Commons Sitting of 12 July 1976

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  TRADE

    Bermuda Agreement
    Mr. Adleyasked the Secretary of State for Trade what reaction he has received from the United States Government following his announced intention to seek to renegotiate the Bermuda Agreement covering relations between the two countries on aviation matters.
    Mr. Tebbitasked the Secretary of State for Trade what are his objectives in renegotiating the Bermuda Agreement.
    The Secretary of State for Trade (Mr. Edmund Dell): I have not yet received any formal reaction from the United States authorities.
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    Our objectives in the renegotiation were summarised in the reply that I gave to my hon. Friend the Member for Thornaby (Mr. Wrigglesworth) on 23rd June.
    Mr. Adley: I thank the Minister for that reply. Does he agree that, in view of the importance of the Bermuda Agreement as an international model, fairness dictates that, if there is a need to control capacity on the North Atlantic between Britain and America, this should be done on a fifty-fifty basis between the two nations and not split between the carriers which happen to have traffic rights on that route? Is there not a need for a thoroughgoing review of the fifth freedom rights of American carriers operating wholly within Europe?
    Mr. Dell: I agree with the hon. Gentleman about the fifth freedom carrier rights. The objective is to improve the relative position of British airlines, not merely on the North Atlantic but elsewhere in the world, in regard to our relations with the United States. This is what we hope to achieve through the renegotiations. I hope that we shall not be pressed too far on detailed objectives at this stage. We are entering serious negotiations and it is important that these should be successful.
    Mr. Tebbit: Will the Secretary of State say, first, why he chose this moment to renegotiate? Secondly, will he say whether he received any representations from other British airlines, or from

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    Cathay Pacific or the Government of Hong Kong, which caused him to choose this time?
    In case the Secretary of State thinks that I am being rather critical or implying criticism, I point out that we certainly would not criticise the objectives that the Secretary of State has laid out in his renegotiations.
    Mr. Dell: No such representations influenced the choice of time. This was due simply to the fact that we cannot allow this total inequality in benefit from the current agreement to persist; therefore, it appeared right that we should get ahead with the renegotiation as soon as possible.

    Lonrho
    Mr. Liptonasked the Secretary of State for Trade whether he has now completed his consideration of the report on the Lonrho Company.
    Mr. Teddy Taylorasked the Secretary of State for Trade if he has yet completed his consideration of the report on the Lonrho Company.
    Mr. Dell: The report was published on 6th July. I am considering any implications of the report for the reform of company law.
    Mr. Lipton: Is it not quite scandalous that while they are under police investigation these tarnished tycoons of Lonrho should be considered fit to receive £5 million of taxpayers' money as a loan free of interest for the purpose of rescuing Brentford Nylons?
    Although they may be experts in feathering their own nests, is it not possible to find someone of more repute to take over Brentford Nylons, to save the company from destruction?
    Mr. Dell: That is a point for my right hon. Friend the Secretary of State for Industry. I am sure that he is concerned with saving jobs.
    Mr. du Cann: I realise the difficulties that Ministers always have in regard to inquiries of this sort, and the decision whether to publish, but will the Secretary of State give the House an undertaking that the further inquiries that we understand are proceeding in respect of this company will be expedited as far as
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    possible, so that the company can get on with its constructive work on behalf of people in Great Britain and overseas?
    Is the Secretary of State further aware that I have in my hand a letter from the trade unions in Newcastle welcoming the participation of Lonrho in the affairs of Brentford Nylons, and that when I was there on Friday I had a better reception than I have ever received from any audience in my political lifetime?
    Mr. Dell: If the right hon. Gentleman is referring to the inquiries being made by the Director of Public Prosecutions, that is a matter over which I have no control.
    I take the opportunity of telling the right hon. Gentleman that my Department gave no assurance about the amount of notice that would be given to the company before publication of the report. I deeply resent the fact that the right hon. Gentleman should have decided to lift the confidentiality that his company was asked to observe before the report was published.
    Mr. Wrigglesworth: Will my right hon. Friend tell us whether the company opposed the publication of the report?
    Mr. Dell: Normally, I would have to tell my hon. Friend that the representations made by the company are confidential, but as on Friday it issued a statement indicating that for certain reasons it thought publication was injudicious at this point, the answer to my hon. Friend turns out to be a public fact.
    Mr. Taylor: Does the Minister agree that there is a great deal of unfairness in this kind of private inquiry, when inspectors can make allegations without legal redress and when they can publish whatever documents they select? A great deal of mud has been thrown at Lonrho, rightly or wrongly. Therefore, will the Minister at least agree that Lonrho has made a considerable contribution to British overseas earnings, to the British Exchequer, and to British influence in Africa?
    Mr. Dell: On the last occasion when the hon. Gentleman raised this matter he told me that it would be unfair to Lonrho if the report were not published. The inquiry was conducted with conspicuous

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    fairness, in accordance with the rules and guidance laid down by Lord Denning in the Pergamon Press case. I am absolutely aware of the contribution made by Lonrho to this country's economy; but I do not regard economic success as justifying any kind of behaviour.
    Mr. Madden: Will the Secretary of State tell us what assurances Lonrho has given in return for the £5 million loan, particularly in regard to the maintenance of employment and the future disposal of assets?
    Mr. Dell: These are questions that my hon. Friend should raise with my right hon. Friend the Secretary of State for Industry.
    Mr. Higgins: Is the Secretary of State aware that our wholehearted support for the free enterprise system and the profit motive is balanced by a determination that company law should protect the public interest? The Secretary of State says that he is contemplating whether changes are necessary. Will he therefore say whether this will be in time to amend the Companies (No. 2) Bill?
    Does the Secretary of State agree that the results of the inquiry fully justify its establishment by the previous Conservative Government under Section 165(b) of the Companies Act?
    Concern has been expressed at the fact that not all the documents produced in evidence have been published. Will the Secretary of State undertake to place these documents in the Library?
    Mr. Dell: Taking, first, the hon. Gentleman's point about documents, I am afraid that I do not know to what the company is referring in the allegations that it makes. Obviously, the inspectors had a vast quantity of documents which they saw or photo-copied in preparing their report. But in the preparation of any such report they would have to make a selection. I know of no document that has not been referred to the Department.
    I do not know whether the results of any consideration of implications of the report for the reform of company law will be in time for the Companies (No. 2) Bill, which is at present before the House. However, the duties of directors, which is a major issue raised by this report, are a subject that is likely to be covered in
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    the legislation that will flow from the Bullock Report, and that is to be introduced next Session.
    I have no ministerial responsibility for the decision to refer this company under Section 165. However, in the light of the report, I do not dissent from the decision to do so.

    Balance of Trade (Scotland)
    Mr. William Hamiltonasked the Secretary of State for Trade what estimate he has made of the Scottish balance of trade over the last three years, and of the prospects for the next five years.
    Mr. Dell: None, Sir. But I refer my hon. Friend to the reply I gave as Paymaster-General to a Question by my hon. Friend the member for Aberdare (Mr. Evans) on 5th February 1976.
    Mr. Hamilton: I thank my right hon. Friend for that reply. Will he see that any figures available to him are given the maximum publicity, the more so since it now appears that all the media, including BBC Scotland—in view of the antics of the present Chairman—are on one side of the argument? Will my right hon. Friend take steps to make another official visit to Scotland to present the facts to the people?
    Mr. Dell: I am grateful to my hon. Friend for suggesting that I make another visit to Scotland. I am always delighted to do that, and I shall be delighted on any occasion to repeat to the people of Scotland the facts that I put before the House. Nevertheless, I do not believe that economic considerations will govern decisions about the future unity of the United Kingdom. That is more soundly based than anything that would be decided by such questions, although they are important if Scotland is considering whether she can sensibly go it alone.
    Mr. Teddy Taylor: Is the right hon. Gentleman aware that if he does not publish as many figures as are available facts will be manufactured by those who want to break up Britain? Will he consider carefully the point made by the hon. Member for Fife, Central (Mr. Hamilton) and join all of us in condemning the silly, rather foolish and irresponsible pronouncements made yesterday by the Chairman of BBC Scotland?
    Mr. Dell: I am afraid that I have not seen those pronouncements. But I shall do all that I can to publicise what seem to me to be the relevant economic considerations in those arguments, without, however, claiming that these are the fundamental arguments in this discussion.

    Anti-Dumping Unit
    Mr. Peter Morrisonasked the Secretary of State for Trade whether he will set up an anti-dumping unit within his Department.
    The Under-Secretary of State for Trade (Mr. Michael Meacher): An anti-dumping unit has been in operation within my Department since 1957.
    Mr. Morrison: Is the hon. Gentleman aware that amongst textile workers in the North-West there is a genuine feeling that there is no such anti-dumping unit and that the Government are prepared to sit back while more and more of them lose their jobs?
    Mr. Meacher: In fact, 11 restraint agreements have now been signed, under EEC auspices, with low-cost producers which extend the protection of the textile industry beyond the traditional area of cotton into man-made fibres and also woollens, and which protect the industry more than ever before in its history from disruptive imports from low-cost producers.
    Mr. Jay: Does my hon. Friend regard the transfer of power over anti-dumping duties from the United Kingdom Government to the Brussels authorities as being one of the great benefits of our Common Market membership?
    Mr. Meacher: We operate our existing legislation in the light of the GATT code, and the EEC operates under the same criteria. But we shall, in any event, in a year's time retain the anti-dumping unit in the Department to assist British industry.
    Mr. Hugh Fraser: This anti-dumping unit has been struggling for 18 months with cheap dumped imports of footwear from the COMECON countries. Surely there is something wrong with an antidumping unit that has not succeeded so far in ameliorating the position for the footwear trade.
    Mr. Meacher: The truth of the matter over footwear is that voluntary restraint agreements were reached with three specific COMECON countries about maintaining their level of exports to us in 1975 in accordance with the level in 1974, and that has been maintained in 1976.

    Tariff Barriers
    Mr. Shersbyasked the Secretary of State for Trade what representations he has received from other Governments advocating the reduction or elimination of tariff barriers during the present multilateral trade negotiations.
    Mr. Ralph Howellasked the Secretary of State for Trade if he will urge the EEC to press for the reduction of tariff barriers during the multilateral trade negotiations.
    Mr. Dell: I have not received any direct representations from other Governments about the removal of tariff barriers, but they have made their views known on this point in the course of work on the multilateral trade negotiations. The objective which we ourselves have been pressing of a significant reduction in existing tariff levels is widely shared by other Governments both within and outside the EEC.
    Mr. Shersby: Does the right hon. Gentleman agree that the elimination of tariff barriers is an essential part of increasing world trade, and will he set a target date for their elimination by the end of the decade or at least by the end of the next round?
    Mr. Dell: I do not think that in these negotiations it will be expected that tariff barriers will be eliminated completely. It is generally agreed that there should be a reduction, according to some formula, in the level of tariff protection. There are now other forms of inhibition in the flow of trade, and these will also be a serious element in these negotiations.
    Mr. Marten: What is the Government's view on the Commission's proposals for the taxation of vegetable oils, in view of the very strong reaction against it by the United States?
    Mr. Dell: That is primarily a matter for my right hon. Friend the Minister

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    of Agriculture. But the hon. Gentleman must bear in mind that it is not only Europe that has certain protective devices in respect of agriculture. The United States has them, too. I hope that the hon. Member will appreciate the need for negotiations on these matters.

    East Midlands Airport
    Mr. Rostasked the Secretary of State for Trade if he will make a statement on the implications of the consultative document on airport strategy for East Midlands Airport.
    The Under-Secretary of State for Trade (Mr. Clinton Davis): The document examines, as a basis for consultation, a variety of roles for all the major regional airports, including East Midlands Airport, within the framework of a national strategy. I cannot anticipate the outcome of the consultations with local authorities and other organisations which will now take place.
    Mr. Rost: Will the hon. Gentleman take special note of the problem facing East Midlands Airport, namely, that of competition from Gatwick, Stansted and Luton, resulting from the subsidised prices which they are able to charge compared with East Midlands Airport?
    Mr. Davis: I have had representations about that problem, but in fact there is a dearth of evidence to support the charge.
    Mr. Wrigglesworth: Is my hon. Friend aware that, although the consultative document is welcome, there is great concern in areas like my own, with Teesside Airport, at the speed with which the matter is proceeding? Will he assure us that every possible effort will be made to pursue the Government's policy and to draw conclusions as quickly as possible?
    Mr. Davis: The Government recognised when they embarked on this process that, in involving as many people as possible in the future moulding of a national airport strategy, one of the penalties that would have to be paid was delay. Nevertheless, when so many interests are involved it is essential that everyone should have a fair opportunity to represent his views to the Government. We have set a period of six months for
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    the London regional airport document for consideration and consultation, and a similar period, which will follow that, for the second document, which has been published recently.
    Mr. Adley: Does the Minister accept the simple principle that areas of dense population which need airport facilities should provide those facilities within or adjacent to the areas in which the service is required?
    Mr. Davis: That is one of the considerations that will be applied in the consultations that are now to take place.
    Mr. Lawrence: Further to the question put to the hon. Gentleman by my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), is he aware that the British Airports Authority has provided his Department with evidence? Will he undertake to look at it again?
    Mr. Davis: I have been in consultation with the Joint Airports Committee of Local Authorities, which is one of the organisations involved in this consideration, and I have invited it to provide clear evidence that East Midlands Airport and others are being disadvantaged. I have in mind Luton as well. As yet, no such sufficient evidence has been forthcoming.

    Anti-Dumping Powers
    Mr. Moateasked the Secretary of State for Trade if he will make a statement on the arrangements being made for the transfer of anti-dumping powers to the EEC.
    Mr. Dell: Discussions are in progress with the Commission on the transfer of anti-dumping powers. The Commission is certainly well aware of the importance of making adequate arrangements for the extra work it will have to handle.
    Mr. Moate: Is the right hon. Gentleman not aware of the hostility that will be generated in this country and elsewhere if this House and this Government have to admit their impotence to deal with the many claims that have been received in respect of anti-dumping measures on such things as shoes, clothing or textiles? In view of the irrelevance of this proposal to the well-being of this country, will the Secretary of State seek a derogation or postponement of this regulation?
    Mr. Dell: There is no point in seeking such a postponement or derogation. This is a decision on which we have committed ourselves, but I must now ensure that it works in our interests. To that end we are having serious discussions with the Commission. I am myself in contact with Sir Christopher Soames—and I hope to meet him shortly—in order to ensure that adequate steps are taken to protect our interests when this transfer takes place.
    Mr. Hoyle: Can my right hon. Friend say whether, before the Commission will take action to impose anti-dumping powers, 50 per cent. of an industry has to be affected—and not just industry in this country, but industry in the EEC? If that is the case it means that the footwear and textile industries will be very badly affected indeed.
    Mr. Dell: It is certainly true that the Commission will consider the effects on industry within the European Community, but that does not rule out action to protect industry by a variety of methods which will be open to the Community. One point that I would draw to my hon. Friend's attention is that any anti-dumping measures that would be imposed would affect not just imports into this country but imports into the Community as a whole, and that would be a substantial deterrent factor.
    Mrs. Kellett-Bowman: Has the Minister read the excellent booklet entitled "Unfair" published in March by the Textile Industry Support Campaign, which sets out some of the measures that other countries, including Common Market countries, take to prevent the destruction of their textile industries? Will the right hon. Gentleman take the hint and prevent the destruction of ours?
    Mr. Dell: As the hon. Lady is aware, textiles are governed by the Multi-Fibre Arrangement. Both my Department and the Department of Industry are in discussion with the textile industry to clarify the improvements that they would like to see in the operation of the MFA—improvements that we shall attempt to negotiate when it comes up for renegotiation at the end of next year. I have read the document to which the hon. Lady referred and am well aware of the concern in the industry.
    Mr. James Lomond: So that we can get this question into perspective, will my right hon. Friend tell us how many actual complaints of dumping the anti-dumping unit has had to deal with in the last three or four years?
    Mr. Dell: I cannot give the figure for that period wihout notice, but we certainly have a large number of cases to examine, and we have taken action in an increasing number of them. I shall look up the figures that my hon. Friend asks for and let him know.
    Mr. Higgins: The Secretary of State dodged the question put by his hon. Friend the Member for Nelson and Colne (Mr. Hoyle) about the 51 per cent. limit. On what basis is his Department using that figure? Will the right hon. Gentleman ensure that neither he nor either of his junior Ministers mixes up the two quite separate questions of the MFA, on the one hand, and anti-dumping action, on the other? It is important that this should not be done, in order to have better and more effective action against dumping as well as approval of the MFA.
    Mr. Dell: I entirely agree with the hon. Gentleman on the second point. The industry is affected both by any antidumping action that may be taken and by the protection given under the MFA. I thought it right, therefore, to refer to both aspects. With regard to the question of my hon. Friend the Member for Nelson and Colne (Mr. Hoyle), my Department has not used the figure of 51 per cent. What my hon. Friend was asking was whether the European Commission would insist on a figure of 51 per cent. What I am saying is that the Commission has to consider the effect on the European industry as a whole. I conceded that point. Against that, it is possible for the Commission to impose antidumping duty and to do it for the Community as a whole. That would be a considerable deterrent factor.

    Equity Enterprises Ltd.
    Mr. Wrigglesworthasked the Secretary of State for Trade when the last accounts of Equity Enterprises Ltd. were lodged at Companies House.
    Mr. Clinton Davis: Accounts were lodged on 29th November 1974 made up to 31st December 1973.
    Mr. Wrigglesworth: I am grateful to my hon. Friend for that reply. Is he aware that the shares of this company have been suspended since April of last year and that many unanswered questions about this company remain, to which the shareholders and public would like to hear replies? Will the Minister ask Mr. David Frost and the other directors to make an early statement about the company's affairs?
    Mr. Davis: I take note of what my hon. Friend said. At the present time no action is pending, save that unless the accounts are forthcoming within two weeks action will be prosecuted under Section 148.
    Mr. Anthony Grant: On a more general point, is the Minister aware that there are too many firms which fail to record, in time or accurately, the statutory information required? This is of great inconvenience to the business community. Will he have a blitz on those firms?
    Mr. Davis: We need more than a glimpse in respect of this, and we have at present a Bill in Committee—
    Mr. Anthony Grant: A blitz.
    Mr. Davis: A blitz. I am certainly in favour of having a blitz. Perhaps the hon. Gentleman will have a word with his hon. Friend the Member for Worthing (Mr. Higgins) to help expedite consideration of the Bill aimed at dealing with this precise problem.
    Mr. Arthur Lewis: Will the Minister look up the facts in his Department, which show that for about 15 years I have been trying to get progress in this respect? Will he arrange, through the normal channels, for sponsored Questions, to supply periodic answers, to show that hundreds, and possibly thousands, of companies are deliberately and daily dodging this law, so that we can get records put into Hansard—if Hansard can take it—of the thousands of companies doing this with impunity and, dare I say it, with the support of his Department?
    Mr. Davis: My hon. Friend dare to say anything, and tends to do so from time to time, so I would not have thought that he required any stimulation from my Department to arrange Questions, having regard to his very considerable record in that respect over the 15 years to which he has referred.

    USSR (Export Credits)
    Mr. Blakerasked the Secretary of State for Trade what amount of the British credit of £950 million for exports to the Soviet Union has been taken up at the latest available date.
    Mr. Dell: The total value of contracts placed under the agreement to date is approximately £36 million and further substantial contracts are under discussion between United Kingdom exporters and Russian buyers.
    Mr. Blaker: Have the Government considered whether it makes sense for us to compete with other industrialised countries to provide cheap credit to the Soviet Union when we have to pay much higher rates of interest to borrow the money than do other supplying countries? Should we not rely more on the competitive edge given by the depreciation of sterling rather than on subsidised credit?
    Mr. Dell: The Government have considered that point and we have come to the conclusion that we nevertheless need to provide this sort of agreement as a framework for trade with the Soviet Union. We now look forward to the Soviet Union placing large orders in this country, in accordance with the assurances given during the recent visits here of both Mr. Gromyko and the Deputy Prime Minister, Mr. Kirillin.
    Mr. Kenneth Lewis: Is that not a very poor reply? Will the Minister have a word with his hon. Friends below the Gangway, because whatever influence they have in this country they do not seem to have much influence with their extreme Left-wing friends abroad? This country is doing better trade with capitalist countries than it is doing with Communist countries.
    Mr. Dell: There is no point in the type of remark that the hon. Gentleman has just made. Companies in this country are in serious negotiation with the Soviet Union in respect of very large orders,

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    and I anticipate that large orders will be placed within the framework of this agreement.
    Mr. Costain: Is the Minister aware that the majority of these orders are for capital goods? Is it not farcical that we should be giving the Soviet Union credit on cheaper terms than our own industries so that they can produce these consumer goods? Is that not absolutely stupid?
    Mr. Dell: I must tell the hon. Gentleman, who I know has contacts in industry, that industry does not regard the terms on which we are assisting British industry with the export of capital goods as being excessively competitive. They also want assistance to get orders in the various markets of the world open to them and in the Soviet Union as well.
    Mr. Geoffrey Finsberg: Does the Secretary of State not think that there is a danger in supplying this sort of credit and accepting orders for capital and consumer goods, thus allowing the Soviet Union to get on with defence production?
    Mr. Dell: The hon. Gentleman knows the controls that exist on the export of defence equipment. We have to decide whether to export civil equipment to the Soviet Union for large orders that we countries, and I find that it is not just the view of the Government but also of British companies negotiating with the Soviet Union for large orders, that we ought to give them this sort of support.

    Heathrow (Jet Flights)
    Mr. Jesselasked the Secretary of State for Trade if he proposes to contain the daily number of jet flights in and out of Heathrow; and, if so, at what level.
    Mr. Clinton Davis: In the context of the consultations on the London area airports document published last November, various proposals have been made for limitations on the development of Heathrow, including restrictions on jet flights. All these proposals will be taken into account in the formulation of the Government's airports policy.
    Mr. Jessel: As it was this Government, abetted and encouraged by the Liberal Party, who dropped the proposal for a coastal airport at Maplin—the main hope for the future for people living around
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    Heathrow Airport who suffer from what the Minister has rightly described as the pestilence of aircraft noise—when will the Government face the consequences of that decision and impose a strict daily limit on the number of flights through Heathrow, which already total 600 a day, and prevent any increase in the capacity of the airport?
    Mr. Davis: The question of capacity is very much part of the topics that the Government have invited everybody with an interest in this matter to discuss with us. It would be wrong for me to pre-empt that discussion. The hon. Gentleman seems to be hankering after the rightly-discarded Maplin. I find his remarks quite extraordinary in view of his party's alleged concern over public expenditure.
    Mr. Tebbit: Is it a fact that the capacity at Heathrow will first become limited by the capacity of the passenger terminals unless the Government authorise the construction of new terminals? Since the Government came to office, what has the Minister done to encourage airlines to re-equip with new, quieter aircraft?
    Mr. Davis: If the hon. Gentleman reads the document to which I have referred he will find comments on the adequacy of the terminals for future development and a list of the available options. It would not be helpful for me to indicate that the Government have made up their mind on these matters. Clearly, we have not. On the encouragement of quieter aircraft, we have made clear—and subordinate legislation has been introduced to deal with this matter —that older versions of the noisier aircraft can no longer be introduced, since 1st January this year. We have also sought to draw public attention to and have consultations on retrofit and two segment approach. We have had two-demonstrations, which have created a great deal of public praise for the Government's approach to the problem.

    Inflation Accounting (Morpeth Committee)
    Mr. Tim Rentonasked the Secretary of State for Trade when he expects to receive a report from the Morpeth Committee on inflation accounting.
    Mr. Dell: The Inflation Accounting Steering Group, on which my Department

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    is represented, is to report to the Accounting Standards Committee of the accountancy profession. I understand that the group hopes to send an exposure draft to the ASC by late September, with a view to its publication at the end of November.
    Mr. Renton: On the basis of the information now available, does the Secretary of State think that current cost accounting represents, in the words of the Companies Act,
    "a true and fair view"
    of a company's past financial record? If not, does he think that the introduction of inflation accounting will require changes in company law, and should that be made mandatory on all quoted companies?
    Mr. Dell: One of the decisions that we hope to be able to take following the Morpeth Committee's report is on the question whether changes in legislation will be required. I cannot say definitely at present. I think that current cost accounting is gaining acceptability rather than the opposite.

    Aircraft Purchases (British Components)
    Mr. Hoyleasked the Secretary of State for Trade if he will give reasons for his refusal to seek powers to ensure that foreign aircraft purchased by British companies contain a substantial proportion of British-produced parts.
    Mr. Clinton Davis: In the highly competitive international market in which most British air carriers operate, they need to exercise their commercial judgment in purchasing the most suitable type of aircraft for their particular needs.
    Mr. Hoyle: Does my hon. Friend consider that to be an inadequate answer, particularly as British Caledonian has ordered two aircraft, at a cost of 70 million dollars, and has options on two more, when it has no idea whether there will be any British components available for them? Is my hon. Friend aware that British Caledonian is only considering the possibility of having British engines, if they are available, in the two planes for which it has options? As there will obviously not be British engines in the first two planes ordered, is it likely that it will be prepared to fit British engines in the further two planes for
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    which at the moment it has options? Does not my hon. Friend think that he should have insisted on a roll-over provision in the contract to ensure the fitting of British engines in all planes?
    Mr. Davis: This is not a matter on which am able to insist. If a company seeks to import aircraft, there may be an import duty payable if a comparable aircraft with a substantial British content is available. However, I do not see that I have any locus in the sort of considerations to which my hon. Friend has drawn attention.
    Mr. Rost: Is the hon. Gentleman aware that unless he soon authorises a collaborative project there will be no British air freight industry able to produce anything that British industry can buy? How are the talks with the French on the European airbus proceeding? Will this include a Rolls-Royce engine?
    Mr. Davis: The hon. Gentleman rightly seizes every opportunity to present his point of view, but he knows that these are matters for the Secretary of State for Industry and not for my Department.
    Mr. Walter Johnson: Will my hon. Friend look at this matter again and apply the same strictures to British Caledonian as are applied to British Airways, who are practically forced to buy British aircraft whether they like it or not? Is it not a disgraceful state of affairs that British Caledonian should be purchasing American aircraft?
    Mr. Davis: British Airways are certainly not forced to buy British aircraft. My hon. Friend must not misinterpret the situation. British Caledonian had to apply its own commercial judgment on the purchase of these aircraft. It had to consider whether a comparable British aircraft was available, and it advised us that none was available within the time scale it required.
    Mr. Tebbit: Would the hon. Gentleman not be doing us all a great kindness if he took his hon. Friend the Member for Nelson and Colne (Mr. Hoyle) to one side after Question Time and explained that, very regrettably, there was no British aircraft available, nor one with a substantial British content, which could do this job? Would he also tell his hon. Friend that it is not possible to draw up a contract involving roll-over

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    provisions for an aircraft that does not exist, that has not been designed, and for which no price has been agreed?
    Mr. Davis: I frequently take my hon. Friend the Member for Nelson and Colne (Mr. Hoyle) to one side, and he does the same to me. We frequently have the most constructive discussions together. If the hon. Member for Chingford (Mr. Tebbit) is seeking a tripartite arrangement, we shall have to consider the matter.

    South Africa
    Mr. Wallasked the Secretary of State for Trade what steps he is taking to increase British trade with, and investment in, South Africa.
    Mr. Meacher: Our policy on civil trade and investment is unchanged.
    Mr. Wall: Will the hon. Gentleman confirm that it is the Government's desire to increase trade with, and investment in, South Africa?
    Mr. Meacher: Our policy on this matter was fully stated by the former Foreign Secretary on 4th December 1974.
    Mr. Hooley: Does my hon. Friend agree that the arguments for giving economic support to apartheid do not differ from the arguments advanced 170 years ago for supporting the slave trade? Does he agree that they are as invalid and immoral today as they were then?
    Mr. Meacher: I agree.
    Mr. Cormack: If the Minister believes in furthering British trade, how can he reconcile his answer with the answer he gave to my hon. Friend the Member for Blackpool, South (Mr. Blaker) about credit facilities provided for Russia? Will he come clean and do away with double standards on this matter? Will he support trade with both countries or with neither?
    Mr. Meacher: Credit cover and ECGD facilities are provided in full for South Africa.

    Export Credits
    Mr. Anthony Grantasked the Secretary of State for Trade what steps he is taking to achieve international agreement on the terms and conditions of credit offered by exporting countries.
    Mr. Dell: I refer the hon. Member to my statement in the House on 15th June. The authorities in a number of major trading nations have recently indicated their intention to observe certain guidelines on the terms on which they are prepared to provide official support for export credit of two years or more. These guidelines are being applied by the Export Credits Guarantee Department.
    Mr. Grant: Is the Minister aware that for some years British exporters have been at a disadvantage because other countries, notably France, have found it very convenient to muddle up trade with aid, much to their advantage? I welcome the new arrangements, but will the Minister try to encourage the department dealing with overseas aid to be a little less pious and perhaps more competitive in the terms it offers.
    Mr. Dell: A great deal of our aid is tied. The objective of ECGD is to be competitive, and in general I think that it is and that it has greatly supported our exports.
    Mr. Dykes: Is the Secretary of State in favour of the European Export Bank?
    Mr. Dell: I do not think that that arises on this Question.

    Japanese Steel
    Mr. Michael Marshallasked the Secretary of State for Trade what recent representations he has received from special steels producers in connection with alleged dumping of steel bars from Japan.
    Mr. Meacher: My Department is considering a number of allegations that special steels are being dumped by various countries, including Japan, and I recently met a delegation from Sheffield to discuss this issue.
    Mr. Marshall: Is the Minister aware that this is a very serious and important question? Is he further aware that the recent announcement by his Department that it would have a special inquiry into the dumping of special steels, to be followed shortly afterwards by a disclaimer saying that there would not be a special inquiry, was a fiasco? Before the Minister moves on to another Government Department, will he make sure that this matter is looked at carefully? If the

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    Government cannot make a case for antidumping action on this subject, they will not be able to make one for anything.
    Mr. Meacher: I appreciate the seriousness of this issue, which was emphasised to me by the delegation. I appreciate that the special steels industry is operating at only 35 per cent. of capacity. However, because the industry had difficulty in finding precise evidence of the domestic fair market price in Japan, my Department undertook its own investigation. It did a detailed analysis of imports over a three-month period. We sent details of the result to the industry on 6th May. We did not receive the industry's comments until 23rd June, and in the light of those comments we are urgently considering what our decision will be. I can assure the hon. Gentleman that he will have a decision very shortly.
    Mr. Flannery: Will my hon. Friend accept from me that the special steels industry is by far the most profitable part of the steel industry? We in Sheffield deeply regret that it is not under public ownership, but we are deeply concerned nevertheless about dumping from Japan. My hon. Friends and I from Sheffield are constantly having meetings with those concerned in the city to stop this dumping.
    Mr. Meacher: I accept all that my hon. Friend says. In spite of the complexity of this case, because of the switching between alloys of different sizes and shapes and because actual market prices are not necessarily published about steel prices in Japan, I assure him of a very early decision.
    Mr. John H. Osborn: What information does the Minister have about foreign steel company warehouses in Britain in general and Sheffield in particular, and about the extent to which they are selling from stock at low market prices in this country?
    Mr. Meacher: The question of whether they are selling below market price and not in accordance with the GATT criteria is one important factor which the inquiry will ascertain. But I am well aware of the substantial stocks of foreign steel now held by stockholders in and around Sheffield.

    Regional Airports Policy
    Mr. Steenasked the Secretary of State for Trade if he will arrange an early meeting with the Chairman of British Airways in order to discuss the consultative document on regional airport policy.
    Mr. Clinton Davis: My Department has informed British Airways of the publication of the consultation document on regional airports and invited them to participate in the consultations which will now take place.
    Mr. Steen: Will the Minister get hold of the Chairman of British Airways on the telephone to scotch the rumour that the company is to replace the 111 jets which it is flying from London to Speke Airport with Viscounts as part of its discriminatory policy against Liverpool and in favour of Manchester?
    Mr. Davis: I do not accept that British Airways have embarked upon a discriminatory policy against Liverpool in favour of Manchester. These matters to which the hon. Member is clearly alluding come within the day-to-day commercial judgment of British Airways, and they are not a matter for me.
    Sir W. Elliott: Will the Minister take fully into account that the consultative document suggests with regard to Newcastle Airport a potential and possible increase of 1 million passengers a year? Will he be as sympathetic as possible to the application from Newcastle that there should be Government support for an EEC grant for the development of our buildings?
    Mr. Davis: The hon. Gentleman is no doubt aware that the other day I received a deputation on behalf of those representing Newcastle Airport to discuss this matter. There are very difficult issues affecting an application for EEC assistance for enlargement of the existing terminal facilities. I made that quite clear to the deputation. Although I have not given an absolute and categoric "No" on this matter, I doubt whether I shall be able to afford to this application the sort of approval that the hon. Gentleman seeks.

    West Germany
    Mr. Litterickasked the Secretary of State for Trade what steps he proposes to take to rectify the persistent United Kingdom balance of trade deficit with West Germany.
    Mr. Meacher: Government-supported export services are already doing a great deal to assist the efforts of United Kingdom exporters in the German market, with encouraging results.
    Mr. Litterick: Is my hon. Friend aware that the German-British deficit is the largest single component in the huge trading deficit between the United Kingdom and the Common Market? Since this huge deficit is caused mainly by the importation of manufactured goods, it would seem that our trading relations with Western Germany will be an excellent case on which to apply selective import controls as soon as possible.
    Mr. Meacher: The answer to the first part of the question is "Yes". There has, however, been some improvement in the position inasmuch as the United Kingdom's deficit with the EEC in the first quarter of this year, at £392 million, while certainly a large figure, was the lowest since 1973. But the question of application of selective import controls is one that the Government are perfectly prepared to consider. They have imposed such selective import controls in respect of a number of industrial products, but I doubt whether that is the answer to the problem in respect of the West German market, where it is much more the case that we have lost a certain amount of competitive edge across a wide range of semi-finished and finished manufactures.
    Mr. Tim Renton: The Minister has just referred to a loss of competitive edge. Could that be due to excessive tax burdens in this country compared with those in West Germany?
    Mr. Meacher: No.
    Mr. Arthur Lewis: If my hon. Friend cannot agree with that, to what extent might it possibly be due to the high costs we are having to bear through having our troops in Germany? Is it not about time that the Germans paid their full share of those costs?
    Mr. Meacher: That is an interesting suggestion, but I doubt whether it affects our competitive edge in industry.
    Mr. Peter Bottomley: Is there any natural reason why we should have lost our competitive edge with Germany? if there is any such reason, will the hon. Gentleman explain how selective import controls would cure that?
    Mr. Meacher: One of the fundamental problems of our industry is undoubtedly the chronically low level of investment. The level of manufacturing investment in this country today is, in real terms, about where it was in 1967–68, whereas our EEC competitors, notably Germany, have seen a constant annual real increase. This is a fundamental problem and it may well be justification for selective import controls in particular cases.
    Mr. Shersby: Does the hon. Gentleman think that the level of investment has nothing to do with the level of taxation?
    Mr. Meacher: The level of investment is affected by the level of taxation, but it is affected by several other factors. We have to take into account the totality of factors. If there is no other way of promoting the level of investment that we need, we must proceed by way of public mechanism such as the NEB or by other means such as import controls.

    Textile Industry
    Mr. Maddenasked the Secretary of State for Trade what progress is being made with measures to assist the British textile industry, particularly the clothing sector, to combat unfair competition from Eastern Europe and low-cost overseas manufacturers.
    Mr. Meacher: Under the GATT Multi-fibre Arrangement, 11 bilateral restraint agreements have now been negotiated between the EEC and low-cost supplying countries, and further agreements are expected to follow shortly. In addition, most imports of textiles and clothing from Eastern Europe are restricted by quota, and these restrictions were extended in March this year to cover men's and boys' woollen suits.
    Mr. Madden: Does my hon. Friend agree that these measures are not adequate to deal with the problems confronting the British industry? Is he aware that there

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    is a growing suspicion among those in the textile industry that many of our competitors are not observing the rules, whereas we seem to observe all the rules? Does he agree that this is a disturbing context in which to face the relinquishing of our independence and to pass those powers to the Common Market?
    Mr. Meacher: There has already bean comment on my hon. Friend's last point, and an answer from my right hon. Friend. I do not intend to extend that further. I hope that my hon. Friend will accept that, even if he believes that further measures are needed, the totality of protective measures now in existence will give more protection for the industry than it has ever had before when there is as economic upturn and when the bilateral restraint agreements begin to bite, as they will. As for the Clothing Manufacturers' Federation, we have sought further evidence regarding the anti-dumping application. This is in addition to the voluntary restraint measures that exist for tonnage. We expect to reach a decision shortly as a a result of the latest information that we received on 21st June.
    Mr. Fletcher-Cooke: Does the hon. Gentleman appreciate that in the new agreements that he has told us about—namely, the many agreements with low-cost countries—the quotas are always extended from the previous base year, albeit not as much as the overseas countries would like? Will he think about limiting the extensions in future, even to the extent of a nil extension? Does he realise that it is depressing for domestic manufacturers to realise that every year the quotas are gradually extended, even though that seems to be the fashion in international trade?
    Mr. Meacher: The hon. and learned Gentleman is correct in saying that one of the provisions of the Multi-Fibre Arrangement is that any restraints are imposed on existing levels of trade, and that there is provision for the growth factor, but he will know that the arrangement expires at the end of next year. There will be a review within GATT in the autumn of this year. The hon. and learned Gentleman's proposal for a recession clause is one of the matters to which we are now giving careful consideration.
    Mr. Higgins: Is the hon. Gentleman aware that the Secretary of State said
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    earlier that his Department would not insist that 51 per cent. of an industry had to be shown to be affected by imports for it to make out an anti-dumping claim? None the less, the Clothing Manufacturers' Federation is firmly under the impression that the Department is imposing such a requirement. May we have that matter cleared up? Secondly, is it not the case that Russian industry can dump on this market and re-equip with machinery exported from this country on better credit terms than those available for our own textile industry?
    Mr. Meacher: The hon. Gentleman has drawn attention to the distinction between the Multi-Fibre Arrangement and the anti-dumping applications. The Question is specifically about the Multi-Fibre Arrangement. If the hon. Gentleman wishes to pursue the matter he has raised, perhaps he will table a specific Question. He has referred to assistance to Russian industry, in that it can obtain machinery under better credit cover than now exists for British industry. I do not think that that is a fair assumption to make, bearing in mind the full level of ECGD credit insurance cover that is given to British industry and to Russian competitors.
    Mr. Higgins: On a point of order, Mr. Speaker. I should point out that the Question does not relate to the Multi-Fibre Arrangement.

    UNCTAD Conferences
    Mr. Arnoldasked the Secretary of State for Trade whether lie will now take practical steps towards a British initiative in reforming the structure of any future UNCTAD conference.
    Mr. Dell: We shall be considering, in consultation with our EEC partners and other industrialised countries, all aspects of our approach to forthcoming UNCTAD meetings, including questions related to their effective organisation and functioning. Discussions will also be held with the UNCTAD Secretariat and Commonwealth and other developing countries.
    Mr. Arnold: Is it not the case that the present structure of these conferences inevitably gives them an air of confrontation? Would not progress on individual

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    issues be easier to reach if less emphasis were placed on the opening statements, which, to say the least, are now the subject of serious misrepresentation?
    Mr. Dell: It may be that the present structure of UNCTAD conferences tends in the direction of confrontation. Nevertheless, we have tried to avoid confrontation. The difficulty is to see how we can otherwise organise conferences of so many nations. After careful consideration over a number of years, the conclusion has been reached that the present structure provides the best way of conducting the conferences.
    Mr. Hooley: Does my right hon. Friend agree that there is a basic conflict of interests to be resolved between developing countries and the Western industrial world, and that merely tinkering with the mechanism of UNCTAD will not resolve it?
    Mr. Dell: I agree that changing the mechanism by which UNCTAD operates will not change anything of importance. We have to see whether we can come to a settlement of the conflicting interests within the world to the mutual benefit of both parties.

    Luton Airport
    Mr. Madelasked the Secretary of State for Trade if he will define Government policy as to the rôle of Luton Airport in the 1980s.
    Mr. Clinton Davis: Following the publication of two consultative documents on the London and regional airports, consultations are taking place with local authorities and other organisations. No decisions on future Government policy towards Luton Airport will be taken in advance of these consultations.
    Mr. Madel: How many passengers per year does the hon. Gentleman think it sensible for Luton Airport to be expected to take by the 1980s? Should there be scheduled services in addition to charter services?
    Mr. Davis: Once again, and like other hon. Members, the hon. Gentleman is asking me to make a prejudgment about the very purpose of the consultations. I hope that all those with interests in the development of Luton Airport will ensure that their voices are heard in the process
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    of consultation upon which we have embarked.

    Vauxhall Motors (Polish Factory)
    Mr. Hal Millerasked the Secretary of State for Trade what help his Department is giving Vauxhall Motors in their negotiations to supply a commercial vehicle factory in Poland; and if he will make a statement on Government policy towards such projects.
    Mr. Meacher: To give the kind of information referred to in the first part of the Question would not be in the commercial interests of the British firms concerned, especially whilst negotiations are in progress.
    The second part of the Question is a matter for my right hon. Friend the Secretary of State for Industry.
    Mr. Miller: Will the hon. Gentleman give an assurance that the application from this British firm is being dealt with expeditiously, and on all-fours with any other application from a similar firm?
    Mr. Meacher: Yes, I can give the hon. Gentleman that assurance.

  ENERGY

    SGHW Nuclear Reactors
    Mr. Rostasked the Secretary of State for Energy if he proposes to announce the cancellation of the SGHW nuclear reactor programme.
    The Under-Secretary of State for Energy (Mr. Alex Eadie): As was indicated in the answer of 28th June to the hon. Member for Bedford (Mr. Skeet), the Atomic Energy Authority has suggested that we are at an appropriate point to take stock of progress with the SGHWR. It will be advising my right hon. Friend further
    Mr. Rost: Will the hon. Gentleman come clean and admit that the programme is not only very far behind but will prove far too costly, and that the industry realises it will be a mistake to go ahead with it?
    Mr. Eadie: There is no question of not coming clean. The hon. Gentleman has been tabling many Questions on energy conservation. There has been a change in the climate and relationship involved in the consumption of electricity.

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    There have been changes in energy demand. There is no doubt that these factors will be taken into consideration. I stick to the answer that I have given the hon. Gentleman. There is no question of not coming clean—it is very clean.
    Mr. Hooley: Does my hon. Friend agree that it would now be a disastrous error to abandon the proven technology of the SGHWR in favour of the fast breeder?
    Mr. Eadie: I agree with my hon. Friend that decisions taken in nuclear power should be ones that give confidence to British technology. The facts that are involved relate to those that I mentioned in answering the hon. Member for Derbyshire, South-East (Mr. Rost), who posed the question—namely, that there has been a downturn in energy demand. Therefore, there is no question of turning our backs on British technology.
    Mr. John H. Osborn: Will the hon. Gentleman ensure that once having embarked on a programme of this type there will be no quick changes of political or commercial decisions that were taken, rightly or wrongly, two or three years ago? Will he bear in mind the cost of any change in direction? Does he realise that nuclear energy is important if we are to have greater independence from outside fuel sources for our energy?
    Mr. Eadie: I know how assiduous the hon. Gentleman is in his approach to these matters, on which he has made some noteworthy speeches in the House. The House should be aware that when one is trying to break through frontiers of technology it can be a very costly exercise. I give an assurance that the estimate of the Department of Energy, confirmed by some noteworthy fuel technologists, is that there is evidence that there will be a nuclear power gap in the 1980s. That is generally the view expressed in the House and in the Department.
    Mr. Hardy: While welcoming my hon. Friend's response to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), may I ask my hon. Friend to make sure that any gap in the 1980s will not in any circumstances be met by the introduction of American light water reactors?
    Mr. Eadie: I think I can tell my hon. Friend that if any Government were confronted with a chance or a reversal in the position, it would not be at the expense of British technology. As a country, we have over-capacity in generating. It is not a question of trying to substitute foreign for British technology. There is over-capacity, and there is a general down turn in energy demand.
    Mr. Evelyn King: Is the hon. Gentleman aware that over the years hundreds of millions of pounds have been invested in the atomic station at Winfrith, in my constituency? Can he give me an assurance that no further development is contemplated which will seriously affect the prospects of those who now work there?
    Mr. Eadie: I can certainly give an assurance that before anything happens at the establishment in the hon. Gentleman's constituency, which, incidentally, I have visited twice—and I am not saying that we contemplate anything happening at the moment—there would be the utmost consultation with the workpeople involved in that establishment.

BUSINESS OF THE HOUSE
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): With permission, Mr. Speaker, I should like to make a short Business Statement.
Following the loss of Friday's sitting, the debate on direct elections to the European Assembly was put in place for today but, as shown on the Order Paper, this would come on at a fairly late hour. I understand that it would be for the general convenience and, indeed, more effective, if this debate could come on earlier.
I am therefore arranging for a motion for the Adjournment to be moved at seven o'clock when the issue can be discussed until ten o'clock.
Mr. Peyton: The whole House will be grateful to the Leader of the House for making this statement and for having paid attention to representations by the Opposition on this subject.
May I ask what intentions the Government have with regard to business after 10 p.m.? May I remind the right hon. Gentleman that there is quite a quiverful down on the Order Paper—in case he has forgotten it? Will he say

31
what are his intentions with regard to the Development Land Tax Bill, the Iron and Steel (Amendment) Bill, the Fatal Accidents Bill [Lords] and so on?
Mr. Foot: As the right hon. Gentleman is aware, it is not normal in the House to give such long-term indications as those for which the right hon. Gentleman asks. I hope that we can make excellent progress. I hope that the Development Land Tax Bill will be concluded by twelve o'clock. [HON. MEMBERS: "Oh."] Well, we shall do our best and I am sure we shall have assistance generally in getting the matter through. Then we shall proceed to the Iron and Steel (Amendment) Bill, and I hope that the other matters will not be too lengthy.
Mr. Peyton: I am interested to know the right hon. Gentleman's definition of a long-term view. We shall be very interested to see what progress he makes. We have said that we have no desire to obstruct progress of business in the House. Nevertheless, the Government have the habit of putting down late an inordinate volume of indigestible business.
Mr. Foot: I do not think it is indigestible. I am happy to have the right hon. Gentleman's clear assurance that there will be no obstruction. I know that it goes without saying, but I welcome it all the more when the right hon. Gentleman says that he has no intention of obstructing the business.
Mr. Spearing: Will the Lord President clarify the situation? As the debate at seven o'clock is to be on the Adjournment, I take it that it would be out of order to raise the substantive motion on direct elections to the European Assembly, which is on the Order Paper, and the amendment. Is there no way in which my right hon. Friend can bring forward that business so that the motion and the amendment to it can be moved?
Mr. Foot: The difficulty about doing that is that we would have to lose the intervening business, which I am sure my hon. Friend would deplore as much as I would.
Mr. Marten: If we had reached the motion on the Order Paper on direct
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elections to the European Assembly we would have debated it for a long time. Under the new arrangements we are limited to three hours. Is that not rather a pity?
Mr. Foot: I know that the debate will be earlier, but debates are no worse if they are sometimes succint.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: May I point out to hon. Members that there are more statements to be made. I shall allow one more supplementary question on this statement.
Mr. Alexander Fletcher: Does the right hon. Gentleman recollect that during the debate on direct elections in March, the Prime Minister said that he wanted the view and the discussion of the House in time for the summit meeting? As the summit meeting is taking place this afternoon, can the right hon. Gentleman say whether there are arrangements to keep the Prime Minister advised of the views of the House?
Mr. Foot: Of course, the Prime Minister will be advised. We wished to have this debate earlier than last Friday, when we put it down on the Order Paper, but we discovered also that representations had been made that we could not have had a debate earlier in the week when many hon. Members—hon. Members of all political views and on both sides of the House—who wished to take part were either at the European Assembly or were engaged in work on the Scrutiny Committee, and it was in response to representations from the House that the subject was put down for debate last Friday.

MEMBERS' PAY AND ALLOWANCES
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): With permission, Mr. Speaker, I would like to make a statement about the pay and allowances of Members of Parliament.
There has been no increase in Members' pay since 13th June last year. The maximum increase permitted under the current round of the pay policy is £6 a week, and the Government now propose that the Member's rate of £5,750 should

33
be increased by that amount from the 13th of last month. I will table the necessary motion at an early date. The rate for pension purposes will remain £8,000.
The £8,500 upper limit for any increase must also apply as required by the pay policy. Members who have earnings from other sources which, together with the parliamentary salary and any London supplement, take their total earnings to £8,500 or more are not eligible under the policy to receive the £6 supplement and they will, therefore, be asked to forgo it in full. In borderline cases the £6 will need to be restricted so that total earnings do not rise above £8,500.
The £8,500 limit means that Ministers in this House will not qualify for the supplement, but unless they have other earnings which take them beyond the limit, junior Government and Opposition Whips will be entitled to it.
Draft Orders in Council under the Ministerial and Other Salaries Act 1975 will be tabled which will enable Ministers and Office Holders in another place to receive a supplement to their present salaries, including London supplement, where they fall below the £8,500 limit, subject to the same proviso about any other earnings also being taken into account.
The Government will also put before the House a motion that the secretarial allowance should be increased from 13th June last from its present annual maximum of £3,200 to enable Members to increase their secretaries' salary within the policy by up to £6 a week for full-time assistance and to claim the appropriate reimbursement. Where the services of a secretary are shared, any maximum increase of £6 a week should be suitably apportioned among Members.
I should also inform the House that the Prime Minister has received the second part of the Review Body's Report dealing with ministerial salaries, Members' pensions and some minor matters affecting Members' allowances and facilities. The Report is the second in the series which was commissioned by the Government in January 1975, well before the present pay policy was introduced. It is being printed and will be presented to the House as soon as possible. It recommends substantial increases in ministerial salaries and some improvements in the
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parliamentary pensions scheme. These recommendations cannot be implemented under the current incomes policy. The Government do not propose to take any further action on the Report until incomes policy permits, and I should make it clear that the Government are in no way committed to implementing these recommendations.
Mr. Peyton: The right hon. Gentleman's statement raises two quite important and somewhat novel questions. First, some Members will now be paid at different rates for doing the same job, and this will arise for purely outside considerations unrelated to the amount of work done here. Does the right hon. Gentleman see this as going on indefinitely?
Second, although Ministers may presently be wallowing in a slough of disregard, it seems dangerous none the less that Ministers should be consistently underpaid, since this does not attract the necessary talent to ministerial office. Further, the right hon. Gentleman's statement made at least the pretence of dealing with the salaries of Members of Parliament, and I do not understand why it was thought right to drag in by the heels the salaries of Ministers in another place. I suppose that it was just for convenience. Perhaps the right hon. Gentleman will confirm that.
Finally, what are the right hon. Gentleman's intentions regarding the Review Body, since it would be a foolish exercise to ask distinguished and busy people to churn out recommendations which the Government then felt obliged to ignore?
Mr. Foot: It is true that the proposals which the Government have made introduce a differential as between different Members of Parliament, but this is inevitable if we are to abide by the £8,500 limit and still make the increase which we propose to make for the majority of Members—and certainly for those who need it most. It does not mean that we are suggesting that this should in any way be a permanent feature. That will, of course, be a matter for the House to consider when incomes policy restrictions do not affect the issue.
On the question regarding Ministers' salaries and the right hon. Gentleman's suggestion that Ministers should be paid more, I can only quote what my right

35
hon. Friend the Prime Minister said the other day—Timeo Danaos et dona ferentes—and no one is to be more feared than the right hon. Gentleman in such a respect. As for why we have dragged in, as the right hon. Gentleman puts it, Members of another place, I think that Ministers in the other place are Members of Parliament, and they should be properly dealt with under our proposals.
With regard to the Review Body, it is true that it is an eminent body, and certainly we should take account of what it recommends. I am sure that the House will wish to pass its judgment on what the Review Body says when it is published, but I thought it only fair to make the matter clear to the House in order that no one should be disappointed later in finding that the Government did not propose to breach the pay policy for the benefit of Ministers.
Mr. Peyton: I am sure that Ministers in another place will be gratified to find that, of all people, the right hon. Gentleman describes them as Members of Parliament.
Mr. English: Will my right hon. Friend confirm that under the pay policies of the relevant years we should from the 13th of last month be entitled to £8,312 per annum? Secondly, will he confirm that his application of the pay increase of £6 a week to us will be applied in the same way to the Civil Service so that civil servants also will not get the £6 a week attributed to their pay for pension purposes—which, if that be so, would be a breach of agreements with the Civil Service?
Finally, will my right hon. Friend explain which year we are supposed to take for the assessment of outside earnings? As he should well know, income from Press and television, for example, is uncertain. Does he mean last year, or will he say how it will work?
Mr. Foot: On the last question, I think that the common sense of the matter is that it will have to be governed by the amounts received this year, the same period as is governed by the £6 limit itself. I should have thought that that was a reasonable proposition. Indeed, it is not possible to apply it in any other way.
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In response to my hon. Friend's second question, I do not believe that there is any need for me to make a statement on Civil Service payments arising out the statement which I have just made to the House.
Mr. English: On the same conditions?
Mr. Foot: I understand what my hon. Friend is saying, but I do not wish to make any statement about Civil Service pay on this basis. What we are doing is carrying out our proposals ahead of what has sometimes been supposed. Assistant Secretaries in the Civil Service have received no increase under the current pay round, but we thought it right that we should proceed with the £6 increase where it applied in the House now.
My hon. Friend's first question raises a matter which was fully debated last year, and I have nothing to add to what was said by the Government then.
Mr. Freud: We feel that it ill becomes us to be party to legislation for our own specific benefit, especially when we are exhorting others to show moderation. I accept that we may be entitled to £6 a week extra. I should like to know how many people without our unique ability to bend the law have been unable to obtain this increase. Finally, what steps will the Leader of the House take to see that the £6 a week increase will actually go to the secretarial staff?
Mr. English: On a point of order, Mr. Speaker. The effect of the statement is to distinguish between Members, and I am sure that you will therefore agree that Members who have an interest should declare it.
Mr. Speaker: Order. What is clear to me is that I do not have an interest.
Mr. Foot: I can only confirm your judgment, Mr. Sneaker. I assure the hon. Member for Isle of Ely (Mr. Freud) that there is no question of bending the rules in any sense whatever to suit Members of the House. What we have sought to do in this arrangement is to carry out what I regard as perfectly justified—that is, that both Members and secretaries entitled to the £6 should get it, but at the same time we had to ensure that we did not breach the £8,500 limit, which was in the White Paper approved

37
by the House and which is being applied in the general incomes policy. We have sought to do that in a manner which causes the least difficulty in its application, and I should have thought that hon. Members on both sides would welcome the proposal in that light.
Mr. Mellish: Will my right hon. Friend take it that most of us on both sides, I believe, will accept his proposal and will not quarrel with it at all? We have always had differentials in the House in as much as some Members have earned a great deal more than others—good luck to them, and I do not complain about that. My right hon. Friend is right to say that when increases come along they should be given at the bottom end of the scale. That is what it was all about, and that is right.
However, I have a question to put to my right hon. Friend regarding the Boyle Report. This is a matter which many of us are concerned about, and it raises an important issue with regard to pensions. Of course, I have not seen the Report, but I greatly hope that it will not be bypassed in this respect, because there has been an outstanding anomaly here for a long time, whatever view one may take about increases in salary for Members of Parliament or Ministers. My right hon. Friend will understand that the right time never comes. We are all sick of this business, and I do not know why these things cannot be fixed and automatic. However, on the pensions side, will my right hon. Friend make sure that the question is not bypassed?
Mr. Foot: It is not a question of bypassing it. The Top Salaries Review Body Report will be published. The House will then judge the different proposals in that Report and will take account of what the Report says. That does not mean that the House or the Government will automatically accept what is said on that subject or any other. I wish to emphasise—I do not want anybody to be misled—that we do not propose to depart from the incomes policy in applying proposals when we receive that Report.
Mr. du Cann: While recognising the difficulty of the present situation, I support most strongly what was said by the former Government Chief Whip, the right hon. Member for Bermondsey (Mr.
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Mellish). Will the Leader of the House reconsider what I understand has been his decision to do nothing about the pensions of former Members of this House? If ever any group of persons deserves to be considered, it is those former Members. Many of them are suffering hardship as a result of the fact that they have not been fairly treated in the past.
On the subject of the decision in regard to Ministers, we are now seeing a shabby habit in our national affairs of awarding to those who in any circumstances are accepting responsibility less than their deserved norm.
Mr. Foot: On the first point raised by the right hon. Gentleman, I appreciate what he said, in echoing in turn what was said on that aspect by my right hon. Friend the Member for Bermondsey (Mr. Mellish). I recognise the strong feelings on that subject. I cannot do any more than to ask the House to wait and see what the Review Body says on the subject.
On the topic of Ministers, I fully understand, and indeed welcome, the right hon. Gentleman's eagerness to see Ministers paid their deserts, but in my opinion it would be shabby if the Government were to apply a different rule to Ministers from that which they seek to apply to the rest of the nation. We are seeking to apply the same rules in this House as we seek to apply to people throughout the country. I only wish that everybody else would do the same.
Several hon. Members Several hon. Members rose—
Mr. Speaker: I shall call only two more hon. Members on this statement because there are two further statements to come.
Mr. Arthur Lewis: May I support what was said by my right hon. Friend the Member for Bermondsey (Mr. Mellish)? Do I understand that the Leader of the House and indeed the Government have seen the Boyle Report and have come to the conclusion that they will not implement it without waiting for the view of the House upon that Report? If the House debates that Report and comes to a decision upon it, will the Government, if that is the will of the House, reconsider implementing its recommendations?
Mr. Foot: If it is the will of the House that any particular item, or the whole of the Boyle Report, should be accepted, of course the Government will have to accept that decision. We have seen the Boyle Report, we have examined it, but there are still decisions to be made upon it. I thought that it was only right not to raise false expectations and to tell the House that we are not prepared on that or on other matters to depart from the rules laid down in incomes policy. As my hon. Friend the Member for Newham, North-West (Mr. Lewis) rightly said, it is the House of Commons that reaches the final decision on all these matters.
Mr. Hordern: As the Leader of the House has referred to the pensions of Members of Parliament who have retired, what particular recommendations do the Government intend to make to assist former Members of Parliament who have retired or who were defeated in the polls in 1964 and who, in present circumstances, are not entitled to a pension of any sort? Can the right hon. Gentleman outline any Government proposals to cover that category of Member?
Mr. Foot: I understand the strength of feeling on this subject. The hon. Gentleman is one among several Members who have raised this matter with me. However, I must ask the House to see what the Review Body says before we pass judgment.

UGANDA (MRS. DORA BLOCH)
The Minister of State for Foreign and Commonwealth Affairs (Mr. Edward Rowlands): I shall, with permission, Mr. Speaker, make a further statement about Mrs. Dora Bloch.
On 7th July I told the House that we were sending our High Commissioner back to Kampala to discuss Mrs. Bloch's disappearance urgently and fully with the Ugandan Government. Mr. Hennessy saw President Amin on 9th July. On 10th July the Ugandan Government sent Mr. Hennessy a note which continued to deny knowledge of the whereabouts of Mrs. Bloch and repeated that Israel shouldered the responsibility for her as for all other hostages.
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As we said at the time, this is totally unacceptable in that Mrs. Bloch was seen by a member of the High Commission staff in hospital well after the Israeli operation at Entebbe Airport was over. We are just not satisfied with the results of any inquiries the Ugandans may have made.
Our High Commissioner in Kampala arrived home this morning. I have had a report personally from him. As a result I deeply regret to have to inform the House that there seems little doubt that Mrs. Bloch was taken from her room in Mulago Hospital at about 9.30 p.m. —local time—on 4th July and that she is no longer alive. We extend our deepest sympathy to all her family. In whatever circumstances Mrs. Bloch's death took place, the Ugandan Government must bring those responsible to justice.
Her Majesty's Government's overriding concern, particularly in the present confused situation in Uganda, must be for the 500 British citizens who still reside there. We should do nothing which could jeopardise their welfare at this time. In the light of Mr. Hennessy's report, he will remain in London for further consultations, while we consider the future of our relations with Uganda.
I should like to take the opportunity to put the record straight on misleading Press reports that Her Majesty's Government sent a message of condolence to President Amin about Ugandan soldiers killed during the Israeli raid at Entebbe. In the course of our many contacts with the Ugandan authorities after the hijacking incident, we did, as did other Western Governments represented in Kampala, express sympathy to the families of all the persons killed in the hijacking incident. These were not regrets to President Amin. No personal message was sent either by my right hon. Friend the Foreign and Commonwealth Secretary or by any other Minister. Her Majesty's Ambassador in Israel also conveyed to the Israeli Government our commiserations with the families of the Israelis killed in the course of the incident.
Mr. Maudling: I thank the Minister for that statement. I recognise the Government's proper concern for the safety of British citizens who are still in Uganda. There is no doubt that we are faced with a particularly hideous and brutal crime.

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What steps are the Government intending to take to ensure that the Ugandan Government bring those responsible to justice? Secondly, on the Press reports dealing with the message sent by the British Government, is the Minister aware of the degree of outrage felt at those reports over the weekend? I am glad that he has done something to clear that matter. May I ask him whether in the course of the message expressing sympathy, quite rightly, to the families of those who were killed in the incident, anything was said about Mrs. Bloch?
Mr. Rowlands: We shall press the Ugandan Government most strongly to bring these people to justice, but the right hon. Member for Chipping Barnet (Mr. Maudling), with his experience in the Foreign and Commonwealth Office, will know that we are in a very confused and potentially dangerous situation and therefore should do nothing that might jeopardise the welfare of over 500 British citizens who are now in Uganda. On the subject of the conveying of condolences, I am glad that the right hon. Gentleman has accepted my statement. There have been many misleading reports. We were not aware in detail of the problem arising from the incident concerning Mrs. Bloch. The moment we were aware of that matter, we pursued it with vigour and determination.
Mr. Greville Janner: Is the Minister aware that yesterday I saw one of the sons of Mrs. Bloch and spoke to another? They have asked me to convey to Her Majesty's Government their deep appreciation of the personal help that has been given to them, not least by the British Consul in Israel. They wish also to say two other things. They wish first to say that they attribute the blame to one man and to one man alone, and that is to President Idi Amin, without whom nothing happens in that country. They ask Her Majesty's Government to use their best endeavours to see that if, hopefully, their mother is still alive, she is returned to them and, if she is dead, that her body may be returned to them so that it may lie alongside her husband.
Mr. Rowlands: I am extremely grateful for those remarks and for the wishes which my hon. Friend has conveyed from Mrs. Bloch's relatives. It would be only a cruel hope if I were to
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say that there were any hope that she was alive. As for the situation in regard to Mrs. Bloch's body, we have not been able to substantiate the situation. We have had a number of reports, but it would not be helpful if I were to go in for any surmise. I should not like to hold out hope on that last point.
Mr. David Steel: I join in the sincere expressions of sympathy to Mrs. Bloch's relatives. Sadly, is this case not just one among many hundreds of people killed, or missing without trace, in Uganda in recent years? In this wretched business, is not the loss of life among Ugandan soldiers the responsibility of President Amin and his policies? Will the Minister make it clear that international opinion increasingly regards the name of Amin as synonymous with butchery and terror?
Mr. Mellish: Careful David, he is black.
Mr. Rowlands: The hon. Gentleman made a number of points. I do not think that we can comment on whether President Amin was personally responsible. We have had no clear indication and no detailed inquiry into the incident and therefore we cannot make any specific comment. The hon. Gentleman's view will be noted, that international opinion will be outraged by the fact that the incident involved Mrs. Bloch.
Mr. Faulds: Wiil my hon. Friend accept that the murder of an old woman in circumstances such as these is quite beyond the pale of civilised behaviour? Will he further accept that none of us in this House has any time for the conduct of the régime of General Amin? Will he also understand that tragedies such as this will continue in other parts of the world until the major international injustice done to the Palestinian people is put right?
Mr. Rowlands: I do not think that I should go into the much broader issues that my hon. Friend has raised. I agree that the incident involving Mrs. Bloch will be an outrage to the international community.
Mr. Geoffrey Finsberg: I hope that I may join in the condolences that have been expressed and pass on the opinion of a constituent of mine, a niece of Mrs. Bloch, that the Government have done

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all that they can. Does the Minister agree that what has happened bears a remarkable resemblance to the way in which the former Chief Justice of Uganda was dragged from his court? And those murderers were never brought to justice. What advice is the Minister prepared to give to the remaining British subjects in Uganda? Is it right that they should not be advised to leave? So long as they are there they represent hostages to the sort of foul blackmail that Amin is continuing to perpetrate.
Mr. Rowlands: British citizens in Uganda will be fully aware of the situation. They have gone through many crises in the past few years. If the Government were officially to make the kind of comment that the hon. Gentleman has made we could exacerbate the situation, and that is what we are trying to avoid.
Mr. Ogden: My hon. Friend's statement is important for what it does not say about other relations in Southern Africa or the presence of the Foreign Secretary to make a statement. May I therefore ask the Leader of the House to introduce a motion for the Adjournment of the House—
Mr. Speaker: Order. That does not come at this stage. I thought that the hon. Member wanted to ask a question.
Mr. George Cunningham: On the question of the 500 remaining United Kingdom citizens in Uganda—not British subjects, because General Amin and the entire population of Uganda are British subjects—will the High Commission in Kampala be informing them that it is impossible in present circumstances for us to guarantee their safety and that they ought to leave the country, and that if they do not we can take no responsibility for their continued safety?
Mr. Rowlands: I cannot say that the High Commission will be expressing advice in those terms, but it will be advising all individuals of the problems associated with the situation.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: I shall allow only two more questions, because there is a further statement to be made to the House.
Mr. Hugh Fraser: First, will the Foreign Office make some amends for its incredible weakness so far by at least showing itself resolved at today's meeting of the Security Council to make a resounding condemnation of terrorism? That would give some gratification to those who feel totally let down by the weakest Foreign Office that this country has ever seen.
Mr. Rowlands: The right hon. Gentleman's remarks about our stance is quite unjustified. We shall support every effort at the Security Council to condemn international hijacking and terrorism.
Mr. Jay: In view of what appears to be the barbaric conduct of the Ugandan Government, will the Government seriously consider advising United Kingdom citizens in Uganda to return home?
Mr. Rowlands: I have noted the representations made by hon. Members on both sides of the House, but I hope that hon. Members will realise the importance of such remarks if they were made by the Government at this time.

ANGOLA (MERCENARIES)
The Minister of State for Foreign and Commonwealth Affairs (Mr. Edward Rowlands): With permission, Mr. Speaker, I will make a statement on the outcome of the trial of mercenaries in Angola.
The House will recall my statement on 29th June in which I referred to the appeal for clemency which the Prime Minister addressed to President Neto immediately after the judgment and sentences. Her Majesty The Queen sent a message on 4th July. To neither of these has there been a reply nor, as far as we know, have the Angolan Government replied to numerous other appeals.
As the House will know, last Friday, 9th July, President Neto issued a statement confirming the sentences of death. The four men were shot on Saturday afternoon, 10th July, by a firing squad.
I am confident that I speak for hon. Members on both sides of the House when I express our shock and dismay that the Angolan Government disregarded so many appeals for clemency and have taken the extreme and irreversible step

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of carrying out the four death sentences. The House will know that we have already expressed our sympathy to the families in their distress. My officials have throughout been keeping in close touch with them.
As regards the trial itself, although certain rights were accorded to the defence by the court, our conclusion is that the trial was not a fair trial in the sense in which we would understand that term. We have noted the absence of any presumption of innocence and the prejudicial nature of much of the process and evidence. Although all the defendants were accused and found guilty of the crime of being a mercenary, we do not accept that it has been established that being a mercenary is a crime having a basis in international law.
It was alleged in the trial that there had been complicity by the British Government in the recruitment of the mercenaries and arrangements for their departure. I need hardly say that this is completely untrue. We consistently expressed our opposition to all external intervention in Angola and ourselves abstained from any intervention. As to specific allegations about departure arrangements, no special facilities were given or special arrangements made by the Government. No authority in Britain has the power to prevent an individual from leaving the country with or without a passport unless he is wanted for a criminal offence.
We shall leave the Angolan authorities in no doubt of our opinion of the trial and of its procedures. We shall also consider the position of those men sentenced to long terms of imprisonment and action that we may be able to take on their behalf.
Finally, the House will recall the setting up of the committee under Lord Diplock to inquire into the law on the subject of mercenaries and to make recommendations. I understand that Lord Diplock will be presenting his report in the near future.
Mr. Maudling: Is it not clear from the Minister's statement that what we are faced with is judicial murder—not justice, but political reprisal masquerading as justice? Can the Minister confirm that of the four men executed one was mentally disturbed, another was crippled and the other two were convicted of no known
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crime? What of the eight men still in gaol? Is it not a fact that these men, British citizens, have been convicted of no crime known to national or international law? It is wholly intolerable that they should rot in gaol for no crime at all. Will the Minister recognise that this is an intolerable situation for any British Government, and will he act upon it?
Mr. Rowlands: In my statement I made clear our position about the trial and our assessment of it, as I did of our first assessment of the indictment and the other facts that we have obtained. I am still awaiting the return of Mr. Byatt, who remained in Luanda to help with certain detailed arrangements involving the bodies of the mercenaries. We have made it clear —as I did in my statement—what we feel about the nature of the trial and its proceedings.
Mr. Powell: Why did the Government not learn from the case of Hills in Uganda the unwisdom of advising the Sovereign to be involved in appeals for clemency in this kind of case? Will the Government refrain in future from bringing about the humiliation of the CI own by that type of advice?
Mr. Rowlands: The right hon. Gentleman is wrong. I think it right that we should have done everything that was humanly possible to make the appeals of clemency to the Angolan Government. I think that we were right to make such an effort and to make the representations that we made. They were made at many levels by many Governments and organisations as well as our own Head of State, the Prime Minister and the Archbishop of Canterbury. We do not apologise for taking such steps, and we shall judge each case on its merits in the future.
Mr. Robert Hughes: Although I am opposed to capital punishment, many people on this side of the House and outside as well as myself will have a strong feeling that the Government's and Opposition's reaction to the sentences being carried out is grossly exaggerated and hypocritical. Some of the epithets about barbarism would be better applied to those who condoned the mercenaries' behaviour and those who connived with their going to Angola. [HON. MEMBERS: "What about the Cubans?"] Should we

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not express some sympathy for the Angolans and for other British subjects who suffered at the hands of the mercenaries?
Mr. Rowlands: I know that my hon. Friend and other hon. Members on this side of the House conveyed pleas of clemency to the Angolan Government. Therefore, I am surprised at his comments that people do not feel strongly about the deaths of the mercenaries, given the situation which prevails. I cannot comment any further except to say that I read in the papers today about Mr. Banks complaining that the British Government had let the mercenaries down. I am surprised that he should say that when he is the one who peddles in other people's lives.
Mr. Amery: Would the Minister of State agree that Angola, in spite of our recognition of it, is not really a sovereign power but is a Soviet-Cuban colony? Would he agree that the trial, sentences and executions were master-minded in Moscow and Havana? Would he also agree that it is not the puppet régime of President Neto which is accountable but Mr. Brezhnev and Mr. Castro?
Mr. Rowlands: The right hon. Member is wrong in law, for sure. The Angolan Government is a sovereign Government in that country and the trial was effected in the name of that Government.
Mr. Newens: Many of us who deplore the actions of the mercenaries none the less sent appeals for clemency to President Neto and we deeply regret the fact that the executions were carried out. Nevertheless, does the Minister of State recognise that there is now a need for action to be taken to prevent the recruitment of mercenaries in this country by freelance individuals? Action should be taken to prevent such people leaving the country in their own interests.
Hon. Members: Like Russia?
Mr. Rowlands: On the recruitment of mercenaries, we must await the report of the Diplock Committee. Many hon. Members on all sides of the House have grave qualms about the way in which the mercenaries were recruited and about the people behind that recruiting.
Mr. Richard Wainwright: The Minister of State said the Government are considering what they can do about the very long terms of imprisonment being served by the other mercenaries. Will the Government approach this in the context of the Angolan civil war being virtually at an end, or will they approach it believing that that country is still in a state of active civil war?
Mr. Rowlands: We must deal with the situation as it exists. We have recognised the Angolan Government as the true national Government of Angola.
Mr. Charles Morrison: Tribute should be paid to the families of the mercenaries, who have suffered an appalling ordeal in the last few weeks. Credit should also be given to the legal representatives of the mercenaries, who volunteered their services free of charge and free of expenses. As the mercenaries were executed without any justification in international law and subjected to political assassination, should not exceptional financial assistance be given to the families if they wish to bring the bodies home?
It is rumoured that there was some source of Government assistance some weeks ago to bring home mercenaries who escaped harm at the end of the engagement in Angola. If that is not true, does the Minister of State know how these mercenaries were financed in getting home and would he tap that source now?
Mr. Rowlands: I appreciate the hon. Gentleman's remarks, but there is no provision in public funds for the repatriation of bodies. As he may know, about 1,500 British citizens die abroad each year, many of them in tragic circumstances. Many grieving parents ask for assistance in getting the bodies home, and they would be equally grieved if we made an exception in this case. We are doing all we can to facilitate the arrangements, and we are in close contact with the families of the executed mercenaries.
I do not know the details of the case to which the hon. Member has drawn attention, and I know of no precedent of the Government paying for the repatriation of bodies.
Mr. Fitt: While associating myself with expressions of sympathy to the relatives of those executed, does the Minister of State not believe that the Government and the Opposition are in danger of being charged with just a little hypocrisy? Will they recognise that in 1916 the British Government laid down the pattern for this type of execution when they took James Connolly out to be executed in a wheelchair? In this situation the best action which the British Government can take is to ensure that in no circumstances will a British subject engage in mercenary activities in the future.
Mr. Rowlands: I am pleased that I was not responsible for the events in 1916 in Ireland. Nevertheless, I appreciate the force of the hon. Member's remarks. I cannot fully agree with the comparison of the two events or comment about the Opposition's hypocrisy.
Mr. Crowder: Will the Minister of State publish the terms of the appeal made by the Queen on behalf of the Government, and of the reply she received, if any? In view of the events of last week, will the Government break off diplomatic relations with this savage Communist régime?
Mr. Rowlands: It is difficult to break off diplomatic relations with a Government with whom we have no diplomatic relations. I cannot promise to publish the appeal made by the Queen without her permission, or any other appeal.

FOREIGN AFFAIRS
Mr. Ogden: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"The need for Members of the House of Commons to strengthen the ability and determination of the Government to take effective action regarding the executions of British subjects in Angola, to secure the safety of British subjects in Uganda, and to ensure that British actions in the United Nations are in accord with majority opinion in the House of Commons."
Mr. Speaker: The hon. Member has asked leave to move the Adjournment of the House for the purpose of discussing
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a specific and important matter that he thinks should have urgent consideration, namely,
"The need for Members of the House of Commons to strengthen the ability and determination of the Government to take effective action regarding the executions of British subjects in Angola, to secure the safety of British subjects in Uganda, and to ensure that British actions in the United Nations are in accord with majority opinion in the House of Commons."
As the House knows, under Standing Order No. 9 I am directed to take account of several factors set out in the Order, but to give no reason for my decision. I have listened carefully to the representations which the hon. Member has made, but I have to rule that his submission does not fall within the provisions of the Standing Order. I cannot submit his application to the House.

FINANCE BILL (PROCEDURE)
Mr. Peyton: On a point of order, Mr. Speaker. I am sorry to raise this matter again in this manner, but unfortunately and significantly our procedures here give no place for the complaints we now have to make regularly about the disadvantages with which hon. Members are faced because they do not have important papers available. I refer, of course, to the Finance Bill.
The Order Papers today and on Friday contained, for the first time, five Government new clauses and 146 Government amendments to this very important Bill. It does not need me to expand on this at length in order to remind the House of how the Government's business is now in total disarray, but I think that we, and, if I may say so, the Chair, must seriously reflect upon the fact, first, that this position involves a really serious erosion of the rights of the taxpayer to know what the law is going to be in order that informed representations may be made in time, and, secondly, that this sort of disarray very much enhances the already great danger that absolutely fatuous and half-baked proposals will find their way on to the statute book.
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): Further to that point of order, Mr. Speaker. I do not know

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whether I would be entitled to debate the matters which the right hon. Member for Yeovil (Mr. Peyton) raised in his point of order and the adjectives which he has applied to the situation, all of which I repudiate, but if he has any specific complaints we will look into them and seek to overcome them, as we did last week. When he raised a number of questions on Wednesday and Thursday last week about the operation of the Finance Bill this week, we made special arrangements to ensure that the amendments which were appearing were sent to those hon. Members who had applied. We made special efforts to assist in that direction. Whatever criticisms the right hon. Gentleman may make, I would have thought that he might also have had the courtesy to pay a tribute to those who worked so hard to try to ensure that we overcame the difficulties.
Mr. Peyton: Further to that point of order, Mr. Speaker. What the right hon. Gentleman said at the end of his intervention has nothing to do with the matter. Of course, we acknowledge the hard work of those concerned. They deserve thanks and appreciation—and from none of us more than the Government. But a cursory look through the Order Paper reveals one Government amendment after another bearing a star, indicating that it is appearing for the first time today. I believe that this is a grave erosion of the rights of the House of Commons, and it is no good the Leader of the House simply saying that if I have any specific complaints he will look into them. Of course I have specific complaints. I have five complaints about Government new clauses and 146 complaints about Government amendments.
Mr. Lawson: Further to that point of order—
Mr. Speaker: Order. The House knows that what I have done is an old custom. I have been very tolerant to a matter raised as a point of order because I felt that it was in the interests of the House that I should do so. But the provision of papers for the House is not my responsibility, and it will be no good hon. Members seeking to pursue the matter with me. I hope, therefore, that hon. Members will not seek to pursue an argument which will take time out of the Private
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Members' debate on the problems of Greater London, which finishes at 7 o'clock, when the matter is not really the responsibility of the Chair.
Mr. Lawson: Further to that point of order, Mr. Speaker. I assure you that this is not synthetic indignation. We feel very strongly indeed. The House will be aware that only three and a half days have been allocated for the Report stage of the Finance Bill, yet we have 159 Government amendments and 13 Government new clauses to consider, apart from other new clauses and amendments. Since—
Mr. Speaker: Order. I suggest that it would be helpful to the hon. Gentleman and his hon. Friends to pursue this matter within order when we come to the subject tomorrow rather than that we should take time out of the debate on Greater London today. I shall be surprised if the hon. Gentleman and his hon. Friends are not able to pursue it tomorrow.

OFFICIAL REPORT
Mr. Powell: On a point of order, Mr. Speaker. I ask you, as the general guardian of the interests of hon. Members, whether it has been brought to your attention that the Official Report for the sitting of a week ago last Friday is not yet available to hon. Members. This is a particular inconvenience—I use a weak word—not merely to hon. Members representing Northern Ireland constituencies but to the whole public in Northern Ireland, since the matters dealt with were of great importance to them and of great and complicated detail. I ask you whether you could use your own good offices to secure that this impediment is removed.
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): Further to that point of order, Mr. Speaker. I recognise what the right hon. Member for Down, South (Mr. Powell) has said, and I think that "inconvenience" is a mild word to describe the position which has arisen. We shall do our best to overcome it. The failure to print that day's proceedings of the House of Commons arose owing to some industrial action of some form or other which occurred at that time, and

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those engaged in the operation have been seeking to sustain the provision of papers for the House in the meantime. But I appreciate what the right hon. Gentleman has said and will try to see whether we can overcome the problem. Perhaps I can then seek to make a statement to the House.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I am not seeking to restrict the right of hon. Members to raise points of order, but I do not propose to take any more points of order—
Mr. Mellish: Good. Let us get on with the London debate.
Mr. Speaker: Order. The right hon. Member for Bermondsey (Mr. Mellish) has not been back with us for long on those Benches, and we shall be glad to hear him—when I call him. As I was saying, I do not propose to take any further points of order about tomorrow's business now.
Sir Frederic Bennett: On a point of order, Mr. Speaker—
Mr. Speaker: Is this a new issue?
Sir Frederic Bennett: Yes, Mr. Speaker. It is not on tomorrow's business but concerns last Thursday. You will remember telling me, charmingly as usual, that I had not searched my conscience deeply enough when you refused to allow me to raise a point of order which you have now allowed to be raised, but I make no complaint of that. I ask now whether, until and unless the Official Report of the business of last Friday week is available, we could not at least have photostat copies of Hansard made available to us.
Mr. Speaker: I am obliged to the hon. Gentleman, who knows that he occupies a special place in the House. He has been here for a very long time.
Mr. Mellish: Too long.
Mr. Speaker: That may be thought about a lot of people. It is true that last week I said to the hon. Member for Torbay (Sir F. Bennett) that I would not allow his point of order, and yet I have allowed a similar one from the Front Bench today. But it has long been a custom in the House to allow a little extra
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latitude to the Front Bench, which speaks for the whole of its side of the House. This custom has gone on a long time, and I intend to use my discretion in that regard.

BILL PRESENTED
  PROTECTION OF BIRDS (AMENDMENT)
  Mr. Peter Hardy presented a Bill to amend further the Protection of Birds Act 1954; And the same was read the First time; and ordered to be read a Second time upon Friday 16th July and to be printed. [Bill 196.]

QUESTION OF PRIVILEGE
Mr. Adley: On a point of order, Mr. Speaker. I apologise to my hon. Friend the Member for Ravensbourne (Mr. Hunt) for holding up the start of the debate on his motion on the problems of Greater London, but I wish to raise with you what I consider to be a serious matter of privilege. It arises from a report on page 2 of the Daily Telegraph of today, which says:
"Six Labour MPs, sponsored by the National Union of Public Employees, have had their political fitness tested by having to write a 1,000-word thesis on trade union power."
[Laughter.] This is no laughing matter. The report goes on:
"The test was devised by the union officials following its decision to increase the number of NUPE sponsored MPs from six to 12. There are, however, 16 aspirants for sponsorship including the six MPs who already enjoy the privilege."
The implication is clear, Mr. Speaker—that an hon. Member has to satisfy trade union leaders if he is to meet the criteria of sponsorship laid down by the union concerned.
In certain constituencies, the Labour nomination is totally dependent on trade union sponsorship. The relationship between such a Member and his sponsoring union is totally different from the relationship between another Member and another group or body of people. No one is sponsored by, for example, ICI or Unilever. The words in the report refer to testing "political fitness". I submit that they are a serious reflection upon and a threat to hon. Members' freedom of activity, they are an indication of the power of trade union sponsorship

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and all that that implies for hon. Members, and they are an abuse of the relationship between an hon. Member and those of his constituents who are not a party to that relationship implied in sponsorship. I ask you, therefore, to consider this matter and to rule upon it in due course.
Mr. Speaker: The hon. Member for Christchurch and Lymington (Mr. Adley) gave me notice that he wished to raise this matter of privilege. If he will bring the papers to the Table, I will rule upon it tomorrow.
Newspaper handed in.

GREATER LONDON
4.30 p.m.
Mr. John Hunt: I beg to move
That this House views with grave concern the decline of the capital city under Labour; notes in particular that the problems of the Greater London area have been aggravated and accentuated by the policies pursued at Westminster and at County Hall in the spheres of housing, education, transport and employment; and hopes for an early return of Conservative administrations to restore sound and responsible government to London.
It is now more than two years since the House last had the opportunity of debating London affairs. Today, we are debating the grave and growing problems of our capital city only because of my luck in the Ballot. That underlines the total inadequacy of the parliamentary time that is allocated to Greater London. [HON. MEMBERS: "Hear, hear."] I am glad to have that support of hon. Members from both sides of the House.
The voice of London is largely unheard and unheeded. That is one of the reasons why I have been urging upon the Government the appointment of a Minister to be specifically charged with responsibility for London affairs. In that way the claims of London could be voiced both at Government and Cabinet level, and we, as London Back Benchers, would also have the opportunity, at Question Time, of putting the Minister under fire over the handling of London affairs.
I am glad to see the right hon. Member for Bermondsey (Mr. Mellish) in his place, because on a previous occasion he went so far as to submit his own name for consideration for such an appointment. I do not know whether he still holds that view, or whether he maintains a wish to return to the present Government. Perhaps in that connection, as in others, he feels that enough is enough. We shall listen to him with interest later in the debate.
What I am saying is not unreasonable. After all, Wales, with a population of less than 3 million, and Scotland, with a population of just over 5 million, each has its own Secretary of State and its own Question Time. Greater London, with a population almost as large as Scotland and Wales put together, has nothing. That is part of the reason for the growing feeling of anger and frustration

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amongst those who live and work in Greater London. They feel that our capital's problems are being ignored and neglected. Unless the problems that I outline in my motion—housing, education, transport and employment—are tackled urgently and vigorously, we shall see our great capital city reduced to a kind of urban museum, filled with tourists who visit the Tower of London and the Tate Gallery. It will be abandoned by the real Londoners, for whom life in the capital has become too uncomfortable and too expensive.
Today, the ever-lengthening queue has become the symbol of London. We have to wait longer for buses and trains. But for many, the queue for a decent home becomes daily more disheartening. In many parts the dole queues are growing immensely long, with unemployment as high as 13 per cent. in some areas. There is the new and unattractive face of London. There is now a steady drift of people and jobs from the capital. The responsibility for that rests squarely with the present Government and their Labour colleagues at County Hall, across the river.
In the context of today's debate, it is interesting to recall that on 20th November 1973 we had a similar debate on the position of London. On that occasion the hon. Member for Hackney, South and Shoreditch (Mr. Brown)—whom I am pleased to see in the Chamber—moved a motion that condemned the Conservative Government of that time for allowing the public services of the capital city to:
"deteriorate to the point where they are now reaching breakdown and are causing grave hardship to the population of Greater London." —[Official Report, 20th November 1973; Vol. 864, c. 1133.]
If the population of Greater London were consulted today they would gladly put the clock back three years to the happy Tory days of 1973. The hon. Member for Hackney, South and Shore-ditch then spoke in tones of strident outrage against the Conservative Government for the levels of unemployment in London.
I have been undertaking a little research, and I find that in November 1973, at the time of the last debate, unemployment in London stood at 46,700, or 1·2 per cent. of the population. In
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June of this year it stood not at 46,700 but at 148,478—which is higher than in Scotland. In many parts of London—Poplar and Stepney, for example—unemployment now stands at 13·1 per cent. of the population. In Holloway, it is 11·2 per cent. and in Canning Town, 9·1 per cent. As the brief that was sent to us from the Greater London Council says:
"A climate of depression is becoming firmly established which could easily become self-perpetuating".
Mr. Anthony Grant: I appreciate the researches of my hon. Friend the Member for Ravensbourne (Mr. Hunt), but is he aware that the Government, in an answer to a Question that I tabled, shamelessly revealed that in the last two years unemployment in London and the South-East had risen by 150 per cent.—a record for the country?
Mr. Hunt: My hon. Friend the Member for Harrow, Central (Mr. Grant) underlines my argument. He had some responsibility during the period of Conservative Government and he is therefore well qualified to point to the contrast between the years of Tory rule and the years that have followed. When one makes that comparison and looks at the figures today, not much imagination is needed to envisage the kind of speeches that would now be coming from Labour Members if figures of that gravity and magnitude were occurring under a Tory Administration.
The other major problem afflicting our capital is housing. All hon. Members know, from their constituency surgeries, that council house waiting lists are growing longer week by week and that there is now a sense of deep despair among families who have been waiting without hope for so long. Promises, given so lightly by Labour candidates at election time, have turned sour. There is anger amongst the homeless and overcrowded, who find that they have been cruelly betrayed.
It is not simply a question of complacency or incompetence—although there has been some of that. In one important respect the Government's policy has actually accentuated the problem. I refer to the 1974 Rent Act, which, by extending security of tenure to furnished accommodation, has virtually

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dried up the supply of furnished accommodation in the London area. The result is that single people, such as young teachers, nurses and students, as well as newly-marrieds, who were dependent upon that type of accommodation, now find it practically non-existent. Even where it is available it is available only at a price that is well beyond their means.
In the categories of young people I have mentioned are those who can never hope to accumulate enough points on a council waiting list to be rehoused in that way. Therefore, they must rely on the private sector, and they look in particular to furnished accommodation to meet their housing needs.
Mr. Nicholas Scott: Matters are worse than my hon. Friend said. It is possible for Labour Members to have passed the 1974 Rent Act unaware of the effects it would have on certain portions of London, but to destroy the Homes Bill of my hon. Friend the Member for Cambridge (Mr. Lane), which would have rectified some of the anomalies of that legislation and made it possible for young people to have a fairer deal, could only have been malevolent and wilful.
Mr. Hunt: I fully support what my hon. Friend has said. I shall be saying a word about the way in which the shortage of furnished accommodation could be dealt with. That links up with the Bill presented by my hon. Friend the Member for Cambridge (Mr. Lane).
Mr. Ronald Brown: Will the hon. Gentleman tell us the amount of furnished accommodation he believes was available in the London borough of Bromley, and how much he thinks it has been reduced because of the 1974 Act?
Mr. Hunt: I cannot specify the effect on particular boroughs. I think that there has been some effect in Bromley, but it has been felt more severely in the inner London areas. That is the matter with which I am primarily concerned this afternoon, although I know that in Bromley some landlords who previously let furnished accommodation freely and willingly are now reluctant to do so. That is the pattern not only in Greater London
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but throughout the country as a result of the Act.
A number of surveys have confirmed what my hon. Friends and I have been saying, that as a direct result of the passage of that Act there has been a dramatic fall in the number of furnished flats and other accommodation available. A quick glance at any of the London evening newspapers will amply confirm that. Looking through today's issues, I found that there was virtually nothing available in the central London area for less than £25 a week, and many of the rents being asked were far in excess of that.
One of the side effects of the 1974 Act —and in a way this is a loophole in the Act—has been an increased availability of holiday flatlets and similar accommodation for wealthy tourists, whilst accommodation for ordinary Londoners has declined almost to vanishing point. I ask the Minister to show a greater sense of urgency in dealing with the problem than his Department has so far shown. It is not enough merely to rely on the parrot cry that this is all being considered by the review of the Rent Act that is under way. That review will take a substantial time, and London cannot wait that long. The need for action is urgent and imperative. I hope that the Minister will be able to give us some encouragement that action will be taken to relieve the hardship and anguish of so many in London.
One of the suggestions that have come repeatedly from the Opposition side of the House is a system of short-term tenancies that would give limited security of tenure to the tenant and provide some protection for the landlord. That may well be a means by which we could help to revive the market in furnished accommodation—a market that has been grievously undermined by the operation of the 1974 Act, which was a reflection of the Labour Party's longstanding antagonism towards the private landlord and private property.
There is another very important potential source of housing in inner London—the 5,500 acres of dockland which lie idle and unused. It is astonishing that in the comprehensive brief provided by the GLC for this debate, a copy of which reached

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me this morning, I can find no mention of the redevelopment of dockland. That is a depressing reflection of the priority that the council attaches to that project —one that could revive and rejuvenate an area that has been allowed to run down over recent years, with a dramatic loss of people and jobs. When I recently suggested at Question Time that it was about time the Government injected a new sense of urgency into the redevelopment of London's decaying dockland, the Secretary of State for the Environment reported that I had a great nerve to accuse the Government of being dilatory.
We are entitled to ask how much longer the saga is to be allowed to drag on. The first report on dockland was commissioned in 1971, yet today we are still as far as ever from a comprehensive redevelopment of the area. In France or Germany, by now, the whole dockland area would be a bustling complex, providing thousands of new jobs and homes for Londoners. The fact that it remains idle and neglected is a reflection of the lethargy that afflicts the government of London.
It is because of this that London under Labour is rapidly becoming a depressed area. Faced with unemployment and bad housing, the young and the skilled are moving out of the area, and there is a total lack of confidence in the future. In its brief, the GLC says that it has consistently pressed for industrial development certificate control to be removed. Over the years there has been a number of casings of the Regulations, but the council makes the fair point that the very existence of the Regulations deters firms from applying for industrial development certificates. In view of the deteriorating unemployment situation and the sharp decline in manufacturing industry in London, I hope that the Minister will be able to offer the prospect of further relaxations of the Regulations, if not total abolition of the certificates.
Mr. Norman Tebbit: Does my hon. Friend accept that more than that is needed? Even if it can obtain an industrial development certificate, not every company wants to invest money in London, where it must pay the whole cost of equipping a new factory, when it could go to a development area or special devel-
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opment area and have at least half paid by the Government.
Mr. Hunt: My hon. Friend has made a valid point. London would probably now qualify as a development area, with all the investment incentives that apply to to those areas. Something must be done. The rundown is becoming alarming. I hope that the Minister will take my hon. Friend's point into account when he replies.
My speech so far has been a depressing catalogue of decline in London. But if the present situation is grim, as I believe it is, the outlook for London is even bleaker, with severe cuts in local government expenditure now adding to the problems. Confirmation of that comes from the GLC's brief, which says:
"The problems of Greater London have, of course, been exacerbated by pressure to cut public expenditure".
This adds a new dimension to London's problems.
We on the Opposition side of the House have consistently urged economies in public expenditure, and we shall continue to do so. However, in the case of local government expenditure the Government have many of their priorities totally wrong. For example, what is the sense of cutting back on teacher recruitment, of increasing class sizes, of delaying the replacement of archaic and outdated primary schools, while, at the same time, subsidising school meals by £328 million per year in order to provide them at what I would consider, and what most people would consider, to be a totally unrealistic figure of 15p per day? Again, how can one defend the inadequate resources for the provision of more and better housing for Londoners when those who are lucky enough to live in GLC accommodation pay an average rent of only £5·50 per week.
Mr. Tebbit: Or do not pay it.
Mr. Hunt: Or do not pay it, as the case may be. The arrears are now a mounting problem for the GLC. One has to compare the GLC average rent of £5·50 per week with the average industrial wage in London of £67 per week. Yet the £5·50 per week is enough to cover only 35 per cent. of the GLC's housing costs. This subsidy is allowed to continue while many other Londoners are paying more than

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they can afford for sub-standard and inadequate accommodation.
Mr. George Cunningham: I am delighted to hear the hon. Gentleman speaking against this unjustified subsidy. I hope that this means that he will join me in opposing the London rate equalisation scheme, under which my constituents and his hon. Friend's constituents in Greenwich subsidise by a 5p surcharge on their rates the hon. Gentleman's constituents, who thereby get 6p in the £ deducted from their rates. Is he against that subsidy, as well as the ones he is talking about?
Mr. Hunt: I think that my borough treasurer may challenge the figures that the hon. Gentleman has put forward. I shall be listening very carefully to his speech, and I shall decide my vote in accordance with the arguments put forward. That is one more example of what I regard as perverted priorities in expenditure in London.
Instead of spending money on municipalisation which, in the current year, is estimated to cost £23 million—a policy that does not add a single extra unit of accommodation to Greater London's housing stock—it would be much more sensible for the Greater London Council to spend its money on new sheltered accommodation for the elderly for which there is a chronic need in London. This would help to reduce the under-occupation of council properties and release many three and four-bedroom homes for young families who stand in such desperate need of them.
I have had time in the limited period of this debate to cover only a few subjects. I want to allow as many hon. Members as possible to participate, so I have concentrated on a number of specific issues. The full-scale exposure of the inadequacies of the Labour Government in London would take my speech up to well past 7 o'clock. I leave my hon. Friends to deal with a number of other problems, notably in transport and education, which I have not had time to cover.
In conclusion, I believe that the present state of London is a massive indictment of Labour rule both at Westminster and at County Hall. In spite of that, I feel that all is not yet lost. Real improvements could still come by a change of
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outlook, a change of policy and a change of philosophy, and, above all, a change of political control.
If this debate is seen in retrospect as the first step in the process of changing political control across the river, and as a prelude to a change of control in the House of Commons, it will not have been in vain.
4.56 p.m.
Mr. Robert Mellish: I think that every Londoner will be pleased at the luck of the hon. Member for Ravensbourne (Mr. Hunt) in the Ballot. Last Friday's Evening News —a very reputable paper and usually very accurate—said that the hon. Member would raise the problems of London on Monday and that the hon. Member had said that there would be no party politics involved because he was concerned only with the well-being of London people which is so near and dear to his heart.
The Evening News could not have known much about the motion which the hon. Gentleman has put down. He will forgive me if I say that it is going it a bit too much to say that the heartaches and problems of London should be laid at the door of the Labour Government. I shall not make a party political speech except to make this party political point: the problems of London have been getting worse and worse over a period of years because Governments of both parties have followed policies on which we have had the best advice and we have found that that advice was wrong. It was said that the employment needs of the regions outside London were so great and that we in the South were so insulated against unemployment and had so much fat on which we could live that we should divert our industry.
The Conservative Government as much as the Labour Government spent millions of pounds attracting industry away from London. I remember vividly in 1966 pleading with colleagues and industry in my own constituency to leave us and to go to the North. I made a speech to them. This was all part of the policy to get the London population reduced. The hon. Member for Ravensbourne states that it has suddenly happened in the past two years, but we know that that is wrong.
Mr. Neil Macfarlane: The right hon. Gentleman made a very important point when he said that previous Administrations had received much bad advice. Would he tell the House the sources that provided that bad advice? It would be very important for the future.
Mr. Mellish: I was then junior Minister responsible for housing. We were advised by the planners in the then Ministry of Housing that the problems of my colleagues and friends in the North were so serious and disastrous, and our position in London was so affluent that we had a policy to get the population in London down to X number of people. We were bursting at the seams, our new towns policy had to continue, so we sent industry away. Professor James, our chief planner, produced facts and figures to show that unless the policies were adopted, disaster would follow for London. We pursued the policy with great vigour. It was a wrong policy. I think that this is a lesson for all of us. We should not follow what the planners say. We should rely on our own judgment.
That policy has been going on, and the trouble is that it has gone so far. I am now back on a party political line. Let us consider the size of the Department of the Environment. The Conservative Party created that Department. Have we ever in our lives seen such a monstrosity as the Department of the Environment? Does anybody know what it is doing? Who is the Minister for Transport? Is it the Secretary of State for the Environment? Who is the Minister responsible for housing? I understand that he is a Minister of State. The Conservative Government believed, foolishly—I do not know whether the Opposition still believe it—that if we made things big they would be more efficient. That was what they did with the Department of the Environment. They made it so big and bloated that I cannot believe that anyone knows what is going on in it. It is an incredible Department when it comes to getting things done speedily and quickly.
The Opposition are in no position to say to us, "Look at all the terrible mistakes you have made".
Mr. Ronald Brown: Does my right hon. Friend recall that from 1967 to
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1973 Sir Desmond Plummer did his best to make sure that we lost industry from London?
Mr. Tebbit: Perhaps the right hon. Gentleman is being less partisan than he thinks. Perhaps his views would find much agreement on the Back Benches on both sides of the House, but there might be considerable disagreement with them on the Front Benches on both sides of the House, and that has been the situation for a good many years.
Mr. Mellish: All right. But it comes ill from the hon. Member for Ravensbourne to try to put all the blame on the Labour Government. It would not be a bad idea to recognise the mistakes made by the Conservative Government.
Which was the party that brought in the great reform of local government in London? It was the Conservative Party. I used to pick up the telephone and say "Do you know that Ilderton Road is in a deplorable state? I want it swept." Half-an-hour later the staff of the borough engineer would be down there and the road would be made clean. Now the authorities do not even know where it is. That is an example of the situation with the edifice that the Conservative Party erected. There is nothing in common between the far end of Dulwich and the downtown part of my constituency. The problems of the sort of people I represent and the problems of the people who live in Dulwich are quite different. The two places are almost like two different worlds.
Mr. Toby Jessel: Is the right hon. Gentleman aware that Ilderton Road is, and always has been, on a borough boundary?
Mr. Mellish: As I was born in my constituency, I know that half of Ilderton Road is in my constituency. That is all I bother about. It starts where the first tree is planted.
One of the saddest features of this matter is that the Government have never become involved in London. That is the fault of all of us. We must become involved. The hon. Member for Ravensbourne made a fair point. The noise and bluster that we get from the Scots and: Welsh is out of all proportion to the size of those two countries. They have Secretaries of State and a period at

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Question Time specially for them. Who has ever thought of a special period at Question Time for London?
The sad part about the situation of the homeless in London is that, by and large, the problem is concentrated on two or three boroughs. Camden is one of the boroughs in the worst situation because it has a railway terminus. People get off the trains at King's Cross and Euston and go no further. For many of them it is probably the first time they have been to London. The problem of the homeless is to be found in such boroughs as Camden, Tower Hamlets, Shoreditch, Wandsworth and my own borough of Southwark.
Another problem in London which disturbs a number of people concerns the youngsters. It is estimated that tonight 4,000 youngsters, many of them in great moral danger, will be attracted to London by the bright lights. They will get to the railway termini and that will be the end of the road for them. Where will they go? What is there for them? Who will tell them anything about anything? Who will help them? No one.
Governments are only too pleased to use local democracy as an excuse to do nothing. Half the trouble with local democracy is that it has enough problems without sharing other local government problems.
I do not expect my hon. Friend the Minister to give me a snap answer today, but the Government should be involved in these matters. Why should not the Government and the London Boroughs Association be involved in setting up units, north, south, east and west, in London to which the homeless and young people can go for advice and help? There should perhaps be a Government representative there and any expense should be shared equally among the boroughs. The Government must have some authority to ensure that these problems are shared.
To listen to the hon. Member for Ravensbourne, one would think that his constituency was teeming with homeless people, youngsters who were in great moral danger, methylated spirits drinkers, and drug addicts. In fact, the number of such people in his constituency is infinitesimal. As a fellow Londoner. I
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argue that the problems of the inner London boroughs should be shared by Ravensbourne and other boroughs.
Mr. Scott: I wish not to query the right hon. Gentleman's basic assumptions but merely to ask whether he thinks it right that the Government should establish such centres. Many youngsters, when they come to London, would be particularly wary about becoming involved with anything run by central Government or even by local government. There are a number of local agencies in London, such as the Cyrenians, catering for single homeless people who are being squeezed out by a lack of funds. Rather than establish quasi-Government residential reception centres for these people, to which they would not go anyway, would it not be better to support the voluntary organisations which are already active in the field?
Mr. Mellish: My experience is that children and homeless people who are in trouble will go anywhere for help. One could perhaps link the charities with the centres. I do not deny that dealing with the matter through the charities might be another way of assisting.
The Government must become involved in London's problems. Manchester and Birmingham do not have London's problems with the homeless and young people. With unique problems, the Government must show an interest and must not simply say "We shall set up a study group", whatever that might mean. I ask my hon. Friend the Minister to tell us what he can do about getting the Government involved in these matters.
Turning to the question of housing—I was wrong in what I said about the question of party politics; one must keep coming back to it—I firmly and sincerely believe in a genuine property-owning democracy. If I had my way, I would turn the Labour Party's policy on its head and local authorities would be allowed to build council houses for sale to people on the waiting list on the basis of need. For example, in my constituency in Southwark houses would be built for sale to people in need on the waiting list, which numbers 9,000. I do not believe in selling council houses which are already built, particularly in inner London.

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I run a surgery every Friday night. The housing problem presents great difficulty because of slum clearance and redevelopment getting the first choice so that hardly anything happens to the housing list. But we have had a great measure of success in regard to the vast number of flats occupied as a result of exchanges and transfers. To take that away from us to any large extent would be a disaster for boroughs such as my own.
On behalf of Inner London, I maintain that any suggestion of selling existing council property is not on. But, having said that, I maintain, as one who has lived in rented property, and in unsubsidised borough council property, before starting to buy my own home, that the vast majority of people want to buy their own homes. Anyone in the Labour Party who does not believe that is stupid. In the long term, it is very much better from the point of view of maintenance. There are no maintenance costs. If a window is knocked out in one's own home it is no good running to the borough council about it. This is something one has to do for oneself.
When these council houses are built for sale there should be 100 per cent. mortgages provided, probably linked with building society funds and Government funds. What we must do is to cut out the lawyers. I am sure there will be a cheer of approval for that.
Mr. Tebbit: Hear, hear.
Mr. Mellish: I am obliged. Whenever the hon. Member cheers there is almost unanimous approval from everybody. The same argument applies to the stamp duty and so on. There could be an enormous breakthrough on the housing front.
Let us consider places outside London, such as Dover, with 3,000 to 4,000 families on the waiting list. How many houses will they get with the subsidised cake? They will be told by the Department of the Environment that they can build about 50. How, in heaven's name, will they ever get rid of their waiting list, under any Government, in those circumstances?
I would say to councils such as Dover, "There will be no more subsidised housing. You will now build for sale. You
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will build as many houses as you can and sell them to those on your list." In a very short time, places such as Dover would get rid of their waiting lists completely.
Mr. Ronald Brown: Does not my right hon. Friend recognise that the main object of these outer areas is to make sure that people from inner London do not go there, and that the price barrier which would be established would make it impossible for people to buy houses there?
Mr. Mellish: I do not agree with my hon. Friend. If the Government were involved here, as I suggest they ought to be, they would have a great deal to do with determining what the prices should be. If any family on the waiting list in my constituency wanted to get to Dover, where houses were being sold to those in need, they would be entitled to a great deal of priority. The actual cost paid by each person per week or per month would be very little more, if at all, than is already paid in rent. I ask for this suggestion to be investigated and to be shown to be practical. People want to see housing treated as a dynamic topic in this country, but where is the dynamism in housing today, in either the Government or the Opposition?
The last time that housing was treated in a dynamic way was when Dick Crossman was alive. Old Dick was full of gimmicks but he was a great Minister. He really brought housing to life. Perhaps his biggest mistake was when he said "We will build 500,000 houses in a year." It was daft to mention a target of that sort, and it was not achieved, but I was proud that under Dick Crossman we built the largest number of homes ever built in the history of this country. The local authorities were really made to work. They can he made to do what they are told if there is a Department willing to kick them in the right place to make sure that they do it. It does not matter whether it is by a Tory or a Labour Government.
What are the Government's intentions about industry? The future of dockland comes into this. I recently went to a meeting on the subject. I will not disclose the full details but it became abundantly clear to me that the present dockland committee is not the sort of

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committee to attract industry into dockland. We can have all the plans we like. Anyone can produce plans. What counts is cash. That is what we want. Where does the money come from at the end of the day? The Government have to fund it. To what extent are the Government intending to become involved in dockland? What plans have they? Again, what overall plans have they concerning transport in the area?
The hon. Member for Ravensbourne was very unfair to us. One might have thought, according to his speech, that dockland went down under our Administration. With respect, it was under the right hon. Member for Worcester (Mr. Walker) that the process started. I remember writing to the Prime Minister of the day, the right hon. Member for Sidcup (Mr. Heath), pleading for something to be done urgently about dockland. I had a splendid letter in reply. The Minister dealing with housing at that time immediately moved into action and set up an inquiry which lasted from 18 months to two years. Eventually a report was produced, which included a recommendation, among other things, for a safari park. What sort of rubbish is that?
Mr. Nigel Spearing: May I remind my right hon. Friend that it was the Travers Morgan study, set up by the right hon. Member for Worcester (Mr. Walker), which was the subject of our mutual dislike. Will my right hon. Friend agree that it would be easy for the Government to take action in dockland without spending more money, It could divert the expansion envisaged for Kent and South Essex, and reduce the expansion envisaged at Peterborough and Milton Keynes, thereby enabling development to be brought back to London. This could be done on the existing budget.
Mr. Mellish: My hon. Friend makes everything too easy. If we are to get dockland off the ground, there has first to be a lot of confidence in areas in which it no longer exists. We have first to get the rest of the South-East to forgo much of its planned capital investment. We have to convince people in the South-East that if any money is diverted from them to dockland, there will be a future in dockland for them as well. It must
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not be seen as something just for Bermondsey, for Southwark or for inner London.
We have the chance now to do something. If we miss the chance now we shall never have it again. Once this land is built upon, it will not be available again for the next 150 years. Are we prepared to let it go? Can we not generate some energy and get really excited about it? I hope that we are not to have another study group—an excuse for doing nothing.
Of course, I recognise that the economics are terribly difficult today, but I want to get through to my hon. Friend the Minister that no one is asking for untold millions to be spent this year. We are simply asking for a start. We are asking for houses to be built. We are asking for some industry. No one expects the whole thing to be done overnight, but for goodness' sake let something happen, so that the ordinary people of London can see that it is happening.
Only this silly old Britain would have allowed dockland to go the way it has. Which nation would have allowed our wonderful River Thames, the greatest highway in the world, to remain empty, day after day after day, when every one of our bridges is packed with traffic?
We are democracy mad. Nothing can ever be done here without consultation. Consultation is the curse of almost everything we have tried to do in this country. I was involved in a consultation last week about dockland. Only seven people turned up, but we have consulted. I dare say I know all the seven people who were there.
When my hon. Friend replies, I ask him please to be positive. I do not expect anything to be done overnight, but please let us have some hope for the future.
5.19 p.m.
Sir George Young: I am sure that many London Members will appreciate the sense of frustration that characterised the speech of the right hon. Member for Bermondsey (Mr. Mellish). I wanted to stop the Travers Morgan study when I was on the Greater London Council. Had the right hon. Gentleman's political colleagues voted with me, we could have stopped it and saved Londoners a lot of money, but they did not support me. I only wish that more

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of the right hon. Gentleman's hon. Friends had been here to listen to his earthy common sense on the question of housing finance and the wishes of the ordinary people in London.
We are indebted to my hon. Friend the Member for Ravensbourne (Mr. Hunt) both for his choice of subject and for the knowledgeable and moderate way in which he introduced it.
The problem in London is basically the same as that in other inner cities. It is that of the flight of industry and of middle income people, with the resultant loss of the tax base and of funds with which to modernise London's infra-structure and in turn the falling quality of public services in education, transport and housing.
I want to mention two or three specific difficulties. The first is blight. This is a difficulty that we can avoid. The problem of planning blight in London has got worse because the resources are no longer available to implement some of the more ambitious schemes that the local authorities have produced. It seems right that local authorities should review their development plans and that, where it is clear that resources are no longer available, they should drop their plans and let owner-occupiers and others get on with rehabilitating areas which can no longer be comprehensively developed.
In my constituency, we have a large self-inflicted wound in the middle of Ealing which has been blighted by planning blight for more than 10 years, where there is no prospect of the local authority scheme going ahead but where no one else can intervene because the dead hand of planning blight lies on the area. Throughout London we see these derelict sites which are an affront to common sense because the local authorities have been unable to decide what shall be done to them.
One problem that we have not resolved is London's planning machinery and the inter-relationship between the boroughs, the GLC and the Department. It is all too slow. The chances of all three bodies finding the right sort of money at the right time are infinitesimal. As a result, nothing happens. We need to look again at the planning machinery in London.
The second problem that I mention is the plight of industry. London has been
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bled white to provide blood transfusions for other parts of the country, and this process has to stop. I hope that the Minister will say roughly when he sees the Government arresting this process and reversing it. I am sure that he will accept that it cannot go on indefinitely.
The problem is a simple one. Successful firms in my constituency who wish to expand find that they cannot expand where they are because they cannot get the IDCs. So they leave London entirely. Other firms wishing to set up and exploit new technology do not come to London for the same reason. As a result, we have an imbalance. The successful firms wishing to expand get up and go. Firms employing new technology cannot start. So there is a danger of London being left with those firms which cannot or do not want to expand and firms not employing new technology. We have to reverse this process at some point. I see the hon. Member for Ealing, North (Mr. Molloy) nodding his agreement. I am sure that he will confirm that in West London we have lost far too many jobs in the last decade. Unemployment in West London is rising and morale amongst employees is at an all-time low as they wonder whether their firms will be the next to go.
Thirdly, on housing, it is nonsense that the GLC should own accommodation which is empty in new and expanding towns to which Londoners cannot move because they cannot find employment there. It is an affront to Londoners living in bad housing conditions that expensive and desirable property owned by the GLC and paid for by Londoners should not be made available to them. Now that there is a cut back on building funds for housing associations and local authorities in London, it is clear that we must use all the existing houses that we have outside London if we are to make renewed progress on the waiting lists.
Mr. John Page: I am interested in what my hon. Friend is saying, but I wonder about the direction in which he takes it further. It seems to me that he is saying that we have to encourage the expansion of firms in new towns which take London's overspill in order that Londoners may move there and occupy the new houses, which is rather contradictory to current thinking, which seems to be that we must have the removal of IDCs

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from the London area so that more jobs can be taken up by local people. I wonder what is my hon. Friend's thinking on that?
Sir G. Young: I take my hon. Friend's point. My conclusion would be to allow people to retain their jobs in London and to move out to the accommodation in Basingstoke and Bracknell. At the moment people are not allowed to do that. They can accept accommodation in new towns only if they renounce their employment in London and find jobs in the destination new towns. If they are prepared to commute for the time being, they should be allowed to have the new accommodation and in that way there would not be any incentive for Londoners to provide more jobs in the areas where the towns are.
If the price of putting more money into more accommodation is that local authority rents should go up, which I believe they should, I am prepared to see some withdrawal of the tax concessions to owner-occupiers. This is quite logical. If we are to get agreement that more resources should go into housing, it seems sensible that everyone should contribute regardless of his accommodation. As a country, we spend far too little on housing, and I see an argument for increasing what owner-occupiers pay as well as for increasing what council tenants pay.
A growing problem in all our constituencies is that of council accommodation built relatively recently which is inadequately maintained. I have in mind tower blocks especially. For reasons of bad management and inadequate facilities, more and more people wish to leave them. We are building up enormous problems on these large tower block estates if we continue to cut back on management and maintenance.
Finally, on transport, I cannot allow this occasion to pass without putting in a plea for those of us who bicycle round London. I see that the hon. Member for Newham, South (Mr. Spearing) is nodding his agreement. More and more Londoners are taking to two wheels to get to work and to school. The bicycle sheds in primary and secondary schools are nearly all over-flowing. It is time that the Government, the GLC and the local
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authorities responded to the increasing numbers of people who have already taken to two wheels and the increasing number who would like to if only conditions were made attractive. A cyclist does the equivalent of 1,600 miles to the gallon, which is an efficient conversion of energy into movement. I am concerned that the response from authorities to this new and revised form of transport is unsympathetic.
I see the answer as putting more resources into London's problems, with higher rents, coupled with reduced concessions to owner-occupiers. We can lift planning blight at no cost and increase rateable value by allowing new houses to be built and allowing shops and new industry to move into the areas. I am convinced that the dynamism is within London to solve the problems if only the Government, the GLC and the boroughs will allow us to get on with the job.
5.27 p.m.
Mr. Ronald Brown: I add my congratulations to the hon. Member for Ravensbourne (Mr. Hunt) on his choice of subject, and I endorse without reservation his complaint that we in London never seem to get any time for debates unless we are very lucky in a Ballot or we contrive a debate by misusing a GLC General Powers Bill or Money Bill for the purpose. It is about time that Governments of both persuasions understood that London has a standing which should be debated regularly in this House and that London Members should have access to Ministers in the way that Scottish and Welsh Members do for matters affecting their areas.
The hon. Member for Ravensbourne was kind enough to give me notice of his intention to mention the speech that I made in 1973. I have had a brief opportunity to re-read it. I stand by every word that I said. I withdraw nothing of what I said then. I put the blame where it fairly belonged and. having read the speech again, I realise that my own right hon. and hon. Friends have not done as well as I hoped. The end of term report that I give them is about Beta-plus. They could have done much more.
However, the House does itself a disservice when it does not underline what has been done. One factor which has

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come out today is London's industrial unemployment situation. My right hon. and hon. Friends have moved the limit on industrial development again, but not a word has been said about it. From 1st May they have allowed industry in Greater London to expand to 12,500 sq. ft. without the need of an IDC. I do not suggest that that is enough. I want much more. But it is more than 5,000 sq. ft. We have moved progressively to 10,000 sq. ft. and now to 12,500 sq. ft., and the Government are now waiting to see the validity of our argument that holding down expansion to 5,000 sq. ft. was the reason for so many firms moving out of London. I hope that we shall all make sure that firms in our constituencies understand that they can now expand to 12,500 sq. ft. without the need for an IDC.
It has been suggested that I might like to go back to those happy days under the Tory Government and the Tory GLC. Having re-read my speech, and considered what the situation was then, the answer is "No, I would not like to go back to those days under the Tory Government and the Tory GLC".
What irritates me most is the fact that no one seems to learn from mistakes. We go on remaking them as each new Government take office. One accepts that mistakes are made, but what is unforgivable is for Government to continue to go on making the same mistakes. It is worth while getting on record the sort of figures that we are talking about as far as industry in London is concerned. I regret that some of our hon. Friends from the Provinces, on both sides of the House, seem to consider that London is very well off and that we are cheating if we ask that special facilities be given to us.
Mr. Ernest G. Perry: My hon. Friend suggested that we in London want special facilities. We do not want special facilities. We just want the same facilities as exist in other parts of the country.
Mr. Brown: Precisely. Although our provincial colleagues consider that we want special facilities, I agree with my hon. Friend, the Member for Battersea, South (Mr. Perry), that we are not asking for special facilities.
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I would quote some figures which may be valuable. In 1961 the number of people employed in manufacturing industries in London was about 1,430,000. By 1974, that figure had fallen by 490,000 people—a decline of some 34 per cent. in the number of industrial jobs available. It may be argued that this decline was due to various factors but, when one examines what the figure was outside London, one finds that the decline in industrial jobs was only 5 per cent. There can be no justification for arguing that London can withstand a decline of 34 per cent. in its industry when the average for the rest of the country was only 5 per cent. That is something which should be looked at seriously. It is something which our colleagues in the Provinces have to understand.
I would submit that the figures which are constantly given for unemployment in London are not true. They are created to cover Greater London and the South-East. It is the inclusion of the South-East which creates the problem because when people become unemployed, they become unemployed where they are living. That fact does not appear in the London statistics where people commute from places in the South-East and beyond. Consequently we never get a true figure.
I would pay tribute to the Minister. I understand that the Department of the Environment and the Department of Employment, are involved in discussing the arguments, which some hon. Members and myself have put, to ascertain whether it would be possible to get a more meaningful statistic which would show what the problem is in the Inner London area rather than giving an overall figure which is so often quoted by our colleagues in the provinces who argue that our difficulties in London are minimal when compared with the difficulties in other parts of the country.
We also have to ensure that publicity for industry in London can still be carried out. I would remind the House that the GLC, for example, is prevented from advertising under Section 73 of the London Government Act 1963 and Section 144 of the Local Government Act 1972—both pieces of legislation passed by Conservative Governments. They make it impossible for publicity to be given for attracting industry into London.

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Somehow we have got to make sure that this embargo is withdrawn so that the GLC, and the borough councils, will be able to advertise outside London to encourage industry where it is of a suitable type to come to London. Unless we can do that other areas will continue to come into London and run vast publicity campaigns to withdraw industry from London. It is a bit of a nonsense for us to stand here and bemoan our problems without dealing with the very reason why we cannot publicise what we have to offer in London. I hope that the Minister will be able to give some assurance that he and his right hon. Friends will examine the possibility of changing the law to allow the GLC and the London boroughs to advertise outside London for industry to come into London.
Another thing which appeals to me is the possibility of London representation on the National Enterprise Board. If we are to have the NEB running its affairs for the whole country, it seems to me that the large conurbations of London ought to be represented on it in order to make London views known. The Industry Act 1972, and the Industry (Amendment) Bill currently being considered by this House, ought to be amended to provide assistance for those areas in London which are badly affected by the heavy and rapid decline in manufacturing employment.
Mr. Geoffrey Finsberg: Do I understand the hon. Gentleman to say that he would contemplate putting down an admendment to the Bill in relation to this particular item?
Mr. Ronald Brown: This is an important issue for London but I do not think we want to involve ourselves in party points. I am asking the Minister to listen to our debate, to consider the points raised and, as a result, I shall look closely to see what he does. If it is possible for us to discuss putting down an amendment to the Bill I would do just that, but I ask the hon. Gentleman to remember that while hon. Members in London are the largest group in this House we still do not outvote the rest of our colleagues. We must make out our case tonight so that our colleagues will understand our problems, otherwise the Government will undoubtedly argue. as previous Govern-
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ments have said, that if they give a special facility to London then every other region in the country will want a similar facility. I would suggest that we press the Minister to consider this point and let us see how he goes on from there.
I agree that from time to time the easiest way for Governments to get out of taking decisions is to set up inquiries. The hon. Member for Ravensbourne suggested that someone ought to be responsible for London so that we can have an overall picture of what exactly is happening. That can either be done by setting up a Royal Commission to examine our case, which means a delay of two years, or perhaps we can persuade the Government to appoint a Minister responsible for London. The Minister will be in a position of saying to my right hon. Friend the Member for Bermondsey (Mr. Mellish) in no uncertain terms that in the Department of the Environment every major office is held by a London Member. That has not helped us yet. However, if we can get a promise that in the future this will have its rewards I shall be happy. At the moment those hon. Members tend to give the impression that they are leaning over backwards to ensure that they are not seen to be treating London as a special case.
Another problem raised by the hon. Member for Ravensbourne is that furnished accommodation is drying up. In my own constituency one of the biggest factors for homelessness was furnished accommodation. People were being turned out of furnished accommodation with monotonous regularity. The hon. Member for Ravensbourne may not have had the problem in his area, but in my constituency hundreds of families were put into bed and breakfast establishments after being thrown out of furnished accommodation. Consequently, the Government's action on furnished property was a great help in my constituency.
The hon. Member for Ravensbourne does not understand the enormous problems in Southwark, Wandsworth, Hackney, Islington and other inner London areas. I do not wish to be unkind to him. I know that his area has its own problems, but Bromley was a classic example of a London borough being unwilling to co-operate with the other boroughs in providing help to areas of stress.

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Many of us have good will towards Bromley. When I served on the London Boroughs' Association, we tried to help Bromley over its gipsy problem, but that council was intransigent in its refusal to help with the problems of the inner London boroughs.
My right hon. Friend the Member for Bermondsey suggested that councils should be required to build houses for sale. The hon. Member for Ravensbourne could have told him that the price of property in Bromley makes it impossible for anyone in my constituency to buy a house there. The same applies to Kingston and to many other outer London boroughs, none of which has made any contribution to solving the capital's housing difficulties. The Government must take action, otherwise the housing position will be as serious in the future as it was some years ago.
Mr. John Hunt: The hon. Gentleman is being rather unreasonable to Bromley Council, which now has an agreement with the GLC to accept a number of nominated tenants. However, in the council's experience some tenants to whom it has been suggested that they might move out of inner London have said that they do not wish to break their links with those areas to come into the old Kentish areas such as Bromley. Does the hon. Gentleman not think that far greater priority should be given to the redevelopment of inner London, especially the dockland area, which has already been mentioned in the debate?
Mr. Brown: The dockland area has been a difficult problem. There are a number of local authorities involved. My right hon. Friend the Member for Bermondsey has never served in local government; he has always been in the Ministries. Some of us understand the need for autonomy in local government. I am not against bringing in the Government, but local government must be responsible and the five boroughs involved must act. Bromley has been one of the most difficult London boroughs. If it has changed, we are always grateful for the sinner that repenteth, but it should have repented a long time ago.
We are dealing with a serious problem. Employment, the quality of life and all the things we hold dear in London are
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at stake. When the Conservatives were in power, I complained bitterly that they did not give us positive answers. I trust that the Minister will offer us some help tonight.
My hon. Friend has the good will of all hon. Members from London in his efforts to grapple with these vast problems. We need his help to ensure positive action for this great metropolis so that the first-class people who live here can have a first-class society in which to live in happiness and dignity, so that they can believe it is still worthwhile to be a Londoner.
5.45 p.m.
Mr. Peter Bottomley: I followed with interest the remarks of the hon. Member for Hackney, South and Shoreditch (Mr. Brown). The fact that he said that this was one of the few public occasions in the last two and a half years in which he could complain to his own Government for not doing some of the things the last Conservative Government did not do indicates the Government's inactivity as seen by their own Back Benchers and the few opportunities hon. Members have to discuss London problems in the House.
The Ferrier Estate in my constituency sums up, in a small area, many of the problems facing London as a whole. There are 8,000 people on the estate which has a very high turnover because many people are unhappy about housing. They want to buy their own homes and, as this is not possible for London council tenants, they have to move, which does not do much for securing a good sense of community.
The people on the estate are concerned about education and the changes that have occurred over the last 20 years. I do not want this to be seen as a condemnation of all changes or of those schools which have made minor changes but retained the sense of education as serving children and teaching them to read, write and be civilised better than they could be taught if they stayed at home with their parents. On the Ferrier Estate, as in many other areas of London—including council estates and owner-occupied areas—parents want their children to get the best education and they are concerned about some of the things which are happening at present.

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How is it that we can build homes in London for 8,000 people—which would be a small town in many parts of the country—and find that there is no sub-post office, no police station, no youth facilities of any size, no opportunity for anyone to set up a small factory to employ, say, 10 people and nothing for people to do except to live there?
Large numbers of old people and young families with children, from the top of the waiting list, are thrown together with no facilities and we wonder at the enormous cost of vandalism and the enormous need for social services to prop up what could be a community that stands on its own feet.
If we realised that people can look after themselves better if they are given the opportunity and that society, the community and the local authorities need prop up fewer and fewer people, we could provide opportunities for those who can to cope with their own future.
The Rochester Way in my constituency sums up many of the bad aspects of London transport. The Minister will not need reminding, as the A2 runs through both our constituencies, that 10 or 15 years ago the GLC and the Government started to build a road from the Black-wall Tunnel to "The Dover Patrol" and from Falconwood into Kent, leaving a three-mile stretch across Eltham.
The A2, the main road to Europe, has been carrying an increasing amount of traffic and is only 24 feet wide in some places in Eltham. Originally named Deansfield Street, it was renamed Rochester Way, as if that would make it any wider, and the GLC said that it would build a relief road. It bought up nearly all the houses on the proposed route for the relief road and for the past 10 years they have been sitting idle. Some are occupied, all are falling apart. At the same time, all the homes on the existing route are falling apart. By its inactivity, the GLC is destroying twice as many homes.
Why is it that over the past 10 years the GLC and the Government have not decided to build the road? I argue that it is a lack of political will. Every time that consideration has been given to building the road someone must have said "We cannot do that. West Woolwich is
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a marginal constituency. It might mean that 500 people will change their vote. We shall make sure that an extra 40 or 50 people are killed on the road and that art extra 40 or 50 homes start falling apart." If that has been the excuse for inaction, it is a disgrace for London. Let us remember that London is one of the finest capitals in the world. I say that as someone who has lived in London nearly all his life.
I take up my next point as a previous resident of Battersea, a present resident of Lambeth and the representative of part of the Greenwich borough. I think I can claim to speak for a good proportion of South London.
Most of the people in South London can make as good a contribution as those in other areas, but in general those who have the opportunity of moving out of inner London take the opportunity to do so. They leave behind those who cannot move out. This happens in part because of large-scale redevelopment schemes, and in part because people do not like to remain in London because of the education that is available, for example, or because they want to go to an area where their children can grow up and get a home of their own. It has to be accepted that it is not possible to get a new home in London unless one has a wife and three children or £3,000. I suppose that it is possible to get £3.000 by following page 15 of Labour Weekly, which sets out how to win half a million pounds on the football pools. However, for most of us that is not very appropriate.
In the areas in which I have lived school teachers do not want to live where they work. In the main, they do not want to wait on the council list for 15 years before they get a home. They mostly move out of the area. Social workers do not live in the areas in which they work in inner London. They move out. Many politicians do not live in the areas that they represent. They move out, or move to an area closer to where they work. I do not blame anyone for doing that. Policemen and many others have gone. The local vicars in inner London provide the only reference point. In inner London, and in many parts of the other boroughs, those who are deeply committed to their area have chosen to move out. It is time that we started examining our policies. The school

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teacher moves out because he does not want his children to go to an inner London school. Many school teachers do not like the way in which secondary schools have developed in emphasis. This is not a blanket condemnation of comprehensive schools. The fact is that in many parts of London many school teachers take the view "I shall do my best to make the system work, but it is not for me".
The same applies for the architects and planners who were involved in the Ferrier Estate, for example. They are not saying "May I put my name at the top of the GLC list? I should like to live on the eighth floor of the Kidbrooke block."
We should be giving consideration to what people can do for themselves and what they should be encouraged to do. That would mean that the GLC and the Government would be able to do better that which others cannot do for themselves. Let none of us at County Hall or Westminster seek to provide housing, education or jobs that we would not accept for ourselves. The people on whose behalf we are in this place are not a lower species than ourselves—they are just the same as us. The schools and the housing that is good enough for our own families represent the standards that all the people need.
5.54 p.m.
Mr. Ernest G. Perry: I am sure that the hon. Member for Woolwich, West (Mr. Bottomley) will forgive me if I do not take up his line of thought. Frankly, I agree with most of what he said. We want to know what is going on in the large London estates, some of which have no facilities of any sort. That is a situation that leads to the deterioration of local community relations. Several of the problems that the hon. Gentleman mentioned should be taken up. I am sure that my hon. Friend the Under-Secretary of State will try to do what he can.
I thank the hon. Member for Ravensbourne (Mr. Hunt) for introducing this subject this afternoon. London Members have had to be content with two and a half hours of debate every two years, but the majority of London Members are agreed that London is badly treated when it comes to apportioning parlia-
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mentary time. I go as far as to say that two and a half hours in two years is not good enough. It is nowhere good enough that Members who represent the capital city of this once great Empire and Commonwealth should be given that amount of time to discuss the problems of London. I hope that my hon. Friend, being a London Member and living in London, will recognise that we believe that drastic changes should be made and that London should get a fair crack of the whip. We do not want special facilities, merely a fair crack of the whip. I might say that we in London think we are very important.
I congratulate the hon. Member for Ravensbourne on winning a place in the Ballot. I am only sorry that we have to rely upon a Private Member's motion to discuss such an important matter. I do not agree with the hon. Gentleman when he says that things will be different in London if we accept his motion. If he sincerely believes that a return to power of the Tories on the GLC, or even to Government in this place, will make the slightest difference to London, he wants to think about it again. I recall two motions that I put down shortly before the GLC elections in 1972 or 1973. They were almost word for word the same as the motion now before us, except that I used "Conservative" and not "Labour".
London Members are naturally interested in London's problems. My hon. Friend will recognise that Londoners feel keenly the capital's problems. I do not suggest that Labour London Members can cure its problems, any more than Conservative Members will say that they have a solution to the problems. A good idea that has been mooted on many occasions is that London should be represented by a Minister. We have a Secretary of State for Scotland and a Secretary of State for Wales, but London does not have even a junior Minister. Surely a case can be made out for London being represented by a Minister. There should be a separate Minister for London.
I hope that my hon. Friend will convey to his right hon. Friends the sentiments and views, that are sometimes extreme, of London Members on both sides of the House. They feel that it is about time that a Government, whether Conservative or Labour, introduced some ministerial

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representation for the Greater London authority.
Mr. Douglas Crawford: I hesitate to intervene in the affairs of another country, but surely Scotland and Wales are countries whereas London, with all respect, is not. It is the capital of a great country, but it is not a country.
Mr. Perry: But we have more than our fair share of Scotsmen in London and more than our fair share of Welshmen. Indeed, we have more than our fair share of all the other immigrants from all over the world. The hon. Gentleman speaks of Scotland as a nation, but London is much superior in that it represents the whole of the country. There are people from throughout the country in London as well as from throughout the Commonwealth.
The problem facing London has not suddenly arisen. I suppose there has been a general deterioration since about 1950. I do not use that date because the Tories came into power in 1951, but because in my view there has been a general deterioration in London during that time. Do not let us disguise the fact that immigration has played a part in the problems of London. Many people have moved out of London but many others have moved in. We have had Chinese, Pakistanis, Indians, Africans, West Indians, Mauritians and Guyanans. They all seem to have moved in to Wandsworth. However, I am sure that the problem of immigration is tied up with the other problems of London.
The hon. Member for Ravensbourne mentioned IDCs. I have known, particularly in the last 25 years, large firms, good prosperous businesses with hundreds and thousands of employees, move out of Wandsworth and Battersea to other parts of the country, to Scotland and Wales, and even to Essex, having obtained Government grants to enable them to move, and then the land which they have left in London has been used for some other kind of development which has not provided the sort of employment necessary in London. I can mention half a dozen large firms which have left Battersea and Wandsworth in the last few years, and the sites which they occupied are still lying derelict.
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In passing, I would not suggest that that the new Covent Garden market is a white elephant, but I do say that it is big enough to accommodate all the markets in London. Anyone going along Nine Elms Lane will find acre after acre of derelict land which was once occupied by factories which have now been moved to other parts of the country. This has resulted in lost employment, wages and salaries, and to some extent homes in other parts of the country to which the people have moved.
Mr. Ronald Brown: May I remind my hon. Friend that that is only part of the story? It is true that firms, particularly those in the furniture industry, have left London for other places. Unfortunately, they have then gone into liquidation and the employees have migrated back to London where they are unemployed, thus causing even further problems for the housing lists.
Mr. Perry: That is true.
I was glad to learn that the Greater London Council only last week decided to hand over to the tenants blocks of flats built during the war by St. Catherine's Dock. The flats are being handed over lock, stock and barrel. The tenants will be responsible for the management and they will be in a position to decide which tenants to install when there are vacancies. The GLC will have nothing to do with it except that it will be responsible for banking the rents, and improvements and things of that nature will come out of the rents. This idea should be followed in many other parts of London. One of the solutions to our housing problem is some sort of co-operative effort so that people living in blocks of flats should have a pecuniary interest in the block in which they live.
I now wish to refer to a matter which was mentioned by the hon. Member for Ealing, Acton (Sir G. Young). I do not complain at his having left the Chamber because I know that he has other important business. I disagree with him completely on one of his points in connection with housing in London. He said that tax reliefs received by owner-occupiers should either be reduced or abolished. I am totally opposed to that idea because if tax concessions were taken away from owner-occupiers we would restrict the

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number of people who could become owner-occupiers. It is through the tax concession that many people of modest and ordinary means, such as Members of Parliament, are able to obtain their own house. The hon. Member should look into this matter a little more carefully before advocating such a scheme. Many owner-occupiers at present are in extreme difficulties in trying to meet their interest and mortgage repayments, and to remove these concessions would place a very heavy burden on them. I hope that hon. Members opposite will take up this matter and get the hon. Gentleman's lines a little straighter.
One of our problems in London is that while it is a tourists' delight, it is a Londoner's lament. There is nothing worse for Londoners than to go into the West End or the City to work and be confronted with hundreds and thousands of people from all over the world milling around London on holiday. Good luck to those people, but it makes life very difficult for Londoners.
Finally, I feel that we should do something about the amount of rubbish which is left all over London. [HON. MEMBERS: "Hear, hear."] I had intended to dilate on that subject at some length, but it is apparent that I have the unanimous support of hon. Members in all quarters of the House.
I should like to express my thanks to the hon. Member for Ravensbourne for raising this subject of London and allowing us to debate it.
6.5 p.m.
Mr. Anthony Grant: I do not want to follow all the observations of the hon. Member for Battersea, South (Mr. Perry). I should, however, like to say that although I did not hear the speech of my hon. Friend the Member for Ealing, Acton (Sir G. Young) on home ownership problems, I find myself a little more in agreement with the hon. Member for Battersea, South than with my hon. Friend. I also agree with the hon. Gentleman in congratulating my hon. Friend the Member for Ravensbourne (Mr. Hunt), who has done a great service in giving us this opportunity, in a remarkably bipartisan approach, to debate the subject of London. We all agree that the situation in London, from the employment point of view and in many other
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respects, is entirely unsatisfactory and that we are not getting a fair deal.
I am delighted to see the Under-Secretary of State for the Environment, the hon. Member for Greenwich (Mr. Barnett), at the Dispatch Box, knowing that he is a London Member and that he took a great interest in this subject as a Back Bencher, and we are sure that we shall get a sympathetic reply from him. However, in view of the size and importance of London and the breadth of the subject that we are discussing, I should not have thought it unreasonable if the Secretary of State himself had had the decency to put in an appearance.
Having said that, I should add that I am somewhat doubtful about whether it would be worth while having a Ministry for London. London is probably over-governed already, and to add yet more bureaucrats would pile confusion upon agony. If one abolished the GLC—which idea I must say rather appeals to me—there might be a good case for having a Government Department for London, but I do not think that it is necessary to pile bureaucratic fears upon bureaucratic fears. The most reasonable arrangement might be for a high-level Minister to be designated and to have some responsibilities for dealing with problems in London, but I would not give him a huge bureaucratic Civil Service Department.
I should like to say a brief word or two on employment, which has been the subject of some speeches today. I am—and I think the House is—deeply concerned about unemployment in London, which has changed very rapidly. My hon. Friend the Member for Ravensbourne gave some figures. I do not want to sound partisan, but I should like to draw attention to the fact that during the last two years unemployment has increased in London and the South-East by 150 per cent.—the greatest increase anywhere in the country. When I raised this matter with the Chancellor, he said in his usual laughing manner "That proves that our regional policies are correct". I do not think that they are.
I support the desire of all Governments since the war to see that the less favourably placed areas of the country have a greater share of the economic resources available in order to make them viable,

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but I do not think that Londoners ought to be told that the long-term problems of places such as West Central Scotland, Tyneside and Merseyside are in any way comparable with the situation in London over the past decade. Therefore, I believe that regional policy should be used to right the situation in London.
There are two basic weapons of regional policy. First, there is straight cash—the money which goes to development areas, intermediate areas and special development areas. There is neither sense nor need to designate London as a development area or any other form of assisted area. That would be wholly unrealistic, and I do not believe that industry or the people of London expect it to be labelled as a depressed area and thus to receive taxpayers' money.
The second important weapon in regional policy is the industrial development certificate, and this is a valuable weapon since it costs the taxpayer nothing. In my view, it is the most valuable weapon one can have. When the Conservatives were in Government and I had some responsibility for these matters, there was a considerable build-up of employment in London and the South-East, and there was difficulty in other areas—in the North-East and the North-West, for example—and I thought it right that we should relax the IDC policy. We did that to a certain extent, but the policy changed when the present Government came to power.
The present Government, unwisely, in my view, immediately tightened up at the lower level of the IDC scheme. I regarded this as wrong, although I well understood the pressures upon them. I was subject to pressure myself. I see the hon. Member for Fife, Central (Mr. Hamilton) in his place, and I recall that he tackled me on more than one occasion to ask why I was being rather relaxed or sloppy over industrial development certificates. But I discovered that even if one stopped a relatively small development in London or the South-East, it did not necessarily have the effect of making that development go to West Fife. That might apply in the case of large firms—perhaps they would go—but it does not apply to small firms. By and large, they do not develop at all.
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There is, therefore, a case for relaxation of the IDC policy to some extent, and I support what the Government have done. Although I thought it foolish to tighten up as they did on coming into office, I think that they have been sensible in relaxing at the 12,500 sq. ft. level. Moreover, I believe that they will have to relax a lot more, because the situation in London is bleak, especially for small industries and businesses.
We want a broad spread of activity in London. The last thing we want is to find ourselves awash with car factories and assembly lines in labour-intensive industry. That is not London's character. We need a flexible opportunity for the skills of the people of London. I include here commercial activity as well. Perhaps both Governments have been over-harsh in the application of the office development permit scheme. I understand the irritation experienced when great office buildings appear in various places only to stand empty for a long time. Naturally, this annoys people on the housing list. Nevertheless, London will be a commercial as well as an industrial centre. It will attract head offices of companies which want to be in the right location, near to the Government and near to the Continent.
There must, therefore, be a relaxed attitude in the Government on the question of office development. If this has the result that the occasional office building is not at once occupied, that is a risk worth taking in order to keep employment. For example, very many office workers live in Harrow, yet they have to go a long way each day to work, struggling on London Transport in the unsatisfactory circumstances which commuters have to endure, and I am sure that they could do with more office space in Harrow. The Minister is well aware of that, I know.
London does not want subsidies. London should not be given any more taxpayers' money for these purposes. It is not a development area. It is not a depressed area. Let us give London the right conditions so that firms both large and small—especially small, and in the service sector, too, just as much as in manufacturing—have the opportunity to develop and grow.
Mr. Ronald Brown: Is the hon. Gentleman not aware that there is a vast amount of empty office space in London already, and one can find 50,000 sq. ft. any time one wants it?
Mr. Grant: In fact, there is not a vast amount of office space in Harrow. My constituents have to move out of the borough to work more than the constituents of any other London borough have to do. I am sure that I am right in my figures, and I should like my constituents to be able as far as possible to stay within the borough boundaries and do the commercial jobs they want to do. All we want is flexibility in this respect. London must be a commercial and administrative centre as well as an industrial centre.
There has been some criticism of tourism, and I understand the irritation which people feel at the burden which tourism puts upon the metropolis. In my view, however, tourism is enormously important. It provides a vast amount of foreign exchange, it brings enormous invisible earnings, and it is a great help also in international relations if people come here—even young people—to see Britain and come to understand us. London is the magnet. I agree that we must try to get people out of London into other parts so that our capital city is not, as it were, cluttered up, but London will remain the magnet, and if we are inhospitable and tourists feel that they are harassed, the result will be damage to the country as a whole.
My final question is about rates, and I hope to hear a straight answer from the Minister. Last year the then Secretary of State for the Environment rightly told the local authorities "The party is now over". Any sensible person will agree with that, since local government spending had been quite astronomical.
As a result of the instructions given, my local authority—I know that others did the same—behaved wholly responsibly, cutting back on its spending and restricting growth in compliance with all the requirements laid down by the Secretary of State and the Government. Local government expenditure was, indeed, curbed. However, we know that those words fell on deaf ears in some local authorities, and spending has continued to rise disgracefully.
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I am disturbed now to have my attention drawn to Circular 45 of 1976, which, if I have understood it correctly, says, in effect, that the Secretary of State, alarmed at the excessive expenditure of local authorities, proposes to haul back the excesses from everybody in his next rate support grant—that is, from all local authorities regardless of whether they have been responsible and have pruned back, as Harrow did. It seems that the ratepayers of Harrow will have to pay for the excesses of other local authorities. This is grossly unfair, and I hope that the Minister will comment on it, or at least draw to the attention of the Secretary of State the strong feelings of Harrow on the subject.
Why should the Harrow ratepayer who has been responsible and curbed expenditure have to pay for £100,000 council houses in Camden? Why, indeed, should Chelsea Football Club be subsidised? Why, in heaven's name, should £10,000 be found for the General Strike exhibition? Why should the Pinner golf course in the constituency of my hon. Friend the Member for Harrow, West (Mr. Page) be subsidised? Does the Greater London Council think that it can run a golf course? It is all ludicrous, and I want the Minister to look at it again.
Unless the whiff of decay in London is to become a stench, we must have a far more flexible policy towards industry and commerce than we have had in the past under either Government. The situation now is far worse than it was when we were in office, and we must have financial responsibility among all local authorities in the way they approach their affairs.
6.19 p.m.
Mr. William Molloy: The hon. Member for Harrow, Central (Mr. Grant) said in his closing words that the situation in London now is much worse than it was when the Conservatives were in office. It is worse because they would not listen to us when we urged them to do so much that was necessary when they were in office a couple of years and more ago.
I join other hon. Members in thanking the hon. Member for Ravensbourne (Mr. Hunt) for introducing this debate. I agree

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with his motion so far as it draws attention to the problems of Greater London, although after that there is a lot of biased and unwarranted political verbiage. Nevertheless, I thank the hon. Gentleman for giving us this opportunity, having on so many occasions urged the Leader of the House to provide more time—as much time as the Scots, the Welsh and other regional communities have—to discuss London's problems. All we have had, however, is this short debate today, when we have had to truncate our speeches and keep within four or five minutes. In these circumstances, I hope that hon. Members on both sides will support me if I am ever palmed off again with the suggestion that we are lucky to have a debate such as this only through the good grace of the hon. Member for Ravensbourne.
Some hon. Members agree that the Greater London area and the London boroughs are too large a concept and are too distant from ordinary people. Since that was a Tory creation, it was primarily politically motivated and not in the interests of humane government. We are now paying a heavy price for the removal of local government from ordinary people.
Because we become angry and annoyed about these matters, we are sometimes too inclined to say, as the motion says, that the capital city of Great Britain is in decline. But those who take that view should go overseas and examine what is happening in other parts of the world. Government in Greater London has been subjected to a massive degree of change. The creation of large London boroughs and an amorphous GLC area obviously did not work out as the theorists suggested. The idea originally was that there would be more cohesion, more money and that therefore much more could be accomplished, but that idea has not worked out.
However, this does not mean that all has been disaster. I must say to my hon. Friend the Member for Battersea, South (Mr. Perry) that not all the people who come to the Greater London area and central London are merely tourists coming here to enjoy themselves. He must remember that goods, food and many other items are very much cheaper in the United Kingdom than in the countries from which many visitors come. It is in one
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way unfortunate that the largest shopping area in the United Kingdom is in London and that because people come to the capital city, that creates problems. At the same time all this activity helps to contribute to the economy of London.
Much has been said about London's housing problems and admittedly the situation is serious. However, the picture is not all that depressing. I remember when I was part of the local government set-up in the London borough of Fulham and the terrible effects of the Tory Rent Act of 1957. That legislation caused havoc and distress, and indeed more suicides flowed from the enactment of that piece of legislation than from any other Act of Parliament. It reduced many ordinary Londoners to the ignoble and degrading status of being refugees in their own land. Covetous and greedy landlords took advantage of that Act and turfed people out on to the streets. The State had to come in to rescue ordinary people who had been savagely treated by private enterprise.
Although there are housing problems in various parts of London, the record of the Labour-controlled areas in terms of slum clearance and many other activities is to the credit of those authorities. They have done an enormous amount to enhance the standard of life of ordinary people. Therefore, it is daft now to say that, because things are not going all that well, we should return to the form of administration that introduced the Rent Act 1957 with all its vicious, unseemly and foul connotations. That measure was backed by people who were not interested in clearing slums—namely, the Tory Party.
I turn to the important matter of the great anxiety about unemployment. I have sought to raise the topic of joblessness in the Greater London area in Adjournment debates and by parliamentary Questions. I should like to examine for a few moments the causes of unemployment. Let us examine the employment situation in my constituency. The policies of successive Governments have caused some industries to move out of the area and no other industries have returned to take their place. I believe that London Members on both sides of the House should join in pressing the present Government—or, in 20 or 30

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years' time, possibly a Tory Government—to take steps to deal with this problem.
We are in danger of discovering that land that was once used by thriving industries has now been vacated by industry and is being used for warehousing. Instead of such sites giving employment to 800 or even 1,000 skilled artisans, the warehouses involve the employment of perhaps only half-a-dozen clerks and a few forklift truck drivers.
Another important factor to bear in mind is the downturn in the number of skilled apprenticeships. One of the proud boasts of the Greater London area has been the production of skilled apprentices.
Much has been done in terms of education and housing in the London borough of Ealing. I wish to issue a challenge: I defy anybody in this House or outside to compare the housing record of the London borough of Ealing with that of any administration in any other London borough. I issue that challenge because I do not think that we should make too much of the many agonised words of Conservative Members when dealing with these topics.
I wish to conclude by dealing with a subject that has irritated many people in Ealing. The Ealing, Hammersmith and Hounslow Area Health Authority—another Tory creation—proposes to close two hospitals in Ealing. I refer to the Northolt Community Health Clinic and the Islip-Manor Community Health Clinic. Both are busy and worthwhile clinics that serve two large housing estates. I cannot imagine anything more lunatic or ludicrous than that those clinics should be closed. I hope that the Minister will refer this matter to his right hon. Friend the Secretary of State for Social Services in the hope that he will introduce some sanity into the situation and will stop this appalling proposal.
I join with those hon. Members who believe that the GLC is probably doing its best to deal with these problems, as indeed other local authorities and certainly hon. Members are. However, I believe that these efforts require some form of co-ordination so that our efforts can produce fruitful results. I believe that a Minister with responsibilities for Greater London is required to help to assist in this co-ordination and that this will redound
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to the benefit of Greater London generally.
6.29 p.m.
Mr. Geoffrey Finsberg: This has been an interesting debate, and I am so sorry that a larger number of hon. Members have not been able to participate. I congratulate my hon. Friend the Member for Ravensbourne (Mr. Hunt) on being able to give the House an opportunity to debate the subject of London.
It has been said by many people that London is not discussed often enough in this House. I am glad that hon. Members on both sides of the House put pressure on the former Leader of the House to discuss this subject on the Floor of the House rather than in some weird regional Committee upstairs. I hope that the present Leader of the House will not repeat that nonsensical suggestion.
The right hon. Member for Bermondsey (Mr. Mellish), who is the best Londoner on the Labour Benches, made some valuable points, particularly about the sale of council houses, and I look forward for the second time to seeing him quoted as having turned Labour policy upside down. I am sorry that when the right hon. Gentleman had responsibility in the Cabinet he was not able to persuade his colleagues to do anything for London, but what is clear from what has been said on both sides of the House about London as a whole is that there is a general desire for a review of the division of powers among the various authorities in London. I do not think that we can go on in the mould that was established in 1964–65.
The hon. Member for Ealing, North (Mr. Molloy) threw out a challenge about the record of his local authority in housing. I am not in a position to deny it, but I can ask him whether he is proud of the fact that one-third of the tenants of Ealing borough council are in arrears in their rent, to a total of £230,000. It may be that the administration of the housing department is not as good as the hon. Gentleman or I would like.
My hon. Friend the Member for Ealing, Acton (Sir G. Young) talked about cycles. He was also quoted as talking about a reduction in tax relief for owner-occupiers. He did not say abolition, and I doubt whether he would find very much support from either side of the House even for a reduction.

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My hon. Friend the Member for Woolwich, West (Mr. Bottomley) made the important point that one of the things we need to do is to improve the quality of life on housing estates so that we can bring down the amount of vandalism on them. It is poor quality maintenance and of the environment that feeds on itself and causes vandalism.
The hon. Member for Hackney, South and Shoreditch (Mr. Brown) was less than his usual self today. I think that the brief supplied by County Hall was well below par. It was a turgid, mucky brief, and I do not think that the hon. Gentleman was able to make much of it. He was a trifle unfair about outer London, because reports from the Department of the Environment—the mystery housing section—indicated that quite a few of the nominations made by outer London boroughs were not taken up by the GLC. It is therefore unfair, as my hon. Friend the Member for Ravensbourne said, to try to put too much blame on local authorities such as Bromley and Barnet. Offers were made, but the record shows that they were not always taken up—[Interruption.] I shall refer the right hon. Gentleman to the actual document. I think that the Minister then was the hon. Member for Manchester, Ardwick (Mr. Kaufman), but I shall talk to the right hon. Gentleman later.
Mr. Mellish: Speaking with a lot of experience of a once-a-week surgery, I must tell the hon. Gentleman that I never heard of anybody in Bermondsey being offered anything in Bromley by Bromley.
Mr. Finsberg: The document was produced by a departmental working committee on which there were representatives of the GLC and London boroughs. It was clear that quite a few of the nominations made by some outer London boroughs were not taken up by inner London boroughs and the GLC. Those are the facts. Whether Bermondsey was in it I cannot tell. I did not have access to the confidential figures, but I saw the report.
The hon. Member for Battersea, South (Mr. Perry), with his usual sound common sense, said it was time that we gave tenants in council flats—not just in houses—the chance of some sort of participation—perhaps on the Birmingham 50–50
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basis, but flat dwellers ought not to be left out in the cold. My hon. Friend the Member for Harrow, Central (Mr. Grant) spoke about jobs and IDC regulations and relaxations, and most of us remember the bitter battle when we last debated that subject. The then Minister of State at the Department of Industry, the hon. Member for Liverpool, Walton (Mr. Heffer) stonewalled as much as he could. He did not want to help London in this battle. However, we won, but only because he realised that he would be defeated by a combination of hon. Members on both sides of the House.
Most of the debate has been fairly good-natured, bipartisan and quite impartial. One of my hon. Friends told me that I had better do what I usually do. I fear that I had better do a little stirring up because this is necessary or people will not realise what is going on in London.
Let me consider a couple of examples of waste in London. My own London borough of Camden is so bigoted that it will not sell any property it owns. It decided in April as a matter of principle not to accept a figure that was regarded as fair and reasonable by the district valuer for the freehold of a property in Hatton Garden that is leased until the year 2035 at a fixed rent of £550 per annum. There is no chance of a rent increase, but the council will not sell. This will mean a loss of nearly £3 million to the ratepayers of Camden on the invested sale price, but the council has a policy and is not prepared to budge from it. The poor ratepayers have to foot the bill for the principles of their Socialist masters, and I do not think that that is right.
I refer next to the London borough of Wandsworth, where the Government are to be defied by the council. In June the council ran an advertisement in a publication Social Work Today, headed
"One reason why we will not be making social service cuts this year."
It said that, far from obeying the Government's request to reduce the number of social workers, it wanted to recruit even more, and on 1st July the personnel committee of the London borough of Wandsworth decided to upgrade 50 members of its staff even though the advice was that that would be in breach of the Government's pay policy. What do the

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Government propose to do about Wandsworth's defying them?
It is no good the Government saying, as my hon. Friend the Member for Harrow, Central said, that they may claw back something from next year's rate support grant. All that means is that the poor, long-suffering ratepayer will have to foot the bill to pay for the consciences of Socialist councillors, and that is not good enough.
The GLC is as spendthrift as ever. In the past two years it has increased its rate demand by more than 235 per cent., whereas in the last two years of Tory rule at County Hall—years which my hon. Friend said ought to be recalled and would be welcomed by London—there was an increase, but of only 1½ per cent., and people would rather pay 1½ per cent. than 235 per cent.
What worries many people about the present GLC is that it is so large that it does not know even what properties it owns. I had a constituency case which concerned squatting. The GLC wrote to me and denied that it owned the property and said that it belonged to the London borough of Camden. After further probing, the GLC wrote to say that it was sorry but it had the wrong name and it was called something different. If it had a new name, that had been its name for more than 30 years and even the old LCC was wrong and the blame cannot be put on the new GLC. However, the GLC is not prepared to do anything about getting rid of the squatters and old people are living in fear of their lives because the GLC will not act.
As recently as the last GLC meeting on 29th June, the Chairman of the Housing Management Committee said:
"It is necessary in the context of limited resources to give priority to gaining possession of property due for immediate or early rehabilitation. If attention is diverted to New Court this can only be at the expense of part of the current rehabilitation programme. I do not consider this will be justified as New Court properties are not due for rehabilitation until next year and would be at risk of being squatted in again before then."
The poor long-suffering non-squatters have to suffer because the GLC will not have even a short-term letting for that property. It is pretty grim that the GLC has to be told how to run its affairs.
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We all remember that there was a promise of frozen or free fares for public transport. That was in the Labour Party's election manifesto. Those promises have all gone. Fares have risen by over 85 per cent. and the promises on fares, together with many other Socialist promises, have disappeared to the four corners of the earth.
An interesting statement was made in the Press last week. The GLC Transport Committee chairman was talking about the Speedbus. He said that a change in control at County Hall next year would not alter the decision on the Speedbus, as the officials had taken their decision. Let me make it clear that where councils are controlled by the Conservatives, it is the elected councillors who take decisions and not the paid staff, and the sooner Mr. Daly realises that the better. What will the Speedbus cost? I believe that it will cost £500,000, and it may save only two minutes on some bus journeys. Added to that it will cause undoubted chaos for a large number of Londoners.
Mr. Mellish: I wish the hon. Member would put the record straight. The GLC has implemented free journeys for old people. He should not distort the story too much.
Mr. Finsberg: Free fares for old people were instituted by many Conservative authorities long before the GLC brought them in, and the right hon. Member knows it. He should not try to put the record right with further incorrect statements.
The poor London ratepayers have to foot the bill for a General Strike exhibition at Covent Garden. When the GLC has to make cuts—when the Secretary of State orders further cuts in public expenditure—I hope that Londoners will remember that there would have been £10,000 more if the GLC had not wasted it on such a frippery as this commemoration exhibition.
One subject on which we are all united is that of employment. This is not a party political matter, as we are all agreed that London has been badly treated. This treatment goes back some 10 or 20 years under Governments of all colours. The time has come for the whole system of industrial development certificates, office development permits,

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and the Location of Offices Bureau to be re-examined.
It is no use the Government or the GLC saying that only 7 per cent. of IDCs have been refused. That is not the point—the very existence of the Regulations acts as a deterrent to many small firms particularly, and they will not apply for certificates because they do not want to be bothered with all the wretched form-filling. I hope that the Minister will give urgent consideration to the system of IDCs and ODPs and will make an examination and take swift action. We want action now to get more jobs into London.
There will have to be major cuts in local government expenditure. Many Conservative-controlled councils, like Harrow, made a start last year in reducing the provision of certain services because they took to heart the advice given by the then Secretary of State for the Environment, who does not seem to wear a white tie on appropriate occasions now that he has been translated to the Foreign Office. These councils knew that the party was over. Such councils should have the support of all sensible and practical ratepayers. There is a responsibility on ratepayers to speak out in support of local authorities who do their duty, however unpopular, against those who think that high spending means sound administration.
This must be put across to people. One hears cries that this service cannot be cut and that service cannot be reduced, or that libraries cannot be closed for two hours. But if cuts have to be made, they must he made and supported.
This motion has helped to focus the attention of the House on London. I hope that it will focus the attention of the Government on the needs of London, and I hope that in future the Government will not rely too much on the charity of London Members to make opportunities for debates. I hope that they will give us some Government time for debate. The Leader of the House seems to have plenty of time to spare, judging from the way he is running parliamentary business at the moment, so perhaps he could find time for a debate in which the problems of London could be discussed properly.
6.45 p.m.
The Under-Secretary of State for the Environment (Mr. Guy Barnett): I apologise for the absence of the Secretary of State. I know it was his intention to be present and he may well come in while I am speaking. He was very sorry that he could not be here at the beginning of the debate, but his absence does not represent the degree of importance that we attach to this matter. Also the Minister for Planning and Local Government cannot be here because he is meeting the new town chairmen today to discuss many of the issues that have arisen in this debate.
Although there have been considerable points of disagreement—and I refer particularly to the speech of the hon. Member for Hampstead (Mr. Finsberg)—there are two points on which we are all agreed. First, I congratulate the hon. Member for Ravensbourne (Mr. Hunt) on raising this particular subject. As a London Member, I concur with what has been said by almost every speaker. We do not debate this subject enough, and we are very grateful to the hon. Member for taking this opportunity to raise the problems of London.
The debate has been most valuable. There has been a reference to the fact that the population of London is nearly as large as that of Wales and Scotland together, and nearly as large as that of Sweden, and yet we debate its problems on very few occasions. That is something that we must have put right.
The second point on which we are all agreed is that London has massive problems. Four of the problems mentioned by the hon. Member for Ravensbourne are education, employment, transport and housing. The fact that the Treasury Bench is littered with papers represents the degree to which I am being briefed by four or five Government Departments in order to deal with this debate. There is no doubt that most of the debate has concentrated on the subjects which are of greatest concern to Londoners—namely housing and homelessness, industry and employment, obsolescence in manufacturing industry, commuter services, and the social problems which arise as a direct consequence of all these difficulties. We have difficulties in schools, problems of vandalism and the difficulties faced by

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social workers, the police, probation officers and teachers.
Despite the speech of the hon. Member for Hampstead, the House will want to pay tribute to the work done by officials and councillors all over London, and to professional workers of one kind or another who are daily "picking up the pieces" in London. To an enormous extent we are indebted to them for the kind of work these people do in dealing with the problems of London.
Sometimes things do go wrong. I was sorry that the hon. Member for Hampstead saw fit to talk about all the things that go wrong. His speech seemed to go around the dustbins of all the local authorities. Of course things occasionally go wrong and mistakes are made. It would be senseless for a Government Minister, a local council or the GLC itself not to admit that it happens from time to time. The problems are difficult, and the complexity of decision-making in London is much greater than in other parts of the country where the problems are less.
I cannot approve the motion in every way. In fact, I would suggest that we do not approve it tonight. It refers to
"the decline of the capital city".
My hon. Friend the Member for Ealing, North (Mr. Molloy) criticised the suggestion that the capital city is in steady and steep decline. I would also rebut that point. I understand that the Conservative Party in London had a conference last weekend on these issues and called it "Crisis London".
It is wrong for us to try to dramatise the problems with which we are dealing and to suggest that the whole of London is in decline or that it is a city of crisis. I believe that hon. Members opposite got some good advice at that conference, and I hope that they take it. I hope, too, that they will take my advice—that the hundreds of thousands of tourists who visit London every year do not visit a city in crisis or in decline, but that many of them are aware that, in comparison with some of the large cities elsewhere in the world, London is tackling, in many ways successfully, some of the major problems that we are facing.
Mr. Arthur Lewis: Is my hon. Friend aware that
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a great American whom we all love and admire, Bing Crosby, has said that he makes a point of coming to London at least once a year because it is the best city in the world?
Mr. Barnett: I agree, and sometimes we are apt to talk our city down.
It is very important also to recognise the problems that tourism brings. I have some figures here which may interest the House about the number of overseas tourists and the number of nights they spend in London. The number of nights they spend in London has risen between 1972 and 1976 from 47 million to 62 million. That is just one indication of the considerable burden that they place on London, although, as hon. Members have rightly recognised, London gains enormously as a consequence, of their coming and, of course, of the money they spend here.
It has been said in the debate that there is need to have a Minister for London as a solution to its problems. Prior to the debate I examined the possibility of dealing with the problems of London by the appointment of a Minister with special responsibility for it. I think that there are major arguments against it. First, I think that it is generally recognised that London is and must be thought of as part of the South-East Region. Presumably, therefore, if we thought that the solution lay in the appointment of a Minister for London—in parallel, for example, to the Ministers responsible for Wales and Scotland—that would not take account of the fact that the health of the South-East Region as a whole is dependent on the health of London, and vice versa.
Do not let us forget that a great many Londoners have been and are being rehoused outside the GLC boundaries. I met some of them yesterday in Thurrock. Many thousands of GLC tenants live outside the borders of the GLC. Do not let us forget also the important complementary relationship between the GLC and the London new towns and the degree to which London is dependent on people travelling from outside its borders to work here. It would be a mistake administratively to set up a Minister, presumably with a Department of his own, to deal with particularly London problems.

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Earlier I pointed out that in my reply I was trying to represent four or five different Government Departments. I do not think that hon. Members would suggest that those powers of each of those Departments should form a new Ministry for London. The sheer proximity of County Hall and the boroughs to Government Departments can be of considerable advantage in the sense that consulation of one kind or another can take place among the Government and the GLC and the boroughs to a greater extent than is perhaps possible for our friends in Wales and Scotland, where big distances are involved and where there may, for that reason, if not for any others, be arguments for a very different type of set-up.
Mr. Molloy: The main point of my submission was that a Minister for London would not have a great Department. His primary rôle would be that of coordination, looking at ideas and proposed solutions, and being able to put them into effect where necessary. London is lacking some sense of co-ordination.
Mr. Barnett: I take the point. My hon. Friend wants to see more coordination. If any Department has that responsibility it is mine. My hon. Friend might be surprised to discover the great amount of co-ordination between my Department and other Government Departments and of the consultation and contact between my Department and the GLC.
I want to refer to a number of points made in the debate. I come first to that raised by the hon. Member for Harrow, Central (Mr. Grant), who asked for specific replies. I understood his question to be why, if certain local authorities had overspent considerably, other local authorities should suffer. He must bear in mind that the Government are bound inevitably to be in a difficulty here. If we were to follow the kind of road he was talking about—perhaps it is one that he himself would follow—it would be bound to mean Government intervention with individual local authorities. That is something my right hon. Friend is reluctant to do.
Mr. Anthony Grant indicated dissent.
Mr. Barnett: The hon. Gentleman shakes his head, but I make it clear that
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if the Government were to "carpet" individual local authorities, or to make adjustments to take account of decisions taken, wisely or unwisely, by individual local authorities, that must increase the amount of Government intervention and involvement in local decisions, and therefore in local government. That is one reason why I would be reluctant to follow the line suggested by the hon. Gentleman.
The review that we have undertaken is not complete. We expect to have the returns within a week or so. They will be examined and any decision taken will have to be taken on that basis. The hon. Gentleman will understand if I do not say anything further about how the Goverment will act in the light of the issue he has raised.
Mr. Anthony Grant: I do not like interference, any more than the hon. Gentleman does, with individual local authority decisions, but where local authorities have breached what the Government have said, why should those which have complied with the policy bear the burden? Should not the greatest spendthrifts bear the biggest burden? That is all one asks.
Mr. Barnett: The hon. Gentleman should understand that whatever the Government may have said is not necessarily the law of the land. The law of the land has been made by this House. What the Government recommend or ask local authorities to do is one thing; the law of the land is another. Local authorities rightly have a certain measure of freedom to do as they please within the law of the land, and the hon. Gentleman has not referred to any situation in which a local authority has broken the law. Therefore, one has to be careful about going along the line he suggests.
I want to refer to the speech of the hon. Member for Ravensbourne, and I hope that the House will understand why I now concentrate on it. I appreciated the moderate way in which he moved the motion. He, too, referred to the suggestion of the appointment of a Minister for London, with which I have dealt.
The hon. Gentleman expressed particular concern about the decline of industry in London. As far as industrial development certificate control is concerned, I do not think it can be shown that the Government have been inactive. He was kind enough to refer to the fact that we

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have considerably increased the limit below which it is possible for industrial development to take place without a certificate.
The Department of Industry operates as far as it can a very flexible approach in considering applications for industrial development certificates. For example, sympathetic consideration is given to proposals by existing occupants to modernise and improve premises.
This is a matter of great concern to many hon. Members who represent London and who see one of their major problems lying in the fact that premises are outdated and therefore unlettable. That change in policy, made by my right hon. Friend the Secretary of State for Industry, is therefore of direct benefit to London.
It being Seven o'clock, the proceedings on the motion lapsed, pursuant to Standing Order No. 6 (Precedence of Government Business)

EUROPEAN PARLIAMENT (DIRECT ELECTIONS)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Stallard.]
7.0 p.m.
Mr. Sydney Irving: The Committee of which I was Chairman was appointed on 17th May after some skirmishing about its terms of reference. When the Committee met next day it was clear that there was to be a meeting of the European Heads of State on 12th and 13th July and that the Government would have to take a view at that meeting on the matters which are the responsibility of the Community and which are listed in Part II of the Green Paper.
If the Committee had been unable to report by then, the Government would have had no help in formulating that view and the House, which would want to debate the matters, would have no guidance. In addition, if the Committee reported at a later date and came to a different conclusion from the Government, difficulties would have been created which we thought were worth trying to avoid. The Committee decided to try to get out its report in time, and it was published on 15th June.
Although progress was speedy and was perhaps something of a record, the Committee had the benefit of submissions from 60 organisations and individuals. The list is impressive. On behalf of the Committee I should like to thank all those organisations and individuals who cooperated in order to help the Committee stick to the timetable.
Many people perhaps do not realise that we were not asked whether direct elections were a good thing or whether they should be held. Our instruction was to consider proposals for direct elections to the European Assembly and the arrangements requiring action by Parliament and by the European Community following the Government's commitment to proceed to such elections. The question of the commitment of the House will be discussed tonight, but that was not a matter for the Committee.
We considered four matters—the size and composition of the Assembly, the date for elections, the period for which the

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Assembly should be elected and the status of members of the Assembly, with special emphasis on the dual mandate. I shall make a few brief comments on each of those, although the report speaks for itself.
On the matter of size, the Committee's finding follows the broad consensus of the evidence that we had, although we had suggestions ranging from as few as 45 members to upwards of 600. Our main concern was that the Assembly should be large enough to enable the component parts of the United Kingdom to have proper representation, and that that representations should match that of the smaller member States of the Community. Luxembourg had to be left out of our consideration and must be treated exceptionally anyway, as it has a population of only 350,000, whereas Northern Ireland has a population of 1½ million.
With that exception, we believe that population should be the other determining factor. The upper limit, however, should not be so large as to constitute difficulties for other countries that may wish to join the EEC. We decided to put the figure within upper and lower limits to allow the Government room for manoeuvre in the negotiations today and tomorrow.
I now turn to the date of the election. As it had been generally agreed that May or June 1978 should be the date, the Committee confined itself to discovering whether it was, in practice, possible to stick to that timetable. The Home Office evidence indicated that, assuming we were to use the present framework and practice of elections in the United Kingdom, although it would be a tight timetable, it was possible to complete preparations in time for May or June 1978.
Mr. Neil Marten: The right hon Member for Dartford (Mr. Irving) said that it was generally agreed that the date should be May or June 1978. By whom was it generally agreed? Why did not the right hon. Gentleman call more oral evidence?
Mr. Irving: The statement is made in the consultative document that there was general agreement. That general agreement is among Governments and no
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doubt the matter will be discussed in the debate tonight. There is a comprehensive summary about evidence attached to the report. We felt that all the evidence was there and that we should not get further elucidation by calling further oral evidence.
As to the day on which the results should be announced, there was strong evidence from the local authority associations and the chief officers against holding them on the same day as other elections. The local authorities associations told us:
"We cannot stress enough the probability of total confusion in the minds of the electorate if elections take place on the same day as other elections".
The association also believed that to hold elections on the same day as other elections would be more expensive than holding them on separate days.
The Committee came to the conclusion that the Assembly should last four or five years. It thought that that was appropriate because it was in line with the four or five years which is the normal period for a fixed-term Parliament in Europe. The Committee expressed its preference for four years because that is divisible by two and would enable the European Parliament, if it wished, in future to alternate the election of members every two years.
The Committee decided that the declaration of results should be announced together, after the first ballot in any country which has more than one ballot. That is an obvious conclusion, and I will not comment further on it.
The Committee was in no doubt that the operation of the dual mandate was burdensome on members who had to spend a week or more at Strasbourg every month, which would make it difficult for them to play a full part in their own Parliament. However, it seemed to the Committee that that was a matter for the individual to decide. But to have no dual mandate could mean little continuity after direct elections. That is important at least in the beginning until other means of relating Assembly membership, membership at Westminister and membership of devolved Assemblies is worked out.
The work of the Committee is still proceeding on the practical questions involved in the conduct of elections. The Committee hopes to produce its final report by 30th October this year. The Committee

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reserves the right to look again at its findings if that is thought justified by changing circumstances.
I should like to express the Committee's warmest appreciation of the excellent and strenuous work done by the clerks to the Committee, Mr. Limon and Mr. Clark. I hope that the report of the Committee will be of service to the House.
7.9 p.m.
Mr. Douglas Hurd (Mid-Oxon): I think that it would be for the convenience of the House if I were fairly brief in this limited debate and did not try to cover the whole of the ground covered by the report, but I must not be so brief that I forget to congratulate the right hon. Member for Dartford (Mr. Irving) on all his work as Chairman of the Select Committee and on the skilful way in which he has presented his report. The House is much in his debt, and we thank him.
I should also protest on behalf of the Opposition at the way in which the matter has been handled procedurally by the Government. We are debating the subject at the very moment when the Heads of Government are debating it in Brussels. It is something that the debate has been brought forward by a few hours as a result of representations by my right hon. Friend the Member for Chipping Barnet (Mr. Maudling), but that is not nearly good enough. If the reports just received are correct, the Heads of Government in Brussels have been discussing the matter for some hours. I understand that they are about to meet again and are expected to agree on a formula that would give a total of 406 seats, with the United Kingdom having 80. I am also told that the British Government appear to have accepted the formula without waiting for this debate.
The Minister of State will be able to say whether what I have heard is correct. If it is anything like correct, it reveals a deeply unsatisfactory state of affairs that has come about directly as a result of the Government's failure in their management of the business of the House to give the need to discuss European matters its proper status.
There has been throughout a series of delays and a perfunctory handling of this very important matter. It has been clear since December 1974, and perhaps before, that the question was coming to the
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fore as a matter for Community discussion. Perhaps the Government, within their own terms of reference, were reasonable in arguing that we should not consider it and think deeply about it until after the referendum in June last year, but I have never been able to understand why they took so long to produce a Green Paper, which did not see the light of day until February 1976, eight months after the referendum.
Then we had the debate at the end of March, but it was not until 30th April, a month after the debate in which the Prime Minister announced that there would be a Select Committee, that the motion to set it up was tabled. There was another delay of a fortnight, and it was not until 17th May that the Select Committee was set up.
A paradox has emerged. Some of my right hon. and hon. Friends and some Labour Members feel that the subject of direct elections is dangerous, because the powers of the House would be diminished, because powers would be filched from us by the European Parliament. I do not think that there is substance in that. It seems to me that there is clearly a need for a directly-elected European Parliament.
Mr. Arthur Lewis: What the hon. Gentleman said earlier proves our point.
Mr. Hurd: It proves something else. I believe that if we want democratic control over the central institutions of the Community, we must have a directly-elected Parliament. The story of the past few months and the handling of this business does not show that we are losing powers to a European Parliament. It shows that we are simply not effectively using the powers that we have to control and influence what British Ministers do on our behalf in Brussels. The responsibility for that failure by the House to exercise its powers, which no one is taking away from us—the matter goes far beyond direct elections, and applies to almost every European subject that we are called upon to discuss—is a direct result of the perfunctory way in which the Government have handled the business of the House on this subject.
It is not the fault of the Minister of State, but he has a responsibility. We know that the Leader of the House is a

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know-nothing in European matters, to put it at its politest. That puts a great responsibility on the Minister to be active at his elbow, saying—to take an apparently minor example, though perhaps not so minor—that we must honour the commitments of the previous Leader of the House to have a Business Statement on Europe at the end of every month. We did not have one at the end of last month. That is the kind of slipping and shabby handling of the matter that we see. It is time that at any rate we on the Opposition side of the House made a substantial protest about the way in which the House is asked to take these European matters.
Mr. Marten: Let us have a vote tonight.
Mr. Hurd: I say to my hon. Friend, who intervenes from a sedentary position, that if we had taken the advice of the hon. Member for Southampton, Test (Mr. Gould) in a letter to The Times, that we should hold up the Select Committee's report even longer, we should even now be taking mountains of oral evidence when the Heads of Government are discussing the matter. We should then have the ludicrous situation that the House had condemned itself to even longer delays and we had ended up discussing something that was completely irrelevant.
We on this side of the House accept the Select Committee's conclusions, although we note that it has not yet begun to tackle the really sensitive and difficult political matters.
Mr. Ronald Bell: When my hon. Friend says "We on this side of the House", he of course means some of us on this side of the House.
Mr. Hurd: My hon. and learned Friend has been a Member for much longer than I, but I think he will accept that there is a convention that I am allowed to use those words and that he is then allowed to qualify them or to deny his support, as he wishes.
We accept in particular the rather cautious judgment in the report about the numbers of members of the European Parliament. There is a balance to be struck between the likely work load, future membership of the Community and
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the need effectively to represent the different parts of the United Kingdom. I think that in its rather cautious bracketing of numbers the Select Committee has got the balance about right.
It is worth emphasising that the Select Committee does not recommend any division of those numbers within the United Kingdom. It has not entered into what will be one of its most difficult tasks—what balance the Boundary Commission, if it is given the job, should strike between the different parts of the United Kingdom within whatever total is agreed.
For historical reasons, enshrined in statute, Scotland is over-represented here, if we think simply in terms of population per seat, and Northern Ireland is underrepresented. There is no reason in logic why those considerations should necessarily apply in the representation of the United Kingdom in the European Parliament. In that respect, we start with a clean slate. It will be a difficult balance to strike between the need for a proper proportionality and the need to show that each part of the United Kingdom is adequately represented.
I hope that we shall not exaggerate the importance of this numbers game. So often one might think, particularly reading some comments coming out of Scotland, that it was vital for Scotland to have an enormous representation. One would have the impression that in the European Parliament one would see all the Scottish Members sitting together and speaking and voting for Scotland. That is not so. The European Parliament is organised on the basis of political groupings which cross national boundaries. The Scottish Members—as no doubt the Welsh Members will be when that situation arises—are divided among the different groups to which they choose to give their allegiance.
Therefore, the numbers game is of limited importance. What is important—particularly with the powers of the European Parliament as limited as they are, and as they are likely to remain for some time—is not the quantity of representation but its quality. What we are talking about is the power to influence the line taken within each group and therefore, at one remove, the line taken by the Commission and the Council of Ministers.
Mr. J. M. Craigen: Does that mean that the hon. Gentleman does not accept the importance of having representation based on population?
Mr. Hurd: I cannot think that the hon. Gentleman has been following my argument. I have been saying that proportionality is an essential guideline and that in working out the arrangements for the European Parliament we do not need necessarily to follow in the tracks of the arrangements made for the House, which are far from being proportional.
Mr. Dafydd Wigley: I have heard with dismay the hon. Gentleman's explanation. Would he not accept that areas such as Wales and Scotland have such a rich diversity of characteristics that they need the same as other small nations in Europe, namely, stronger representation particularly to get the diversity in those nations across in the European context?
Mr. Hurd: There is something in that argument, but not as much as is often supposed. Perhaps the hon. Gentleman could do me the courtesy of reading what I said. I spoke of a balance between his consideration and proportionality. That is one of the most difficult tasks before the Select Committee and the House when we come to discuss the next stage of decisions in, I suppose, the autumn.
Mr. Marten: On a point of order, Mr. Deputy Speaker. I heard a strong rumour which has come straight from the Common Market that the whole thing has already been agreed by the Council.
Mr. Deputy Speaker (Sir Myer Galpern): Order. I am in advance of the hon. Gentleman. Although I was not in the Chair at the time, I understand that an announcement has already been made to the House about the number of 480.
Mr. Marten: Further to that point of order, Mr. Deputy Speaker. I was out of the Chamber at the time for about three minutes while I picked up this piece of news. Has it officially been announced by the Front Bench that an agreement has been reached at the Common Market? If that is so, and I understand it to be so, there is no point in having this debate. Could the Minister
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now send off to find out straight away whether the story is correct or—
Mr. Deputy Speaker: The hon. Member for Mid-Oxon (Mr. Hurd) made a statement about conclusions or decisions which I believe we are awaiting. However, he asked the Minister of State whether he would confirm the statement that he made to the House.
Mr. Hurd: If my hon. Friend had been able to be present at the beginning of the debate, he would have heard me refer to a report which I had seen on the tape, possibly the one he saw. I asked the Minister to confirm or deny that. I protested in terms which perhaps my hon. Friend would accept as reasonably vigorous at the position in which that news, if true, placed this House and the debate.
I conclude with a word about the date and the recommendation of the Select Committee's report about May or June 1978. It has always seemed to me that there was no magic for Europe in that date.
There are two important considerations.
First, in each member State, particularly in this country, direct elections should take place in an orderly and acceptable way. We on this side of the House had in mind the need to find an orderly and acceptable way of fixing the boundaries of the constituencies.
The second consideration is that we should take part in direct elections at the same time and in the same week as our partners in the Community. I think that the argument for that is very strong. We all individually have our own ideas about what the priorities for Britain in the European Community should be—whether we should put all our effort into achieving reform of the CAP or a new common fisheries policy or a common foreign policy. We would disagree among ourselves about the priorities but we would agree that matters will arise in the Community in the next year or so where it will be vital that the bargaining and persuasive power of this country should be at its most effective, more effective than it has been hitherto.
Nothing would do more to weaken our bargaining power and to diminish Britain's weight inside the Community than our failure to come to the starting

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gate on direct elections at the same time as our partners. That would be a damaging blow to us as well as to the Community.
We support the report and the recommendations of the Select Committee as far as they go, while recognising that it is only at the beginning of its task and the most difficult part of that task lies ahead. I urge the Government to bestir themselves in the management of business of the House so that the European dimension of our duties here gets proper recognition which it has not had hitherto. We on this side, but for the caveat mentioned by my hon. and learned Friend the Member for Beaconsfield (Mr. Bell), do what we can to make a success of the important advance in democracy in our Community which we believe that direct elections should represent.
7.26 p.m.
The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley): I shall begin by replying to the question that the hon. Member for Mid-Oxon (Mr. Hurd) asked me directly and which he described as a rumour he had picked up outside. There is absolutely no foundation to the rumour. I am instructed by the Prime Minister to say that he has not subscribed to any agreement today, nor will he until I have reported to him the outcome of this debate. I am equally under instruction to report to the Prime Minister the moment this debate is concluded and until then he will not come to an agreement with our European partners.
Mr. Marten: That ties in very much with the report that the agreement has been reached but that no announcement is to be made until after 10 p.m., which is borne out by what the right hon. Gentleman will do—to telephone the Prime Minister once this debate has ended. I should like this to be gone into and a report made about it. If that is true, it is a very serious thing that the Prime Minister has done. My hon. Friend the Member for Richmond, Surrey (Sir A. Royle) laughs from a sedentary position, but it is a most serious thing for the Government to do.
Mr. Deputy Speaker: We are not conducting the European Parliament yet.
Mr. Hattersley: I give the hon. Gentleman credit for not having heard what I said rather than accuse him of intentionally misrepresenting me. I said not that an agreement had been reached, but that an announcement would not be made until the debate had ended. I said that the Prime Minister was not willing to subscribe to any agreement until he had heard the views of the House of Commons. That is very different from what the hon. Gentleman was suggesting, which was that the agreement had been reached but would be kept secret until 10 o'clock. That is categorically not true.
Mr. Nigel Spearing: On a point of order, Mr. Deputy Speaker. In view of what the Minister said, I was under the impression that no decision was to be made tonight. This debate is on the Adjournment. Can you confirm that and that there is to be no view of the House registered, because there is no substantive motion before it?
Mr. Deputy Speaker: This debate is on the Adjournment.
Mr. Hattersley: The House last debated direct elections over two days—on 29th and 30th March—and during that debate the Government were able to make four points clear. First, it was the view of the Government that the Treaty of Rome committed member States to eventual direct elections, and the Government believe that by signing the Treaty of Accession we have accepted that obligation. Secondly, the Government made it clear that the powers of the eventual elected Assembly were those specified in the Treaty of Rome—they could not be extended without the express agreement of the member States. The Government made it clear that they could not envisage a situation in which they could recommend the House to extend the power of the Assembly.
Thirdly, we made it clear that although the Government felt committed through signing the Treaty to direct elections, we could not commit the House, that the House would have opportunities to make its own judgment on direct elections, that that was a matter for the House alone. Fourthly, we said that it was our intention to consult Parliament as often and as deeply as possible. The first stage of that consultation was the two-day debate

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in March. The second stage was the Select Committee on Direct Elections which emerged from that debate and which was set up not only with wide terms of reference but in the knowledge that the European Council hoped to make progress on the arrangements for direct elections during its summer meeting. which is taking place today and will continue tomorrow.
Knowing that the crucial meeting of the European Council was only a few weeks away, when the Select Committee was eventually formed, the Committee decided unilaterally, and I believe rightly, that the best course was not to make a long theoretical study of the philosophy of direct elections but to grasp the opportunity which the Government hoped to offer to it of directly influencing the Government's policy and having a direct bearing on, perhaps changing the course of, the policy which the Government would adopt during the discussions in Brussels and Luxembourg. I emphasise that, in spite of a number of events which are not the Government's responsibility—this debate takes place a great deal later than the Government wished—the opportunity to influence the Government has not passed.
Sir Anthony Royle: I agree with much of what the right hon. Gentleman has said, but he commented that the events relating to the delay of this debate were not the responsibility of the Government. I accept that they are not the responsibility of the right hon. Gentleman nor of his colleagues at the Foreign and Commonwealth Office, but surely they are the responsibility of the Leader of the House and the Patronage Secretary, who so confused business on Thursday night that the debate which should have taken place on Friday before the meeting of Heads of Government in Brussels could not take place and therefore is taking place now during the meeting in Brussels.
Mr. Hattersley: I am reluctant to venture into this contentious ground, because we should be discussing the substance of the report, but, as some hon. Members opposite seem to wish me to do so, let me say two things. First, the setting up of the Committee was delayed by a perfectly legitimate procedural device, operated over several nights by hon. Members
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opposite, which held up the setting up of the Committee. Secondly, we hoped to have a debate on Monday last, but we were approached by hon. Members on both sides of the House who said that that was not a convenient time for people involved in other European business and we allowed it to slip back by four days. I shall not allow my self to comment on the proceedings on Thursday evening. They do not seem to me to be the responsibility of the Government or to the credit of those who kept us here until past one o'clock on Friday afternoon.
I turn to the question of what is happening today. First, the Heads of Government, meeting today and tomorrow in Brussels, hope to decide and agree upon the four major outstanding issues on the organisation of direct elections. The first is the size of the Assembly and the distribution of seats within it among the member nations. The second is the date of the first election. The third is the duration of the European Assembly so elected. The fourth is the so-called dual mandate.
Many other decisions must be taken before the elections are held, but the EEC Governments believe that only those four major decisions are appropriate for corporate Community policy. The rest will be best decided by the individual member States according to their own individual preferences. The obvious example is the nature and form of the election in each country. That is left as a matter for individual member nations to decide. It will not be decided in Brussels this week. nor was it discussed or considered in the interim report of the Select Committee, because the Select Committee concentrated its interim report on those four immediate issues where the decisions and deliberations of my right hon. Friends the Prime Minister and the Foreign Secretary were imminent.
I turn to the question of those four areas of decision.
Mr. Hugh Dykes: Surely the right hon. Gentleman is not saying that the European Council will not meet again, if necessary, to reach certain policy decisions on, for example, the provision of finance and infrastructure services in the direct elections which may well harmonise with what the individual member States will decide but will be

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within the ambit of the European Council on subsequent occasions.
Mr. Hattersley: I am saying what the hon. Gentleman hopes I am not saying or suspects I am not saying. There are only four major issues to be discussed and decided by Europe as Europe.
Mr. Dykes: Now.
Mr. Hattersley: The hon. Gentleman says "Now". The opposite of "now" is "a very long time", but I cannot believe that even in his time here, which probably is a good deal longer than that of others of us, including myself, the proposal for a common form of elections will be discussed in Brussels. That is something that individual Parliaments and Governments will decide. It is the four major issues which I have mentioned which the Heads of Government will discuss in Brussels over the next two days.
Mrs. Gwyneth Dunwoody Mrs. Gwyneth Dunwoody (Crewe)
rose—
Mr. Hattersley: I must make progress, because, the Government's case having been set out, the object of this debate is to allow the House to express its opinion.
During the two-day debate in March the Government said that they favoured an Assembly of 350 Members or more. In such an Assembly Britain would receive enough seats, first, to enable proper representation for the nations in the United Kingdom, and secondly, to ensure that constituencies, although very large, were still manageable for a single Member being elected on the traditional pattern of British elections. The Select Committee urged the Government to strive for an Assembly of between 350 and 425 Members. That we shall gladly do and that the Prime Minister is in fact doing.
I have explained why in the Government's view the Assembly cannot be too small. I reiterate what the hon. Member for Mid-Oxon said about its being not too large. The Assembly must not be so large that it is unmanageable even when the accession of new member States increases its total membership. The Select Committee seems to the Government to offer the right balance between the lowest possible size and the largest manageable size, and certainly the Government accept that part of its recommendations.
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Secondly, on the question of the date of direct elections, the majority of EEC members hope that direct elections can be held in May or June 1978. The then Prime Minister endorsed that hope at the European Council meeting on 1st and 2nd December last, but he qualified his endorsement in two ways, and I mast repeat those qualifications now. First, we can implement the decision to hold direct elections only if and when Parliament carries the necessary legislation. Secondly, and equally obviously, we can remain in the proposed time scale only if the necessary administrative preparations which will follow the legislation can be made early enough for the elections to be held in good order.
Those are two important qualifications. It does not mean that the Government will not do their best to meet the timetable: they will. We shall use our best endeavours in good faith in the hope that we shall be ready by the spring of 1978. However, although we endorse the Select Committee's view that that is the time for which we should strive, out of fairness to our colleagues in Europe as well as out of honesty to the House, I must reiterate that there are two practical obstacles. If they can be overcome, all will be well. If they cannot, there will clearly be difficulties about the timetable which would make it impossible to hold the elections then.
The third major question being discussed this week in Brussels is the duration of the Parliament. That question has two sub-headings within the general heading. The first is whether the elections to the Parliament should be held on a single date or on different dates within the nine Member nations. The Green Paper which the House debated in March was specific about the Government's view on this question. Paragraph 20 read:
"On balance it seems best to have the whole European Assembly elected at the same time…for a fixed period."
I know very well that there are very many rival theories—for instance, that the elections to the Assembly should be held on the same dates as national General Elections. But it seems to the Government, and certainly to me, that there are many administrative as well as other difficulties in principle associated with having a movable feast in Britain

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and a fixed feast in other parts of the Community.
The Select Committee said much the same in paragraph 16 of its report about having a single date for European elections, and the Government gladly agree. The Select Committee also said that a single date should be interpreted as covering a brief period of dates—Thursday by tradition in the United Kingdom, Sunday in France and Italy and in other EEC countries. I am absolutely sure that is right, and equally pleased to record that the Government subscribe to the same view as the Select Committee.
We share its view, too, almost exactly but not precisely, on the duration of the European Parliament which will eventually be elected. In paragraph 22 of the Green Paper the Government recommend a fixed term of five years. In paragraph 16 the Select Committee recommends four or five years. Then it announces a slight bias in favour of four years. The Government, too, favour four or five years, but they have a slight bias in favour of five.
I do not believe that this is a fundamental issue, and the Chairman of the Select Committee explained that the slight bias was because four was more easily divisible if we wanted a shorter term and rotating membership. The Government view stems from the fact that there was a strong feeling among our partners that five years was the right period, and we should like to meet them on that. It is the one issue on which the Government and the Select Committee disagree, but it is not a matter of principle, and, since the Committee has talked of four or five years, I am very near to embracing its proposal and announcing our agreement.
Concerning the issue of the so-called dual mandate, this is the system by which membership of the European Parliament is only open to Members of this House or by which membership of the European Parliament carries special automatic privileges in this House. I shall try to deal with the second point in passing in a moment. It is the intention, I think, of the Select Committee to deal with the second point, concerning automatic privileges for Members of the European Assembly, when it makes its second or next report. This evening I want to deal
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only with the issue of the formal obligatory dual mandate—a requirement which might say that no one was allowed to stand for election to the European Assembly who did not already hold a seat in this place.
The task to which my right hon. Friend the Prime Minister will turn his mind today and tomorrow is an attempt—I believe it will be successful—to ensure that there is no obligatory dual mandate throughout the whole of the EEC. It would then be left for us on some future occasion to decide whether we wished to have a dual mandate here in the United Kingdom.
In honesty I have to report that when that argument arises, whether here or somewhere else, I shall be emphasising the overwhelming disadvantages of the dual mandate. The burden it would place on Members of both places would be intolerable. It is a peculiar sort of universal suffrage which says there shall be a popular democracy in the EEC when only some 600 Members of Parliament here and a number of peers are allowed to offer themselves as candidates.
Clearly, in regard to the minority parties, if I may so describe them—I refer to them in that way only in a numerical sense—it would be intolerable if they were told that they could not put up candidates for every seat, in the case of the Liberals, or for every seat in Wales, in the case of Plaid Cymru, in a General Election.
Mr. D. E. Thomas: Before the right hon. Gentleman leaves the question of dual mandate or membership, may I ask whether if he has considered the question of dual membership of the Welsh and Scottish Assemblies and of the European Parliament?
Mr. Hattersley: When many years ago I worked for Ray Gunter, he used to say "I have enough problems with my own issues without dealing with those of other people". I shall rest on that admirably cautious principle this evening.
The dual mandate is an issue which the House, from Britain's point of view, can and no doubt will decide later. Some of us will urge the unacceptability of such a proposal. All the Prime Minister is doing today and tomorrow is to ensure that it does not become compulsory

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throughout Europe and that it shall be left for us to decide at a future time. The Government are subscribing basically to the recommendation of the Select Committee, and in doing so I am happy once more to endorse what the Committee decided.
I know that very many Members are anxious to be assured about the future consultations on direct elections after the European Council has finished and before the final decisions are formalised and the legal implications finally determined. I am sorry—I say this frankly to my right hon. Friend the Member for Battersea, North (Mr. Jay)—that it has not been possible, because of the procedural necessities, to adopt his amendment this evening, because I believe that we could have met him on that. I shall have been happy if on one occasion at least I had been able to put his mind at rest.
But let me put the position to him exactly. If, as is possible but not certain, the procedure for formalising direct elections is to be a convention, before ratification of that convention the Government would seek the approval of the House of a draft Order in Council, under Section 1(3) of the European Communities Act. That would require an affirmative resolution by both Houses, and would therefore make a further opportunity to debate the subject obligatory and unavoidable. If the procedures adopted were not a convention, I assure the House that the Government would want to provide a parliamentary opportunity—I am not sufficient of an expert on parliamentary procedure to describe exactly what it would be—to ensure that the House had the same chance of debating the subject as if the convention were the chosen means by which it was given legislative form.
Of course—this is always the final word on direct elections—Parliament will be asked to approve the necessary legislation which implements direct elections and makes the holding of direct elections possible. Therefore, whatever the form of the legalisation of the Community's decision, Parliament will have the last word on whether direct elections are held in this country. None of us complains about that. Nobody in the Government is sorry that the long process of consultation which began in the last two days of March will continue. It is all part of our
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determination properly to consult Parliament and, through Parliament, the people.
That enables me to offer a final word of thanks to the Chairman and to the members of the Select Committee—other than myself—for the speed with which they have operated in order that the process of consultation can better be carried out. I do not thank them because they did it as a service to the Government but because they did it as a service to the House of Commons, enabling us to debate the matter this evening. It will enable me to report the discussion to the Prime Minister later this evening, and it will enable the Prime Minister to take account of the observations made here before he makes his final dispositions in (relation to his colleagues and others tomorrow.
7.48 p.m.
Mr. J. Enoch Powell: This is a strange debate that we are having this evening. It is a humiliatingly strange debate. The subject which is before us is, I suppose, the most important, the most fundamental, subject for the very existence of this House and its authority that could be imagined. It is no other than whether there is to be established a separate and concurrent representation of the people of this country—a representation that is to operate within the framework of an organisation which has been given overriding powers over this Parliament, and which, by the confessed intention of those who approve our membership, is to extend its authority progressively over all the major spheres of our national existence.
That is the subject. But the Prime Minister is not here. The Foreign Secretary is not here. Perhaps I should add that the Leader of the House of Commons—the most pertinacious and eloquent enemy of this whole business—is not here. I expect he is not far away. He is certainly not so far away as the Prime Minister and the Foreign Secretary.
The Prime Minister and the Foreign Secretary are, with their fellow Prime Ministers and Foreign Secretaries, at this moment engaged in effectively deciding the very question which is the subject of this debate. Although we appreciate the courtesy—I do not use the word ironically—of the message that we received from the Prime Minister, what

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cannot be conveyed to the Prime Minister by the Minister of State is the view of this House, for no view on this subject will or can be taken by this House this evening.
It would be necessary to go very far back in our history to find a parallel to what is happening in this Chamber. I am inclined to think that we have to go as far back as the last days of the Rump, on the eve of its dismissal by Oliver Cromwell—the remnant of a House of Commons from which the power had departed and which knew perfectly well that the effective decisions about the government of the country were being taken in other ways and outside this Chamber.
Mr. Michael English: It came back, though.
Mr. Powell: The hon. Member for Nottingham, West (Mr. English) has jumped to the end of my speech. I shall conclude with some such reflection as that.
The Minister of State says that it is not correct to say that the decision is being taken elsewhere. Let us examine this. If the European Council today or tomorrow comes to a conclusion, not merely will the authority of the Government be committed to that conclusion and that agreement, but, when it comes before us, in whatever form, for ratification, as did the Treaty of Brussels on 20th January 1972, we shall be told, as we were told then, that the honour of this country is already committed. Then, when the legislation is placed before us to implement that agreement in terms of our domestic law, once again, as through those long months of 1972, we shall be told in the time-honoured words that we are debating only the "nuts and bolts", that, since we are implementing a convention or an agreement—by then it will be a treaty in some form or another—we are not able to depart from the ambit of it.
The reality is that the decision in this matter is being taken elsewhere. As Mr. David Wood writes in The Times today,
"For good or ill… Westminster power has been passed elsewhere, into the keeping of ministers and later perhaps into an elected Parliament."
There is some dispute about whether technically we are, by virtue of our acces-
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sion to the European Economic Community, committed in principle, though we cannot be committed in particular, to participation in direct elections to a European Assembly and to agreement, which is impossible without us, to there being direct elections. There was an extremely cogent argument by a distinguished "silk" a day or two ago in the correspondence columns of The Times which argued that the commitment was solely to direct elections "with a uniform procedure" and that, if that was not what we were agreeing to or discussing, what we were agreeing to or discussing was something to which there was no commitment. There has also been the long debate, ably sustained by my hon. Friend the Member for Banbury (Mr. Marten) and others, about whether the wording of Section 138 of the Treaty of Rome necessarily implied acceptance, by accession to that treaty, of the duty sooner or later—and with good will—to comply with the principle of direct elections.
But these, though important, as the word of the law and the words of a treaty always are important, still miss the reality. Those who have taken part, usually less numerous than the attendance this evening, in our nocturnal debates upon various instruments of the European Economic Community have frequently remarked with varying degrees of irritation that, whatever we debate that comes from the European Community, before we are well started we seem to be back to square one, discussing whether we ought to belong to the European Economic Community at all.
That is not surprising, because everything which, even within that narrow ambit, comes before this House essentially poses the question "Will you go along with this, or will you insist through Ministers that, whatever others do, it shall be the choice and the will of this House only which shall prevail?". So even in the smallest details that ultimate testing point is always present to the mind of the Chamber and to those taking part in debate. That is so a fortiori of this great, and essentially new, question. It is not merely that, as a matter of form, the agreement of the United Kingdom is necessary for it to proceed. It is because on so great a matter as this—the history of the European Economic Community has proved it—any nation which wishes

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can have its way. Therefore, the Government and, therefore, Parliament and, therefore—for it is ultimately the same thing—the pople, are deciding de novo and without moral commitment whether they will create a parallel and in nature superior representation of the electorate of the country.
Nothing can bind a nation member of the Community to accept the principle of direct elections against the will of its Parliament or against the will of its people. If the refusal of one nation or another means the end of the European Economic Community in that form, so be it.
I do not believe that those whom we represent are fully seized of what it means that there should be direct elections to a European Assembly. It would be insulting to blame them, since it appears to me that many who sit in this House and have more opportunity to direct their minds to these matters are not seized of it. Yet in essence it is simple. It is that, if we create for an institution, for an embryo state, such as the European Economic Community, a direct source of popular authority, sooner or later nothing can prevail against the expression of that popular authority and no artificial bounds can be set to its extension.
I quote once again from the article in The Times today, for I thought that it was extremely well expressed. It says:
"…the argument for a European Parliament is that once created on a popular vote it will demand and get more and more power."
Indeed, by the very logic of the European Economic Community and by the very intentions of those who will it, that has to be so, since its power must extend coevally and co-equally with the extension of the authority of that state. So, on whatever side of this debate we may be, at least there should be no fluffing and muffling of the fact that, once again, even in three hours on the Adjournment, this is the Great Debate; and it is the Great Debate brought forward again unprejudiced.
Sir Anthony Royle: I personally take the view that I would not be upset if there were an increase in the powers of this Parliament along the lines the right hon. Gentleman is suggesting. Would he agree that if those powers are to be
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passed and agreed by this Parliament the matter must come again before this Parliament and the other nation Parliaments of the Nine?
Mr. Powell: Yes, and let us all understand what the debate will then be like; for we have been through this several times already. What shall we be told? We shall be told "the representatives of the very same people who sent you here, along with their other colleagues in the European Assembly"—the very persons to whom we in this House decided to entrust the popular mandate when we set up direct elections—"have asked for and have resolved in favour of an extension". How will we, who exercise our powers by virtue of our representative character, say "nay" to that, when this is the next stage for which they ask and upon which they are resolved—especially when, very likely, they include a majority, for all I know, of the representatives of those sent from the United Kingdom? Whose authority is going to prevail—the authority of this provincial Parliament or the authority of the representatives of the electorate of the United Kingdom in the seat of that super-State to which this Parliament has conceded, broadening as ever by the extension of the treaties, overriding authority over all the essential and characteristic powers of this House?
Mr. Dykes: Will the right hon. Gentleman give way?
Mr. Powell: I hope the hon. Gentleman will forgive me. I am sorry but I really must not. I do not think it is fair to hon. Gentlemen who will be taking part in a debate compressed into this dimension. I must deny myself of the pleasure to which the hon. Gentleman invites me.
I was about to conclude by reminding the House once again of what was the basis of the referendum—the statement which the Government, with full responsibility, made to the British people at the time of the referendum. It was that continued British membership of the Community depends upon the continued assent of Parliament—which, since we are periodically elected, means the continued assent of the electorate. So long as we are recognisable as a Parliament, the people of this country at every moment, either through this House, or by recreating this House, have the moral and legal

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right to withdraw their assent to what exists as well as to deny their assent to what will be proposed.
I do not know how that will happen or whether it will happen. I myself believe that when the people of this country, whose history is inseparable from that of this House, understand what is meant by the forfeiture already made on their behalf, let alone by the forfeiture of their independence and self-government which would be implicit in direct elections, then they will not suffer it. That is a judgment which every one of us must make for himself; but it ought to be understood, not just by the Government but by the world outside, that there are those, and they are not few, inside this House, and there are those, and they are not few, outside this House who are convinced from what they believe of the very character of Parliament and the British people that what we have done will not endure and that if we take this further step, that, too, will be a house built upon sand.
8.5 p.m.
Mr. Nigel Spearing: I do not think it would be right for those of us who are present to say that we are grateful for the opportunity given us tonight because, in doing that, we would be saying that we have to beg the Government to give this House time to debate this vital and important issue. The House knows that this was originally put down on a motion to approve the Select Committee Report last Friday. My right hon. Friend the Member for Battersea, North (Mr. Jay) and others of us put down an amendment which asked that nothing should be decided unless and until the full package had been debated and decided by this House. However, we are not now debating that amendment. The Government may claim that it was not their fault, but the fact is that we do not have a substantive motion before us and it has been impossible for the Government, for procedural reasons, to put the amendment on the Order Paper down for this debate between seven and ten o'clock.
This is by no means untypical of the problems that this House has always had when it comes to debating Community matters. That is not a surprise, because any executive outside this House is always in tension with it—just as the ex-
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ecutive in Whitehall is and the executive in Brussels—the new executive for this country and this House—is always in tension with this House.
We are now debating this matter on a motion for the Adjournment on which the House can make no decision. Let it go out tonight, to the Prime Minister and to the British people, that whatever happens as a result of this debate, there is no decision on direct elections, because this House has never been given the opportunity to debate that in principle. We may have discussed it, and we may have been consulted, but we have not yet decided. As I shall hope to show, nor have the British people.
The second aspect of the difficulty is that even the Government do not know the legal instrument, and the nature for putting into effect, any decision which may be taken at the so-called summit tonight, if it is taken. The Minister of State, in reply to a Written Question on 5th July, told me that it might take the form of a draft Order in Council under Section 1(3) of the European Communities Act. He added:
"Whatever legal form is chosen the Government will ensure that Parliament has an opportunity to examine the text and consider proposals for its implementation."—[Official Report, 5th July 1976; Vol. 914. c. 389.]
That is very nice of him. He has gone a bit further tonight. He said there will be a parallel opportunity—presumably a parallel opportunity to the Statutory Instrument procedure—which is a travesty of democracy on the weight of the issues being decided. For any Government, and a Labour Government, to decide on 3rd November to define a Community treaty in exactly the same parliamentary procedure as the domestic Statutory Instrument is an outrage against democracy. It was on 3rd November that the House was deceived into passing that particular Standing Order. It was an outrage for democracy, even if we get our European Communities Act procedure. For the House to decide that such a vital issue under Standing Order 73A, which is applicable to a domestic Statutory Instrument, is an unparalleled monstrosity perpetrated not only on this House but upon the British people.
The right hon. Gentleman cannot tell us what procedure will be used. He cannot even tell us what instrument will

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be effected after the decision which, no doubt, the Prime Minister will in some way take tonight. There was some argument in respect of New Zealand butter when the summit renegotiated the treaty under our Government. I hope, in winding up the debate, that my hon. Friend will tell us whether the effective instrument which will be put into effect, whatever is decided in Brussels today or tomorrow, will be decided at that meeting or whether it is to come to some future Council for a future decision under some sort of legal procedure.
If the Prime Minister is taking a decision tonight which is subject to some sort of procedure in this House, however slight—under Standing Orders one and a half hours' discussion, although the Government may give us more—on what sort of mandate does he claim to be able to take it?
Up to the referendum, the Government kept quiet about this apparent obligation to direct elections. Some of us claim that there is no such obligation under the Treaty. The Government said there was no need to worry because there was no date fixed in the Treaty. On 18th March 1975 the former Prime Minister, the right hon. Member for Huyton (Sir H. Wilson), was challenged by the hon. Member for Banbury (Mr. Marten) to say whether the Government were in favour of a directly-elected European Parliament and how political union was defined. My right hon. Friend referred him to the communiqué issued after the Paris meeting
"in which our position was entirely reserved on all these matters until after the referendum."—[Official Report, 18th March 1975; Vol. 888, c. 1478.]
If, as the Government claim, there was an obligation under the treaty—which some of us refute because we regard the treaty as ambiguous—why did the Prime Minister not spell it out at that time?
Another opportunity arose in May last year when the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) asked:
"Is it not the plain and simple fact that under the treaty it is obligatory, at some time, to have direct elections to the European Parliament? Is not the only question, assuming continuity of membership, when?"
My right hon. Friend the Secretary of State for Social Services, who was then
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Minister of State at the Foreign Office, replied:
"I think there is nothing plain and simple about the issue at all."—[Official Report, 21st May 1975; Vol. 892, c. 1404.]
That was the Government's view before the referendum. They were twice given the opportunity to spell out what they claim to be an obligation under the treaty.
Nor did the Government say very much about direct elections during the referendum. They brought out a colourful leaflet in which two pages were devoted to the question whether Parliament would lose its power. But there was no mention of direct elections.
I do not think hon. Members opposite can claim that direct elections will not reduce the power of this House. Why was that fact not included in the leaflet sent out by the Government?
Mr. Marten: It was a con trick.
Mr. Spearing: If that is so, what is the Prime Minister doing in Brussels tonight?
Mr. Arthur Lewis: Getting the job for Roy.
Mr. Spearing: The "No" leaflet distributed to every household during the referendum mentioned direct elections, but the "Yes" leaflet produced by the organisation of which my right hon. Friend the Member for Birmingham, Stechford (Mr. Jenkins) is a vice-president said nothing about the subject. It said:
"The position of the Queen is not affected. She will remain Sovereign of the United Kingdom and Head of the Commonwealth. Four of the other Community countries have monarchs of their own."
Of course the Queen, in physical form, and her successors may remain, but the point which is forgotten is that the position of the Crown in this country is unique. It is a dictatorial hierarchial executive authority within the State which has been taken over by a democratic body—this House. The executive of which my right hon. Friend the Minister of State enjoys being a member, is the executive of the Crown controlled by this House. At least since the death of Queen Victoria the Crown has been neutral in political matters, mainly taking the advice of Ministers whom this

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House sustains and maintains in Government. This House puts through the laws, even though the Queen signs them. The executive is in the hands of the House and the Government which this House puts at the head of the executive to operate the Crown on behalf of this House and the British people.
Now that we have acceded to the Treaty of the European Community, we have a new executive in Brussels. That treaty is superior to the whole apparatus of the historic executive of this country seen through the Crown.
The Queen is now subject to that executive and the terms of the Act. Until now, one could have said in this House that if a majority wished to leave the Community or vary the European Communities Act or, indeed, do anything at all, we could tell the executive exactly where to get off and, if necessary, pull it down as the House did to the executive of Mr. Neville Chamberlain in 1939.
That is because everybody here is directly elected by his constituents. If one directly elects anybody else to a legislature, assembly or Parliament linked to a superior executive, that clearly prejudices not only the power of this House but its continued existence and superiority. That is what a large number of people, particularly the Liberal Party, seem to have forgotten.
In his famous report, Mr. Tindemans looks forward to exactly that when he says:
"Direct elections to the Parliament will give this Assembly a new political authority. At the same time it will reinforce the democratic legitimacy of the whole European institutional apparatus. A consequence of the Parliament's new authority will be an increase in its powers which will take place gradually in the course of the progressive development of the European Union, notably through a growing exercise of the legislative function".
Mr. William Hamilton: Hear, hear.
Mr. Spearing: If my hon. Friend the Member for Fife, Central (Mr. Hamilton) sees the legislative power of the European Assembly and executive gaining power only at the expense of this House and the domestic executive of the United Kingdom, let him say so here and now.
Mr. William Hamilton: If my hon. Friend had read my speeches, he would
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know that I had said that many times before.
Mr. Spearing: My hon. Friend is at least honest enough to declare that he is an out-and-out federalist. Certain other hon. Members opposite and on this side have done the same. Unless an hon. Member can stand up to his electorate and say that he believes in a unitary or federal European State, in which we should sink the identity and independence of the United Kingdom in some form of an EEC United States of Europe, he has no right to vote in favour of any scheme for direct elections which may emerge from the meetings today or tomorrow.
Such an hon. Member will be voting to give away power which is not his to give away. This argument was used at the time of the European Communities Act. It did not commend itself to the right hon. Member for Sidcup (Mr. Heath) who told us that he went to negotiate—no more, no less. We know what happened. He negotiated away considerable powers of this House and the British Government. He pooled the sovereignty.
Mr. Dykes: Will the hon. Gentleman say what he thinks would happen after direct elections if all the sovereign Parliaments of all the member States and all the member Governments of all the member States were against any extension of the powers of the European Parliament?
Mr. Spearing: I think that we might develop a European Community that I should like to see—namely, a cooperative grouping of independent nations that would co-operate with each other without any power of legitimising the majority to overcome the minority. It may well be asked whether all of my hon. Friends who have doubts about the EEC fully subscribe to a European organisation of that sort—namely, one of international co-operation and not of supranational authority. Those in favour of direct elections create a supranational mechanism that overcomes the system of international co-operation that I have outlined.
The procedural way in which we have approached this matter is typical of the way in which EEC matters have been

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badly dealt with in the House. Even if we get a debate under Standing Order 73A our procedures will be seen to be inadequate. Of course, the Government themselves do not know the legal instruments whereby direct elections might be brought in. That, in itself, is a warning. That is why we say that there must be a full debate on the motion with the opportunity for amendments. Any hon. Member who wishes to vote for direct elections when the opportunity comes should make it clear to his or her constituents that they are voting for the end of an independent United Kingdom.
Mr. Hurd: On a point of order, Mr. Deputy Speaker. Since the Minister of State spoke I have heard from good sources in Brussels that a decision has been taken about elections for the European Parliament. I have heard that the composition of the Parliament is to be 410 seats, with 81 seats for the United Kingdom. I understand that the decision will be announced at 10 o'clock. This may well have developed since the right hon. Gentleman spoke. He may well have been unaware of the decision. Does he wish to modify in any way what he has told us?
Mr. Hattersley: Further to that point of order, Mr. Deputy Speaker. I have been in the Chamber since I gave my assurance. That was the assurance that came from the Prime Minister, and, therefore, I accept it, as I am sure will the House. I think that we need to be careful about what we say as to the accuracy of such reports. The hon. Gentleman has now reported that two different figures have been agreed. I think that prompts us to regard with some caution the accuracy of the reports. The hon. Gentleman cannot have been right on both occasions. I shall make inquiries. If my hon. Friend the Under-Secretary of State has anything to tell the House when he replies, he will do so. I understand the importance of the hon. Gentleman's point.
8.24 p.m.
Mr. Alexander Fletcher (Edinburgh, Member for Newham, South (Mr. North): The possibility exists that the Minister of State may be the subject of one of the con tricks to which the hon. Spearing) was referring. The hon. Member
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for Newham, South did not disagree with the views of my hon. Friend the Member for Banbury (Mr. Marten), but I do. The Minister of State should be careful that he is not being used to mislead the House as to the true nature of events taking place in Brussels.
The information that my hon. Friends and I have had for some time is that the decision was made at 7 o'clock this evening, and that the only delay is that of making an announcement. Apparently, it is not to be made until shortly after 10 o'clock, by which time this debate will have ended. With all the good will in the world, I cannot see any method whereby the Minister of State will have any detailed discussion with the Prime Minister which will affect the decision that we believe was made an hour and a half ago.
Mr. Arthur Lewis: Surely the hon. Gentleman will agree that it would not take the Foreign Office two minutes to get on the phone to the Prime Minister and to receive an answer literally by return. My right hon. Friend could receive an answer directly from the Prime Minister if he wanted to take that course.
Mr. Fletcher: I do not disagree with the hon. Gentleman that the information could be made available to the Minister of State. However, I said at the beginning that unfortunately the right hon. Gentleman might well be subject to a con trick in allowing the debate to go ahead. The only caveat that has been made about the 7 o'clock decision is that the announcement itself should be delayed.
I do not know what sort of men the Government think they are dealing with in Europe. What do they think of the President of France or the Chancellor of Germany? What do they think when we have a debate such as this and we try to suggest that some mechanism is in use at Westminster that may have a bearing on the final outcome of the summit meeting in Brussels? To think along those lines is to underestimate the calibre of person with whom we are dealing in the Community. That makes this debate a charade. In fact, it is a post-mortem on the decision to which the Government have already committed themselves. [Interruption.]
I quite understand why the hon. Member for Penistone (Mr. Mendelson) feels

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sore about the tactics and antics of the Government Front Bench. My hon. Friends and I feel sore about the way in which European business has been handled and the way in which important matters of this sort have been handled. I am bound to say that politicians in Europe, good friends of Britain, feel equally sore about the way in which the Government attend to European business and the way in which they attempt to make decisions about Europe. That is why a week or two ago the President of France visited the United Kingdom—namely, to find out what the Government had in mind regarding Europe.
Mr. John Mendelson: It is not just that I doubt that the hon. Gentleman is anything like so naїve as to think that our negotiators would have told the President of France and the Chancellor of the Federal Republic "Wait dramatically until the horses arrive from across the Channel, because an important decision is being communicated from there". I am equally amazed by the humbug and hypocrisy of the hon. Member for Mid-Oxon (Mr. Hurd). He agrees with all the decisions and is partly responsible, as the adviser of the former Conservative Prime Minister, the right hon. Member for Sidcup (Mr. Heath), yet he has the nerve today to criticise the Government, who are acting in accordance with the sell-out for which his Government were responsible.
Mr. Fletcher: If the hon. Gentleman is looking for nerve, he need look no further than the Government Front Bench. That is where the nerve is being exercised in the whole of this debate.
I return to some of the points of substance. It is extremely hard to understand why it took the Government from June 1975 to set up a Select Committee to debate and discuss direct elections. Why did it take the Government until March 1976 to have a debate on the subject, and until May 1976 to set up a Select Committee that had barely four weeks to try to reach some conclusions on the size and composition of the European Parliament, and to give some advice to the Government in particular and to Parliament generally? The Government's tardiness in this respect suggests either general incompetence in handling the business of the House, or a complete lack
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of understanding of the significance and importance of the events taking place tonight in Brussels.
This proposal means not just a change in the European Community. It means a major change at Westminster, and it is naїve to deny that major changes will affect this place with the coming of direct elections in the EEC. I can think of nothing that will bring the political presence of Europe closer to the people of Britain than the incidence of direct elections in Europe, and I can think of nothing that will mean a greater constitutional change for this country than the incidence of direct elections in Europe. I say this as a supporter of direct elections and as a supporter also of the European Parliament. Yet I am surprised by the flippancy of Members on the Government Front Bench when it comes to debating major subjects such as that of direct elections.
The right hon. Member for Down, South (Mr. Powell) talked about the growing powers of the European Parliament. It is hopeless to deny that the powers of the European Parliament will grow. They will grow for the very reason that the European Parliament is set upon chasing the Executive and trying to master the Executive in Europe, and while this is happening the decline of this Parliament takes place because for some reason or other this place lacks the will to check and control the Executive. It is not so much a constitutional difference that we are witnessing between Britain and Europe: it is an absence of will in this place which will bring about so much that we as Members of this House decry.
Mrs. Dunwoody: If that is so and if this is the power that the European Assembly is seeking, will the hon. Gentleman tell me, as a member of that Assembly, why the Assembly is dilatory in setting up the public accounts committee that would give it that power and why it refuses to take the powers that it already has and use them effectively?
Mr. Fletcher: It has taken some time to set up the committee, but it does exist and it is operating now in Europe. The European Parliament may hasten slowly, as all Parliaments do, but it is a Parliament on the ascendancy, which is quite opposite to the situation at Westminster. That is why there is so much feeling in this House and elsewhere about the

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powers of the European Parliament compared with the decline in the powers at Westminster.
Mr. Ronald Bell: Does not my hon. Friend think that the reason for this very true difference is the excessive power of the parties and the excessive tightness of their organisation here and the fact that in the European Assembly the parties are as yet in an embryonic stage? Does not my hon. Friend fear that when they become as well established there, the same mortifying effects will show?
Mr. Fletcher: My hon. and learned Friend is absolutely right. There is in Europe a common purpose among the parties in Parliament to see the Parliament strengthened, compared with the situation here where there is no common purpose across the Floor of the House. It may be, as my hon. and learned Friend the Member for Beaconsfield (Mr. Bell) predicts, that in time partisanship will destroy a great deal of that common purpose, but while it exists it is admirable, and I believe that it will strengthen the powers of the European Parliament.
Mrs. DunwoodyWhere was the hon. Gentleman last night?
Mr. Fletcher: One of the great disappointments of this debate is that Parliament ought to have been asked to consider this matter long into the days and nights, in a long and serious debate about Europe, about direct elections and, indeed, about the powers of the European Parliament, and we should have been able to express those views to the Prime Minister long before he and the Foreign Secretary departed for Brussels. The reasons why this has not happened all add up to the fact that we on this side of the House and, I sense, a number of hon. Members opposite are rather disgusted by the bungling performance of the Lord President of the Council in his efforts to manage the business of this House.
The only thing about the Select Committee worthy of congratulation is the fact that the Minister responsible for the legislation was a member of the Committee, as was his opposite number, my hon. Friend the Member for Mid-Oxon (Mr. Hurd). This sort of pre-legislative work in a Select Committee has done
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one good and and important thing for the future of Westminster.
My hon. Friend mentioned the representations from various parts of the United Kingdom, and I should like to make a few remarks on those lines. I agree that the numbers game is not very important, although I may agree in a rather different way from the manner in which my hon. Friend expressed himself. It is certainly not as important as regional representation, regional identity, in trying to form constituencies for direct elections to Europe. Here, I think, it is necessary, first, to try to get the balance right in respect of Northern Ireland, Wales and Scotland and the regions of England.
There are two important considerations. I hope, first, that the distribution of seats within the United Kingdom will not turn out to be a fait accompli after tonight. I hope that we shall not for some reason or other find in tomorrow's newspapers that the Government have done more than agree the composition of the Parliament in Europe and have in fact committed themselves to some sort of distribution within the United Kingdom. The House should have an opportunity to debate that matter.
Second, it is essential that we do not just pay lip-service to regional representation and the fact that there is a regional identity in various parts of the United Kingdom. One has only to look at the position of Northern Ireland, where, under the old formula of about 67 seats for Britain, there would be two for Northern Ireland, to see how absurd it would be in comparison with the present 10 seats for the Republic of Ireland and the prospect of 13 or 14 being made available to the Republic. Plainly, the number of seats for Northern Ireland cannot be smaller than three, and even that seems a ridiculously low number for its population. Certainly, the number cannot be smaller than three; indeed, it should be four, or even five.
The same applies to Wales, with a population equivalent to that of Eire. There is talk of four or five seats for Wales. Again, those must be minimal figures if one is to have any kind of representation from the distinct country of Wales in Europe as part of the United Kingdom's representation there.

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Scotland has a population of over 5 million, equivalent to that of Denmark, and here, too, the original number of six or seven would be abysmally low. The ideal representation from Scotland, I suggest, would be an absolute minimum of 10, and preferably about 12. That is the only way I can see for giving the local government regions of Scotland proper representation in the European Parliament.
Mr. Ronald Bell: What does that leave for England?
Mr. Fletcher: I hear my hon. and learned Friend's question. England has to decide for its regions and what their identities are. It is my job in this Parliament, representing a Scottish constituency, to try to represent the interests of Scotland, and I am sure that English Members, being in a majority, will be equally forceful in representing the English interest.
My plea is that there should be a considerable disparity in the numbers of electors in each constituency. I believe this to be inevitable, and it is no bad thing if we are able to represent, perhaps on a local government basis, the best interests of Scotland, or Wales and of Northern Ireland and the best interests of the regions of England in the European Parliament. That is why I firmly believe that local government gives the basis for constituency arrangements and for much easier local identity as between the people of this country and the Parliament in Europe.
Because of the tactics adopted by the Government so far, with their lack of respect for the views of this Parliament, the passing of the direct elections Bill will coincide with the passing of the devolution Bill, and both measures will invite the closest scrutiny from fried and foe alike. These two major pieces of constitutional legislation will simultaneously rock this old boat, and Westminster will be hard put to digest the major issues which will be presented on the Floor of the House, presumably in Committee of the whole House in both cases.
If those Bills are to have any chance of succeeding, during the coming recess, whenever that is, the Government's business managers will have to acquire skills of a far higher order than they have exhi-
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bited so far on both these subjects and, in fact, in the conduct of all their business.
8.39 p.m.
Mr. Douglas Jay: In all the long and rather murky story of the way in which this country has been manoeuvred against its will into ever greater entanglement in the Common Market, I doubt whether the House has ever been treated quite so deplorably as it has tonight. We are now debating this issue with a whole series of conflicting statements about what is happening in Brussels, and even without knowing whether the point at issue has or has not been decided before the end of the debate. It will not surprise me if some of my hon. Friends decide to show their opinion of the Government's handling of the matter by voting against the Government motion in the Lobby tonight.
I very much regret that, since this debate is now technically on the Adjournment, my hon. Friends and I cannot move the amendment which we wished to move, requiring the Government not to commit themselves to any convention or agreement for direct elections until this House had voted, as well as debated, this issue. At no time so far has this House or the electorate approved of the momentous constitutional step of introducing in this country direct elections to an Assembly outside it. Until both Parliament and the electorate have done so, I do not believe that the Government have any right or authority to commit this country to any sort of agreement or convention involving such a constitutional revolution.
Not merely did the Select Committee fail to weigh the arguments for and against direct election—they did not try. They plunged into the mechanics of the operation, and that deprives their Report of a great deal of serious value. It is rather more sensible to decide whether there is a case for having direct elections for the Assembly before one starts to argue on the number, geographical methods of election, and so forth.
Mr. Alexander Fletcher: As a member of the Select Committee, may I tell the right hon. Gentleman that our terms of reference excluded the principle of elections. They related merely to the means of achieving that end.
Mr. Jay: It was nothing of the kind. I discussed the terms of reference with

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the Leader of the House, and the words that this House approved were
"to consider proposals for direct elections."
They thus clearly included the merits one way or another. My right hon. Friend the Minister of State tonight used the phrase "wide terms of reference", which enabled it to discuss these matters. I am not blaming the Select Committee, but I am saying that it is a pity that it ignored the main issue. But as it failed to do so, I hope that the House will seriously consider the case for and against direct elections to the Assembly.
I need hardly point out that there is no legal obligation under the treaty for Member States to introduce direct elections. The Foreign Office originally pretended that it was, but faced with the wording of Article 138 has now wisely retreated to admitting that it is not a treaty obligation but a political commitment. Indeed, so far from being a legal obligation under the treaty, it is doubtful, as Mr. Leolin Price, QC, pointed out, whether the present proposals are legal under the treaty at all.
Article 138 proposes elections
"in accordance with a uniform procedure in all Member States."
But there is now no proposal for uniform procedures in all Member States. Therefore, formally these proposals are not within the terms of the Treaty of Rome. But even if the proposals are reduced to the status of a political commitment, they are a political commitment only of the Government and not, as yet, of this Parliament—and certainly not of the electorate.
As has been pointed out, the electorate did not vote in the referendum for direct elections. There was no mention at all of direct elections in the Government's referendum manifesto which I now have in my hand, and which was delivered to every voter at public expense in the referendum campaign. Indeed, to remove any doubt about this—and the document was signed by the then Prime Minister—the Government carefully and specifically omitted any reference to direct elections in that manifesto. If the Government thought that they were obtaining a mandate for such elections or wished to do so, they would have
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included a mention of them in their manifesto, but they did not.
Indeed, in the constitutional section of that manifesto entitled
"Will Parliament lose its power?"
the Government in effect did exactly the reverse. They said:
"No new policy can be decided in Brussels or anywhere else without the consent of a British Minister answerable to the British Government and the British Parliament."
Secondly, they said:
"The Minister representing Britain can veto any proposal for a new law or new tax if he considers it to be against British interests."
The whole emphasis in that manifesto was on the power of Ministers to defend British interests and their responsibility to the British Parliament for what they did in Brussels. It was on that basis that the public voted in the referendum.
I therefore go as far as the referendum result, but I do not go beyond it because we have no right to do so, and I hope that other hon. Members, particularly the Manifesto Group, will do the same as I. None of us has any authority from the electorate to go beyond that. Indeed, as the Minister will remember, the hon. Member for Saffron Walden (Sir R. Kirk) said on the Continent after the referendum that it was not a vote for federation, and my right hon. Friend fairly said that he agreed that that was correct.
Some hon. Members may argue, I suppose—not my hon. Friend the Member for Fife, Central (Mr. Hamilton), who is very frank, although I do not think that he would claim he has a mandate from the electorate for what he is proposing—that direct elections to this Assembly are not a step towards a federal or unitary State. If so, what is the point of holding such elections at all? The simple truth is surely that either this proposed Assembly will have some real power, in which case adherence to it is a step towards some sort of federal State and a loss of real independence by this country, for which the electorate has not voted. Or else it will not have real power, in which case it is a waste of time and a good deal of public money. That is the fundamental dilemma which it seems to me so many propagandists have been trying to conceal from the public.
The real danger to this country is that at present British Ministers are at any

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rate in some real sense responsible to this House for their actions—not as responsible as some of us might wish, but they are responsible none the less for what they do in Brussels as well as anywhere else. But if we establish another directly elected Parliament that responsibility will become blurred and Ministers will say—I can almost imagine the present Minister of Agriculture, Fisheries and Food saying—"You may not like what we have been doing. I do not like it much myself, but this other elected body has voted for it."
I believe that if we retreat down this road we shall weaken the authority of this Parliament—as my hon. Friend agrees we shall—with only a remote chance, or a gamble, that a new-fangled body will reflect the opinion of the British electorate or have any real control over the executive power in Brussels. The British electorate will have only the most indirect and remote influence—if any at all—over the legislative and executive machine and decisions emerging from Brussels. It would be a classical case of sacrificing the substance for the sake of the shadow. The net result would be a major loss of democratic control by the British people over their own legislation and their own Government.
Mr. John Roper: Could my right hon. Friend explain why it would mean a further loss of control as a result of direct elections? I understand that he may think that there has been a loss already, but how would direct elections extend it?
Mr. Jay: It would be extended because it would enable British Ministers to say that they could ignore in future the decisions of this Parliament because of some shadowy authority of another Parliament. That is my reason for being opposed to direct elections in principle.
Had I and some of my hon. Friends been able to move our amendment we would have suggested that the Government should not reach any commitment in Brussels until the House had voted on this central issue. My right hon. Friend told us tonight that any convention, agreement or treaty which was reached would be subject to ratification of this House at a later date, in addition to the legislation that would follow. I recognise that he has gone some way to meet us,
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but not the whole way. We do not know that the Prime Minister or the Foreign Secretary will not tonight commit the Government and recommend the ratification of such a treaty to this House, and we know from past experience that we shall be told that we are committed and therefore the Government morally must request the House to carry the matter through. Although the Minister has gone some part of the way tonight, his offer does not fully satisfy me or some of my hon. Friends.
On top of this we must reflect on the situation in which the House is placed tonight as a matter of procedure. I find it difficult to believe that many hon Members will be prepared to support the Government motion this evening.
Several Hon. Members Several Hon. Members rose—
Mr. Deputy Speaker: Order. The winding up speeches are clue to begin at 9.35 p.m. There are still eight hon. Members who have been present throughout the debate who wish to speak. I want to accommodate as many as I can.
8.53 p.m.
Mr. John Davies: Naturally I respect your request, Mr. Deputy Speaker. I can afford to be brief.
I must join many other hon. Members in regretting that on this central issue we have a ritual tribal dance of a debate rather than a reality. We have become accustomed to the fact that when we are discussing Community matters, whatever the overt attitude of mind of the Government may be, the House has little, if any, opportunity to express its will in a way which matters to the Government, and upon which the Government can be influenced seriously.
Personally, I am deeply committed to the whole principle of the EEC, but I do not think that this is a proper or right way for the House of Commons to be treated in its relationship with the Community.
I must join other hon. Members in the comments and criticisms made in this matter. It seems to me that if the Government are to carry the House with them in the reasonable and proper development of Community activities, it is necessary to have a much improved method of handling EEC matters. We must have a real distinction separating the central matters which must be subject to proper and adequate discussion, at a timely

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point which is valid and important to the Government. This has not been the case in the practical EEC issues with which we have had to deal in the past two years. I have a sincere and deep resentment against the attitude of mind which has been displayed in the handling of these affairs in this House.
Mrs. Dunwoody: We are debating it at a much earlier hour than usual.
Mr. Davies: That is one advantage. Even with debates lasting longer than this, they have been at a time and in a form which have no influence one way or another.
The debate so far has revealed the dilemma with which we are faced. The Report of the Select Committee is a prosaic, factual document dealing with the mechanics, but we are inevitably drawn into discussion of the fundamentals of the issue because those fundamentals, although rehearsed in this House before, have never come to the point of crunch at a time when it matters—and that is now. The point of crunch is now. However much ratification takes place, or however much perhaps the approval of the House may be sought, let us be in no doubt that at this point crucial decisions are being reached, and they are being reached without the benefit of a consolidated view of this House being expressed in real and proper form.
I am sorry that the right hon. Member for Down, South (Mr. Powell) is not present, because I would like to say something about his views on the European Parliament itself. He said that no artificial bounds can be set to the extension of its powers, that the extension of the authority of the EEC State would itself dictate the limits of those powers. I say to him, with great respect because he is such a considerable expert in these matters, that he is not correct. A distinction must be drawn between what is the range of powers which the European Parliament can draw to itself and those which are prescribed and are clearly within the treaty, as is also the method by which those powers can be extended. The Parliament has no powers of auto-extension within its own capacity. It must deal with the Community system, and the change of the law and the granting of additional powers of the Community
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system requires that it shall be the Council of Ministers which, in the last resort, shall give its authority.
It is erroneous to imagine that we are in the course now of a formal, directly-elected Parliament which has within its grasp the totality of any powers it may wish to assume to itself without regard to the rights of Government. That is not true. It would be dangerous and damaging for it to be left on the record that that is the case. Moreover, there is a substantial difference between the reality of competence and the reality of powers. I believe that the competence of the Community as it stands was the subject of the referendum, and that the Government received an overwhelming majority within the framework of that competence, as defined within the framework of the treaties, to act for the benefit of the country, and to sink within a common framework the activities of this country in this important and vital field, believing, as I believe the country quite rightly did, that in this matter it was much better for us all to act in common accord in a community than it would be to endeavour to act out our part in isolation.
Mr. Jay: The right hon. Gentleman would not deny that there was no mention of direct elections in the Labour Party manifesto.
Mr. Davies: There was no need for there to be. Every hon. Member who took an interest in these matters knew very well what were the contents of the Treaty of Rome. We all knew what this country had signed a treaty to accede to. We all knew very well, in terms of the referendum, that it was within the context of that treaty that we had given the authorities of this country the right so to proceed, and believed that it was in the interests of this country so to do. To suggest otherwise is a poor, concocted argument which has little validity for the fundamentals of the issue.
Let us be clear that the powers of a directly-elected European Parliament are still circumscribed by the provisions of the treaty and that the Parliament itself can do nothing to change them on its own. It seems to me that as in this Parliament, so in a European Parliament, the reality of the requirements of Parliament, whatever they may be, is the control

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of the executive, to try to hold the executive within the confines of the people's will as expressed through this House.
I do not believe that a directly elected European Parliament will filch our powers. It is an ally to the Westminster Parliament. The complexity of governmental activities and the economic powers which are expanded year by year are so great that one needs every ally one can get to try to help Governments in such issues.
I regard the European Parliament as a force to help Westminster and Westminster as a force to help the European Parliament. I would be unhappy if we were in competition with our colleagues in Europe who are there to help and support us. I cannot in any way subscribe to the view expressed by the right hon. Member for Down, South that a directly elected Parliament is a threat to our future. On the contrary, it is a powerful ally, for which we should be thankful and which we should support.
9.2 p.m.
Mr. John Roper: I agree with much of what the right hon. Member for Knutsford (Mr. Davies) said. But I disagree with him in one respect, because I am grateful to the Government for having brought forward the debate so that we can discuss the matter at an early hour. They have provided us with three hours and although that is not enough, it is better to have the debate now than not to have it at all.
It is foolish to suggest that the matter is not important. The decision about direct elections has not changed the powers of this Parliament, but it will increase the moral authority of the European Parliament. That will help to reduce the democratic gap which exists in the Community and which many critics of the Community have pointed out over the last four or five years. Direct elections will in no way take over the powers from the House. They will enable the two Parliaments to act more effectively and in a more complementary manner.
My right hon. Friend the Member for Battersea, North (Mr. Jay) suggested that in some way Ministers would cease to be responsible to the House once there was a directly elected European Parliament. I cannot accept that doctrine. Ministers are responsible to the House
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and the House has a duty to ensure that they act in appropriate ways within the European Community.
I shall take up a point made by my right hon. Friend the Member for Battersea, North about the referendum. I speak only for myself, but I addressed a number of meetings during the referendum campaign and in each of my speeches I referred to the European Parliament and I said that I looked forward to the day when direct elections took place to establish a larger measure of democratic control over Community institutions. During those meetings speakers who were opposed to the Common Market talked of direct elections, and there is no doubt that the electorate of the time was not aware of the possibility of direct elections at the appropriate time.
Mr. Jay: While giving full credit to my hon. Friend the Member for Farnworth (Mr. Roper) for his candour, I am sure that he will agree that the Government's manifesto, of which 25 million copies were printed, was more important than his election speeches.
Mr. Roper: I was not able to draft the manifesto. Comments have been made about the various figures coming from Brussels in the last few weeks and about those we have had this evening. As the figures go up, the more delighted I am with the efforts it appears my right hon. Friends the Prime Minister and the Foreign and Commonwealth Secretary and British officials are making in achieving a better representation for this country in the new European Parliament. I congratulate my right hon. Friends if the figures the Prime Minister can agree to after the meeting approach the figures quotod.
The original proposal by the European Parliament was for only 67 Members for the United Kingdom. In evidence to the Select Committee I suggested that 86 would be an appropriate number, with a European Parliament made up of 418 Members. The figures which were quoted at seven o'clock this evening approach those figures. Perhaps after my right hon. Friend the Prime Minister has heard the result of this debate we may reach a total of 418, with 86 for the United Kingdom. Things seem to be moving in that direction.

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I turn to a more important matter. As we approach direct elections over the next two years, the House and the Government will have to think about ways of informing the electorate about their implications, and not merely in the election campaigns. They will have to give people an idea of what a European election is. The budget proposals of the European Commission, to be considered by the Council of Ministers in the near future, include a figure of 400,000 units of account for a special information campaign on the direct election proposal. What is the Government's attitude to that? What sum will they add to that amount to make it an effective campaign in this country as well as elsewhere?
I hope that in due course we may also hear the Government's view about the financing of the election campaigns. Whatever attitude parties may take to the general argument in favour of financing political activity in this country, there is something to be said for consideration of public finance when we have a new set of elections thrust upon us.
I should like next to say something about the question of Members of this House having an opportunity to see the activities of the European Parliament before the direct elections take place. Together with the hon. Member for Banbury (Mr. Marten), the hon. and learned Member for Beaconsfield (Mr. Bell), the right hon. Member for Knutsford and some of my hon. Friends, I had the opportunity last week to visit the European Parliament. I found it a most interesting and informative experience. I learned a great deal more about it by spending 48 hours in Luxembourg than I could by reading all the many documents that come our way.
I hope that in the next 12 months the Government will make facilities available so that in preparation for direct elections all hon. Members who wish to do so may see the European Parliament at work. They will then realise that a dual mandate for a long term is impossible.
Mr. Marten: I am interested that the hon. Gentleman should suggest that. Does he not think that it would have been right for the Select Committee to see the European Parliament in practice before making its report?
Mr. Roper: The Select Committee was set a very tight timetable. As I was not a member of it, it would not be proper for me to comment on the way in which it carried out its work. It acted with alacrity and produced a report with which I have no difficulty in agreeing, although the hon. Gentleman may find it more difficult to do so.
If there is not a dual mandate, we shall need to consider what the links between the members of the European Parliament and Members of this House should be. I very much agree with what was said in the debates in March by my right hon. Friend the Member for Fulham (Mr. Stewart) and the right hon. Member for Chipping Barnet (Mr. Maudling)—that it is not a matter for institutional links but rather for working out other ways, probably through the parties.
The first report from the Select Committee is a valuable document for which I believe the House can be grateful. I very much hope that it will be possible for the Government after hearing the debate to make an agreement along the lines I have suggested.
9.10 p.m.
Mr. Emlyn Hooson: I shall make a very short contribution to this debate. I think that in the bicentennial year of America no one should underestimate the potential power of the embryonic Parliament. Of course, this is arguable, and people have argued it. So much of this is concerned with semantics. The legal powers of the Parliament of Europe, whether directly elected or mandated, are very circumscribe, but it is in the nature of human experience to realise that once this body is directly elected it will move from strength to strength. No doubt that will happen.
I alone in my party had doubts about this country's entry to the Common Market. Now that we are in it, I am all for a directly elected European Parliament. To whom is the Commission in Brussels responsible? Is it responsible to this House? Of course it is not. Is it responsible to anybody? No. I look forward to the time when the European Parliament evolves in such a way that it exercises direct control over its executive. Only in that way shall we have a democratic Europe.

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We in this country and in this House are having the worst of all worlds. We do not control many of the things in the Common Market. Our Ministers are inadequate for this purpose. Many of the criticisms made today are criticisms not of the Common Market but of the way in which the Government and the House deal with the Common Market. Whatever the reasons for it, whether we are pro-Europe or anti-Europe, we deplore the limited time given for this important debate. It is clearly a charade. What will the Prime Minister announce at 10 p.m.? Everyone knows that the agreement was virtually made before the Prime Ministers met. The negotiations were already virtually complete.
If the Government care about the Common Market and want a good relationship between the Common Market and the House, they are not going the right way about it in the way they are treating the House.
I come to the question whether there should be direct elections in 1978. It seems to me from what the Minister of State said when he was repeating the two qualifications that the Prime Minister put on them that the Government were doubting their own capacity. Apparently, every other European country can achieve direct elections by May or June 1978. Why not this country? Why the two qualifications? I think that the two qualifications should go. If we are to have direct elections, let us have them in May or June 1978. It is important to have them at the same time as the elections in other parts of Europe.
It is very important to have a uniform system of elections. Everyone knows that other European countries use a proportional system for elections. It should apply here. If we are to move out of this very difficult stage for this country, when we are still emotionally out of Europe—I grant the right hon. Gentleman that point anyway; we have not moved forward since the referendum—it will be much better if we had a uniform system of elections because we are bound to move in that direction.
The hon. Member for Mid-Oxon (Mr. Hurd) talked about the numbers game. He must be very careful not to put a premium on independence. For example, the number of representatives for
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Northern Ireland when compared with the Republic of Ireland leads one to believe that it would be better off if it were independent. Comparisons between Wales and Luxembourg or Scotland and Denmark lead us to believe that we must be careful about how the numbers for the European Parliament are allocated. I say no more about that. Clearly it will be a difficult matter.
The right hon. Member for Down, South (Mr. Powell) said that there was no historical analogy for this situation but that of the Rump Parliament. Clearly there is an important distinction. The Rump Parliament did not have a referendum. At that time there had been no referendum in this country. We can argue about the semantics and about whether the posture and method of the former Prime Minister were right, whether he was absolutely frank, and so on. But the people of this country took a momentous decision—
Mr. Arthur Lewis: Against the facts.
Mr. Hooson—and it is far too late to turn back the clock.
9.17 p.m.
Sir Anthony Hoyle: I agree fully with the last remarks of the hon. and learned Member for Montgomery (Mr. Hooson). Again and again the comment has been made in this debate that the decision has yet to be taken. But the decision on principle has been taken. It has been taken in a referendum and in many votes in the House.
When the Select Committee, of which I had the honour to be a member, was set up, the plan was that it should go into details about how we should carry out direct elections but not go into detail about the principle, which had already been decided in the House and in a referendum. Therefore, our aim—and this was made clear by the right hon. Member for Dartford (Mr. Irving)—was to produce some thoughts and ideas in time for them to have some effect on the Government and the decision which has to be taken with the other eight members of the Community.
The Select Committee did not go to Brussels; it did not take a lot of oral evidence: there was not time to go to Brussels or to take a lot of oral evidence.

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However, we considered a great deal of written evidence and came to conclusions on the four main issues which we were asked by the House to consider. We met the time scale demanded of us by returning and publishing our report in time for the Government to take it into account in the discussions which have been going on in Brussels in the past two months. I should hope and I should welcome the Government's reaching agreement today in Brussels with the other eight Governments on a system of direct elections. It is possible to do that and to meet the date of 1978.
The Select Committee is now moving on to its second report and we hope to make it available to the House possibly by the end of October. We have already taken public evidence from many members of local authorities in Scotland, Ulster and England and Wales. It is becoming increasingly clear to us that all those representatives of local authorities think that we can meet the 1978 deadline, that the work can be done and that the organisation can be put in hand. I have no doubt that, if agreement is reached today in Brussels, we shall not be one of the countries dragging their feet when the time comes for direct elections in 1978.
I support the comments of my right hon. Friend the Member for Knutsford (Mr. Davies) and my hon. Friend the Member for Mid-Oxon (Mr. Hurd) on the question of the European dimension on European business in this Chamber. It is not good enough that hon. Members should spend a great deal of time in producing a document for this House, that arrangements should be made to debate it in the House at a reasonable time last Friday, and that it should then be delayed and rushed, as it is tonight. in a three-hour debate before other major business is taken at 10 o'clock.
Again and again this has happened in the past, and I ask the Minister who is replying to the debate to give us an assurance tonight that he and his right hon. and hon. Friends in the Foreign and Commonwealth Office will do all they can to press the Government to consult the House on these European issues with greater seriousness.
We all accept that the Ministers in the Foreign and Commonwealth Office take
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these issues seriously, but it is just not good enough that week in and week out business which affects Europe—European business with a capital B—is always taken late at night or in the early hours of the morning and pushed into a corner by the Leader of the House when he states the business of the week. I support the comments of my right hon. and hon. Friends and by hon. Members on the Government side who have said that the Government should take the European dimension much more seriously.
I hope that the Prime Minister has now reached or is reaching agreement in Brussels on direct elections for 1978. If he is, I welcome the decision of Her Majesty's Government to press ahead with direct elections for 1978. I hope and trust that over the course of the next year or two before the 1978 elections take place we shall have a chance to hold debates on the subject at a reasonable hour and with reasonable thought.
9.21 p.m.
Mrs. Gwyneth Dunwoody: I shall not detain the House very long, because I find this a very depressing occasion. I hope that my right hon. Friend the Minister of State will forgive me if I say that I very desperately want to believe what he says about no decision having been taken at the present time. But when I am at the point, as an elected Member of Parliament, of believing that we shall have to pray to St. Anthony, the patron saint of lost causes, and to rely on the good sense of the Gaullist party to get us out of this very difficult mess concerning direct elections, I hardly feel that the House of Commons is being treated seriously.
This is one of the most fundamental issues we have ever been asked to decide. What I find very shocking about it—I use the word advisedly—is that, whatever right hon. and hon. Members have said tonight, I do not believe that the British electorate as a whole has ever had explained to it precisely what the commitment to direct elections will be. There was no explanation of this in the documents put out by the Government at the time of the referendum. I do not believe that the electorate is yet aware of the implications.
As a Member of the European Assembly, I do not believe that a Parliament of the size recommended by the Select Committee will be content simply to remain

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an impotent body. I agree with those right hon. and hon. Members who have made it plain in this debate that as federalists they envisage the extension of powers of the European Parliament. I think that that is almost inevitable. But it can be done, I feel, only at the expense of a democratic system which in this country has been evolved over hundreds of years. There is at least a feeling of involvement between the elected Members of Parliament and their constituents.
Let us be realistic about it. How many of us, working as we do every week in our constituencies, really believe that we are able to get the complete feeling of our constituents about the political issues of the day? How much more difficult will it be, then, for a European Member, seeking to represent 10 times the population that we seek to represent in this House, to know what those people believe and think and, what is more, to tell them what is happening in the European Parliament?
I despair at the present lack of machinery in the House of Commons to enable us to tell the electorate and the people what is being done in their name. Ministers make package deals. Those of us who wish to examine their details are told that, unfortunately, this is part of a bargaining process and that we can only discuss them when they come back to the House of Commons. But this is never at a time when these matters are likely to be reported, never at a time when the House is full, never in a way that enables people to know the many changes taking place, not only in the constitution of this country, but in their own rights.
I believe very strongly that we should not accept either the principle of direct elections to a European Assembly or the machinery that is being thrust upon us. Within their very limited terms of reference, the members of the Select Committee endeavoured to give information as well as they were able. But, once it had been decided that they were not allowed to examine the principle, and once they were told that they had to work at great speed and bring their report before the House so that a decision could be taken tonight, they were limited in such a way that they were not able to produce the very best of reports.
The existing European Parliament has a number of rights to question the Execu-
162
tive, to set up public accounts committees and to change its existing procedure in a way that would give it a right to question the Commission and to seek the information that would enable it to pass on the facts and figures to the electorate of the Nine. It does not do so. What is very plain is that, the closer matters come to home political issues, the further away agreement goes.
Max van der Stoel said only last week that what made him despair about the stagnation of the Community was the lack of real political will. This has arisen not because individual Governments are not committed to the idea of European unity—many are more committed than I believe they should be—but because the reality of politics, once it enters into a debate, means that those who are elected must consider the interests of their constituents. That will not happen with vast electorates further removed from the system of government, as they would be in a European Assembly. It does not happen today. We do not discuss what is happening in the European Community in our name today.
I only wish that there were a motion that we could vote against so that we could make it plain how strongly we believe that the sovereignty of this Parliament should not be challenged. It has survived 900 years because it is a democratic system, and it must be protected at all costs.
9.28 p.m.
Mr. Neil Marten: One of the problems of a squeezed up debate of this kind is that one cannot debate and one cannot intervene in the speeches of other hon. Members. I deplore this kind of debate. Equally, I deplore the fact that the decision, apparently, has been taken already. No one is fooled by the fact that the Minister of State will telephone the Prime Minister with the results of this debate. It it is quite absurd to think that people will believe that. He will telephone, of course, but how can he give an account of this debate on the telephone?
Since we are debating the Report of the Select Committee, I want to be one of the few to concentrate on the Report as such. In doing so, I borrow a word from the Left wing—not necessarily the Left

163
wing here but the Left wing in international circles—and christen the members of the Select Committee "lackeys of the Government". For that is precisely what they are. The Government said they wanted this Report by a certain date, and the members of the Select Committee bowed to the Government and produced it by a certain date. In doing that they have done great damage to the system of Select Committees.
In their Report, the members of the Select Committee have given no reasons for their conclusions. What is more, the outcome was predictable before they even sat. Anyone looking at the Committee's membership could have said "This is what they will recommend", and, hey presto, they recommended it.
Sir Anthony Royle: As a member of the Committee—
Mr. Marten: I am not giving way—
Sir Anthony Royle Sir Anthony Royle rose—
Mr. Marten: No. I did not interrupt when the hon. Gentleman was speaking—
Sir Anthony Royle: The hon. Gentleman is attacking—
Mr. Marten: Indeed, I am, and I shall go on attacking the Committee. I am attacking the whole method of work of the Committee and not the individual members of it.
The idea of having a Minister on a Select Committee like this was very odd. The Minister should have been called as a witness. The two Members of the European Assembly should not have been on the Committee. They have a vested interest. They should have been called by the Committee as witnesses. Why were not more witnesses called? The Committee sat once a week. Why did it not sit more often and hear more witnesses? Why, for example, did not the Committee hear Mr. David Butler, the Fellow at Nuffield College who is a great expert on elections? Recently he wrote a very interesting letter to The Times in the course of which he said that, if the Rotherham by-election swing to the Conservatives had been translated into elections for a European Parliament, the results would have been that Labour would have won nine seats, the Conservatives 56, the
164
Liberals none, the Scottish National Party none, and the Ulster Unionists two. That is an extremely good example of why the Committee should have gone into this in much more depth by taking evidence from people who know about this sort of thing. That affects the timing which was a matter for this Report.
Sir Anthony Royle: Sour grapes.
Mr. Marten: It is not sour grapes. It is a bunch of grapes on my right, rather sour from Richmond, I am afraid.
Why did they not visit the Assembly? They had the time. Why did they not look at this curious Assembly and take the evidence from that? Why is there no report in respect of the costs of the whole operation? In these days when we are told that we have to cut down on expenditure, there is no question of what it will cost to hold these elections or who will pay for them. I hope that there is no question of the elections being financed out of Community money, because it would be deeply offensive for British elections to be financed out of foreign money.
If one looks at the state of the Common Market today what does one see?
"It is sterile and ineffective. It is disintegrating. It is in an advanced stage of erosion. It is suffering from political anaemia and it is moving backwards in despair".
Those are the words of the present President in Office in the Council of Ministers, the Dutch Foreign Secretary, Mr. van der Stoel, speaking in the Council of Ministers on Wednesday 7th July.
If that is the position of the Community, surely we do not want to leap into this proposition without a lot more thought and a lot more investigation by the Select Committee. Then we have the Community now being run by the Troika of London, Paris and Bonn. This needs to be looked at because our friends in Luxembourg, with whom we had a very good lunch the other day, and in Brussels, and the Belgian Parliament, are getting extremely worried about it. But some starry-eyed people such as my hon. Friends the Members for Harrow, East (Mr. Dykes) and Richmond, Surrey (Sir A. Royle) believe that all this will be solved by having direct elections to the European Parliament. There is not one shred of evidence that directly electing members will make one jot of difference at all. Here we are being put to all this

165
expense, for which this country will have to pay—
Mr. William Clark: What expense?
Mr. Marten: My hon. Friend the Member for Croydon, South (Mr. Clarke) asks what expense. I suggest there will be the cost of the elections. There will be the cost of maintaining 200 extra Members of the European Parliament and their salaries and staff. One visit to the European Parliament shows that we have a huge building to go to with researchers and beautiful secretaries and lovely offices. All this will be multiplied by at least two or three if we go ahead with direct elections. My hon. Friend the Member for Croydon, South asks "What expense?" He is a member of the Select Committee and it was up to him to produce the cost of the whole thing. He has been thoroughly irresponsible in not going into the costs but making this recommendation.
We have the ridiculous affair of the Parliament shuffling from Luxembourg to Strasbourg at a cost of £3 million a year, with 800 officials and 60 tons of paper going up and down. What an absurdity. Let us hold the proposition up until we get some sense out of that alone.
I just wonder what the extra 200 Members of Parliament will do when they get there with their lovely researchers and lovely secretaries and lovely expenses allowances. What will they do which the 198 cannot do at the moment? We understand that they will not get any extra powers, so what will they do? Obviously they will produce plenty more paper and more advice which no one listens to.
The first thing we ought to do is to agree on the electoral system which will be used for the direct elections. It should be the same franchise throughout the whole of the Community. The right hon. Member for Battersea, North (Mr. Jay) said in his speech that it is quite wrong and quite against Article 183 to go ahead with direct elections with different franchises in each country. We need to get right the structure of the Community and the relationship between the Parliament, the Council of Ministers and the Commission before bothering about direct elections. We must get right the aims of the Community. Many hon. Members have said that it must be either a federal
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Europe or L'Europe des patries. As a Conservative, I am in favour of L'Europe des patries. So, too, is my right hon. Friend the Leader of the Opposition and, I believe, the Government.
There are many other reasons for my disagreement with the Select Committee's Report. The Committee acted irresponsibly and was the lackey of the Government. It bent to the Government's will, which a Select Committee should never do.
Mr. William Hamilton: On a point of order, Mr. Deputy Speaker. I wish to protest at the imbalance in the selection of speakers in this debate. I realise that it is not a point of order, but I have made it nevertheless.
9.36 p.m.
Mr. Reginald Maudling: Whatever this debate may have revealed, it is clear that my hon. Friend the Member for Banbury (Mr. Marten) has not changed his views about the Community. I am a little baffled because he does not seem to know whether he wants an Assembly with more or fewer powers. Perhaps he could consider that a directly elected Assembly might be able all the more effectively to exercise its existing powers of supervision over the Executive.
If this debate has been critical and suspicious of the Government, it is their own fault. The Prime Minister made clear when he was Foreign Secretary that the purpose of setting up the Select Committee was that the Government would need to know the views of the House before entering into any commitment.
The Committee was established and it reported expeditiously. A debate was fixed for Friday last week—the last possible moment before the meeting of the Heads of Government. The Government allowed the business of Friday to be lost and proposed discussion of this issue as the last item of business tonight. They have always been too casual about European business, but the suggestion that a matter of this importance should be discussed last was discourteous to the House, to say the least.
Under pressure, the Government agreed to this debate's taking place between 7 and 10 o'clock. The Minister of State told us that no commitment would be made by the Prime Minister before he

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had heard the views of the House. My hon. Friend the Member for Mid-Oxon (Mr. Hurd) told us that he had received reports that definite decisions had already been taken—including a membership of the Parliament of 410, with a United Kingdom membership of 81.
It may be that the Prime Minister is waiting for a brief telephone call to tell him to carry on because the House has not objected. He may have told the other Heads of Government that there will be no problem, that he will have to clear the matter formally before going ahead. All this may be technically consistent with what has been said, but it is not the way to treat the House.
It would not be knowing the views of the House before entering into any commitment. The Prime Minister cannot know the view of the House for some time yet, but I suspect that he may have already entered into some commitment, conditional on its not being overthrown by the debate. We shall wait to see what emerges, but if the figures quoted by my hon. Friend the Member for Mid-Oxon prove correct, the House will feel that it has been badly treated by the Government.
Mr. Jim Spicer: On the BBC television 9 o'clock news it was announced that agreement had been reached. It was mentioned that at the last minute the Prime Minister had put in a joker by saying that he would like to hold a decision until after 10 o'clock because he wanted to wait for this debate, but it was clear that everybody regards the decision as having been taken.
Mr. Maudling: That makes it all the more important in the interests of the House that in reply the Minister should categorically state what the position is in the light of the reports that we have received from more than one hon. Member.
I turn briefly to the issues involved in the debate. The Minister of State rightly said that we are committed in principle to direct elections by the Treaty of Rome. Of course, we are not committed by Article 138 to the details of any particular scheme. However, we are morally committed to work as best we can, genuinely and honestly, to try to agree on a scheme for direct elections.
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Article 138 of the Treaty of Rome can have no other meaning.
Secondly, the right hon. Gentleman rightly said that there is no automatic extension of the powers of the European Assembly or Parliament if it becomes directly elected. That is true. That has been emphasised by several hon. Members. The right hon. Member for Down, South (Mr. Powell) disagreed. Not for the first time, I thought that his remarkable eloquence concealed a certain lack of logic. He appeared to be arguing that the European Parliament, by virtue of being directly elected, would be able indefinitely to extend its powers. He neglected the fact that we are still directly elected, thereby implying that we should not be able to defend ourselves. That is a total lack of logic.
It is also a complete misunderstanding of the proper situation that was referred to by my right hon. Friend the Member for Knutsford (Mr. Davies)—namely, that we should look upon the two Parliaments not as competitors but as cooperators. There are jobs and duties for each Parliament to perform.
There is the specific duty laid upon the European Parliament by the Treaty of Rome to perform certain functions that are additional to the functions of this Parliament. We have our duties, and they are specified in the Treaty. Both Parliaments have separate functions and both need to be done effectively. Both are involved very much with the control of the Executive, and in our view both can be more effectively carried out by directly elected bodies than by indirectly elected bodies.
The fourth main group of issues to be raised in the discussion in Brussels today and tomorrow is the main subjects of the report of the Select Committee—namely, the size and distribution. These are obviously extremely difficult problems and no final solution will satisfy everyone. However, we believe that the proposals made by the Select Committee are about right.
The date for the direct elections will be May or June 1978. Normally it is right to aim at a particular date. There may be some slippage, but if we do not have a target at which to aim, we shall not shoot accurately. I hope very much

169
that the target of May or June will be achieved.
The duration of the Parliament is put at four years or five years. That seems sensible as between the one and the other. As the Minister of State said, I cannot see very much to choose between the two.
The right hon. Gentleman explained the dual mandate in a different way from that to which we are accustomed— namely, as if it were only a matter of allowing people to become Members of the European Parliament if already Members of a national Parliament. I have always looked at this problem in the light of the burden falling upon those who are Members of both Parliaments. It would seem that the burden of being a Member of both Parliaments would be too much to carry. I do not seek to lay down firm rules and I do not seek formally to disbar as I should prefer to leave the matter optional, but we should make it clear that anyone who tries to undertake both duties simultaneously is taking on more than lie should judiciously attempt.
Mrs. Elaine Kellett-Bowman: Does my right hon. Friend think that as time goes on it may well be that most of the Members of the European Parliament will not have served in this House? Does he think that desirable? Does he think it preferable that someone should have served in this House and acquired the feeling of the place before moving on?
Mr. Maudling: I entirely agree. I was commenting on simultaneous membership of the two Parliaments. My hon. Friend has a very good point.
The main argument in this debate has been not about the report of the Select Committee but about the principle of direct elections. The old argument has been rehearsed that we have heard so often—namely, whether the elections should take place in principle. It was made quite clear by the Prime Minister when the Select Committee was set up, or when the proposal came forward for setting it up, that it could cover every issue with the obvious exception of the Treaty and the obligation to hold such elections. The Select Committee faith-
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fully reported within that context, and this House should approve its report.
9.45 p.m.
The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson): May I at the outset refer to the point raised at the beginning of this debate by the hon. Member for Mid-Oxon (Mr. Hurd) and which has been referred to by a number of hon. Members? Since the hon. Member for Mid-Oxon raised his point of order, we have been in touch with Brussels again. Of course there has been some discussion about direct elections this evening, but the Prime Minister told his colleagues that he could not subscribe to any decision until he had received news of tonight's House of Commons debate. I understand that the European Council is returning to the subject tomorrow. I am sure that this news will reassure all those who have been concerned about this issue.
Having made the position clear to the House, I should like to begin by congratulating my right hon. Friend the Member for Dartford (Mr. Irving) on having introduced the debate. He and the Select Committee have done an excellent job, and this House is deeply indebted to them for the thoroughness and speed with which they have dealt with this part of their task. I am sure that that is something in which all hon. Members will join, perhaps with the exception of the hon. Member for Banbury (Mr. Marten), who I think reduced somewhat the standard of debate by the type of terminology he used in his reference to the Select Committee. With that odd exception, I am sure that the whole House is grateful to the Select Committee for the speed and thoroughness with which it did its job.
May I now deal with the opening remarks of the hon. Member for Mid-Oxon? I have already dealt with his assertions concerning the decisions which he alleged had been made. He was, however, I thought, rather churlish in his complaint about what he described as the perfunctory handling by the Government of the European business in general and direct elections in particular.
Mr. Hurd: Before the hon. Gentleman proceeds with that point, would he comment on the proposed total number of

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seats and the United Kingdom total which I gave? Are those correct?
Mr. Tomlinson: I am not in a position to comment on any numbers. There have been all kinds of suggestions. [Interruption.] An hon. Member shouts from a sedentary position that it was on the television. If I were to subscribe to the truth of everything that has been seen and heard on television, there might be conflicting views about what the truth is. I have made a clear statement and I stick to it. I can understand the hon. Member for Mid-Oxon wanting to get away from his point. I think he was rather churlish in his complaint about the Government's handling of European business and the direct elections as being somewhat perfunctory. That suggestion I reject in its entirety, and I am sure that hon. Members will reject it as being the basic nonsense that it is.
So far we have had a two-day debate on the Green Paper, a debate in which hon. Members took perhaps a little less interest than they have in the affairs of today. But we had a full two-day debate. The fact that there was a delay in the Select Committee's starting its work almost contradicts the other observations which the hon. Member for Mid-Oxon made when he said that this House was not exercising control over the Government. It was, in fact, that very process, the exercise of control by this House over the Government, which led to the long delay between the desire of the Government to set up the Select Committee and the House in fact setting it up.
Once the House set up the Select Committee, it got down to its work with remarkable speed, the resolution having been passed on 17th May, and the Select Committee having its first meeting the following day. For that reason, I suggest that the whole House should be grateful to the Select Committee for the work which it has done.
The debate on the Report of the Select Committee is being held today instead of last Friday, and here again several hon. Members criticised the Government for their handling of the business. That debate was arranged for last Friday largely because of representations made by many hon. Members on
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both sides of the House, Members concerned partly because of their European commitments and wishing to be here so that they could take part. The Government readily acceded to the representations made to them, and that is why the debate was to take place on Friday.
It ill behoves hon. Members to criticise the Government for the fact that that debate did not take place when the truth is that, far from the Government's preventing it, it was the capricious behaviour of a limited number of hon. Members on the business of Thursday night that prevented Friday's debate from taking place. That ought to be made clear and understood.
Mr. Maudling: Was it not entirely within the Government's power to preserve Friday's business?
Mr. Tomlinson: I have no wish to become involved in a debate about what happened on Thursday night, but I must point out that if the Opposition Front Bench, which supported the principle of that legislation, had been able to keep a capricious group of its own Back Benchers in hand, we should have had the Government's business on the Friday.
Several hon. Members Several hon. Members rose—
Mr. Speaker: Order. The Minister is not giving way, and he must be allowed to continue.
Mr. Patrick Cormack: Will the Minister give way?
Mr. Tomlinson: I wish now to turn to the principle of direct elections. The commitment to direct elections contained in the EEC Treaty has been public knowledge for many years. Article 138 of the Treaty of Rome requires that the European Assembly draw up proposals for election by direct universal suffrage, and that point was admirably underlined by the right hon. Member for Knutsford (Mr. Davies) in his speech. The Government's legal advisers are in no doubt that such a commitment exists, and the Government have made clear that they accept that commitment.
The commitment is, I believe, clearly endorsed by British membership of the Community on the basis of the treaties, treaties which were endorsed by Parliament and the British people in the process of the referendum and the decisions of

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the House following the referendum. The Government have involved Parliament as closely as possible in consideration of the question of direct elections both in the debate on the Green Paper and in the other steps taken since.
Mr. William Clark: Will the Minister give way?
Mr. Tomlinson: In the very limited time available to me, I wish now to refer to the question of the procedures for the subsequent discussion of direct elections. This was referred to by my right hon. Friend the Minister of State when he opened the debate. Let me make as clear as I can, since a number of hon. Members seem either not to accept what he said or to have failed to understand it, that on 29th March in the House the Prime Minister set out the procedures which the Government proposed to follow if there were to be a convention.
Before ratification, the Government would seek approval of the draft Order in Council under Section 1(3) of the European Communities Act. This would require approval by affirmative resolution of both Houses. In addition, Parliament would be given the opportunity to approve the necessary implementing legislation. This also would take place before ratification of the convention.
Should we wind up with a different form of legal instrument, I assure the House that the Government will provide Parliament with similar opportunities to consider the scheme and the implementing legislation before it comes into force. That is an assurance which hon. Members were seeking, and it is an assurance clearly and unequivocally given.
Mr. Kevin McNamara Mr. Kevin McNamara (Kingston upon Hull, Central) rose—
Mr. Tomlinson: Now, on the question of power for the European Assembly—
Mr. McNamara Mr. McNamara rose—
Mr. Speaker: Order. The Minister is not giving way. He must be allowed to continue.
Hon. Members: Give way.
Mr. Tomlinson: I come now to the question of powers for the European Assembly. This subject also has been referred to by a number of hon. Members on the assumption that somehow the pro-
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cess of direct elections will endow the European Assembly with a vast array of new powers. In this connection I quote from what the Prime Minister said in the two-day debate on the Green Paper:
"These powers will be subjected to the process of discussion, and when public opinion or opinion in this House decides that a power is worth transferring it will be transferred, but not before then. This Government have no plans for giving the Assembly further powers" —[Official Report, 29th March 1976; Vol. 908, c. 914.]
That was clearly stated in the debate on the Green Paper and remains the position today.
My hon. Friend the Member for Newham, South (Mr. Spearing) spoke of a lack of clarity about a commitment to direct elections. He quoted some Questions asked in the House in 1975. I make it clear that in his researches he did not go back far enough. Let me draw his attention to the date of 29th January 1975 when my right hon. Friend the Minister of State, in reply to a question put by the right hon. Member for Saffron Walden (Sir P. Kirk), made it quite clear —column 389—that the principle of direct elections was established.
Mr. Spearing: Will the Minister say why that was not made plain in the Government leaflet at the time of the referendum?
Mr. Tomlinson: It surely is abundantly clear to anybody with the capacity to read Article 138 that implicit in the referendum and in the Treaty of Accession was our acceptance of the principle of direct elections laid down in the Treaty of Rome.
My hon. Friend the Member for Farnworth (Mr. Roper) made an admirable contribution to the debate. Let me try to reply to his specific question by saying that the Government will want to hear the views of the Select Committee concerning any addition of Government funds to ensure an effective election campaign. I hope that the Second Report of the Select Committee will address itself to these many other questions that fall for decision at national level.
A large number of accusations have been levelled at the Government for treating this House badly. One of the complaints was made by the hon. and learned Member for Montgomery (Mr.

175
Hooson). I hope that he will accept that the Government's intentions have been clear—namely, to obtain the fullest debate possible before a decision on direct elections is made.
Nobody was surprised when the hon. and learned Gentleman in the remainder of his speech made his customary plea for proportional representation. But I was surprised when he went on to talk about the need for care in the allocation of numbers. If there was one thing above all else that was made clear in the discussion on direct elections it was that great care should be taken to make sure that all parts of the United Kingdom received adequate representation.
The hon. Member for Richmond, Surrey (Sir A. Royle) said that we should take the European dimension much more
seriously. Surely the care and attention given by the Select Committee to the subject of direct elections should have led people to debate the issues rather than to seek in this debate to rehearse well-worn speeches as to the basis of our membership of the EEC. Those decisions have been clearly taken and were supported by the vast majority in this House. They were irreversible decisions and decisions which have been clearly—
Mr. Jay Mr. Jay rose in his place and claimed to move That the Question be now put.
Question put, That the Question be now put:—
The House divided: Ayes 109, Noes 196.

Division No. 233.]

AYES

9.59 p.m.]

Ashton, Joe

Heffer, Eric S.

Parry, Robert

Atkins, Ronald (Preston N)

Hooley, Frank

Pavitt, Laurie

Atkinson, Norman

Hoyle, Doug (Nelson)

Powell, Rt Hon J. Enoch

Bell, Ronald

Hughes, Roy (Newport)

Price, C. (Lewisham W)

Bennett, Andrew (Stockport N)

Hutchison, Michael Clark

Reid, George

Body, Richard

Irving, Charles (Cheltenham)

Richardson, Miss Jo

Boyson, Dr Rhodes (Brent)

Jay, Rt Hon Douglas

Roberts, Gwilym (Cannock)

Brotherton, Michael

Jeger, Mrs Lena

Rodgers, George (Chorley)

Buchan, Norman

Kelley, Richard

Rooker, J. W.

Callaghan, Jim (Middleton & P)

Kerr, Russell

Sedgemore, Brian

Canavan, Dennis

Kilroy-Silk, Robert

Selby, Harry

Carmichael, Neil

Kinnock, Neil

Short, Mrs Renée (Wolv NE)

Castle, Rt Hon Barbara

Lamble, David

Sillars, James

Clark, Alan (Plymouth, Sutton)

Lamond, James

Silverman, Julius

Colquhoun, Ms Maureen

Latham, Arthur (Paddington)

Skinner, Dennis

Cook, Robin F. (Edin C)

Leadbitter, Ted

Smith, Dudley (Warwick)

Corbett, Robin

Lee, John

Swain, Thomas

Cormack, Patrick

Lewis, Kenneth (Rutland)

Taylor, R. (Croydon NW)

Crawford, Douglas

Lewis, Ron (Carlisle)

Taylor, Teddy (Cathcart)

Crowther, Stan (Rotherham)

Lipton, Marcus

Thomas, Dafydd (Merioneth)

Cryer, Bob

Litterick, Tom

Thompson, George

Cunningham, G. (Islington S)

McNair-Wllson, M. (Newbury)

Thome, Stan (Preston South)

Dean, Joseph (Leeds West)

McNamara, Kevin

Tuck, Raphael

Douglas-Hamilton, Lord James

Madden, Max

Urwin, T. W.

Dunwoody, Mrs Gwyneth

Marshall, Jim (Leicester S)

Watt, Hamish

Durant, Tony

Marten, Nell

Welsh, Andrew

Evans, loan (Aberdare)

Maynard, Miss Joan

Wigley, Dafydd

Evans, John (Newton)

Mendelson, John

Wilson, Gordon (Dundee E)

Fell, Anthony

Mikardo, Ian

Wilson, William (Coventry SE)

Flannery, Martin

Miller, Dr M. S. (E Kilbride)

Winterton, Nicholas

Fletcher, Ted (Darlington)

Miller, Mrs Millie (Ilford N)

Wise, Mrs Audrey

Forrester, John

Moate, Roger

Woof, Robert

George, Bruce

Molloy, William

Young, David (Bolton E)

Gould, Bryan

More, Jasper (Ludlow)

Gow, Ian (Eastbourne)

Newens, Stanley

TELLERS FOR THE AYES:

Gray, Hamish

Noble, Mike

Mr. Arthur Lewis and

Hart, Rt Hon Judith

Orbach, Maurice

Mr. Ron Thomas.

Hatton, Frank

Ovenden, John

NOES

Abse, Leo

Bidwell, Sydney

Brown, Ronald (Hackney S)

Allaun, Frank

Bishop, E. S.

Buchanan, Richard

Anderson, Donald

Blenkinsop, Arthur

Butler, Mrs Joyce (Wood Green)

Archer, Peter

Boardman, H.

Campbell, Ian

Armstrong, Ernest

Booth, Rt Hon Albert

Cant, R. B.

Ashley, Jack

Boothroyd, Miss Betty

Carter, Ray

Atkins, Ronald (Preston N)

Bottomley, Rt Hon Arthur

Carter-Jones, Lewis

Barnett, Rt Hon Joel (Heywood)

Boyden, James (Bish Auck)

Cartwright, John

Bates, Alf

Bradley, Tom

Clemitson, Ivor

Bean, R. E.

Bray, Dr Jeremy

Cocks, Michael (Bristol S)

Beith, A. J.

Brown, Hugh D. (Provan)

Cohen, Stanley

Benn, Rt Hon Anthony Wedgwood

Brown, Robert C. (Newcastle W)

Coleman, Donald

Concannon, J. D.

Jackson, Colin (Brighouse)

Radice, Giles

Cox, Thomas (Tooting)

Jackson, Miss Margaret (Lincoln)

Roberts Albert (Normanton)

Craigen, J. M. (Maryhill)

Janner, Greville

Robinson, Geoffrey

Cronin, John

John, Brynmor

Roderick, Caerwyn

Cunningham, Dr J. (Whiteh)

Johnson, James (Hull West)

Rodgers, William (Stockton)

Davidson, Arthur

Johnson, Walter (Derby S)

Roper, John

Davies, Denzil (Llanelli)

Jones, Barry (East Flint)

Rose, Paul B.

Davies, Ifor (Gower)

Jones, Dan (Burnley)

Ross, Stephen (Isle of Wight)

Davis, Clinton (Hackney C)

Judd, Frank

Ross, Rt Hon W. (Kilmarnock)

Deakins, Eric

Kaufman, Gerald

Rowlands, Ted

Dell, Rt Hon Edmund

Lamborn, Harry

Sandelson, Neville

Dempsey, James

Lestor, Miss Joan (Eton & Slough)

Shaw, Arnold (Ilford South)

Doig, Peter

Lever, Rt Hon Harold

Sheldon, Robert (Ashton-u-Lyne)

Dormand, J. D.

Lomas, Kenneth

Shore, Rt Hon Peter

Douglas-Mann, Bruce

Luard, Evan

Short, Rt Hon E. (Newcastle C)

Drayson, Burnaby

Lyons, Edward (Bradford W)

Silkin, Rt Hon John (Deptford)

Duffy, A. E. P.

Mabon, Dr J. Dickson

Silkin, Rt Hon S. C. (Dulwich)

Dunn, James A.

McCartney, Hugh

Small, William

Eadie, Alex

McElhone, Frank

Smith, John (N Lanarkshire)

Edge, Geoff

Macfarlane, Nell

Snape, Peter

Edwards, Robert (Wolv SE)

McGuire, Michael (Ince)

Stallard, A. W.

Ellis, John (Brigg & Scun)

Mackenzie, Gregor

Steel, David (Roxburgh)

Ellis, Tom (Wrexham)

Mackintosh, John P.

Stoddart, David

English, Michael

Maciennan, Robert

Stott, Roger

Evans, Fred (Caerphilly)

McMillan, Tom (Glasgow C)

Strang, Gavin

Ewing, Harry (Stirling)

Magee, Bryan

Strauss, Rt Hon G. R.

Fernyhough, Rt Hon E.

Mahon, Simon

Summerskill, Hon Dr Shirley

Fletcher, Raymond (Ilkeston)

Mallalieu, J. P. W.

Thomas, Jeffrey (Abertillery)

Foot, Rt Hon Michael

Marks, Kenneth

Thomas, Mike (Newcastle E)

Ford, Ben

Marquand, David

Thorpe, Rt Hon Jeremy (N Devon)

Fowler, Gerald (The Wrekin)

Marshall, Dr Edmund (Goole)

Tierney, Sydney

Fraser, John (Lambeth, N'w'd)

Mason, Rt Hon Roy

Tinn, James

Garrett, John (Norwich S)

Meacher, Michael

Tomlinson, John

Gilbert, Dr John

Mellish, Rt Hon Robert

Varley, Rt Hon Eric G.

Ginsburg, David

Millan, Bruce

Wainwright, Edwin (Dearne V)

Golding, John

Moonman, Eric

Walden, Brian (B'ham, L'dyw'd)

Gourlay, Harry

Morris, Alfred (Wythenshawe)

Walker, Harold (Doncaster)

Graham, Ted

Morris, Charles R. (Openshaw)

Walker, Terry (Kingswood)

Grant, Anthony (Harrow, C)

Morris, Rt Hon J. (Aberavon)

Ward, Michael

Grant, George (Morpeth)

Moyle, Roland

Watkins, David

Grimond, Rt Hon J.

Mulley, Rt Hon Frederick

Weitzman, David

Grocott, Bruce

Murray, Rt Hon Ronald King

White, Frank R. (Bury)

Hamilton, W. W. (Central Fife)

Oakes, Gordon

White, James (Pollok)

Hardy, Peter

Ogden, Eric

Willey, Rt Hon Frederick

Harrison, Walter (Wakefield)

O'Halloran, Michael

Williams, Alan (Swansea W)

Hattersley, Rt Hon Roy

Orme, Rt Hon Stanley

Williams, Alan Lee (Hornch'ch)

Hayman, Mrs Helene

Owen, Dr David

Williams, Rt Hon Shirley (Hertford)

Healey, Rt Hon Denis

Padley, Waiter

Williams, Sir Thomas

Hooson, Emlyn

Park, George

Wilson, Alexander (Hamilton)

Horam, John

Parker, John

Woodall, Alec

Huckfield, Les

Peart, Rt Hon Fred

Wrigglesworth, Ian

Hughes, Rt Hon C. (Anglesey)

Pendry, Tom

Hughes, Robert (Aberdeen N)

Perry, Ernest

TELLERS FOR THE NOES:

Hunter, Adam

Prentice, Rt Hon Reg

Mr. James Hamilton and

Irvine, Rt Hon Sir A. (Edge Hill)

Price, William (Rugby)

Mr. Joseph Harper

Irving, Rt Hon S. (Dartford)

Question accordingly negatived.

It being after Ten o'clock, the motion for the Adjournment lapsed, without Question put.

BUSINESS OF THE HOUSE
Motion made, and Question put,

The Government Business may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Tinn.]

The House divided: Ayes 280, Nose 70.

Division No. 234.]

AYES

[10.13 p.m.

Abse, Leo

Dunn, James A.

Kerr, Russell

Allaun, Frank

Dunwoody, Mrs Gwyneth

Kilroy-Silk, Robert

Anderson, Donald

Eadie, Alex

Kinnock, Nell

Archer, Peter

Edge, Geoff

Lambie, David

Armstrong, Ernest

Edwards, Robert (Wolv SE)

Lamborn, Harry

Ashley, Jack

Ellis, John (Brigg & Scun)

Lamond, James

Ashton, Joe

Ellis, Tom (Wrexham)

Latham, Arthur (Paddington)

Atkins, Ronald (Preston N)

English, Michael

Leadbitter, Ted

Atkinson, Norman

Evans, Fred (Caerphilly)

Lee, John

Barnett, Guy (Greenwich)

Evans, loan (Aberdare)

Lestor, Miss Joan (Eton & Slough)

Barnett, Rt Hon Joel (Heywood)

Evans, John (Newton)

Lewis, Arthur (Newham N)

Bates, Alt

Ewing, Harry (Stirling)

Lewis, Ron (Carlisle)

Bean, R. E.

Fernyhough, Rt Hon E.

Lipton, Marcus

Beith, A. J.

Flannery, Martin

Litterlck, Tom

Benn, Rt Hon Anthony Wedgwood

Fletcher, Raymond (Ilkeston)

Lomas, Kenneth

Bennett, Andrew (Stockport N)

Fletcher, Ted (Darlington)

Loyden, Eddie

Bidwell, Sydney

Foot, Rt Hon Michael

Luard, Evan

Bishop, E. S.

Ford, Ben

Lyons, Edward (Bradford W)

Blenkinsop, Arthur

Forrester, John

Mabon, Dr J. Dickson

Boardman, H.

Fowler, Gerald (The Wrekin)

McCartney, Hugh

Booth, Rt Hon Albert

Fraser, John (Lambeth, N'w'd)

McElhone, Frank

Boothroyd, Miss Betty

Garrett, John (Norwich S)

McGuire, Michael (Ince)

Bottomley, Rt Hon Arthur

George, Bruce

Mackenzie, Gregor

Boyden, James (Bish Auck)

Gilbert, Dr John

Mackintosh, John P.

Bradley, Tom

Ginsburg, David

Maclennan, Robert

Bray, Dr Jeremy

Golding, John

McMillan, Tom (Glasgow C)

Brown, Hugh D. (Provan)

Gould, Bryan

McNamara, Kevin

Brown, Robert C. (Newcastle W)

Gourlay, Harry

Madden, Max

Brown, Ronald (Hackney S)

Grant, George (Morpeth)

Magee, Bryan

Buchan, Norman

Grant, John (Islington C)

Mahon, Simon

Buchanan, Richard

Grimond, Rt Hon J.

Mallalieu, J. P. W.

Butler, Mrs Joyce (Wood Green)

Grocott, Bruce

Marks, Kenneth

Callaghan, Jim (Middleton & P)

Hamilton, James (Bothwell)

Marquand, David

Campbell, Ian

Hamilton, W. W. (Central Fife)

Marshall, Dr Edmund (Goole)

Canavan, Dennis

Hardy, Peter

Marshall, Jim (Leicester S)

Cant, R. B.

Harrison, Walter (Wakefield)

Mason, Rt Hon Roy

Carmichael, Neil

Hart, Rt Hon Judith

Maynard, Miss Joan

Carter, Ray

Hattersley, Rt Hon Roy

Meacher, Michael

Carter-Jones, Lewis

Hatton, Frank

Mellish, Rt Hon Robert

Cartwright, John

Hayman, Mrs Helene

Mendelson, John

Castle, Rt Hon Barbara

Healey, Rt Hon Denis

Mikardo, Ian

Clemitson, Ivor

Keffer, Eric S.

Millan, Bruce

Cocks, Michael (Bristol S)

Hooley, Frank

Miller, Dr M. S. (E Kilbride)

Cohen, Stanley

Hooson, Emlyn

Miller, Mrs Millie (Ilford N)

Coleman, Donald

Horam, John

Molloy, William

Colquhoun, Ms Maureen

Hoyle, Doug (Nelson)

Moonman, Eric

Concannon. J. D.

Huckfield, Les

Morris, Alfred (Wythenshawe)

Cook, Robin F. (Edin C)

Hughes, Rt Hon C. (Anglesey)

Morris, Charles R. (Openshaw)

Corbett, Robin

Hughes, Mark (Durham)

Morris, Rt Hon J. (Aberavon)

Cox, Thomas (Tooting)

Hughes, Robert (Aberdeen N)

Moyle, Roland

Craigen, J. M. (Maryhill)

Hughes, Roy (Newport)

Mulley, Rt Hon Frederick

Cronin, John

Hunter, Adam

Murray, Rt Hon Ronald King

Crowder, F. P.

Irvine, Rt Hon Sir A. (Edge Hill)

Newens, Stanley

Cryer, Bob

Irving, Rt Hon S. (Dartford)

Noble, Mike

Cunningham, G. (Islington S)

Jackson, Colin (Brighouse)

Oakes, Gordon

Cunningham, Dr J. (Whiteh)

Jackson, Miss Margaret (Lincoln)

Ogden, Eric

Davidson, Arthur

Janner, Greville

O'Halloran, Michael

Davies, Denzil (Llanelli)

Jay, Rt Hon Douglas

Orbach, Maurice

Davies, Ifor (Gower)

Jeger, Mrs Lena

Orme, Rt Hon Stanley

Davis, Clinton (Hackney C)

John, Brynmor

Ovenden, John

Deakins, Eric

Johnson, James (Hull West)

Owen, Dr David

Dean, Joseph (Leeds West)

Johnson, Walter (Derby S)

Padley, Walter

Dell, Rt Hon Edmund

Johnston, Russell (Inverness)

Park, George

Dempsey, James

Jones, Barry (East Flint)

Parker, John

Doig, Peter

Jones, Dan (Burnley)

Parry, Robert

Dormand, J. D.

Judd, Frank

Pavitt, Laurie

Douglas-Mann, Bruce

Kaufman, Gerald

Peart, Rt Hon Fred

Duffy, A. E. P.

Kelley, Richard

Pendry, Tom

Perry, Ernest

Silkin, Rt Hon S. C. (Dulwich)

Walden, Brian (B'ham, L'dyw'd)

Prentice, Rt Hon Reg

Silverman, Julius

Walker, Harold (Doncaster)

Price, C. (Lewishem W)

Skinner, Dennis

Walker, Terry (Kingswood)

Price, William (Rugby)

Small, William

Ward, Michael

Radice, Giles

Smith, John (N Lanarkshire)

Watkins, David

Richardson, Miss Jo

Snape, Peter

Watkinson, John

Roberts Albert (Normanton)

Spearing, Nigel

Weetch, Ken

Roberts, Gwilym (Cannock)

Stallard, A. W.

Weitzman, David

Robinson, Geoffrey

Steel, David (Roxburgh)

White, Frank R. (Bury)

Roderick, Caerwyn

Stoddart, David

White, James (Pollok)

Rodgers, George (Chorley)

Stott, Roger

Willey, Rt Hon Frederick

Rodgers, William (Stockton)

Strang,. Gavin

Williams, Alan (Swansea W)

Rooker, J. w.

Strauss, Rt Hon G. R.

Williams, Alan Lee (Hornch'ch)

Roper, John

Summerskill, Hon Dr Shirley

Williams, Rt Hon Shirley (Hertford)

Rose, Paul B.

Swain, Thomas

Williams, Sir Thomas

Ross, Stephen (Isle of Wight)

Thomas, Jeffrey (Abertillery)

Wilson, Alexander (Hamilton)

Ross, Rt Hon W. (Kilmarnock)

Thomas, Mike (Newcastle E)

Wilson, William (Coventry SE)

Rowlands, Ted

Thomas, Ron (Bristol NW)

Wise, Mrs Audrey

Sandelson, Neville

Thorne, Stan (Preston South)

Woodall, Alec

Sedgemore, Brian

Thorpe, Rt Hon Jeremy (N Devon)

Woof, Robert

Selby, Harry

Tierney, Sydney

Wrigglesworth, Ian

Shaw, Arnold (Ilford South)

Tinn, James

Young, David (Bolton E)

Sheldon, Robert (Ashton-u-Lyne)

Tomlinson, John

Shore, Rt Hon Peter

Tuck, Raphael

TELLERS FOR THE AYES:

Short, Rt Hon E. (Newcastle C)

Urwin, T. W.

Mr. Ted Graham and

Short, Mrs Renée (Wolv NE)

Varley, Rt Hon Eric G.

Mr. Joseph Harper.

Silkin, Rt Hon John (Deptford)

Wainwright, Edwin (Dearne V)

NOES

Bell, Ronald

Harvie Anderson, Rt Hon Miss

Renton, Tim (Mid-Sussex)

Body, Richard

Hawkins, Paul

Shaw, Giles (Pudsey)

Bottomley, Peter

Hutchison, Michael Clark

Shepherd, Colin

Bowden, A. (Brighton, Kemptown)

Irving, Charles (Cheltenham)

Sims, Roger

Brotherton, Michael

Kaberry, Sir Donald

Skeet, T. H. H.

Budgen, Nick

Kellett-Bowman, Mrs Elaine

Smith, Dudley (Warwick)

Burden, F. A.

Kershaw, Anthony

Spence, John

Clarke, Kenneth (Rushcliffe)

Knight, Mrs Jill

Sproat, lain

Clegg, Walter

Lane, David

Stanbrook, Ivor

Cope, John

Latham, Michael (Melton)

Taylor, R. (Croydon NW)

Cordie, John H.

Lawrence, Ivan

Thomas, Dafydd (Merioneth)

Crawford, Douglas

Lloyd, Ian

Thompson, George

Critchley, Julian

McNair-Wilson, M. (Newbury)

Wakeham, John

Dodsworth, Geoffrey

Marshall, Michael (Arundel)

Wall, Patrick

Drayson, Burnaby

Maxwell-Hyslop, Robin

Watt, Hamish

Durant, Tony

Mayhew, Patrick

Welsh, Andrew

Fell, Anthony

Moate, Roger

Wigley, Dafydd

Fletcher-Cooke, Charles

More, Jasper (Ludlow)

Wilson, Gordon (Dundee E)

Gilmour, Sir John (East Fife)

Morrison, Charles (Devizes)

Winterton, Nicholas

Glyn, Dr Alan

Newton, Tony

Young, Sir G. (Ealing, Acton)

Gow, Ian (Eastbourne)

Nott, John

Gower, Sir Raymond (Barry)

Osborn, John

TELLERS FOR THE NOES:

Griffiths, Eldon

Page, John (Harrow West)

Mr. Patrick Cormack and

Hall, Sir John

Rathbone, Tim

Mr. Alexander Fletcher.

Hannam, John

Reid, George

Question accordingly agreed to

DEVELOPMENT LAND TAX BILL
Order for Third Reading read.
10.23 p.m.
The Minister of State, Treasury (Mr. Denzil Davies): I beg to move, That the Bill be now read the Third time.
We have had long debates on the Bill in Committee and on the Floor of the House. I think that hon. Members will agree that we have attempted to get the tax as right technically as possible. I am grateful to Opposition Members who have put forward a number of constructive suggestions. We also consulted widely with representative bodies both before and after the Bill was introduced.
Moreover, we have gone to considerable lengths to keep the public informed of our proposals as they evolved. The Inland Revenue issued a statement in February 1975 which described the intended structure of the tax in some detail. The White Paper "Development Land Tax" contained draft clauses with explanatory notes. It is extremely unusual for the introduction of a major new tax to be preceded by the publication of draft clauses, thus enabling interested parties to make representations at what may be called the pre-legislative stage. I believe that the experiment has been a success. Finally, there are the notes which came out with the Bill. All in all, it has been a most effective two-way process of consultation and discussion.
The Bill as published reflected the first fruits of this process. The amount of the exempt slice of development value realised was raised from £5,000 per financial year to £10,000; and for the three years up to 1979 there was to be a reduced rate of 663 per cent. for the next £150,000 slice of development value realised each year. These measures are designed to encourage owners to bring land forward for development.
During Committee stage, a number of changes were made. I shall not mention all of them, but some should be mentioned. For example, in response to representations, we provided a simplified form of special addition to relevant improvements—in the form of a "further
184
addition" to base A. This will be of especial help to industrial estate developers. Provisions were made for company amalgamations and reconstructions, and also for disposals which take place on the incorporation of a business. To deal with amalgamations and reconstructions, what is now Clause 22 provides broadly that where a scheme of amalgamation or reconstruction involves the disposal of an interest in land that disposal will be treated as if it were made for no consideration. This ensures that no liability will arise until the land is developed or disposed of to a third party.
Again, following a commitment given in Committee, we were able on Report to bring forward an amendment providing relief where, as part of the transfer of his business to a company, a person disposes of an interest in land to the company and receives shares as, or as part of, the consideration. In such circumstances, payment of some or all of the DLT may be postponed for up to eight years. DLT will, however, become payable earlier if in the meantime either the original owner disposes of the shares received as consideration or the new corporate owner disposes of the land. This I think is an important concession in an area where it is very difficult to legislate adequately for each individual case.
There were other improvements, too, which I shall mention more briefly. We ensured, for instance, that sale and leaseback transactions do not trigger deferred liability on an industrial development. Again, certain anti-avoidance provisions appeared on closer examination to be too stringent. These were corrected. One instance is, in particular, the change on a company leaving a group. This was modified so that the charge applies only where the interest in land owned by the departing group member was acquired after 12th September 1974.
Many of the amendments made on Report originated from suggestions made in Committee. For example, it had there been argued that as the Bill stood there was a danger of double taxation where a project was commenced on land subject to an incumbrance; where, for example, the land to be developed was subject to a valuable right of way or a restrictive covenant. This was remedied on Report by providing that incumbrance holders are not taxed until they receive some money

185
for giving up their rights. At that time the owner gets a corresponding credit.
There was also discussion of the definition of a major interest in the context of a deemed disposal. The Bill originally provided that a reversion on a lease with 50 years to run at the time of the deemed disposal should be a major interest. Following the Committee stage debates, this period was reduced to 35 years.
So far as private residences are concerned, we extended the exemption to a house occupied by a dependent relative, and brought the area rule into line with that applying for capital gains tax. Thus, the area which may qualify for exemption is now one acre or such larger areas as the Commissioners regard as appropriate. On a rather similar point, the exemption for development of a house for occupation by an adult member of the owner's family was also extended to cover a house for occupation by a dependent relative.
During Committee, we promised to look again at the two-year time limit in Clause 18, and, as a result, we brought forward on Report an amendment increasing it to three years. This means that a developer who paid full value for land will have three years to begin his project with the assurance that no DLT will arise.
The provisions for giving relief where both DLT and another tax are charged were improved and the circumstances in which such relief could be claimed were widened.
We were also able, partly in response to some interesting speeches by the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn), to put the Bill in slightly better shape in relation to Scots property law. I think that he will agree that we have gone a long way to meeting some of the legitimate points which he made about the interaction between Scots property law and English property law.
One change was mentioned in a leader in today's Financial Times, which, as usual, got it wrong. As the Bill stood, the charge on first lettings imposed by the Finance Act 1974 was to be discontinued in respect of first lettings after the appointed day, with the important proviso that the first lettings charge was to be preserved where relevant development had been started before that day.
186
When we discussed this in Committee, I accepted that this could mean that developers might be discouraged from starting work before the appointed day. We dealt with this on Report by providing that the first letting charge would not apply if the relevant development was commenced on or after 18th May 1976—the date of the Committee discussion. This means that developers can feel free to get ahead with their developments in the knowledge that the charge will not bite on a future letting. Various changes designed to help the taxpayer were also made to the administration provisions.
Mr. Michael Latham: Before the Minister leaves that point, will he confirm that the appointed day is still to be 1st August? There are rumours about 1st September.
Mr. Davies: I can confirm that, and will deal with it in a moment more fully.
I should like, in particular, to mention here that we have extended the protection given to mortgagees where an authority acquiring an interest in land from a mortgagor makes a DLT deduction from the amount paid to the latter. As the Bill stood, a mortgage taken out on or before 12th September 1974 was protected. Following our Committee discussions, I thought it right to extend that protection to mortgages taken out in the period between 12th September 1974 and lithe May 1976, the date of the Committee debate.
New mortgages, of course, will have to take account of the operation of the tax—we have had quite lengthy debates on this—but I do not believe that the fears which have been expressed in our debate, that normal commercial lending will be inhibited by the arrangements, are well founded.
All this demonstrates at least that we have paid serious attention to suggestions made by hon. Members in debate and by representative bodies outside the House. Where these suggestions would improve the Bill, without running contrary to its basic principles, we have not hesitated to act on them.
I should like briefly to discuss two other issues about which some hon. Gentlemen showed concern in Committee. In the course of the Committee debate

187
on what is now Clause 31, certain Opposition Members suggested that there was insufficient parliamentary control over the contents of Revenue statements of their practice and extra-statutory concessions. This is not peculiar to development land tax but the point was made in Committee.
It might be helpful if I set out the position on this. A statement of practice is a description of the way the Revenue will in the general run of cases interpret and apply particular legal provisions. There is nothing legally binding. The statement is a public statement of the Revenue's understanding of the law and the practical ways it proposes to give effect to that understanding. It is open to any taxpayer, who considers that its application to his own tax liabilities produces a result which cannot be upheld in law, to appeal against the assessment in the usual way.
Extra-statutory concessions, on the other hand, are departures from the strict letter of the law, but obviously always in favour of the taxpayer. Their purpose is to allow relief which is within the spirit of a particular piece of legislation but which, for some reason or other, is not actually given by it.
There is a published list of these extra-statutory concessions which is brought up to date annually. They are all reported to the Comptroller and Auditor General, and are subject to scrutiny by the Public Accounts Committee. They are therefore subject to parliamentary examination and oversight.
The Revenue announced important decisions on tax matters in the form of Press statements. Copies of all their statements are placed in the House Library and so are available to hon. Members.
Mr. Nick Budgen: Will the Minister not agree that it really is a gross abuse of the English language to pretend that that process amounts to parliamentary control?
Mr. Davies: I disagree with the hon. Gentleman. What I said was that all these concessions are announced and that the Comptroller and Auditor General is informed of them. The Public Accounts Committee looks at them in detail, and
188
the report of the PAC is debated in this House. The hon. Gentleman has his opportunity of partaking in those debates.
The other point concerns the fears that were expressed in Committee and again during the Report stage of the Bill that local authorities and other net-of-tax bodies might use their compulsory purchase powers in such a way as to leave vendors with no option but to suffer an excessive DLT deduction. I understand the concern which is felt about this and I have asked the Inland Revenue to watch carefully for any indication that such abuse is taking place. Although I should be reluctant to introduce further complications into the net of tax arrangements, I shall not hesitate to take action if experience shows that modifications are required for the protection of vendors against the unreasonable use of authorities' powers. Such modifications would be made either by the Board of Inland Revenue under its regulatory powers or, if necessary, by legislation.
With experience of the operation of the tax in practice, no doubt other anomalies will occur, but again I assure the House that we shall keep the operation of the tax under review. My right hon. Friend the then Paymaster General announced to the House during his speech on Second Reading our intention that the appointed day for the tax should be 1st August of this year. I confirm that that is still our intention. But our timetable, of course, is subject to the Bill being enacted before 1st August.
The order specifying the appointed day will be made ifand when the Bill Day will be made if and when the Bill receives its Royal Assent. At the same time, the Inland Revenue will issue a Press notice drawing attention to the new obligations imposed upon the vendors and developers of development land. Also, to ensure a smooth start to the arrangements for net of tax purchase, a memorandum giving detailed guidance to local and other authorities will be issued.
I accept that there is a certain difference of opinion amongst certain members of the Opposition with our view about the best way of taxing betterment or development value. But at least it can be said that the tax which we are proposing is a fair and equitable way of dealing with a very difficult problem. It ensures that the majority of what is a windfall gain at the

189
end of the day is returned to the community which created it, and it is returned to the community mainly through the net of tax arrangements.
It is not a tax on the profits of development as such. The profits of development will be taxed, as they are at the moment, under the normal corporation and income tax provisions. This tax is designed to charge windfall gains—
Mr. Nicholas Fairbairn: If the hon. Gentleman is determined to put it forward as a principle that a windfall gain created by the community should be taxed, why does the community promote premium bonds and not tax them? That is truly a windfall gain created by the community.
Mr. Davies: I think both sides will agree that windfall gains created by the community should be taxed. That is a principle accepted on both sides of the House. I do not know whether the hon. and learned Gentleman accepts it, but the official Opposition do and a large number of Opposition Back-Benchers do. Most people will agree that such gains should be taxed.
We have tried to isolate such gains and to tax them under this legislation, leaving the normal profits of development free to be taxed in the normal way. We believe that this is a fair and equitable structure. I invite the House to give the Bill a Third Reading.
10.38 p.m.
Mr. Graham Page: First, I thank the Minister for his kind words about the constructive way in which the Opposition tried to deal with the Bill in Committee and on Report, and I thank him, too, for the way in which on many occasions he accepted our efforts in that respect.
I am sorry that the hon. Gentleman had to confirm to my hon. Friend the Member for Melton (Mr. Latham) that the appointed day was to be 1st August. I had hoped that he would say that, because the Government had got themselves into such a mess over the parliamentary programme, they proposed to put this Bill on the shelf for a few years.
The Government have given birth to a twin-headed monster which is named
190
the Labour policy on land or the land policy of the Labour Party. This Development Land Tax Bill is one of the ugly heads. The other is the Community Land Act. The one cannot be considered in isolation from the other. The levy imposed by the Development Land Tax Bill is intended to become the confiscation compelled by the Community Land Act. The Development Land Tax Bill creates for three years a levy of two-thirds of the development value of land when the land is sold or one starts to develop it. After three years, the levy is to go up to four-fifths of the development value and, some time after that, on the second appointed day under the Community Land Act, it is intended that the levy will become 100 per cent. That is what I call confiscation. It never will become 100 per cent. because before that second appointed day there will be a Conservative Government in office and we shall have repealed the Community Land Act.
Having chopped off one ugly head of this twin-headed Labour Party land policy monster, can the body and the other head survive? Indeed, is there any need for it to survive? There can only be one justification for a development land tax at the penal rate provided for in the Bill and that is that the purpose of the tax is to finance the activities of the local authorities and other statutory bodies who, under the Bill, are given exceptional powers and duties to take land and to operate land schemes which will grossly disrupt town and country—I stress "country"—planning.
It will bog down the process of land transfer. It will impede and obstruct the availability of land for development, except under compulsion, and over the years to come it will be a very great deterrent to development. That certainly needs financing by some such extraordinary taxation, or levy system, as the Bill provides.
Soft words have been spoken by Treasury Ministers about the numbers to be employed but the mind boggles at the swelling of the staffs of local authorities, and the massing of the mandarins of Middlesbrough, to deal with the process of compulsory acquisition of net-of-tax purchases. That will drive the potential land vendors out of the open market. It

191
will stop developers from embarking on constructive enterprises.
That is recognised by the Government. The Bill is strewn with little carrots to try to attract land owners and builders to get on with the job which they would have been getting on with very well had it not been for the provisions of the Bill. The Government have provided little carrots such as the special addition to Base A, the exemption of the first £10,000 of tax, the reduced rate on the first £150,000, the builder's stock-in-trade, the deferment of tax for industry and the exemption for projects shortly after acquisition. These are all very little carrots compared with the rate of tax and the administration of the tax.
They are all temporary palliatives. They are a recognition by the Government of the damage that this tax will do to development. They are temporary because they will last only two or three years, but their real significance lies in the fact that the Government, to use another metaphor, have had to put some sugar on the rather bitter pills in the Bill. The Government have realised that sugar coating is necessary in order to make the Bill swallowable.
Let us look at the short periods for which these palliatives will last. The special addition will last for nine months, the reduced rate for 32 months and the projects after acquisition just for three years. Let us look, particularly, at the limited nature of the provisions for deferment of tax—the roll-over provision. It is limited to industry only. That rollover provision. It is limited to industry only. That roll-over provision should not have been so narrow as to exclude business premises in general.
Roll-over provisions are well recognised in taxation law, and quite rightly, because they encourage the ploughing back of investment. However, in so many ways the Bill is breaching normal taxation principles, particularly that part relating to net-of-tax purchases. It is wholly wrong to put in the hands of all sorts of statutory bodies, albeit they include local authorities, the power to assess development land tax payable by the vendor from whom they are acquiring land and then to deduct that estimated amount from the purchase price. The tax should be properly assessed by the Board of the Inland
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Revenue, paid via the Board of the Treasury, and then allotted to the local councils as the Government may see fit, in accordance with their policies at the time.
The worst innovation in the Bill is the taxation—for first time in centuries—of Churches and charities. I couple with them another community service, pension funds. Apart from the fact that charities, Churches and, to a great extent, pension funds have never been taxed before, the Government have always tried to argue that a justification for the Bill is that the proceeds of the tax should go to organisations which provide services to the community.
By taking money away from, for example, the Churches and giving it to statutory bodies listed in the Bill, the Government have put on record their belief that the Church schools and homes for the elderly and children, the Salvation Army hostels, terminal hospitals and similar services are less worthy than commercial enterprises—undertaken by the Highlands and Islands Development Board or some boating lake built by the Lee Valley Regional Park Authority. It is ideology taken to the extremes of idiocy.
We shall divide against Third Reading. Although a tax upon gains realised from the enhanced value of property resulting solely from the granting of planning permission may be justifiable, the Bill puts the tax at far too high a rate.
This is a transitional measure leading to the 100 per cent. Community Land Act tax which we intend to repeal. The Bill taxes Churches. We shall relieve them of the tax. It taxes value before realisation. We would collect it out of realised gains. It restricts roll-overs to industrial premises. We would extend them to business premises. It allows the tax to be assessed and taken direct by statutory bodies and local authorities. We would require the Treasury to assess, collect and properly allot the proceeds. This is a bad Bill which ought to be rejected.
10.47 p.m.
Mr. Michael Latham: I start, as I do in all housing debates, by declaring my interest as a director of a house-building company.
My right hon. Friend the Member for Crosby (Mr. Page), in his very good

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speech, made it clear that the heart of the Bill appears in Clause 1—the rate of tax of 80 per cent.
Mr. Patrick Cormack: There is no heart in the Bill.
Mr. Latham: I correct myself. I should have said the diseased heart of the Bill is in Clause 1.
Of course, there are easements—the £10,000 exemption in Clause 12, though that is of limited value to housebuilders since it is £10,000 per year and not per site, the 66⅔ per cent. rate for three years in Clause 13, and the special addition provisions in Clause 6.
Ever since Second Reading I have tried to warn that the problem of land supply is not immediate but is likely to become acute in two or three years' time when existing land stocks are exhausted. The market in land at present is artificial. Some vendors are bringing forward land to avoid the 1st August date, but this is obviously a once-and-for-all benefit. Others are so confused by the relative benefits, or otherwise, of being taxed under development gains tax or development land tax that they are holding back altogether. Every housebuilder is finding that. The land is certainly there, but it tends to be land with special circumstances—companies which are closing down, well-advised vendors who reckon they will be better off under development gains tax or secondary sites being released by other builders with cash flow problems. It is not a healthy market, nor one that could support the expansion in the housing programme that we should all like to see.
The Bill, and especially the 80 per cent. rate, represents a grave and drastic threat to the housebuilding programme of the early 1980s—a period which is not very far away. No one in the building world has forgotten that, ultimately, the tax is intended to be 100 per cent. If that day ever comes, private housebuilding in this country is finished. Fortunately, as my right hon. Friend said, wiser counsels should by then prevail.
The Government resist arguments about the Clause 1 rate of tax by pointing to the role of local authorities under the Community Land Act and under Clause 39 and Schedule 7. The Minister for
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Planning and Local Government has even argued that these procedures will allow local authorities to meet the needs of builders. He has argued that they will be better off under the new system than under the old. For example, on 7th November, in an interview with the magazine Estates Times, which he loves to quote, he said:
"Under our proposals, builders will have greater assurance of land supply and less need to use a higher proportion of their capital in holding stocks for future use."
I have no doubt that the right hon. Gentleman genuinely believes that, but no housebuilder does, although it is possible that some property developers might. It is impossible to try to persuade the private housebuilder that he will be able to rely on local councils to provide him effectively and speedily with his basic raw material of land. To the housebuilder, as a result of bitter practical daily experience, the local authority is often the body which causes delays, often expensive delays. The frequently arise because of a combination of ignorance and prejudice against commercial procedures and practice.
I remember once doing business in France in 1973 before I came to the House and saying to some French architects that the English housebuilding problem could be summed in seven words—namely, everyone wants more houses built somewhere else. That is the whole of the problem. There is the endless struggle to reconcile the views of the developer, who wants to build, with the local residents who want to stop him and the local ratepayer who does not want to pay for the sewers on the rates.
Even if the local authorities were keen to follow the Clause 39 procedures, which many emphatically are not, there are overwhelming resource problems standing in their way. Bristol University's School of Advanced Urban Studies has examined the first few weeks of the operation of the land scheme. It points out that the allocation of resources for land acquisition in England is £25 million this financial year, and that £5 million of that is intended to go on administration. But the staff of the school is quoted in the Estates Times of 4th June as predicting a much higher figure than £5 million. I am sure that they will be right.

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For example, take the county of Leicestershire. On 19th May the Planning Officer of the Melton Borough Council wrote to tell me that the total allocation for the county would be about £450,000 this year. The County Secretary confirmed that figure by letter a few days later. The Planning Officer said that £200,000 would go on staff costs, leaving £250,000.
I understand from a further telephone conversation with the Planning Officer only yesterday that the total bids for Leicestershire as a whole are currently £1·5 million. That figure has been reached only after the closest scrutiny. As there are 10 local authorities in Leicestershire, including the county council, no builder will expect much help from that source.
No wonder that the Melton Planning Officer wrote to me to say that the net effect of the stimulation of initial hopes at district level during discussions earlier this year, and the subsequent revaluation of the money likely to be available, has resulted in a considerable amount of time wasted in presenting the intial intentions of the council to the Department of the Environment in December last year, and in particular has resulted in a growing disassociation between districts forced to compete for what now appears to be a pittance.
The whole of the Clause 39 procedure is now increasingly shown to be what we always said it would be—namely, a hollow sham. Even if it were a sensible way to proceed, the idea of placing the local authorities between the land vendor and the builder is that of a sort of sleepy entrepreneur looking for land, with about as much dynamism and experience as displayed by gentle country parson suddenly asked to act as a tooth-and-claw City tycoon. However, there is no money available for it, and thank heavens for that. After all, the idea was half-baked in the first place.
Nor is the profit, if any, likely to be all that impressive. After going through these procedures, the local authority is left with 30 per cent. of any surplus in the land account. In Leicestershire, under the land equalisation and management scheme, half of that 30 per cent. goes to the county council. So the district council will be left with 15 per cent.—
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some bonanza, especially as 15 per cent. of nothing remains nothing.
There are two points to which I want to refer and which I was prevented from raising on Report because I was in bed with a form of 'flu. Under Clause 16 and Schedule 5, exemption is given for builders' stock in trade provided that the land was owned with planning permission before White Paper day. Paragraph 1(1)(b) of Schedule 5 deals with successful appeals. However, because I was ill, I was unable to deal properly with the question of technical refusals. In our Standing Committee debate on 5th May and again on the Floor of the House on 24th June, reported at col. 1923, the Minister, my hon. Friends and I seemed to be talking about different things. The Minister was concerned with the situation where an applicant sorts out details by negotiating, including the withdrawal of the original application and the submission of another. But there is an important field which has been missed.
Let us suppose that the builder submits an application which the local authority rejects. On appeal, the Secretary of State says that the application should be granted except for one factor. "Put that right", he says, "and the planning permission should be granted." So the builder goes away and submits a new application with the defect corrected, and consent is given. That procedure happens regularly. In my judgment it is not covered by the White Paper day protection in Schedule 5. The only way to solve the problem is by withdrawing the Bill or amending the Finance Bill, since nothing can be done to this Bill in another place.
Again Schedule 1, paragraph 5, makes the provision of gaining an exemption if a start is made before the appointed day depend on the planning permission being authorised. Yet it does not deal with the regular situation whereby a local authority has imposed a condition, perhaps regarding landscaping, that forbids the development until the details are agreed on that condition, which may be of a fairly trivial nature. Despite numerous pleas from the Housebuilders Federation, the Government have chosen to deal with this problem not by amending the Bill but by writing to local planning officers asking them to review and

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to remove any minor technical conditions from otherwise fully authorised permissions which are preventing developers from making a start before 1st August. That seems to me to be a complete hand washing procedure by the Government. They recognise the injustice but they leave it to local authorities to sort it out.
What happens if they do not? Will the Minister refund the tax to the developer? Of course he will not. hope that the local government Ombudsman will jump on any cases of local authorities not responding to the Government's letter—not that that will help the developer, who will have no effective redress at all.
If this Bill obtains a Third Reading tonight we come to the effective end of a chapter. The Government will have placed on the statute book the two Bills which the Minister for Planning and Local Government, but no one else, regards as the total solution—
Mr. Tim Sainsbury: The final solution!
Mr. Latham: "The total solution" were the words the Minister used. They will not work. They are based on fundamentally erroneous assumptions that private housing development can take place by bureaucratic impulse rather than by the private decisions of millions of people and the willingness of business men to provide for them. That will be a black day for the housing programme. In a few years time we shall all be back again on the legislative treadmill putting right the errors of Silkin Mark II, just as Parliament in the 1950s dealt with the errors of Silkin Mark I. Much as I like the right hon. Gentleman, I hope that neither he nor his learned brother have any children who will seek to be elected to this House, for to repeat the errors of the fathers even unto the third generation would be more than the housing programme could bear.
11.0 p.m.
Mr. Douglas Crawford: I shall direct my remarks to the general rather than to the particular. The Scottish National Party is not opposed to a development land tax, but we are opposed to this particular development land tax because in one way
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it goes too far and in the other it does not go far enough. The hon. Member for Melton (Mr. Latham) said that the development land tax will soon have a severe effect on the availability of land on the periphery of the cities of England and Scotland. That applies to land for council housing as well as for private housing, and the bona fide building company will be hit pretty hard in both Scotland and England.
We all agree that land speculators must be hammered, and hammered hard. [HON. MEMBERS: "Why?"] Members of the Conservative Opposition ask why land speculators should be hammered. They should be hammered because they are making profits out of something which is unacceptable, and which my party find unacceptable.
Mr. Cormack: Unacceptable to whom?
Mr. Crawford: In Committee, I took it that Members of the Conservative Party were in agreement with the Government side that land speculation was ipso facto bad.
Mr. Fairbairn: I do not know that the hon. Gentleman came to that conclusion, but, assuming he did, is he now saying that anybody who is caught by this Bill as a result of developing his garden in Scotland is making something which he ought not to have?
Mr. Crawford: I said nothing of the kind. I said that in my view—I am sure that I have the agreement of the Government side here—land speculators should be hammered, and hammered hard. If the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) says that land speculators should not be hammered, fair enough.
Returning to the middle ground, I say that this Development Land Tax Bill throws the baby out with what is increasingly becoming non-existent bath water. The right hon. Member for Crosby (Mr. Page) referred to charities and Churches, and I agree entirely with him.
My party takes the view that land should be made available for public and private housing in Scotland and that the Bill will not help. However, having said that, I should add that all of us in the Scottish National Party would have

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liked to see some commitment, even if only in principle, to doing something about the unacceptable face of capitalism as we see it manifested by land ownership in the Highlands, which is hampering development. There are many ways in which what is happening in the Highlands is the worst form of capitalism.
Remembering the parable of the talents, it could be said, perhaps, that Lonhro has converted one talent into 10, but in the Highlands people with one talent have very largely buried that talent in the ground. All too often, the land ownership in the Highlands is bad for the local economy, bad for local culture and bad for the social make-up of the local community. The Bill has very little to say about that. In my view, it does not recognise that there are specific Scottish differences from England.
Mr. Cormack: The tartan dimension.
Mr. Crawford: It uses a sledgehammer to crack a certain nut which has decreased in size over the past few years, and it does not provide a sledgehammer to do something about the socially inequitable ownership of vast tracts of land in Scotland. I say that for two reasons. First, it goes too far as regards land on the periphery of cities, and second, it does not go far enough in dealing with the dreadful socially inequitable ownership of land in the Highlands.
11.4 p.m.
Mr. Tim Sainsbury: The hon. Member for Perth and East Perthshire (Mr. Crawford) spoke of this tax as being a tax on land speculators. In that, as in so many other matters, he is totally mistaken. This is not a tax on land speculators, because, apart from anything else, there are very few land speculators around. It is a tax on developers of land. My hon. Friend the Member for Melton (Mr. Latham) has already authoritatively described how adversely it will affect one type of developer, the house-building developer.
Mr. Crawford: I did not say that it was a tax on land speculators. I said that land speculators should be hammered, and hammered hard.
Mr. Sainsbury: I apologise to the hon. Gentleman if I misinterpreted his remarks.
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I wish to declare an interest, not as a housebuilder but as a director of a commercial firm. If housebuilders have fears about the effects of the Bill, I can assure the Minister that the fears of those in commerce, particularly in hotel and catering are just as great, if not greater.
Perhaps the criticism we have heard so far goes a little too far. I recall on the occasion of the Third Reading of the Community Land Bill congratulating the Minister for Planning and Local Government on his skill in hiding in that measure the Marxist nature of the proposals in his efforts to get the House to accept them. We have since been assured that neither wing of the Labour Party is Marxist.
Congratulations are also due to the Minister on introducing proposals for this particular gain into a "slimline" 192 pages of legislation. Even the current Finance Bill has only 163 pages. It is no mean achievement to have found so much to say on so little at such length. Not only the length of the Bill but its contents are a delight for lovers of mystery stories. Nothing in it is quite what it seems. Right at the beginning we find on page 1, in Clause 1, that we are talking about a tax on
"the realisation of the development value of land".
Innocent people might be taken in by that and believe what it says. But we are not concerned with the realisation of development value because a substantial criticism of the Bill is that it is not a tax on the realisation of development value. One comes to realise that there is a thing called "deemed disposal", when one is assumed to have realised development value and when in fact one has not actually done so.
Throughout the Bill words are given new meanings. It comes as a relief when one gets to page 112, two-thirds of the way through the Bill, to learn that an "article" means an article. It is one of the few occasions in the Bill when a word actually has its normal meaning.
Even in mystery stories, we do not normally have to concern ourselves with what the murder victim has got up to. But in this particular mystery story—on page 12, Clause 9—we find a description of how we shall treat anything done by the deceased. I find this very disturbing.

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It would appear that the concept "You can't take it with you" is not entirely believed by the Treasury.
Congratulations are well in place for whoever was responsible for these 192 pages of masterly English. Indeed, the Minister has congratulated himself effusively on the manner in which he has consulted widely on the Bill. He cast White Papers around with lavish abandon, to the joy of the printers, and attempted to get the matter right technically. One had not to listen long to the remarks of my right hon. Friend the Member for Crosby (Mr. Page) or to my hon. Friend the Member for Melton to realise that he had failed dismally in that task. Perhaps his congratulations would have been more well-earned if he had paid serious attention to the representative bodies. He may have done so occasionally on minor technical matters, but on matters of substance as to the rate of tax the Royal Institution of Chartered Surveyors said.
"We must repeat here with all possible emphasis that an initial rate of 80 per cent. is bound to retard development."
That was the Royal Institution of Chartered Surveyors, and every representative body that has commented on the Bill has criticised the rate of tax. The Minister claims credit for the extent to which he has consulted, but every commercial organisation has been bitterly critical of the concession given to industry but denied to retailing and the hotel and catering trades as if they were second-class citizens. The Government appear to believe that the supply of Socialist doctrine is more important than the supply of land for housebuilding, industry and commerce.
Mr. Budgen: My hon. Friend ought to realise that commerce is a second-class citizen. It does not belong to the TUC.
Mr. Sainsbury: Much as I admire my hon. Friend's normal interventions, I refuse to accept that commerce is a second-class citizen, and I suggest that the 12½ per cent. of the labour force employed in distribution would not happily accept that, whether or not they are members of the TUC. It is time that the Government woke up to the realities of the situation, and perhaps they will, because we are getting used to their
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coming back and claiming credit—the Chancellor of the Exchequer is excellent at it—for trying to put right the mess that they have made. We had the Chancellor of the Exchequer's disastrous 1974 Budget, CTT and the Price Code. We heard him saying "I shall not hesitate to take action". We heard that from the Minister today.
The Minister has been hesitant for long enough. If he stopped hesitating and took the Bill away he would at long last do something effective. As it is, we are being asked to approve a Bill that is fatally defective in its rate of tax and in taxing a gain before it is realised. We are being asked to approve putting Socialist doctrine ahead of the needs of industry and commerce. For that reason I shall oppose the Third Reading of the Bill.
11.12 p.m.
Mr. Walter Clegg: This is a most interesting debate. There seems to be some interest in it on this side of the House, but the poor Minister does not have even a PPS behind him. The hon. Gentleman has been left on his own to put the Bill through, and he has done a pretty good job. The supporters of this great Socialist Marxist measure prefer to spend their time outside the Chamber rather than in it listening to the debate.
Let me, too, declare an interest. I am a solicitor, and I suppose that I am also one of those who after today's announcement by the Leader of the House must declare another interest in that I am unlikely to get the £6 a week.
My interest in the Bill arises from the fact that I shall have to advise on this measure after it becomes law. I can imagine the situation when somebody asks what is meant by
"Effect of disposals after a project of material development".
I shall say "Let us look at para. 48 of Schedule 8", and sub-para. (3) says:
"The fraction referred to in sub-paragraph (2) above is that of which—

(a) the numerator is the adjusted net proceeds of the subsequent disposal and

(b) the denominator is the net proceeds of the relevant disposal."

I then look at sub-para. (5) which says:
"If, in a case falling within sub-paragraph (4) above,—

(a) the subsequent disposal is a part disposal, and

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(b) at the time referred to in that subparagraph, any instalments of tax provided for by paragraph 45 above have not yet become payable,

then, notwithstanding anything in sub-paragraph (4) above, paragraph 44(1) above shall apply to that part of the added amount which remains after deducting therefrom the fraction of that amount determined under sub-paragraph (6) below."
Mr. Fairbairn: If my hon. Friend's client can afford it, he can get counsel's opinion. If he has enough counsel, he will get as many opinions.
Mr. Clegg: It will be of great assistance to my hon. and learned Friend. He will get very close to the extra £2,500.
Now I turn to one of the most obnoxious forms of the tax, and that is its connection with the Community Land Act. I am sure that the Treasury does not like this connection but that has been overruled in the Cabinet. This is a Department of the Environment tax which the Treasury has had to administer. What I find sinister about it is the fact that local authorities will have the ability to buy land net of development land tax. As a result they will look upon planning in a very different way.
In the past they looked at the planning problem as a planning problem. Now some local authorities will look upon it as a way of earning money for themselves. They will look for a piece of land with a low base value, step in and buy it cheaply, and then sell it and make a profit. The planners will be overridden by the development part of the authority, and we shall not get planning decisions in future. Instead we shall get decisions which are of financial benefit to the local authority.
Another thing which I find objectionable about this tax is the fact that ordinary people who vote Labour believe that because the values will be taxed, the house they buy will be cheaper. It will be no such thing, because the Government have said that they must have the profits the developers get in order to make the thing work. In this day and age of Government restrictions, the local authorities will borrow money to buy land, then sell it to repay the cost of the land and all the administrative costs as well. For the man in the street this will mean that his house will be more expensive, not less expensive. It is time the country recognised that.
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I believe that there should be a tax on betterment, but this one is pitched too high. We shall see the slowing down of development for housing and for industry, in spite of the concessions.
There are a great many things in this legislation which the Treasury will have to watch. The Minister of State said that several matters would be kept under review, but the Treasury will have any amount of trouble from the tax because of the way in which it is formed.
I advise my hon. Friends to vote against the Third Reading because the tax is pitched much too high, because it gives local authorities the ability to make money for themselves, because it will generate more bureaucracy, and at the end of the day it will provide very little relief for our fellow citizens.
11.18 p.m.
Mr. Stephen Ross: I will come to the rescue of the Minister, because I intend to support the Government tonight. Nevertheless, I agree with many of the remarks made by the hon. Member for North Fylde (Mr. Clegg). Like him, I sat on the Community Land Bill Committee, and I opposed that measure as hard as he did. I also voted against its Third Reading. However, I believe that the Government are right to tax betterment, and although I do not think that they have got the right solution, I think that the development land tax is a rather better tax than that which we have at the moment in the development gains tax. If we defeat this Bill tonight we shall have to continue with the present 81 or 82 per cent tax, and no one wants that.
I also believe that the Government have introduced this piece of legislation in a very correct manner. They have given very clear explanations, and they have listened to many of the representations which have been made, including those from the Royal Institution of Chartered Surveyors, of which I happen to be a member. I only wish that they had listened to similar representations made on the Dock Work Regulation Bill.
There are obvious omissions, and I support everything that has been said about the charities. It has been said that charitable resources should remain at the disposal of charity trustees in order to obtain the maximum benefit to the community. This measure will effectively

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prevent that from happening if it remains unamended, although one accepts that charities will still be free for some years in relation to land owned prior to September 1974. But it will certainly have an adverse effect, if it is unamended, after a short period or if no compensation is offered in return.
I am still dubious about the option proposals. The subject still seems wrapped in mystery, although I accept that in the normal way options will not be liable to development land tax and the Minister is nodding his agreement to that.
I had hoped that, despite our differences of approach, we could have reached a consensus on the land question. I had a fire the other day and most of the documents got burned including, thank goodness, three huge volumes of the Town and Country Planning Act 1947. Since then we had had the Land Commission and the betterment levy. Could we not have got some sort of agreement about the planning and development of land? It is tragic that this has not happened.
The Community Land Act and this Bill are too complicated and will be expensive to operate. But at least some of the leaders of the property world are prepared to accept and to try to make this system work. Many local authorities wish to do so, and we should listen to them, and they are not all Socialist-controlled. The Bill should be given a fair trial. Since I became spokesman for the Liberal Party on the environment, I have tried hard to convince myself that, despite my party's fundamental objections, we should drop some of our own proposals and give these measures a fair trial.
Mr. Sainsbury: Is the hon. Gentleman saying that the Liberal Party approves of a tax rate of 80 per cent.?
Mr. Ross: The Government have accepted, at least for three years, a reduction to 66⅔ per cent. That is a fair gesture and is what the RICS first proposed. Up to a value of £160,000, that is not a low figure, and over that figure people can afford to pay 80 per cent.
The Layfield Report finally convinces me that we are going down a blind alley once again. Layfield refused to look at land value taxation or suggested site value rating as a possible solution for
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local finances largely because it would be contrary to the provisions already on the statute book in the Community Land Act, so he came up with nothing better than a system based on the capital value of properties, which would be no solution at all.
The real solution is to tax the annual value according to the quality of the land and its development potential. That would encourage the best use of land and ensure the positive use of planning. It would put land on the market, and one could vary the tax upwards according to whether people held the land off the market. This method has been proved in other countries, such as New Zealand and Denmark and in Johannesburg and in parts of the United States. Moreover, it could be comparatively simple, provided the civil servants did not overdo it as they did in 1910 and with this Bill.
The development land tax, however, has merit and should be supported. But there should in the years ahead be a staged change to a system of site value rating borough by borough and valuation officers should be making the necessary preparations now. But I suppose that neither the Government nor the Opposition will make such a proposition, and goodness knows what the Tories will put in place of DLT. But do we really want to go back to the bedlam of 1971 to 1973? I was practising in business at the time and know what the situation was.
If they continue to turn a deaf ear, both sides will continue to make a complete hash of the whole development of property business.
11.25 p.m.
Mr. Robert Adley: I am pleased to see that the hon. Member for Isle of Wight (Mr. Ross) has not joined his lion. Friend the Member for Rochdale (Mr. Smith) on the Liberal Back Benches—wherever they might be. I was surprised that the hon. Member should take such a sanguine approach because of the dependence that his constituency has on tourism, and the adverse effect this Bill will have on hotels and boarding-houses.
I congratulate the Minister on being a most even-tempered, generous and decent Minister because he has sat on

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the Front Bench listening to constant complaints in virtual isolation from his right hon. and hon. Friends. I am tempted to ask "What is a nice Minister like you doing on such a nasty big Bill like this?".
We are concerned about the affect that the Bill will have on industries and companies who own land which they might consider developing. Presumably, industries and companies wish to develop their own land in order to create new enterprise and thus new jobs. The Bill will give a further kick in the teeth to organisations that might be prepared to make that new investment that everybody is so anxious that they should make.
As someone who is interested in the hotel industry, I resent the constant denigration by the Government of service industries. On Report, I used the phrase "job snobs" and I have no reason to retract that phrase. The Government are discriminating between those who work in manufacturing industries and those who work in the service industries. In answer to the intervention by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), I can tell him that I have advised the British Hotels, Restaurants and Catering Association that it might invite Jack Jones to join that organisation's national council. The Government might then take a different attitude towards service industries in general and the hotel industry in particular.
Legislation such as this is driving the entrepreneur abroad. Such measures ensure that golf courses flourish because there is less and less incentive to work. The Bill was born in spite, will be weaned in malice and developed in envy and it will die unloved and unmourned. The best thing that the House can do is to see that it is stillborn by refusing it a Third Reading.
11.28 p.m.
Mr. Nicholas Fairbairn: I pay tribute to the Minister. He has done "good by stealth" and must not
"blush to find it fame".
He has steered through the House a Bill of immense and totally unnecessary complexity. It is one of the most contortuplicate legislative measures we have
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seen in the House. It will not be understood by lawyers. It may be understood by nekromancers, coprotomancers, digitomancers or pyromancers, but it will not be understood by the people who will have to apply it—the local authorities—and therefore great injustice will be done. It is part of the general philosophy of aspheterism. I do not suppose that hon. Members opposite will know what that is because they were privileged to undergo that form of education which ensures that no one fails.
Mr. Arthur Lewis: What does it mean?
Mr. Fairbairn: Aspheterism is a situation in which one does not believe in the concept of private property.
Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. Like me, you are probably very amused by what the hon. and learned Gentleman is saying, but I always understood that on Third Reading one might discuss only what is in the Bill. When will the hon. and learned Gentleman get to what is in the Bill instead of using these wonderful dictionary words with which he is troubling the House?
Mr. Deputy Speaker (Mr. Oscar Murton): I think that the hon. and learned Gentleman is coming to the point.
Mr. Fairbairn: With great respect, I would not expect the hon. Gentleman to understand so simple a term, because it means "anathema to private property" I understood that that was part of the hon. Gentleman's philosophy.
Mr. Arthur Lewis: It is not in the Bill.
Mr. Fairbairn: Yes it is. It is the core of the Bill that it is anathema to private property. What I find particularly offensive is that the hon. Gentleman, who will no doubt vote for Third Reading, would not understand one section or subsection if he read it, far less the word "aspheterism". The hypocrisy of Labour Members is shown by the fact that they are about to vote for a meaningless and bad Bill which they could not understand, imposing a burden on local authorities which will try to interpret "deemed disposals" and all sorts of fantasies of that kind.

209
I am grateful to the Minister for paying me the tribute that I was able to suggest some improvements which bring the Bill closer to the language and principles of the law of Scotland. Needless to say, the hon. Member for Perth and East Perthshire (Mr. Crawford) did not help us in any of those matters. So concerned is the Scottish National Party with Scotland and the law of Scotland that it did not bother about that sort of matter. The hon. Gentleman's only contribution tonight was to say that land speculators should be hammered and the Highlands should belong to somebody else. No doubt the Minister will introduce a Bill to deal with those two important matters, in addition to ensuring that Lonrho does not have its talent.
What I find most dangerous about the Bill is not that it is so complex to achieve a simple result but that it will defeat its own purpose. It will not make land or houses cheaper and it will not make development easier. At the same time it will overburden local authorities with work they do not understand. It will tax people who would develop their land and now will not.
The Bill will ensure that charities and Churches and those who do good for the community without any expense to the community are forced to pay a price that they cannot afford. No charity or church has more money than it needs. The Bill will take away from them some of the money which would otherwise have been available. I do not believe that any Labour Member thinks that any charity, Church or pension fund provides a service at a greater price than that at which the State can provide it. The cost to the community is inevitably lower.
The Minister talks about returning to the community the benefit that the community has allegedly bestowed—a benefit which one has no desire to have, a loss which one has no desire to have, a recompense which one has no desire to have, all of which are taxable. We must remember that the Bill will take away from charitable and beneficial sources of the community finance which it would otherwise be in the interests of the community to leave with them.
This is an immensely complex Bill, an unnecessarily complex Bill. It is bad legislation which is part of the cacotopia of Socialism, the compulsion to do every-
210
thing that is bad. I might even say "cacistotopia", the compulsion to do everything that is worst.
Mr. Ivan Lawrence: Floccinaucinhilipilification.
Mr. Fairbairn: That just means that one sets everything at naught. The Bill does not. It sets everything at complexity, and it is a bad Bill for that reason. It pretends to achieve a simple and fair objective, but it is to be by evil, complex, ill-thought-out means. The House should reject it, if for no other reason than that it is legislation of the most disgraceful kind and the most unthought complexity.
11.35 p.m.
Mr. Ioan Evans: I rise briefly to say how much we on the Government side of the House welcome the Bill. From the Opposition we have heard only the usual chorus of protest that we hear when the Government are righting a wrong.
I should like to compliment my right hon. Friend the Minister on having brought the Bill to its Third Reading. It is a complicated Bill. Those of us who served on the Standing Committee considering the Bill left it largely to the Minister to answer the arguments of the Opposition, which he did very ably.
Mr. Fairbairn: Does the hon. Member understand any of the Bill's provisions?
Mr. Evans: I understand the basic purpose of the Bill. It is complicated, but we have had other complicated legislation. My right hon. Friend dealt with the Bill to establish the Land Commission, another complicated piece of legislation. As the hon. Member for Isle of Wight (Mr. Ross) said, earlier we had the Town and Country Planning Act 1947. Whenever we have attempted to deal with the problem of the price of land, we have been criticised by the Conservative Party, but when Labour came to office in 1974, it had to deal with the problem of rapidly rising land prices, a problem which had faced the previous Government.
Here we have a Bill that deals with the increase in the price of land that is brought about not by an individual but by the efforts of the community. We believe that a large measure of the

211
increase in development value created by the community should be returned to the community.
Lord Barber tried to deal with the problem. When the Tories were in office, they were faced with rapidly increasing land values. It is said by Opposition Members that the price of land has little effect on the price of housing. The price of building land in 1969 was £18,940 per hectare. By 1972 it had risen to £39,490, a rise of 68 per cent. in one year. By 1973, still under the Tory Government, the price had risen to £61,190, a rise of 55 per cent. on top on the earlier 65 per cent., or a rise of well over 100 per cent. in two years.
One of the aims of the present Government is to reduce the cost of land to local authorities. If a local authority decides to extend its boundaries, build more houses, or provide hospitals and schools, why should the individual who sells the authority the necessary land be the only person to benefit? The community generates the spending to provide the services, and the cost to taxpayer and ratepayer is tremendous and highly inflationary. Speculation in land values in 1974 created a crisis in land, especially for local authorities.
We have had a Second Reading debate, we have had the Committee dealing with all the finer points, and now we have the Third Reading. I hope this measure will soon become law, and right the wrong that Lord Barber, when he was Chancellor of the Exchequer, was also trying to tackle. But now the Conservatives are back-tracking on what they said they would do. The Labour Government have had the courage to face up to the problem and to do what is right.
11.40 p.m.
Mr. Nick Budgen: This is the last battle in the recent campaign by the Labour Party in its perpetual war against private property. There have been two major parts to the campaign. The first was the Community Land Act, and the second is the Development Land Tax Bill.
This division illustrates perhaps best of all the essential dilemma of a Socialist Administration. It is interesting, for those of us who have had the misfortune to fight throughout the whole of
212
the campaign, to reflect upon the differences of style and the differences of content of the two Ministers, who respectively were responsible for the Community Land Act and for the Development Land Tax Bill.
I remember the fanfare with which the Community Land Bill ended. The Minister for Planning and Local Government proudly proclaimed that he had solved the land problem, and he put forward without apology, and without any attempt to mitigate the Socialist doctrine, the view that he was ushering in the promised land. He made it clear that that land would be exclusively developed and owned by the State.
What a very different speech we have had from the Minister of State tonight. He has been intelligent, careful, determined to answer each of the smaller criticisms. He has been determined most of all to explain to the people of this country—especially, I suspect. to the risk takers and the people of wealth—that the Socialist Government do not wish to attack wealth or property. He has been determined to explain that this is not an attempt to usher in the Socialist dream world. He has explained that this is a consensus measure which has been ushered in before by Lord Barber, and which has the support of a wide measure of sensible opinion in the professions and in this House. He has shown a desire, most of all, to be the reconciler and the Socialist by stealth.
But it will not work. This is only an interim measure. What the Government should really be saying is "Yes, you can live for a short time. There will be an interim measure for the first £150,000. The tax will only be two-thirds. But after that we shall belt you with 80 per cent. If you survive that you can wait until the second appointed day. That will be the coming of the Socialist millenium, when all land is confiscated at current use value."
It is as well that we shall recollect that all Governments move towards the centre in the middle of their period of office. It is something that Conservative Members often have to regret when we see our own Government doing it. On the other hand, perhaps we can rejoice when we see a little temporary relief being given to the country by a Socialist Administration as it moves towards the centre.

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But do not let us kid ourselves. This is only a temporary phase. This is only a temporary Bill. The second appointed day will be upon us. The left wing of the Labour Party will play its part in the creation of the next programme for Socialist reform. If we have another Socialist Government they will succeed in nationalising and confiscating all land at current use value. That is their declared aim.
11.45 p.m.
Mr. Ian Stewart: My right hon. Friend the Member for Crosby (Mr. Page) has made a major contribution to this legislation, as the Minister of State recognised, and I want to add my own words of thanks to him. As a novice, it has been a pleasure and an education to me to work with someone so experienced and so wise.
As my right hon. Friend pointed out, there are a number of serious shortcomings in the Bill, and we believe that, dispite the progress that we have made, many of its aspects will be positively harmful. I mention a few of the matters which have arisen in the debate.
The Minister pointed to the need to tax windfall gains. But what are windfall gains for the purpose of this legislation? The development gains tax, which the hon. Member for Aberdare (Mr. Evans) mentioned—if I turn a deaf eye to the hon. Member for Isle of Wight (Mr. Ross), I hope that he will forgive me—applied only to windfall gains realised by private individuals as owners of land and not to companies which invested in property or land, which carried out development or building, and so on. There is a fundamental difference between the two.
How can a trader make windfall gains from his stock-in-trade? By definition, that is a nonsense. We believe that there is a fundamental difference between a "one off" sale by an individual at an obvious profit and a deemed disposal by a company whose business is development or building at the start of a material development.
Development land tax applies both to charities and to pension funds. So our first main area of basic disagreement with this legislation is in the application and the impact of the tax.
Mr. Lawrence: My right hon. Friend the Member for Crosby (Mr. Page) committed the Conservative Party to abolishing the tax in its effect upon Churches. Is that a commitment which also extends to abolishing the tax in its effect upon charities?
Mr. Ian Stewart: My right hon. Friend points out to me that he meant to say both. That is our commitment.
The other point which has been raised is about the position of the exempt bodies—the local authorities—which are permitted to acquire property and land net of tax under these arrangements. As my hon. Friend the Member for North Fylde (Mr. Clegg) reminded us, this will encourage local authorities to go for the acquisition not of urban sites for infilling but of the green fields around the edges because they think that, with a low current use value, these will yield them the greatest profit.
There will be an enormous extension of the power of local authorities. Already they are monopoly granters of planning permission and promoters of development. Now they will be, in addition to being collectors of local rates, tax gatherers in a different way, with powers to bring about the very taxable event itself by the exercise of compulsory purchase orders. If the Government want local authorities to win friends and influence people, this is hardly the right way to go about it.
Alas, as my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) reminded us, in the Government's mind the development land tax is no more than a transitional mechanism in the community land scheme leading on to some Never-Never Land of the second appointed day. In the meantime, whether or not the second appointed day ever comes, an instrument of land policy the development land tax itself will be a disaster, as I am afraid we shall see before very long.
The Minister was generous enough to acknowledge the Opposition's contribution to the improvement of the Bill. But, as my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) said, it remains a Bill of hair-raising obscurity and complexity. Will it ever work? Possibly it will be understood by the civil servants who

215
designed it or who will operate it. But it will not be comprehensible to the taxpayer. What do the words mean? What is the legal effect of a Bill which is so complex in its interaction?
This year, the Finance Bill contains 30 or 40 new clauses on capital transfer tax, and five schedules, and on the Report stage of the Development Land Tax Bill we had two new Government clauses which had to be dropped because they had not been sufficiently thought out. The Minister promised that they or something like them would be brought back at a later stage. But we should register as a house a further protest against bringing forward half-baked tax legislation which is bundled on to the statute book to gratify the appetites of Government supporters below the Gangway.
My hon. Friend the Member for Hove (Mr. Sainsbury) referred to the structure of this tax and the fact that, because of the deemed disposal, it would fall to be paid, in many cases, before the funds were received either, in the case of a capital investment, before the value was realised or, in the case of a trading operating before the profits accrued.
We believe that this is a fundamental weakness in the tax itself. Development land tax on these proportions reduces the base on other taxes and, with them, their offsets and allowances. It means that advance corporation tax and the roll-over and industrial building allowances will be all that much less useful and valuable than they were meant to be. Only this last weekend the newly appointed Under-Secretary of State for Industry, in talking of priorities for the allocation of national resources, said:
"We have got to put factories first."
Those are the words, but this Bill is what the Government do. Although there is some slight benefit in deferment for industrial companies it does not apply to the service industries and what my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) described as "non-industrial interests" will be severely harmed by the provisions in the Bill. Losses are not offsettable. That means that there will be fewer developments, extra delay and increased cost. Not only that, but resultant scarcity will push up the
216
net cost of the projects and that will mean higher rents and prices for properties.
Finally, and above all, we on this side of the House object to the rate of tax. In this we have with us the hon. Member for Perth and East Perthshire (Mr. Crawford) because he has pointed out that at such a high rate there will be a real deterrent to transactions in land. Even the Government recognise that 80 per cent is too high. That is why they have introduced a rate of 66⅔ per cent. for two and a half years. But two and a half years is hardly sufficient to get the development and building industries out of the slump into which they have now receded.
If the Government want to perpetuate that slump in the construction industry and to put up the price of housing, they could not think of a better way of doing it than imposing development land tax at 80 per cent. and to promise 100 per cent. before very long. These rates are much too high for the real world in which we live. At 80 per cent. it is a penal levy. At 100 per cent. it is political confiscation. Like the levy of 1947, and the Land Commission of 1967, it will fail in practice before long. But in the meantime it is capable of doing a great deal of damage which may take years to restore.
I think there has been some common ground between us about the taxation of betterment. But the Development Land Tax Bill, as it stands, is a sadly lost opportunity of achieving an agreed approach between us or a workable means of doing it. Development land tax is indiscriminate in its application. It constitutes a historic departure on charities and pension funds and is an insight into the Socialist envy against provision of benefits other than by the State.
The new methods of tax collection, and the powers of local authorities, will prove not only invidious for them but repugnant to the taxpayer. The Bill is confusing in detail, incomprehensible in form and surreptitiously deprives a large part of industry and commerce of many of the reliefs and allowances which exist.
Above all, set at a rate of 80 per cent. at onset, which is itself a deterrent to voluntary transactions in land and property, it is only a step towards that total confiscation which hon. Members opposite contemplate with such relish. It will do lots of damage to the building, pro-

217
perty and construction industries in this country and to the future of many people seeking to own their own homes. We do not believe that the House should give passage to such a Bill.
11.54 p.m.
Mr. Denzil Davies: With the leave of the House, Mr. Deputy Speaker, may I reply to the debate. We have heard reiterated again many of the arguments made in Committee and on Report with regard to this Bill. I am sure hon. Members will understand if I do not go into them in detail.
One point which has been made time and again is that the rate of this tax is too high. I would suggest that most people in this country, as the hon. Member for Isle of Wight (Mr. Ross) said, would not consider a tax rate of 80 per cent. on a gain in excess of £160,000—that is what we are talking about—as too high especially when the gain does not arise from productive investment, the application of manufacturing processes or the carrying out of proper development but arises because a line is fortuitously drawn on a planning map and a person happens to have land on the right side of the line.
Hon. Members opposite have been constructive on technical matters, but they have failed to put forward an alternative policy. We have had various suggestions on how to deal with the land problem, but nothing constructive. All the Opposition can do is to vote against Third Reading. They want to return to development gains charge which is, by common consent, a bad tax and which is imposed at a rate of 83 per cent.
The Opposition abolished the betterment levy when they came to power after the 1970 General Election. That levy was charged at 40 per cent. They reverted to the capital gains charge. When the property boom got out of hand because they printed money, they brought in—by Inland Revenue Press notice—a panic measure and a 75 per cent. tax on development land.
The Opposition have still not thought out their policy. They say they want a tax on betterment, but they have been hypocritical in the past, and if they were returned to power they would still have no answer to this problem.
If the House rejects the Third Reading, we shall return to the development gains
218
charge at a rate of 83 per cent. and a completely inadequate framework for taxing this kind of betterment gain. I do not believe that the House will want that.
The Opposition say they want to retain development gains charge because it is better, but perhaps they have not seen the report this week by the chairman of Brixton Estates Ltd., which develops mainly industrial property. The chairman, who may be known to hon. Members opposite, is a banker and financier in the City of London. He said:
"Development Land Tax is less onerous for investment companies"
—and we are concerned with proper investment and proper development—
"and it should be possible for us to resume an active development policy in the U.K. Preparations have, therefore, been made to commence new industrial and warehouse schemes following the proposed change in taxation on the 1st August next."
That is the view of the chairman of an important development company. The development gains charge, which the Members opposite wish to retain, has been roundly condemned by people in the development industry in this country.
Mr. Graham Page: Will the Minister quote the next sentence of the report of the chairman of Brixton Estates Ltd.?
Mr. Davies: He said:
"It is to be regretted that the property industry should continue to be subject to legislation which will hinder commercial and industrial development at a time when an adequate supply of modern buildings to meet the needs of industry is an essential part of the economic recovery of this country."
The Conservative Party, by saying that it will repeal parts of this tax, but being unable to put forward any alternatives, is continuing the uncertainty.
This is a good tax which attempts to deal with a particular problem. The tax on development gains and betterment value should be at a proper high rate. It is right that the rate should be 80 per cent. when the amount exceeds £160,000. We believe that the majority of the people of this country believe this to be fair and reasonable and that they support the Bill.
I invite the House to give the Bill a Third Reading.
Question put, That the read Bill be now read the Third time:—
The House divided: Ayes 288, Noes 250.

Skinner, Dennis

Tierney, Sydney

Willey, Rt Hon Frederick

Small, William

Tinn, James

Williams, Alan (Swansea W)

Smith, John (N Lanarkshire)

Tomlinson, John

Williams, Alan Lee (Hornch'ch)

Snape, Peter

Tomney, Frank

Williams, Rt Hon Shirley (Hertford)

Spearing, Nigel

Tuck, Raphael

Williams, Sir Thomas

Stallard. A. W.

Urwin, T. W.

Wilson, Alexander (Hamilton)

Steel, David (Roxburgh)

Wainwright, Edwin (Dearne V)

Wilson, Sir Harold (Huyton)

Stoddart, David

Walden, Brian (B'ham, L'dyw'd)

Wilson, William (Coventry SE)

Stott, Roger

Walker, Harold (Doncaster)

Wise, Mrs Audrey

Strang, Gavin

Walker, Terry (Kingswood)

Woodall, Alec

Summerskill, Hon Dr Shirley

Ward, Michael

Woof, Robert

Swain, Thomas

Watkins, David

Wrigglesworth, Ian

Thomas, Dafydd (Merioneth)

Watkinson, John

Young, David (Bolton E)

Thomas, Jeffrey (Abertillery)

Weetch, Ken

Thomas, Mike (Newcastle E)

Weitzman, David

TELLERS FOR THE AYES:

Thomas, Ron (Bristol NW)

White, Frank R. (Bury)

Mr. James Hamilton and

Thorne, Stan (Preston South)

White, James (Pollok)

Mr. Ted Graham.

Thorpe, Rt Hon Jeremy (N Devon)

Wigley, Dafydd

NOES

Adley, Robert

Fell, Anthony

Knox, David

Aitken, Jonathan

Finsberg, Geoffrey

Lamont, Norman

Alison, Michael

Fisher, Sir Nigel

Lane, David

Amery, Rt Hon Julian

Fletcher, Alex (Edinburgh N)

Langford-Holt, Sir John

Arnold, Tom

Forman, Nigel

Latham, Michael (Melton)

Atkins, Rt Hon H. (Spelthorne)

Fowler, Norman (Sutton C'f'd)

Lawrence, Ivan

Awdry, Daniel

Fox, Marcus

Lawson, Nigel

Baker, Kenneth

Fraser, Rt Hon H. (Stafford & St)

Lester, Jim (Beeston)

Bell, Ronald

Fry, Peter

Lewis, Kenneth (Rutland)

Bennett, Sir Frederic (Torbay)

Galbraith, Hon. T. G. D.

Lloyd, Ian

Bennett, Dr Reginald (Fareham)

Gardiner, George (Reigate)

Loveridge, John

Benyon, W.

Gardner, Edward (S Fylde)

Luce, Richard

Berry, Hon Anthony

Gilmour, Rt Hon Ian (Chesham)

McAdden, Sir Stephen

Biffen, John

Gilmour, Sir John (East Fife)

McCrindle, Robert

Bigga-Davison, John

Glyn, Dr Alan

Macfariane, Neil

Blaker, Peter

Godber, Rt Hon Joseph

MacGregor, John

Body, Richard

Goodhart, Philip

Macmillan, Rt Hon M. (Farnham)

Boscawen, Hon Robert

Goodhew, Victor

McNair-Wilson, M. (Newbury)

Bottomley. Peter

Goodlad, Alastair

McNair-Wilson, P. (New Forest)

Bowden, A. (Brighton, Kemptown)

Gorst, John

Madel, David

Boyson, Dr Rhodes (Brent)

Gow, Ian (Eastbourne)

Marshall, Michael (Arundel)

Braine, Sir Bernard

Gower, Sir Raymond (Barry)

Marten, Nell

Brittan, Leon

Grant, Anthony (Harrow, C)

Mather, Carol

Brocklebank-Fowler, C.

Gray, Hamish

Maude, Angus

Brotherton, Michael

Griffiths, Eldon

Maudling, Rt Hon Reginald

Brown, Sir Edward (Bath)

Grist, Ian

Mawby, Ray

Bryan, Sir Paul

Grylls, Michael

Maxwell-Hyslop, Robin

Buchanan-Smith, Alick

Hall, Sir John

Mayhew, Patrick

Buck, Antony

Hall-Davis, A. G. F.

Meyer, Sir Anthony

Budgen, Nick

Hamilton, Michael (Salisbury)

Miller, Hal (Bromsgrove)

Bulmer, Esmond

Hampson. Dr Keith

Mills, Peter

Burden, F. A.

Hannam, John

Miscampbell, Norman

Butler, Adam (Bosworth)

Harrison, Col Sir Harwood (Eye)

Mitchell, David (Basingstoke)

Carlisle, Mark

Harvie Anderson, Rt Hon Miss

Moate, Roger

Chalker, Mrs Lynda

Hastings, Stephen

Monro, Hector

Channon, Paul

Havers, Sir Michael

Moore, John (Croydon C)

Churchill, W. S.

Hawkins, Paul

More, Jasper (Ludlow)

Clark, Alan (Plymouth, Sutton)

Heath, Rt Hon Edward

Morgan-Giles, Rear-Admiral

Clark, William (Croydon S)

Heseltine, Michael

Morris, Michael (Northampton S)

Clarke, Kenneth (Rushcliffe)

Hicks, Robert

Morrison, Charles (Devizes)

Clegg, Walter

Higgins, Terence L.

Morrison, Hon Peter (Chester)

Cockcroft, John

Holland, Philip

Mudd, David

Cooke, Robert (Bristol W)

Hordern, Peter

Neave, Airey

Cope, John

Howe, Rt Hon Sir Geoffrey

Nelson, Anthony

Cordle, John H.

Howell, David (Guildford)

Neubert, Michael

Cormack, Patrick

Howell, Ralph (North Norfolk)

Newton, Tony

Crawford, Douglas

Hunt, David (Wirral)

Nott, John

Critchley, Julian

Hunt, John

Onslow, Cranley

Crouch, David

Hurd, Douglas

Oppenheim, Mrs Sally

Crowder. F. P.

Hutchison, Michael Clark

Osborn John

Davies, Rt Hon J. (Knutsford)

Irving, Charles (Cheltenham)

Page, John (Harrow West)

Dean, Paul (N Somerset)

James, David

Page, Rt Hon R. Grahamn (Crosby)

Dodsworth, Geoffrey

Jenkin, Rt Hon P. (Wanst'd & W'df'd)

Percival, Ian

Douglas-Hamilton, Lord James

Jessel, Toby

Peyton, Rt Hon John

Drayson, Burnaby

Johnson Smith, G. (E Grinstead)

Pink, R. Bonner

du Cann, Rt Hon Edward

Jones, Arthur (Daventry)

Powell, Rt Hon J. Enoch

Durant, Tony

Jopling, Michael

Price, David (Eastleigh)

Eden, Rt Hon Sir John

Joseph, Rt Hon Sir Keith

Prior, Rt Hon James

Edwards, Nicholas (Pembroke)

Kaberry, Sir Donald

Pym, Rt Hon Francis

Elliott, Sir William

Kellett-Bowman, Mrs Elaine

liaison, Timothy

Emery, Peter

Kershaw, Anthony

Rathbone, Tim

Eyre, Reginald

Kimball, Marcus

Rawlinson, Rt Hon Sir Peter

Fairbairn, Nicholas

King, Evelyn (South Dorset)

Rees, Peter (Dover & Deal)

Fairgrieve, Russell

King, Tom (Bridgwater)

Rees-Davies, W. R.

Farr, John

Knight, Mrs Jill

Renton, Rt Hon Sir D. (Hunts)

222

223

Ranton, Tim (Mid-Sussex)

Speed, Keith

Trotter, Neville

Ridley, Hon Nicholas

Spence, John

Tugendhat, Christopher

Ridsdale, Julian

Spicer, Jim (W Dorset)

Vaughan, Dr Gerard

Rippon, Rt Hon Geoffrey

Spicer, Michael (S Worcester)

Wakeham, John

Roberts, Michael (Cardiff NW)

Sproat, Iain

Walder, David (Clitheroe)

Rodgers, Sir John (Sevenoaks)

Stainton, Keith

Walker, Rt Hon P. (Worcester)

Rossi, Hugh (Hornsey)

Stanbrook, Ivor

Wall, Patrick

Rost, Peter (SE Derbyshire)

Stanley, John

Warren, Kenneth

Royle, Sir Anthony

Steen, Anthony (Wavertree)

Weatherill, Bernard

Sainsbury, Tim

Stewart, Ian (Hitchin)

Wells, John

Scott, Nicholas

Stokes, John

Welsh, Andrew

Shaw, Giles (Pudsey)

Stradling Thomas, J.

Wiggin, Jerry

Shelton, William (Streatham)

Tapsell, Peter

Winterton, Nicholas

Shepherd, Colin

Taylor, R. (Croydon NW)

Wood, Rt Hon Richard

Shersby, Michael

Taylor, Teddy (Cathcart)

Young, Sir G. (Ealing, Acton)

Silvester, Fred

Tebbit, Norman

Sims, Roger

Temple-Morris, Peter

TELLERS FOR THE NOES:

Sinclair, Sir George

Thatcher, Rt Hon Margaret

Mr. Spencer Le Marchant and

Skeet, T. H. H.

Thompson, George

Mr. Cecil Parkinson.

Smith, Dudley (Warwick)

Townsend, Cyril D.

Question accordingly agreed to.
Bill read the Third time and passed.

IRON AND STEEL (AMEND MENT) BILL
As amended(in the Standing Committee),considered.
New Clause 8

  DUTY OF CORPORATION TO PROVIDE INDEPENDENT ASSESSMENT OF ACCOUNTS
  'In section 24 (Accounts of the Corporation and audit) at the end there shall be inserted—
  "(8) Notwithstanding the duties imposed on directors of the Corporation under subsection (5) above, the Non-Executive Directors of the British Steel Corporation shall be regarded as an Audit Committee to whom the auditors shall report for formal consultations prior to the submission of report and accounts as provided for in subsections (4) and (6) above. The Audit Committee shall make its own report upon these consultations to the Secretary of State who shall lay a copy before each House of Parliament and, while ever it is formally in existence, with the Select Committee on Nationalised Industries.".'—[Mr. Michael Marshall.]
  Brought up, and read the First time.
  12.16 a.m.
  Mr. Michael Marshall: I beg to move, That the clause be read a Second time.
  Before we proceed further, I invite the Minister of State to intervene to give some idea of the Government's intention about business. It is disgraceful that at this hour of the morning we should be considering a Bill to increase the British Steel Corporation's borrowing requirement by £4,000 million. We appreciate that we now have a new Prime Minister, a new Leader of the House and a new Patronage Secretary, but it is getting
  224
  beyond a joke when that combination of inexperience causes this kind of foul-up in our business. Therefore, I invite the Minister of State to tell us his intentions.
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): The Government intend to complete the remaining stages of the Bill tonight and to get the Third Reading.
  Mr. Marshall: I can only say that I am sorry to hear that.
  Mr. Geoffrey Finsberg: Does my hon. Friend not agree that it is possible for large numbers of us to make long, detailed and helpful speeches, which might take us well past one o'clock lunch-time tomorrow?
  Mr. Marshall: My hon. Friend reflects the great strength of feeling on the Opposition Benches—namely, that we are being put under some kind of moral blackmail. We have a full programme this week, and I do not think it helps the House once again, on this important Bill, to be squeezed into discussing such matters in the hours after midnight.
  In dealing with this clause, we in no way seek to delay the proceedings of the House—just the reverse. Let us consider the difficulties with which we are faced. First, in Committee the Government refused to accept an amendment tabled by the Opposition that would have allowed us to be satisfied that the amount of information brought forward at the time of a further increase in borrowing powers was of such a nature as to be satisfactory and to enable hon. Members to make judgments about the corporation's past performance and indeed about future investment intentions.

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  I make no criticism of the Chair in its selection of amendments and new clauses. We are now considering a clause which introduces an important new concept, but which is also the only possible recourse that we have in providing some sort of independent assessment of these borrowing powers. The importance of this will be evident in a moment, but I want to make it clear that by our other proposal we should have encouraged the Minister to satisfy the House at his discretion and at the discretion of the Department of Industry what information was proper and relevant for this House to have in considering the borrowing powers. It is unfortunate, but in rejecting that the Government have left us with no alternative but to bring forward some kind of check point so that when we are considering the possibility of an increase from £3,000 million to £4,000 million we move in a considered kind of way.
  We recognise that the British Steel Corporation has about seven outside directors, and we are anxious to explore the role that they can play in helping both the House and the country.
  Mr. Deputy Speaker (Sir Myer Galpern): Order. Too many independent conversations are taking place in the Chamber and the Chair is finding it very difficult to hear the hon. Member moving the new clause.
  Mr. Marshall: I am grateful for your protection, Mr. Deputy Speaker.
  These are important matters, and I hope that we can approach these debates in a serious way. The concept behind the new clause is important, and it touches upon a basic question which I now put to the Minister. What is the role of the outside directors of the BSC? We have had no answer to that. We have very little feel from anything that was said in our previous deliberations of what view the outside directors take of the corporation's past borrowings, of its future borrowings and of its whole investment programme and performance, which are inevitably linked in an assessment of these matters.
  In considering that question we have to decide what is the best way in which we can effectively seek the views of those directors, and that is why we have tabled
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  the new clause. It is necessary to say something about what we mean by this concept of the audit committee. I hope that if some of my hon. Friends are able to take part in the debate they will develop this concept in a broader sense than I shall do by way of introduction.
  Mr. Tim Renton (Mid-Sussex): Hear, hear.
  Mr. Marshall: I am grateful to my hon. Friend for his vocal support. He has considerable experience of these matters.
  The basic idea is to draw on the American experience, where it is common practice for the largest companies in the United States to have an audit committee made up of their outside directors. This involves the outside directors questioning the auditors at the time of the preparation of the annual report and accounts. This could involve a major examination, but in general terms they look primarily at the internal controls.
  The principle that American companies have followed in these matters is for the audit committee to concentrate its activities on the past record and performance of the company, but by being willing to create ad hoc committees and to co-opt executive directors as required it is possible for the outside directors to have a clear view of future investment intentions, of future market projections and, indeed, to make a complete assessment of the performance of the company for which they bear special responsibility. This is a concept which has great interest for us. The great advantage which the outside directors of the British Steel Corporation could bring to bear here is that they could at this moment in time help the House, the taxpayer, and the country to a better understanding of what is being done in their name.
  I have stressed the American experience because I want to develop that argument, and I hope that some of my hon. Friends will give the House the benefit of their experience, too. To put the issue in the wider perspective of the American steel industry, the three largest American steel companies—US Steel, Bethlehem and Republic—all operate in precisely this way. I would be interested to hear how far the Department of Industry has looked into this concept. The three largest

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  American steel companies use this approach, and in doing so they have set a pattern which we should explore.
  The American approach is to look at budgeting, forecasting and capital investment, and, by extension, this allows outside directors to give the shareholders a view whether the report of the auditors is based on sound financial terms and whether they have satisfied themselves of the general stability of the company and the general soundness of future plans.
  This brings me to the direct United Kingdom situation. In the last report of the British Steel Corporation there are seven outside directors listed, who represent a wide range of talent. They include the managing director of Vickers, a former Labour MP, a former steel trade unionist, a partner in a leading firm of chartered accountants, the Dean of Nuffield College, a former senior civil servant, and the chairman of a major engineering group. Those directors represent a wide range of experience. They reflect industrial, financial and commercial as well as trade union experience.
  Are the Government sympathetic to the concept we are putting forward? In the sense of the corporation having some need to be judged by the House, I must go back to the criticisms we made during Committee stage of the Bill. We really are not satisfied with the piecemeal way in which information will be obtained from Ministers and from the Department. We have no proper voting mechanism. Hon. Members on the other side were not slow to make the same point in Committee. The hon. Member for Rother Valley (Mr. Hardy) is straining in his seat. I am sure he would agreed with me—
  Mr. Peter Hardy (Rother Valley): The hon. Member has informed the House of the very real ability and obvious sense of responsibility possessed by the directors he has mentioned. But those directors have enough ability and experience to decide whether they wish to have the sort of committee he has mentioned, and whether they would welcome such a committee being introduced by diktat from above. He has not told us whether Bethlehem Steel or any of the others he mentioned set up audit committees as a result of outside instructions or whether the idea was engendered from within.
  12.30 a.m.
  Mr. Marshall: I take the point. I shall address myself to that aspect, but in general we are not prescribing a commitment, it depends on how we see the creation of this audit committee. The American examples are not directly comparable since we are dealing with a nationalised industry where the question of parliamentary accountability is of concern to us all.
  The measure of experience to which both I and the hon. Member of Rother Valley have referred is a basis upon which the House and the country could, with some confidence reasonably assume that the kind of vetting I have mentioned had been done, and we would benefit considerably in our deliberations when looking at the annual report and accounts and, by extension, at further tranches of borrowing commitment as envisaged in the Bill.
  More than a body of knowledge is at stake here. Because of the nature of the Bill, because of the way in which the Government have felt unable to accept the arguments in favour of the open-ended, enough-information-to-satisfy-the House argument, and because we have not been able, due to the selection of amendments, to discuss the Green Paper approach, the only effective safeguard we see now for the House beyond the bland assurances we have had from Ministers lies in the sort of approach that we suggest.
  I do not want to sell short the role of Ministers in this matter. They have tried to be helpful throughout the Committee stage. But I do not believe that we have yet reached a satisfactory conclusion or have addressed ourselves to the continuing problem of how the House, not just now but on future occasions, can properly judge whether the corporation. in going ahead on permission to undertake massively extended borrowing, is on the right lines.
  It is not just a matter of the sums of money involved. although in 1972 the corporation's borrowing commitment was about £300 million, whereas. under this Bill, by 1979–80 it can go up to £4,000 million. The Financial Times on Friday suggested that even that limit is now beginning to look very sick and that, with an increase of the capital cost of the

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  1972 strategy to some £5,000 million, the borrowing power may well require to receive further amendment much sooner than we think. That is indicative of the very large sums of money involved, and the therefore crucial need to have some kind of considered and dispassionate view.
  Mr. Hal Miller (Bromsgrove and Red-ditch): Will my hon. Friend tell us how more and more borrowing is needed to produce less and less steel?
  Mr. Marshall: My hon. Friend raises a question which it would be more appropriate to address to the Minister of State. The burden of our criticism is that we feel that these very large sums of money are being brought forward on a basis not properly spelt out. That is why we advocate an audit committee to help us, certainly for the future.
  As regards the detailed operation of the audit committee's activities, we have drawn the new clause in terms which would leave the position relatively open. We are looking for an evolutionary approach, and in order to help the House and the outside directors about our thinking, I should explain that we envisage the creation of an ad hoc committee which could begin this work on the basis of seeing how far development along American lines would be of value, and if, at some later date, that were to be formalised by the Secretary of State we would, on the basis on which we are putting the case, look at it sympathetically.
  The precise way in which outside directors should have to make a report available to the House and to the Select Committee on Nationalised Industries should be a matter of discretion for them. But if we left it there, we should be doing less than justice to the gentlemen concerned because I am sure that they wish to have some idea of the way in which we feel that such proposals might work in practice.
  I cannot do better than recommend them to look at the proposals in New Clause 1 which provides for such information as may be required to be contained in a Green Paper which would be produced at the time of the new tranche of borrowing under subsection (3A) of Section 36 of the Act. Such information should include an indication of the alter-
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  native financial arrangements considered for future investment schemes, including the possibility of joint ventures.
  The corporation currently has a number of joint ventures and it has said that it seeks in future to find further opportunities or joint investment with European steelmakers. It has said that it is not averse to further joint ventures with independent steelmakers in this country—for example in steel stockholding and stainless steel. Over the whole range the corporation has made it clear that joint venture is part of its thinking.
  If that is the case, the problem is that there is little suggestion by the Government about the way in which the corporation is now thinking about joint ventures in terms of an overall financing commitment. We should like to hear something about that from the outside directors if they go ahead with the audit committee approach as we suggest. Similarly, with the suggestion that there should be a projected balance sheet, profit and loss account and funds flow forecast—
  Mr. Deputy Speaker: I remind the hon. Member for Arundel (Mr. Marshall) that New Clause 1 has not been selected.
  Mr. Marshall: I defer to your ruling, Mr. Deputy Speaker.
  Mr. Nicholas Ridley: On a point of order, Mr. Deputy Speaker. How can the audit committee mentioned in the new clause perform its functions unless it sees accounts? I know that nationalised industries do not produce very good accounts, but accounts must be produced and my hon. Friend the Member for Arundel (Mr. Marshall) is right to talk about them.
  Mr. Deputy Speaker: But. Mr. Speaker has not selected New Clause 1, and the hon. Member for Arundel appears to be reading from that new clause. Mr. Speaker would, therefore appear to have been wasting his time in deciding not to select it for discussion. The hon. Gentleman should speak to New Clause 3, which gives him plenty of scope.
  Mr. Marshall: In New Clause 3 we suggest than an audit committee should be set up. With respect, Mr. Deputy Speaker, it would be irresponsible simply

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  to say it should be set up without outlining its activities. I suggest that a suitable short shopping list could be contained in the Green Paper if we had the opportunity of providing that document for the House. I hope, Mr. Deputy Speaker, that you see that outlining the corporation's intentions for the future is crucial to the argument if there is to be any sense at all in considering the BSC's future borrowing and its outside directors. The basis on which we should operate is, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) said, to look at the report and accounts as basic working documents.
  There are many other areas to which attention might be turned and I have highlighted but three. Hon. Members may have their own suggestions as to ways in which the audit committee work should develop. All I say now is that we are putting forward an opportunity—because the Government have refused to do so—for the House to be satisfied that the corporation is moving along the right lines. This is a matter deserving of the most careful attention. Hon. Members must recognise in their hearts that the present situation is far from satisfactory and that we are not able to have a planned and considered way of looking at these matters.
  The saga of the Bill has been a story of getting information bit by bit, in some instances because of the good will of the Minister. At the start of our proceedings it was necessary to write to the Chairman of the British Steel Corporation to get a clearer picture of what was envisaged in terms of the borrowing requirement, the breakdown of what was to come from the National Loans Board and what from public dividend capital. We had to write to the chairman to get that information. At the very start that was an indication that we should get only the most general information. It will be recalled that some Government Back Bench Members complained along these lines.
  It is common ground that we have to improve the present situation, in Committee the Minister of State told us that he was a compulsive provider of information, and I pay tribute to his good will in at least answering the questions put to him. However, he will recognise that we had to ask many questions to elucidate
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  the kind of information that we needed to build up an overall picture.
  As he will recall only too well, we were being asked for these massive sums on reports and accounts that were 15 months out of date. Through his good offices, the Minister was able to get some unaudited accounts for us. But that is not good enough and he must recognise that in future we must have more than this kind of titbit information.
  It has been suggested that the report of the audit committee should be made available to the Select Committee on Nationalised Industries as some way in which to give that Select Committee extra status. The Select Committee has recently taken upon itself responsibility for looking at the reports and accounts of the British Steel Corporation annually. It has to do that alongside its study of the reports and accounts of many other nationalised industries. My hon. Friends will be quick to agree that one certain feature of the Select Committee while the present Government stay in power is that it will be a growth industry—that it will have to look at more and more reports and accounts of more and more nationalised industries.
  In that event the Select Committee should have access to the fullest range of information and impartial judgment. That is precisely why we have suggested that this kind of review would be helpful to the Select Committee.
  Some hon. Members have argued that this investigation could be left entirely to the Select Committee on Nationalised Industries. The trouble about that is that the last steel industry study by the Select Committee was in 1972. There is currently a study into the technological problems of the corporation which is not expected to report until 1977. Such a five-year cycle is not good enough when we are dealing with massive increases in borrowing by the corporation. I do not intend to pursue that argument further at this point.
  I hope that the Government will feel disposed to accept the new clause. It is the acid test of whether there is genuine goodwill and a genuine earnestness on the Government's part to make some improvement to the Bill.
  12.45 a.m.
  The Government have admitted on a number of occasions that this is more

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  than a borrowing powers Bill. It has been an opportunity for them to include a number of other proposals to do a certain amount of tidying up of the iron and steel legislation generally. We are fully entitled to put forward proposals that we believe will not only improve the system but help us decide whether the borrowing envisaged is likely to be put to a clear and determined test of judgment when the final tranche must be considered in 1979–80. We look for a positive answer from the Minister tonight. Upon it will depend our attitude to the rest of the Bill.
  Mr. Ridley: I speak with great humility and diffidence, because I wish slightly to quarrel with my hon. Friend the Member for Arundel (Mr. Marshall). I am not sure that I agree with the clause. My hon. Friend's speech was full of erudition, wisdom and extremely good reason. I hope that he will not take it personally if I beg to differ a little with the purposes of the clause.
  It is extremely unfortunate that we must embark upon the Bill at this time of night, because these are important issues, which will come before us more and more, and we should take them with ever-increasing seriousness. The affairs of our public sector of industry are becoming more and more catastrophic and are placing financial burdens upon our economy which cannot be sustained for much longer. We should not be debating the matter when the Press has gone home and the House is thin. The nation as a whole must be told that nationalisation is one of the most disastrous failures—
  Mr. Deputy Speaker: Order. Will the hon. Gentleman tell us what we must put before the nation at this stage? Is it not New Clause 3, and not the general matter of nationalisation?
  Mr. Ridley: The clause lays upon the non-executive directors a duty to try to improve our nationalised industries. Poor souls! I have every sympathy with them in that impossible task which my hon. Friend wishes to place upon them. That is why I am a little unhappy about the clause.
  Who are the non-executive directors? What do they direct, and on whose behalf do they direct it? Do they represent anyone? No. Do they represent share-
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  holders? Are they elected by shareholders? They are personal friends of some clapped-out Cabinet Minister of long ago, who have been placed upon the board in order to adorn it. [Interruption.] The Minister has no need to laugh. He will do his share of patronage in the short space of time which remains to him to make such facile appointments as non-executive directors.
  Mr. Sainsbury: Lord Beswick.
  Mr. Ridley: No doubt Lord Brayley, of Canning Town Glass Works, will find his way on to several nationalised industries' boards. I remember that well-known short list which was chewed over by successive Departments looking for potential candidates. It is still current in the Minister's Department.
  Mr. Norman Tebbit: I am certain that the trustees of the London Co-operative Society's pension fund are the sort of chaps a Government like the present one are bound to appoint to responsible jobs.
  Mr. Ridley: There are certain persons who used to run the Crown Estates and who found favour in public industry. No doubt there will be a long list of trade unionists, subscribers to the social contract, who will find their reward in non-executive seats on the nationalised industries.
  What is the point of these non-executive directors? They are appointed for a five-year period, I believe, and when it comes to near the end of the five-year period the Ministry rattles the sabre at them. There is a leak in one of those well-known public sector papers such as The Times or the Financial Times, to the effect that so-and-so is coming to the end of his five-year period and it is not at all certain that he will be reappointed. He has not entirely toed the line. He made a remark at the board meeting two years ago which could be interpreted as criticism.
  Mr. Sainsbury: He snored.
  Mr. Ridley: I am not demeaning these non-executive directors.
  Mr. Martin Flannery: What about Lonrho?
  Mr. Ridley: The hon. Gentleman has no need to ask about Lonrho. It does not come to this House at 10 minutes to one for £2,000 million, £4,000 million or £6,000 million.
  What are these non-executive directors supposed to do? Who are they supposed to represent? The theory with the non-executive director of a private sector company is that he represents the interests of the shareholders. He is theoretically, at least, in a position to exert the influence of the shareholders to dismiss the management. But can these non-executive directors dismiss the management? Can they say that the affairs of the corporation are being run badly and that the whole thing should be changed? No, not for one moment.
  The non-executive directors of a public sector company are not directors at all. They are adornments of the board. They are the Christmas decorations, to use a current phrase from the Lonrho report. They are taken down on twelfth night and put back into the box until the eve of the next board meeting. Even if they were formed into an audit committee, they would not be able to control the efficiency of the British Steel Corporation, and they would not be able in any way to change the course of events.
  The corporation is not run in such a way as to be amenable to direction by the board. It is run by the civil servants and by the two hon. Gentlemen now sitting on the Government Front Bench. It is not run in order to make steel. It is not run in order to make profits. It is run in order to provide jobs, particularly in certain politically sensitive areas.
  Let us look at the Bill. It provides up to £4,000 million, yet the total cost of nationalising the steel industry was only £600 million. Already the sums of money are escalating far beyond the promises that we were given at the time of nationalisation. The money is pouring out, and I do not believe that the non-executive directors formed into an audit committee will be able to stem this bleeding.
  The trouble is that the British Steel Corporation is not losing money by some mischance. It is not losing money because adverse terms of trade have temporarily affected it. It will not start
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  to make money at any stage in the future. It will go on losing ever greater sums of money—[Interruption.] The Under-Secretary of State, who so recently has joined the establishment, cannot avoid this by mumbling through his beard to the Minister of State. This is public enterprise. It is not investment that we are discussing. It is paying for the losses hitherto incurred by public industry. This industry was taken into public ownership to improve its efficiency. Far from doing that, the efficiency of the steel industry has been receding all the way.
  Mr. Nicholas Winterton: Does my hon. Friend believe that the provisions of this Bill, involving very large sums of public money, will enable the corporation to produce more steel and thereby to reduce the vast quantities of steel that we need to import in order to export a number of manufactured goods?
  Mr. Deputy Speaker: That does not arise under New Clause 3.
  Mr. Ridley: I am sorry that you should say that, Mr. Deputy Speaker. I was hoping to follow my hon. Friend into the territory that he staked out so tantalizingly—
  Mr. Deputy Speaker: Tantalising it may be, but it is irrelevant.
  Mr. Ridley: Irrelevantly and tantalisingly staked out, but, in response to your encouragement to me to stay on the straight and narrow, I shall do so.
  I should like to explore the relationships of the proposed audit committee to the Commission in Brussels, because these relationships will be difficult if my hon. Friend's clause becomes law. The Commission in Brussels has forbidden any interference in our steel industry, no price control, and no subsidies to be paid. It has said that the British Steel Corporation has actually to compete on its merits and not lose money, otherwise the Commission will frown upon our activities.
  I want to know what reaction the Government have had from consulting the Commission in Brussels about this new clause. No doubt the ubiquitous Minister of State has flipped over in his British Helicopter Corporation helicopter or nationalised hovercraft to ask the Commission in Brussels whether we can continue to subsidise the steel industry under

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  the rules of the Common Market, and no doubt he has been told that we cannot.
  Why, then, does the hon. Gentleman proceed with this Bill? After all, £4,000 million, even in our depreciated currency, is a subsidy. Possibly it is not a very big one in his eyes, but it is a subsidy, and we are not supposed to grant subsidies to nationalised industries which are supposed to be competitive and commercial. So how can the audit committee meet the Commission face to face and eyeball to eyeball and say that it is efficient if we continue to lose these large sums of money?
  That is what worries me about the new clause. It seems to lay the audit committee open to grave dangers of censure, even to being taken to the Court of Justice at the Hague if it approves the accounts of the corporation and accepts the money which is being provided.
  I should like to know a great deal more. I do not believe that the audit committee should be the non-executive directors. I do not believe that they will discharge the rôle. But I think that the Government have a duty to explain to the House the enormous losses of the British Steel Corporation.
  1 a.m.
  Why do not hon. Members form themselves into an audit committee? The night is young and there is plenty of time. We could adjourn while the papers were circulated. We could see the accounts and the day-to-day figures which have been produced by the British Steel Corporation and we ourselves could be the audit committee. After all, that is what public accountability means. This industry has been taken into public ownership. Let us see the books and have all the information. I have, from time to time, studied the reports of the British Steel Corporation and I am perplexed as to why it has lost so much money and why it cannot get rid of some of its surplus manpower and get some modern plant in and do the job like the Japanese. If we had the efficiency of the Japanese steel industry we would have only one-fifth of the manpower that the BSC employs. But in deference to the modern trend I am not suggesting that we should attempt to do anything like that. That
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  would be disgraceful. It would mean that we are making someone unemployed.
  I am not suggesting it but I would like to be a member of the audit committee. When I go down to my constituency, which I do every weekend, my constituents ask me "Where has all our money gone. Where are our taxes employed? Why do we have to pay such appalling taxes?" They tell me "You are responsible. You are in the Parliament and you must know where they have gone."
  I say to them "It has gone on such grandiose things as the white heat of technological revolution, the steel corporation, public ownership and the commanding heights of the economy". I come out with all that clap-trap but they are not impressed. They do not say "Hurrah for the Member".
  Mr. Deputy Speaker: The hon. Gentleman knows full well that he is out of order. As far as I am aware a General Election is not imminent and there is no use the hon. Gentleman making an election address here this evening.
  Mr. Ridley: I am simply seeking to discharge my role as a member of the audit committee, Mr. Deputy Speaker. Admittedly, I have not been cast in that role but I was hoping that I might be in resisting this new clause.
  Mr. Tebbit: I think my hon. Friend was about to embark on a most interesting line of suggestion when he mentioned the performance of the Japanese industry. Perhaps he might like to consider whether he would resist New Clause 3 if it were arranged that the independent directors, who form the audit committee, were from the Japanese steel companies. Then we could have a truly independent view which might be of great value.
  Mr. Ridley: My hon. Friend must accept the mood of the country and hasten more slowly. After all, if the Japanese accepted British non-executive directors on the board, instead of the Mitsubishi, would they improve the performance of the Japanese industry?
  Mr. Tom King Mr. Tom King (Bridgwater) rose—
  Mr. Deputy Speaker: Order. This has become so interesting that even Mr. Deputy Speaker is being ignored completely. No one seems to be addressing me.
  Mr. Tom King: I apologise Mr. Deputy Speaker. May I put a point to my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), because it is an interesting point? In the Japanese steel industry, like Japanese industry generally, considerable use is made of non-executive directors who are often retired business executives. They often retire in Japan at 55 and take on non-executive directorships. I think the point that my hon. Friend is making is not entirely irrelevant.
  Mr. Ridley: That depends on how one treats non-executive directors. I have a great deal of faith in them in the private sector. I think they should out-number the executive directors. They have a role to play in the same way as supervisors have for those who believe in the two-tier board system. However, I do not understand the point of non-executive directors in the public sector. They do not represent anybody.
  While I should welcome a few Japanese, I am not sure that they would be welcome to the Government.
  Mr. Hal Miller: How can my hon. Friend come to that conclusion? If the Government are capable of putting Hungarians on the British National Oil Corporation, we could presumably have other nationalities on other corporations.
  Mr. Ridley: That argument has convinced me. I had not thought of it. I am grateful to my hon. Friend.
  Sir Frederic Bennett: On a point of order, Mr. Deputy Speaker. I have sat patiently throughout this debate listening to discussions about every sort of non-executive director of every known nationality. Can someone tell me who are the non-executive directors of the BSC? Perhaps my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) could supply, in his concluding remarks, a list of the corporation's non-executive directors. It would help us in making a judgment on the new clause.
  Mr. Ridley: My hon. Friend has come to my rescue. I understand that the non-executive directors of the British Steel Corporation are Sir Peter Matthews, Mr. G. R. Chetwynd, Mr. Ward Griffiths, Sir Melvyn Rosser, Mr. A. Silberston, Sir Matthew Stevenson and the honourable W. K. J. Weir. There is not a Japanese
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  or a Hungarian among them. This reaffirms my opposition to the new clause. It is not sufficiently international. It is xenophobic. I have always been in favour of the Common Market. I should like to extend the new clause beyond Europe to Japan.
  The non-executive directors on this totally inadequate list are not qualified to make the BSC efficient. I care about this bleeding of money out of the sector into the inefficient BSC. I care desperately about the inefficiency of its failure to control it.
  I do not blame the corporation. It does not have the power. The Minister, sitting on the Front Bench, looking both bored and worthy, feels he has acquired some status by his elevation, but he has actually acquired a vicarious responsibility to do something about this situation. It is no good the Minister justifying the corporation by reading out a lot of mumbo-jumbo. It is his responsibility to stop my constituents having to pay high taxes because of the ever-deepening wound in the body industrial and public. The non-executive directors cannot do the job. The Government own the BSC. They and no one else can, should and must do the job.
  If the non-executive directors were to be strengthened by the addition of a few Hungarians and Japanese, I should feel able to vote for the new clause. Perhaps I shall support it anyway, but I hope that what I have said will be taken into account in deciding future policy towards the corporation.
  Mr. Tim Sainsbury: I am sure that any hon. Member would be somewhat hesitant to follow such a distinguished contribution as that made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). I was a little nervous when he appeared to become rather critical of non-executive directors. I should declare an interest as a non-executive director of what I think could be regarded as a fairly substantial public company as well as a non-executive director of several private companies. I have a special interest in the new clause as it highlights the important functions of non-executive directors.
  I think that my hon. Friend the Member for Cirencester and Tewkesbury is

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  wrong in his concern about how Brussels might view the new clause. It seems that it is a proposal that is in line with the fifth directive and the valuable work that is being done in Brussels on company law and participation.
  My hon. Friend the Member for Arundel (Mr. Marshall), in so excellently introducing the new clause, spoke of the report and accounts as being a basic working document. That was a modest way of describing the most important document that a company produces, whether it be public or private, during the course of a year.
  It is not just the report and accounts that one receives and studies that are important. If properly prepared, they will give an important, accurate and concise picture of the company's situation, but in the preparation of report and accounts as a director, formerly executive and now non-executive, one is aware of the need to answer a number of questions and to prepare the facts and figures that are the input to the accounts. That is a valuable method of ensuring that management is doing its job.
  The pressures that are brought about by the timetable of the preparation of report and accounts work there way quite a long way down the management structure of a company. The questions that one is looking to see answered in properly prepared report and accounts, apart from all the facts and figures, relate, for example, to the source and application of funds. They will require answers from many areas of the company's operation.
  To answer such questions as the adequacy of the resources available for the investment programme, the nature and scope of that programme and the sums involved in it is the problem to which the audit committee would be directing its attention. There have been unhappy occasions when it has been evident from the performance of companies that top management have not had the right answers to some questions. It is necessary to ensure that the right answers are produced and that they are checked and double checked for their adequacy.
  There are many other matters that may in future become statutory requirements for report and accounts. Safety records and export performances are the sort of
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  matters that we may expect to see more of in future. We find that the words in the first line of Schedule 24(1) are rather critical. They state:
  "The Corporation shall keep proper accounts and other records".
  It is interesting that the new clause is not a change in the schedule—namely, the use of the word "proper". I think that my hon. Friend the Member for Arundel will agree that the purport of the new clause is to give additional authority that the word "proper" is used with justification and that the report and accounts that are produced are proper report and accounts. It goes on to refer to "other records".
  I am concerned not only because of the enormous sums of public money involved, to which my hon. Friend the Member for Cirencester and Tewkesbury has drawn our attention, but also because nobody in commerce and industry can fail to be aware of the critical importance of the British steel industry to the rest of industry and commerce. It is one of the major suppliers of the various materials which the rest of industry and commerce need. It is also a most important supplier to the construction industry which has a vital role to play in any investment programme.
  1.15 a.m.
  It is not so long ago that many investment programmes in this country were critically delayed by the non-availability of certain sizes of universal beams or, if they were available, they were available on long delivery. Certain sizes were being rolled at intervals of only four or five months, and each rolling was taken up well in advance of the time that it was to become available. This was a serious handicap to a number of production programmes. It is not only with items like universal beams that these problems have arisen. We have been aware more recently of the problems involving certain sizes of steel piping and tubing. These problems can be a serious handicap not only to the steel industry but to the whole of British industry and commerce. We are considering an industry which not only involves large sums of public money and employs many people but whose performance is in itself critical to the performance of the rest of British industry and commerce.

  243
  Like my hon. Friends, I regret that because of the confusion into which the present Government seem habitually to get the affairs of the House. we are discussing this matter at this time when there is a smaller attendance than would otherwise be the case.
  Apart from the importance of the steel industry to the rest of British industry and commerce, one cannot fail to be aware of the intense frustration felt very often by the public and business men in small, medium and large businesses because of the performance of nationalised industries. It seems to me that they feel that this is something over which they have no control and, indeed, over which the nationalised industry management and this House have no control. that the whole thing is going on in an apparently inefficient way and not producing the service that they could reasonably expect, while consuming vast sums of public money and suffering very badly on an international basis. There seems to be no method of focussing the attention of this House on the performance of nationalised industries.
  Mr. Nicholas Winterton: Would my hon. Friend direct his attention to this audit committee which is to be formed from the non-executive directors? Does he feel that the qualifications of these non-executive directors will enable the British Steel Corporation to produce an independent assessment of accounts? Does he believe that the influence of the non-executive directors will enable the British Steel Corporation to produce more of the steel that we require and that the knowledge and influence of these non-executive directors will enable the British Steel Corporation to deal with the subsidy which it is receiving in accordance with the spirit of the European Economic Community?
  Mr. Sainsbury: My hon. Friend has fired a barrage of formidable questions, all of which are extremely relevant. I was directing my attention to the audit committee and was developing my reasons for saying that my hon. Friend the Member for Circencester and Tewkesbury had pointed out—shall I say "warts and all"—some of the potential problems. I thoroughly commend the proposed new clause to the House. It certainly merits
  244
  prolonged experimentation, if one puts it no higher than that. The very questions to which my hon. Friend the Member for Macclesfield (Mr. Winterton) has just referred are questions to which the non-executive directors, through the operation of the proposed audit committee, would be expected to direct their minds.
  My hon. Friend the Member for Cirencester and Tewkesbury raised some doubts about the capacity of the non-executive directors to fulfil the functions which would be put upon them by the new clause, but, as I read the clause, it says not that this shall be their only function but that, in addition to their other functions, they shall have this function, and it would be my expectation that, if they were given this function, the executive management at board level of the British Steel Corporation would provide the audit committee with the sort of service in terms of full-time staff which one would look for in an internal audit department, though they would look not so much at figures and detail and the past as an audit department would as to the more general sweep of affairs and, in particular, the matters mentioned by my hon. Friend the Member for Arundel—budgeting, forecasting and investment.
  Budgeting, forecasting and investment are the three critical areas in which there are the greatest public doubts about the performance of nationalised industry, and the British Steel Corporation in particular. Obviously, budgeting is fundamental to any business, but in a nationalised business which is a supplier of critical importance to the whole of British industry and commerce, the forecasting of demand both national and international, and the basis upon which forecasts are prepared, are vital to the operation of the industry.
  One of the fundamental criticisms of nationalisation which hon. Members on the Government side fail to appreciate, probably because of their lack of experience in business in too many cases, is that extremely serious consequences follow if decision making is concentrated in one board for a whole industry. I do not imagine that there is a board of directors in the country which would claim to be so wise and far-seeing that it would never make an error. If decision making for an industry is concentrated in

  245
  one group of people and they make a mistake, as inevitably they will, the consequences of that mistake upon that industry and upon others will be disastrous. Where market forces and com- petition operate, as likely as not, if one board makes a mistake, another will make a mistake the other way or some will get it right.
  My right hon. Friend the Member for Knutsford (Mr. Davies) referred to the oil industry. There are some very large companies in the oil industry—usually called multinationals, with an overtone of insult nowadays. Undoubtedly, their boards will occasionally make mistakes. There are five or seven large oil companies operating in this country. But the collective wisdom of these boards coming to their different conclusions is more likely to lead to a healthy oil industry than would concentrating the entire investment programmes of the industry into one board, which would be the consequence of nationalising the whole lot.
  In the present context, we are considering the British Steel Corporation, in which all the decisions have to be taken through one board, and our suggestion that the report and accounts of that board should be subject to an audit committee has much to commend it.
  Mr. Ridley: Does not my hon. Friend think that relationships might be strained at the board room luncheon when it is known that non-executive directors are preparing reports on executive directors and that when the smoked salmon is going round there might be a sense of froideur between certain parts of the board? Is that desirable in the interests of unity for the purpose of rebuilding our steel industry?
  Mr. Sainsbury: My hon. Friend underestimates the qualities of directors, executive or non-executive, of companies in the British Steel Corporation. I do not know what sort of skills they would have, but I would expect that the non-executive directors would be working closely with and asking questions of the executive directors and through the executive arm.
  I hope that the House in considering the clause will wish to see the role of the audit committee reviewed on a regular basis to see how best it can be carried
  246
  out and how the non-executive directors can best be provided with the means of ensuring that they are able adequately to fulfil their role. I now that my hon. Friend the Member for Mid-Sussex (Mr. Renton) will wish to develop this theme if he catches the eye of the Chair. I hope that the clause will bring about a modest improvement in the situation, and for that reason I support it.
  Mr. Tim Renton: This debate has been somewhat of a see-saw. My hon. Friend the Member for Arundel (Mr. Marshall) came down firmly in favour of this bold new experiment of an audit committee in a nationalised industry, then my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), in a devastating speech, totally destroyed the concept, and finally my hon. Friend the Member for Hove (Mr. Sainsbury) brought us back into balance.
  The only thing missing from the debate has been a contribution from the Labour Back Benches. However, all three Members present on those Back Benches up until a short while ago were asleep. Therefore, perhaps it is not surprising that we have had no speech from that side of the House.
  Mr. Ronald Brown: Rubbish.
  Mr. Renton: This serious innovation from my hon. Friend the Member for Arundel is worthy of deep consideration by the House, even at this late hour.
  The person who is sadly missing from the Opposition Benches, because of other commitments, is my hon. Friend the Member for Kensington (Sir B. Rhys Williams) because he has given this subject a great deal of consideration.
  Mr. Ronald Brown: Which is more than you have, you idiot.
  Mr. Renton: My hon. Friend was personally responsible for bringing in the idea of non-executive directors in this context, Indeed, he dealt with this matter in Standing Committee on the Companies (No. 2) Bill.
  1.30 a.m.
  It was, furthermore, interesting that after that speech the Under-Secretary of State for Trade said:
  "I believe this approach to be very interesting and, as I have said, very constructive, but

  247
  only as a basis for discussion."—[Official Report, Standing Committee C; 1st July 1976, c. 66.]
  One is led on, on the basis of that encouragement from the Under-Secretary and a lot of research by such as my hon. Friend the Member for Kensington, to look a little more deeply into the question of non-executive directors getting together with the auditors to form an ongoing and continuing investigation into the financial performance of a company.
  My hon. Friend the Member for Cirencester and Tewkesbury questioned whether the non-executive directors are capable of carrying out this function. He cast the non-executive directors in the shape of lunchtime directors who would not have the capacity to handle these functions. I should like to put it to him that he should take the view that by putting these new duties on non-executive directors we should be giving them a rôle to fulfil in both public and private sector companies.
  Mr. Sainsbury: Is not a second point of relevance that if these non-executive directors see that they have a defined and valuable rôle to play within the companies we are more likely to be able to attract people of the proper calibre?
  Mr. Renton: Yes. Like my hon. Friend, I must declare an interest as a non-executive director. He has put finger on the point, which is that if we give non-executive directors a specific rôle to perform on the board we shall attract people of a higher calibre. Furthermore, we shall overcome the difficulty which many non-executives feel, which is a certain lack of knowledge and uncertainty about what their role is meant to be.
  In the Standing Committee considering the Companies (No. 2) Bill [Lords] my hon. Friend the Member for Kensington developed that point very well. He made the point that in auditors we have a supervisory element in each company. Add to that the non-executive directors who are at any rate there on the board, and one could have a continuing supervision of at least the financial performance and effectiveness of a company in using its cash flow and the funds available to it.
  I believe that this would be an improvement on the present situation be-
  248
  cause, as my hon. Friend the Member for Hove with his industrial knowledge knows, what often happens is that when the auditors present their report on the company's accounts they go to see the fiinancial director. They talk to him about the situation, tell him what they see wrong with the company, what they are worried out in the company's use of its money and how it handles its cash flow, but often they do not know what the financial director does with that report.[Interuption.] The hon. Member for Hackney, South and Shoreditch (Mr. Brown) has now awakened. Perhaps he would like to intervene instead of interrupting from a sedentary position.
  Mr. Ronald Brown: The hon. Gentleman is boring the House to tears.
  Mr. Renton: I know that the hon. Gentleman will develop his constructive remarks in a speech when I sit down.
  Mr. Ronald Brown: The hon. Gentleman is a silly man.
  Mr. Renton: The auditors report to the financial director, but they do not know what he will do with their critical comments, whether he will tell the managing director, or what he will do. They do not have the power to appear at the board as auditors to tell the board as a whole what they think about the company's financial performance. Nor do they have the capacity to know whether the board as a whole is aware of their criticisms of the company and the way in which it is handling its funds. If the non-executive directors and the auditors—
  Mr. Sainsbury: Would my hon. Friend agree that in practice this weakness, to which he draws attention, in the ability of the auditors as a supervisory body is most apparent when it comes to their role in relation to forecasting? Auditors look backwards, they look at past performances, at what has happened. They are not interested in the vital area of forecasting.
  Mr. Renton: Once again my hon. Friend the Member for Hove has made an interesting and valid comment. I believe that the getting together of auditors and non-executive directors should be confined to the areas of past performance and the way in which funds have been

  249
  handled. The non-executive directors do not have the capacity to look forward. Here I differ from my hon. Friend the Member for Arundel. I would confine them to the specific role of examining how the company has used its funds, and its financial effectiveness.
  My hon. Friend referred to the American steel companies which have gone along this road. This practice of audit committees was recommended by the Securities and Exchange Commission in New York for all major companies. It started in Ontario, Canada, about 10 years ago, and now Price Waterhouse, the well-known firm of accountants, has produced a booklet entitled "The Audit Committee" which spells out in some detail its recommendations of how such committees should operate.
  I am tempted to read this booklet to the House in its entirety—[Interruption.]—because it is relevant, but I feel that it is perhaps a little too long—[Interuption.] For example, it suggests that while the ultimate responsibility for approval of financial reports rests with the entire board, the audit committee is often a better means of dealing with the uncertainty which exists in this increasingly complex and sophisticated area—indeed, that it is the best means of fulfilling the responsibilities associated with a company's financial reporting.
  Mr. Nicholas Winterton: Perhaps my hon. Friend will appreciate from the new clause that the audit committee will make its own report, upon consultations with the auditors, to the Secretary of State, who, in turn, will lay a copy of the report before each House of Parliament, and the Select Committee on the Nationalised Industries. This development of the report of the directors which will be placed before the House by the Secretary of State will keep the House in touch with the way in which public funds are being expended. Does my hon. Friend believe that this will be helpful to the House in keeping a tab on the way in which the taxpayers' money is being spent in the British Steel Corporation?
  Mr. Renton: Yes, that is an important point. [Interruption]. Here we are representing effectively the shareholders in the nationalised industries. If we had in the House or in the Select Committee the availability of such audit committees, we
  250
  would be far better placed to discharge our functions as representatives of the shareholders in the continuing examination of the affairs of the nationalised indutries than we are by being landed once a year with a series of indigestible reports. Audit committees would make our task easier and would enable us to discharge it more effectively.
  It will be of interest to you, Mr. Deputy Speaker, to know that this pamphlet describes the functions of a typical effective audic committee. I wish I had had the foresight to photocopy it and, as in the case of the photocopies of the famous rig that was or was not a ship, circulate it throughout the Chamber. Having failed to do that, I shall quote just two functions which are important to the consideration of the new clause.
  "The typical effective audit committee will have responsibilities that include the following: first, a review of the financial statement with the independent accountants prior to recommending approval by the board."
  Second on the Price Waterhouse list is
  "enquiry into the effectiveness of the company's management, financial and accounting functions through discussion with the independent accountants, external auditors and appropriate officers of the company."
  Having described—[Interruption.]—the functions—
  Sir John Eden: On a point of order, Mr. Deputy Speaker. I am listening to these quotations, and, although I am sitting immediately in front of my hon. Friend the Member for Mid-Sussex (Mr. Renton), I find it extremely hard to hear what he is saying and follow his line of argument because of the constant interruptions coming from another quarter of the House. I think that perhaps the hon. Member for Hackney, South and Finsbury (Mr. Brown) is finding himself in some difficulty. I do not know whether he is trying to take part in the debate, but it must be clear to you that he is making considerable noise from a sedentary position. It would help further the course of the debate if hon. Members could hear what the hon. Member who has the Floor is saying.
  Mr. Deputy Speaker: I have no difficulty in hearing what the hon. Member for Mid-Sussex (Mr. Renton) is saying. But I appeal to him to get on with the business. Let us get on with it.
  Mr. Ronald Brown: Further to that point of order, Mr. Depty Speaker. I was listening to the debate but the vulgarity of the hon. Member who raised the issue provokes me to say that he should have some standard of courtesy in this House.
  Mr. Deputy Speaker: That is not a point of order.
  Mr. Renton Mr. Renton rose—
  Mr. Deputy Speaker: The hon. Member was at his last quotation.
  Mr. Renton: Yes, Mr. Deputy Speaker. You have had the last quotation.
  Having described the functions of the audit committee, as I see it, one is led back to the point raised by my hon. Friend the Member for Cirencester and Tewkesbury, who asked whether non-executive directors are the right people from the board to sit with the auditors in the continuing functions I have described. I think that they are, because executive directors have a parti pris in the way financial decisions have been taken, Some of those decisions will have been decided with the managing director. They will have taken such decisions throughout the year, and they are not capable of sitting in independent judgment on themselves with the auditors. Far better placed to do so are the non-executive directors, who stand a bit back from the executive directors in this respect and have a freedom of argument and objectivity of view which, coupled with the approach of the auditors, should bring a correcting discipline to this area of the company's performance.
  Mr. John Davies: My hon. Friend will be aware that in some continental practice the audit committee is outwith the board and makes a report to the company which enables the company to decide whether it will discharge the directors in respect of the responsibilities they have engaged to fulfil in the preceding period. Is that not a better arrangement, as it is external to the board, and the board is looking therefore to the annual general meeting for discharge? I wonder whether non-executive directors are as well able as an external body to do that.
  Mr. Renton: What my right hon. Friend is touching on, in effect, is the producing of tension within the board if the
  252
  board has non-executive directors being critical, with the auditors, of the executive management. It is because of that tension, even conflict, that the situation of the audit committee outside the board has been developed instead. But I have a preference for an audit committee which has non-executive directors on it as well. I see a counter balance between the non-executive and the executive of the board and out of that counter-balance will come fruitful progress. I see that my right hon. Friend the Member for Knutsford (Mr. Davies) is well aware of that development and prefers it.
  1.45 a.m.
  We are led back to the points made by my hon. Friend the Member for Arundel about the function of the audit committee and its continuing rôle. My hon. Friend defined that well. I differ from him in one or two respects but I am glad that he drew our attention to the improvement that such an audit committee might bring about in the performance of the British Steel Corporation. I echo what my hon. Friend said about such an improvement being desperately needed. On the Select Committee on Nationalised Industries, he and I have been privileged to hear about the future plans of the BSC. We know that it desperately needs an investment of literally billions of pounds if it is not just to keep up with but to catch up with the expansion which has taken place in the past decade in the German, Japanese and American steel industries.
  I want to see the BSC undertake investment so that it is, as my hon. Friend the Member for Hove said, fully competitive in all steel products produced in this country. But one must sit back and look at the record of the corporation over the past eight years and ask, in view of the enormous loss it has made in past years, whether it is right for another £3 billion or £4 billion of tax payers' money to be used for new capital investment in the corporation.
  In recent months I have been anxious about the enormous losses it has incurred through foreign borrowings. The sterling slide cost the BSC £40 million lost on its foreign borrowings. When the BSC management found that it could tap the Eurodollar market, it went into that market almost bald-headed. It did not appear to have thought of the consequences to the

  253
  corporation of borrowing dollars if the dollar appreciated in value against sterling. Indeed, The Times of 5th May said:
  "The rôle of the BSC in raising large sums from foreign sources was hailed as a considerable advance in the financial management of the public sector of British industry".
  That is an extraordinary remark. For such borrowing to be hailed as a considerable advance must lead one to query the internal financial disciplines of the corporation.
  In answer to a Question, a Treasury Minister recently told me that the total of foreign borrowing by the public sector now amounted to about £5 billion. To repay that sum at the exchange rate ruling at the end of March would cost £6 billion. None of that money has been repaid and if the dollar goes up more, the loss will be greater. At the end of March the total loss, if the loans had been repaid at that time, would have been £1 billion.
  Mr. Anthony Nelson: Does my hon. Friend the Member for Mid-Sussex (Mr. Renton) agree that it is not just a matter of substantial foreign currency borrowing incurred by public corporations which may at some later stage be covered by profits but, because of the Treasury exchange rate guarantee system, the main part of the liability will fall on the tax payers and that half—
  Mr. Deputy Speaker: Order. That has nothing to do with the clause.
  Mr. Renton: With the greatest respect, Mr. Deputy Speaker, I should have thought it had everything to do with the clause, but I do not question your ruling. The corporation has lost £40 million to date on its foreign exchange borrowings, many of which are guaranteed by the Treasury. Whether or not they are guaranteed by the Treasury, the burden in the end falls on the taxpayer.
  Mr. Deputy Speaker: The fact that those words come from the hon. Gentleman's mouth does not make them in order. Those references are not in order.
  Mr. Renton: We are talking about the audit committee, the prime function of which is to review with the non-executive directors the corporation's continuing financial performance. Is the audit committee suitable for a public sector com
  254
  pany? I take the point made by my hon. Friend the Member for Cirencester and Tewkesbury that it is hard to see how easily an audit committee with non-executive directors fits into the pattern as compared with the private sector. We are all acting for the shareholders in the nationalised industries. If such an audit committee were to make continuing reports to us, and if the non-executive directors had a specific function which I believe they would welcome, it would be that much easier for us to discharge our function as watchdogs of the financial performance of these industries.
  Mr. Nicholas Winterton: Bearing in mind the splendid advice about the car industry given to the Government by the hon. Member for Sheffield, Attercliffe (Mr. Duffy) as Chairman of the particularly important Select Committee on Nationalised Industries, does not my hon. Friend believe that if the Select Committee were more involved through the report it receives from the Secretary of State, the audit committee and the board of British Steel, the House could more adequately represent the interests not only of the corporation, in giving it good advice, but—of paramount importance—the taxpayer, to whom my hon. Friend has so rightly referred?
  Mr. Deputy Speaker: That, too, has nothing to do with the clause.
  Mr. Nicholas Winterton: On a point of order, Mr. Deputy Speaker. The Select Committee forms an important part of the clause, and the report which the Secretary of State could lay before it, coming from the audit committee, I believe to be very much of importance and very much part of the debate.
  Mr. Deputy Speaker: The hon. Member has already said the same thing three times in the course of the discussion of this clause.
  Mr. Renton: My hon. Friend the Member for Macclesfield (Mr. Winterton) has extended the argument somewhat by suggesting that there would be a continuing theme for the audit committee in reporting on the whole range of the nationalised industries to the Select Committee on Nationalised Industries, which would enable the House to discharge its

  255
  duties more effectively. That is the kernel of the argument.
  If in this one instance a nationalised industry were to start with an audit committee and if the system were to be found to work effectively and the non-executive directors were used sensibly in this function, for once we should have an area in which the public sector could lead the way and the private sector might follow, and that would be a change very much for the better.
  I hope that the new clause will commend itself to the Government. A great deal of thought has gone into its preparation. I believe that if once this idea of an audit committee got under way, the British Steel Corporation would find that the committee would greatly assist in its financial results.
  The Under-Secretary of State for Industry (Mr. Les Huckfield): I want to help the House as much as possible by addressing my remarks to the new clause. I hope that the hon. Member for Arundel (Mr. Marshall) has recognised from the start that the clause has one major drawback, namely, it is technically defective in that the Iron and Steel Act 1975 did not create the class of non-executive directors of the British Steel Corporation to whom he and his hon. Friends have made such constant references.
  As I understand Section 1(3), the Act specifies that the corporation shall consist of the chairman and not fewer than seven nor more than 20 other members, and no distinction is made whether they shall be full-time or part-time members, or whether they should have any executive functions.
  Mr. Fairbairn Mr. Fairbairn rose—
  Mr. Huckfield: As a matter of practice, the chairman may invite a member to undertake particular responsibilities, but it is a matter of arrangement and not of law. because it is not in the statute.
  Mr. Fairbairn Mr. Fairbairn rose—
  Mr. Huckfield: I recognise the intention of the new clause and I understand that it is a fashionable concept in accountancy circles.
  Mr. Fairbairn Mr. Fairbairn rose—
  Hon. Members: Give way.
  Mr. Michael Marshall Mr. Michael Marshall rose—
  Mr. Deputy Speaker: Order. If the hon. Member addressing the House does not wish to give way, he does not give way.
  Mr. Huckfield: I am sure that hon. Members recognise that, although it is a fashionable concept in accountancy circles, it is premature at this stage, particularly when, as is fairly well known, the Government are conducting a fairly wide-ranging review of the whole relationship and the conduct of relations between Government Departments and nationalised industries, a review under the auspices of the National Economic Development Office. I am sure that hon. Members will appreciate the good sense in awaiting the outcome of that survey before proceeding with any changes in the relationships among Government Departments, the House and the nationalised industries.
  As the new clause is defective and as, for the reasons I have explained, it is premature, I hope that the House will now agree to its withdrawal.
  Mr. Walter Harrison (Treasurer of Her Majesty's Household)Mr. Walter Harrison (Treasurer of Her Majesty's Household) rose—
  Mr. Peter Bottomley: On a point of order, Mr. Deputy Speaker. As the Minister did not give way during his short speech and as the debate has been going on for just two hours, I hope that you will not accept the closure motion.
  Mr. Tom King: On a point of order, Mr. Deputy Speaker. Can you confirm to the House that, although the Government have got themselves in a position in which we are proceeding with this very important business at this time of night, the Chair is not in any way influenced by that lateness in determining how long a debate will run and that we on the Opposition Benches are entitled to the same time for consideration of these measures at this hour of the night as we should have at a more normal hour?
  2.0 p.m.
  Mr. Deputy Speaker: I have had ample experience of all-night sittings and it does not worry me in the slightest.
  Mr. Walter Harrison Mr. Walter Harrison rose in his place and claimed to move, That the Question be now put.
  Question put, That the Question be now put:—

  Division No. 236.

  AYES

  [2.2 a.m.

  Archer, Peter

  Golding, John

  Ogden, Eric

  Armstrong, Ernest

  Graham, Ted

  Orme, Rt Hon Stanley

  Athton, Joe

  Grant, George (Morpeth)

  Ovenden, John

  Atkins, Ronald (Preston N)

  Hardy, Peter

  Owen, Dr David

  Atkinson, Norman

  Harper, Joseph

  Palmer, Arthur

  Barnett, Guy (Greenwich)

  Harrison, Walter (Wakefield)

  Park, George

  Bates, Alf

  Hart, Rt Hon Judith

  Parry, Robert

  Bean, R. E.

  Hatton, Frank

  Pendry, Tom

  Benn, Rt Hon Anthony Wedgwood

  Hooley, Frank

  Penhallgon, David

  Bennett, Andrew (Stockport N)

  Hoyle, Doug (Nelson)

  Perry, Ernest

  Bishop, E. S.

  Huckfield, Les

  Price, C. (Lewisham W)

  Blenkinsop, Arthur

  Hughes, Mark (Durham)

  Price, William (Rugby)

  Bradley, Tom

  Hughes, Robert (Aberdeen N)

  Radice, Giles

  Bray, Dr Jeremy

  Hughes, Roy (Newport)

  Richardson, Miss Jo

  Brown, Hugh D. (Provan)

  Hunter, Adam

  Roderick, Caerwyn

  Brown, Ronald (Hackney S)

  Irving, Rt Hon S. (Dartford)

  Rodgers, George (Chorley)

  Buchan, Norman

  Jackson, Colin (Brighouse)

  Rooker, J. W.

  Buchanan, Richard

  Jackson, Miss Margaret (Lincoln)

  Roper, John

  Callaghan, Jim (Middleton & P)

  Janner, Greville

  Rose, Paul B.

  Campbell, Ian

  Jay, Rt Hon Douglas

  Ross, Stephen (Isle of Wight)

  Canavan, Dennis

  John, Brynmor

  Rowlands, Ted

  Carmichael, Nell

  Johnson, James (Hull West)

  Sandelson, Neville

  Cartwright, John

  Johnston, Russell (Inverness)

  Sedgemore, Brian

  Clemitson, Ivor

  Jones, Barry (East Flint)

  Selby, Harry

  Cocks, Michael (Bristol S)

  Judd, Frank

  Shaw, Arnold (Ilford South)

  Coleman, Donald

  Kaufman, Gerald

  Silkin, Rt Hon John (Deptford)

  Colquhoun, Ms Maureen

  Kilroy-Silk, Robert

  Silkin, Rt Hon S. C. (Dulwich)

  Cook, Robin F. (Edin C)

  Kinnock, Neil

  Silverman, Julius

  Corbett, Robin

  Lambie, David

  Skinner, Dennis

  Cox, Thomas (Tooting)

  Lamborn, Harry

  Small, William

  Craigen, J. M. (Maryhill)

  Lamond, James

  Smith, John (N Lanarkshire)

  Crawshaw, Richard

  Latham, Arthur (Paddington)

  Spearing, Nigel

  Crowther, Stan (Rotherham)

  Leadbitter, Ted

  Stallard, A. W.

  Cryer, Bob

  Litterick, Tom

  Stoddart, David

  Cunningham, Dr J. (Whiteh)

  Loyden, Eddie

  Stott, Roger

  Davidson, Arthur

  Lyons, Edward (Bradford W)

  Strang, Gavin

  Davies, Bryan (Enfield N)

  Mabon, Dr J. Dickson

  Summerskill, Hon Dr Shirley

  Davies, Denzil (Llanelli)

  McCartney, Hugh

  Swain, Thomas

  Davies, Ifor (Gower)

  McElhone, Frank

  Thomas, Jeffrey (Abertillery)

  Davis, Clinton (Hackney C)

  McGuire, Michael (Ince)

  Thomas, Ron (Bristol NW)

  Deakins, Eric

  Mackenzie, Gregor

  Tinn, James

  Dean, Joseph (Leeds West)

  Maclennan, Robert

  Urwin, T. W.

  Dempsey, James

  McMillan, Tom (Glasgow C)

  Varley, Rt Hon Eric G.

  Dormand, J. D.

  McNamara, Kevin

  Wainwright, Edwin (Dearne V)

  Douglas-Mann, Bruce

  Madden, Max

  Walden, Brian (B'ham, L'dyw'd)

  Duffy, A. E. P.

  Mallalieu, J. P. W.

  Walker, Harold (Doncaster)

  Dunnett, Jack

  Marks, Kenneth

  Walker, Terry (Kingswood)

  Eadie, Alex

  Marquand, David

  Ward, Michael

  Edge, Geoff

  Marshall, Dr Edmund (Goole)

  Weetch, Ken

  Ellis, John (Brigg & Scun)

  Maynard, Miss Joan

  White, Frank R. (Bury)

  English, Michael

  Meacher, Michael

  White, James (Pollok)

  Evans, Fred (Caerphilly)

  Mellish, Rt Hon Robert

  Wilson, Alexander (Hamilton)

  Evans, John (Newton)

  Mendelson, John

  Wilson, Sir Harold (Huyton)

  Ewing, Harry (Stirling)

  Mikardo, Ian

  Wilson, William (Coventry SE)

  Fernyhough, Rt Hon E.

  Millsn, Bruce

  Wise, Mrs Audrey

  Flannery, Martin

  Miller, Mrs Millie (Ilford N)

  Woodall, Alec

  Foot, Rt Hon Michael

  Moonman, Eric

  Fowler, Gerald (The Wrekin)

  Morris, Charles R. (Openshaw)

  TELLERS FOR THE AYES:

  Fraser, John (Lambeth, N'w'd)

  Murray, Rt Hon Ronald King

  Mr. Peter Snape and

  George, Bruce

  Newens, Stanley

  Mr. James Hamilton.

  Gilbert, Dr John

  Noble, Mike

  NOES

  Bennett, Sir Frederic (Torbay)

  Gower, Sir Raymond (Barry)

  Rippon, Rt Hon Geoffrey

  Bottomley, Peter

  Grist, lan

  Roberts, Michael (Cardiff NW)

  Brotherton, Michael

  Heseltine, Michael

  Sainsbury, Tim

  Chalker, Mrs Lynda

  Hunt, David (Wirral)

  Shaw, Giles (Pudsey)

  Clarke, Kenneth (Rushcliffe)

  King, Tom (Bridgwater)

  Sims, Roger

  Cooke, Robert (Bristol W)

  Marshall, Michael (Arundel)

  Stradling Thomas, J.

  Davies, Rt Hon J. (Knutsford)

  Meyer, Sir Anthony

  Townsend, Cyril D.

  Durant, Tony

  Miller, Hal (Bromsgrove)

  Winterton, Nicholas

  Eden, Rt Hon Sir John

  Montgomery, Fergus

  Edwards, Nicholas (Pembroke)

  Morgan-Giles, Rear-Admiral

  TELLERS FOR THE NOES:

  Fairbairn, Nicholas

  Nelson, Anthony

  Mr. Nicholas Ridley and

  Fairgrieve, Russell

  Renton, Tim (Mid-Sussex)

  Jim Lester.

  Gilmour, Sir John (East Fife)

  Question accordingly agreed to.
  The House divided: Ayes 178, Noes 33.
  Question put accordingly, That the clause be read a Second time:—

  Division No. 237.]

  AYES

  [2.10 a.m.

  Bennett, Sir Frederic (Torbay)

  Gower, Sir Raymond (Barry)

  Ridley, Hon Nicholas

  Bitten, John

  Grist, Ian

  Rippon, Rt Hon Geoffrey

  Bottomley, Peter

  Havers, Sir Michael

  Roberts, Michael (Cardiff NW)

  Brotherton, Michael

  Heseltine, Michael

  Ross, Stephen (Isle of Wight)

  Chalker, Mrs Lynda

  Hunt, David (Wirral)

  Sainsbury, Tim

  Clarke, Kenneth (Rushcliffe)

  Johnston, Russell (Inverness)

  Shaw, Giles (Pudsey)

  Cooke, Robert (Bristol W)

  King, Tom (Bridgwater)

  Sims, Roger

  Davies, Rt Hon J. (Knutstord)

  Lester, Jim (Beeston)

  Townsend, Cyril D.

  Durant, Tony

  Meyer, Sir Anthony

  Winterton, Nicholas

  Eden, Rt Hon Sir John

  Miller, Hal (Bromsgrove)

  Edwards, Nicholas (Pembroke)

  Montgomery, Fergus

  TELLERS FOR THE AYES:

  Fairbairn, Nicholas

  Morgan-Giles, Rear-Admiral

  Mr. Anthony Nelson and

  Fairgrieve, Russell

  Penhaligon, David

  Mr. John Stradling Thomas.

  Gilmour, Sir John (East Fife)

  Renton, Tim (Mid-Sussex)

  NOES

  Archer, Peter

  Gilbert, Dr John

  Ogden, Eric

  Armstrong, Ernest

  Golding, John

  Orme, Rt Hon Stanley

  Ashton, Joe

  Graham, Ted

  Ovenden, John

  Atkins, Ronald (Preston N)

  Grant, George (Morpeth)

  Owen, Dr David

  Atkinson, Norman

  Hamilton, James (Bothwell)

  Palmer, Arthur

  Barnett, Guy (Greenwich)

  Hardy, Peter

  Park, George

  Bates, Alf

  Harrison, Walter (Wakefield)

  Parry, Robert

  Bean, R. E.

  Hart, Rt Hon Judith

  Pendry, Tom

  Benn, Rt Hon Anthony Wedgwood

  Hatton, Frank

  Perry, Ernest

  Bennett, Andrew (Stockport N)

  Hooley, Frank

  Price, C. (Lewisham W)

  Bishop, E. S.

  Hoyle, Doug (Nelson)

  Price, William (Rugby)

  Blenkinsop, Arthur

  Huckfield, Les

  Radice, Giles

  Bradley, Tom

  Hughes, Mark (Durham)

  Richardson, Miss Jo

  Bray, Dr Jeremy

  Hughes, Robert (Aberdeen N)

  Roderick, Caerwyn

  Brown, Hugh D. (Provan)

  Hughes, Roy (Newport)

  Rodgers, George (Chorley)

  Brown, Ronald (Hackney S)

  Hunter, Adam

  Rooker, J. W.

  Buchan, Norman

  Irving, Rt Hon S. (Dartford)

  Roper, John

  Buchanan, Richard

  Jackson, Colin (Brighouse)

  Rose, Paul B.

  Callaghan, Jim (Middleton & P)

  Jackson, Miss Margaret (Lincoln)

  Rowlands, Ted

  Campbell, Ian

  Janner, Greville

  Sandelson, Neville

  Canavan, Dennis

  Jay, Rt Hon Douglas

  Sedgemore, Brian

  Carmichael, Neil

  John, Brynmor

  Selby, Harry

  Cartwright, John

  Johnson, James (Hull West)

  Shaw, Arnold (Ilford South)

  Clemitson, Ivor

  Jones, Barry (East Flint)

  Silkin, Rt Hon John (Deptford)

  Cocks, Michael (Bristol S)

  Judd, Frank

  Silkin, Rt Hon S. C. (Dulwich)

  Coleman, Donald

  Kaufman, Gerald

  Silverman, Julius

  Colquhoun, Ms Maureen

  Kilroy-Silk, Robert

  Skinner, Dennis

  Cook, Robin F. (Edin C)

  Kinnock, Neil

  Small, William

  Corbett, Robin

  Lambie, David

  Smith, John (N Lanarkshire)

  Cox, Thomas (Tooting)

  Lamborn, Harry

  Snape, Peter

  Craigen, J. M. (Maryhill)

  Lamond, James

  Spearing, Nigel

  Crawshaw, Rchard

  Latham, Arthur (Paddington)

  Stoddart, David

  Crowther, Stan (Rotherham)

  Leadbitter, Ted

  Stott, Roger

  Cryer, Bob

  Litterick, Tom

  Strang, Gavin

  Cunningham, Dr J. (Whiten)

  Loyden, Eddie

  Summerskill, Hon Dr Shirley

  Davidson, Arthur

  Lyons, Edward (Bradford W)

  Swain, Thomas

  Davies, Bryan (Enfield N)

  McCartney, Hugh

  Thomas, Jeffrey (Abertillery)

  Davies, Denzil (Lianelli)

  McElhone, Frank

  Thomas, Ron (Bristol NW)

  Davies, Ifor (Gower)

  McGuire, Michael (Ince)

  Tinn, James

  Davis, Clinton (Hackney C)

  MacKenzie, Gregor

  Urwin, T. W.

  Deakins, Eric

  Maclennan, Robert

  Varley, Rt Hon Eric G.

  Dean, Joseph (Leeds West)

  McMillan, Tom (Glasgow C)

  Wainwright, Edwin (Dearne V)

  Dempsey, James

  McNamara, Kevin

  Walden, Brian (B'ham, L'dyw'd)

  Dormand, J. D.

  Madden, Max

  Walker, Harold (Doncaster)

  Douglas-Mann, Bruce

  Mallalieu, J. P. W.

  Walker, Terry (Kingswood)

  Duffy, A. E. P.

  Marks, Kenneth

  Ward, Michael

  Dunnett, Jack

  Marquand, David

  Weetch, Ken

  Eadie, Alex

  Marshall, Dr Edmund (Goole)

  White, Frank R. (Bury)

  Edge, Geoff

  Maynard, Miss Joan

  White, James (Pollok)

  Ellis, John (Brigg & Scun)

  Meacher, Michael

  Wilson, Alexander (Hamilton)

  English, Michael

  Mellish, Rt Hon Robert

  Wilson, Sir Harold (Huyton)

  Evans, Fred (Caerphilly)

  Mendelson, John

  Wilson, William (Coventry SE)

  Evans, John (Newton)

  Mikardo, Ian

  Wise, Mrs Audrey

  Ewing, Harry (Stirling)

  Millan, Bruce

  Woodall, Alec

  Fernyhough, Rt Hon E.

  Miller, Mrs Millie (Ilford N)

  Flannery, Martin

  Moonman, Eric

  TELLERS FOR THE NOES:

  Foot, Rt Hon Michael

  Morris, Charles R. (Openshaw)

  Mr, Joseph Harper and

  Fowler, Gerald (The Wrekin)

  Murray, Rt Hon Ronald King

  Mr. A. W. Stallard.

  Fraser, John (Lambeth, N'w'd)

  Newens, Stanley

  George, Bruce

  Noble, Mike

  Question accordingly negatived.
  The House divided: Ayes 37, Noes 174.

New Clause 4

  DATE OF SUBMISSION OF ANNUAL REPORT TO PARLIAMENT
  'In section 24 (Accounts of the corporation and audit) at the end there shall be inserted:—
  "(8) The Secretary of State shall lay a copy of the annual report before each House of Parliament not later than three months after the end of the financial year."'.—[Mr. Giles Shaw.]
  Brought up, and read the First time.
  Mr. Giles Shaw: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker: With this clause we may also take New Clause 6—Quarterly accounts—and New Clause 7—Half yearly accounts.
  Mr. Shaw: I apologise, Mr. Deputy Speaker, that in subsection (8) in New Clause 4 reference is made to
  "a copy of the annual report"
  when it should read
  "a copy of the annual report and accounts".
  The matter was put to the Public Bill Office last Thursday. We requested that an amendment be made, but unfortunately that has not been done. I hope that the Under-Secretary of State will recognise that we are referring to the report and accounts.
  We are returning to possibly a much more important and valid topic for discussion by hon. Members on both sides of the House—namely, the role of Parliament in relation to the accountability of the corporation, and the way in which we should discharge our obligation to constituents and taxpayers. I hope that we shall have a full debate on what should be the role of Parliament.
  In each of the new clauses there is reference to the precise way in which Parliament should become involved. There are three principles involved in the clauses and it is for the benefit of the House that we should take the clauses together.
  The first principle at stake is how Parliament should discharge its obligation to taxpayers to ensure that the moneys we are subventing to the corporation are properly accounted for—[Interruption.]
  Mr. Deputy Speaker: Order. Mr. Shaw.
  Mr. Shaw: The second principle at stake is how should Parliament, in its duty to the board of the corporation, avoid interfering in the orderly management of its affairs. Anything we do in the way of scrutiny of accounts and examination of progress must bear in mind the overriding importance of ensuring that the corporation can continue with the full management of its own affairs.
  The third point of principle involved in these clauses is, how should Parliament be kept informed of the board's operating performance so that Parliament can have the right context in which to arrive at an appropriate decision on tranches of public expenditure in respect of which the Minister can lay an Order under the affirmative procedure?
  In relation to New Clauses 6 and 7 where we refer to quarterly or half-yearly accounts, I do not see any great difference in principle between those two forms of measurement. I do not think there is any major reason why we should prefer quarterly to half-yearly accounts, although we would all wish to see as regular accounting as possible. What is at stake is a decision on what should be the correct formula for the monitoring of the corporation's activities and the correct way in which this monitoring should be laid before the House. Therefore, I do not distinguish between the three and six months in those new clauses.
  We start with some slight advantage in knowing the Minister of State's commitment to public information. In fact, according to the Official Report of the Committee stage, the Minister of State said:
  "I am a great believer in providing the maximum possible amount of information for Parliament and the public on activities of publicly-owned corporations."—[Official Report, Standing Committee G, 15th June 1976, cc. 133–4.]
  Mr. Tom King: When is he going to start?
  Mr. Shaw: My hon. Friend the Member for Bridgwater (Mr. King) asks "When is he going to start?".
  Mr. Deputy Speaker: Order. Let us get a proper understanding on these three

  263
  proposed new clauses. The heading of New Clause 4 is:
  "Date of submission of annual report to Parliament."
  It is only a question of the date of submission which should be discussed on each of the clauses.
  Mr. Shaw: I think you will also agree, Mr. Deputy Speaker, that there are 365 permutations.
  Mr. Fairbairn: On a point of order, Mr. Deputy Speaker. When did the superscription of a clause ever control what the clause said? The fact that the superscription says
  "Date of submission of annual report to Parliament",
  which is not mentioned in any relevant way in the clause, is nothing to do with the matter.
  Mr. Deputy Speaker: We are dealing only with the dates of submission.
  Mr. Peter Bottomley: Further to that point of order, Mr. Deputy Speaker. You quoted the words "Date of submission …". The last five words are:
  "… of annual report to Parliament."
  Mr. Deputy Speaker: I am obliged to the hon. Gentleman. That is what I am saying. It is a question of the date of submission of the annual report to Parliament that we should be discussing.
  Mr. Shaw: I am very happy with your ruling, Mr. Deputy Speaker. It is a matter of the date of submission of which I am speaking.
  Subsection (8) of New Clause 4 states that a copy of the annual report and accounts shall be laid
  "before each House of Parliament not later than three months after the end of the financial year."
  It will also be recognised that in the subsequent new clauses we are dealing with quarterly or half-yearly accounts. We are at one in dealing with the question when these accounts are to be laid before the House and in what form, should the House agree to monitor the affairs of the British Steel Corporation. We acknowledge the fact that the Minister of State is clearly in favour of disclosure of all the activities, where possible, of publicly-owned corporations. The Minister of State said:
  264
  "Speaking again in general terms, I am a great believer in annual reports and accounts providing information in inverse ratio to the presentation."—[Official Report, Standing Committee G; 15th June 1976; c. 134.]
  The Under-Secretary will recall that we had a little joust about the way in which they should be presented.
  But since the Minister of State is clearly in favour of the disclosure in the report and accounts of as much information as possible about the corporation, there is little difference in principle between the two sides of the House on the matter. What concerns us is the time at which these reports shall be laid, and possibly the extent to which they should cover the activities of the corporation.
  2.30 a.m.
  In the debate on the previous new clause, my hon. Friend the Member for Arundel (Mr. Marshall) referred to the difficulties which the Standing Committee had in obtaining reports and accounts for any period later than March 1975. That was all we had when the Committee sat, and we wish to record our gratitude to the Minister of State for his efforts to obtain unaudited and draft accounts for the consideration of the Committee. But the fact that about one year after presentation of the previous year's accounts we did not have available for scrutiny in Committee the subsequent year's trading accounts and report of the corporation of itself suggests that there is need for statutory provision for the preparation of accounts and need also for a time scale within which that provision shall be met.
  Mr. Tony Durant: Is my hon. Friend aware that the current accounts are still not available? I have just tried to get them from the Vote Office.
  Mr. Shaw: I am interested to hear that. If we are to discuss this important Bill tonight, towards the middle of July 1976, and we do not yet have the report and accounts for the trading year 1975–76, that shows the need for amendment to the Bill in the way we propose. [Interruption.] I hope that the point which my hon. Friend made will have some influence on hon. Members below the Gangway.
  Mr Tom Swain: Tell "Cornfield" to shut up.
  Mr. Shaw: I always enjoy a minor intervention, but I fancy that interruption from below the Gangway is becoming major.
  Mr. Ridley: On a point of order, Mr. Speaker. The remark which came from the hon. Member for Derbyshire, North-East (Mr. Swain) was "Tell 'Cornfield' to shut up". Is that some code to which we are not privy?
  Mr. Speaker: Order. Terms of affection in this place are not a matter for me.
  Mr. Nicholas Winterton: I am most grateful, Mr. Speaker, for the compliment which you have just paid me, and I am grateful also to the hon. Member for Derbyshire, North-East (Mr. Swain) for passing it in the first place.
  Mr. Shaw: As one who went to university, sowed his wild oats, got ploughed and left to cultivate his own land, I am delighted to hear it, but I wish to bring the House back to the new clauses, and I trust that my efforts will be rewarded with some measure of concentration.
  We recognise that it is a major proposal that we should ask the corporation to lay a copy of the annual report and accounts before each House of Parliament not later than three months after the end of its financial year, but we have a duty to the public and to the House to ensure that financial housekeeping within the corporation, as in all nationalised undertakings, is treated as one of the most important criteria of performance by which we may judge its effectiveness.
  That requirement must apply however large the undertaking may be. The corporation has about 48 subsidiary companies, and it must be able to demonstrate to the House its efficiency and good housekeeping. [Interruption.] If the hon. Member for Luton, West (Mr. Sedgemore) does not wish to hear my speech. perhaps he will go out.
  In the context of financial control, we recognise that the relationship between the British Steel Corporation and the Department of Industry will undergo substantial examination in the investigation carried on by the National Economic Development Office. The Under-Secretary of State will recall that in Committee we set great store—as, I think, he does, too—by the expectation that this inquiry will
  266
  probably result in major changes in the way in which the interface between the Government and the corporation will be charted in future years. Obviously, financial management will be at the top of the list of priorities when one comes to consider methods whereby the corporation can give an account of itself not only to the sponsoring Department but to Parliament itself.
  In this clause we are dealing with the role of Parliament in relation to the report and accounts of the corporation, but if a Government are to reduce public expenditure, and if Parliament is to monitor the public sector, the early publication of the report and accounts of a major undertaking such as the BSC is essential.
  It would be relevant to the economy to have up-to-date accounts of an element in the economy as vital as the corporation. Indeed, I can think of nothing more important than that this House should have before it, within three months of the end of the financial year, the report and accounts of BSC to give the Government a clear view of that important sector of our economy. Annual reports and accounts are frequently dealt with as simple historic documents looking back to years long since forgotten. Certainly they are much less important than current documents in the calendar year in which decisions are taken.
  Furthermore, such information will clearly be relevant to Parliament's work. We know that the Select Committee on Nationalised Industries has found it difficult to obtain up-to-date information about the institutions which have been set up to monitor these matters, but all the work we carry out in Parliament on industrial debates—in employment, investment, regional policy and so on—concerns aspects of the economic management of a major undertaking such as the British Steel Corporation. It would undoubtedly be helpful to have this information within three calendar months. It is vital that reports and accounts are seen as soon as possible.
  We must remember that this is a reasonable commercial discipline. I accept that the Minister may offer some slight amendment in respect of the timing. If four months were thought to be a more viable concept than a period of three months, we would be willing to discuss amendment to our proposal, but what we

  267
  cannot willingly concede is the important principle of obtaining up-to-date information in the form of reports and accounts which are useful in discussing the future development of the BSC.
  I am well aware that Governments are always criticised for being slow in providing information. I recall that there was a sixteenth century Flemish proverb at the time Spain ruled the Low Countries: "If death came from Spain, we should all be immortal." It surely must be within the wit of the Department of Industry and BSC to provide reports and accounts within as short a period as three months.
  Mr. Fairbairn: My hon. Friend can rest assured that there is no risk of the present Government being immortal.
  Mr. Shaw: It is fairly clear that, after all these late nights, the Government and their supporters are dying on their feet. On page 20 of the Iron and Steel Act 1975, it is said in Part II, in Clause 24(3)
  "The accounts of the Corporation shall be audited by an auditor appointed by the Secretary of State, and a person shall not be qualified to be so appointed unless he is a member of one or more of the following bodies …".
  Almost every body of chartered accountants is listed in that Act to offer assistance to the corporation in the preparation of its accounts. Indeed, the provision concludes—and my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) will doubtless find this of great importance—
  "but a Scottish firm may be so appointed if each of the partners is qualified to be so appointed."
  Let us assume that there is within the corporation and within its financial advisers the capacity to produce the accounts within the limit that we have set in this new clause.
  There is a further element to the frequency with which these accounts should be set before the House, and it is directly related to the Bill. This is the vast scale of the borrowing requirement being laid before the House and therefore the real necessity to have a clear statement of how the corporation is proceeding and whether its financial investments are producing adequate returns, as we hope they would be.
  It is vitally important that we should remind ourselves that the object of the
  268
  Bill is to allow a major increase in the borrowing requirement, to allow that increase to be lifted by an Order laid before the House at possibly an even later hour than that appertaining tonight. Unless we have adequate financial information, we shall be unable to take a proper and full-hearted decision on it.
  I remind the House that the statutory limit was set four years ago at £300 million. That was in 1972. It was raised to £1,250 million about two years later and then raised in the 1975 Act to £2,000 million. It is now before the House in this Bill as £3,000 million, with the right to increase it by a further £1,000 million, subject only to an affirmative Order.
  The House must recognise that, given that scale of borrowing, the clause that we have tabled suggesting that the corporation's accounts are presented within three months is reasonable if the House is to be asked to give approval to this scale of investment by the corporation. When one looks at the other new clauses dealing with quarterly or six-monthly reports, one realises that it is equally relevant, if the House is to be asked to increase the tranches and the Minister comes before us with a simple statutory Order procedure, that we should have much more regular information about how far the corporation is proceeding. We cannot be asked to agree to another subvention being made to the corporation without a full and well-documented case about the latest financial returns that the corporation might make. We therefore need the report and accounts to be available to us with such frequency as is compatible with the requirements of the House of Commons taking a decision on matters affecting the borrowing requirement of the corporation.
  This clause is not the place in which to discuss such things as return on capital—that is a subject on its own—but it is right that we should draw attention to the fact that if the Government require the Price Commission, for example, to produce a quarterly report on all the pricing acitivities of British industry so that it can be laid before the House as a document of importance in discussing how the economy is behaving, it is not outside the wit of the Department of Industry or the corporation to lay a comparable report before the House on a quarterly basis.
  Mr. Hal Miller: Has my hon. Friend considered the situation under the National Enterprise Board where, before British Leyland gets a fresh tranche, we are to have the comments of the NEB on the company? Does my hon. Friend consider that with the BSC we should have not only the accounts but the Government's comments on them so that the House is able to take a reasoned view before authorising the release of the next tranche of money?
  Mr. Shaw: My hon. Friend has made a fair point. It so happens that, in relation to the NEB, we set up a new procedure under the Industry Act 1975 whereby we were able to go into considerable to detail about how that board should operate and what rôle Parliament should have towards it. In relation to the British Steel Corporation there is not the same degree of procedure laid down, and my hon. Friend is quite right to say that we could well do with the same disciplines being applied to the nationalised industries as are necessary for the National Enterprise Board. We have put this new clause before the House because it is our firm intention that Parliament should have a more important rôle in overseeing the activities of the British Steel Corporation than it has had in the past. This is necessary in principle because we are being asked to subvent vast sums of money to the corporation. Therfore we should have the most up-dated information available in the context of the BSC.
  2.45 p.m.
  Mr. Tom King: My hon. Friend says this is reasonable in principle. But he did express some concern in practice. What is a reasonable time in which the BSC might report? The amendment suggests three months. Has he had any discussions with the corporation on this point? How long does it feel it needs to report?
  Mr. Shaw: I think that ICI, as a matter of principle reports within seven weeks of the end of the financial year. The Minister may like to take that point on board. I welcomed his comments when we discussed this in Committee. The Minister produced very rapidly the unaudited—I admit—accounts in a short time. This led us to believe that the corporation does provide updated
  270
  accounts very regularly, as a demonstration of its financial progress.
  My right hon. Friend was right to point out that in large sectors of private industry the regular updating of accounts on a quarterly basis is not uncommon. Therefore, it is certainly both practical and desirable for the Corporation to do this as far as the House of Commons is concerned.
  Finally, I stress the fact that we cannot have, on behalf of the taxpayers, or on behalf of our own constituents, a thorough-going examination of the corporation unless the kind of information we have before the House is updated and relevant.
  I seek to get away from the tendency to regard the report and accounts as an historical document. If we had it more regularly it would become an aid to forecasting the direction in which the economy turns. If this debate gets us to look forward and to use the financial data of the British Steel Corporation to guide us in our deliberations of industrial policy, it has been worthwhile.
  Sir Anthony Meyer: want to support my hon. Friend the Member for Pudsey (Mr. Shaw) in his eloquent plea for strengthening parliamentary control over the BSC and over the supervision which the Secretary of State exercises over the corporation's activities.
  I must confess that I am rather less warm in my affection for the BSC than are many hon. Members on both sides of the House. To judge from the proceedings in Standing Committee, there was some vying on both sides in the protestations of good will towards the corporation. I feel rather churlish in adopting a less friendly attitude, but there are two very good reasons for this. Briefly, first of all—
  Mr. Speaker: Order. The hon. Member must be even briefer than that. His affection for the British Steel Corporation has nothing to do with the clause, which is to do with annual reports.
  Sir A. Meyer: I am seeking to show that by submitting regular annual reports and accounts very briefly after the financial year has ended, the corporation

  271
  would enable one to form a clearer judgment of what it is up to. If that judgment were favourable, it would alter my feelings of affection towards the board. But in deference to your ruling, Mr. Speaker, I will not dwell on the first point that I was going to make about the excessive share of the national resources being devoted to the steel strategy under the 10-year plan. That share is altogether disproportionate.
  I come to the point directly related to the new clauses, the importance of strengthening parliamentary control over the expenditure of the corporation as a means of keeping a close check on what the corporation is up to. One of the reasons why I am defective in affection for the corporation arises from what has happened over the steel works bordering on my constituency and in which many of my constituents work.
  Because of the inadequacy of the checks that this House is able to apply to the course of conduct proposed by the corporation, it is not possible to acquire the information needed in order to judge whether the proposals of the corporation for the closure of steelmaking at Shotton and for other closures are well-founded. Without up to date information, it is not possible to judge.
  Mr. Durant: Perhaps I can assist my hon. Friend. In the annual report for 1975, the type of activity he is referring to comes under the heading "Extraordinary Items", and it is merely stated that from time to time the corporation will need to close various plants.
  Sir A. Meyer: That is precisely the point I am coming to—the extraordinarily vague and ill-defined nature of the statistical information which the corporation provides when it is driven into a corner. It is not made easier for us to judge the rightness of its proposals on such scanty figures when there is frequent interference—I use the most neutral term possible—by Ministers in proposals by the corporation. These tear me apart because sometimes I approve what the Ministers are doing and disapprove what the corporation is doing.
  As a result of this situation, we have a see-saw effort. It is instructive to observe that the Sunday Times of 18th August 1974 referred to a last-ditch
  272
  effort to save the Shotton works. On the basis of the information available to us then, we had every reason to think that a decision was imminent. The Liverpool Daily Post of 19th July 1975—
  Mr. Max Madden: On a point of order, Mr. Speaker. While many of us would find the history of Shotton steel works of great interest, is it in order on this new clause?
  Mr. Speaker: It is not in order to discuss the whole question of closures and so on. I do not think that the hon. Member for Flint, West (Sir A. Meyer) was going to do that. I think that he was just illustrating his argument for a moment, but he must keep to the new clause.
  Mr. Michael Heseltine: Is not New Clause 5 being debated with this group?
  Mr. Speaker: The hon. Gentleman should pay more attention. That is a separate point.
  Sir A. Meyer: I would not dream of discussing the whole programme of closures. I am trying to point out the difficulty in arriving at an intelligent appreciation of the BSC's proposals or of Government policy on the inadequate and tardy statistics which are supplied to us and which would be remedied if the new clause were accepted.
  On 30th July we read a newspaper report headed:
  "Death sentence fixed for next week".
  The latest was this year when we read:
  "Silence over Shotton decision".
  Now the Minister promises a statement as soon as possible.
  Mr. Speaker: Order. We must discuss the question whether there is an annual report or the proposals in New Clauses 6 and 7.
  Sir A. Meyer: We need more regular, detailed information and the only way of getting that is through an annual half-yearly or quarterly report. If we had periodic, three-monthly figures to enable us to form an intelligent judgment, we could arrive at a rational assessment of the calculations that the BSC slips into a general rag bag when trying to sell its controversial proposals

  273
  to successive Governments for phasing out steelmaking at Shotton in favour of the big-plant strategy of concentrating all steelmaking at Port Talbot and shipping hot-rolled coil to Shotton for finishing.
  All the decisions that we must make whether a strategy is justified depend upon having up-to-date figures to enable us to balance the costs involved. The costs are marginal because they depend upon the unstated element of transport and shipping hot-rolled coil across North Wales to the South by means of an inadequate road and rail system.
  Without comprehensive figures it is not possible for us to form a considered judgment whether the Government's acceptance or rejection of the BSC's proposals is justified. The Minister must have encountered the difficulty of having statistics which are not sufficiently up to date for him to reach a decision.
  I strongly support the new clause. Perhaps on a later debate I can return in more detail to the costs involved in the Port Talbot and Shotton strategy. I hope that I have said enough to indicate the importance of providing figures, without which we cannot intelligently argue about proposals.
  3.0 a.m.
  Sir J. Eden: It is a matter for regret that this debate is having to be taken at this hour. [Interruption.] I could not hear what the Minister of State said. Does he wish to intervene?
  Mr. Kaufman: I said that if certain Conservative Members had not filibustered so shamefully on the Race Relations Bill this would not have happened. This Bill would have been taken much earlier.
  Mr. Speaker: Order. I did not hear the little exchange before, because my attention was distracted, but perhaps now we can come back to the annual report.
  Mr. Tom King: On a point of order, Mr. Speaker. Was not the reference by the Minister of State to the Race Relations Bill—I do not know whether he was here for any of the proceedings on that Bill—a reflection on the Chair? I understand that he accused my hon.
  274
  Friends of what can only be repetition, which would have been out of order.
  Mr. Speaker: I heard only half the exchange. Perhaps we can now return to the clause.
  Sir J. Eden: The point arose simply because I began by regretting that this important debate was having to take place at this hour. The Minister of State then intervened, at my invitation.
  Mr. Speaker: If the Minister made a remark about activities on some other occasion, it can have had nothing to do with the clause.
  Sir J. Eden: I think, Mr. Speaker, that you missed the context in which I was having the exchange with the hon. Gentleman. It is a matter for regret that we are having to have this important debate at this hour.
  Mr. Speaker: No one regrets that more than I do, but we must come to the clause, not the reason why we are discussing it at this time.
  Sir J. Eden: So far I have not been able to get beyond my first sentence and I have been called to order three times.
  This is one of the most important debates for Parliament. In normal circumstances it would command wide attention, not only in the House but throughout the country. It is of fundamental importance to us in this House. As a Minister in the previous Government, I had to grapple with the problem. Labour Members are now having to grapple with it. I know how difficult it is to deal with the accountability to Parliament of the vast nationalised industries. It is one of the hardest matters that we must all face up to and try to resolve. It will not be dealt with by debates held at this hour of the morning, for whatever reason. I hope that a means will be found to debate the matter more fully, perhaps on a report of the Select Committee on Nationalised Industries. All too often such debates, which are important to the House and the way in which it discharges its obligations to the electorate, are taken at odd hours of the morning or are sandwiched between other debates and curtailed.
  I have an interest which I declare to the House—in the products of the British Steel Corporation in a number of ways,

  275
  and I should like to get that on the record at once. My interest in the new clause, so ably moved by my hon. Friend the Member for Pudsey (Mr. Shaw), lies in the need to get good information about the affairs of the corporation as soon as possible. It is required not for interventionist purposes—I emphasise that—but in order that we may adequately and effectively discharge our obligations to the taxpayers and the electorate, who have a direct interest in the progress of these industries. The more nationalised industries there are and the more significant a factor in the economy they become, the more necessary it is for us in the House so to organise our affairs and our procedures that we have a proper working relationship with them.
  At the very base of this whole issue lie two other factors. First, there is the method by which and the degree to which the corporation itself exercises its own financial control. Unless there is effective financial control and management within the corporation, there cannot be the quality of information available in the report and accounts that the House ought to have.
  That takes me straight to the point made by my hon. Friend the Member for Pudsey and taken up in his intervention by my hon. Friend the Member for Bridgwater (Mr. King). This concerns the time that we should expect the corporation to take to prepare its annual report and accounts. Three or four months is a very short period.
  I have to admit quite openly that I have been a director of a company that does not succeed in doing that, and it is a very much smaller affair than the corporation. That is a condemnation of me and my colleagues on the board rather than an apologia for the corporation.
  However, it is an ideal towards which the corporation should be aiming. I accept what was said by my hon. Friend the Member for Bridgwater—a company with the enormous ramifications of ICI is able to produce its report and accounts very close to the end of its financial year. No doubt other giant corporations are able to achieve that. The examples of many United States companies, some of the biggest companies in the world, are valid in that they are able to publish their reports and accounts very close to the
  276
  ends of their financial years, thus making available to their shareholders relevant and topical information.
  Whatever period is specified, it is a goal towards which the corporation should be aiming and which we should be actively promoting and encouraging. It will be achieved more easily if there is regular financial reporting of all the constituent activities of the board of the corporation. This will come about if the board itself requires monthly reporting of all the financial statistics and progress for which the corporation is responsible.
  There would be on that basis no reason at all why the corporation should not provide half-yearly or even quarterly reports. Therefore, at the very least we should be aiming for a half-yearly report. If it is not possible to give the full progress in half a year, at least some formal interim half-yearly statement should be made which would be laid before the House and which would be capable of debate.
  I hope that the hon. Gentleman from the Whips' Office is not trying to curtail the debate. He may have missed the opening observations I chose to make as to the importance of the debate. So far we have had very few contributions, and I am trying to be as brief as possible.
  The other factor lying behind this—having mentioned the question of the quality of the financial control within the corporation itself—is the relationship between the corporation and the Government, the relationship between Government Ministers and the Government Department and the chairman and board of the corporation. This is the second key factor which lies behind the group of new clauses that we are considering.
  There are a number of ways by which Ministers might seek to discharge their obligation generally to oversee the activities of the nationalised industry. They might go for the details, the candle ends, and seek to intervene at many different points of time throughout the course of the year. They might seek to interpose themselves in between the decisions taken by the board and their execution by management further down the line. They might even seek to interfere with the taking of those decisions by the board in the first place.
  All these have been attempted by Ministers of all Governments over many

  277
  years. and no doubt I was as guilty as any of my predecessors and successors in this respect. But we have to look at this afresh. This grouping of new clauses, calling for annual reports and accounts and for more regular reporting to this House through the Secretary of State and through the Select Committee on Nationalised Industries, provides us with the opportunity to look more carefully and more critically at the methods by which Ministers and Government Departments seek to discharge their statutory obligations over these nationalised industries.
  The basis on which I hope that Ministers are seeking to carry out their own part of the commitment on behalf of the taxpayer is through properly constructed and fully examined corporate plans. If the Minister, in his reply, can give the assurance that there is a corporate plan in existence for the British Steel Corporation, that this has been the subject of full scrutiny and examination by him and his advisers, that should it have been necessary he was prepared to call in the assistance of outside qualified expertise, and that at the end of the day he had formally agreed the corporate plan with the corporation itself, then he must follow that up by saying that he has in existence a proper monitoring procedure.
  That monitoring procedure, if it is to mean anything at all, must rely on the financial information made available to him by the corporation, and that financial information must be made available, if not on a monthly basis—which is what I should like to see—then at the very least on a quarterly basis. Those quarterly reports to him should form the basis of quarterly reports to this House. I think that this is the approach that we should adopt, because what we are calling for in this group of amendments is not niggling intervention, not unnecessary additional labour to be imposed upon the management of an industry which already has burdens enough to carry, but the dissemination to Parliament and, through Parliament, to the taxpayer generally of that quality of financial information which should be available automatically to management and without which management could not properly discharge its own functions.
  278
  My hon. Friend the Member for Pudsey has done this House a great service in proposing this group of clauses, but, as I have said at the beginning of my remarks, this is an unfortunate moment to have this debate. However, it is a most important debate. I hope that the Minister will recognise it as such and not trivialise it in the way that he did the last clause that we discussed, which was just as important. We look forward to hearing a proper and considered reply from the hon. Gentleman.
  3.15 a.m.
  Mr. Les Huckfield: I thought that the right hon. Member for Bournemouth, West (Sir J. Eden) made a rather helpful speech—helpful, that is, until he came to his perforation—althtough I cannot agree with him in his desire to shackle the British Steel Corporation with obligations which are not at present imposed on the private sector. This has been the aim of the Oposition in these three new cluases.
  I refer first to New Clause 4, and I recognise the intention of the Opposition in moving it. However, the corporation has a good record in producing its annual report and accounts within four months of the end of the financial year, and this follows the best traditions of normal commercial practice. I am sure that the Opposition will recognise that to do this even more quickly would be an unduly onerous obligation to place on the corporation and would probably be impracticable as well. It is because of that that the House should reject the new clause.
  I come, then, to New Clauses 6 and 7 which follow in a similar vein in wishing to impose shackles on the corporation. The corporation already has the practice of publishing a half-year statement which is fully consistent with the requirements of the Stock Exchange for quoted corn-panics in the private sector. Such accounts are normally based on unaudited management information, and it would not be worthwhile to require either all the detail called for in the amendment or for the figures to be subject to the full scrutiny of the auditors. The requirement for an audit at this stage would give rise to expense and delay as well as a large amount of additional work.
  The Government believe that we should proceed by co-operation in these matters,

  279
  and therefore we urge the rejection this triad of new clauses.
  Perhaps I might refer to the rather peculiar speech of the hon. Member for Flint, West (Sir A. Meyer), who was bemoaning the lengthy delay in coming to a decision about Shotton. I remind him of his own voting record on that project at the time of the 1973 White Paper—
  Mr. Speaker: Order. I remind the Minister that that is not to do with the clause, either. It is not for me to advise the Minister, but he must deal with the new clause and not the voting records of other hon. Members.
  Mr. Huckfield: I was relating what the hon. Member for Flint, West said on that earlier occasion to the new clauses at present under discussion.
  However, because all three clauses seek to impose what we consider to be undue obligations and burdens on the corporation which are not currently placed on companies in the private sector, we urge their rejection.
  Mr. Nelson: I feel that we have had a most interesting and worthwhile debate on these new clauses. I would like to take this opportunity of perhaps emphasising a couple of the points which my hon. Friends have made, and which I hope some of my other hon. Friends will have the opportunity of expounding hereafter.
  My hon. Friend the Member for Pudsey (Mr. Shaw) opened the debate by discussing the important duty which the British Steel Corporation has towards the employees, the shareholders and to Parliament. He pointed out that the lack of information of a financial nature made available to the Committee of the House, preceding the important discussions which have taken place on the Bill, has inhibited a proper discussion of the important increase in the borrowing limits provided and has stultified some positive conversations which might otherwise have taken place in introducing proper cost controls within the corporation.

  Division No. 238.]

  AYES

  [3.21 a.m.

  Archer, Peter

  Atkinson, Norman

  Bean, R. E.

  Armstrong, Ernest

  Barnett, Guy (Greenwich)

  Benn, Rt Hon Anthony Wedgwood

  Atkins, Ronald (Preston N)

  Bates, Alf

  Bennett, Andrew (Stockport N)

  Mr. Durant: I merely wish to add of customers to my hon. Friend's list of people who are concerned.
  Mr. Nelson: I am most grateful to my hon. Friend. Although that was an omission on my part, my hon. Friend the Member for Pudsey did mention customers.
  The scale of the borrowing power has made it tremendously important that we have available to us up-to-date information of the kind which would be provided should the new clauses be introduced. My hon. Friend the Member for Flint, West (Sir A. Meyer) pointed out in a practical way, close to his own constituency interest, the importance of the provision of such information before major decisions are made either on particular plants or with regard to major policy decisions on major coastal plants or, perhaps, the mini-mill policy. Finally, my right hon. Friend the Member for Bournemouth, West (Sir J. Eden) spoke lucidly about the importance of parliamentary control and, indeed, of cost control within the British Steel Corporation which the objectives of these new clauses would certainly assist.
  For my part I feel that the changing circumstances of the British Steel Corporation, especially when it now involves new generations of plant and vastly increased amounts of money, call for much more regular accounting and up-dating of the information made available in order to assure the public, and Members of this House, that there is in no way any sense of window dressing in the performance of the corporation or, indeed, that there is inadequate control within the corporation of its own financial affairs. I feel that the out-of-date and inadequate information at present provided is a serious and debilitating factor in the proper discussion of the important matters such as those now before the House.
  Mr. Walter Harrison rose in his place and claimed to move, That the Question be now put.
  Question put, That the Question be now put:—
  The House divided: Ayes 163, 20.

  Bishop, E. S.

  Harper, Joseph

  Owen, Dr David

  Blenkinsop, Arthur

  Harrison, Walter (Wakefield)

  Palmer, Arthur

  Bradley, Tom

  Hart, Rt Hon Judith

  Park, George

  Bray, Dr Jeremy

  Hatton, Frank

  Parry, Robert

  Brown, Hugh D. (Provan)

  Hooley, Frank

  Pendry, Tom

  Brown, Ronald (Hackney S)

  Hoyle, Doug (Nelson)

  Penhaligon, David

  Buchan, Norman

  Huckfield, Les

  Perry, Ernest

  Buchanan, Richard

  Hughes, Robert (Aberdeen N)

  Price, C. (Lewisham W)

  Callaghan, Jim (Middlelon & P)

  Hughes, Roy (Newport)

  Price, William (Rugby)

  Campbell, Ian

  Hunter, Adam

  Radice, Giles

  Canavan, Dennis

  Irving, Rt Hon S. (Dartford)

  Richardson, Miss Jo

  Carmichael, Neil

  Jackson, Miss Margaret (Lincoln)

  Robertson, John (Paisley)

  Cartwright, John

  Janner, Greville

  Roderick, Caerwyn

  Clemitson, Ivor

  John, Brynmor

  Rodgers, George (Chorley)

  Cocks, Michael (Bristol S)

  Johnson, James (Hull West)

  Rooker, J. W.

  Coleman, Donald

  Johnston, Russell (Inverness)

  Roper, John

  Colquhoun, Ms Maureen

  Jones, Barry (East Flint)

  Rowlands, Ted

  Cook, Robin F. (Edin C)

  Judd, Frank

  Sandelson, Neville

  Cox, Thomas (Tooting)

  Kaufman, Gerald

  Sedgemore, Brian

  Craigen, J. M. (Maryhill)

  Kinnock, Neil

  Shaw, Arnold (Ilford South)

  Crawshaw, Richard

  Lambie, David

  Silkin, Rt Hon John (Deptford)

  Crowther, Stan (Rotherham)

  Lamborn, Harry

  Silkin, Rt Hon S. C. (Dulwich)

  Cryer, Bob

  Lamond, James

  Silverman, Julius

  Davies, Bryan (Enfield N)

  Latham, Arthur (Paddington)

  Skinner, Dennis

  Davies, Denzil (Llanelli)

  Litterick, Tom

  Small, William

  Davis, Clinton (Hackney C)

  Loyden, Eddie

  Smith, John (N Lanarkshire)

  Deakins, Eric

  Lyons, Edward (Bradford W)

  Spearing, Nigel

  Dean, Joseph (Leeds West)

  McCartney, Hugh

  Stallard, A. W.

  Dempsey, James

  McElhone, Frank

  Stott, Roger

  Dormand, J. D.

  McGuire, Michael (Ince)

  Strang, Gavin

  Douglas-Mann, Bruce

  MacKenzie, Gregor

  Swain, Thomas

  Duffy, A. E. P.

  Maclennan, Robert

  Thomas, Jeffrey (Abertillery)

  Dunnett, Jack

  McMillan, Tom (Glasgow C)

  Thomas, Ron (Bristol NW)

  Eadie, Alex

  McNamara, Kevin

  Tinn, James

  Edge, Geoff

  Madden, Max

  Urwin, T. W.

  Ellis, John (Brigg & Scun)

  Mallalieu, J. P. W.

  Varley, Rt Hon Eric G.

  English, Michael

  Marks, Kenneth

  Wainwright, Edwin (Dearne V)

  Evans, Fred (Caerphilly)

  Marquand, David

  Walden, Brian (B'ham, L'dyw'd

  Evans, John (Newton)

  Maynard, Miss Joan

  Walker, Terry (Kingswood)

  Ewing, Harry (Stirling)

  Meacher, Michael

  Ward, Michael

  Fernyhough, Rt Hon E.

  Mellish, Rt Hon Robert

  Weetch, Ken

  Flannery, Martin

  Mendelson, John

  White, Frank R. (Bury)

  Foot, Rt Hon Michael

  Mikardo, Ian

  White, James (Pollok)

  Fowler, Gerald (The Wrekin)

  Millan, Bruce

  Wilson, Alexander (Hamilton)

  Fraser, John (Lambeth, N'w'd)

  Miller, Mrs Millie (Ilford N)

  Wilson, Sir Harold (Huyton)

  Freud, Clement

  Moonman, Eric

  Wilson, William (Coventry SE)

  George, Bruce

  Morris, Charles R. (Openshaw)

  Wise, Mrs Audrey

  Gilbert, Dr John

  Murray, Rt Hon Ronald King

  Woodall, Alec

  Golding, John

  Newens, Stanley

  Graham, Ted

  Noble, Mike

  TELLERS FOR THE AYES:

  Grant, George (Morpeth)

  Ogden, Eric

  Mr. Peter Snape and

  Hamilton, James (Bothwell)

  Orme, Rt Hon Stanley

  Mr. David Stoddart

  Hardy, Peter

  Ovenden, John

  NOES

  Bennett, Sir Frederic (Torbay)

  Grist, Ian

  Shaw, Giles (Pudsey)

  Bottomley, Peter

  Heseltine, Michael

  Sims, Roger

  Brotherton, Michael

  King, Tom (Bridgwater)

  Stradling Thomas J.

  Durant, Tony

  Marshall, Michael (Arundel)

  Townsend, Cyril D.

  Eden, Rt Hon Sir John

  Meyer, Sir Anthony

  Fairbairn, Nicholas

  Miller, Hal (Bromsgrove)

  TELLERS FOR THE NOES

  Fairgrieve, Russell

  Nelson, Anthony

  Mr. Michael Roberts and

  Gower, Sir Raymond (Barry)

  Osborn, John

  Mr. Jim Lester..

  Question accordingly agreed to.
  Question put accordingly, That the clause be read a Second time:—

  Division No. 239.]

  AYES

  [3.32 a.m.

  Bennett, Sir Frederic (Torbay)

  Heseltine, Michael

  Sims, Roger

  Bottomley, Peter

  King, Tom (Bridgwater)

  Stradling Thomas, J.

  Brotherton, Michael

  Marshall, Michael (Arundel)

  Townsend, Cyril D.

  Durant, Tony

  Meyer, Sir Anthony

  Fairbairn, Nicholas

  Miller, Hal (Bromsgrove)

  TELLERS FOR THE AYES:

  Fairgrieve, Russell

  Nelson, Anthony

  Mr. Michael Roberts and

  Gower, Sir Raymond (Barry)

  Osborn, John

  Mr. Jim Lester.

  Grist, Ian

  Shaw, Giles (Pudsey)

  NOES

  Archer, Peter

  Asbton, Joe

  Atkinson, Norman

  Armstrong, Ernest

  Atkins, Ronald (Preston N)

  Barnett, Guy (Greenwich)

  The House divided: Ayes 19, Noes 165.

  Bates, Alf

  Hamilton, James (Bothwell)

  Ovenden, John

  Bean, R. E.

  Hardy, Peter

  Owen, Dr David

  Benn, Rt Hon Anthony Wedgwood

  Harper, Joseph

  Palmer, Arthur

  Bennett, Andrew (Stockport N)

  Harrison, Walter (Wakefield)

  Park, George

  Bishop, E. S.

  Hart, Rt Hon Judith

  Parry, Robert

  Blenkinsop, Arthur

  Hatton, Frank

  Penhaligon, David

  Bradley, Tom

  Hooley, Frank

  Perry, Ernest

  Bray, Dr Jeremy

  Hoyle, Doug (Nelson)

  Price, C. (Lewisham W)

  Brown, Hugh D. (Provan)

  Huckfield, Les

  Price, William (Rugby)

  Brown, Ronald (Hackney S)

  Hughes, Robert (Aberdeen N)

  Radice, Giles

  Buchan, Norman

  Hughes, Roy (Newport)

  Richardson, Miss Jo

  Buchanan, Richard

  Hunter, Adam

  Robertson, John (Paisley)

  Callaghan, Jim (Middleton & P)

  Irving, Rt Hon S. (Dartford)

  Roderick, Caerwyn

  Campbell, Ian

  Jackson, Miss Margaret (Lincoln)

  Rodgers, George (Chorley)

  Canavan, Dennis

  Janner, Greville

  Rooker, J. W.

  Carmichael, Neil

  John, Brynmor

  Roper, John

  Cartwright, John

  Johnson, James (Hull West)

  Rowlands, Ted

  Clemitson, Ivor

  Johnston, Russell (Inverness)

  Sandelson, Neville

  Cocks, Michael (Bristol S)

  Jones, Barry (East Flint)

  Sedgemore, Brian

  Coleman, Donald

  Judd, Frank

  Shaw, Arnold (Ilford South)

  Colquhoun, Ms Maureen

  Kaufman, Gerald

  Silkin, Rt Hon John (Deptford)

  Cook, Robin F. (Edin C)

  Kinnock, Neil

  Silkin, Rt Hon S. C. (Dulwich)

  Cox, Thomas (Tooting)

  Lambie, David

  Silverman, Julius

  Craigen, J. M. (Maryhill)

  Lamborn, Harry

  Skinner, Dennis

  Crawshaw, Richard

  Lamond, James

  Small, William

  Crowther, Stan (Rotherham)

  Latham, Arthur (Paddington)

  Smith, John (N Lanarkshire)

  Cryer, Bob

  Litterick, Tom

  Snape, Peter

  Cunningham, Dr J. (Whiteh)

  Loyden, Eddie

  Spearing, Nigel

  Davies, Bryan (Enfield N)

  Lyons, Edward (Bradford W)

  Stallard, A. W.

  Davies, Denzil (Llanelli)

  McCartney, Hugh

  Stoddart, David

  Davis, Clinton (Hackney C)

  McElhone, Frank

  Stott, Roger

  Deakins, Eric

  McGuire, Michael (Ince)

  Strang, Gavin

  Dean, Joseph (Leeds West)

  MacKenzie, Gregor

  Swain, Thomas

  Dempsey, James

  Maclennan, Robert

  Thomas, Jeffrey (Abertillery)

  Dormand, J. D.

  McMillan, Tom (Glasgow C)

  Thomas, Ron (Bristol NW)

  Douglas-Mann, Bruce

  McNamara, Kevin

  Tinn, James

  Duffy, A. E. P.

  Madden, Max

  Urwin, T. W.

  Dunnett, Jack

  Mallalieu, J. P. W.

  Varley, Rt Hon Eric G.

  Eadie, Alex

  Marks, Kenneth

  Wainwright, Edwin (Dearne V)

  Edge, Geoff

  Marquand, David

  Walden, Brian (B'ham, L'dyw'd')

  English, Michael

  Maynard, Miss Joan

  Walker, Terry (Kingswood)

  Evans, Fred (Caerphilly)

  Meacher, Michael

  Ward, Michael

  Evans, John (Newton)

  Mellish, Rt Hon Robert

  Weetch, Ken

  Ewing, Harry (Stirling)

  Mendelson, John

  White, Frank R. (Bury)

  Fernyhough, Rt Hon E.

  Mikardo, Ian

  White, James (Pollok)

  Flannery, Martin

  Millan, Bruce

  Wilson, Alexander (Hamilton)

  Foot, Rt Hon Michael

  Miller, Mrs Millie (Ilford N)

  Wilson, Sir Harold (Huyton)

  Fowler, Gerald (The Wrekin)

  Moonman, Eric

  Wilson, William (Coventry SE)

  Fraser, John (Lambeth,N'w'd)

  Morris, Charles R. (Openshaw)

  Wise, Mrs Audrey

  Freud, Clement

  Murray, Rt Hon Ronald King

  Woodall, Alec

  George, Bruce

  Newens, Stanley

  Gilbert, Dr John

  Noble, Mike

  TELLERS FOR THE NOES:

  Golding, John

  Ogden, Eric

  Mr. John Ellis and

  Graham, Ted

  Orme, Rt Hon Stanley

  Mr. Tom Pendry.

  Grant, George (Morpeth)

  Question accordingly negatived.
  Mr. Swain: On a point of order, Mr. Speaker. In view of the small number of Opposition Members present, will you consider using your discretion and invoking Standing Order No. 36, so that we might get our voting over in about three minutes instead of having to go through the tedious business of voting in the Lobby?
  Mr. Speaker: The hon. Gentleman should draw my attention to that situation the next time a Division is called, because it turns on the question whether a Division is unnecessarily called. I am not satisfied that a Division was unnecessarily called.

New Clause 5

  ANNUAL DETERMINATION OF RATE OF RETURN ON NET ASSETS
  'In section 14, subsections (4) and (5) shall be omitted and the following subsections shall be inserted:—
  "(4) The Secretary of State shall, with the approval of the Treasury and after consultation with the Corporation, determine annually the rate of return on net assets which the Secretary of State considers it is reasonable for the Corporation to achieve in each forthcoming financial year.
  (5) The Secretary of State shall give notice to the Corporation and to the House of Commons of the determination under subsection (4) above when he lays the annual report before both Houses of Parliament"'.—[Mr. Nelson.]
  Brought up, and read the First time.
  3.45 a.m.
  Mr. Nelson: I beg to move, That the clause be read a Second time.
  I hope that this clause will be considered sympathetically because it deals with the important matter of the future prosperity of British steel.
  The current target of BSC of 8 per cent. of net assets for the four years 1972–1977 as has become increasingly obvious, cannot be matched by the performance of the corporation. The question of a proper target for the corporation, or any other public sector industry, has never received proper discussion in this House at a time when the level of public funds to those industries has increased substantially. The matter is worthy of greater consideration and attention than some Labour Members seem to be affording it on this occasion.
  Section 14(4) of the Iron and Steel Act 1975 provides that
  "The Secretary of State may from time to time determine — the rate of return on net assets"
  of the BSC. That in no way pre-empts what is proposed in the new clause. We feel that as there is no requirement that the Secretary of State shall determine an adequate rate of return, or a rate of return at all, this should be instituted in the legislation affecting the financing of the corporation.
  Section 14 of the Act is defective in a number of major ways. First, there is no requirement that the Secretary of State shall set a target for the corporation—a corporation which has utilised over 1,000 million of taxpayers' money. The proper machinery should exist requiring a target to be set so that we should be able to see whether that target is a proper one each year, measured by the performance of the corporation.
  The present target is meaningless. The pre-tax profit of the corporation has varied considerably in the last four years, and so has the return as a percentage of net asset value. In the years 1973–74 and 1974–75 the BSC made a pre-tax profit of £56 million and £89 million respectively. In both years it had net assets of £756 million and £879 million, thus producing a return in both years of 7 per cent. of net assets employed and 10 per cent. But in the latest year under con-
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  sideration, for which the Secretary of State has produced and published figures, the loss for the corporation amounted to £245 million. That resulted in eradicating a surplus achieved in recent years and in writing down the net assets of the corporation. Although the public dividend capital was increased, producing net assets of £947 million, it was not sufficient to avert a return on net assets employed of minus 25 per cent. That is the factual performance of the British Steel Corporation over the past three years compared with the 8 per cent. target which was set about four years ago and which has been reflected in an actual performance of an average of minus 2·6 per cent.
  I appreciate that the figures are dry, but they are important because they involve substantial amounts of money and we have a proper remit both to scrutinise the efficiency with which the corporation tries to carry out the targets set for it and its ability over a period of time—three or four years now—to measure up to that prospect. We now have the prospect for the year ahead of a nil return for the corporation. We hope that it will break even this year, but it will by no means measure up to the 8 per cent. set for it.
  There is no fixed period under the 1975 Act for achieving a target, and there is no indication whether the target is to be an average target over a number of years or a target for each year within a period of an investment programme or a period of accounting under consideration. There are no means by which Parliament must be made aware of the target, and therefore there is no ability on the part of Parliament to assess the corporation's results. In our view it may be even more meaningless as the debt-equity ratio of the corporation has increased to the current level in recent years and the losses incurred by the corporation have written down the total assets and therefore made the target, which is a percentage of net assets, increasingly meaningless. I feel, and I hope that this view will be shared by hon. Members on both sides of the House, that an adequate target can be both set for and required to be implemented by the British Steel Corporation.
  During the Second Reading debate the Minister in answer to the hon. Member

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  for Motherwell and Wishaw (Dr. Bray) said:
  "Of course we have to approach these matters responsibly and to have appropriate financial targets."—[Official Report, 26th April 1976; Vol. 910, c. 108.]
  On 29th January of this year in answer to a Question the same Minister said that the four-year target of 8 per cent. that was set in 1972 was still operative. I recognise the problem that the Minister has had and the lack of financial information that was mentioned in an earlier debate, but we feel that this figure has become increasingly meaningless, and we find those two statements incompatible. We feel that not only should a meaningful target be set for the corporation but that it should be instituted on a regular basis and be a requirement for future Governments.
  Without the discipline of an annual rate of return the affairs of the corporation will drift into policies of hunch and blind faith. The Financial Times last week reported that the cost of the investment programme of the corporation had risen from about £3,000 million estimated in the 1973 White Paper to between £5,000 million and £7,000 million—a fantastic increase which tops the estimate of the Secretary of State during the Second Reading debate and compares dismally with the original targets set in the 1973 White Paper.
  It is almost certain that the corporation will fail to achieve the target that has been set for it, and also that it will fail to achieve its target of 40,000 job redundancies by the end of 1977. What chance is there of the corporation achieving any target against that background of performance?
  We nevertheless feel strongly that it is an important financial discipline to impose on the corporation that such a requirement be given legislative effect and that consideration be given to machinery for trying to work out on a budgetary basis year by year what an appropriate return should be. That is why, in the words of New Clause 5, we have set the requirement that the Secretary of State shall consult the corporation and, indeed, that annually he will determine that rate.
  The Government have concluded an agreement with the trade unions on wage restraint for the forthcoming year. They
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  have set and raised their expectations of growth in the GDP in the current year, yet they have no meaningful target for the performance of the BSC, which consumes 8 per cent. of the public sector borrowing requirement and the public debt for the following years. This corporation employs 213,000 people, and we are seeking to double its borrowing powers to £4,000 million, yet no meaningful target exists, and there is no requirement in legislation that such a target should be met on a regular basis.
  Sir Charles Villiers, who described his appointment to the chairmanship of the BSC as 'a dream come true", certainly could not make that remark about the corporation's performance target. When describing his style of management, he said that, after careful monitoring, he believed in very heavy penalties for failure.
  Yet we, as the trustees for the public purse, have no adequate powers of monitoring, of providing penalties or indeed, of knowing what amounts to failure or success in the performance of the BSC. This is a problem with which we have grappled for some time, but we have sought, on a piecemeal basis, to try to obtain a critical opinion of the performance of the corporation, and the criteria set for it.
  We believe that the public sectors of British industry are embarking on massive investment programmes in steel, coal, oil, gas and communications, and the new generation of capital plant will draw on public finance to an unprecedented level. In these circumstances, the time has come to discard the inadequate monitoring, budgeting and financial objectives of yesterday, and to introduce a tighter and more positive encouragement to these corporations to fulfil their potential.
  As a means to this end, I recommend the new clause to the House.
  Mr. Swain: On a point of order, Mr. Speaker. Would you give a ruling on whether a Division can take place on this clause when so few Opposition Members are present?
  Mr. Speaker: Order. No one has called a Division yet.
  Mr. Heseltine: Further to that point of order, Mr. Speaker. I was under the impression that the Minister was going

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  to do us the courtesy of replying to the debate. I am sure it would help the House if we knew whether we were to receive the customary reply.
  Mr. Speaker: I have answered the point of order of the hon. Member for Derbyshire, North-East (Mr. Swaint). I do not know the answer to the point raised by the hon. Member for Henley (Mr. Heseltine). Is the Minister about to reply?
  Mr. Kaufman: I was interested to hear how the Opposition are proposing to add more "crucial legislation" to the Bill. As I have listened I have wondered more than once why such proposals were not included in the Iron and Steel Act 1972.
  The requirement to set a target rate of return for each year, as the hon. Member suggests, would amount to much the same thing as publishing a profit forecast for the year ahead. It would not be likely to stimulate better performance than present practice, which is to set a target for a longer period, taking into account the overall performance to be expected and the fluctuations due to the steel demand cycle. Many management decisions in an organisation the size of the BSC take time to work through and to be reflected in the financial results.
  4.0 a.m.
  To give the management reasonable flexibility and so place on it proper responsibility for performance, the target period must be sufficiently long. The restraint of having to secure a specified return on a one-year horizon would almost certainly lead to a style of short-term decision-making which would neither be right for the corporation nor in the wider national interest. The Government already publish a forecast of funds available to the corporation from internal resources a year ahead in the Financial Statement and Budget Report. This does not give quite the same detail as a profit forecast, but is nevertheless an indication of likely performance.
  A statutory requirement on the Secretary of State to inform Parliament of financial targets he has set is hardly necessary, since the practice is for such targets to be announced in Parliament. In any case, the corporation makes a practice of stating its target in each annual report. Since
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  the main effect of this new clause would be to place an undesirable short-term constraint on the operations of the BSC management, it should be rejected.
  Mr. Michael Marshall: It was good to hear the Minister of State on his feet at last. We had been looking forward to it all evening. I am sorry that he has dismissed the new clause. On Second Reading, particularly on the urging of the hon. Member for Motherwell and Wishaw (Dr. Bray), there was clear evidence of a wide interest on both sides of the House in the question of looking at the financial target. The financial target having brought a return in only two years out of the last five, it is increasingly a matter of irrelevance, if not for scorn and derision.
  It would have been helpful to have more constructive thinking from the Government and an indication that they were prepared to look seriously at a review of the target. I understand that the Minister, seeking to keep the proceedings short, has had to take a number of short cuts through his speeches, but that is the Government's problem in bringing business forward at this late hour. [Interruption.] If hon. Members wish to intervene, we shall be glad to listen to their speeches. Our own speeches have been sound and well-argued and they will well repay study in Hansard.
  There is a serious point at issue here. I hope that the Government will think again. We have not sought simply to talk for the sake of talk. This is a serious question. It will come up again and again. It is bound to come up, for example, when we are looking at the final tranche of borrowing. We shall want to look again at this question when we come to the £3,000 to £4,000 million borrowing level. I urge the Government to think again about this matter because it is an important principle, but for the moment we believe that we have given it a proper airing.
  Question put and negatived.

Clause 2

  INCREASE IN BORROWING POWERS OF CORPORATION, ETC.
  Mr. Nelson: I beg to move Amendment No. 1, in page 2, line 3, leave out from million' to end of line 5.

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  The object is to prevent the Secretary of State from raising the borrowing limit of the corporation to £4,000 million without introducing a Bill. We believe that there are good reasons for this, substantiated in Committee by the inadequacy of the information presented for the initial increase in borrowing to £3,000 million, and embodied in the Minister's own reasoning for introducing an Order procedure to allow a further tranche of borrowing at a further stage of up to £4,000 million. The sum of £1,000 million, or 8 per cent. of this year's public sector borrowing requirement, should not go through on the nod by the Order procedure, which requires only the approval of the House of Commons and which requires no supporting information, report or prospectus.
  In Committee we discussed at length the possibility of bringing forward a prospectus along the lines of those produced by commercial bodies which seek substantially to increase borrowing powers. We increasingly believe that, as these amounts are growing larger and larger—and under the present Government the public sector is growing out of all proportion to the ability of the people to afford it—it is appropriate that an adequate prospectus be required, to set out detailed information. That would ensure that there was some justification for the form of finance made available.
  The Minister is happy to allow an increase in the borrowing powers to £3,000 million but that is as far as it should go. Should there be the necessity for raising it by another £1 billion there should be the same parliamentary scrutiny and sanction as we have accorded to the initial increase, which amounts to 50 per cent. If an Act is necessary to raise the borrowing power from £2 billion to £3 billion, an Act should be necessary to raise it from £3 billion to £4 billion.
  The BSC has an inadequate method of scrutinising and sanctioning such an increase. Both the sums of £3 billion and £4 billion are out of date. The Financial Times, to which I have referred, said that there had been a substantial increase in the cost of the modernisation programme and that, taking account of inflation over recent years, it might now cost between £5 billion and £7 billion. That is substan-
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  tially more than that acknowledged by the Minister on Second Reading or by Sir Monty Finniston in his letter dated 21st May to my hon. Friend the Member for Arundel (Mr. Marshall) in which he said:
  "Over the four-year period from April 1976 to March 1980 we foresee an increase of about £3,000 million in our total borrowings counting against the borrowing limit. Over that period some £4,000 million would be required for the ongoing massive capital investment programme and other investments (again on our best assumptions about inflation) and little short of £1,000 million for increased working capital; but nearly £2,000 million of this should come from self-generated funds in the form of retained profits, depreciation and development grants."
  That is the latest estimate of the cost of the BSC's development programme. The substantially altered cash flow projections, which the former chairman of the corporation set out in his letter, means that the BSC will reach both the £3 billion limit and the £4 billion limit earlier than 1978 and 1980 respectively. That is a matter for concern. The cost of the investment programme has substantially increased—perhaps more than doubled in the space of a few years—and on top of that there is the prospect of the borrowing powers being made substantially nearer those thought likely by the BSC. The Secretary of State is reported to be revealing to the House later this month the detailed strategy for the development of public sector steelmaking.
  Are we not entitled to be privy to this information before discussing the complexities of a Bill like this? Were we not entitled to a statement if, as has been suggested, it is a major change or embellishment of the existing policy, so that we may know the Government's exact intentions towards the conduct and management of the corporation before sanctioning a massive increase in the borrowings?
  We should also like to know the conclusion of the little Neddy which has been inquiring into the iron and steel industries. Both that information and the detailed financial accounting information should have been available to the Committee and the House. Without it we have no way of knowing whether we are doing a proper job as trustees of the public purse by sanctioning at some indeterminate date a substantial increase in the corporation's borrowing powers.

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  We hear that the Government's working party is concerned by a failure to achieve smooth implementation of the steel development programme and that productivity and manning levels in the corporation are not making sufficient progress. Are we not entitled to know what progress has been made, whether it is sufficient, whether it matches up to the agreement that the corporation made with the trade unions earlier this year, and whether it justifies some of the assumptions which the Government have made? [Interruption.]
  Mr. Deputy Speaker (Mr. Oscar Murton): Order. It is wrong for hon. Members to make interventions from a sedentary position, even if they are pointing apparently at an empty Bench.
  Mr. Nelson: I share your concern, Mr. Deputy Speaker. I had felt that all my points were valid and new, arising out of discussions in Committee which involved scrutiny of a substantial amount of public money, and that we were entirely proper in our concern to ensure that there was proper scrutiny. We are suggesting something which should find agreement on both sides of the House. It is terrifying that we can face each other, shadow boxing all night, and when a sensible proposition is advanced in an amendment such as this it is met with nothing but jeers and jokes from the giggle group on the Labour Benches.
  As the corporation's borrowing limits will inevitably be reached, probably sooner than projected, why not provide in the Bill one limit which can be justified now and substantiated on the basis of the information the Government have made available? We welcome what information has been provided, particularly the unaudited statement of accounts that the Minister was good enough to obtain for members of the Committee. But if more is needed in some years' time, let the Parliament of that day consider the matter on the facts available. It should not be our remit at this time of stringent economic conditions to provide contingent finance for public-sector industries.
  Mr. Kaufman: The amendment is not acceptable to the Government. Even though the immediate increase of £1,000 million in the British Steel Corporation's
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  statutory borrowing limit, as provided for in the Bill, looks very large, the scale of the corporation's operations and its financing needs under the development plan approved by the right hon. Member for Worcester (Mr. Walker) when he was Secretary of State for Trade and Industry are such that £1,000 million could not be expected to last very long. Given the time normally required for the passage of legislation, it would be only about another year before the House would have to start considering a further increase.
  While the Government fully accept that the House should have an opportunity from time to time to debate the BSC's affairs, it is unnecessary and unduly cumbersome to consider the borrowing limit at intervals as frequent as one year. It was only a year ago that the matter was covered in another Bill, now the Statutory Corporations (Financial Provisions) Act 1975. The present Bill provides for a further increase in the limit to be made by statutory Order subject to affirmative resolution of this House, so the House will then have an occasion to debate the matter. To go further is unnecessary.
  4.15 a.m.
  Mr. Fairbairn: I find it amazing that Government supporters should find it useful to point to these empty Benches when throughout the Report stage and Third Reading of the Development Land Tax Bill, which is supposed to represent their policy, not one Labour Member was present to support the Minister. [Interruption.] I am perfectly willing to wait for the obscenities of hon. Members opposite to die down. I do not think that I can be accused of provocation when Labour Members are making remarks such as those about getting criminals out of gaol.
  Mr. Deputy Speaker: Order. I fail to see what this has to do with the amendment.
  Mr. Fairbairn: We ought not to forget that we are discussing proposals that will increase the borrowing power of the British Steel Corporation by £2,000 million. I represent about a thousandth of the country's voters, which means that we are discussing a debt for my constituents of £2 million. Labour Members who represent urban areas are committing their constituencies to debts of £2 million or £4 million. We should not regard as

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  frivolous the reality of what we are doing to our constituents. [HON. MEMBERS: "You are frivolous."] Hon. Members say that my attendance here is frivolous, but they were not here when we discussed the Development Land Tax Bill.
  Mr. Deputy Speaker: Order. The House must conduct itself with more courtesy.
  Mr. Fairbairn: I am obliged to you, Mr. Deputy Speaker. Let us be realistic. Labour Members are often anxious about the rents and taxes that their constituents have to pay. They are anxious about poverty and about debt. Let us not treat as frivolous legislation that will commit each of our constituencies to a debt of between £2 million and £4 million. Let us be absolutely clear about what we are doing.
  The Minister spoke glibly of £1,000 million lasting only a year and if its being cumbersome to come back for more every year; and so we have £2,000 million and we have the Government coming back every two years. What is not cumbersome about two years that is cumbersome about one year?
  Mr. J. W. Rooker: An extra 12 months.
  Mr. Fairbairn: An extra 12 months. Just an extra £1,000 million. We need to get some order and reality into this matter. What does not impress me about Members on the Government side is that they constantly call for control and for public accountability, and say that the people should own everything. They call for democratic principles. [Interruption.] But here we have the people's money and they are saying that the people should not have any control over the spending of it. They say "If the Minister thinks it would be a nuisance to come back in a year, let us make it £2,000 million." Why not £10,000 million? There is no principle in Members on the Government side. They are not concerned with tax or with the real effect on human beings, or on their constituents. They just believe in extravagance.
  Mr. Flannery: What about Lonrho?
  Mr. Fairbairn: I do not think that Lonrho arises in the amendment.
  Mr. Tom King: On a point of order, Mr. Deputy Speaker. We were making quite reasonable progress but I think it will be within your observation that since the sedentary interruptions have started we are now making slower and slower progress. I appreciate your difficulties in controlling the House. But there are some hon. Members who are interested in making progress.
  Mr. Deputy Speaker: I am not aware of any difficulty that the Chair may be having in controlling the House. The Chair will make the decisions. I should indeed be grateful if there were fewer interruptions and if the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) would continue as quickly as possible with his speech.
  Mr. Fairbairn: I am not upset by the bad manners of hon. Members opposite—
  Mr. Deputy Speaker: I am appealing for courtesy on both sides. Perhaps we can continue with the debate. I hope that hon. Members will keep strictly to the amendment.
  Mr. Fairbairn: I am not even upset by the courtesy of hon. Members opposite. But I was asked a very simple question. I was asked "What about Lonrho?" It is very relevant to this matter. The Steel Corporation has to borrow £4,000 million. Lonrho cancels out that sum. That is the difference.
  I refer to the report of the steel corporation on this matter. Hon. Members opposite will no doubt be interested in it. Under three consolidated accounts, the subsidiary companies of the corporation, which with minor exceptions have been consolidated in these accounts, are those in which the corporation holds either directly or indirectly more than 50 per cent. of the equity. The exceptions relate to companies in liquidation, subsidiaries in Rhodesia and a few more subsidiaries the consolidations of which would be of no real value in view of the insignificant amounts involved. The insignificant amounts involved are only £10 million. Let us be clear. We are dealing with money, with human beings. That is all it is about.
  If we are to say that these corporations, these nationalised industries, are accountable to the people, who are their

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  representatives, if not us? To whom can they report, if not us? To whom can they appeal, if it is not us? To talk of another £1,000 million so that the Minister does not have the inconvenience of having to come back in a year seems to me to be an offence against each constituent, which each of us, whatever view we take, represents.
  Let us be clear that we represent the interests of our constituents who earn the few pounds from which the tax will be taken, and out of which this will have to be paid. It is easy for hon. Members opposite to giggle and laugh and to think that it is easy to raise £1,000 million, but it will be coming out of the wage packets of those whom they continually claim are the people who are over-taxed, who are over-burdened, who are over-poor. Yet in one sentence they can ask "What is £1,000 million for another year?" [Interruption.] The sedentary objections made by Government supporters below the Gangway do nothing but prolong my remarks. I hope that, one day, they will realise that the money has to come out of the wage packets of those whom they represent and they should not pass measures of this kind so easily, assuming that the money will come from someone else. It comes from their constituents—
  Mr. Flannery: So do the profits looted from them.
  Mr. Deputy Speaker: Order. We cannot have two simultaneous debates from both sides of the House. I appeal to hon. Members to allow the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) to get on with his speech, so that we can perhaps make progress.
  Mr. Fairbairn: I am obliged to you, Mr. Deputy Speaker. However, the point made by the hon. Member for Sheffield, Hillsborough (Mr. Flannery) is a good one. So do the profits looted from them, as he puts it. But it is from profits that tax comes. It has to come either from profits or from wages. That is where the £1,000 million will come from, unless it is borrowed from the Arabs, and that eventually will have to come out of wages.
  Let us not be fundamentally stupid. The money has to come from one or the other, and, since there are not many profits left, it will have to come from wages.
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  So do not let us agree another £1,000 million as a mere nothing, as if it did not affect anyone except the rich. It affects every constituent whom we represent.
  Let us not overlook the fact that it is irresponsible for this House merely to say "Anything will do—£3,000 million, £4,000 million: it does not matter. The Minister can decide." If that were the attitude of a private company, Government supporters would object strongly. Let us not allow it to be the conduct of this House.
  Mr. John H. Osborn: I have been interested in the iron and steel industry all my life, and to speak in this House as dawn breaks is no unusual experience for me. But when I was doing it 10 years ago, the conditions were different. The proposal then was to bring steel into public ownership in order to improve the efficiency of the industry and to produce an industry of which the nation could be proud. Just about 10 years ago, these debates were at their height. If I had been asleep for the past 10 years and had awakened this morning, I should feel rather like Alice in Wonderland meeting the Mad Hatter.
  A number of very good new clauses and an amendment have been put forward to control public expenditure and to control money which must come either from outside sources or from the hard-pressed taxpayer. As regards this amendment, I am surprised that the Minister has been allowed by the Treasury to insert the figure of £4,000 million at this very critical time. I wonder whether the Chancellor of the Exchequer and the Treasury, on behalf of taxpayers and the people lending money to the country, have done their job.
  We have a Select Committee on the Nationalised Industries and we have other Select Committees looking at the expenditure of the public sector, and it comes as a shock to me to discover that we are discussing a difference not of £300 million or £400 million but of £3,000 million or £4,000 million.
  The Opposition want to include a provision to demand, as any outside banker would demand, a reasonable assessment year by year of the return on capital. I visit many companies, including the British Steel Corporation in my area. The

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  professional management is there in both the private and public sector. Perhaps, in the public sector, management is disspirited in many ways because it is unable to control the rising and mammoth public expenditure and investment for which it is responsible. But the same problems rest with the private sector. As has been pointed out, the sources for public finance must come from the individual and from the corporate company as taxpayer to meet ventures such as this.
  4.30 a.m.
  I would make it clear that I am a Member of Parliament from the Sheffield area, who has been in the steel industry all his life, who wants to see wise capital investment, and good capital investment, in the steel industry. There are added problems in my area for it appears that steel is being dumped in Sheffield itself. One might analyse the reason for this. We in Sheffield want proof about whether, in fact, our competitors are dumping steel in Sheffield and whether the steel produced in other steel works, where productivity is very much greater, is not the cause of the dilemma with which we are faced.
  However, the money-lenders, the bankers and those, who in this case represent the Sate, must ensure that there is adequate return on capital. They must ensure that as money is loaned on a major capital investment project of this type, that project is going well. Perhaps the tragedy is that we are not able to break this expenditure up into small packages so that we can assess the competence of the management. As the present chairman and previous chairmen have found, management within a corporate body such as the British Steel Corporation must be extremely difficult. Obviously, having embarked on an investment programme, which seems to be escalating, some formula must be found for not having to cut it back.
  Hon. Members opposite should remember that I meet many business men, chairmen and boards who are looking at the capital investment of their own companies. They have not got dissolute bankers, perhaps an almost dissolute Treasury, behind them such as the steel industry, and other public sector companies, have. They have bankers who apply the disciplines which are applied
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  in the steel industries elsewhere in the world. At the present time too many boards resent the criticism, which has been voiced in the last 12 hours in this House, in respect of private boards not proceeding with investment programmes on the scale of State industry. One reason is that the funds to finance the steel corporation, and other public projects, are coming from over-taxed private sector industry.
  It is wrong, at this hour, to ignore an amendment such as this. It is a reasonable amendment and I believe that the taxpayers in this country would support the proposal that the Select Committees advising the House should apply control, for unless the Chancellor puts the brakes on this country will suffer a further lowering in the value of the pound.
  I think that I have said enough. My colleagues on this side of the House, for the last two or three hours, have carried out a valuable operation in the interests of the taxpayers and people of this country. I hope that the Minister will have second thoughts in respect of this amendment. I hope that a Treasury adviser is present. Perhaps we ought to have more advice from the Treasury at this time. A blank cheque for £4,000 million in present circumstances is a recipe for economic catastrophe. I hope that in three months' time, hon. Members will recollect my words at 4.30 this morning.
  Mr. Giles Shaw: I emphasise how saddened we were at the tone of the Minister's response to my hon. Friend the Member for Chichester (Mr. Nelson). The Minister seemed to want to override any further accountability to this House for the operation of the Bill. He said it was unacceptable—because it was inconvenient—to accept an amendment requiring further legislation to be introduced, possibly within 12 months.
  In considering major nationalised undertakings, we represent the taxpayer, the shareholder and the consumer. That is why we have to treat these undertakings differently from the rest of industry. The Minister is fond of saying that we seek to put shackles on the BSC which would not be put on other commercial companies, but it is because the taxpayers, shareholders and consumers

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  are represented in the one institution that the corporation must turn to that institution when authority is required for major investment.
  I am deeply saddened that a way for Parliament and the nationalised industry to meet and discuss a sensible method of control and future activity has been dismissed in such a cavalier manner by the Minister.
  Mr. Fairbairn: My hon. Friend should not overlook the fact that in a public industry the whole public are shareholders and we are their representatives. This House is the meeting place of the representatives of the shareholders.
  Mr. Shaw: That is the point that I thought I was making. We are acting as proxies—I am not sure whether that word exists north of Hadrian's Wall—for the shareholders of the BSC.
  Ways must be found to improve the technique by which Parliament scrutinises the money being spent. I hope that the Minister will appreciate our anxiety when we see money apparently being put down in advance. The Minister says that legislation would be inconvenient because the BSC may run out of money within 12 months. He suggests a little cash in advance—and decides on £1,000 million, hoping that inflation does not make it £2,000 million by the time it is spent.
  Parliament needs a clear indication of the purpose for which money is required, together with how much steel will be produced and how many workers employed. I am sorry to have to return to this subject at this hour of the morning, but that is the sort of discussion we need. We must consider whether we are making sensible use of a dwindling national asset.
  Mr. Peter Bottomley: This debate indicates just what Socialist planning is capable of. A year after the Iron and Steel Act, the Government have had to come back for an extra £2,000 million or £3,000 million. I hope that when current nationalisation plans are costed, the country will be made aware of how quickly the bill can increase.
  It is clear that the capital needs of the corporation have increased because of the inflation of the past 12 months. When I was working in the BSC eight years ago, we negotiated a minimum pay
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  agreement of £13 is 6d per week. The minimum wage is now probably three or four times that figure and the financial requirement for financing new plant and equipment has probably increased by a similar amount.
  When one looks at the finances of the corporation today and compares them with years ago, one can see how ridiculous has been the race of pay after prices, fuelled by Government inflation, epitomised by the increased borrowing requirement now before us. At the same time, I think that the House will regret that during our many debates there has been little from the Government on exactly how the British steel industry will become competitive.
  I refer the Minister to an article in the Lloyds Bank Review that is an apologia for nationalisation. The author makes the point that it is only relevant to make international comparisons. I am disappointed that throughout the past few hours the Government have not explained exactly how their Iron and Steel (Amendment) Bill, or their strategy for the steel industry, will make British steel competitive with our European partners' steel, or that of the Japanese and the Americans. It is clear to me and to anyone with any common sense that mucking around with the steel industry does not achieve anything, and that—
  Mr. Deputy Speaker: Order. The hon. Gentleman must confine himself to the borrowing powers mentioned in the amendment.
  Mr. Bottomley: But if investing an extra £2,000 million or £3,000 million does not have the result of making British steel competitive with our international trading competitors, Mr. Deputy Speaker, there is no point in the whole exercise. It is a matter of deep regret that the Government ask to extend the borrowing powers of British steel and yet pay no attention to how we shall get a prosperous steel industry.
  The purpose of borrowing this money can only be to make the production of steel more efficient and cheaper for the user. It can only be to ensure that those who work in the industry can earn high wages. But if we are to have a featherbedded industry, if we are to delay making the decisions that other countries

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  have made, there is no point in this exercise.
  It is worth reminding ourselves that the extra £1,000 million that the Minister wants to play with looks rather substantial in comparison with one or two of the other matters that we have debated in the past week or two. I remind the House of the £750,000 net that the Government felt they could allocate to the 600,000 one-parent families—[Interruption.]—on supplementary benefit.
  Mr. Deputy Speaker: Order. That has nothing to do with the amendment.
  Mr. Bottomley: The hon. Member for Sheffield, Hillsborough (Mr. Flannery) and his hon. Friends, who have continually interrupted those who have spoken from the Opposition Benches, do themselves and their party no service.
  Mr. Flannery: Get on with the amendment. The hon. Gentleman has not touched on the amendment.
  Mr. Bottomley: If the hon. Gentleman wants to intervene, I am willing to give way to him, otherwise I should be grateful if—
  Mr. Deputy Speaker: Will the hon. Gentleman please address himself to the amendment?
  Mr. Bottomley: If it were possible to reduce the £4,000 million for which the Minister is asking to £3,999 million, we should be able to double the extra earnings disregard which a one-parent family on supplementary benefit could receive from an average 8p a week to 16p a week, yet the Government cheerfully talk about an extra £1,000 million.
  If we set aside not £4,000 million but £3,850 million, we should be able to double the child benefit scheme from which the Government have run away. Labour Members, who through their seated interventions and their conversations have indicated their lack of interest and their lack of support for the amendment, will have to explain to their constituents why they were willing to set rid of whatever accountability there may have been in the steel industry before granting the extra £3,000 million for which the Government are asking. They will have to explain why the Labour
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  movement, composed of the Parliamentary Labour Party, the trade union movement and the National Executive, can backtrack on one of its most solemn commitments, thereby committing what the Prime Minister called the betrayal of trust and the breach of the voluntary agreement, and yet ask for an extra £2,000 million or £3,000 million.
  4.45 a.m.
  When the public expenditure accounts are published we shall learn exactly what the accountability which is supposed to come with public ownership of the steel industry means. When Socialist planning in the steel industry has shown that it has been a failure and when Socialist planning in other areas which are Government controlled, such as the supply and employment of teachers, comes amuck, the present Government will get their come-uppance and, no doubt, against the wishes of hon. Members opposite, not only shall I be re-elected but, apparently against the prophecies which they have been making in the past five minutes, nearly all the other Conservatives will be re-elected as well.
  Mr. Deputy Speaker: Order. The hon. Gentleman really must not stray from the amendment to the hypothetical question of elections. He must confine himself to the amendment under discussion.
  Mr. Bottomley: If we are talking about an extra £2,000 million or £3,000 million, if Socialism is the language of priorities and if elections are decided according to how Governments discharge their responsibilities in dealing with public money and in safeguarding the public purse, I think that the present Government, both by their action this morning in their cavalier attitude to money, and in their cavalier attitude to people in this country, especially those who are not represented by the big battalions on the Government benches, will get their comeuppance and they will deserve it.
  Mr. Nelson: My hon. Friend the Member for Woolwich, West (Mr. Bottomley) has given his candid views on this important amendment and has given to this debate a breadth which is worthy of considerable attention by hon. Members on both sides of the House. I shall say why I think it is worthy of our consideration. What my hon.

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  Friend was talking about, and what we are discussing, is opportunity cost. The Government have only a limited amount of taxpayers' money for spending, and we are concerned with priorities in the social and industrial field. The Government, for what it is worth—and it is a policy decision with which we on these benches have a great deal of sympathy—have expressed a priority for encouraging investment in industry—
  Mr. Flannery: On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Gentleman to speak a second time in this debate without the permission of the House?
  Mr. Deputy Speaker: The hon. Member does not need the permission of the House. He moved the amendment.
  Mr. Nelson: Thank you, Mr. Deputy Speaker.
  I was pointing out the degree of support which we on this side of the House have for the priority that the Government have given to the industrial programme. While we recognise that it is a matter of different priorities in spending, we welcome the Government's intention, which has been reported during the passage of this Bill, to stick to the difficult and expensive decision to go ahead with the British Steel Corporation's extensive development programme.
  My hon. Friend the Member for Woolwich, West spoke of the dramatic effect of the increase in inflation on the costs of the British Steel Corporation—a rate of inflation which has not only forced the Government to bring forward this increase in the required borrowing limits but has also built into their projected forecasts 13 per cent. inflation reducing to 10 per cent. by the end of this decade. which must add considerably to the potential financing requirement of the Corporation and will affect the date at which that increased amount of borrowing will be required.
  My hon. Friend the Member for Pudsey (Mr. Shaw) spoke of laying out money in advance. This House has always been rightly concerned to look carefully at retrospective legislation. It is appropriate that we should look increasingly carefully at prospective legislation which seeks to bind future Govern-
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  ments and which seeks at a later stage to allow subsidised amounts of public money to go through on the nod under a procedure which in past years would have been unthinkable.
  My hon. Friend the Member for Sheffield, Hallam (Mr. Osborn), with his close and experienced interest in the affairs of the steel industry, spoke of the need for an adequate rate of return, and I share his concern that adequate information should be brought forward before any increase as provided for in the order procedure is put into effect.
  Many of us would be sympathetic to proposals whereby the Select Committee had an on-going ability to scrutinise the operation of the British Steel Corporation and the extent to which the finance which it makes available for its own development programme is funded properly, whether by public dividend capital, foreign currency borrowings or whatever it may be. I am sure that the Select Committee has a valuable part to play here, and we hope that the Government will take note of that view.
  Finally, though by no means least, my hon. and learned Friend the Member for Kinross and West Perthshire (Mr. Fairbairn) spoke about the issue which is central to all the new clauses which we have debated and to this amendment as well—that in the end it is the taxpayer who pays, that the buck stops with the taxpayer. Our proper remit is to scrutinise the ability which the Government enact for themselves substantially to increase the borrowing powers of the corporation at a later stage.
  I was disappointed that the Minister of State felt able to respond so briefly to the amendment. Although I recognise that it is important that the Bill should go through for the on-going development of the British Steel Corporation's programme, and we certainly should not want to inhibit its early implementation, I consider that the Minister could have made some more conciliatory and more positive remarks with regard to the procedures for sanctioning further amounts of public debt made available to the corporation and for the presentation of information at that stage.
  However, since we have no desire to inhibit the main intention of the Bill to provide the tranches of moneys involved

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  —both the £3,000 million and the £4,000 million—and since the projections of cost for the investment programme have spiralled in the way I have described, I feel that it would be inappropriate for us to force a Division. I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  4.52 a.m.
  Mr. Kaufman: I beg to move, That the Bill be now read the Third time.
  4.53 a.m.
  Mr. Michael Marshall: The Minister of State has moved the Third Reading with the brevity which we have come to expect from him. I think it right that, in spite of the hour, we should take this opportunity perhaps to draw breath and to consider some of the implications of this measure, which has been before the House and in the minds of many hon. Members on both sides since its Second Reading on 26th April.
  It is customary at this stage of a Bill to thank the Ministers who have guided it through Committee and to this point, and that I do. On several occasions I have referred to the help which they have endeavoured to give us in providing information. We have not been satisfied with the range of information or felt that we have really managed to get down to the—[Interruption.] If the hon. Member for Birmingham, Perry Barr (Mr. Rooker) wishes to intervene, I shall gladly give way. Otherwise, I hope that he will give me the courtesy of a hearing. Those of us who have been concerned with the Bill since 26th April have a perfect right to consider the matter in a sensible way.
  The Bill has raised a number of important issues for the whole future of the way the British Steel Corporation's finances are operated, and it is right that the House should be concerned at a state of affairs in which the corporation's borrowing of £300 million in 1972 is likely to reach £4,000 by 1979–80. I am quoting these figures, on which we have to rely in much of our proceedings, but all the recent indications give me cause for alarm. I hope the Minister will take my questions seriously. If he is unable to give categorical answers now, I should be grateful if he would consider ways
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  in which we can be given answers to these questions at a later stage. Because of the nature of our proceedings, I have had to leave some of these questions to the end. Some of the answers could have been given in our discussions on the various new clauses.
  My understanding is that the latest estimate of the BSC's 1972 investment programme, to be completed at the end of the decade, is £9,000 million. Taking into account the estimate of 20 per cent. working capital, that brings us to a figure of £10,000 million or £11,000 million as the total requirement for the 1972 investing programme.
  These figures are so massive that one does not need to apologise for looking at them yet again, even at this late hour. On Amendment No. 1 my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) was right to point to this dramatic increase in the level of borrowings by the BSC. He was also right to point to the lack of a Treasury voice in our proceedings. On Second Reading we urged that we should have a Treasury Minister present during the Committee stage. The lack of that voice has been a disadvantage at all stages.
  The Minister will be aware that those of us who are members of the Select Committee on Nationalised Industries and have been examining the activities of the BSC in that context have had the opportunity to question Treasury Ministers. It is clear to many of us and from Press reports that there is grave disquiet about the growing discrepancy between the view of the Department of Industry in putting forward unadulterated the BSC viewpoint and the natural reluctance of the Treasury to give so sweeping and wide-ranging a blank cheque.
  I turn to the questions which I wish to put to the Minister—questions entirely relevant to the Bill. Since the level of capital investment appears to be massively in excess of anything we had envisaged, will the Minister give the House an assurance that the BSC is physically able to support this level of debt? As my right hon. Friend the Member for Henley (Mr. Heseltine) pointed out on Second Reading, these sums envisaged are so far in excess of anything the corporation has achieved in the first nine years of its life that we have a valid worry and concern whether the corporation is sufficiently

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  solvent to maintain these important anticipated earnings.
  The advice we have been given by informed and professional accounting sources suggests on the one hand that a proposal involving a debt equity ratio of the corporation would be raised on a 55–45 basis, and, on the other, that a level of borrowing of £9,000 million to £10,000 million is a figure on which even the biggest corporations in the world would hesitate to embark. In a normal commercial situation the first of those alternatives would mean that they could show that they had a substantial and major breakthrough envisaged by way of a new product. The second would mean that they could show that in a period of greatly increased world demand they expected that they would substantially increase their share. Can the Minister confirm that he has any expectation of the corporation developing along those lines? If he does, that does not square with the most optimistic views of those within the corporation to whom I have spoken or those of steel observers outside.
  What are the corporation's expectations about the repayment of debt? As we understand the present loans, they have come from the National Loans Fund on 17-year terms but we always need to remind ourselves that the corporation tells us again and again that it regards its borrowings as extremely expensive in terms of paying the commercial rate in this country. That is why it has had recourse to borrowing in foreign exchange to a substantial extent. Again and again in our proceedings my hon. Friend the Member for Chichester (Mr. Nelson) has had occasion to query that borrowing, because here again we have a total vacuum in terms of Government policy. We have no idea whether the Treasury is willing to allow borrowings in foreign exchange to the total exclusion of United Kingdom borrowing.
  If we take these levels of borrowing, it is essential that we begin to get some feel as to precisely what are the repayment intentions of the corporation. Does it see some kind of debt scheduling scheme about which the Minister can tell us? Does it see advantages in making early and advance payments? If the corporation is to sustain the present levels of interest charges on its level of debt, it is
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  difficult to see how it could possibly have a sufficient borrowing surplus to meet that kind of commitment.
  I ask the Minister to take this opportunity to say that he has no intention of coming before the House before the expiry of the Bill's arrangements to seek debt write-off. This is important, because the Minister will remember that when we sought from the corporation—because we did not have it on Second Reading—an outline of the way in which it saw the £3,000 million to £4,000 million borrowing levels applying over a period it was kind enough to send us a breakdown which showed that £3,000 million would be exceeded and that the £4,000 million take-up was likely to be exercised in 1979–80. Can the Minister give us a clear assurance that he will not come before the House to seek to alter the debt/equity ratio of the corporation, to transfer the debt capital to PDC, or in any other way to write off its substantial debts. That is a fair question that we should consider, and I hope that the Minister will be able to answer it as a matter of urgency.
  Finally, as an adjunct to the whole question of the level of borrowings, I must revert to the way in which, on earlier new clauses, we discussed the relationship and, indeed, the implications of joint ventures between the corporation and the independent steel companies. As I said earlier, we see that as exercising the corporation in ways which I shall not repeat but which are well documented. The corporation has a number of joint ventures and is seeking other joint ventures with other European steelmakers and other European fabricators, and this would go downstream within the industry.
  Equally, there are a number of joint BSC-independent company ventures. Round Oak steel works is a good example of a work owned 50–50 by BSC and TI. It is a good example of industrial relations and profitability, and it brings clearly into focus the need for this House to have some better feel for and, indeed, a better understanding, of the Government's commitment to the continuation of a mixed economy in steel. To the extent that the Minister is able to, I hope that he will give us an assurance that the Government are encouraging that situation. If he can, we shall feel that perhaps there is some kind of cushion and an addi-

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  tional opportunity to offset this highly worrying, totally unspecified and largely unquantifiable level of debt.
  Will the Minister of State repeat, in effect, the assertions made in 1967 at the time of nationalisation by the then Minister of Power, Mr. Richard Marsh—or Sir Richard Marsh, as he is now—that it was the intention of the Labour Government, and future Labour Governments from that point onwards, to help to encourage a vigorous, alert and profitable private sector as well as a public sector in steel? He made the point that an independent sector was equally important to the Government as a public sector.
  In his time in the Department of Industry, the Minister of State has acquired a great deal of knowledge of this matter. The relationship between the two sectors now is one which could be crucial in terms of the NEDC working party and the wider NEDC studies about the whole relationship of nationalised industry to government and the role of the independent companies and the BSC.
  We want a clear assurance from the Government tonight that they will in no way seek to inhibit the present relationship, and not stand in the way of further joint ventures, but will encourage such ventures. That assurance will go some way to making us feel that the worrying levels of debt have a chance of being eased by some flexibility.
  This has been a most important debate, and, despite the badinage which has taken place in the wee small hours, all those hon. Members who have taken part have done so out of genuine interest in the subject. It does not help to have hon. Members opposite shouting out about numbers on this side of the House. We all know the numbers game. They have to maintain 100 hon. Members, and I can understand their feelings on this But, instead of venting their spleen on us, maybe they should vent it against the Government's business managers. Had they brought this business forward at a reasonable hour, we could have given the matter a great deal more attention.
  I put this plainly and squarely to hon. Members opposite, a number of whom have taken a keen interest in the matter. It has been a loss that they have not
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  made any contributions tonight, and I want it formally on the record that I regret but understand the reason for their silence. This debate started just after midnight, and we have covered the subject with only a bare minimum of attention. But the discussion we have had has been crucial and important, and, what is more, it is the kind of argument which will not go away. The arguments we have sought to put forward will return again and again.
  When we come to this final tranche of £4,000 million, I urge the Minister to think seriously of the way in which the House should debate these matters. If he tries to come forward with that kind of order after midnight, it will be inimical to proper discussion and debate on matters of the highest importance. It is in this sense that I regard the whole exercise as being one not just of importance on this occasion but of putting down very important markers for the next few years ahead.
  5.10 a.m.
  Mr. Peter Bottomley: I will try not to repeat the remarks that I made on Report. I hope that the Leader of the House will recognise the interest that many hon. Members are taking in the debate even at this late hour. I believe that the Minister of State would be well advised to pay attention to the fact that our manufacturing industries are critically dependent on the efficiency of the steel industry. I do not think that its efficiency and its accountability to the country through this House are served by having debates like this so late at night. That has been shown by one or two things that have happened in our debates.
  The Government should also recognise that if they are talking about an investment programme of over £500 for every ton of steel produced, they need to demonstrate where the savings are to come from for that investment.
  I was working in the steel industry in 1968 and I remember how pay for groups of 21 people had to come up through division to Grosvenor Place and then to the Ministry and from there to the Prices and Incomes Board. So often we tend to stifle industries on which we depend by putting them under public control but losing public accountability.

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  The Government, especially at a time of recession, when steel output is remarkably low, and of large import contracts, must be more open in saying what are their targets for the industry and how they are being met. I recently asked the Minister whether planning agreements were in force with the nationalised industries, but I got an equivocal answer. If such agreements are to be the salvation of industry, as some hon. Members opposite believe they will be, perhaps the Minister can tell us how they apply to the nationalised industries.
  Mr. Deputy Speaker: Order. The hon. Gentleman is straying from the Bill. On Third Reading, no question of planning agreements arises.
  Mr. Bottomley: I understand that the Government have some good reason for asking for extra money for the steel industry, and that must come into some sort of plan. One asks that in the nationalised industries such planning agreements and others will be open and above board, as they must be if any kind of accountability is to be possible.
  If they mean to lead this country through some kind of industrial regeneration, the Government are more likely to be able to do it by avoiding situations like this, when we have had to debate most important matters concerning the steel industry at this late hour. I hope that never again shall we have a debate like this, with so many hon. Members opposite present but taking little interest.
  5.15 a.m.
  Mr. Ian Grist: Rarely, if ever, has the House voted such a large amount of money at this hour with such a skimpy prospectus. I have been disappointed—some would use stronger language—that the Government have refused, throughout our debates, to give further information or to press the BSC for more information to be made available to Parliament and the taxpayers, and thereby to its employees. That is a sad reflection on the way in which the Bill has been handled.
  An undertaking in Committee from the Minister involved the investment of about £600 million, which pre-empts the £1,000 million tranche. The investment was that which may or may not take
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  place at Port Talbot. On 17th June the Minister said that an early decision would be forthcoming. Earlier than that he said that he or his right hon. Friend hoped to make an announcement on this vital investment for the steel industry in South Wales. I hoped that by this evening we would have had some news about this major plant. It is of considerable concern, not just to the workers at Port Talbot but to workers in the related tinplate works in South Wales.
  If we are to vote these huge sums of money knowing nothing about where they are to be spent or what return they will earn, the Minister should at least say when a decision will be announced. If he can do that, perhaps our time will not have been utterly wasted.
  5.17 a.m.
  Mr. Nelson: We have had an interesting debate. It has provided an opportunity for hon. Members on this side of the House to embellish points made in Committee and to emphasise their concern about the inadequacies of information and monitoring and the deficiencies of the BSC operation. It is a shame that the full discussions and contributions from this side of the House have not been matched either by Government Back Benchers or by Ministers. My sympathy is with the advisers and civil servants whose hard work on the briefs has remained unheard while we remained ignorant of the enlightenment which they could have thrown on the discussion.
  Five major areas which arose in Committee and on Report are worthy of mention at this final stage. We hope that they will be implanted in the Government's mind as being worthy of further consideration and that they will be an encouragement to the BSC. They are: first, the production and supply shortages problem; secondly, the size and implementation of the investment programme; thirdly, plant closures and policies; fourthly, redundancies and manning levels; fifthly, foreign currency borrowing levels.
  I intend to keep strictly to the provisions of the Bill. Fear was expressed by the Government working party of shortages in home-produced steel. There are alarming reports of certain shortages, chiefly in certain strip mill products.

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  The capacity is there but lack of cooperation at Llanwern strip mill division means further increases in imports. That is important because the lack of investment or inadequacy of production at major steel plants has resulted in increases in imports of steel into the country. Because of unreliability of BSC supplies, many United Kingdom customers have now switched to, and stayed with, foreign suppliers. Their sources are now more reliable.
  This has been reflected in the decline in the proportion of the United Kingdom steel market which the corporation has taken. Let us look at the last seven-year period, between 1968 and 1975, which has not been selected as particularly unusual. Imports increased from 9 per cent. to 19 per cent., and the BSC's contribution to the United Kingdom steel market decreased from 66 per cent. to 55 per cent., whereas the contribution of the private sector was roughly the same, increasing from 25 per cent. to 26 per cent.
  What estimates have been made of the effect of the pick-up in the European economy, particularly the automotive industries, this autumn, and the amount of stocking going on in anticipation of shortages later in the recovery cycle or increases in prices? These are important matters, because they will undoubtedly affect the drawdown of further tranches and the timing of the investment programme.
  The corporation's prices, at least for some of its strip mill products, are well below market levels internationally. This must be a matter of concern to all of us. Here we have a product in very short supply, which there is a certain amount of capacity to produce in this country, yet the figures seem to indicate that the corporation is charging generally a price which is still, despite the alleviation of the pricing policy in the industry, substantially below the rates prevailing in the rest of the world.
  If there are shortages, it must be madness to sell products below the increased price agreed this year. This artificial pricing policy must distort the demand and supply relationship, and it will act to the detriment of the corporation's profitability and, therefore, its ability internally to fund a substantial amount of its own development programme.
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  The corporation produces four-fifths of the United Kingdom steel output, yet our great fear is that in sustaining industrial and economic recovery the corporation will be unable to play its part because of past decisions on products, pricing, plant and personnel which were either not made or not made early enough. Therefore, we support the Government in their deliberations on a surgical approach to certain operations of the corporation.
  We cannot afford to go into the recovery cycle of the British economy and of demand for steel simply utilising some of the older capacity, thereby ensuring that there will be in an eventual downturn or easing of the market the problems encountered two years ago, which were reflected in the current year's lack of profitability. The problems then will be even greater unless at this prospectively good time the Government are prepared to take a much longer look at the development programme and the need for rationalisation, for want of a better word.
  The size and implementation of the investment programme are matters on which we have sought detailed assurances. The cost of the expansion of the BSC has now soared to over £5 billion compared with the estimate of £3 billion in 1973. The original estimates have been rendered obsolete by inflation and slow progress with the building of certain major new steel plants.
  The Minister told us that in its projections the corporation had assumed a rate of inflation of 13 per cent. a year towards the end of this decade, reducing to 10 per cent. Even assuming that those figures are correct, what sort of return is considered to be attainable on the size of capital outlay? We did not have detailed answers when we discussed what we thought was a positive amendment to change the corporation's target. We received neither sympathy nor explanation.
  The upturn in demand may substantially increase the temptation to retain inefficient steel plants and capacity, especially where large numbers of workers are affected, rather than taking the longer-term view, which in many circumstances may or may not be—but probably will be—necessary with a view to introducing

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  certain new systems, whether direct reduction in the ore field or basic oxygen systems themselves.
  The corporation is subject to a cash limit, to which the Secretary of State referred on Second Reading, and which we understand to be currently £950 million for this financial year. Will this or a stricter limit restrain the capital programme of the corporation? Is it possible that any further consideration of cutbacks in public expenditure, while not directly affecting the priority given to the industrial sector, will in some way restrain the cash limits provided for the exercise and thereby inhibit the implementation of this very important programme?
  Thirdly, on a number of occasions we have expressed concern about the lack of information and decision on certain plant closures and investments and the policy behind them. This is relevant is estimating likely cash flow or draw-down under the Bill and potential profitability. Decisions on Shotton and Port Talbot are long overdue.
  We sincerely recognise the importance of a decision that affects 6,500 employees, but uncertainty is often worse than a closure and some certainty would have enabled many people—certainly some—to widen their personal horizons.
  The steel makers recently made the point that the corporation's strategy leans too heavily towards concentrating production in a few very large coastal works. In view of the diverse and specialist nature of the clients of the corporation, should the Government at this stage be embarking on a second phase or major new phase of the corporation's development? Are the Government satisfied that the right balance has been drawn between mini-mills and medium-sized or large plants? What progress has been made and what objectives are being set with regard to introducing direct reduction and BOS systems in BSC plants? We should like the Government to be more forthcoming about this broad area of meeting the competition of major industrial and steel-producing countries, such as Japan, which has a far higher productivity than our BOS methods.
  I come now to redundancy and manning. We recognise the importance of pressing ahead with plans to reduce
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  manning levels and thereby increasing the productivity of the corporation and the degree to which it can internally finance its major development programmes. But we are gravely concerned about the report of the corporation and the TUC steel committee meeting recently to discuss the progress in the implementation of the demanning agreement signed in January. The corporation will certainly not achieve its target of 40,000 jobs reductions by the end of 1977. The corporation has reduced its work force to 213,000 by a reduction of only some 7,000.
  Manning levels are essential to the sanctioning of the Bill, and the prospects of the corporation financing its own development programmes rather than following a broad lead from the Government will be substantially prejudiced if the Government and the corporation are not prepared to go ahead to try to implement the spirit and the wording of the agreement made with the TUC.
  The unions have co-operated on the initial slimming operations but they are now taking a tougher line about what they regard as the inbuilt overmanning in the industry because they believe that the pay policy agreed between the Government and the TUC does not allow more pay for streamlining job structures. We believe that that is inadequate and that the corporation should take a stronger view.
  The letter from Mr. George Wright, the General Secretary of the Welsh TUC, to the Secretary of State for Industry recently pointed out that the shortage of special steels meant, in his view, that there was a future for all Welsh BSC plants. If the letter were made public one might be able to consider the way in which the case is substantiated Nevertheless, it is very important, when looking at an increase in the borrowing powers of £4,000 million, to be certain that the BSC will not only save money but increase productivity and the efficiency of the overmanned and elderly plants.
  Finally, I refer to the foreign currency borrowing policy of the corporation—a question on which I and a number of my colleagues have spoken. During the Committee stage our fears have been increased, rather than allayed, that the ability of the BSC to borrow abroad will be unfettered, and that, far from just allowing it to borrow abroad, there is under the present

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  Treasury exchange rate guarantee scheme a positive encouragement for it to do so, which inevitably results in a liability to the British taxpayer.
  Even where the BSC borrows in foreign currency, without the benefit of the exchange rate scheme, this has, as we have learned, resulted in substantial loseses for the corporation in terms of the write-off of its own borrowings. This has meant that it will eventually have to be paid for by the taxpayer.
  Approximately half the corporation's debts of £1,050 million are for currency borrowing. Of this, £246 million is covered by the Treasury exchange rate scheme, but £237 million is not covered at all and is purely at risk at a time when there has been a very substantial and startling decline in the value of sterling compared with other currencies.
  The Treasury scheme provides positive encouragement to other industries to borrow abroad. The BSC is not alone. It is a policy which is spreading unfettered towards other areas of the public sector. The National Coal Board last week floated a $50 million loan at 81 per cent. for five years. This again is a largely unfettered ability to borrow abroad, not only creating a foreign currency liability but transferring the foreign currencies into sterling and applying them in British assets, thereby doubling up the liability which the taxpayer carries and on which we have been seeking to provide adequate constraints.
  I pay tribute to the work of my hon. Friends in Committee during the passage of the Bill in pressing the Government so hard to obtain adequate information. I hope that, despite the poor comments and the paucity of their language on this occasion, many of the points we have made will be taken seriously both by them and by the BSC.
  We feel that our contributions have been positive and will genuinely encourage the success and the return to profitability of the BSC, while at the same time, with a massive increase in investment, increasing its accountability to the House of Commons and to the taxpayer, whose interests we are all here to serve.
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

FATAL ACCIDENTS BILL [Lords]
Read a Second time.
Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
Bill immediately considered in Committee; reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
Bill accordingly read the Third time and passed, without amendment.

LEGITIMACY BILL [Lords]
Read a Second time.
Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
Bill immediately considered in Committee; reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
Bill accordingly read the Third time and passed, without amendment.

LOTTERIES AND AMUSEMENTS BILL [Lords]
Read a Second time.
Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
Bill immediately considered in Committee; reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
Bill accordingly read the Third lime and passed, without amendment.

RESTRICTIVE PRACTICES COURTS BILL [Lords]
Order for Second Reading read.
Mr. J. W. Rooker: On a point of order, Mr. Deputy Speaker. Can I move that we take all Second Readings together and then all the Committee stages together because, as a former production engineer, I am getting

321
worried about the Mace continually being lifted up and down—
Mr. Deputy Speaker (Mr. Oscar Murton): Order. I understand the hon. Gentleman's concern about time and motion study but, in fact, it is part of the tradition of this House that each Bill be taken in the proper manner.
Bill real a Second time.
Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
Bill immediately considered in Committee; reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56(Third Reading), and agreed to.
Bill accordingly read the Third time and passed, without amendment.

RESTRICTIVE PRACTICES COURTS BILL [Lords]

  RESTRICTIVE TRADE PRACTICES BILL [Lords]
  Read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
  Bill immediately considered in Committee; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56(Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  POLICE PENSIONS BILL [Lords]
  Read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
  Bill immediately considered in Committee; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56(Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  ADOPTION BILL [Lords]
  Read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Thomas Cox.]
  Bill immediately considered in Committee; reported, without amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56(Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  PUBLIC SUPPLY CONTRACTS
  5.50 a.m.
  The Minister of State, Treasury (Mr. Denzil Davies): I beg to move,
  That this House takes note of Commission Documents Nos. R/1361/73 and R/877/75 on Public Supply Contracts.
  The EEC drafts of the Supplies Directive and the Council resolution on third-country products are closely related, and with their recently updated explanatory memoranda, are fairly self-explanatory. I shall say only a few words about the background.
  Essentially the draft Supplies Directive would, when adopted, require member States to follow common procedures for the advertising and award of central Government and local government supplies contracts to reduce discrimination on grounds of nationality.
  The underlying obligation is not a new one. We have been bound since the Treaty of Accession by provisions prohibiting discrimination of nationality, and we inherited a parallel directive on public works contracts. What we are concerned with here is a framework of straightforward rules which do no more than introduce procedures which give practical effect to the principle of nondiscrimination to which we are already committed. In these circumstances the aim of the Government has been to play a full and positive part in the negotiations to ensure that the final shape of the directive is in accordance with United Kingdom interests.
  The main effect of the directive will be an eventual increase in intra-Community trade with new opportunities for

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  United Kingdom industry to obtain public orders abroad. At the same time, other Community countries will have an opportunity to apply for our contracts. We cannot be certain about the outcome, but because our public purchasers are already slightly more free than those of other countries to purchase abroad the introduction of compulsory advertisement is likely to involve a net benefit to the United Kingdom.
  The directive requires that certain public supply contracts should be advertised. Although this new advertising requirement will carry with it a degree of administrative work, it will not produce a heavy burden. It is expected to bring benefits in the sense not only that other countries' public contracts will be open to United Kingdom competition but that United Kingdom firms which have not previously shown an interest in our public contracts will be encouraged to do so in future.
  The directive will apply to central Government and local government, police and fire services and health services. It will not apply to purchases of weapons or war material, and contracts awarded by authorities responsible for transport, telecommunications or the production, transmission or distribution of energy or water. Moreover, it will not apply to contracts below a threshold. We expect this threshold to be in excess of £100,000.
  If the directive is accepted by the Council, it is expected that it will come into effect in late 1977 or early 1978. It is, however, not expected that the effects of the directive would be more than modest for some considerable time. In the long term it may be hoped that competition for public contracts throughout the Community will build up, but its development is likely to be of slow process. In any event, the possibility of increased competition for its contracts can hardly fail to be advantageous for any public, as indeed for any private, purchaser.
  I understand that the CBI is generally in favour of early liberalisation of public supplies contracts. This is what we would have expected, since in our view British industry can gain from the Supplies Directive and the CBI's attitude accords with the present emphasis on
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  exports. Nevertheless, the CBI has some reservations about certain aspects of the directive, and has made some detailed suggestions for amendment. In particular, it is looking for closer monitoring of the working of the directive.
  I can certainly assure the House that the Government regard an adequate system for monitoring the operations of the directive as of the utmost importance. We want to be sure that it is operated by every country in a way which is equal and fair. The machinery for ensuring this will be an advisory committee, on which every member State, including ourselves, will have a place. It will be the advisory committee's job to carry out the monitoring of the operation of the directive. The directive itself does not lay down how the advisory committee will carry out its function because this is a matter for the committee itself. We shall, of course, insist in Brussels on an effective system of monitoring through this advisory committee.
  I can equally assure the House that there is no doubt that there will be considerable collection of statistics and other information from member countries in order to assess the effectiveness of the directive and whether it has been operated with equal fairness by all members. Indeed, my own feeling is that one of the problems may well be to avoid engaging in collecting too much information, because not only would this add to the administrative burden on the public service in this country and then that of other countries but it would be difficult to extract meaningful conclusions from the information collected.
  We have also proposed that there should be formal machinery for a review of the directive after two to three years' operation. I am glad to say that the Commission appears to have accepted this proposal in principle. Under this review, when the time comes we shall seek to get any improvements which may be necessary.
  I know that local authorities are somewhat concerned about two issues raised by the directive. These concern its effect on standing offers and approved list procedures. Standing offers are arrangements with contractors whereby a standing offer to supply certain items over a period is agreed, instead of separate contracts for each batch of goods. We see

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  no reason why we cannot reach an accommodation on this point which will allow the system to continue.
  On the second point—that is, the question of approved lists—there is nothing in the directive to prevent the operation of approved list procedures, but, of course, advertising will be necessary.
  Finally, I come to the second document before us, the draft Council resolution on third-country products. Broadly its purpose is to prepare the way for a common policy towards third-country products and in the meantime to make it easier for the Commission to approve proposals from member states to refuse access to public contracts, whether they are advertised under the terms of the directive or not, to any such third-country products which are causing economic difficulties. This, I believe, is a sensible safeguard which the Government will not hesitate to use if the need arises.
  The directive and the resolution are aimed at improving the liberalisation of trade and production within the Community, and I hope the House will see fit to take note of them.
  5.57 a.m.
  Mr. John Davies: The one thing that is certain beyond words is that the Government will not have a lot of information or advice from the House this morning on the subject of these proposals. It is unlikely, in view of the time at which they are being debated, that there will be a whole-hearted batch of information deployed on the subject. I feel a little worried that that should be so, because the directive and the resolution in question touch on a matter of substantial importance not just to those people who are concerned with the awarding of contracts for supply throughout the country and the Community but, naturally, to those who are concerned with supplying.
  The trouble about these proposals is that they constitute to a large degree all pie in the sky or pig in a poke. The truth is that they are modelled almost precisely on the previous public works supply contract arrangements which, as the Minister has said, we inherited on becoming members of the Community. I think it is well known that those provisions constitute some of the most ineffective provisions of any kind that the Com-
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  munity has put together. They have had simply no effect whatever in terms of the widening of the availability of public works contracts to suppliers in various countries.
  It seems a pity that the Minister, in opening this matter, has had to say that he thinks it can only be advantageous to move in precisely the same direction on the basis of supply as we have done on works. It must be very questionable whether that is so. I for my part —I have no remit to speak for anybody except for myself—having been concerned with examining the documents in question, regard them as wholly unsatisfactory as they stand. They appear to do a thing which industry not just in this country but throughout the Community would desire, and that is to provide a much wider availability of public supply arrangements and a much wider range of supplies, but in fact they do no such thing.
  We in this country have the habit of being more observant of the provisions of such directives than some other members of the Community, engaging in arrangements with other suppliers in the Community and expecting little counter-benefit to ourselves.
  I must therefore say at the outset that, as they presently stand, these proposals are a danger to us instead of the benefit which our industry, I believe, and the industries of other countries would wish them to be. Although I speak as a lone voice this morning, giving the view of the House on the matter, I do so with some determination, and I have to tell the Minister that I believe that he would be extremely unwise in the interests of this country to accept the two documents as they stand. He would be opening up this country to risks without any countervailing benefits whatever, and I must ask him to give careful consideration to the representations which I make, even though, as I say, I speak at this moment as a lone voice.
  Moreover, the directive raises an issue of singular importance which warrants at least being stated so that it is on our record. The Minister pins a good deal of hope both on the activities of the advisory committee and, more particularly, on the review of the directive. As for the advisory committee, one can hope that it will adopt adequate and

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  sensible measures of monitoring, but we have no assurance about that. At the moment of accepting the directive, we have no assurance that that will be so. Therefore, we find ourselves caught with proposals with severe implications—proposals which in other circumstances we might greatly welcome—while having none of the corresponding assurance which should go with the certainty that the whole of these proposals will be the subject of careful scrutiny and monitoring by the advisory committee as we go along. I consider, therefore, that the directive is defective in this respect, is bound to cause concern, and may well cause damage.
  Second, there is the question of the review, to which the Minister attached some importance. The truth, as we all know, is that once one is engaged with Community directives—at which point one has arrived, if they are on matters of any importance at all, by the route of unanimity—one is stuck with them unless one can revise them by the route of unanimity. It is all very well to say that in a couple of years we shall have a chance to look at everything and we can put right anything which we do not think was right in the first place. In fact, that is far from being certain. The truth is that the Minister, or one of his colleagues, would have to go to the Council of Ministers and there try to find a sufficient degree of unanimity for such changes as would give effect to the purposes he sought.
  It could well be that he would not be able to do that. We have heard a good deal, quite rightly, about the problems of the horse-trading and bargaining that goes on for one advantage as against another. Perhaps the Minister would find himself caught with a series of bilateral bargains to try to ensure the very minimum of reasonable treatment within the framework of the public supply contracts in order to achieve the changes he wished. But were he not to achieve that degree of bilateral agreement with individual member States and thereby reach unanimity in the Council, we should find ourselves caught in perpetuity with what would basically be a highly unsatisfactory set of provisions.
  I gather that the House is being asked to take note of the directive and reso-
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  lution in a favourable sense, and the Minister rather gave the impression that the Government regard these as being good and sensible proposals for the openings of the Community's commercial activities. Perhaps they could be, but that is not the point. We may find ourselves as a result of this morning's somewhat inadequate discussion caught in what may in the future be substantial commitments to advertise and allow supplies to come in from a variety of different member States, with no corresponding offsetting advantage whatever.
  For my part, I can only say to the Minister that if he takes that course and agrees to the proposals in their present form, even with all the safeguards which he thinks he has in the advisory committee and the review procedure, he may be the perpetrator of a major piece of damage to British industrial interests and the recipient of no piece of industrial advantage.
  6.5 a.m.
  Mr. Max Madden: At this hour of the morning I shall be brief.
  I am greatly indebted to the right hon. Member for Knutsford (Mr. Davies) on two grounds—first, because he has touched on many of the points about which I feel concern; and, secondly, because he is the Chairman of the Scrutiny Committee, which has enabled this House to discuss this directive, even at this extremely late hour. We owe a debt of gratitude to him and to his Committee for recommending the directive for discussion in the House.
  The right hon. Gentleman said that the directive was a matter of concern. That concern is underlined by the anxiety which surrounded an earlier directive on public works introduced in 1971 relating to civil engineering contracts of £400,000 and above. That matter caused widespread comment throughout the civil engineering industry and associated industry.
  The matter can be summarised in the following way. It is feared that the operation of this directive, if allowed to stand without modification, will mean that the United Kingdom will observe the directive to the letter, whereas other member States of the Common Market will not do so. Recent figures compiled by one source have shown that Britain has advertised 2,500 contracts within the

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  Common Market, whereas Germany has advertised 800, France several hundred fewer, and the Italians only three. It is interesting to note that the Italian Government are being brought before the European Court of Justice to inquire into their extremely low level of advertisement and the seeming non-observance of the directive.
  In view of this situation, it is imperative that effective safeguards be introduced into this directive, and I believe that they need to be stronger than the Minister has indicated to date.
  It is apposite at this stage to draw attention to a letter sent to me by the Federation of Civil Engineering Contractors, and, indeed, copies of the letter were circulated to other Members of Parliament. The letter said:
  "We strongly support the ideal of an open market throughout the 10 nations, but we think you should know that our experience shows that the practice falls far short of the ideal. United Kingdom public authorities have been applying the works directive to the letter but the other nations give it scant observance. The result has been that the British construction market has been laid wide open to competition (which we don't object to) but we have no reciprocal opportunities on the Continent. We believe that the public supplies directive will present a repeat of this experience. It is essential that effective safeguards he built into the proposal. The fact that the EEC authorities have told us that other nations would object to the inclusion of effective monitoring and enforcement procedures demonstrates the importance of vigilance."
  We are seeking to ask the Minister to endeavour to persuade other members of the Common Market to make a modest concession—namely, that not only should there be advertising of tenders of amounts of £40,000 but that publicity should be given to whom the contract is awarded to eventually. This would help in the monitoring process, about which we are concerned. The directive has reference to the United Kingdom. Because we spend significantly more in terms of public expenditure than do the other member States of the EEC, suppliers of such items as office furniture, office equipment, and so on, particularly look to the United Kingdom as a lucrative market for their manufactured goods. For that reason alone we should be insisting on much stronger safeguards. Secondly, we should also look to the records on the observance of a public works directive which we considered earlier.
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  Finally, we should have regard to the effect that this will have upon large local authorities and consortia of local authorities and many Government Departments which hitherto have adopted and pursued a "Buy British" policy, because, if the directive is enacted and pursued with vigour by competitors within the Common Market, local authorities in areas of high unemployment could be put in the embarrassing situation of having to award contracts to foreign suppliers at the expense of local suppliers.
  For all those reasons, I ask the Minister to consider carefully the modest request that is being made by those concerned about these matters for contracts to be advertised when they are awarded. This is a modest and minimum demand but one which if it could be met by our partners within the Common Market would help to make the directive a little more acceptable.
  6.11 a.m.
  Mr. Denzil Davies: I hope that I may have the leave of the House to reply to the debate.
  Despite the fact that the hour is late, or early as the case may be, we have had an interesting debate, and I am grateful to the right hon. Member for Knutsford (Mr. Davies) and my hon. Friend the Member for Sowerby (Mr. Madden) for raising some important points. As the right hon. Member for Knutsford said, this is an important directive, and I appreciate its importance and the dangers that could arise to this country and to British industry if there were not reciprocity between us and the European countries.
  We were conscious of that when we sought to strengthen the directive originally, and I should tell the House what we have tried to do. Right hon. and hon. Members may not agree that it is enough, but we have tried to strengthen the directive in three ways. The first way is by seeking to establish the advisory committee. I think that the committee will be effective. Other parts of the directive may not be, but when the directive is agreed the advisory committee will be established and will monitor these contracts. We shall he a member of the committee and be able to ensure that there is a certain amount of reciprocity and that the rules are not abused or ignored. I think that the committee will go a long

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  way towards meeting some of the problems.
  We also pushed for an increase in the threshold. My hon. Friend mentioned a figure of £40,000. This was mentioned originally, although it is not in the directive. We are almost certain that we can get agreement on a threshold in excess of £100,000. This would mean that the directive would cover only about 20 per cent. in value of the total contracts awarded by central Government and local government.
  Thirdly, we have tried to ensure that all the provisions of the directive will operate in all the member States. Having said that, I accept the misgivings that have been expressed in this debate, and if more hon. Members had been present no doubt misgivings would have been expresssed by others as well. What has been said is possibly a reflection of some of the doubts that would be expressed by hon. Members in general.
  Mr. Nigel Spearing: My hon. Friend said twice that the Government would try to get reciprocity, or try to do something else. If the ostensible purpose of the measure is to give complete fairness and impose reciprocal obligations, why does my hon. Friend use the word "try", rather than "can"?
  Mr. Davies: I use the word "try" because some of the proposals put forward have not found acceptance by other countries of the Community. A number of other countries do not feel that there is a danger, or perhaps there are other reasons why they do not wish to accept what we put forward. The point made by my hon. Friend the Member for Sowerby about advertising contracts seems reasonably fair, but one or two other countries are not happy to go along with that, and my hon. Friend will appreciate the situation if this continues.
  I take note very fully of what has been said. We will go back and do our utmost to strengthen this directive still further, within the confines and limitations of the kind of situation in which we are placed. We are dealing with eight other member States, and it is not always possible to be completely negative in these matters.
  I accept what has been said about misgivings, but I assure the House that it is
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  not our purpose to damage in any way British industry's prospects of employment in this country. I hope that the House will accept the assurances that we are concerned about this matter and that we will do everything we can to strengthen the directive still further.
  Question put and agreed to.
  Resolved,
  That this House takes note of Commission Documents Nos. R/1361/73 and R/877/75 on Public Supply Contracts.

  ROBERT GLEN AND SON LTD., IRVINE
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thomas Cox].
  6.16 a.m.
  Mr. David Lambie: I regret that the debate on this subject of the closure of Robert Glen and Son Ltd. has to take place at this early hour after such a long debate during the night. However, I do not apologise to my hon. Friend, the Minister of State, for continuing with the debate because this matter is of vital concern to my constituents in Central Ayrshire, and particularly in the town of Irvine.
  Robert Glen and Son Ltd. is an old-established family business in Irvine, which was formerly a joinery business but which now concentrates on the production of high quality doors. It was taken over by F. Hills and Son Ltd. of Stockton, which is a subsidiary of the Joinery Division of Bowater Building Products, which is part of the multinational Bowater Corporation Limited.
  The present employment, excluding sales, is 99 workers, including 15 staff. As well as giving employment to tradesmen and craftsmen, the factory is one of the few areas left in Central Ayrshire which provides training for apprentices in the construction industry.
  In spite of the fact that the people running the factory thought they were doing well, on 21st April this year, like a bolt out of the blue, and without consultation at local level, Mr. C. M. Clarke, the General Manager of F. Hills & Son Ltd., producer a memorandum on proposed cost reduction in Stockton and Irvine. This memorandum pat forward

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  alternatives for saving just over £500,000, involving among other proposals the closure of the Irvine factory, making 99 employees redundant.
  This memorandum was presented to the national offices in London of the trade unions involved. The first the Irvine employees heard of it was the following week when a rumour started in the factory that the Robert Glen factory was closing.
  I thought that planning agreements, employees' protection legislation, and other measures passed by successive Labour Governments meant that such actions, taken without adequate consultation, were illegal and things of the past. Do planning agreements just mean that the decisions affecting the future of an industry and its employees can be slipped on to the table of the national office of a trade union, and nothing else? That was not my opinion, or was it the opinion of trade union delegates and shop stewards in the Irvine factory. They did not take part in any consultations before these plans were published.
  As Member of Parliament for the area, I was contacted by the shop stewards and immediately arranged a meeting on Sunday 2nd May with the local union delegates and shop stewards and the senior management of F. Hills & Son Ltd. at the Irvine factory. Mr. C. M. Clarke, the general manager of F. Hills & Son Ltd., gave us the background to his proposals. I again complained about the lack of consultation. I said that it reminded me of nineteenth century industrial relations and that it was completely out of touch with present-day ideas of industrial democracy and the right to work and the rights of workers to consultation.
  In the proposed cost-reduction memorandum, the following paragraph appeared, giving the background to the proposal to close the factory. It said, referring to 1976:
  "The final profit forecast will be less than £200,000 which represented a return on turn. over of 1·6% and on capital employed of 5·3%. This is lower than could be obtained if the capital was placed into risk-free investment. A level of profit which is less than 20% of capital employed will not be sufficient to guarantee survival in the medium term. Therefore, a profit of not less than £750,000 is required for 1976…meaning a cost saving of at least £500,000 on present levels of expenditure."
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  That is the background to the proposal to close the factory.
  F. Hills & Son Ltd. was getting a 20 per cent. return on the capital involved in this factory. The memorandum put forward the proposal that by closing the whole operation of F. Hills & Son Ltd. in Irvine £120,000 could be saved, and that making redundant 99 people in Irvine and 29 staff at Stockton, the other factory involved, would save £330,000. and with other savings the required figure of £550,000 could be reached.
  Other proposals put forward involved making redundant 177 employees over the whole operation, which would save a comparable amount of money. In spite of the fact that it is making redundant 177 employees, whatever the other financial restraints, the management of F. Hills & Son Ltd. decided that it would continue with the closure of the Irvine factory.
  To be fair, I must state that the management said that it would consider any proposals that I or local people involved could put forward, but I made the point that it was taking the easy way out. I reminded Mr. Clarke that, since entering Parliament in 1970, I had been in many similar positions, and I had always found that managements which had decided to solve their problems by the easy solution of closing down factories were themselves told the next time round that they were not up to a satisfactory level and declared redundant.
  Following that meeting, when we were given the opportunity to put proposals to the management, I contacted my right hon. Friend the Secretary of State for Employment and had an urgent meeting with him, when I appealed for Government help. He immediately offered help, and confirmed it in writing on 18th May, both to me and to Mr. D. J. Worthy, manager of personnel services, Bowater Building Products Ltd. It had become apparent to me that the management personnel of F. Hills & Son Ltd. were only go-betweens. They were the message boys carrying out the orders of Bowater, the parent company with the main financial holding.
  Following my meeting with the Secretary of State, the offer of help was confirmed and the Under-Secretary of State

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  at the Department of Employment contacted Mr. D. G. Worthy, making an offer of a temporary employment subsidy of the maximum amount of £20 a week per job to be maintained for 12 months. The offer totalled £128,960 and was made in writing less than one week after my meeting with the Secretary of State. In his letter to Mr. Worthy, the Under-Secretary of State said:
  "We are particularly concerned about the threat of jobs and we are hopeful that the avenues of financial assistance available will enable employment at the firm to be maintained".
  Of the total of over £128,000 the Government allocated about £103,000 to maintain the jobs of the 99 workers at the Irvine factory.
  I also made immediate contact with the Minister who has special responsibility at the Scottish Office for Section 7 of the Industry Act. We had a meeting in Glasgow with representatives of the three unions. We asked the Minister to intervene on behalf of the Government and we told him of the serious problem that the closure would create in the Irvine area. The Minister agreed to make personal representations to Bowater in an attempt to achieve further consideration of the problems facing Robert Glen and Son Ltd.
  Unfortunately, the result of that meeting was not satisfactory. The Minister wrote to me on 18th May saying:
  "I explained the various forms of Government assistance available to safeguard the Irvine jobs but it was clear that the company's view was that the commercial situation was such that Government assistance could not prevent the closure".
  The letter continued:
  "I am sorry that I cannot be more helpful but I was told by the Bowater people that they are making strenuous efforts to find alternative employment, both in other Bowater establishments and elsewhere locally, for those made redundant and that they have so far succeeded in finding possible jobs for at least half of their Irvine employees."
  At that time the latest unemployment figures for the area were published. On 10th June the unemployment rate for the Irvine travel-to-work area was 9·6 per cent.—a total of 3,572. The male unemployment level was at 12 per cent. when Bowaters offered possible jobs to at least half of their Irvine employees.
  I also appealed to the Chairman of the Scottish Development Agency, Sir
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  William Gray, for help. When we passed the Act setting up the agency I thought that it would be able to deal with such situations by taking over and running viable plants. I told Sir William that we had a pool of skilled labour—a great advantage of the factory at Irvine—and that to continue production we needed to have that skilled labour taken over by the agency. Sir William replied on 8th July:
  "We have looked into the case again"
  —that was after I had been in touch with him two or three times by letter and telephone—
  "in some considerable detail. Unfortunately, all the information we have makes it clear that the Stockton plant has sufficient capacity to cope with present and likely future orders: not just in quantity, but also in quality and in diversity."
  Therefore, in his opinion the agency should not intervene in the closure. He also said, striking a more enthusiastic note, that the outlook was not unpromising in the Irvine area.
  The union delegates, the shop stewards and I have been waging a campaign to try even at this late hour to secure direct Government action, or indirect action through the agency, to maintain the labour force as a viable unit at the Glen factory at Irvine. We are dealing not only with Robert Glen and Son Ltd. but with F. Hills and Son Ltd. and the Bowater Building Products Joinery Division.
  The decision was taken by the Bowater Corporation Ltd. When we look at its annual report of 2nd April 1976, especially the statement by the Chairman, Lord Erroll of Hale, the real reason for the closure of the Irvine factory becomes apparent. He said:
  "I hope that shareholders will regard the final outcome of a pre-tax profit of £52·9 million for 1975 as satisfactory."
  That was slightly down on the profit for the previous year.
  "In North America, the increase in economic activity…did not materialise, although I am glad to say that there are now real signs that this has commenced and is likely to continue."
  He was holding out to shareholders the prospect of a brighter future, with profits being increased from £53 million.
  Lord Erroll of Hale also said that the Building Products Division was losing money, but the memorandum given to

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  the employees at Irvine said that F. Hills and Son Ltd. last year made a profit of more than £200,000. Bowater was closing a factory in Irvine controlled by F. Hills and Son Ltd. in an area of the organisation that was making a profit of more than £200,000. That was certainly a much reduced profit, but it had had outstanding profits in 1973. When they were making profits, the workers and the management were all that is good, but immediately the profits began to drop, the workers were faced with the threat of redundancy. In his statement Lord Erroll said:
  "I want to finish this statement by saying thank you to them"—
  that is, the employees—
  "on behalf of the board and of the shareholders".
  His thanks to the workers at Irvine for making part of the profit of £200,000 was to put them into the dole queues at Irvine.
  I recognise that it is difficult to control a multinational company such as Bowater, not only in this but in many other respects. The Labour Government find it difficult to control the multinational oil companies. But the Labour Government are still the Government of this country, and we have to tell international companies such as Bowater what is good for the country and not accept what is good for Bowater and for its shareholders.
  There is one part of Lord Erroll's statement to which I draw my hon. Friend's attention. It is:
  "It has to be recognised that government interference in business is an ever-increasing problem which causes damage to the economy of the country and involves industry in costly and time-consuming activities. Your board believes it esssential, whatever political party happens to be in office in the United Kingdom, for there to be an effective opposition in Parliament to ensure that all shades of opinion are reflected in legislation which is enacted."
  In order to guarantee opposition to the Labour Government, the board has already decided to give £10,000 to Conservative Party funds and a lesser sum to the Liberal Party. It is no wonder that Lord Erroll is worried about Government interference.
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  We want Government interference, and I am asking my hon. Friend even at this late stage to give us more Government interference in this case. The men accepted redundancies and the factory is to close at the end of the month. In spite of that, I ask the Minister to order the Scottish Development Agency to look at this closure again, to take over the factory, which is owned by the Cunningham District Council, and to utilise the skill that is there. I want an assurance that financial aid and active encouragement will be given to any firm that wants the factory when it is closed at the end of July and that wants to use the available skills.
  I want an assurance that the legislation that we have been passing since 1974 means something. Night after night—and this has been a very good example —we have been pushing legislation through this Chamber in the belief that we were bringing industrial democracy into industrial relations, so that actions by multinational companies such as Bowater could not wipe out our proposals, so that we were not just rubber stamps. I hope that my hon. Friend will be able to give me that assurance.
  6.39 a.m.
  The Minister of State, Scottish Office (Mr. Gregor MacKenzie): Let me say at the start that I share the concern of my hon. Friend the Member for Central Ayrshire (Mr. Lambie) and regret that the closure of this old-established company at Irvine, an area of already high unemployment, will lead to nearly 100 people losing their jobs. Some of them, I know, have been employed there for nearly 40 years, and it is indeed sad that they should be faced with this at the end of their long and loyal working lives.
  When the company first advised us that it was to close its Irvine factory, I was mindful of the fact, as were my colleagues in other Departments, that employment in the area had suffered a number of setbacks in the recent past. I therefore asked officials of my own Department to carry out an immediate inquiry into the closure, to see whether there was anything the Government could do to persuade the company to reverse its decision. It soon became very clear that the company

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  believed that it had strong economic and commercial arguments for the closure.
  Nevertheless, after I had heard a deputation from the work force, led by my hon. Friend who has raised the subject tonight, I asked the company's management to meet me. I explained to them at some considerable length the Government benefits available for maintaining employment, and I discussed with them, again at some length, the possibility of Government assistance for the Irvine factory. But I was told—I can only report this to my hon. Friend—that the company had concluded that for the long-term wellbeing of the group it was necessary to make substantial savings, and that these could best be made by closing Irvine.
  The management also told me that, although 100 jobs were at stake there, the group's main employment was at Stockton, an area very hard hit by unemployment, and that the company employed about 1,000 people in the four Stockton factories.
  The immediate choice was between making 144 people redundant at Stockton or 98 at Irvine, but this was not a real choice. To have made 144 redundant at Stockton could have alleviated the immediate problems of the group, but the long-term problem was basically that the group had more capacity than it believed would be needed for the next few years.
  The management went on to tell me that to maintain capacity at both Stockton and Irvine they would have to continue to bear substantial overheads at Irvine. They were sure that unless the group was properly organised now, its whole future could be in jeopardy, and that the long-term security of many of the Stockton jobs would be at stake.
  It was clear that the management were convinced that no amount of Government assistance would cure their underlying problem of over-capacity. I had to accept that, this being the case, there was very little the Government could do to prevent the closure in this way.
  The company has offered, as my hon. Friend mentioned, compensation terms to the employees greater than the statutory minimum, and I have noted that the
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  workers have accepted these terms by an overwhelming majority.
  Mr. Lambie: They have no alternative.
  Mr. MacKenzie: I am pointing out what has happened at this time. My hon. Friend seems to think that I am the person closing the factory. I am only reporting what has been happening. We want to get that on the record.
  In addition, in an effort to alleviate the hardship, it is only fair to point out, a number of jobs have been offered in the Stockton area to workers at Irvine. Indications at the moment are that only a few will transfer.
  My hon. Friend pointed out to me that a number of local employers had been contacted with details of the workers to be made redundant. This was also pointed out to me by the management. A number of these workers have now found jobs in this way.
  My hon. Friend asked me, in the course of his comments, whether I would order the Scottish Development Agency to take over the factory at Irvine and to run it as a commercial proposition My hon. Friend must look with some care at the Act which set up the Scottish Development Agency. I can only refer him to the powers of my right hon. Friend the Secretary of State for Scotland in this regard and to the guidelines which were published at the time when the agency was set up.
  Whatever powers, specific or general, may be given to the Secretary of State, there is no power which allows him to go into the Scottish Development Agency and to tell it how to run its business on a day-to-day basis, which is what my hon. Friend is asking me to do tonight. I think it would be quite improper for the Government, once having set up a body of this kind, to take on the task itself of running the agency.
  My hon. Friend will accept from me, I am sure, that Sir William Gray and his colleagues on the board have gone into this matter very thoroughly indeed. The board has adopted, as it always would, a sympathetic approach to the problem of a closure of this kind, but in its judgment this is not something it would be prepared to take on at the present time.

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  My hon. Friend asked me whether I would be prepared to examine any other application for assistance—
  The Question having been proposed after Ten o'clock on Monday evening and the debate having continued for
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  half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at fourteen minutes to Seven o'clock a.m.