HC Deb 26 January 1976 vol 904 cc104-72

7.9 p.m.

Mr. Timothy Raison (Aylesbury)

The House has just been debating a subject which is dominated by public expenditure constraints. We now turn to a subject where unnecessary public expenditure is involved. We have chosen the subject of direct labour and municipal trading for several reasons. The fundamental reason is that we reject the endless extension of collective provision into more and more aspects of our lives. The public sector is already far too large for efficiency, freedom or the health of our economy.

Everybody knows that once an activity enters the public sector, the prospects of any kind of economic discipline are reduced. Why? Because there is always the taxpayer and the ratepayer to fall back on. Moreover, why should public money be used to provide services which may undercut and drive out of business those ratepayers and tax payers who have provided that money?

These important issues are raised because of current attempts to extend direct labour and municipal trading. There is a fairly clear divide between the parties on this subject. I can only hope that in the debate, we shall obtain some reassurances from the Government.

We do not suggest that local authorities should not have direct labour departments or should not sell anything at all. Obviously it can be reasonable for councils to handle some of their own repair work, and so on, or to sell booklets about their buildings or buns in their sports grounds. However, we believe that it is entirely wrong that councils should plunge further into commercial activities or into the management of building operations for which they are generally unsuited.

We know that the Government take a different view. On direct labour, the Minister for Housing and Construction, who is to reply to the debate, has been explicit. On 14th October last year, in a speech to the Institute of Municipal Building Management, he said: Some of the ideas I want to examine are the scope for co-operative enterprise; the possible evolution of direct labour departments into more widely based building organisations, as well as the conventional expansion of work". Later he said that he was setting up a departmental working group on these matters which would include representatives of local authorities, but not, needless to say, of the construction industry.

On 13th January this year, in answer to a Question by my hon. Friend the Member for Gainsborough (Mr. Kimball), the Minister said: Subject to the constraints on local authority activities, I wish to see the maximum possible expansion of efficient direct labour organisations."—[Official Report, 13th January 1976; Vol. 903, c. 108.] The Government's policy is clear. They wish to see "the maximum possible expansion".

What about the other side to the debate—municipal trading? The Labour Party manifesto of October 1974, referring to housing, stated: Local councils' lending will be expanded so that they can play a major part in helping house purchasers and keep down costs by supplying unified services for estate agency, surveying, conveyancing and mortgages". On 16th April 1975, the Minister for Planning and Local Government was asked by the hon. Member for Cannock (Mr. Roberts) if he will introduce legislation to enable local authorities to act as estate agents, undertake the legal side of house purchase, and provide a wide range of community services such as funeral arrangements and taxi services". The reply was: I sympathise with the general objectives to which my hon. Friend has referred, and we shall keep these possibilities in mind along with other candidates for legislative time."—[Official Report, 16th April 1975; Vol. 890, c. 423.] The Government clearly want more direct labour and municipal trading. We do not.

This matter has become highly topical partly because of actions by the Minister for Housing and Construction to promote direct labour and partly because of three Bills which are being promoted by Socialist-controlled local authorities. The first is the West Midlands County Council Bill, which contains astonishing powers to extend municipal trading, as well as some pretty rum powers to provide a scheme for registering dogs.

The second is the Greater London Council (General Powers) Bill, which would allow any local authority in London to carry out virtually any construction work for anybody in London.

The third is the Tyne and Wear Bill, which would extend the powers of local authorities to engage in construction and civil engineering, including repairs and maintenance, for an ever-increasing range of public and voluntary bodies.

All this comes at a time of massive unemployment in the private construction industry. I believe that about 200,000 are out of work in that industry. It comes at a time of bankruptcies and near despair among many private traders, especially the smaller traders. It also comes at a time when there is general agreement that local government staffing must be pruned, not expanded.

The forthcoming public expenditure White Paper is expected to set out the need for big reductions in public service manpower, which, incidentally, the Government are busy expanding through measures such as the Community Land Act.

It is nonsense to talk about new powers of this kind. The Government should have the guts to tell their supporters in these areas to call a halt and to tell local authorities that expansion of their activities in the ways I have described is completely out of the question.

I have no doubt that my hon. Friends will deal with those Bills in considerable detail. I should like to give a few examples of what has been happening.

First, I will deal with the direct labour side. The record of direct labour departments is extremely patchy and often worse. I will quote a few examples. The first comes from Building of 28th November 1975. Referring to what happened in Newcastle, it states: The £8,000 a year head of Newcastle upon Tyne District Council's direct labour department, John Chick, has been suspended from his job following the discovery of 'arithmetical errors' in the department's bills of quantity for a £1.3 million housing project in the city…. Before suspending Mr. Chick, Newcastle Council announced that it had abandoned the deal with its own building department and that it was negotiating with Shepherd Construction, the second lowest tenderer, to take over the contract. The department won the job in September after submitting a tender some £180,000 lower than Shepherd's price. Another example comes from Hammersmith, reported in the Fulham Chronicle on 4th July last year: The council's Housing Directorate has reported: 'There is no longer any routine inspection of buildings or periodic maintenance other than repainting and most of the day-to-day repairs have stopped'. Delays in maintenance on one estate were reported to vary from weeks to months. The report states that Hammersmith Council's Direct Labour Building Organisation is the direct cause of the crisis: that more than 30,000 orders for repair jobs are sent out in a year—many are bodged, many simply do not get done. The next example comes from Norwich: Norwich ratepayers will have to pay 1p in the pound extra in 1976–77 for its council's services—a rise of 5 per cent. … Half of the 1p increase is to meet anticipated losses of £300,000 on housebuilding by direct labour over the next three years. Incredibly enough, the reaction in Norwich was: Three days later the Norwich city council's works committee decided to ask for the promotion of legislation to allow the direct labour department to tender for work outside the city. I will give one more example which comes from Wigan. The Wigan Evening Post and Chronicle on 6th November last year reported: The council decided to give a scheme for building 249 homes to direct labour, though two contractors submitted lower tenders. Acceptance of the direct labour estimate involved a extra £42,000—and would, with interest charges, have cost the council another £220,000. The department had a poor record of success in obtaining work in competition in 1975. A suggestion was made that, if it was not given the job, 100 men would have to be made redundant. The Minister for Housing and Construction has now decided that all tenders are too high and that the project was to go out to tender again. Thank goodness for that. Many other examples have accumulated over the past few years.

Of course, things go wrong in the private sector as well. Nobody would dispute that. However, the House must understand that there are certain fundamental differences between the two systems. First, in the public sector there is always the possibility of fall-back on the ratepayer. In the private sector, mismanagement leads to bankruptcy. Secondly, it is all too easy to work things in favour of direct works departments. Local authorities can set the level at which works go out to tender and exclude overheads from their accounting.

Thirdly—this is very important—there is no contract with direct labour.

Direct labour departments can submit unrealistically low tenders, get the jobs and then come along and say, "We are terribly sorry, but the price has gone up." That is not possible in the private sector. There is a fixed contract, and it is not possible for builders to get away with incompetence in the way that it is possible for direct labour departments to do.

Mr. John Cartwright (Woolwich, East)

Is the hon. Gentleman saying that there is no example of a private tenderer putting in a contract figure and then going to the local authority concerned two years later and saying, "I am sorry, but the cost has gone up and we must have a higher figure"?

Mr. Raison

The normal contract has provision for dealing with rising costs.

Next, there can be a sheer lack of businesslike attitude in local government departments. I am not saying that this is always the case. We know some that are very well run, but far too often the local authority is not equipped to take decisions about business matters. All in all, as Aneurin Bevan, oddly enough, said, "Direct labour can be an expensive luxury".

The question before the House and the Government is: what should be done about this situation? Obviously, the inquiry which the Minister has set up is inadequate and it cannot possibly carry the confidence either of the industry or of the public as a whole.

First, it seems to me that there must be some tightening of the rules set out in the circular of 1969 which recommended that direct labour departments would have to obtain work by tendering in competition with contractors for a considerable and representative proportion by value of its work. That has proved to be quite inadequate, because the proportion has never been defined and apparently some building managers have claimed that 10 per cent, is a sufficient proportion to test whether tenders are competitive.

Next, it is important that we take seriously the recommendations of the Chartered Institute of Public Finance and Accountancy. These have been set forth in a paper called "Direct Works Undertakings Accounting". What they aim to do is to provide a minimum acceptable standard. After all, CIPFA is entirely a public sector body. Nobody can accuse it of being in the hands of the contractors. Its members are public servants.

I shall not try to summarise CIPFA's Report, which is fairly detailed, but in our view there are certain points in it that are essential. First, it is vital that competitive tendering should be the normal practice. Secondly, direct labour departments must be separate trading units, with a fair share of overheads allocated to them and accounts which show the ratepayer absolutely clearly the cost and balance sheet of the service. Work should be monitored not only by the district auditor but by independent quantity surveyors.

I repeat that CIPFA, in its Report, provides the basis of what is necessary, but if there is to be an inquiry on top of this, it should go far wider than the present Government working party. It seems wrong that the Minister should have said that there is some doubt about whether this Report will ever be published. He told one of my hon. Friends in answer to a Question on 14th January that he would not decide whether the Report was to be published until after it had been received. It seems to me that that gives the Minister a clear chance to withhold the Report if it is unfavourable to what he believes in. There is a serious issue of confidence in local government here, as well as the right of the construction industry and the ratepayer to receive fair treatment.

It is intolerable that, for example, the £ million contract for the construction of the Sheffield-Rotherham link road has recently been awarded by the South Yorkshire County Council to its direct labour department without any effort at all being made to secure competitive tenders, so that quite clearly the council is running the risk of paying substantially too high a price for this major contract.

It seems to be equally intolerable that, according to the Building Trades Journal of 12th December 1975, in the Wear Valley building firms were reported to be carrying out more than £7½ million worth of new construction work for the district council on houses, bungalows and flats, but suddenly the direct labour department put forward an estimate for one project lower than the tenders obtained from builders. The project was for three houses. On the strength of this estimate, not even on the successful completion of the job, the council indicated that it would tell the Department of the Environment that there was no longer any need to invite tenders for work from private firms. That cannot be a proper way to run a municipal undertaking.

The truth is that direct labour in this form can be an example of the delusions of grandeur that afflict Socialist local authorities in particular, and the GLC is a classic example of this. The committee chairman, Mr. Balfe, is apparently aiming at a huge construction department to take on all sorts of work, no doubt encouraged by the words of the Minister for Housing and Construction. On the whole, the GLC is manic-depressive nowadays rather than purely manic but this GLC Bill reveals only the manic side.

Now I turn to another example of the manic—in the realm of municipal trading: the astonishing West Midlands County Council Bill. Part II of the Bill provides for a fantastic array of powers for any council in the West Midlands, not just the county council. Clauses 5 and 6 include the power to provide and sell from butcheries, bakeries and cook-freeze units. The Bill provides the power to grow and sell horticultural produce. It provides the power for making and supplying house furniture. It provides the power to build anything the councils want. It provides the power to run garages. It provides the power to act as estate and travel agents. It provides the power to sell pharmaceutical and cosmetic products. It provides the power to act as jobbing printers.

Clause 7 is the most alarming of all. It would allow a local authority to carry on inside their area such other commercial activities as are in their opinion in the interests of their area…". I understand that even the leader of the West Midland County Council is beginning to have qualms about that proposed power. The Bill also appears to give the right to local authorities to take over private firms. It also says that local authorities can borrow what they like to implement the Bill without reference to the Secretary of State.

If Part II of the Bill were ever to reach the statute book it would set the most appalling precedent and, as I think most of the House knows, there has been a storm of absolutely justified protest throughout the West Midlands about the Bill.

Mr. Norman Tebbit (Chingford)

On hearing my hon. Friend read that list it occurs to me that the powers that the Bill would give the West Midland County Council are wider than those which the Government are proposing to give the Scottish Assembly in economic matters.

Mr. Raison

My hon. Friend has made a pertinent point. It is interesting that in the West Midlands, as I understand it, several of the district councils themselves are unhappy about the power that it is proposed to thrust upon them. What is equally interesting is that several people in the Labour movement are also unhappy about the Bill. I understand that the Secretary of the Walsall and District and Co-operative Society has written to my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) on the subject of the Bill saying: I am writing on behalf of the Walsall and District Co-operative Society to ask you to oppose Part II of the Private Bill which is being introduced in the House of Commons by West Midlands County Council. I am sure that if my hon. Friend is called in the debate he will expand on that.

At the same time, even the trade union movement is not happy about that Bill. The Birmingham Mail of 6th January, speaking about USDAW, said: The union says it is opposing the Bill because there is no evidence that municipal shops are needed in the West Midlands. It could lead to a monopoly situation and 'might go to the extent of effectively eliminating consumer choice in a particular area'. So much for the claim that the object is to provide better choice for consumers.

The Government must surely recognise and say to the House that that sort of thing has nothing to do with the reasons for local government. Local government exists to provide certain basic services to the community, not to destroy the livelihood of its own ratepayers. Anyway, what confidence can there be in the ability of local government to manage commercial services any more than in its ability to become developers under the Community Land Act?

The only thing that we can be sure of is that if the Bill went through there would be more bureaucracy and more highly paid jobs. No doubt we would see in the West Midlands County Council someone called the Director of Trading Services, probably on about £10,000 to £12,000 a year. No doubt there would be a Chief Officer for Bakeries, probably a £9,000-a-year job. He would be not a mere master baker or master butcher but a dough insertion officer or bread extraction officer—perhaps more appropriately, a dough extraction officer.

We must ask the West Midlands County Council who are to run the garages, the estate agents, the furniture makers, the beauty product sellers and so on. No doubt in some cases it will be those who are bankrupted by the Bill, but in others it will be Buggins who has missed his turn for something else. Ultimately, we shall all end up on the public service payroll, with nice salaries, splendid pensions and agreeable offices. But one day, someone, in a still small voice, will say, "I wonder who is paying for all this".

It is time to ask that question now. This debate gives the Government a chance to call a halt to this ludicrous and damaging spread of bureaucratic Socialism through local government. If they do not, we shall ask the House to show in the Lobby what it thinks of this dangerous nonsense.

7.32 p.m.

The Minister for Housing and Construction (Mr. Reginald Freeson)

I am sorry that the hon. Member for Aylesbury (Mr. Raison) should, as usual, deal with a subject of social ownership, in whatever field—[Laughter.] That reaction underlines the point that I was about to make. It is about time that the Conservatives stopped this rigid, doctrinaire and rather dreary examination of something of considerable importance which should be treated coolly and rationally. We had very little of that from the hon. Member for Aylesbury. It was certainly a good knockabout speech but it did not discuss the issues in the way in which they should be treated.

This issue never fails to raise a sub-rational reaction from Conserative Members. This is shown by the way in which they react. Even their heckling illustrates their knockabout approach to this subject—

Mr. Tebbit

Get on with it.

Mr. Freeson

That illustrates my point. It is difficult to have a constructive discussion on a serious issue—

Mr. Patrick Cormack (Staffordshire, South-West)

Stop being so peevish. Get on with it.

Mr. Freeson

—if we do not have more sensible interjections as well as speeches from the Conservative Party.

I shall be pleased to deal as I go along with such points of merit as the hon. Member for Aylesbury raised about direct labour. Since time is short, I shall leave the Under-Secretary to deal with the municipal trading aspects of what the hon. Gentleman said, and other related matters raised in the debate, and confine myself to questions of direct labour organisation.

Mr. Tebbit rose

Mr. Freeson

May I at least proceed a little before I am further interrupted?

Let me first described the position of direct labour organisations in the construction industry—quietly and objectively, I trust—so that we may know what we are discussing.

Mr. Tebbit rose

Mr. Freeson

It would be far better if the hon. Gentleman were to listen to what is being said just for a few moments.

There are 637 local authority direct labour organisations in Britain. They employ in total over 171,000 workers. In 1974, they undertook about 14 per cent. of the total public sector construction work in this country. Their share of the total construction industry's new housing work was about 3 per cent., of all other new work 2 per cent. and of all repairs and maintenance work 22 per cent. Their share of the value of all construction work in 1974, which are the latest figures I have, throughout the country—

Mr. Teddy Taylor (Glasgow Cathcart)

Which country?

Mr. Freeson

Great Britain. Are we now to have statements from the hon. Member about the economies of separate countries? Throughout the country, which is Great Britain, their share of the value of all construction work in 1974 was just under 8 per cent.

I repeat that this Government want to see the maximum possible expansion of efficient direct labour departments. We want to do so for a number of reasons. Not least among them is our general view that social enterprise, if properly developed, can involve its workers as members, instead of alienating them as so much of industry has done in past generations. Relatively small-scale public enterprises, such as direct works building departments, have a particular scope here, I believe. But there are other more pragmatic reasons for our support for direct labour departments.

There is the very practical consideration that some building operations are by their very nature best carried out by direct labour—for instance, those works that are not readily definable and quantifiable in advance, like maintenance and improvements. Here the most sensible, efficient and economic approach, as private as well as public property owners know, is to have work done by a conscientious work force responsible directly to the owner. This is widespread in private enterprise as well as local authorities.

There are also the inherent virtues of social enterprise—in relation to good employment practices, the use of advanced methods and, especially, nowadays, training.

On the capital works side, another consideration is the benefit to the construction industry as a whole of a competitive, vigorous and efficient publicly-owned sector. The industry consists of various types of organisation in both the private and the public sectors. Individual corporate identity and organisation and competition are important in stimulating efficiency. A vigorous public sector operating under fair and reasonable rules can help to provide this. The efficiency and economy of direct labour organisations should be tested in competition with private contractors.

This has been made clear in the policy circular to which the hon. Member referred and which was issued to local authorities last May. I must correct myself. In fact, he referred to an earlier circular dealing with the same topic. Another was issued last May in which we made it clear to local authorities that the lines laid down in the last Labour Government's policy circular on this issue should be pursued.

Mr. Teddy Taylor

This is a very serious point. How can the Minister give figures for Great Britain, including Scotland, and details of numbers employed and work done when I have a letter from the Minister of State, Scottish Office, dated 6th January, saying that he does not know which authorities have direct labour departments or how many are employed? Where does the Minister get his information about Scotland, in view of the letter in which his right hon. Friend says that he does not know which local authorities have direct labour departments and how many are employed in them, if any?

Mr. Freeson

The hon. Gentleman does not need to repeat the point. I thought that I had made it clear that the figures which I have quoted are for 1974. If he wants to pursue later figures relating to Scotland alone I suggest he takes those queries up with the Minister concerned and not with me.

Mr. Cormack rose

Mr. Freeson

Not straight away. Let me continue. [Laughter.] I hope that the building industry, private enterprise as well as public, takes note of the style in which this debate is being conducted. [HON. MEMBERS: "Hear, hear."] I can tell hon. Members opposite that I have had a much more responsible and serious reaction from representatives of private enterprise in the building industry on this subject than I am getting from hon. Members tonight. If they do not believe me I suggest that they check with representatives of the industry.

The strength of the management of direct labour organisations is of obvious importance in achieving and maintaining that efficiency and economy. It is the Government's policy to help local authorities to achieve the kind of policies and practices which we have referred to in the circular that we issued last and the one issued towards the end of the last Labour Government. Some guidance has been given to local authorities on the financial and management control of direct labour organisations. This was contained in a manual of principles which was commended to local authorities—not by the Tory Government but by the last Labour Government—in 1969.

There is a need—popular or unpopular as it may sound, and underlined by the ignorance and prejudices frequently expressed by the Opposition—for a better appreciation of the way in which direct labour organisations operate. This was why I announced in October that I intended to set up a departmental working party to review the organisation and operation of local authority direct labour organisations. This review will include tendering and accounting procedures, and I am asking the working party to consider the report, to which the hon. Gentleman referred, and which was published last year by the Chartered Institute of Public Finance and Accountancy, on accounting procedures.

The working party's job will be basically a fact-finding exercise. This is why I have limited the membership to departmental officers and local government officers. Arrangements will be made for obtaining evidence from outside bodies, and the private sector of the industry will have the opportunity to draw attention to any matters it wishes to have considered by the working party within its remit. This has been made clear by me personally to representatives of the building industry in discussions I have had with them. The first meeting of the working party is expected to be held next month.

While this is going on, we need to sort out once and for all the muddles caused by the last Government's local government reorganisation, and to provide by general legislation a proper statutory framework for the activities of direct labour organisations.

Mr. Graham Page (Crosby)

As the Minister is now talking about the working party and about local government reorganisation, will he give the right figures? The figures the Minister has given the House cannot possibly be right. Local government was reorganised on 1st April 1974, and there are not now 637 local authorities, so how the 637 direct labour organisations can exist I do not know.

Mr. Freeson

I am talking about the number existing today.

Mr. Graham Page

With respect, the Minister stated just now that he was giving figures for 1974, and the correct number of direct labour organisations is 425, not 637.

Mr. Freeson

My figures related to the volume of work and the number of employees. It will be on the record and can be read in the Official Report. I quoted very accurate and clear figures for the volume of work and number of employees in 1974—the latest available figures.

I want to deal with the position created largely by the Conservative Government. This arises as a result of the Local Government Act 1972. A number of rather foolish anomalies were created, and we are trying to sort them out.

Under the legislation that we are operating as a result of the 1972 Act direct labour organisations may not, in general, carry out new work for another local authority. This was why on local government reorganisation, difficulties arose for some of the direct labour organisations of the former county boroughs. With the transfer of functions to the new counties, the scope for employment of those organisations which became part of the new districts was severely restricted. We therefore made two transitional orders under the Local Government Act. These enable the direct labour organisations of 24 named district authorities to carry out work for their associated county councils within the former county borough area. These orders expire, however, at the end of March 1977.

We intend to introduce substantive legislation to deal with this and related matters as soon as possible. In framing the legislation we shall have regard to the inter relationship between counties and district councils, and we shall ensure that the resources of direct labour organisations can be used to the best advantage. I want to avoid a situation in which the efficiency of these organisations is impeded by a legislative strait jacket of the kind that the last Government introduced, I think unwittingly. Therefore, we shall propose sensible adjustments to their fields of operation in the shorter term.

Mr. Michael Latham (Melton)

Will the Minister explain why he proposes to introduce legislation and has announced a decision to do so in advance of the report of the working party he has set up, which was supposed to be engaged oil a fact-finding exercise?

Mr. Freeson

I have been explaining that this legislation will deal primarily with the anomalies created by the passage of the 1972 Act. The working party will be collecting facts about the internal organisation of direct labour organisations, and will also take into account the report referred to in the discussion.

I have mentioned the shorter term deliberately because the two exercises to which I have referred—the working party and the legislative proposals that we shall introduce—are essentially designed to reinforce and rationalise existing arrangements.

I should like now to turn to what I regard as the major aspect to which we should direct our attention for the longer-term future. The deliberations of the departmental working party will provide a sound basis for the development of future policy towards the rôe of the public sector in the construction industry. There are, of course, difficulties at present in the context of the overall constraints, to which I have referred, under which local authorities are having to operate. But we need to develop now our ideas on the wider issues.

There are a number of ideas—I refer to the speech that I made to the Institute of Municipal Building Managers not long ago—which I shall examine and, I hope, discuss constructively and widely throughout the industry. These include the possible evolution of direct labour departments into more widely based building organisations. The report to which our attention was commended drew attention to this. Also included is the idea of turning them into trading organisations. This idea is not unpopular in certain quarters in local government already. There is scope, too, for co-operative enterprise, and I would not rule out cooperative enterprise on a large scale.

I also want to consider the extension of public enterprise by way of a building agency that could act flexibly, using its own direct labour resources, private contractors and co-operatives in a rational and efficient way.

Mr. Raison

Why has the Minister set up an inquiry into the future of direct labour without any representatives on it of the construction industry?

Mr. Freeson

I wish the hon. Member would listen to this carefully set out explanation of the position. I said that the working party would not be looking at these wider future issues and that its essential job was to collect information about the methods being used in a wide range of direct labour organisations up and down the country, and that it would also take account, fortuitously, of the publication of the report to which reference was made. But the wider and longer-term issues, to which I am now referring, go beyond the scope of the working party, which will be engaged essentially on a fact-finding and fact-relating exercise.

The ideas to which I have referred have not been decided upon, but I am committed to examining the ways by which we can improve the efficiency of the industry, and effectively involve building workers, by hand or by brain, in running that industry.

I should like to have views from all those with a constructive contribution to make. We need to consider these issues realistically and rationally in the light of the characteristics of the construction industry. We need to involve all those who work in the industry in considering how it should develop in the future. This is why I shall welcome views from people on all sides with knowledge and experience of the industry. I am here, of course, speaking in a much wider context, but the future of direct labour organisations will fit into an examination of these alternative and further ideas as to development in the industry related to the public sector. Against this broad background that I have been indicating, each individual proposal coming from local authorities in the meantime must be judged on its merits.

As to the private legislation before Parliament this Session, it is not for me tonight to comment here on the detailed provisions of the Bills. There will, as all hon. Members know, be ample and proper opportunity for the Government to make the required report and the required submission on Private Members' Bills, as is normally the practice. But I will say this. I am not impressed by rabid diatribes from either side in the argument on this matter. In general I sympathise with local authorities which seek to extend their powers in a responsible way for the good of the community. We shall be considering our own attitude to the detailed provisions of these Bills in the light of our own general legislative proposals.

It is in that spirit that I deal with the debate tonight. I hope that from now on we shall seek to avoid the rather prejudiced—

Mr. Raison

Do not be pompous.

Mr. Freeson

That is rich, coming from the hon. Gentleman.

I hope that from now on we shall seek to avoid the kind of prejudiced statements and fun-making debates which do not do the construction industry any good and are certainly no service to responsible and sensible local government action in these matters.

7.50 p.m.

Mr. Reginald Eyre (Birmingham, Hall Green)

In the public discussion in which I took part in Birmingham about the West Midlands County Council Special Powers Bill, to which the Minister referred, there was never any serious attempt to justify the enormously wide extension of municipal trading powers given under the Bill. When the Minister said tonight that he wanted seriously to discuss social ownership for a few moments, I thought that he would be developing some kind of justification—to use his own words, "quietly and objectively" to justify the Bill. However, he made no attempt to deal with the Bill or to justify it in any way. The tremendous Socialist explanation for which we are all waiting is postponed to the last speech in the debate. That had better be a good one.

Mr. A. W. Stallard (St. Pancras, North)

It will be.

Mr. Eyre

Part II of the proposed West Midlands County Council Special Powers Bill, which is to be presented to Parliament tomorrow, contains 13 clauses of ominous purpose which provide for a monstrous and totally unjustified extension of the powers of local government. At a time when shopkeepers, traders, small companiees and locally based businesses of all kinds are struggling for survival and to counter some of the damaging effects of Government policies, their very existence is threatened across the whole range of their business activities by the Bill. I say "across the whole range of business activities" because the breadth of the Bill is gigantic. The only kind of trading activity that is left out of the Bill is shipping, and that was included in the original West Midlands Bill.

Part II of the Bill brings profoundly into question the proper rôle of local government. It was very disappointing that the Minister did not seek to deal with that in any way. Most sensible people believe that local government already has sufficient problems and responsibilities on its hands and that it should concentrate its efforts and talents upon improving the present performance of its duties, and that this would be much to be preferred rather than its undertaking extra trading activities, many of the problems of which its salaried staffs do not begin to comprehend.

The implications of Part II of the Bill are also extremely wide in geographical terms. For example—and this is only one example—power is sought to extend the operation of construction services and the supply of building materials throughout the country on request. There is also power to enter into trading arrangements with other persons or with local authorities anywhere in the country. There is also power for the formation of companies, if desired, further to achieve these purposes. In addition, undoubtedly—I think that the Minister understands the significance of this—other Socialist-controlled councils are regarding the Bill as a pilot scheme upon which they could base their legislative proceedings.

Even worse, we see from the terms of Early-Day Motion No. 137, supported by more than 40 Labour Members, clear evidence of the desire of Left-wing Members to pressurise the Government to introduce general legislation to enable all local authorities to engage in similar activities.

Mr. Ivor Clemitson (Luton, East)

The hon. Gentleman has used the emotive term "Left-wing". Does he agree that the list of the names of hon. Members appearing on that Early-Day Motion shows that they come from all sections of the Labour Party?

Mr. Eyre

The hon. Gentleman is entitled to express his judgment as to where he places his colleagues on the political spectrum.

Mr. Clemitson

I choose not to do so. The hon. Gentleman introduced the matter.

Mr. Eyre

On examination, the motion is clearly entitled to be labelled "Left-wing".

Mr. Clemitson

Absolute nonsense.

Mr. Eyre

If those hon. Members who support that motion had their way, the prospect would be a series of communes across the country, developing along the lines of the Marxist pattern, and it would mean the end of a way of life for those working in small, independent businesses.

In this respect the House should note the opposition of the Union of Shop, Distributive and Allied Workers, expressed in Birmingham earlier this month. I was very glad that my hon. Friend the Member for Aylesbury (Mr. Raison) referred to this very important announcement. The union opposes the Bill because, its spokesman said, There is no evidence that municipal shops are needed in the West Midlands. The spokesman said that the Bill could lead to a monopoly situation and might go to the extent of effectively eliminating consumer choice in a particular area". It was not only that. The union spokesman went on to say that the Bill could lead to unemployment among his 62,000 members. That is very significant in the West Midlands, where the unemployment situation has grown so markedly worse during the last two years. Unemployment there has trebled in that period.

The carefully considered and measured terms in which Walsall and District Cooperative Society has asked Members of Parliament to oppose the Bill should also be noted and very carefully considered by the Minister. I hope that the Minister who is to reply to the debate will deal expressly with these points. I quote from a letter dated 31st December 1975 which was sent to me and to other West Midlands Members by the Secretary and Chief Executive Officer of the Walsall and District Co-operative Society. It says, While the Bill contains assurances that separate accounts will be kept of the results of commercial activities under Part II, the Bill is silent on the question of trading losses. It seems inevitable that these, if any, will fall on ratepayers in general, including Co-operative Societies which are both substantial ratepayers as well as being non-profit voluntary associations founded on self-help. The Secretary goes on to say, You will be aware that local authorities now act as enforcement agents in respect of many laws affecting retailers. In addition, they are planning authorities with wide powers, including compulsory purchase. Soon, under the Community Land Act, they will be able to acquire development land either for their own use or disposal at market values. They may also enter into arrangement with others for such land transactions and will share in the profits arising therefrom. He goes on: In our opinion, no local authority could compete fairly with other traders in view of its special position as described above. Retailing is a fiercely competitive business and consumers can shop where they wish. He concludes by inviting hon. Members to oppose Part II of the Bill.

I emphasise not only the burden which would be put on ratepayers in respect of losses—and the Minister will have to make clear the Government's attitude to the fact that the Bill does not deal with this aspect—but the unfair trading aspect which is in the Bill because the Bill would authorise unlimited borrowing by local authorities, without requiring the consent of the Secretary of State, to be repaid over a term not exceeding 60 years.

Mr. Cormack

Does not my hon. Friend think it regrettable that virtually no Labour Members from the West Midlands are present?

Mr. Eyre

It is certainly desirable that they should have been here so that we could have ascertained their reaction to the letter from the Walsall Co-operative Society.

As I was saying, the Bill would authorise unlimited borrowing, and in view of the implications for public expenditure at present, the Chancellor of the Exchequer would be out of his mind if he agreed to that. Small businesses and traders could not hope to borrow money for business purposes on such favourable terms. Colossal debts for future generations could be built up by improvident borrowing secured on the rate funds of local authorities, and all for the purpose of carrying out these doctrinaire objectives. Every ratepayer in the West Midlands could be forced under these powers to provide funds for unlimited investment in commercial enterprises not of his choosing.

Against the background of nationalised industry losses, this prospect should fill every ratepayer with dread. It is becoming clear from the Bill and the motion that the self-employed and small independent businesses have no place in Socialist philosophy. I believe that Socialists do not care for individuals but only for the system they seek to impose upon individuals. I ask the Minister to say quite clearly to the West Midlands County Council that the Bill is not suitable for treatment within the Private Bill procedure. He should point out that it is far too drastic and political in the nature of its proposals. On behalf of the Government, he should indicate that in no circumstances will official Government support be forthcoming for the Bill.

Finally, I ask the Minister to advise the West Midlands County Council to omit Part II of the Bill as being totally objectionable. Otherwise, he and the promoters of the Bill and hon. Members opposite can be sure of our total opposition to that Part of the Bill.

8.5 p.m.

Mr. Ivor Clemitson (Luton, East)

I was under the apprehension, or perhaps misapprehension, that this was a general debate about municipal trading and local authority enterprise and not specifically about the West Midland County Council's Bill.

The local authorities are under considerable attack and suspicion. Their powers have diminished while their budgets have grown. They are saddled with a system of local taxation which in many ways is unfair and outdated and needs changing. But Opposition Members are only too willing to exploit this unpopularity, and when anyone suggests that we should do something which would increase the initiatives open to local authorities and which, very arguably, would relieve the burden on the ratepayers—on the evidence, would do so—we find opposition to these suggestions which at times borders on the hysterical. For example, Mr. Bernard Levin, who uses the word "mad" with great profligacy, wrote a particularly violent piece in The Times about the Bill.

How times have changed! In 1913, on the eve of the First World War, 80 per cent. of the water, 65 per cent. of the electricity and 40 per cent. of the gas were supplied by local authorities, which also ran 80 per cent. of the tramways. Yet the hon. Member for Aylesbury (Mr. Raison) bemoaned the increasing public expenditure. From the point of view of local authorities, the public sector has been contracting violently in the last 30 or 40 years.

These enterprises in 1913 and before were presided over not by what Mr. Levin described as "Socialist loonies" but by very upright and sober citizens who would not have subscribed to what the hon. Member for Birmingham, Hall Green (Mr. Eyre) called doctrinaire Socialist Marxist philosophies.

Let us come to more recent times. When the electricity undertakings were being nationalised the spokesman of the Conservative Party said: The right hon. Gentleman talked about local authorities. The fact that he is taking over distribution from the local authorities is just one more example of the present Government's policy or whittling down the power of the local authorities."—[Official Report, 3rd February 1947; Vol. 432, c. 1426.] More recently, the Redcliffe-Maud Report said: Local authorities must—and can—be given a real measure of freedom in reaching their own decisions and in settling, within broad national policies, their own priorities. They must be allowed to develop their own methods, to use their own initiative, to experiment. It was a great pity that the Conservative Government, when they made such a botched job of local authority reorganisation, did not take those words to heart.

Surely what we need is the maximum encouragement of local initiative and local enterprise. I do not want to see the kind of all-powerful monolithic, bureaucratic, remote State apparatus that Opposition Members are rightly afraid of, I want to see local initiative, local enterprise and local democracy, not bureaucracy.

We are told that the ratepayers would have an added burden, but it is interesting again to recall the debates, for example, when the gas industry was nationalised. The Tory spokesmen were then bemoaning the way in which efficient and viable local gas undertakings were being taken over. One of them mentioned Wigan, as the hon. Member for Aylesbury has done, and he said that the Wigan gas undertaking was worth no less than £626,638 and bemoaned the fact that the Government were taking it over without adequate compensation. We were told that there would be competition with other traders. At other times hon. Members opposite are the great champions of competition. On the jobs argument, it may well be that municipal enterprise could increase job opportunities rather than reduce them.

The hon. Member for Hall Green was earlier referring to the case for municipal enterprise, and I should like to quote at some length again from the debate on the Gas Bill, to show how Conservative Members have made a complete volte-face on this point. A Member of what was then the Opposition Front Bench said: The next point is that the Bill undoubtedly removes a great portion of public control. It follows the familiar anti-democratic method to which we are accustomed in Government's schemes. The third of the industry"— that is the gas industry— which is at present in public ownership, is in democratic public ownership. It is under elected representatives. It is under representatives in the choice of whom the people have had a say. Under these conditions, the ordinary, small individual"— about whom the hon. Member was so rightly concerned— has often learned great business and come into contact with the management of great affairs and great industrial undertakings. The gas committee, the water committee, the electricity committee—these, as the hon. Member for Bridgton (Mr. Carmichael) and other hon. Members will know, were their apprenticeships, the schools in which great affairs have been brought to the knowledge of simple folk who otherwise would never have had control of enterprise with millions of pounds of capital and many scores of thousands of employees." —[Official Report, 11th February 1948; Vol. 447, c. 392.] That is the case for local authority enterprise. It was made 30 years ago by a Member of the party opposite.

The one thing which is mad about the West Midlands County Council Bill and the Greater London Bill is the fact that the local authorities concerned have had to go to the great expense and trouble of introducing those Bills. I urge the Government to introduce, as a matter of urgency, a general enabling Bill to enable all local authorities to engage in commercial and trading activities and save them that expense.

8.14 p.m.

Mr. Arthur Jones (Daventry)

I wish to direct what I have to say to the question of direct labour departments in local authorities. This is a very important part of our debate. The Minister spent a long time on it, and I shall devote my attention to it because the other issue which is before us, that of municipal trading, has been dealt with adequately by my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre), who was able to call in aid institutions which usually support hon. Members opposite, and clearly, there is a great cleavage of opinion within the Socialist Party on the question of municipal trading.

On the subject of building departments in local authorities, there are important economic and political questions which are inescapable if proper regard is to be paid to the important issues involved. The Minister made no issue of the maladministration which he knows exists in direct labour departments. Specific examples were quoted by my hon. Friend the Member for Aylesbury (Mr. Raison), and the hon. Gentleman knows them to be true. He knows that the very unfortunate practices to which my hon. Friend referred are widespread. He said nothing to deny the existence of something of which he and the Government disapprove. He made no suggestion that he was taking steps to ensure that these malpractices were corrected or that there would be any requirement to monitor performance within local authority direct labour departments.

The necessity is clearly for separate accountancy for each contract of any size and the independent auditing of accounts relating to direct labour departments. That is my essential criticism of the hon. Gentleman's approach to the whole question of direct labour. I agree that it has an acceptable part to play in local government administration. There are emergency repairs of various sorts which require urgent attention. To hold labour for this purpose must involve other work if continued employment within a direct labour department is to be maintained. I do not deny the validity of that assertion.

Clearly, there is a wide divergence of performance in regard to costing. Concern in this respect led to the preparation of a Report, "Direct works undertakings accounting", published in June of last year by the Chartered Institute of Public Finance and Accountancy. It produced a competent analytical report with practices recommended to ensure effective use of men and materials and a proper accounting for the expenditure of public resources. I take two quotations, the first on page 39, paragraph 2.2: The only reason for the continued existence of a direct works undertaking is its ability to provide a service at least as effective and economical as its competitors. The Minister was well aware of that comment, but he made no attempt to criticise the malpractices which are widespread in direct labour departments throughout local government.

Paragraph 2.3 of the Report says: The style of final accounts of the direct works undertaking must be like that of commercial undertakings rather than the other executive departments of a local authority. It must be capable of use in testing whether or not the direct works undertaking is able to produce a service at no more overall cost than alternative competitive organisations. When will the hon. Gentleman take that line of approach to this material question? All he has referred to are, to use his own words, "flexibly" and "rationally". He has made no comment about the necessity for the proper conduct of direct works departments in local government.

Mr. Freeson

I hope I made clear, as I did publicly, that the Report to which the hon. Gentleman has referred has been noted by the Department and will be studied carefully. May I ask the hon. Gentleman, in return for that assurance, for which I presume he was asking, that he will point out where in that Report the word "malpractice" is used, or else please desist from using it as he has done?

Mr. Jones

The word "malpractices" is my own. My hon. Friend the Member for Aylesbury referred to the issues about which I say there are malpractices. This Report was concerned with the effective monitoring within direct labour departments.

There should be proper commercial accounting procedures with allowances made for rent and rates of accommodation occupied, interest on working capital and borrowed money, allowance for all overheads with proper stock valuations and costings on a current account basis. Performance must be tested against contractors in the private sector. This can be done in a variety of ways, the principal method being by way of a tender on a competitive basis between the direct works department as a nominated contractor and private sector contractors.

In a direct works department, regard must be had to the necessity for mobility of labour which is characteristic in the industry, and one suspects that management is often concerned with the maintenance of its existing labour force rather than the hiring and firing which is characteristic of the building and contracting industry.

I quote again from the CIPFA Report, this time from page 41, paragraph 4.4—

Mr. Gordon A. T. Bagier (Sunderland, South)


Mr. Jones

I hope that the hon. Gentleman will not ask me to give way. Time is very short. This is what is said in paragraph 4.4: Implicit in these criteria is the view that the building department should be treated as a trading undertaking. Such treatment is considered to be justified since it should:—

  1. (i) make performance explicit within the accounts;
  2. (ii) allow more valid comparisons of performance;
  3. (iii) provide both an encouragement to and a discipline within the department by abandoning the charging of actual cost".
There must be a positive determination in local government to direct a labour force to those objectives essential for our economic and social welfare. The present policies of many Socialists in local government are clearly directed towards political objectives, and I accuse the Minister of being biased in that respect. The powers which are sought in, for example, the Private Bill prepared by the West Midlands County Council for the extension of municipal trading are in furtherance not of economic progress but of moves towards the implementation of State Socialism.

If the expansion of direct labour departments and the extension of municipal trading are pursued, except on the basis of sound business practice and carefully monitored financial performance, it can only be at the expanse of the ratepayer and taxpayer. I share the doubts and fears which have been expressed from this side of the House.

Mr. Deputy Speaker (Sir Myer Galpern)

I ought to acquaint the House that the winding-up speeches are due to begin in an hour from now, which leaves but one hour precisely for the 10 hon. Members still anxious to take part. According to my arithmetic, that is six minutes each. Perhaps it will interest the House to know that the hon. Member for Daventry (Mr. Jones) took about six minutes, and made quite a considerable contribution. I hope that that will be a precedent for other hon. Members.

8.22 p.m.

Mr. R. E. Bean (Rochester and Chatham)

It seems that whenever we discuss municipal trading or direct labour the subject generates more heat than light, as we have just witnessed. I am glad that the Minister showed the scope of direct labour organisations, since we constantly hear it said that they represent a large section of the construction industry, whereas the truth is that their actual output is very small. We want to see it increase.

The hon. Member for Aylesbury (Mr. Raison) detailed a long list of failures, but he did not mention the successes. I take him up at once on one important point. He said that when private enterprise fails, when a contractor goes bankrupt or is in trouble, this happens at no cost to the ratepayer. That is not true. It means that a contract is delayed, or that the local authority has to put money into the company to keep it going. The Greater London Council's returns for 1975–76 show that it was forced to put some £2 million to £3 million into private enterprise in the form of ex gratin payments in order to get contracts completed. Moreover, in the current year, 1976, the GLC is having to allow for about £4 million in anticipation of failure in the private enterprise sector. Plainly, therefore, it is not all one way.

Examining the situation from the point of view of successful direct labour organisations, on the other hand, we see a different picture. In Manchester, probably the best example of direct contract work in the country, the productivity of the direct labour force is one-third higher than the national average. We hear no mention of that. In the maintenance sector of the GLC, also a pioneering organisation in its methods of finance and cost control, there is a saving—this is an audited figure—of about £8 million a year in maintenance costs to the ratepayer. In the past year alone the GLC has had visitors from EEC countries and from America to study its methods and working. But we do not hear about that, either. All we hear about is dismal failure.

There has been reference to the report prepared by the Chartered Institute of Public Finance and Accounting, and it is suggested that the direct labour organisations fear this report. The contrary is true. The managers of direct labour organisations, who are represented by the Institute of Municipal Managers, welcome the report. They want it enacted. They want the freedoms which are given to ordinary private concerns. All they ask is that they be allowed to compete with private enterprise on proper terms. They will then be able to show how successful they can be.

In increasing the scope of direct labour we should not confine it strictly to the local government area. The hon. Member for Daventry (Mr. Jones) said that work is often created to keep men employed. Having spent many years in the building industry I assure him that the one thing we want is stability, a guarantee that work will be there next year. In such circumstances, a local government direct labour organisation may have to fabricate work to keep its lads in employment, but if it could look for work outside its area it would not have to use those forms of manipulation. It could then balance its books in the proper sense.

The GLC is asking that its direct labour organisation be given power to compete with private enterprise on the same terms. This should not frighten private enterprise firms. On the contrary, they should welcome it. The controversial Clause 6 in the GLC Bill makes two proposals. First, it would enable local authorities to do contract work as opposed to repair work for other authorities. This could be of particular interest to housing associations, which at present can ask only private enterprise firms to do their work. Second, it would enable public authorities to do work for the private sector. There is no attempt to take over private enterprise work. The purpose is to enable the GLC to perform its full social functions in housing action areas.

The truth is that a great deal of heat has been generated over something which is essential. If our effective direct labour organisations are allowed to compete on proper competitive lines there can be only one result. They will force private enterprise to improve its public image, to improve its standard of workmanship and to improve its reliability in terms of time and cost. In my view, that could do only good.

8.26 p.m.

Mr. Nigel Lawson (Blaby)

In view of the time and your stern injunction, Mr. Deputy Speaker, I shall not take up in detail the argument advanced by the hon. Member for Rochester and Chatham (Mr. Bean), but I will follow him in referring to the Greater London Council.

Apart from the intoxicating extravagance of the West Midlands County Council Bill, the subject we are discussing—municipal trading and direct labour work—is largely work ancillary to housing. In trying to judge the matter objectively and dispassionately, as hon. Members on both sides wish to do, I am sure, it is useful to judge the spirit in which local authorities generally, and the GLC in particular, look at their housing responsibilities.

I am indebted here to a curious document for an insight into that very matter, and it illustrates the point to which I now address myself. Apparently, the GLC is planning to engage in a new piece of municipal trading, the launching of a magazine called You and Your Home. That magazine is to be launched in September this year, and it will be delivered free by GLC employees into the letter boxes of all its 220,000 council tenants.

Commendably, it is the Greater London Council's intention that the magazine should pay its way. Therefore, it is seeking revenue from advertising. It is beginning to circulate a small glossy sheet to all potential advertisers to try to persuade them to advertise in You and Your Home. It is interesting to see the sort of copy that it employs. It points out that GLC tenants have a weekly disposable income … in excess of £8 million. It continues: The typical 'You and Your Home' family enjoys a reasonable income. The husband's basic take-home pay of £48 per week is supplemented by a second income in 40 per cent. of households. Later it reads: The average weekly rent is £5.50 plus £2 for rates leaving a large fraction of the weekly wage as disposable income. Later in the same paragraph it reads: Two-thirds of families own a motor car. The next paragraph explains: GLC tenants are encouraged to decorate their own homes with cash help from the Council—around £25 per room, and up to £40 for a hall and staircase. 'You and Your Home' will tell readers how to claim this help and follow up with pages of practical advice. The magazine then promises sections dealing with the purchase of furnishings, heating systems and all domestic appliances. It is not surprising that it refers to the image of the council tenant. It reads: The image of the council tenant has changed radically in recent years. Average tenants are no longer the poor … Not at all. We are told that families can decorate as they wish. It explains that they receive considerable financial help from the GLC— central heating, double glazing, a new bathroom suite—these can be installed at the discretion of the tenant and the GLC will repay part of the cost should they move. Then comes the clincher: A comparatively low rent makes expenditure on all three projects a realistic proposition and, in fact, leaves a good deal over for furnishings, floor coverings and domestic appliances of all kinds. In other words, the GLC is saying "We keep our rents so low that our tenants have plenty of money to spend on deep-pile carpets, colour televisions and all the other luxuries." That is why advertisers are urged to advertise in You and Your Home.

But who is to pay for all the luxury appliances which the advertisers will be encouraged to advertise to council tenants whose rents are so low that they can afford them? They will be paid for by the ratepayers and taxpayers. On official GLC figures for 1976–77, the next financial year, the year in which You and Your Home is to be launched, it is officially estimated that rents will not even cover maintenance and management costs. The figures disclose that net rents will cover only 30 per cent. of housing costs and that the remaining 70 per cent. will have to come from the ratepayer, and particularly the taxpayer. The subsidy for these council tenants from the general taxpayer will be approximately £120 million. About £60 million will come from the ratepayer. In each case that is six times as much as in 1973–74, a mere three years ago.

These subsidies from the taxpayer and ratepayer are to enable council tenants to buy luxury bathroom fittings, colour televisions and the other pieces of equipment which advertisers are being asked to advertise in this new magazine. This is why we need to pause before allowing any extension of municipal trading. It is totally and abundantly clear that municipal trading is a licence to plunder the taxpayer and ratepayer—and to no social purpose.

8.32 p.m.

Mr. John Cartwright (Woolwich, East)

I hope that the hon. Member for Blaby (Mr. Lawson) will forgive me if I do not follow him through the glossy catalogue of home improvements which he has recited.

I want to balance some of the horror stories about direct labour organisations that we have heard from Conservative Members by setting out my own experiences. The hon. Member for Aylesbury (Mr. Raison) could not find very much of a kindly nature to say about direct labour organisations. The kindest thing he could find to say was that their record was patchy. He could not bring himself to admit that there were any successful direct labour organisations operating. My experience relates to the direct labour organisation in the borough of Greenwich, the borough which I had the honour to lead for three years before coming to this House. That organisation was not a product of the revolutionary Marxist fervour which we have heard about from Conservative Members. Indeed, if I were plotting the violent overthrow of society as we know it, I do not think that I would use local government as the vehicle for such an exercise.

The direct labour organisation in my borough dates back to 1928 when the Metropolitan Borough of Woolwich established a direct labour maintenance organisation. It did so when it discovered, as many other local authorities have since, that it was expensive and wasteful to undertake private maintenance of council estates.

In 1936 the organisation undertook new building, and in the 40 years that have ensued the value of its production of homes runs into hundreds of millions of pounds. At 9 o'clock this morning it had a labour force of 1,049 operatives. It is responsible for the maintenance of 25,000 council houses and flats and 200 public buildings. Its current modernisation and improvement programme is between 400 and 500 units a year. On capital and new building schemes it is responsible at present for nine building sites representing 1,610 new homes. The value of that programme is £20 million. During the current year, the value of the direct labour building force's output on maintenance will be over £2½ million, on minor works over £2 million, and on new buildings over £5 million. That makes a total output this year of almost £10 million.

It is right to point out, in view of what we have heard from Conservative Members, that Greenwich wins its contracts, as do many other direct labour organisations, in open competition with private enterprise—when, that is, it can obtain competition from private enterprise. Many of us remember that in the building boom of 1972 and 1973 we could not get any private enterprise firms to tender for the building of council houses. In that situation if we had not gone to direct labour we would not have had a housing programme.

The Woolwich Dockyard scheme was a typical example. It involved the building of about 400 homes, a community centre and social and recreational facilities at a capital cost in 1973 of £6.5 million. We advertised that contract widely throughout Great Britain. Indeed, we even had to advertise it in EEC countries to see whether they were interested. We had no response. Then, cap in hand, we went to 12 major building companies in this country and said, "Please tender for this job". But they were not interested. Those thrusting terriers of private enterprise were gathering the shekels from building office blocks, hotels, shopping precincts and other lush building projects. Therefore, we had to approach our direct labour organisation, which was already overstretched at that time, and we obtained a tender from it. That tender was approved the first time round by the Department of the Environment, then adminstered by the Conservative Government. That scheme is 35 per cent. complete and well on time.

The acid test for our direct labour organisation was the attitude of the Conservative members on the Greenwich Council. They learned to live with the organisation, if not to love it. They controlled the council for three years and, although they indulged in some ideological nibbling, they did not attack the organisation directly. They have judged its work on its efficiency and have been happy that it should continue. Is that not the attitude we should all adopt?

The hon. Member for Aylesbury spent a good deal of time poking fun and pointing to mistakes made by direct labour organisations. The hon. Member for Daventry (Mr. Jones) made a blanket condemnation when he spoke of malpractice by such organisations. However, he did not specify any.

The hon. Member for Aylesbury said that in the outcome it was the ratepayer who had to pick up the bill. He even said that while direct labour organisations adjusted tenders after they got the job, that was unheard of with private enterprise tendering. I recall occasions two or three years ago when it was a joke trying to find a private enterprise building firm to tender on a fixed price basis. They would not undertake such work unless there were sufficient escape clauses to get them off the hook. Many of us have had experience of arithmetical errors in private enterprise tenders, of intolerable delays in private enterprise contracts, and even of firms going bankrupt half way through the job. All this added to the costs and, as my hon. Friend the Member for Rochester and Chatham (Mr. Bean) pointed out, in these cases it was the ratepayer who picked up the check.

Surely the most unfair comment of all on direct labour that we have heard tonight relates to their management. Among the managers of which I have experience I do not recognise the time-servers on large salaries in plush offices—as pictured by some Conservative Members this evening. Nor do I recognise a political dedication to the overthrow of private enterprise building on the part of building managers in direct labour organisations.

The District Auditors' Society had something very clear and impartial to say about this. It said: Given viability and efficient cost-conscious management working with the discipline of having to compete with contractors, then the benefits of a works department to the council, its ratepayers and its tenants can be very successful. I endorse that. What we ought to do is to leave the management of direct labour building forces to the managers who believe that they can do a worthwhile job for their ratepayers. We should leave them to get on with that job and not subject them to the sort of neurotic political sniping that we have heard tonight.

8.40 p.m.

Mr. Michael Latham (Melton)

I declare an interest in that I am a director of Lovell Homes Ltd., which is a subsidiary of Y. J. Lovell Ltd., a large contracting company.

We know that this subject of direct labour arouses strong feelings among many people. We have heard that tonight. I am sorry to say that the Secretary of State holds fairly strong ideological views on the matter. For example, at an election meeting in Leicester on 19th November 1974 he not only said that he was a passionate believer in council direct labour departments", but went on to add that he would also like to see competition not only from the local direct labour departments but also from a major publicly-owned national firm competing with the Wimpeys and so on. Fortunately even this Government's tendency to throw away public money has not led them into the folly of nationalising individual building companies, which would require hybrid legislation, or setting up their own State company from scratch. The Treasury would never allow such a futile gesture. It would only make sense from the Socialist point of view if the State-owned company were to be awarded all its contracts without competition or irrespective of whether it had submitted the lowest tender. Even if the Treasury were to be browbeaten into accepting such a potentially corrupt and scandalous arrangement, the Public Accounts Committee would undoubtedly have something to say about it. That fantasy of the Secretary of State has been abandoned. I hope that the electors of Leicester were not too badly taken in by it.

There is also the attitude of the Minister for Housing and Construction. The hon. Gentleman knows, although he did not mention it tonight, that the work load in the construction industry at present is appalling. It fell sharply in 1974 and 1975 and we have the Economic Development Council for Building reporting that there will be another fall this year and perhaps another in 1977, including, incidentally, a predicted decline in council housing output about which I have warned on previous occasions, usually to scoffing from the Secretary of State. The builders' federation recently produced yet another gloomy report on the state of trade. The Minister's reaction to this is to set up a working party designed "to develop"—his very word—"direct labour" and thus add to the problems of the industry he is supposed to be sponsoring.

It is not without significance that the working party has deliberately been made up of people with an interest in maintaining or expanding direct labour departments, people such as civil servants or local authority officials. Attempts by me, my hon. Friend the Member for Aylesbury (Mr. Raison) and others suggesting that not only contractors but also members of the District Auditor's Society with all their experience of exposing scandalous over-spending by direct labour should be represented on the working party have been met by evasions or blank refusals. Clearly, the purpose of this working party is to tell the Minister what he wants to hear, namely, that direct labour should be expanded and developed as quickly as possible.

Let me suggest a more constructive rôle for the Minister. He could try to carry out the policy of the 1966–70 Labour Government, or rather that part of it set by Lord Greenwood of Rossendale when he was Minister for Housing and Local Government. It was Lord Greenwood who got rid of the deplorable Circular 50/65 produced by Richard Crossman and who advised direct labour to compete for work "as a general practice". Lord Greenwood also specifically drew the attention of local authorities to the report of the previous working party which had produced the Manual of Principles and which had followed a critical report by the District Auditors' Society in 1967 after the scandals at Salford and elsewhere. That manual, which Lord Greenwood suggested to local authorities should be followed, would among other things have required the chief finance officer to keep records which would allow him to report savings or losses on each direct labour scheme and the overall savings or losses by the department during the year.

What can be more reasonable than that? Yet how many local authorities have produced such reports since the manual was published in 1969? If they have produced such wonderful reports, why have we not heard more about them in the period which has elapsed? Lord Greenwood's policy was quite right. It was practical and non-ideological. It endorsed a sensible report and said that local authorities should follow its recommendations.

Now we have the even more valuable Report by CIPFA which sets out specific practical recommendations. Rather than fiddling about with more working parties in the Ministry—they are not needed: there have been enough already—the Minister should send a circular to local authorities telling them to implement the CIPFA Report, not only in the letter but in the spirit, and saying that he will not grant loan sanction to any direct labour project which does not meet its requrements. It is a practical non-ideological report by non-partisan public officials.

On 24th June the Sunderland Echo reported that the latest estimate for the cost of the town's new sports centre was nearly double the original estimate and that the job was 13 months behind schedule. It is being carried out by the direct labour department. On 10th July the Evening Despatch

Mr. Eric S. Heffer (Liverpool, Walton)


Mr. Bagier rose

Mr. Latham

I shall not give way to the hon. Member for Liverpool, Walton (Mr. Heffer). I shall give way to the hon. Member for Sunderland, South (Mr. Bagier).

Mr. Bagier

Does the hon. Gentleman agree that the difficulties of building the sports centre were partly to do with the supply of materials? Also, will he explain why the right hon. Member for Crosby (Mr. Page), when he was a Minister responsible for local government, specifically debarred local authorities with direct works departments from tendering for houses for sale in Sunderland, stopping them halfway through a contract? Will he not also—

Mr. Deputy Speaker

Order. The intervention has been long enough.

Mr. Bagier

May I quickly ask the hon. Member whether he agrees that profits made by the local authority have been exceptionally good?

Mr. Latham

The Sunderland direct labour department went into a contract knowing the conditions about materials and the specifications, just like any other contractor. If it could not get it right and ended 13 months behind schedule, that is a good reason why it should not have been awarded the contract in the first place. If a contractor had gone wrong, the penalty clauses would have been enforced against him. It is no good the hon. Member for Liverpool, Walton shouting. That is the truth of the matter and he knows it. Let us get on and implement the CIPFA Report.

8.48 p.m.

Mr. Joseph Dean (Leeds, West)

It is interesting to listen to a debate on the merits and demerits of direct labour. When I was in local government I was chairman of possibly one of the most successful large direct labour organisations in the country—the one in Manchester. I do not proclaim that everything is right with direct labour. A bad direct labour organisation is a bad advertisement for that type of building organisation. I have always professed that it must be measured by its financial as well as its social success. Naturally, the hon. Member for Aylesbury (Mr. Raison) dwelt only on its failures.

The hon. Member for Melton (Mr. Latham) mentioned the question of the Salford direct labour department and what happened there about a decade ago. He did not mention that next to Salford was a direct works organisation, four or five times as large, which was operating extremely successfully. It would be well if I were to recount that success. It was all done in competition.

In 1959 we decided to form in Manchester a comprehensive direct labour department from some of the splinter departments which already existed. The success of that department is shown by the fact that it has built in competition 17,000 houses of various types, including high-rise flats, so that Manchester is in sight of the end of its building programme. Nobody else in the area could have built the houses. Perhaps it was 30 to 40 per cent. of its building programme. If the direct labour organisation had not been operating, Manchester would have had a shortfall of 15,000 houses or more.

During that time it also built 50 schools, almost breaking the back of its slum school problem. Quite a lot of work, which was secured for the department in competition with the private sector, was sanctioned by a Conservative Secretary of State.

The only time the matter became political was when the Labour Party lost control in 1967 and the Conservatives were looking for niggers in the woodpile. They were trying to discover something, and there was a full and comprehensive examination of the direct works department by no less a person than Mr. Harry Page, now Sir Harry, an adviser to the National Savings Movement and other reputable national organisations. After a long and intensive examination of the accounts, he expressed the opinion that the direct labour organisation in Manchester was of immense value to the city and had saved the ratepayers great sums of money. Apart from showing realistic savings on contracts compared with the lowest private sector tender, it had kept down the level of other tenders.

I could give other examples of success stories across the board. One concerns an electric wiring scheme. To test the water in this direction, we asked the Electrical Suppliers Association to nominate a contractor to carry out a scheme at the same time as the direct works department, based on the same bills of quantity and the same number of houses, on an almost identical estate. The department showed savings of 33 per cent. or more. Are the Opposition saying that we should abandon such departments? I do not believe that we should.

The hon. Member for Daventry (Mr. Jones) talked about social responsibility. I am not sure what his context was. Can any Conservative Member tell me who in the private sector is accepting social responsibility today by enrolling apprentices in sufficient numbers? I do not know of any firms that are, though the apprentices are the industry's seed corn of the future. The city which with I used to be associated, and of which I have spoken at some length, has more than 4,000 employees, of whom 500 are apprentices. When they end their apprenticeships most will probably go into the private building sector and serve it very well, as they will have had a comprehensive education in the building industry.

Mr. Tebbit

The hon. Gentleman asked a question about apprentices, and I can give him the answer. In 1974, 36,519 apprentices were registered with the National Joint Council. Only 8,981 of them were employed by local authorities, according to Housing and Construction Statistics, No. 14.

Mr. Dean

I am not disputing the figures, but I do not think that the hon. Gentleman's comparisons are fair. The number of employees in the private sector is far bigger. Can the hon. Gentleman tell me of any major building company that will employ 500 apprentices in a construction department employing 4,000 workers? I know that building firms are not employing apprentices. Some time ago representatives of the Federation of Civil Engineering Contractors expressed alarm to me because they could not take on apprentices owing to the cutback in building and construction programmes.

It would be remiss of me not also to mention the employment of disabled people. Are any of the wonderful building organisations in the private sector honouring their commitment to employ a percentage of disabled people? They are not. But the department about which I have spoken has a social conscience and is employing more than the required percentage. This debate illustrates the differences of philosophy and thinking between the two sides of the House.

I have referred to the attack which took place in Manchester. When the city treasurer's report indicated that the department had been successful, the sordidness of the political attack by members on the other side had to be seen to be believed. They could not find anything wrong, so they moved a resolution that the direct labour department should be allowed only to construct houses and maintain houses and other corporation buildings. They wanted to take the department out of the school building programme where it had been showing savings of 5 per cent. to 10 per cent. on the lowest tenders from the private sector. If this were not a criminal attack within the law on ratepayers' money, I do not know what would be. Some of the people on the other side of the political spectrum were delving in murky waters and we resisted their resolutions. The department is flourishing as strongly as ever.

Of course, there are bad direct labour organisations which need to be organised properly. There are just as many bad private builders who need to be organised better, but the suggestion propounded by the Opposition tonight that ratepayers do not pick up the bill if a private firm fails is nonsense. In Manchester, a contractor went bust and before we could get a man on to the site to take over the contract, we had to spend £40,000 shifting rubbish.

We should have a more balanced approach to this subject. Let us take it out of politics and give encouragement where it is deserved. Direct labour departments have to stand on their success.

8.57 p.m.

Mr. Stephen Ross (Isle of Wight)

I agree entirely with the last few words of the hon. Member for Leeds, West (Mr. Dean). The argument about direct labour in local authorities is stale. There are good as well as bad direct labour departments. We have to root out the bad ones.

I am opposed to the far-reaching powers sought by the West Midlands County Council in its Private Bill and I also have grave doubts about the Greater London Council's Bill which seeks additional powers to bid for work in the private building market. It is inevitable that that will lead to abuses, and it is unfortunate that it comes at a time when the building industry is suffering from unemployment and many other difficulties.

However, I do not want to put the clock back and to bar all local government building work. There is a good case for authorities maintaining a direct labour department, especially for highways, building, and maintenance. They must be properly controlled. There may even be a case for extension. This is a possibility that we might look at in a regional context and perhaps it will be dealt with in the White Pacer. In cases of emergency first aid and disasters—for instance, in the recent gales and floods—local authority direct labour departments could get in fast with first aid work.

My own county council is obliged to go out to tender where labour costs exceed £20,000—except where the full council decides not to do so, and that would be only in the case of threatened redundancies in its own department. I am satisfied that everything done by that authority—I was a member of it for seven years—is in accord with the CIPFA recommendations. I will not go into them now, but they are important.

Local authorities—my local authority is one—can be faced with near monopolistic situations when going out to tender for bigger schemes. That is another reason why it is important to maintain direct labour departments. There is such a situation in the Isle of Wight where there are few big contractors.

The former county architect was opposed to the setting up of a direct labour department at one time—it now has over 40 employees—but he became fully convinced that it was a good thing after it had been in operation for a number of years. If it had not been in existence in 1972–73, we would have been in terrible trouble. It was almost impossible to get tenders even for small jobs. I vividly recall one case in my village which concerned a disabled lady who required some small fittings put in her bathroom—hand rails, and so on. We eventually got some cowboy to do the job for £2,500. The workmanship was so shoddy that we had to do the job all over again. That cost the ratepayers a pretty penny. There was a terrible waste of public money at this time. There is a sensible middle path. In a well-run economy, which we must hope finally to get, such violent fluctuations as occurred in those years should not occur.

Why councils should want to enter the whole gambit of retail trading is beyond me. I suggest that they do not have the necessary entrepreneurial flair. Who will work on Saturday mornings and afternoons? Will they work a five-day week? From where will the managers come to run the enterprises? The nationalised industries already are reputedly short of managers. From where will local government get them?

Before coming to this House I was involved in estate agency. I am a chartered surveyor. Estate agency, understandably, is a favourite whipping boy of hon. Gentlemen opposite when it comes to local authorities moving into this area. Some authorities have already played a small part in it. Southampton was involved in the early 1970s, but it soon stopped. It had a multiple listing scheme. However, it did not have a happy experience.

Certainly a great deal needs to be done by estate agents to put their house in order. We have seen examples, because they have had a bad Press. The whole business of buying and selling is unsatisfactory. I have said so many times from this Bench. It is costly and complicated. However, it would be a great deal worse if it were municipalised. It is up to the profession to put its own house in order. I would welcome further legislation on the question of registration. The estate agents' council was established at one time, but it has since folded up.

The West Midlands County Council Bill comes at an unfortunate time. There are now welcome signs of new faces coming into the secondary shopping units. On Saturday I was eating fresh baked bread from a new bakery which has opened in a local village. People are beginning to come back into arts and crafts. They are manufacturing glass, furniture, and so on. I consider the proposed West Midlands County Council Bill to be a gross waste of the ratepayers' money. I do not know what it has cost the authority, but I suspect it is about £10,000. If there is a call to extend the powers of local authorities in this area, it should be implemented in a Government Bill. I certainly look forward to the Minister's remarks on the West Midlands County Council Bill, because I want to know the Government's position. If it is not made clear, I shall advise my right hon. and hon. Friends to join the Opposition if they decide to divide the House.

9.4 p.m.

Mr. George Park (Coventry, North-East)

I should like to join my hon. Friend the Member for Leeds, West (Mr. Dean) in his appeal for a more balanced approach to matters affecting local government. Regrettably, on each occasion when any aspect of local government is discussed in this House, prejudiced views colour the comments of right hon. and hon. Gentlemen of the Opposition.

There can be no doubt that this is because some of their opinions are based on prejudice and are not the result of a serious examination of the various matters that come under the head of this debate. Conservative Members reserve to themselves the right to criticise local government in connection with rates. Taken to the extreme, there is the commitment that rates will be done away with when the Layfield Committee reports. It is a fair bet that, whatever Layfield says, rates will remain a major element of local authority financing.

Particular fun has been had tonight at the expense of the West Midlands County Council. One would think that this proposition by the county council was the result of a capricious whim, but the fact is that, fundamentally, this measure springs from local government reorganisation on 1st April 1974. There were many local Acts applying in the west Midlands prior to that date, but when local government boundaries were reorganised those local Acts applied only to the old areas. In 1979 all the local legislation in the west Midlands area will lapse. At minimum there has to be a consolidation exercise.

Local government cannot win when it tries to put a proposition to Parliament. If it brings in single items to be enacted by legislation, and even if there is general agreement on them, the local authority is asked why it brings in things in penny numbers, and it is told to bring in a number of things together and Parliament will deal with them in one measure. When a local authority puts forward a Bill that contains, admittedly, disparate elements, people choose to make fun of it.

In this case the West Midlands County Council is acting as a co-ordinator. In large part, the content of the Bill has been put forward by the district councils which go to make up the county council area. Rather than a summary dismissal of the Bill, which is what we have had from Tory Members, I appeal for an opportunity to be found for these district councils to come to deploy their case and give chapter and verse for wishing to pursue certain activities. I do not ask the Opposition to accept the whole measure off the cuff, as it were. I ask that the district councils be given a chance to put their case.

Mr. Eyre

I hope the hon. Gentleman is aware that three of the district councils have voted against the adoption of these powers.

Mr. Park

By that comment the hon. Gentleman illustrates the non-attention to what goes to make up this proposition. It is true that there are elements in it that are not related. Motor racing applies only to Birmingham. The Birmingham District Council is the only authority talking about this matter. None of the others has mentioned it.

Dogs are another subject of debate. Many letters have been written about the trouble caused by dogs, and on three successive evenings the Coventry evening papers reported incidents. Dogs were running wild at a playground and dragging children across it. People were totally unable to control these animals. Old people are frightened to go outside their homes because of the dogs. The opposition comes not from the owners, or nominal owners, of these vagrant dogs but from responsible people who care for animals. We get protests from the wrong section of the community. If all the local legislation is to lapse in 1979 it is no good people saying that existing legislation will deal with the problem.

As I understand it, there is no intention on the part of the county council to operate in direct competition with privately-owned businesses, but only where private enterprise has been unwilling or unable to provide for a clearly-seen need. Probably the most outstanding example is chemists' shops. On many housing estates in the West Midlands there are no altogether satisfactory chemists' shops and people have to travel long distances for them. Whether it is private enterprise or the Co-op, they are unable or unwilling to provide these facilities. Local authorities should have the opportunity to fill such gaps.

The county council is drawing together the threads of the desires of other district councils, but it is not true to suggest that a whole host of new provisions is suggested. These are mainly extensions of existing powers. How can anyone ask the West Midlands County Council to be the arbiter, given the delicate relationships which have applied since local government reorganisation? All metropolitan, shire and district councils, irrespective of political party, have a hard task trying to establish relationships after a reorganisation introduced by the Conservative Party despite the fact that no one wanted it.

I hope that the House will give the county council the opportunity to make its case and to be examined. Where there are flaws, amendments can be suggested, but the whole Bill should not be summarily thrown out.

We had a direct labour department when I was Leader of Coventry City Council. After we lost power, the opposition disbanded that department almost overnight and sold off, at bargain basement prices, the expensive equipment which had been painfully built up over a number of years. Hon. Members talk about wasting ratepayers' money, but nothing grated on me more than the fact that, within a matter of weeks of that deal, we were hiring back, from private enterprise, equipment which had been flogged off to it at rock bottom prices.

Currently under the West Midlands County Council, there is being carried out by private enterprise a contract which started with a price of £1,372,000. It has now reached the figure of £2,840,000 and is the subject of legal proceedings. That is under private enterprise, not direct labour. I therefore hope that the hon. Member who suggested that this never happened under private enterprise will have second thoughts.

Several Hon. Members rose

Mr. Deputy Speaker

May I thank hon. Members for responding so readily to my appeal for brevity? As a result, in one hour we have had eight useful contributions.

9.14 p.m.

Mr. Teddy Taylor (Glasgow, Cathcart)


Mr. Heffer

This will be the exception.

Mr. Taylor

More than half the people of Scotland live in council homes or homes owned by public agencies and almost all are repaired or maintained by direct labour departments. In those circumstances, I have been staggered that throughout this important debate not one Scottish National Party Member, all of whom claim to speak for Scotland, has been present. If this is a prelude to what we might expect from self-government, I hope that the people of Scotland will notice that on such a vital issue the nationalists do not appear to care or want to know.

I am also surprised that on this issue we have not had a Scottish Minister present during the debate, despite the fact that many important Scottish aspects are involved. I hope that the Minister, in winding up the debate, will give some information on this matter.

It is certainly my intention, if I do not get a satisfactory explanation, to seek to raise tomorrow, as a matter of privilege, a most astonishing situation which, in my view, shows on the part of the Government almost a conspiracy to hide the facts about direct labour in Scotland. I say this because the Minister, in his very interesting and rather constructive speech at the beginning, gave details of numbers employed and work undertaken by what he claimed to be direct labour departments in Scotland.

I have been very anxious for some time to find out the facts about direct labour in Scotland. I wrote a letter to the Secretary of State for Scotland on the 18th December asking whether he had any records or any information, without specifying a date. I did not ask for today's information or for last year's information. I simply asked whether he had any records available about the number of direct labour departments in Scotland or the number of people employed by such departments.

I received a letter on 6th January, several weeks later, from Lord Kirkhill, Minister of State at the Scottish Office, saying, You asked if there are any records available about the number of Scottish local authorities who have direct labour departments and the number of people they employ. I am sorry that no such information is available to the Scottish Office, nor is there any requirement on local authorities to supply it. First of all, if the Minister says that the information he has is different, I should like to know from which source the information given by the Minister for Housing and Construction came. If the answer is that he received it from the Scottish Office, in my opinion there is a case for investigation as to conspiracy to hide the facts. This is a vital issue. We want to have information about direct labour so that we can talk from a basis of knowledge.

If a man in the street were listening to this debate he would wonder who on earth to believe. There have been compelling arguments from the Conservative side about rotten direct labour departments, and there have been compelling arguments from Labour Members about good direct labour departments.

My own opinion is that direct labour is not successful, and that is based on five years experience on the Glasgow City Council. There were some astonishing attempts at direct labour, involving the running of farms and attempts to engage in property development. We even won prizes at cattle shows. But invariably these attempts at direct labour were a financial disaster. This does not in any way condemn direct labour, but that was my experience, and in Glasgow we have a committee of inquiry looking into our affairs at the present time.

What we need to know is whether there is any way in which we can protect the ratepayer and private industry from unfair competition. I believe that it is in the interests of those who support direct labour and also of those who oppose it that we should have the facts. Competition ought to be on a just basis.

In a publication of the Institute of Municipal Treasurers and Accountants it is stated that in Glasgow we have 169,000 council houses, of which over 100,000 are post-war. This is in a tight area, therefore presumably they are easier to maintain than houses in a scattered council community. But, according to this report, the full cost per year for repairs and maintenance was over £80 per house.

I challenge the Government to say whether they know of any city or district anywhere in Scotland where the cost of repairs and maintenance—almost exclusively by direct labour in this case—is anything like that figure. Do they know of any area where the tenants of council houses are so dissatisfied with the standard of maintenance and the attention they receive? They are not getting the kind of service that council tenants are entitled to get.

The Government ought to do something to help both their supporters and those on the Conservative side who are concerned with the cost of direct labour. We must first have properly detailed accounts for every direct labour department, so that we can see whether the whole story has been told about repair and maintenance contracts and new building work. Secondly, every council should be obliged, when an excess cost is declared for either a private contractor or a building department, to refer it to some kind of independent tribunal. My experience on the city council was that if the direct labour department faced a prospect of overspending, there was an application for an excess cost relating to some special structural problem, and the bill was always paid. What we want to ensure is fair and equal treatment. That is why all excesses on top of normal escalations should go to an independent tribunal— perhaps a Scottish office tribunal and a Department of the Environment tribunal as well.

Thirdly, we should never have or be permitted to have an exclusive monopoly for a direct labour department for any service. For example, let us say that we agree that the department is to do all the house maintenance in Liverpool or in Manchester, Birmingham or London. We should say, in order to obtain a comparison of costs and efficiency, that there must always be provision that the maintenance in one area should be done differently. Many of Glasgow's problems would be resolved if we had a comparison, services in part of the city being done by tendering by private firms and in other parts by direct labour.

Lastly, there should be no subsidy, general or indirect, of building departments.

We want more information and fair competition. It is in the interests of both those who support and those who oppose direct labour that all the facts are disclosed so that we can be seen to have fair competition in the interests of ratepayers and taxpayers.

9.21 p.m.

Mr. Robert Hughes (Aberdeen, North)

I am rather surprised at the naiveté of the hon. Member for Glasgow, Cathcar (Mr. Taylor), concerning statistics about construction and so on in Scotland. His letter to the Scottish Office must have been very badly phrased. He is also showing a depth of ignorance at which I am surprised, bearing in mind his past. There is a document called "Housing and Construction Statistics", published quarterly, I think, by the Department of the Environment, the Scottish Development Department and the Welsh Office, which includes all the statistics that the hon. Gentleman wants. On page 72, for example, we see that in October 1974 there were 24,702 building operatives employed in construction work in Scotland for local authorities. I am referring to the latest edition of the document that is available to me. In the third quarter of 1974 they had completed nearly £26 million worth of work.

The hon. Gentleman is an ex-Minister of the Scottish Office. Unless I am mistaken, he had the Scottish Development Department under his control—admittedly for a very short period of two or three weeks, but I should have thought that even in that time he would have been able to glean the fact that these statistics were published quarterly and would not have to rest on a letter sent to a Scottish Office Minister to get the figures. As is often the case, the hon. Gentleman is far too lazy in doing his own research and therefore seeks someone else to do it for him.

However, the hon. Gentleman has also gone on record as looking at only the bad side in respect of local authorities. The truth is that up and down Scotland there are direct labour departments which are a great credit to local authorities. I mention Fife and Dundee as two examples. Their direct labour departments not only build houses but also go into other work. Dundee has built schools and community centres through the direct labour department, and they are an outstanding success.

The trouble with Opposition Members is that they see things in a totally black-and-white situation. They are concerned only to criticise that which is bad. If things can be shown to be bad, all of us would wish to criticise them. However, I wish that Opposition Members were a little fairer and would point out the good things in local authority direct labour departments.

This is not confined only to house-building and repairs and maintenance. It is curious that some hon. Members want the local authority direct labour departments to do only the repairs and maintenance, which is the side of the industry that most builders in Scotland and, I am sure, elsewhere do not want to touch. It is too difficult, too scuttery, and there is not much profit in it.

Direct labour departments up and down Scotland have done splendid work on roads. I am sure that the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith), who was also at the Scottish Office, will know that Aberdeenshire County Council, as it then was—it no longer exists because of local government reform—had an outstanding record in major road building in the North-East of Scotland in direct competition with private enterprise. There is a case for good local authorities doing good direct labour work.

One could say a lot about companies which have gone bust and have had to be bailed out at tremendous cost to ratepayers. Some socially desirable projects, such as occupational centres for the mentally handicapped, could not even be finished by the builders, despite their being bailed out by the local authority, which paid the bill to keep them going.

I believe that there is a very great role for direct labour departments, for local authorities to spread their wings and provide competition. It never ceases to amaze me when building companies in Scotland, particularly in Aberdeen, combine to form big construction groups, because even when they were separate and submitted separate tenders for work, even when tenders were for contracts costing £7 million or £8 million, they were within pence of each other. We should encourage the local authorities to spread their wings. It would be good for the public, good for the local authorities, and good for the ratepayers.

9.25 p.m.

Mr, Keith Speed (Ashford)

I begin by declaring my interest. I am consultant to a company engaged in competition with direct labour, so I have a certain detailed knowledge of the subject.

The debate has been marked by an air of sweet reasonableness among hon. Members opposite. They have leaped to the defence of individual direct labour departments. They have missed the point. We have never said that there should be no such thing as direct labour organisations. I am the first to say that there are direct labour organisations which are efficient and well run and which, by and large, comply with the CIPFA recommendations. But the important point is that many of them do not, and we still do not know the Government's attitude to trying to tighten up the system and prevent waste of resources and the drain upon the ratepayers of these inefficient organisations.

The Minister for Housing and Construction seemed to try to eat his cake and have it par excellence on the CIPFA Report. To use an American expression, the membership of the new committee is a hung jury. My hon. Friend the Member for Melton (Mr. Latham) pointed out that its members lack experience and also expert advice from the auditors on how they can get to grips with the problem. He said that the committee would not start its work until next month. He said that it would look at all the problems and that, because it would be taking the CIPFA evidence into account, it would be wrong for the Government to put a point of view at the moment on the CIPFA recommendations.

Mr. Freeson

I did not say anything of the kind.

Mr. Speed

If the hon. Gentleman did not say anything of the kind, I will ask him or the Secretary of State now whether they will accept the main CIPFA recommendations. I have asked this at Question Time several times. If, without prejudice to whatever comes out in the committee's report, the Government would accept the main CIPFA recommendations about separate trading accounts, proper competition and comparing like with like, many of our doubts and hesitations would disappear. But they are not prepared to do so.

The hon. Gentleman went further and said, apparently, that it is right for the Greater London Council or other local authorities to seek to extend the powers of direct labour well in advance of his own committee reporting. That is not good enough. He also used the phrases "social ownership" and "social enterprise". They are delightful euphemisms, but who, at the end of the day, is responsible and picks up the tab? All experience of nationalised industries if nothing else shows that no one, at the end of the day, feels either responsible financially or a sense of paternity or maternity for these organisations.

Let us look at the situation which many small and not-so-small businesses are facing. The Chancellor of the Exchequer does his best to help by introducing multiple rates of value added tax. They are paying more in taxation. Regulations stream from the Department of Prices and Consumer Protection and other Government Departments. We know the problems of the rates, particularly commercial rates. The hon. Gentleman will recollect that last April the Government refused to help commercial undertakings with a modest improvement which would have given a modest relief from commercial rates. Now there is the West Midland County Council's Bill.

The Under-Secretary of State is a very reasonable and modest Minister—I hope I do not embarrass him by saying so. The Minister for Planning and Local Government is a very reasonable man, although I am not sure that he is so moderate. But last April, when the right hon. Gentleman was questioned, not only by the hon. Member for Cannock (Mr. Roberts) but by me, he said that basically he was very much in favour of the sort of thing that the West Midlands County Council was trying to achieve. He was being asked for Government time for legislation, but said he could not promise it at the moment, although it was the sort of thing he wanted. When I said I thought this was wrong and I suggested that it would be better to ask local authorities to say that they would cut back, he said that it might be better but that it would be dishonest.

We are entitled to know from the Minister, whatever he says or whatever his right hon. Friend said last April, what is the Government's view about this. I think the West Midlands County Council has wasted a great deal of ratepayers' money in preparing this Bill. There are many things in the Bill which are unacceptable not only to hon. Members but to many of the people whom they represent.

We have already heard about organisations such as the co-operative society and USDAW. If at the end of the day the West Midlands County Council gets its Bill through, is the Under-Secretary going to give a pledge and a commitment that he will not take advice of his 43 hon. Friends who signed an Early-Day Motion that he will go against his right hon. Friend who made sympathetic noises last April?

On the question of direct labour, nobody tonight has mentioned one matter which concerns me greatly. That is the growth of direct-labour in some of our nationalised industries and in some of the water authorities. Here we have a situation in which the Secretary of State, I think, will agree that water authorities, like local authorities, have got to watch their staff, expansion and costs very closely. Yet I am concerned that it is possible for many of the problems mentioned by my hon. Friends tonight to arise with the growth that some of these water authorities may be seeking. Many of them are discussing their budgets at the moment, and they may be taking on additional staff at a time, as my hon. Friend the Member for Melton pointed out, when the building industry is up against it and is finding it extremely difficult to get work and, as we all know, there is massive unemployment among building operatives.

Nowhere is the difference between the two main parties more evident than in the sort of debate we are now having. We on this side of the House believe in the strength and the freedom of local authorities to do what they alone can do. I believe—and I say this having had experience in the Department of the Environment—that much should be moved from Whitehall to county hall and town hall. This is a kind of devolution which strikes a particular chord with me and, in terms of England, I think it is something which many county councils and local authorities would wish to see happen.

If the Under-Secretary agrees with me, hope he will bear in mind the comprehensive-secondary reorganisation Bill which the Government are determined to introduce, which goes contrary to that concept. As a nation, I am convinced that we are over-governed, both at national and local level. The public sector is growing at a rate that is not sustainable even by a thriving economic private sector, and after two years of Socialism we do not have that.

One fundamental gut point which has not come through in this debate is that it is no part of local authorities' activities to undertake direct labour organisations where they have no control, where they can be putting their own local building firms out of business, and neither is it a part of local authorities' activities to engage in a massive expansion of municipalisation, from manufacturing furniture to travel agencies and flower shops at a time when the Secretary of State and even the Prime Minister, if I read correctly his remarks at Eastbourne, are saying that local government has got to cut back and trim its suit according to its cloth.

If that is the situation, how it be that Socialist local authorities—and Tyne-Wear, West Midlands and Greater London are Socialist local authorities—are embarking upon this course? The fact is that they have embarked upon this course because they fundamentally believe in what they are doing. The right hon. Gentleman the Minister for Planning and Local Government fundamentally believed in the sort of support that he was giving, and we do not. We take the view that, at the end of the day, the consumer is best served by the choice, the competition and the sort of service which free enterprise and small and large businesses can give.

In direct labour organisations, on the other hand, we do not know whether the competition is fair, since many direct labour departments do not publish any sort of accounts so that the ratepayer or anyone else may judge whether it is fair. We know also that the Government, by hedging and prevaricating over the CIPFA Report, are not prepared to say that they will see that a proper account and report of stewardship by direct labour organisations can be given to those who foot the bill, the ratepayer and the taxpayer.

There is growing evidence that these Private Bills and what the Minister has had to say both last year at conferences and more recently at Question Time spring from a fairly stubborn Socialist prejudice, the belief that the way to bring about the sort of social revolution which hon. Members opposite wish to see can be found not necessarily in open front-door nationalisation but through this sort of measure, so that more and more people are put out of business and, at the same time, to their chagrin, have to subsidise unfair competition.

The hon. Member for Coventry, North-East (Mr. Park), unlike most of his hon. Friends, spoke directly about the West Midlands County Council Bill. The truth is that he is talking about chemists' shops, and whether it is in the best interests of West Midlands ratepayers and residents that there should be chemists' shops in out of town estates or wherever it may be, requiring the spending of considerable sums of money—that being the situation of many private chemists today. I cannot believe that that can be right.

If there is difficulty in dealing with prescriptions and the supply of drugs, the obvious thing to do is to talk to the area health authority or other authorities dealing with these matters. My information is that no such discussions have taken place. But if there is a problem, that is the first step to take. The local authority should talk to those who are in the best position to influence matters and see that prescriptions can be dealt with.

Mr. Park

After talking to the area health authority, where do we go from there? Will the hon. Gentleman give us the follow up? We have talked to them. What happens now?

Mr. Speed

My information is that constructive discussion has not taken place, and I understand further that there has been no constructive consultation between the West Midlands County Council and others interested who were originally asked to comment on the Bill. The truth is that the West Midlands Bill and the other Bills which we are discussing—

Mr. Michael Morris (Northampton, South)

The simple answer is that family practitioners are empowered to run a dispensing service over a three-mile radius from a chemist, and I believe that they may seek permission to reduce that to one-mile radius if they choose.

Mr. Speed

I am grateful to my hon. Friend. The fact is that there has not been meaningful consultation with any outside interest, and the West Midlands County Council is determined to pursue its path. No doubt many hon. Members opposite would support the council in that, but I shall be most interested to hear the Government's view.

I give warning, both nationally and locally, that the Conservative Party will frustrate these knavish tricks, because we believe in responsible capitalism, whereas so many hon. Members on the Government side do not. We believe in thriving and prosperous small businesses, and many Labour Members and others in the Labour Party do not. We believe in fair competition, in the power of the customer and in choice, and many hon. Members opposite do not.

We are at present engaged in a battle for free enterprise, which is threatened on many fronts as never before. This is a battle which we shall win, for the destiny of this country is not in the boggy quagmire of municipal Marxism which so many hon. Members, especially those who signed the Early-Day Motion, would like. When the district elections come in 14 weeks, the people will show in no uncertain manner what they think, when Socialism is swept out of our town halls. In the meantime, in view of what has been said so far, unless we have some firm assurances from the Minister I shall recommend my right hon. and hon. Friends to join me in the Division Lobby.

9.40 p.m.

The Under-Secretary of State for the Environment (Mr. Gordon Oakes)

The hon. Member for Ashford (Mr. Speed) had the decency and goodness to say that most of the sweet reason he had heard in the debate had come from the Government side of the House. I think that he is right. On balance the debate has been a dismal, dreary repetition of many of the hysterical arguments that we have heard from Conservative Members over decades on municipal trading and direct labour departments.

I find it a matter of astonishment that the Opposition chose on a Supply Day to debate during the afternoon releases from mental hospitals and during the evening, on a three-line Whip, to debate municipal trading and direct labour. They chose to do so at a time when the Leader of the Opposition is attacking the Government and criticising the build up of Russian naval power. Of course, I defend the right hon. Lady's right, or anyone else's right, to say what she wants about the Soviet Union or any other country. However, I find it astonishing that the Opposition, given the chance to debate major issues, decided to use a Supply Day on a debate such as this.

I must comment on the superb timing of the Opposition. At a time when their Leader is making her remarks against the Soviet Union and when Dr. Kissinger has been engaged in Moscow, they choose to introduce this debate a week before a major municipal enterprise that was backed by them as well as by my hon. Friends—namely, the National Exhibition Centre—will open.

Mr. Raison

What has that got to do with it?

Mr. Oakes

That building and that construction results directly from certain clauses in a Private Bill. That building is the result of a municipal enterprise in the West Midlands that has been criticised tonight by the Opposition. On this very day that building has received from the Institute of Marketing, a completely non-political body, an award for the enterprise and initiative shown by the City of Birmingham and the Birmingham Chambers of Commerce. That award has been given even before the centre has started operating. We have this building because of the powers that have been given to local authorities in this House.

Mr. Tony Durant (Reading North)


Mr. Oakes

I do not wish to dwell at great lengt on direct labour organisations. That subject was fully dealt with by my hon. Friend the Minister for Housing and Construction. His arguments have stood very firm against all the petty sniping that come from the Opposition.

The hon. Member for Daventry (Mr. Jones) said of direct labour departments that he honed that a Minister would condemn maladministration. Of course I condemn it. Where it exists I condemn maladminstration in direct labour departments as much as in private firms. However, what the hon. Gentleman calls maladministration is when a local authority tender is put out and then it is decided that it can do the job far more cheaply itself. That is what he calls maladministration. He would not say so if that action were taken by a private firm. I accept that there are regrettable cases of direct labour departments doing things wrongly, but the hon. Gentleman should not castigate every direct labour department as some tend to do, any more than I or my hon. Friends would criticise all private industry because of the mistakes that it makes.

Some Conservative Members have mentioned the ratepayers. Let it be remembered that the mistakes of private industry often lead to redundancies. Various difficulties are then experienced by local authorities. Many private firms come to central Government for money. Private consumers are often left to pay for an inadequate house. That is the result of inefficiency. However, I do not condemn the whole of private industry because of that. I ask Conservative Members to be reasonable about direct labour departments and not to criticise all of them for a few mistakes.

Mr. Arthur Jones

I welcome the Minister's assurance. May I ask him to go step further and say to what extent the Government are prepared to monitor the performance of direct labour departments with the benefit of independent audited figures in respect of large contracts?

Mr. Oakes

My hon. Friend the Member for Housing and Construction said that the working party was now considering that matter. No doubt eventually my hon. Friend will be making a statement on the matter.

The hon. Member for Daventry said that some direct building departments had an acceptable part to play. Certainly his right hon. and hon. Friends when in Government agreed with him. For example, direct labour departments were even allowed to build houses for sale—but the Conservative Government denied them that right.

We heard an intriguing speech from the hon. Member for Blaby (Mr. Lawson). The hon. Gentleman quoted from advertisements placed by the Greater London Council. I did not understand the purpose of the hon. Gentleman's speech. I could not discover whether he was saying that GLC tenants should not own cars or television sets. Having heard the long list of details presented by the hon. Gentleman, I was expecting him at any moment to produce a document showing that coal merchants were interested in the size of the average GLC bath so that they would be better informed as to customers' requirements. His argument almost reached that level.

Mr. Lawson rose

Mr. Oakes

No, I will not give way. I wish to inform the hon. Member for Aylesbury (Mr. Raison) that the recommendations of the committee to which he referred are being considered and a statement will be made to this House.

Mr. Thomas Swain (Derbyshire, North-East)


Hon. Members

Do not give way.

Mr. Oakes

I will give way to my hon. Friend.

Mr. Swain

Will my hon. Friend inform the House about the situation regarding direct labour departments in local authorities where young men are employed, extraneous to requirements, to clean parks and so on? When the final accounting is dealt with for the payment of those wages, will those final accounts be passed by the district auditor? If that is to be the case, how does the Minister explain why the Clay Cross authorities were castigated for doing just that?

Mr. Oakes

Opposition Members were right to warn me not to give way. It serves me right. No doubt the Minister will write to my hon. Friend about the detailed point he mentioned, but I shall not pursue the matter now.

I turn to the other main theme of the debate, the subject of municipal trading. Many Opposition Members sought to generate a great deal of heat, rather than light, on the subject of building promoted by the West Midlands County Council. My hon. Friend the Member for Coventry, North-East (Mr. Park) was right in his approach to the Bill.

Dealing with the comments made by the hon. Member for the Isle of Wight (Mr. Ross), although I do not think we are in danger in the Division Lobby tonight, I should not like to think that the Liberal Party wants to be associated with the attack levelled at us by the Conservative Opposition without the House having heard an explanation from me on the Government's approach to the Bill which has been mentioned.

Hon. Members have been referring to a Private Bill that can be dealt with through the ordinary procedures of this House and not during a Supply Day debate. My hon. Friend the Member for Coventry, North-East pointed out that the powers which local authorities now have will lapse under the Local Government Act 1972, in metropolitan areas in 1979, and in 1984 in the non-metropolitan boroughs. Local authorities will, therefore, seek Private Bills so as to rationalise the legislation and provide for continuing powers beyond those dates. I understand that the West Midlands County Council proposes to promote two Private Bills, a major one in the next Session and a shorter Bill, deposited with the House authorities in this Session. Among other things the Bill contains some new powers with regard to municipal trading.

I will not comment in detail on that Bill. I have seen a great deal of correspondence about it in which some people seem to have become almost hysterical about its provisions. The hon. Member for Birmingham, Hall Green (Mr. Eyre) is a solicitor and the hon. Member for Isle of Wight is an auctioneer. Conservative Members are accustomed to the way in which a company, when it is promoted, frames its article and memorandum. All kinds of things are included which are unlikely ever to be used. When a county council or a private body brings a Bill to this House it aims for the stars. Then it is for this House, Conservative Members as much as anyone else, to go through the provisions of the Bill and decide to what the private authority really needs as opposed to what it is asking for. That is exactly the position with the West Midlands County Council.

Mr. Stephen Ross

Since the Minister is also a member of the legal profession may I ask him whether he would not feel that it would be better advice to West Midlands County Council, if it wanted to build a race track around Birmingham, to tell it not to include all the other clauses which are bound to cause great controversy and which must be opposed?

Mr. Oakes

It goes much further than a race track round Birmingham. The authority is not seeking to engage in massive monopoly trading in the way that is being suggested. I wonder whether the hon. Member for Birmingham, Hall Green is aware that, under existing powers, Birmingham Corporation has extensive farming rights and owns half of every sheep in the area of the reservoirs of North Wales.

Mr. Eyre

Under the Bill the West Midlands County Council has power to raise, without restriction by the Secretary of State, unlimited sums for public expenditure. They can be secured by loans repayable over 60 years. Is the Minister saying that the Chancellor could contemplate such unlimited expenditure at this time.

Mr. Oakes

I said that I will not comment on the Bill in detail. I will say that my right hon. Friend the Secretary of State will be making a statement on the Bill to the House. I do not know what he or any other Secretary of State would say about a Private Bill that demands unlimited financial powers of that nature—but I can guess.

I turn to some more general remarks about local authority enterprise. Like my hon. Friend the Member for Luton, East (Mr. Clemitson) I am amazed at the philosophical maze into which Conservative Members wander when discussing municipal trading. It was a great Conservative, Sir Joseph Chamberlain, who introduced "municipal Marxism" and it has worked very well indeed. This has been a continuing thread in the philosophy of those Conservatives who were more concerned with the welfare of people in cities and towns as a whole than with the welfare of a tiny section of the population.

The right hon. Member for Crosby (Mr. Page) only last year introduced a measure which was vigorously supported by his hon. Friends to allow local authorities to run lotteries. Is not that a form of municipal trading? Would not that be in competition with existing trading? The right hon. Gentleman said, rightly, that it would offer significant relief to the hard-pressed ratepayers. What a difference that was from the approach of the Opposition today.

I should now like to consider the broader principle of local authorities acting as trading bodies. My right hon. Friend the Minister for Planning and Local Government has said before in the House that, in his view, local authorities should be given as much independence and freedom as possible—and that that independence and freedom should be given a purpose and a means to support that purpose. I fully associate myself with those remarks. I sympathise with local authorities which seek to extend their powers in a responsible way for the good of the community. I am proud to be a member of the party that, in its programme for 1973, said: As a demonstration of our intention to breathe new life into local government and

encourage local initiative … we would be prepared to implement the Maud Committee's recommendations that: 'Local authorities should be given a general competence to do (in addition to what legislation already requires or permits them to do) whatever in their opinion is in the interests of their areas or their inhabitants, subject to their not encroaching on the duties of other governmental bodies and to appropriate safeguards for the protection of private and public interests'. That is in our manifesto— appropriate safeguards for the protection of private and public interests".

One of the functions of the House, when considering a Private Bill, is to do precisely that. It does not need a Supply Day debate to determine such matters. In 1973 and early 1974 the Opposition piled injury on to local government. As a result of the disastrous reorganisation which introduced, democratic local government was put in an extremely difficult position. In debate after debate in the House, on subject after subject, the Opposition have added insult to that injury.

In contrast, I am proud to be a member of the present Government who, for the first time in 30 years, gave local government the greatest single extension of its powers through the Community Land Act. The difference of approach to local authorities and local democracy between the Opposition and the Government can be seen in the Conservative Party's opposition to that Act as well as its sniping today about a Private Bill related to municipal trading. The deeds and speeches of the right hon. and hon. Members opposite tonight give the lie to the claim that they are concerned with responsible local government. I call upon my right hon. and hon. Friends to express in the Lobby their disapproval of the Opposition's peevish, petty, Poujadist view.

Question put, That this House do now adjourn:—

The House divided: Ayes 255, Noes 278.

Division No. 34.] AYES [10.0 p.m.
Adley, Robert Berry, Hon Anthony Bryan, Sir Paul
Aitken, Jonathan Biffen, John Buchanan-Smith, Alick
Alison, Michael Biggs-Davison, John Budgen, Nick
Amery, Rt Hon Julian Blaker, Peter Bulmer, Esmond
Arnold, Tom Body, Richard Burden, F. A.
Atkins, Rt Hon H. (Spe[...]borne) Boscawen, Hon Robert Butler, Adam (Bosworth)
Awdry, Daniel Bottomley, Peter Carlisle, Mark
Baker, Kenneth Bowden, A. (Brighton, Kemptown) Chalker, Mrs Lynda
Banks, Robert Boyson, Dr Rhodes (Brent) Churchill, W. S.
Beith, A. J. Braine, Sir Bernard Clark, Alan (Plymouth, Sutton)
Bell, Ronald Brittan, Leon Clark, William (Croydon S)
Bennett, Dr Reginald (Fareham) Brocklebank-Fowler, C. Clarke, Kenneth (Rushcliffe)
Benyon, W. Brown, Sir Edward (Bath) Clegg, Walter
Cockcrott, John Jenkin, Rt Hon P. (Wanst'd & W'df'd) Raison, Timothy
Cooke, Robert (Bristol W) Johnson Smith, G. (E Grinstead) Rathbone, Tim
Cope, John Jones, Arthur (Daventry) Rawlinson, Rt Hon Sir Peter
Cormack, Patrick Jopling, Michael Rees, Peter (Dover & Deal)
Corrie, John Joseph, Rt Hon Sir Keith Rees-Davies, W. R.
Costain, A. P. Kaberry, Sir Donald Renton, Rt Hon Sir D. (Hunts)
Crouch, David Kellett-Bowman, Mrs Elaine Renton, Tim (Mid-Sussex)
Crowder, F. P. Kershaw, Anthony Rhys Williams, Sir Brandon
Davies, Rt Hon J. (Knutsford) Kilfedder, James Ridley, Hon Nicholas
Dean, Paul (N Somerset) Kimball, Marcus Ridsdale, Julian
Dodsworth, Geoffrey King, Evelyn (South Dorset) Rifkind, Malcolm
Douglas-Hamilton, Lord James King, Tom (Bridgwater) Roberts, Michael (Cardiff NW)
Drayson, Burnaby Kitson, Sir Timothy Roberts, Wyn (Conway)
du Cann, Rt Hon Edward Knight, Mrs Jill Ross, Stephen (Isle of Wight)
Durant Tony Knox, David Rossi, Hugh (Hornsey)
Dykes, Hugh Lamont, Norman Rost, Peter (SE Derbyshire)
Eden, Rt Hon Sir John Lane, David Royle, Sir Anthony
Edwards, Nicholas (Pembroke) Langford-Holt, Sir John Sainsbury, Tim
Elliott, Sir William Latham, Michael (Melton) St. John-Stevas, Norman
Emery peter Lawrence, Ivan Scott-Hopkins, James
Eyre, Reginald Lawson, Nigel Shaw, Giles (Pudsey)
Fairbairn Nicholas Lester, Jim (Beeston) Shaw, Michael (Scarborough)
Fairgrieve, Russell Lewis, Kenneth (Rutland) Shelton, William (Streatham)
Fell, Anthony Lloyd, Ian Shepherd, Colin
Finsberg, Geoffrey Loveridge, John Shersby, Michael
Fisher, Sir Nigel Luce, Richard Silvester, Fred
Fletcher, Alex (Edinburgh N) McAdcien, Sir Stephen Sims, Roger
Fletcher-Cooke, Charles Mc Crindle, Robert Sinclair, Sir George
Fookes, Miss Janet Macfarlane, Neil Skeet, T. H. H.
Fowler, Norman (Sutton C'f'd) MacGregor, John Smith, Cyril (Rochdale)
Fox, Marcus Macmillan, Rt Hon M. (Farnham) Smith, Dudley (Warwick)
Fry, Peter McNair-Wilson, M. (Newbury) Speed, Keith
Gatbraith Hon T G D. McNair-Wilson. P. (New Forest) Spence, John
Gardiner, George (Reigate) Madel, David Spicer, Michael (S Worcester)
Gardner, Edward (S Fylde) Marshall, Michael (Arundel) Sproat, Iain
Gilmour, Rt Hon Ian (Chesham) Marten, Neil Stainton, Keith
Gilmour, Sir John (East Fife) Mather, Carol Stanbrook, Ivor
Glyn, Dr Alan Maude, Angus Stanley, John
Godber, Rt Hon Joseph Mauding, Rt Hon Reginald Steel, David (Roxburgh)
Goodhart, Philip Mawby, Ray Stokes, John
Goodhew, Victor Maxwell-Hyslop, Robin Stradling Thomas, J.
Goodlad, Alstair Mayhew, Patrick Tapsell, Peter
Gorst, John Meyer, Sir Anthony Taylor, Teddy (Cathcart)
Mills, Peter Tebbit, Norman
Gow, Ian (Eastbourne) Miscampbell, Norman Temple-Morris, Peter
Gower, Sir Raymond (Barry) Mitchell, David (Basingstoke) Thatcher, Rt Hon Margaret
Grant, Anthony (Harrow C) Moate, Roger Thomas, Rt Hon P. (Hendon S)
Gray, Hamish Monro, Hector Thorpe, Rt Hon Jeremy (N Devon)
Griffiths, Eldon Montgomery, Fergus
Grist, Ian Moore, John (Croydon C) Townsend, Cyril D.
Grylls, Michael More, Jasper (Ludlow) Trotter, Neville
Hall, Sir John Morgan, Geraint Tugendhat, Christopher
Hall-Davis, A. G. F. Morris, Michael (Northampton S) van Straubenzee, W. R.
Hamilton, Michael (Salisbury) Morrison, Charles (Devizes) Vaughan, Dr Gerard
Hampson, Dr Keith Morrison, Hon Peter (Chester) Viggers, Peter
Hannam, John Mudd, David Wainwright, Richard (Coine V)
Harvie Anderson, Rt Hon Miss Neave, Airey Wakeham, John
Hastings, Stephen Nelson, Anthony Walder, David (Clitheroe)
Havers, Sir Michael Neubert, Michael Walker, Rt Hon P. (Worcester)
Hawkins, Paul Newton, Tony Walker-Smith, Rt Hon Sir Derek
Hayhoe, Barney Nott, John Wall, Patrick
Heath, Rt Hon Edward Onslow, Cranley Walters, Dennis
Heseltine, Michael Oppenhelm, Mrs Sally Weatherill, Bernard
Hicks, Robert Osborn, John Wells, John
Higgins, Terence L. Page, Rt Hon R. Graham (Crosby) Whitelaw, Rt Hon William
Holland, Philip Paisley, Rev Ian Wiggin, Jerry
Hordern, Peter Pardoe, John Winterton, Nicholas
Howell, David (Guildford) Pattie, Geoffrey Wood, Rt Hon Richard
Howell, Ralph (North Norfolk) Percival Ian Young, Sir G. (Ealing, Acton)
Hurd, Douglas Peyton, Rt Hon John Younger, Hon George
Hutchison, Michael Clark Pink, R. Bonner TELLERS FOR THE AYES:
Irvine, Bryant Godman (Rye) Price, David (Eastleigh) Mr. Spencer Le Marchant and
Irving, Charles (Cheltenham) Prior, Rt Hon James Mr. Cecil Parkinson.
James, David Pym, Rt Hon Francis
Allaun, Frank Flannery, Martin Marquand, David
Anderson, Donald Fletcher, Ted (Darlington) Marshall, Dr Edmund (Goole)
Archer, Peter Foot, Rt Hon Michael Marshall, Jim (Leicester S)
Armstrong, Ernest Ford, Ben Mason, Rt Hon Roy
Ashley, Jack Forrester, John Maynard, Miss Joan
Ashton, Joe Fowler, Gerald (The Wrekin) Meacher, Michael
Atkins, Ronald (Preston N) Fraser, John (Lambeth, N'w'd) Mellish, Rt Hon Robert
Atkinson, Norman Freeson, Reginald Mendelson, John
Bagier, Gordon A. T. Garrett, John (Norwich S) Mikardo, Ian
Barnett, Rt Hon Joel (Heywood) Garrett, W. E. (Wallsend) Millan, Bruce
Bates, Alf George, Bruce Miller, Dr M. S. (E Kilbride)
Bean, R. E. Gilbert, Dr John Miller, Mrs Millie (Ilford N)
Benn, Rt Hon Anthony Wedgwood Ginsburg, David Mitchell, R. C. (Soton, Itchen)
Bennett, Andrew (Stockport N) Golding, John Molloy, William
Bldwell, Sydney Gould, Bryan Moorman, Eric
Bishop, E. S. Gourlay, Harry Morris, Alfred (Wythenshawe)
Blenkinsop, Arthur Graham, Ted Morris, Charles R. (Openshaw)
Boardman, H. Grant, George (Morpeth) Morris, Rt Hon J. (Aberavon)
Booth, Albert Grant, John (Islington C) Mulley, Rt Hon Frederick
Boothroyd, Miss Betty Grocott, Bruce Murray, Rt Hon Ronald King
Bottomley, Rt Hon Arthur Hamilton, W. W. (Central Fife) Newens, Stanley
Boyden, James (Bish Auck) Harper, Joseph Noble, Mike
Bradley, Tom Harrison, Walter (Wakefield) Oakes, Gordon
Bray, Dr Jeremy Hart, Rt Hon Judith Ogden, Eric
Brown, Hugh D. (Provan) Hattersley, Rt Hon Roy O'Halloran, Michael
Brown, Robert C. (Newcastle W) Hatton, Frank O'Malley, Rt Hon Brian
Buchan, Norman Hayman, Mrs Helene Orme, Rt Hon Stanley
Buchanan, Richard Healey, Rt Hon Denis Ovenden, John
Butler, Mrs Joyce (Wood Green) Heffer, Eric S. Owen, Dr David
Callaghan, Rt Hon J. (Cardiff SE) Hooley, Frank Padley, Walter
Callaghan, Jim (Mlddleton & P) Horam, John Palmer, Arthur
Campbell, Ian Howell, Denis (B'ham, Sm H) Park, George
Canavan, Dennis Hoyle, Doug (Nelson) Parker, John
Cant, R. B. Huckfleld, Les Parry, Robert
Carmichael, Nell Hughes, Rt Hon C. (Anglesey) Pavitt, Laurie
Carter-Jones, Lewis Hughes, Mark (Durham) Peart, Rt Hon Fred
Cartwright, John Hughes, Robert (Aberdeen N) Perry, Ernest
Castle, Rt Hon Barbara Hughes, Roy (Newport) Prescott, John
Clemitson, Ivor Hunter, Adam Price, C. (Lewisham W)
Cocks, Michael (Bristol S) Irvine, Rt Hon Sir A. (Edge Hill) Price, William (Rugby)
Coleman, Donald Irving, Rt Hon S. (Dartford) Radice, Giles
Colquhoun, Mrs Maureen Jackson, Colin (Brighouse) Richardson, Miss Jo
Concannon, J. D. Jackson, Miss Margaret (Lincoln) Roberts, Albert (Normanton)
Conlan, Bernard Janner, Greville Roberts, Gwilym (Cannock)
Cook, Robin F. (Edin C) Jenkins, Hugh (Putney) Robertson, John (Paisley)
Corbett, Robin Johnson, James (Hull West) Roderick, Caerwyn
Cox, Thomas (Tooting) Johnson, Walter (Derby S) Rodgers, George (Chorley)
Craigen, J. M. (Maryhill) Jones, Alec (Rhondda) Rodgers, William (Stockton)
Crawshaw, Richard Jones, Barry (East Flint) Rooker, J. W.
Cronin, John Jones, Dan (Burnley) Rose, Paul B.
Crosland, Rt Hon Anthony Kaufman, Gerald Rowlands, Ted
Cryer, Bob Kelley, Richard Sandelson, Neville
Cunningham, G. (Islington S) Kerr, Russell Sedgemore, Brian
Cunningham, Dr J. (Whiteh) Kilroy-Silk, Robert Selby, Harry
Dalyell, Tam Kinnock, Neil Shaw, Arnold (Ilford South)
Davidson, Arthur Lambie, David Sheldon, Robert (Ashton-u-Lyne)
Davies, Bryan (Enfield N) Lamborn, Harry Shore, Rt Hon Peter
Davies, Denzil (Llanelli) Lamond, James Short, Rt Hon E. (Newcastle C)
Davis, Clinton (Hackney C) Latham, Arthur (Paddington) Short, Mrs Renée (Wolv NE)
Deakins, Eric Leadbitter, Ted Silkin, Rt Hon John (Deptford)
Dean, Joseph (Leeds W) Lee, John Silkin, Rt Hon S. C. (Dulwich)
de Freltas, Rt Hon S'r Geoffrey Lestor, Miss Joan (Eton & Slough) Sillars, James
Delargy, Hugh Lever, Rt Hon Harold Silverman, Julius
Dell, Rt Hon Edmund Lewis, Ron (Carlisle) Skinner, Dennis
Dempsey, James Litterick, Tom Small, William
Doig, Peter Loyden, Eddie Smith, John (N Lanarkshire)
Dormand, J. D. Luard, Evan Snape, Peter
Douglas-Mann, Bruce Lyon, Alexander (York) Spearing, Nigel
Duffy, A. E. P. Lyons, Edward (Bradford W) Spriggs, Leslie
Dunn, James A. McCartney, Hugh Stallard, A. W.
Dunnett, Jack McElhone, Frank Stewart, Rt Hon M. (Fulham)
Dunwoody, Mrs Gwyneith MacFarquhar, Roderick Stoddart, David
Eadle, Alex McGuire, Michael (Ince) Stott, Roger
Edge, Geoft Mackenzie, Gregor Strang, Gavin
Edwards, Robert (Wolv SE) Mackintosh, John P. Strauss, Rt Hon G. R.
Ellis, John (Brigg & Scun) Maclennan, Robert Summerskill, Hon Dr Shirley
Ellis, Tom (Wrexham) McMillan, Tom (Glasgow C) Swain, Thomas
English, Michael McNamara, Kevin Taylor, Mrs Ann (Bolton W)
Ennals, David Madden, Max Thomas, Jeffrey (Abertillery)
Evans, Fred (Caerphilly) Magee, Bryan Thomas, Mike (Newcastle E)
Evans, Ioan (Aberdare) Mahon, Simon Thomas, Ron (Bristol NW)
Fernyhough, Rt Hon E. Mallalieu, J. P. W. Thorne, Stan (Preston South)
Fitch, Alan (Wigan) Marks, Kenneth Tierney, Sydney
Tinn, James Watkins, David Wilson, Rt Hon H. (Huyton)
Tomlinson, John Weetch, Ken Wilson, William (Coventry SE)
Tomney, Frank Wellbeloved, James Wise, Mrs Audrey
Torney, Tom White, Frank R. (Bury) Woodall, Alec
Tuck, Raphael White, James (Pollok) Woof, Robert
Varley, Rt Hon Eric G. Whitlock, William Wrigglesworth, Ian
Wainwright, Edwin (Dearne V) Willey, Rt Hon Frederick Young, David (Bolton E)
Walden, Brian (B'ham, L'dyw'd) Williams, Alan (Swansea W)
Walker, Harold (Doncaster) Williams, Alan Lee (Hornch'ch) TELLERS FOR THE NOES:
Walker, Terry (Kingswood) Williams, W. T. (Warrington) Mr. James Hamilton and
Ward, Michael Wilson, Alexander (Hamilton) Mr. Tom Pendry.

Question accordingly negatived.