  "Examples of this"—
  that is, the changes—
  "are more extensive training of project managers and a clearer delineation of their responsibilities, standing arrangements for top-level scrutiny of major projects, and a step-by-step approach to procurement."
  The extensive training of project managers may be the most important change, and that was emphasised by the hon. Member for Chertsey and Walton.
  I hope that I shall be excused from engaging in any detailed discussion of the observations of the hon. Member for St. Ives concerning the Civil Service. As he knows, the Treasury no longer has responsibility for most of the matters he raised as they now fall within the province of the Civil Service Department. However, the General Sub-Committee of the Expenditure Committee is conducting what appears to be a fairly thorough examination of the Civil Service Department. No doubt both the the hon. Gentleman and I shall look forward to the result of their deliberations with great interest.
  The right hon. Member for Taunton asserted that Government expenditure was out of control. Frankly—especially when my right hon. Friend the Chief Secretary is sitting next to me—I strongly dissociate myself from the right hon. Member's remarks. However, there will be a White Paper on public expenditure and an occasion to debate these matters fully. Therefore, I shall resist the temptation of going into the matter in the way in which the right hon. Gentleman so obviously failed to do.
  I shall refer to the problems of discipline. As was pointed out by the hon. Member for Cornwall, North, that problem does not exist in the House in the way in which it used to exist. Parliament grew up on the basis of having on the one hand to raise money and on the other to spend it. Therefore, it was faced with the discipline of doing something it disliked in order to do something which it liked very much. That was the discipline
  1628
  and that is why it became the centre of Government. In my view it no longer exists.
  This House is in the process of becoming a spending House and all the speeches and pressures are upon the Government to spend money. There are pressures on the Government not to tax, but those pressures do not come to any great extent to this House. That is what has changed. Perhaps—these are only suggestions—it has something to do with the constituency surgeries where hon. Members are faced with a deluge of people who point out the inadequacies of the spending which is being undertaken in their name.
  However, although this discipline has, to some extent, gone from this House, it has not gone from the Executive which has to resolve in the Cabinet Room the problem of the desire to spend and the desire not to tax heavily. The House of Commons had the ability within itself to resolve this matter but it manifestly did not wish to do so. It did not go so far as to state its priority in public expenditure. The Expenditure Committee was set up to resolve expenditure so that those who wanted to spend money on roads would be battling against those who wanted to spend money on housing who would be battling against those who wanted to spend money on education.
  When I was the chairman of the General Sub-Committee of the Expenditure Committee I tried desperately to get such committees even to discuss the White Paper. So far from wishing even to discuss the White Paper on expenditure, one chairman wanted to avoid discussing his own subject and instead turn the subcommittee into one which dealt with something quite different.
  Mr. Nott: Of course that is right. However, it would greatly assist the House if we could have figures which the House of Commons could understand. The public expenditure figures are extremely difficult to reconcile with the Red Book—Budget estimates. It comes down to the fact that we need to consider expenditure and revenue at the same time.
  Mr. Sheldon: I fully accept that a more easily understood version would be of assistance. However, I do not believe that to be the reason why these sub-committees are not involving themselves in the

  1629
  discussion of choices. What mystifies me even more is why the outside bodies are not bringing pressure to bear on the various sub-committees of the Expenditure Committee. Even if the sub-committees were simply responsible for receiving pressures, the road lobby might think it worth getting in touch with the relevant sub-committee. There is a large education lobby as well as a property lobby and in my experience I doubt whether they have ever thought of approaching the relevant sub-committee of the Expenditure Committee. If we could turn them into the pressure groups at least there would be some resolution of the problems facing the House about how it can play a more important rôle in deciding public expenditure priorities.
  The right hon. Member for Taunton refered to the need to examine alteration in spending which the Expenditure Committee was designed to do but has never been fully allowed to do. He is right to say that, but it has not been fully allowed to do that by the members of the Expenditure Committee. It is well within its terms of reference, its power and ability, but the members have not elected so to do.
  This debate which we hold each Session is not critically important from the
  1630
  point of view of attracting hon. Members to this House. Its work is reflected by the impact it has on those civil servants responsible for the expenditure of public money. This has been a wide-ranging debate, indeed, more wide-ranging than usual. Some fundamental ideas have been put forward by all hon. Members and there will be a great deal of discussion about the way in which we may proceed following the debate.
  As a Government Minister, obviously I cannot be closely involved in these matters, but I have said in the past that from time to time I have considered myself more a Member of Parliament than a Government Minister. Perhaps that is one of my personal weaknesses. However, I look forward to seeing initiatives being taken as a result of this debate, initiatives which will lead to the better selection and control of public expenditure in the interests of everyone.
  Question put and agreed to.
  Resolved,
  That this House takes note of the First, Second, Third, Fourth and Fifth Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute and Northern Ireland Memorandum on those Reports (Command Papers Nos. 6298 and 6286).

  INCOME TAX (CONSTRUCTION INDUSTRY)
  8.0 p.m.
  Mr. Nicholas Ridley: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Income Tax (Sub-Contractors in the Construction Industry) Regulations 1975 (S.I., 1975, No. 1960), dated 28th November 1975, a copy of which was laid before this House on 2nd December, be annulled.
  I declare my interest as a director of a building firm. Indeed, I have obtained the necessary form and am about to try to have a photograph taken in case any activity of the firm requires the production of a sub-contractor's certificate. It is about the need for that certificate that my right hon. and hon. Friends feel that many searching questions must be asked.
  The first question is, why is it possible to obtain these forms—indeed, they have already been sent out—before these Regulations have received the approval of the House?
  It is wrong for the Treasury to seek to bring this scheme into effect by sending out forms before approval has been given to the Regulations. I am aware of the correspondence between my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and the Chief Secretary who talks about setting the wheels in motion. That is all he is doing. It will not be compulsory for anyone to send a photograph with this form until tonight, if the Regulations are approved. But that is not good enough. I believe that the Government should have brought the Regulations forward earlier if they intended to distribute forms to those concerned. Many hon. Members will have had protests from their constituents about the sudden imposition of this form and the photograph without anyone being able to inform them of the statutory authority for it.
  I should like to separate the two main themes in this debate. First, the Opposition do not want to vote against the Regulations in so far as they are designed to stop tax evasion. We cannot connive at tax evasion.
  The other issue concerns the "lump". I think that we are missing greatly the presence of the hon. Member for Liver-
  1632
  pool, Walton (Mr. Heffer) and others who see these Regulations as a means of bringing to an end, or severely restricting, what is known in the building industry as the "lump" and is called more circumspectly by the Treasury "labour-only sub-contracting" in the building industry.
  Whatever may be the details of the ways of stopping tax evasion, my right hon. and hon. Friends and I would like to make it clear that the "lump" is not only an old established process in the building industry but might be highly beneficial. There is a general feeling in the country that we have reached the point where there are too many big units—too many amorphous corporations and organisations—and that it is probably counter-productive in terms of men's efforts and incentives. If, by breaking up the building industry into small firms and sub-contractors, we can again get a spirit of enterprise, we should welcome it. It would also free people from the restrictions imposed by monopolistic unions, which carry greater powers over their members than in the past, by stopping them doing those things which are to the advantage of the national economy.
  We do not want to restrict the activities of labour-only sub-contractors. I am sorry that hon. Gentlemen who have tried so hard in the past to do this are not here to debate the matter on this occasion. This is the second opportunity that they have had. I remember the first opportunity when the relevant clause in the Finance (No. 2) Bill 1975 was discussed on the Floor of the House at the special request of the particular group of hon. Members on the Government side who wished to debate it. Not one of them turned up on that occasion.
  The case for destroying the "lump" has gone by default because nobody has been prepared to argue it. In fact, we utterly reject it and wish to make it clear that it is no part of our policy to discourage people starting their own firms.
  In some respects the Regulations are not wide enough, and in one respect they are perhaps too wide. The number of people engaging in activities who can, if they wish, defraud the revenue of that which is its due is far greater than the number of labour-only sub-contractors in the building industry. After all, there

  1633
  are draughtsmen in the building and engineering industries, there are the so-called moonlight painters and plasterers, and there are many professions in engineering and rural pursuits where the contract is labour-only and cash. This is a growing practice which is likely to grow faster as the Government go on increasing the rates of taxation and the marginal rates of taxation upon extra earnings. The Government must recognise that this is a problem of ever-growing scale, that it is now of wide proportions, and that there will be a great increase in it.
  We welcome this sub-contracting, but do not welcome that it is a device for tax evasion. We shall have to think of new ways of collecting taxation. I should prefer taxation to be so low that people would not wish to go in for these devices. We must realise that PAYE is the only system upon which the revenue can rely. The more people can get out of PAYE, the more difficult it will be for the revenue to collect income tax from the bulk of the working population. Therefore, we must begin to think seriously about this whole problem.
  I have doubts whether the proposal in the Regulations is the right way to deal with the problem. I shall point to the dangers by deploring the extension of the scheme in one particular direction. Local authorities are included in the definition of contractor or sub-contractor. Therefore, when a local authority employs a contractor, it has the power to pay gross the bill which it finally gets or to deduct 35 per cent. if the contractor cannot produce the certificate. That has two dangerous trends. One is that it tends to get to the point where, except for large and reputable firms, the Government will seek to take 35 per cent. off all honest transactions between people. If the scheme were extended in that way, it would be intolerable because every employer would be subject to a 35 per cent. deduction. That means that the contract arranged between employer and employee or between purchaser and supplier would become the subject to a tax on every occasion. The mind boggles at the prospects of the size of the revenue if that were done. I doubt whether it is what the Government want.
  The second direction in which this proposal is obnoxious is that it eventually
  1634
  begins to give to local authorities the power to decide which firms should have 35 per cent. deducted from their bills and which should not. Indeed, they may make it a condition of contract that they deduct 35 per cent. from everybody, certificate or not. We would be wise to eschew any system in which there is power to discriminate in this way. That is one of the defects of the regulations.
  Although we are not prepared to deny the Treasury these Regulations, I hope that I have indicated some of the dangers which may arise. I hope that we shall have some constructive ideas from the Chief Secretary, telling us how he sees the future development of the tax in relation to this problem. It is quite clear that this is not a satisfactory solution on a wider front, and it is likely to be applied on a wider front if we are not careful.
  I have some points of detail to make on the Regulations which would have been better taken in Committee, if there had been more time, and if the Regulations had been incorporated in the schedule rather than in this instrument. The amount of form filling and clerical work is immensely increased.
  Under Regulation 25, the main contractor has to return to the Treasury weekly vouchers for the payments he has made to all sub-contractors. For a sizeable firm of main contractors this can be a mammoth task. It is not quite the same as for a big factory with one place of business. The sub-contractor may be working in dozens of sites all over the country, and he has to set up a series of small site offices, from which these weekly vouchers, certifying payments to sub-contractors, must be sent.
  This in itself is a mammoth addition to bureaucracy, and I think that the time is coming when employers may strike it the mounting cost of collecting the revenue. People paying VAT are beginning to talk about striking, or of demanding payment for their services. This defect in the scheme can only be regretted.
  Is it necessary for the vouchers to be returned weekly? Would it not be possible for them to be returned, say, three-monthly? I cannot see the need for a weekly return.
  The next obnoxious feature concerns the small firm—particularly the new firm

  1635
  starting in the sub-contracting business, which must have a track record of three years before it can obtain a certificate. This is particularly hard, because the problem resulting from not obtaining a certificate is one of cash flow. There is no other real disadvantage, because any tax over-paid can be recovered, and any tax under-paid will no doubt be recovered by the Revenue.
  The real problem is that cash flow will be restricted if a certificate is not obtained. This means that the small firm, and the new firm—which by definition is short of cash—will be put at a disadvantage in relation to the large firm, which is likely to be able to finance its operations whether it obtains a certificate or not. Again, the small man is put at disadvantage by these Regulations.
  Some might argue that there should be no certificates at all, in order to even up the competition between large and small. I do not go that far, but I think it is another serious defect in the scheme, and I am sure that the Chief Secretary would acknowledge it.
  Next, there is the undesirability of demanding proof of third-party insurance before a certificate can be granted to a firm. Nobody would cavil at the need for third-party insurance, or deny the Government the right to insist upon it. We have had these arguments in the past, and the argument is settled. But it is undesirable for the Treasury, in the pursuit of a tax objective, to insist that a matter related not to tax or the Revenue but to safety and insurance, should find its place in these Regulations. I hope that the Chief Secretary will acknowledge that it is odd for the Revenue to be insisting on this, and that he will find a better way of ensuring third-party insurance among sub-contractors.
  The main contractor is placed in a difficulty, because the responsibility for deciding whether a certificate is false or true still rests with him. He still has to decide, on seeing the certificate, together with the photograph, whether it is genuine.
  The problem in the past with enforcing certificate 715 has been that it has been very easy to forge. It has been easy to buy certificates in some public houses. These certificates have not been proof
  1636
  against transfers. I am not at all sure that the addition of a photograph will make them any better. I can imagine some clever people adding beards and moustaches, and slightly altering the slant of their eyes. It would not be too difficult to fake these photographs, but still the main contractor is responsible if he makes a mistake.
  I remember corresponding with the Chief Secretary about a small builder in my constituency who failed to deduct what was then 30 per cent. from the account of one of his sub-contractors. He was taken to court by the Revenue for the tax unpaid by the sub-contractor. This action brought him to his knees. It was a simple slip and in no sense criminal. It merely showed gullibility or neglect, but the contractor who made the slip was virtually bankrupted by it.
  The responsibility is still with the contractor in this new form of certificate, but it is much more difficult for him now, because the mere production of a certificate with a photograph is not enough. The contractor has to look at the man who is brandishing the form before him and to decide whether the man is like his photograph.
  I do not know whether it would be in order for me to ask the Chief Secretary to produce his passport, but I would bet that the photograph in it does not in any way resemble him. It may well have ben taken 10 years ago, when he was even more handsome and beautiful than he is today.
  I doubt whether it will be possible to lay on the main contractor the responsibility for deciding whether a man is like his photograph, or to make the contractor responsible for the payment of very large sums of money if he gets it wrong.
  If the sub-contractor's certificate has been withdrawn at any stage, how is the main contractor to know? This point has been raised with the Revenue by the builders, and it is very important. Some sub-contracts can last a year or two, and if in the course of that time the Treasury refuses a certificate, or the renewal of a certificate, to a certificate-holder, how is the main contractor to know that he must henceforth deduct 35 per cent. He cannot know unless somebody tells him, and the last person likely to tell him is the sub-contractor. Therefore there should

  1637
  be some process whereby the Revenue should inform all main contractors in the case of the withdrawal of a certificate.
  What is the territorial application of the Regulations? It is not stated whether they apply in the Isle of Man, the Channel Islands and Northern Ireland. Do they apply overseas? Suppose a British contractor, working in the Gulf, employs a British sub-contractor on a contract for the Shah of Iran? Does the 35 per cent. have to be deducted? What is the limit of the jurisdiction of the Regulations? This is an important point, because British contractors are doing a great deal of work overseas. Indeed, expansion is possible only if they are working overseas, because the Government have not been particularly successful at home in stimulating prosperity in the building industry. The territorial jurisdiction should he made absolutely clear.
  I turn finally to the question of this obnoxious photograph. I have already expressed doubt whether it will be as foolproof as the Chief Secretary seems to think. In addition, many people find it extremely obnoxious to have to use signed photographs in connection with what are purely tax matters. We feel that it is an obnoxious distinction that the Government, who are not prepared to insist on identity cards for dealing with terrorism and the Irish problem, are prepared to use them in their pursuit of tax dodgers. That seems a very odd priority, especially as the Financial Secretary only a few minutes ago warned the House that we should not try to grab the last penny of taxation by measures which were too expensive. The Chief Secretary should be wary of trying to grab the last penny of tax by measures which are too obnoxious. Many people find the suggested use of photographs very obnoxious.
  In the hope that the right hon. Gentleman will take on board some of the lessons of the way in which this matter is moving and that there will be some original thinking by the Government in finding less obnoxious ways of collecting tax, we do not intend to divide the House, but I should be grateful for answers to the questions that I have put and to those which my hon. Friends will no doubt want to put. I should also be grateful if he would animadvert upon the dangerous direction in which this family of legislation is taking us.
  8.22 p.m.
  Mr. Peter Hordem: I should like to follow the very good speech of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) in one matter—the important question of the additional powers that the Revenue is seeking, particularly the use of photographs.
  There is no question that there has been considerable tax evasion by building sub-contractors. It has been estimated by the Revenue, and in debates in Committee on the Finance Bill, at £10 million. But I do not think that the Revenue or the Government have claimed that every member of the "lump" or every subcontractor is a tax evader. The question that we should ask is whether the powers that the Revenue has sought and been granted by the Finance Act 1975 are efficient or in need of strengthening.
  There is an extraordinary contrast between the powers in that Act and those which obtained until then under the Finance Act 1971. The powers under the 1971 Act needed to be strengthened, but I am not convinced that the new powers were necessary or that the reason for them was purely fiscal.
  It is well known that the trade unions have been against the "lump" for a long time, simply because their organisation in the building industry is small and ill-organised. A characteristic of the industry is that many people in it are not trade unionists; they are independently-minded people, many of them young, who set up small businesses in the industry in which they trained. There are about 360,000 self-employed people in the industry—a considerable number—who have no trades federation.
  The Building Trades Federation represents large and organised firms, and there is no one to speak for the considerable body of self-employed people except, perhaps, Members of Parliament. A body as large as that should have its voice heard. I certainly see no reason why the self-employed should be branded by having to carry permits—that is what they are—with photographs attached if they want to receive tax concessions.
  As my hon. Friend said, many of these people are Irishmen. It is a curious irony that although the Government do not insist that Irishmen should carry identity

  1639
  cards for security reasons, they are now forcing many of them—and Englishmen, too—to carry cards with their photographs attached for tax reasons. There is nothing wrong with the "lump" so long as its members pay their taxes. That is the only issue before us.
  It is up to the House to decide whether these additional powers are reasonable. I believe that they go too far. The previous measures were ineffective, and led to widespread evasion, but that was because the Revenue's powers were generously interpreted. The Revenue issued thousands of tax exempt certificates which might not have been issued under a stricter interpretation of the Act. There is no doubt that many were forged and many were traded in pubs. They were known as "green cards", and I believe that the going price was £50 a time. But that was the fault of the certificate itself, which the Government will now, quite properly, put right. It was just as much the fault of the Revenue for issuing the old cards much too freely.
  The right course is to make the conditions of issue of these certificates much more strict. That has been accomplished, by last year's Finance Act. Under the new conditions, any business which is to have this tax concession without deduction of the 35 per cent. rate must, first, have a bank account. Second, it must be carried on from proper premises with proper equipment, stock and other facilities.
  Third, the applicant must have complied with all the obligations of the Taxes Act 1970 for the preceding three years. That is an important point. It means that a new entrant to the building industry who wants to carry out subcontracting will not be able to obtain the same benefits as are available to those sub-contractors who have been in the business for more than three years. That may not have a considerable effect, but it will have some effect in persuading people that it is not worth while to start up their own businesses as subcontractors.
  New entrants also have to follow the National Insurance Acts and to be quite clear under that. They have to provide, for public liability, a policy of not less
  1640
  than £250,000. For the first time these Regulations apply to companies as well as to partnerships. Some partnerships may be sizeable firms, carrying out business in different parts of the country. The position is that in order to get exemption from the tax a partner has to produce his certificate and perhaps travel hundreds of miles to Scotland, or even to the Orkneys and Shetlands. That will put a considerable strain on a great many people which, in itself, is undesirable. Therefore, it will be much more difficult for new entrants to the building industry.
  The fact is that the trade unions do not want more sub-contractors. They do not want more independent people in the industry. They would much rather that everyone was on a general register and in large firms, so that the trade unions and unionism could spread among those firms. That is their objective, and that is what the Government support.
  Those who operate these businesses are perfectly entitled to do so as long as they pay their taxes. However, there is no doubt that the effect of the legislation will make it more difficult for new entrants to the business to carry on their affairs.
  Finally, I turn to the question of the photographs on the certificates. This was not mentioned in Committee when we discussed the Finance Bill. There is no reason why people should be branded in this way just for tax purposes. I do not accept what the Chief Secretary said, in answer to a Parlamentary Question put to him, that this is in any way comparable to a photograph for security reasons. A photograph for that purpose is entirely reasonable, because the safety of others is involved. However, no one could say that the existing powers, which I have already outlined, are not sufficiently stringent. Not only are there the powers, which are effective enough, but if the rules are broken there is a fine of £5,000. That is a considerable deterrent.
  What would be the position of a main contractor if he passes the holder of a certificate as being the person shown in the photograph? Surely he would be in some way liable if that person, who has produced the tax exemption certificate with the photograph attached, has been accepted by him? The fine is considerable. I hope that the Chief Secretary

  1641
  will deal with this matter. Does the main contractor have any legal liability at all? That position should be made clear. I see no reason why the Revenue's work should be done for it.
  It was Ernest Bevin who said that the kind of foreign policy for which he was working was one in which a British citizen could go to any country he liked without a passport. The Labour Party has come a long way since then. Under this proposal 360,000 men will have to have a passport which is issued not for their own security, or for that of other people, but for tax reasons. I do not like this provision. It will be used as a precedent by this kind of Government. I hope that the Chief Secretary will put forward more convincing reasons than have so far been produced in Committee. This is an unfortunate precedent, and I hope that it will go no further.
  8.32 p.m.
  Mr. J. Grimond: I support a great deal of what has been said so far about the Regulations. I shall not go over them again. Anyone of liberal sympathies in any party must be somewhat alarmed about the proposal for a photograph. It is another encroachment of the bureaucratic State. Further, it is most extraordinary that no such precaution is taken against conceivable terrorists but it is enforced against those who may conceivably offend against the tax laws—laws which are so incredibly complicated that practically everyone offends against them.
  I support what has been said about sub-contractors in the construction industry. The salient feature of this country is that production is falling while obstruction after obstruction is put in the way of production. It would appear that the Government are more anxious to ensure that the trade unions are not offended than they are to increase production.
  The particular aspect on which I want to comment is that which affects my constituency. Sub-contractors are an important element in industry in my constituency. Unlike possibly the rest of Britain we are desperately short of building resources. There is an immense demand from oil-related industries from every sort of construction. At the
  1642
  moment, the project on the Island of Flotta, which is the first pipeline to be brought to my constituency, is seven months behind schedule. In Shetland there is demand for housing, roads and construction of almost every sort. Any sensible Government would he encouraging all the various types of activity in this industry.
  Only today representations were made to me about a matter which is not directly before the House but is related to the Regulations. That is the demand, as I understand it, that contractors will have to insure for a public liability of up to £250,000. The idea of contractors in the more remote islands of Orkney and Shetland—to which oil is coming, incidentally—undertaking this sort of thing is absurd. Clearly, this provision may have been designed to have some effect in the great cities, but these small men are not likely to run up public liabilities of £250,000.
  There is great anxiety, which to some extent I share, about the growing demand in Scotland for separation. But can one wonder that people in my constituency are attracted to the idea of trying something new, when productive industry, essential to housing and construction of various sorts that is desperately needed at present, is hampered by Regulations which cannot conceivably have taken into account the situation in such places as Orkney and Shetland?
  I do not particularly want to place undue emphasis on my constituency, but it so happens that these Regulations have come on the very day that I received these representations, and I think that they are quite justified.
  I conclude by returning to my main theme. It is a most extraordinary sense of priorities that the Government should be putting obstructions in the way of people who are trying to contribute to the productivity of this country. No one approves of tax evasion, but it seems to me that that can be adequately dealt with, or dealt with to the maximum possible extent, under existing Regulations. If one wants to deal with tax evasion, the thing to do is to make taxation simpler and rather less oppressive. No amount of photographs and Regulations will persuade people that taxation is either intelligible or justifiable.

  1643
  Lastly, this House should not pass Regulations demanding that for the sake of the Inland Revenue people should carry about photographs of themselves when we have been faced for six or seven years with absolute defiance of the law in Belfast and Northern Ireland generally, and terrorism of a very unpleasant sort and yet the Government are not prepared to enforce similar Regulations to help in stamping out terrorism.
  8.38 p.m.
  Mr. Graham Page: As the right hon. Member for Orkney and Shetland (Mr. Grimond) and my hon. Friends the Members for Cirencester and Tewkesbury (Mr. Ridley) and Horsham and Crawley (Mr. Hordern) have said, there is nothing wrong with the "lump", either legally or morally. In many cases it is a very beneficial form of trading and contracting. However, we must recognise that it is open to abuse from the taxation point of view.
  These Regulations seek to prevent that abuse by placing heavy administrative burdens on the main contractor. My hon. Friend the Member for Cirencester and Tewkesbury mentioned the burden that is imposed right at the end of the Regulations. Certainly the penultimate Regulation, concerning the weekly return of vouchers, is a burden on the contractor.
  There is the rather vague liability in Regulation No. 23, that the contractor
  "shall make every effort reasonable in the circumstances to obtain such a voucher in respect of every such payment made to him."
  I wonder what is meant by "reasonable in the circumstances."
  There are then some rather oppressive Regulations, such as Regulation No. 12, paragraph (1) of which says that the inspector, for any reason which he sees fit,
  "may at his discretion make an assessment on the contractor in the amount which, according to the best of his judgment,"
  he thinks may be owing. That amount becomes payable 14 days after the assessment is made, and not 14 days after notice has been given to the contractor. That is an unusual use of the Chancellor's power to make such Regulations.
  Paragraph (1)(b) of Regulation 11, under which the contractor has to pro-
  1644
  duce documents, sweeps up all documents which
  "may be specified by the authorised officer."
  Apparently, whether or not they happen to be in the possession of the contractor, documents may be specified by the authorised officer and the contractor is then under an obligation to produce them. He is subject to penalties if he does not. This is an abundance of legislative caution, which may place considerable burdens on the contractor if a meticulous inspector requires him to carry out every letter of the Regulations.
  I want in particular to refer to Regulation 4, headed "Death of contractor". This says that
  "If a contractor dies, anything which he would have been liable to do under these Regulations shall be done by his personal representatives."
  The Select Committee on Statutory Instruments, of which I have the honour to be Chairman, considered the Regulations, and that Regulation in particular, Here I express the Committee's gratitude to the civil servants who gave evidence about it. What concerned the Committee was that under general law a personal representative is liable only for the assets that come to his hand. The witnesses readily agreed to that, and said that it was the intention that the Regulation should go no further. But, as is shown in the Third Report of the Select Committee, they relied on the general law overriding the Regulation. They agreed that the personal representative of a contractor would not be called upon to make payments out of moneys that had not come to him from the contractor.
  Throughout the Regulations there are several provisions for the payment of money by the contractor. He may die bankrupt or insolvent, leaving no money. If he does, and if Regulation 4 is taken literally, the personal representative will have to make payment out of his pocket. The Committee was given the assurance that that was not the intention, but it would be simple to give effect to that assurance in the Regulation.
  I believe that if the personal representatives received no money, or insufficient money to meet the contractor's liabilities, the court should have to say "Parliament has passed this. It has considered the Regulation and has left these words

  1645
  imposing an absolute duty on the personal representative, without any qualification." Therefore, I hope that the Minister will think again and consider whether it is necessary to have amending Regulations.
  After all, this Regulation, fortunately, does not come into operation until a further Statutory Instrument from the Treasury brings it into operation. There is good time yet to make an amendment and bring in an amending Order. I hope that the Minister will not disregard a Report from the Statutory Instruments Committee. That Committee works hard on these matters. So do the servants of the right hon. Gentleman who give evidence. Our reports to the House are selective. The Committee does not report every case on which it hears evidence; it is often well satisfied by the evidence that it receives. In cases in which it is not satisfied, and it reports to the House, I hope that the House will heed its Report and, if necessary, make corrections in the Statutory Instruments.
  8.46 p.m.
  The Chief Secretary to the Treasury (Mr. Joel Barnett): I begin by congratulating the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I know that he has often spoken from the Opposition Front Bench, but I hope that this is now a more permanent situation. I am sorry to see him shaking his head to that suggestion, because I find him much more responsible when he speaks from the Dispatch Box. He does not seem to have quite the reactionary attitude he normally displays. I think that it has some effect on him. In another way I have always found his reaction and reactionary attitudes charming. As the hon. Member knows, I am very fond of him. I am, however, sorry that he has shaken his head, suggesting that he will be on the Opposition Front Bench only for a short period.
  Before I deal with the detailed points that have been raised, particularly by the hon. Member for Cirencester and Tewkesbury, I wish to say something about the Regulations. These Regulations put the administrative flesh on the revised subcontractors' deduction scheme introduced by the Government in last year's Finance Act. The Regulations provide the rules governing the way in which the scheme
  1646
  is to be operated in pay offices on thousands of building sites throughout the country. They replace Regulations made in 1971 and 1972 which dealt with the administrative arrangements for the original 1971 deduction scheme.
  The Regulations come into effect in two stages. The first stage came into effect on 23rd December and activated those Regulations which enable sub-contractors' tax certificates to be issued before the new scheme starts. The second stage, which activates the remainder of the Regulations which deal with the operation of the new scheme, will come into effect on a date to be announced in due course. It will probably be some time in the summer.
  Although this year's Finance Bill and these Regulations revise the 1971 scheme, they do not change the general principles underlying it. The Opposition, when in Government, designed and introduced the original scheme to deal with the widespread tax evasion in the construction industry, particularly by those using the "lump" system. I was pleased to note that everyone who has spoken tonight would in no way wish to support tax evasion of this kind. This is in no way a criticism of those many honest people, self-employed, whether in the sub-contracting industry or any other industry, who do a first-class job and pay their taxes in full without any evasion. It is ludicrous to suggest that what we are doing here is in any way an attack on that kind of person or trader.
  We supported the 1971 scheme. Its intention was to ensure that a deduction was made from all payments to subcontractors unless a sub-contractor could satisfy his main contractor that he was the holder of a special Inland Revenue certificate. Those certificates were intended to go only to honest sub-contractors who could be relied upon to pay their taxes at the end of the year like other self-employed people.
  Unfortunately I have to tell the right hon. Member for Orkney and Shetland (Mr. Grimond) that a lot of things have gone wrong. With the benefit of hindsight it can be said that the scheme was introduced too gently and perhaps with insufficient recognition of the determination there would be to abuse it. That is always the problem with any tax

  1647
  system. Many hon. Members regularly ask for a simple tax system. The fact is that any tax system that is introduced is, regrettably in many ways, within a short period of time not just avoided—which is perfectly legal—but evaded. That is what has happened here.
  In practice, the 1971 scheme has proved to be riddled with loopholes. Tax evasion has continued and remains a national scandal. The abuses have been well documented. Certificates and other documents have been openly bought and sold; certificates have been forged and contractors have often been unable to tell whether the persons presenting the certificates to them were genuinely certificated or impostors, and less scrupulous contractors have failed to inspect certificates at all.
  There were also legislative weaknesses. It was too easy to qualify for one of the new certificates, and many have been obtained by unreliable sub-contractors who have no intention of meeting their tax obligations. There was also a let-out by what might be called the disappearing one-man company trick for companies which were not covered by the deduction arrangements. Under this many subcontractors who are unable to obtain certificates have set themselves up as one-man companies in order to obtain payment in full and avoid the deduction, leaving the company as a shell and disappearing before the Inland Revenue can get the tax or their accounts. For example, one company registered abroad, but now untraceable, was known to have been receiving payment at the rate of £3 million a year without any tax being paid.
  The result of all this was that at one time, in addition to companies which did not need certificates, we know now that there were over 400,000 genuine certificates in existence, a substantial number of which were clearly being used by people other than their rightful owners. There were also an unknown number of forged certificates in circulation. We can never know exactly the amount of tax being lost, but the best evidence we have indicates that it is a minimum of £10 million a year, and probably a great deal more.
  Although, as hon. Members have said, there are times when one may not want
  1648
  to go too far in administrative action, when tax evasion is on this scale it would be an appalling neglect by any Government or the House of Commons not to take action to deal with it. Clearly, this situation could not go on, and I doubt whether any hon. Members or anyone else would want it to continue.
  We took action in the Finance Act 1975 and these Regulations tie up the ends. In the Finance Act, for example, we extended the deduction arrangements to cover all companies, instead of just sole traders and partnerships. Therefore, it will not be possible in the future for someone to turn himself into a company simply to avoid or evade the tax. We have toughened up the qualifying conditions for obtaining a certificate. The administrative weaknesses, on the other hand, such as the faulty design of the certificates are dealt with in the Regulations.
  I hope that the Opposition, who introduced the scheme when they were in office and have seen it so abused, will now support our attempts to put it right. I am pleased that they do not intend to vote against it. I feel sure that they will not want the evasion, and the criminal activities that have grown up with it, to continue. Tax evasion is not just a matter between the evader and the Inland Revenue. It is a matter of concern to the community as a whole. One of two consequences must flow from that. Either tax rates for everyone else must be that much higher than they would otherwise be or the Budget deficit, and therefore the borrowing requirement, must be that much larger. When the evasion is of this order the effect is not inconsiderable.
  A number of Conservative Members have criticised the proposal that the new certificate should incorporate a photograph of the owner. That was the burden of the complaint of most Conservative Members. It seems that they are in danger of getting the whole matter completely out of perspective. The inclusion of the photograph is merely one of the ways in which the certificate is being redesigned. It is absurd to suggest that a certificate of this description—I have a copy of the type of certificate that will be used and it is rather like a bank cheque card but with a photograph incorporated—is a terrible abuse of personal liberty.

  1649
  There are literally hundreds of organisations throughout the country that are issuing certificates incorporating photographs. I know that the hon. Member for Horsham and Crawley (Mr. Hordern) said that it is sometimes necessary for a certificate to incorporate a photograph for security reasons. I take it that the hon. Gentleman had in mind the type of pass that is carried by Members of Parliament. However, there are many organisations which issue certificates that incorporate photographs, and one of the purposes is to save money. For example, British Rail issues certificates bearing photographs for student concessionary travel. There are a variety of other areas in which similar documents are used for security reasons. It is a considerable exaggeration to suggest that the issue of a certificate of this description is of such a serious nature as has been suggested.
  The existing certificate issued under the 1971 scheme is a simple piece of paper with a space for the completion of the owner's name, the number of the certificate and the date on which it expires. I do not criticise the Opposition for having produced a document of that sort when in Government. Probably none of us realised the efforts that would be made by certain elements in the construction industry fraudulently to abuse the certificates. However, the plain fact is that they have been a disaster. Large numbers of them have been forged and even now these are in circulation. Others have been altered, having been sold by or stolen from their proper owners. Because the certificate is such an unsophisticated document, such activities are not easily detected. Many dishonest sub-contractors, unable to obtain certificates of their own, are using impersonation or forgery to obtain payment gross, and then disappearing before the Inland Revenue can catch up with them.
  Before paying a sub-contractor without deduction of the 35 per cent., a contractor is meant to check that the sub-contractor is the owner of a valid certificate. It has been suggested that, instead of introducing a new certificate with a photograph, we should apply pressure to contractors to carry out a proper inspection of existing certificates. The problem is that very often contractors cannot tell from the old style of certificates whether the certificate that is presented to them is genuine
  1650
  and owned by the individual who presents it.
  Contractors cannot be experts on forgery and impersonation. To expect too much from them would have two unsatisfactory results. Some contractors would become discouraged and would give certificates little or no inspection. That would compound the felony and the tax loss. Other contractors, determined to carry out their statutory obligations in full, would hold up payments to sub-contractors until they could be absolutely sure that they were paying out on a genuine certificate. That could cause major cash flow problems to sub-contractors and administrative headaches for contractors.
  Mr. Norman Tebbit: In dealing with the problems which must arise between the sub-contractor and the contractor, will the right hon. Gentleman say something about the problems which may arise if during a sub-contracting operation the sub-contractor's certificate is withdrawn? How will the contractor know about that and what should he do when confronted with such a situation?
  Mr. Barnett: I understand why the hon. Gentleman could not be in the Chamber at the outset of this debate, but that is a question that has already been raised. I said that I should be dealing with such points after dealing with the Regulation as it stands. A large number of detailed points have been raised.
  I was explaining that we are having completely to redesign the certificate. Instead of being a flimsy piece of paper it will be a plastic card of the type that I have indicated to the House. It will be similar to a bank cheque card. It will have engraved on it the owner's name, national insurance number and certificate number. It will also have various security checks on it, which should make it virtually unforgeable. I am sure nobody can complain about those changes.
  But we still have the problem of the sub-contractor who obtains someone else's certificate and impersonates him, thereby seeking to deceive contractors. We gave this problem a good deal of consideration, and it was clear to us that the best way to enable the contractor to check that the certificate has been presented by the right person is by having

  1651
  a photograph on it. Let me make one point clear, because there has been some misunderstanding about it. The photograph is not there so that the Inland Revenue can inspect it. It is there as a protection for the sub-contractor, to prevent other people using his certificate to obtain payment in his name. Most of all—this will answer the point made by the hon. Member for Chingford (Mr. Tebbit)—it is a protection for contractors, who are, in the last resort, liable for any tax they fail to deduct—because they will be able positively to satisfy themselves that the presenter is the proper owner. I must emphasise that the photographs are required for this purpose of identification alone.
  Some suggestions have been made—not in this House but elsewhere—about what they might be used for. I can give an absolute assurance that a photograph will remain the property of the Inland Revenue and is not, and will not be, available for inspection by anyone else or for any other purpose than tax. The overwhelming majority of honest sub-contractors have not objected to the proposal for photographs, probably because they realise that it will be the most effective check on the rampant misuse of documents. They will also know that the rest of the tax-paying community are sick and tired of the way in which those on the "lump" have been able to milk the Exchequer at their expense, and they see no reason why proper action should not be taken to prevent them doing so in the future.
  Those responsible for tax collection—both Treasury Ministers and the Inland Revenue—are sometimes attacked for seeking to collect tax when it is too late—when, for example, the taxpayer has already gone bankrupt or fled the country. These new arrangements are intended to prevent the tax loss before it happens, instead of pursuing it after it has. For this alone, it surely deserves a welcome.
  When we introduced this revised scheme in the last Budget, we announced that the Inland Revenue would consult the construction industry about its implementation, so as to reduce to a minimum the interference with normal day-to-day business. We have honoured that promise. Detailed discussions of a num-
  1652
  ber of the matters dealt with in these Regulations have taken place between the Revenue and representative organisations. From the Revenue's point of view, the discussions have been most helpful. I hope that the representatives of the industry feel so as well.
  The Regulations now contain a number of features reflecting points that the industry has put to us. In particular, the arrangement laid down in Regulation 22 is designed to assist contracting and subcontracting companies who have a large number of contracts running at any one time.
  The point was made by the industry that where a company operates on a nation-wide basis and with many individual contracts in hand at any one time there could be serious difficulties in arranging for their certificates to be inspected by all their main contractors.
  We have done two things to deal with this problem. First, we are proposing to have a special certificate for these companies, which will be in the company's name, not that of an individual director, so that it can be circulated to main contractors by post or by local agents, and not have to be presented personally. Secondly, Regulation 22 provides an alternative method by which this type of sub-contractor can obtain payment without deduction. He can provide the contractor with a declaration of the details of his certificate and ask the contractor to make the payment into a nominated bank account, of which he has previously notified the inspector of taxes. If the contractor has any doubts about the genuineness of the declaration, he checks with the Inland Revenue that the bank account details tally. I believe that these arrangements will greatly assist the practical administration of the revised scheme and, in particular, will ensure a smooth transition as we move from the old, existing scheme to the new one.
  Perhaps I may now deal with the many points raised in this brief debate. The hon. Member for Horsham and Crawley asked about the liability of a contractor who failed to check a certificate and paid a sub-contractor in full. The subcontractor might, for instance, be using someone else's certificate. In these circumstances, the contractor will lay himself open to having to pay the tax that

  1653
  he should have deducted. This was one of the problems under the old system through which we lost a considerable amount of tax. With the new certificates, it will be much easier for the main contractors, and I believe that we have helped them.
  Mr. Hordern: Will the main contractor be liable to a fine of £5,000 as well?
  Mr. Barnett: No, he will just be liable for the tax he should have deducted.
  The hon. Member for Cirencester and Tewkesbury asked how a contractor would know if a sub-contractor's certificate had been withdrawn. The Inland Revenue does not intend to circulate all contractors in these circumstances but it will tell contractors who are known to have recently engaged a man whose certificate has been withdrawn. If a contractor has not been told and pays a gross wage in good faith, no action will be taken against him.
  The right hon. Member for Crosby (Mr. Page) raised a point about which he and the Select Committee on Statutory Instruments, of which he is the distinguished chairman, have been concerned. We pay very close attention to what the Committee does because we know that it does not report to the House everything that comes before it. He and his Committee are worried that under regulation 4 personal representatives might have to discharge the liabilities of a deceased contractor. This Regulation is an exact copy of Regulation 12 in Statutory Instrument No. 1779 of 1971 which it replaces.
  There has never been any problem of the old version being interpreted in the way the right hon. Member fears. A similar provision also appears in a PAYE Regulation No. 33 of Statutory Instrument No. 344 of 1973. This provision has existed in the PAYE Regulations since 1944 and it has never been suggested that it involves personal liability on the part of representatives. I can understand the right hon. Gentleman's concern about the strict legal position, but I am advised that no court would be likely to interpret the Regulation in the way which worries him and his Committee.
  The principal purpose of the Regulation is to enable us to ask a personal representative to make a return that a
  1654
  deceased contractor was liable to make. For that purpose, it places the representative under the same obligations as the contractor, including the obligation to account to the Revenue for amounts the contractor had, or should have, deducted on payments to uncertified sub-contractors. There is an overriding principle that the personal representatives are liable only to extent of the assets of the estate they are administering. The only exception is in the case of devastavit—in layman's terms, a wrongful dispersal of assets. We did not consider that there was any difficulty in relying on a general principle of law in interpreting this Regulation. If it had been our intention, which both the right hon. Gentleman and the Committee conceded it was not, to recover these amounts from the personal representative's private funds, it would in our view have required very clear and express terms to achieve such an objective.
  The right hon. Gentleman suggested that it would clarify the position to include a proviso limiting liability to the assets in the estate, and I appreciate his concern about that. However, there would be problems there, too. To do that in the present Regulations alone would have the opposite effect and would throw real doubt on the scope of the PAYE Regulations and other provisions which did not include the words. Any contractor's executor who had to deal with both PAYE obligations and the obligations under these Regulations would feel that his liability was wider under the one than the other. I can assure the right hon. Gentleman and the Committee that an explanation of the extent of the liability will be given in the explanatory booklet which we are to issue, and it will make clear that the provision does not involve a charge upon the representative's personal assets.
  Mr. Ridley: Is it not a bit unfair that the main contractor's liability to pay tax in respect of a defaulting sub-contractor might be very much greater than his entire assets? In other words, the fine on him for his negligence or carelessness or his failure to observe that the certificate is bogus or forged could be unlimited. He might secure a contract for £1 million and sublet £999,000 of it. His liability would therefore be enormous

  1655
  compared with the size of his stake. Is it a fair principle that the risks a contractor faces are commensurate not with his offence but with the size of the subcontract which he has let?
  Mr. Barnett: I think the sort of example the hon. Gentleman has given is unlikely to occur. If I were that contractor and I knew that by not deducting tax from a particular firm I would be leaving myself open to that kind of liability, I would be more than a little negligent in not ringing up the Inland Revenue to find out whether the certificate was genuine. More often than not the sub-contractor used will have been used for a long time by the main contractor, and the main contractor will know that there has not been impersonation and forgery, and he will know that the certificate is valid.
  The right hon. Member for Crosby also raised the question of the powers of collectors to demand money within 14 days. The 14-day period is already well established in PAYE tax, with the amount deducted being payable 14 days after the 5th of each month. All this amounts to the contractor simply holding someone else's tax. It is not the main contractor's money. It is money he has deducted from a sub-contractor who does not have a valid certificate, and it is not unreasonable that he should pay it over as quickly as possible.
  Mr. Graham Page: I realise that the provision is partly a repetition of the PAYE provisions, and I understand the 14-day period. But that is not quite the position in the Regulations. That can be an assessment at any time and for any reason which the inspector thinks fit. Within 14 days of the inspector thinking fit and making the assessment, the money becomes payable without any notice in this case to the main contractor.
  Mr. Barnett: In practice, I should be surprised if inspectors of taxes behaved in the way suggested by the right hon. Gentleman. As I have said, this money does not belong to the main contractor who has deducted it. We are not being unreasonable.
  The hon. Member for Cirencester and Tewkesbury—ever ready to find unusual questions to put to me—asked about
  1656
  territorial coverage and whether a contractor or sub-contractor could be found liable if he had not deducted tax for something he had done in Saudi Arabia or elsewhere. The area covered is the United Kingdom, that is to say, England, Scotland. Wales and Northern Ireland, but not the Isle of Man or the Channel Islands. It also includes territorial waters. To that area must be added installations to which the Mineral Workings (Offshore Installations) Act 1971 applies.
  Several hon. Members referred to the three-year rule and the condition that requires a sub-contractor to have been within the tax net for three years before he can obtain a valid certificate. That condition is not, strictly, part of the Regulations. It is a statutory condition contained in the Act. Judging by what was said by the hon. Member for Cirencester and Tewkesbury and the hon. Member for Horsham, there is some misunderstanding. There would be no need for a man who had been on PAYE and who suddenly became self-employed to have three years' Schedule D assessments before being able to get a valid certificate. His period under PAYE would count. In that sense the arrangements for the self-employed would not be so harsh as was suggested.
  The type of person who would be affected is the immigrant who has no tax record, the school leaver with no tax record and the person who comes out of prison with no tax record for the previous three years. A normal trader would not experience that difficulty. Most traders, even if they have been in business only for a short time, will have some PAYE record before going into business.
  Under this scheme and these Regulations, inspectors of taxes will have discretion in the allocation of the valid certificate. My experience of inspectors of taxes has always been that they use their discretion fairly in the allocation of certificates. They have made clear to industry that they do not intend to withhold or withdraw certificates for any small matter. Only a serious matter would cause the withholding or withdrawal of a certificate.
  The right hon. Member for Orkney and Shetland conjured up the difficulties of a small trader in one of the islands in his constituency having to bear the burden of a £250,000 public liability

  1657
  insurance as one of the conditions. It is possible that even the smallest of contractors who did not take out a public liability policy for the sum of £250,000 could find himself in much greater difficulties. For example, there has recently appeared in the Press a report about a fire started by a painter's blow torch causing £8 million worth of damage. In the past, considerable penalties have been awarded against small sub-contractors. From discussions we have had with the industry, it is our understanding that this kind of public liability policy is by no means excessive.
  Several hon. Members, including the hon. Member for Cirencester and Tewkesbury, asked about the voucher scheme. I was asked whether vouchers could be returned three-monthly rather than weekly. One of the weaknesses of the present scheme is that vouchers are returned too late for the Inland Revenue to catch people who are misusing them. That is one of the reasons why we are closing the loopholes and why vouchers will be asked for weekly. In that way the Revenue will be able to catch the defrauders while they are still on the site, which has not been possible hitherto. Special arrangements have been introduced to reduce the administrative burden of the major contractors.
  These schemes were devised in close consultation with the industry and at its request. The hon. Member for Cirencester and Tewkesbury raised the question why local authorities should be deemed to be contractors within the scheme. This has nothing to do with the Regulations but it is part of the Finance Act. The local authority situation is still under discussion between the industry and ourselves. The purpose of deeming local authorities to be contractors, which is the same provision as was included in the Conservatives' Act of 1971, is that they frequently engage in contractual arrangements with construction firms usually through their own contracts department. If local authorities were not deemed to be contractors the payments they made would fall outside the scheme and there would be a loophole for the "lump" and other uncertificated sub-contractors to obtain considerable work—as we understand it, 50 per cent. of construction work at present is handled through local authorities and the Department of the Environment
  1658
  —without being subjected to the 35 per cent. reduction.
  Mr. Ridley: Does that not indicate that there should be an inquiry into direct labour? If direct labour is the cause of this very damaging new provision—admittedly it was in the previous Regulations—should we not tighten up the rules under which direct labour operates, by circumscribing direct labour rather than sub-contractors?
  Mr. Barnett: Like the hon. Gentleman, I am concerned to keep down the level of public expenditure by having as few further inquiries as possible. However, I am not in favour of abolishing direct labour because I do not go along with the hon. Gentleman's view on that subject. I do not think it is as serious a matter as the hon. Gentleman has indicated. Indeed, his own Government, which he from time to time supported, included the same provision in their Act. It worked perfectly well.
  Mr. Tebbit: The Minister is right to say that there was provision in the previous Conservative Administration's Act. The difference is that until these Regulations become law non-corporate bodies only are included in the net. Now that corporate bodies are included, the net is widened to such an extent that the whole principle is changed.
  Mr. Barnett: When I tried to explain this matter earlier I thought that the hon. Gentleman was nodding in agreement. He may have been nodding off, but I thought he was nodding in agreement. One of the major abuses of the 1971 scheme was the facility with which single contractors or sub-contractors were able to form companies, evade tax and get away with substantial sums of money. Therefore, the fact that the large companies which operate nation-wide will have this special type of certificate and special scheme which will be nothing like so onerous—indeed it was a scheme which was prepared in conjunction with the industry—
  Mr. Tebbit: I agree with the Minister that it is essential to bring corporate bodies within the provisions because of the amount of fiddling which has gone on. However, my point is that the bringing in of corporate bodies changes the nature of the issue of the local authorities

  1659
  being regarded as main contractors. Therefore, many more people are now caught in the net than under the old Regulations.
  Mr. Barnett: I entirely accept that. One of the difficulties in this scheme has been to differentiate between the big or the small perfectly genuine company and the one-man disappearing type of company. In order to ease the path for the larger companies—the companies which operate nation-wide—we have introduced this scheme which we think will be helpful.
  Finally, I should like to deal with the point made by the hon. Member for Cirencester and Tewkesbury, which was raised with me in correspondence by the right hon. and learned Member for Surrey, East (Sir G. Howe), about issuing the forms to sub-contractors and asking them to apply for the new contract. As I explained to the right hon. and learned Gentleman in our correspondence, the application forms were sent out as quickly as possible after the new legislation received the Royal Assent to give firms in the industry time to get their applications in and examined and their new documents prepared before the scheme came into force. The danger is that a firm which delays could find that it does not get a certificate in time and will have to suffer the 35 per cent. deduction. As I assured the right hon. and learned Gentleman, and I assure the House, inspectors will accept applications from sub-contractors who refuse to supply photographs and will proceed with the processing of them, leaving the question of the photographs to be sorted out when the Regulations become law.
  Mr. Ridley: The right hon. Gentleman must realise that if we were to prevent the Regulations coming into force tonight—there are enough of my hon. Friends present to do that considering the right hon. Gentleman's audience—he would have incurred public expenditure illegally by sending out these forms. How would he justify that? The right hon. Gentleman would be in the same position as his right hon. Friend the Home Secretary when he collected television licence money illegally. How would the taxpayer be
  1660
  reimbursed? That is the danger of what he did.
  Mr. Barnett: The hon. Gentleman has got carried away with himself again. We were merely sending out the forms. We were not collecting any tax on them. The old situation still applied. There was no question of collecting tax illegally. I hope that the hon. Gentleman is satisfied. I suppose it is always asking a lot, but, knowing his good nature, I am sure that he is.
  I hope that I have replied adequately to all the questions which were put to me.
  Mr. Tebbit: I apologise for having been late getting here, but the debate came on earlier than I expected. One point still worrying many people in the industry concerns the appeals procedure when a certificate is refused. As the right hon. Gentleman knows, if it is refused on the ground of the company's tax record, the Commissioner's discretion cannot be reviewed by the appeal body. What is the position in those circumstances? Is there any form of appeal for someone who has been refused a certificate on the ground of his previous tax record?
  Mr. Barnett: No. That appears in the main Act. It is not in these Regulations. There is no appeal in those circumstances. I have considerable sympathy with this problem. Even if a sub-contractor has not fulfilled every dot and comma under the terms of the Regulations and the Act, the inspectors will use their discretion reasonably. In my experience, they always have, and I have no doubt that they will in these circumstances. A rigid appeals system in that kind of situation could do positive damage to the sub-contractor. I have looked into the matter closely, because I was concerned to see how it would work. I will certainly keep a close eye on it to see whether any changes are necessary.
  I hope that the House recognises that these Regulations, which have emerged after considerable discussions between ourselves and the industry, will be helpful to all concerned. I am sure that we all want this scandalous evasion of tax brought to an end. Therefore, I am happy to recommend the Regulations to the House.
  Question put and negatived.

  STATUTORY INSTRUMENTS
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.),
  HORTICULTURE
  That the Horticulture (Apple and Pear Growers) (Special Payments) (Variation) Scheme 1975 (S.I., 1975, No. 1999), a copy of which was laid before this House on 11th December, be approved.—[Mr. Shape.]

  OVERALL CONCEPT FOR THE NEXT MULTI- ANNUAL RESEARCH PROGRAMME OF THE JOINT RESEARCH CENTRE
  That this House takes note of Commission Document No. R/2627/75 relating to the Overall Concept for the Next Multi-Annual Research Programme of the Joint Research Centre.—[Mr. Shape.]
  Question agreed to.

  ADJOURNMENT
  Motion made, and Question proposed. That this House do now adjourn.—[Mr. Shape.]

  THORN COLOUR TELEVISION FACTORY
  9.30 p.m.
  Mr. Michael McGuire: I am pleased to have extra time, but I do not propose to use it all myself because I can see some of my hon. Friends and hon. Gentlemen opposite who wish to say a word on this subject.
  Tomorrow the Thorn colour tube factory in Skelmersdale in my constituency will cease production. Over 1,300 workers will lose their jobs. The factory will wind down its operations until it finally closes in about April. Some 200 workers will carry on after next week, and these numbers will decrease steadily until the factory closes completely in April.
  When the news broke, the mood in the new town was one of deep despair and utter disbelief. It has cast an air of gloom over the town. Skelmersdale is not any ordinary town. It is a New Town, and the people were positively encouraged to come to it as the deliberate result of Government policy. They have come in the main
  1662
  from Merseyside, where, fortunately, people are used to hard knocks.
  This is the hardest knock these people have ever had to take. They came to Skelmersdale to try to build a better, fuller, richer life for their families and themselves. As I said in the House on 12th January when I tried to get a Standing Order No. 9 debate on the matter, they have had their modest hopes and ambitions cruelly dashed. They feel betrayed, and they certainly see a very grim future ahead of them in the next few months.
  The present male unemployment rate is just over 15 per cent. and the female unemployment rate is just over 11 per cent. These figures are based on the best available evidence, Some confusion arises from the fact that, for the purposes of employment statistics, Skelmersdale is linked in a common travel-to-work area with Ormskirk, and the combined figure of 9·9 hides the true figure for Skelmersdale. In Ormskirk abut 5 per cent. of the men are unemployed, and just over 2 per cent. of the women.
  The real nature of unemployment can be disguised by the use of a device of this sort. I do not suggest that it is used simply as a means of camouflage. It is just an accident that there is this common travel-to-work area. Nevertheless, the true figure is disguised.
  To have this kind of unemployment in any town is intolerable, but for a New Town it is a scandal. It will spell ruin for many small traders, and a whole community will be blighted. It will take a long time to recover from this blow. I believe that the Government have a grave responsibility for what is happening.
  Why has this factory closed? Why has the biggest employer in the Skelmersdale New Town had to close? At its height it once employed over 1,600 people. It had to shed some labour, and the number came down to just over 1,300.
  I am not saying this in an unkind way, but my hon. Friend the Minister of State has said that the television tube making industry is highly capitalised and not labour-intensive. With respect, I think he is mistaken. It is probably the most highly capitalised factory in my constituency but it has also employed the largest number of people. The next biggest is a few hundred short of that

  1663
  figure and is also highly capitalised. Another factory I know of, not in Skelmersdale, has a capitalisation equal to that of Thorn but an employment potential of only a couple of hundred. So it has the twin blessing of being highly capitalised and highly labour-intensive.
  This is about the fourth debate that we have had on this subject. When the news was given some weeks ago that the factory would close, the Government stepped in immediately and funded the wages bill while investigating the restructuring problem to see whether a British tube manufacturing industry was viable, even if it meant amalgamating Thorn and Mullard. But RCA, although only the junior partner with Thorn, did not want to know. It wanted to get out of what it saw as a continuing loss-maker. Without RCA's patent rights, there was no hope for Thorn unless it had the technology of its competitor, Mullard. Mullard had separate talks with the Minister and gave a figure—it was a private meeting but I should like to know what the figure was—for supplying not only the present depressed market but also an optimum future market, plus exports.
  Once RCA got out and Mullard refused to join in, I must reluctantly accept that, except by keeping men "digging holes and filling them in", there was probably nothing that the Government could do. But it would have been a gesture of good will, even if it looked bad economically. The same could be said, after all, of the Chrysler rescue.
  This factory opened in 1971 and quickly began to make profits, but Government action had already jeopardised its long-term future. Less than five years later, it was finished. A sad chapter in the short history of Skelmersdale New Town has ended in tragedy.
  The factory certainly made profits, at best £2½ million a year. It existed for only a short time. In a new technology, there is a curve of early losses being followed by profits. Despite some difficulties—the factory has had some labour management problems—Thorn was making profits but it was overtaken by events which put it into the red.
  1664
  I said that there were labour problems. I shall expand on that because when one mentions Skelmersdale people have at the back of their minds that there is something else behind it and that it is not only these circumstances that have brought about the closure of this factory. They do not utter their thought that it was the attitude of the men that caused the factory to close.
  It is true that the factory had labour problems. The American production manager said, with the benefit of hindsight, that they could not have expected anything else. He said that it was a green field site which had quickly got into its stride, was meeting the boom in colour televisions, had quickly collected over 1,600 men but had no trained lower management. Men were promoted as foremen because they had blue eyes, and perhaps for other reasons. He said that they were almost chosen on the spot and that no one said "This man is a capable workman, he will make an ideal foreman or charge hand." He also said that there was no planned procedure for disputes or any conciliation programme and that they had all the necessary ingredients for strife, and they got strife.
  However, the factory put all those things behind it. That has been shown in the last few months. The factory introduced its so-called "survival plan". It reduced the number of hours it took to make a tube from four to less than one and a half, and even that time was being reduced. The factory was making more tubes of better quality. Disputes had been virtually eliminated. What could have been a great success story has been stopped dead.
  I find it incomprehensible—this is what I consider to be the Government's involvemen—that the Government have helped to bring about this sad state of affairs. The American manager told me that colour tubes were not easy to manufacture. I cannot dispute or affirm that. He went on to say that it was about the third most difficult consumer durable to make.
  At almost the same time as the Government set up this factory they encouraged the establishment of two more competing companies, one in Durham and, incredibly enough, Sony—the Japanese

  1665
  firm —in South Wales. Presumably, Sony would import Japanese tubes to make television sets here. Therefore, the factory at Skelmersdale did not have a chance. The planners, God bless the mark, as my mother used to say, could not have done any planning at all. The Government's left hand did not know what their right hand was doing. Why did not someone make a market calculation? Everyone must have had an idea of the saturation point from the figures for black and white television sets. I am told by people in the industry that that point was expected to be reached when we had about 16 million colour television sets, slightly fewer than the 18 million monochrome sets that we have. At present, we have about 12 million of the 16 million, so there are only 4 million to go.
  We are talking about an industry which has been established literally in the past few years. That is my first criticism of the Government. My second criticism is that the Government did not work out the effect of a 25 per cent. rate of VAT on the industry. I realise that inflation can sweep us all away and I reaffirm my support of the Government's strategy to contain inflation. Statistics show that the Government's policy is proving a success and I hope that we get the rate of inflation down to the figure which the Chancellor of the Exchequer has forecast and for which so often he has been derided. I wish him, the country and the party well.
  One of the tactics within the Government's strategy to contain the rate of inflation was the imposition of this fierce rate of VAT at 25 per cent—over a 300 per cent. increase—and other corresponding restrictions on the sale of TV sets and their rentals. I do not believe that the Government worked out the effect of this rate of VAT on the industry. Certainly they could have damped down demand but not crippled it. In fact, the bottom has fallen right out of the market. If that had not happened, it is the considered opinion of those in the industry that they would have been able to weather the storm for a little longer.
  The main charge that I level against the Government—apart from the planning matter—is that they have persisted with their almost insane refusal to deal with imports. I know that this is a very difficult subject. We are a trading
  1666
  nation, and we have to approach this matter with great caution. However, everyone in the industry believes that we are trying to compete with a country—Japan—which is sending here both television tubes and television sets on an unfair basis.
  The companies concerned, Mullard and Thorn, jointly submitted what I consider to be most impressive evidence. One cannot describe it as proof, because one cannot prove these things in the sense of satisfying the High Court. However, extrapolating from what was the price of a tube a few years ago and looking at the fierce inflation and the tremendous cost of raw materials, to which the Japanese are as vulnerable as anyone else, and probably more so, with raw materials costs and inflation in Japan, and a dampened down market—which must have increased the unit cost of each tube—the Japanese could not for three or four years have guaranteed—as they have done and, I think, will still do until the end of the year—that they could maintain prices for these three years.
  We sent a trade mission to Japan. I discussed this with the Secretary of State, along with trade unionists. We were told by the companies which submitted this evidence jointly, Thorn and Mullard, that the Government spurned an offer of technical assistance for that mission, the better to equip it to find out whether tubes were being dumped. "Dumped" has a technical meaning. It is in two parts. The first part is fairly easy to prove. That is that the native or indigenous product is being harmed. The second part is more difficult. It is that the people bringing the goods here are selling them at a lower price than the home-produced market price. Due to the structure of the Japanese industry, this is impossible to prove, because the Japanese do not have tube manufacturers as we do. In Japan they are called "in-house producers". Therefore, one has to extrapolate.
  When the Government spurned the assistance offered by the tube manufacturers, they were not acting in the best interests of the country or the tube manufacturers, and, above all, they were not demonstrating that they were willing to use every legitimate means to try to ascertain the truth.

  1667
  We were told that the mission that went to Japan was quite well equipped. I do not want to impugn the integrity of its members or to impute any ulterior motives to them. We were told that they had a fluent Japanese speaker with them from the Embassy. I thought that that was very astute of them, because if they had not had this chap with them they would have really been up the creek. However, I think that they should have had technical assistance, which was available.
  I have a few more minutes for the debate than I expected, and some of my hon. Friends will wish to take part. I end with some brief comments. I believe that the Government's failure to take action on controlling imports has damaged the industry. That is coupled with all the other things I have mentioned. Mullard has said that it will try to take on the Japanese. It is losing immense sums on the tubes now. I believe that in a short while Mullard will be coming to my hon. Friend and demanding import controls, and that my hon. Friend will be unable to resist that demand.
  I believe also—and this is not solely a criticism of the Government—that to be given only 18 days' notice, from 5th January, that the factory would be closed on the 23rd, irrevocably, was quite wrong. The tragedy and irony is that if this notice had been issued 13 weeks later, in April, under Labour legislation, the Employment Protection Act, 90 days' notice would have had to be given.
  I do not know the terms the workers secured in the redundancy negotiations, which I believe they concluded yesterday. I hope that they used the argument that they are morally entitled to much longer than 18 days, and argue on the basis of what 90 days would mean to them in cash.
  We want the Government to realise that Skelmersdale is a disaster area. We want a vote of confidence from them. I hope that my hon. Friend the Minister can offer a great deal of comfort to my people. I would prefer not to have a panic reaction which gives us the dolls-eye type of factory, which would be subject to all the pressures I have described and perhaps in a short time bring us back to the same, sad situation.
  1668
  I want a positive response. I want the Government to say "We intend to bring to Skelmersdale New Town industries which have a secure, long-term future. We shall demonstrate our confidence by seeing that they are of that type." It will take a little while to do that, and the people know it.
  There are one or two things the Government can do in the meantime. They can announce that they will give us a new hospital. That would be a vote of confidence in the New Town. To plan a New Town without a new hospital would be to make a mockery of New Town planning. The site has been available for a long time. We have been told that it was a best-buy. The hospital would give work to our building industry colleagues at present unemployed and fill a desperate medical need. Above all, building the hospital would demonstrate the Government's good intentions.
  We should also be told that the Government will aid us by their programme to disperse Government jogs. As I have told my hon. Friend the Minister of State, Civil Service Department, the North-West has been shabbily treated in this respect, as we see when we consider the jobs earmarked for South Wales and Scotland. We need a bigger share of the cake in Skelmersdale and the North-West generally.
  I hope that the Government have learned something from what has happened, and that if they will the end—Skelmersdale New Town, which is a creation of the Government—they will will the means. I hope that this sad chapter will quickly be over, and that the brighter, richer, fuller future for which the people came to Skelmersdale will soon be theirs.
  Mr. Deputy Speaker (Mr. George Thomas): Four right hon. and hon. Members wish to speak. If they confine themselves to five-minute speeches, they will all be able to take part.
  9.53 p.m.
  Mr. Peter Viggers: I thank the hon. Member for Ince (Mr. McGuire) for the opportunity to take part briefly in the debate. My constituency contains the largest television set factory in Europe—Thorn's Ultra factory, employing more than 3,000 people. It is a cheerful, prosperous, successful

  1669
  factory, which draws its colour television tubes from the Thorn factory at Skelmersdale.
  My fear is that the British television set manufacturers will go the way of the British radio set manufacturers. Japanese manufacturers captured the United Kingdom component market and then without too much difficulty captured the set manufacturing capacity. As a result, there is now no major British-owned radio set manufacturer. It will be easy for the television industry in this country to go the same way.
  It has been the policy of successive Governments to tinker with consumer demand by changing the tax rates and credit arrangements. When they ease purchase tax, imports flood in and fulfil the demand that has been created. When the Government tighten restrictions the home manufacturer is left with surplus capacity. The harshest blow of fill was the tinkering with the VAT rate, changing it from 10 per cent. to 8 per cent. and then up to 25 per cent.—a so-called luxury rate. When contemplating the word "luxury", it has to be remembered that it is possible to obtain the "luxury" of a colour television set as a social security benefit.
  The result of the increase of VAT to 25 per cent. was predictable. Deliveries of sets in the 11 months to November 1975 were 30 per cent. down on the previous year. There have been 50 changes in purchase tax rates, VAT rates, hire-purchase rates and credit terms in the past 10 years. It simply cannot go on. I hope that Governments of whatever complexion will realise that it is their responsibility to provide a stable background against which the industry can work. It will be sad if nothing can be done for Skelmersdale, even at this late hour.
  9.57 p.m.
  Mr. Bob Cryer (Keighley): I am grateful to my hon. Friend the Member for Ince (Mr. McGuire) for raising this subject. Some of my constituents work in the largest colour television set manufacturing factory in Europe—the Bradford factory of Thorn. They are much concerned about the closure of the Skelmersdale factory and fear that it will lead to an erosion of their job prospects. The National Economic Development Office
  1670
  said in October of last year that if a viable picture tube industry could not be maintained in the United Kingdom the set makers would be in the hands of their major overseas competitors. This is the fear of those of my constituents who work at Thorn, and the rest of the Thorn employees. They came here last Tuesday to lobby Members, to express that fear, and to make sure that their public representatives understand the difficulties.
  Thorn has a large retail sector, and therefore might not be all that badly harmed if it ceased manufacturing and started importing complete sets. It is very much to be hoped that this will not happen, but it is something which, because of its integrated position, could occur. It has already been said that there is a strong parallel with the United Kingdom radio manufacturing industry. Output in that industry dropped rapidly. From 87 per cent., the home-based manufacturers' share of the United Kingdom market fell to 17 per cent. This was largely due to Japanese imports. The share of the United Kingdom market taken by Japanese imports of television tubes and sets increased from 9·6 per cent. in 1971 to 50·7 per cent. in 1974, which indicates the rapidity of the growth of imports.
  The dumping of goods is difficult to prove, as my hon. Friend the Member for Ince has said. This is because the Minister has difficulty in going to Japan and opening the books of companies there. The only solution, because of the difficulty of proving dumping, is to impose selective import controls. We do not ask for total exclusion. For example, France allows in 12,500 sets a year. We have seen important sections of British manufacturing industry disappear entirely. When the importers have cornered the vast majority of the market the low prices have been changed to high prices. The motor cycle industry is a case in point.
  The home market—this was emphasised by the employees who came down last Tuesday—is essential for a sound base. It is certainly essential if the British manufacturing industry is to be retained, ready for the much-vaunted upturn in the economy, when it comes. May I ask for an assurance from the Minister that the Government will not allow set manufacturers to wither away? I ask

  1671
  him to ensure that a planning agreement is entered into with Thorn and that the Government urgently consider taking a shareholding in the company to ensure an even greater degree of accountability.
  I also ask the Government to consider selective import controls. If the Government are considering a greater degree of control over the economy, in the interests of planning a Socialist economy, it is totally impossible for them to ignore imports. They cannot allow a free market for imports. I ask for a planning agreement internally and a planning of imports externally. That will ensure that the televisions manufacturing industry is retained on a viable basis.
  9.59 p.m.
  Mr. Graham Page: I am grateful to the hon. Member for Ince (Mr. McGuire) not only for bringing the matter before the House but for the very clear way in which he put the case of the Thorn factory in Skelmersdale, which has failed not because of bad management, or bad business, or bad running of the firm.
  It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn—[Mr. Snape.]
  Mr. Graham Page: The firm has suffered from the 25 per cent. rate of VAT, restrictions on hire purchase, and the dumping of Japanese goods. I use the word "dumping" deliberately. I say that the firm is not to blame for its management, because it has streamlined its labour over the past years, as a result of work study exercises. It has got the greatest productivity it can out of the men it employs, and it has not produced just one item; it has produced the new PI tube, which is difficult to manufacture but which is a great success.
  Those who will be thrown out of work by the closing of the factory are not all employed in Skelmersdale. A fairly small percentage are actually employed there; many work in my constituency. Therefore, the closing of this factory is not just a concentrated depression in Skelmersdale; it causes a depression in a wide
  1672
  circle, in which skilled people will be thrown out of employment.
  I cannot understand why the case for anti-dumping has failed. It has been wrongly accepted, I believe, that dumping could not be proved. Dumping occurs when the export price is below the fair market price in the country of origin. Under Section 6 of the 1957 Act the Minister has a wide discretion to judge what that export price is. There are certain provisions for calculating it in the Act. When one realises what has happened in terms of the import of television tubes from Japan, one cannot imagine that there really is no case for an anti-dumping Order.
  The hon. Member for Keighley (Mr. Cryer) said that we must have import controls. That is far too wide an expression. In this instance I am not talking of controls over a large area of imports; I am talking about an anti-dumping Order against these particular items. Bearing in mind that they have arrived in this country with a gap of £10, which cannot be accounted for in terms of the difference in prices, the matter seems to be one of deliberate dumping on this country. Taking into account the degree to which Japanese manufacturers have penetrated this country, as compared with other countries, one must conclude that they have made a deliberate effort to undermine production in this country. I ask the hon. Gentleman to re-examine the case for an anti-dumping Order.
  Under the 1968 Act a provisional Order can be made. If the case is eventually not proved, no harm is done by that provisional Order—by a suspension, as it were, of the position. I ask that the case be looked at again and that the facts be re-examined under the discretion which the Minister has to decide on the figures and calculations. I ask for a real effort to prove the dumping case and that an anti-dumping Order be issued to protect this industry in Skelmersdale.
  10.5 p.m.
  Mr. Leslie Spriggs: I, too, congratulate my hon. Friend the Member for Ince (Mr. McGuire) for giving the House an opportunity to learn something of the sadness and gloom that has spread throughout Skelmersdale and has linked nearby St. Helens with the same problem.

  1673
  One of the large companies in my constituency, namely, Pilkingtons, produced the glass section of the television tubes for Thorn of Skelmersdale. In 1974, when orders were falling off, about 650 jobs were lost at the Ravenshead factory, in St. Helens. A further 750 jobs are being lost gradually as the firm closes down at Ravenshead. There are parts and pieces of equipment in stock that will have to be cleared from the factory and the firm is keeping on a minimum staff to clear up. It is expected that the factory will finally close its doors at the end of March and that a total of approximately 1,400 jobs will have been lost by then.
  Right hon. and hon. Members have appealed to Ministers in various Governments to examine what has been happening in world trade. I want it to be firmly understood that none of us is anti-Japanese. We are representatives of the people, and we want to do what we can to protect our constituents' jobs. That is why I asked the then Secretary of State for Trade and Industry to take action on dumping from Japan and Taiwan. We still have not received an answer to the question that I Dosed. I was told that the Secretary of State had not been able to obtain the necessary information to justify an anti-dumping Order.
  The researchers have found that of the total number of television tubes and sets that Japan exports, 51 per cent. find their way to the United Kingdom. Most of the EEC countries take less than 1 per cent. That is an example of Government control. I recognise that the Japanese must work and fight hard for every job that they win and that they have to continue to fight to maintain those jobs, but why have they succeeded where the British firms have failed? Why have they been able to take over large orders from firms in this country and from other parts of the world, whereas our own factories, staffed with highly skilled technicians and workers, both men and women, are losing their jobs?
  I wish the Japanese all the good will in the world, but I appeal to my hon. Friend to do all in his power to get the Japanese to recognise the sense of the argument that they should take a fair share of the trade and not dump their unemployment in the United Kingdom.
  10.10 p.m.
  Mr. Ian Percival: I also wish to thank the hon. Member for Ince (Mr. McGuire) for initiating this debate. I congratulate him on affording us an opportunity to discuss this matter tonight.
  I, too, have constituents who will lose their jobs tomorrow. It is difficult to think of anything more depressing than the situation that faces those workers we are dealing with a new work force, in a new factory, in a new technology, in a new town. The future of these people must have appeared rosy as recently as 1973, when they reached their peak production. Now, for them the situation could not look bleaker. In addition, there are the long-term effects, of which we have heard from hon. Members on both sides of the House, that may arise if this initial disaster is allowed to happen.
  I know that we are all waiting to hear the Minister, and we wish to give him the maximum amount of time to reply, but I wish to emphasise one point. I cannot believe that it is not possible to take some anti-dumping action. The Japanese fixed the price for a 22-in tube at £34 early in 1973. Even then, it was a price that was hard to match in this country. The Japanese are still landing tubes in this country at that price. There is surely ample evidence to justify the making of a provisional Order such as that suggested by my right hon. Friend the Member for Crosby (Mr. Page).
  I think that we all tend to be overcautious in these matters. Here is an instance in which, unless we are prepared to do something quickly rather than to wait until we have a belt-and-braces case, the damage to our constituents will be great, quite apart from damage that we may do to long-term prospects in the industry. That damage may be such as to make it impossible for any recovery at a later date.
  I sincerely urge the Minister to take some action, and to take it now, even though he may be taking a risk, or may think that such action would be wrong.
  10.13 p.m.
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): The people of Skelmersdale are suffering this

  1675
  week very grave misfortune, but their one piece of good fortune is that they have in my hon. Friend the Member for Ince (Mr. McGuire) a champion who has fought for them in every conceivable way and on every possible occasion. He has left no avenue unexplored in putting their case. Although this is a sad week for Skelmersdale, its people can rejoice in having such a representative in this House because of the way in which he fights for their interests.
  My hon. Friend has given the House an opportunity to debate an extremely serious issue. Hon. Members on both sides of the House have spoken appropriately of the situation in the town. I hope that in that serious situation none of us will seek to exaggerate the disadvantages. The hon. Member for Gosport (Mr. Viggers)—who spoke with appropriate severity as to the way in which the British electronics industry had yielded markets to foreign competitors, a way that cannot be to the credit of that industry—implied that we in this country do not have a radio industry. Although far too much of the market has been yielded to the Japanese, it must go out from this House that we still have an admirable radio industry. It makes high quality radios that are more than suitable to compete with foreign imports.
  My hon. Friend the Member for Keighley (Mr. Cryer) rightly said that we should seek to avoid a situation in which the British colour television industry might wither away. Again, I want it to go out from this House that the British Government have no intention of allowing the British industry to wither away, or of seeing the British television tube industry defeated.
  My hon. Friend the Member for St. Helens (Mr. Spriggs) asked why the Japanese had succeeded so greatly in this industry. I refer my hon. Friend to the Boston Group Report on the motor cycle industry and its description of the way in which the Japanese took over that market. We are determined that we shall retain markets of the kind to which my hon. Friend the Member for Keighley referred. If right hon. and hon. Members opposite referred to that Report, they would see how difficult it is to prove any kind of dumping case against the Japanese.
  1676
  In the many discussions I have had with representatives of the colour tube and television set industries, it has been necessary for me to repeat that while the Japanese may well have been selling colour television tubes in this country at a loss, that does not necesarily mean that they are dumping them here.
  I am deeply distressed that the factory of Thorn Colour Tubes Limited at Skelmersdale is to be closed, causing serious personal difficulties for those who are to lose their jobs and further problems for the locality which, as my hon. Friend the Member for Ince has described, has already a very high rate of unemployment.
  I have devoted a great deal of attention—and so have my colleagues—to the problems of the manufacturers in the United Kingdom of colour television tubes. We in the Government strove hard to find a solution for the factory at Skelmersdale because of the employment consequences of its closure and also because here was a factory specially designed and built for the product.
  Despite all our efforts, we could not find a solution. I wish to emphasise—because my hon. Friend's constituents have a right to know—that the Government were willing to play a major rôle in bringing about a solution if one could have been found.
  There were preliminary discussions with Thorn Colour Tubes Limited on whether financial assistance could be provided towards the costs of re-tooling for new types of tubes to be made at Skelmersdale. But these were not pursued after the company told us that they were unable to carry on with the factory.
  Then we offered—and our offer was accepted—up to a little more than £1 million towards the losses of the factory so that it would be kept open while we completed our investigations into the possibility of restructuring the industry. Without that money, the factory would have been closed 2½ months ago. We ended that support on 31st December 1975 only after it had been established that there could be no place for the factory in a restructuring of the industry. I wish to make clear to the people of Skelmersdale and to those who worked in the factory that had a viable rôle been found for Skelmersdale in a restructured

  1677
  industry, we would have been prepared to consider giving substantial help to assist the factory during an initial phase of the restructuring.
  Thorn Colour Tubes Limited, which had invested heavily in the Skelmersdale factory, is jointly owned by two major groups—Thorn Electrical Industries and the Radio Corporation of America. Both have high reputations in television and other products and are very substantial organisations. But even they could not continue to bear the heavy losses which had been incurred at Skelmersdale because, after a careful review, they could see no prospect of an improvement. I know from the several discussions I had with the chairman and the managing director of Thorn that they did not rush into a decision to close the factory. They were anxious to find a solution, but they told me that they could not expect the group to continue indefinitely with the heavy burden of losses at the factory.
  The technology employed at the factory was drawn from RCA. The other tube manufacturer in the United Kingdom—Mullard—uses the technology of its parent company, Philips. There is no indigenous technology in this country for colour television tubes. So it should be recognised that, deeply regrettable though the closure of the factory as Skelmersdale is, this is not a case of abandoning a key United Kingdom technology. In this country we have had two foreign technologies.
  The tubes made at Skelmersdale were of the fat, 90 deg. type. This type is not now used much outside the United Kingdom and North America. It is being superseded by the slim, 110 deg. type, particularly for export markets, for complete sets as well as for tubes on their own. Thorn Colour Tubes Limited had made 110 deg. tubes, but a year ago these were dropped as part of a plan to rationalise production so that losses might be reduced.
  There have been two main consequences. In recent times, when our home market has been depressed the slack could not be taken up by exports. Secondly, the set makers have purchased supplies from abroad.
  The sizes of tubes made at Skelmersdale have, until very recently, been con-
  1678
  fined to 26-in. and 22-in. This, combined with the fact that Mullard, too, has not made smaller sizes, has meant that foreign tubes have had to be imported to meet the needs of set makers for 20-in. and smaller sizes. Probably approaching 40 per cent. of colour sets sold in the United Kingdom in 1975 were of those sizes.
  My hon. Friend the Member for Keighley and the hon. Member for Gosport have spoken about the interests of their constituents who work in colour television set factories. If we had imposed import controls on colour television tubes it would not have protected the Skelmersdale factory, but it would have caused unemployment in colour television set factories which depended on imported tubes for their sets.
  Mr. Percival: Is the Minister correct in saying that the factory did not make 20-in. tubes? My information is that it did, and that it went into mass production of them in 1975 with a radical new technology.
  Mr. Kaufman: I regret that my information is that we did not have the capability in this country to meet these needs, and I assure the hon. and learned Gentleman that I had many discussions with Thorn and Philips in my efforts to find a solution. I do not want in any way to seem vainglorious, but I spent dozens of hours trying to find a solution which, among other things, would save the factory at Skelmersdale.
  Indeed, I come now to the very point the hon. and learned Gentleman raised.
  Thorn Colour Tubes Limited had made preparations in 1974 to start the manufacture of 20-in tubes but those plans were frustrated at that time by the low prices of Japanese tubes. The company, together with Mullard, had drawn our attention to this and other consequences of those low prices which applied also to 22-in tubes, and alleged that the Japanese were selling at dumped prices.
  My right hon. Friend the Secretary of State for Trade had this allegation investigated in Japan by an exceptionally strong team of expert officials. They made an extensive examination, during which prices of relevant sales in Japan were compared with prices charged in the United Kingdom, but no evidence was

  1679
  found to justify the imposition of antidumping duties. However, my right hon. Friend drew the attention of the Japanese Government to the serious problems caused to the manufacturers in the United Kingdom by the low prices of Japanese tubes. It is to be noted that some of those prices and the prices of certain other imported tubes have recently increased.
  Another problem was the dependence of Thorn Colour Tubes Limited on supplies of glass and some other components from other manufacturers. My hon. Friend the Member for St. Helens explained that glass parts had been obtained from Pilkington's factory at Ravenhead, but the requirement was inadequate and resulted in the closure of that factory, an event which caused us great concern and regret. We could see no justifiable way in which we could have helped since there was no prospect of the factory be-becoming viable in the foreseeable future. In contrast, Mullard's operation is complete and integrated, with a large glass-making plant and component factories.
  In the light of all those features, it had become clear to my Department that the television colour tube industry as structured was of doubtful viability. We approached the problem in terms of a single technology in the United Kingdom, with, possibly, a Government stake. I assure my hon. Friend the Member for Keighley that one ingredient of the solution which I sought to achieve was a Government equity stake, if possible, through the NEB. I regarded that, if we could have achieved a solution, as an essential component, and I told both Phillips and Thom that that was my objective. They had no doubt about it.
  It was at this point that Thorn and RCA informed us that they could not afford to keep their factory at Skelmersdale going. It was clear that the only chance of a viable future for the factory was as part of a consolidated industry and that, therefore, the Government would not have been justified in providing the substantial financial support necessary to keep the factory in operation as an independent unit. As I have told the House, Thorn and RCA agreed to keep the factory open, with financial support from the Government, while we completed our investigations into
  1680
  restructuring the industry. However, with RCA's and Thorn's decision to withdraw, the only way forward was on the basis of the technology and management of Mullard.
  Let me make clear that we wanted to provide if at all possible a continued rôle for the facilities at Skelmersdale. We strove to that end, and I bitterly regret the outcome.
  The fundamental problem was one of over-capacity. The total capacity at existing factories of about 2·3 million has been less than half loaded and has resulted in uneconomic production. In 1976, total demand which could be met from our factories will be no more than last year. In 1977, it may be more but only at a level to half load capacity which would then be available.
  When, in later years—I know that my hon. Friend the Member for Ince is concerned about this—demand further increases as off-take of colour sets reaches 2 million—the level at which we consider demand will stabilise—Mullard's capacity could be expanded to meet the requirement. Production could be concentrated at high loading to give maximum economies, enabling a wider range of tubes to be made at more competitive prices. To retain the capacity at Skelmersdale would perpetuate the unsatisfactory conditions of low loading which have added to unit costs, making the industry unprofitable and uncompetitive. In any case the conversion of the plant to Mullard's technology would be expensive.
  As my right hon. Friend the Chancellor of the Exchequer said on 17th December, the Government carefully considered whether restrictions on imports of colour tubes would have helped. Imports had fallen from 1·5 million in 1973 to 1·3 million in 1974 and to some 900,000 in 1975. But a large proportion of the imported tubes are of sizes and types not made in the United Kingdom and, therefore, we could not introduce controls on these without causing serious harm to our manufacturers of colour sets. We were forced to conclude that controls on tubes that are similar to those made here would not make a sufficient impact on loading to improve the position of Thorn Colour Tubes Limited. We looked even into the the possibility of the factory at Skelmersdale being used for some colour tube

  1681
  work other than production of new tubes. But again we drew a blank.
  I assure my hon. Friend that all the Government Departments concerned—the Department of Industry, the Department of the Environment, with its responsibility for New Towns, the Department of Employment and the agencies of the Manpower Services Commission—will do everything possible to help the employees to find new jobs and to secure alternative employment for the area. As well as being a New Town, Skelmersdale is part of the Merseyside Special Development Area and this means that the full range of regional and other incentives is available to attract new projects. We and the Development Corporation will continue to promote the area vigorously, but
  1682
  I do not wish to give the impression that new manufacturing projects will be easy to find.
  I regret very much the closure of the factory at Skelmersdale, but I hope that what I have said will show that the Government did everything possible to help before concluding that there was no viable future for the factory.
  The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at half-past Ten o'clock.