POWER TO VARY REBATES

HC Deb 05 July 1977 vol 934 cc1118-52

Lords Amendment: No. 1, in page 2, line 12, at end insert— (3A) No order shall be made under subsection (1) above unless the Secretary of State thinks it expedient to do so with a view to adjusting the level at which the Redundancy Fund stands for the time being and having regard to the sums which may be expected to be paid from that Fund in any future period.

3.42 p.m.

The Minister of State, Department of Employment (Mr. Harold Walker)

I beg to move, That this House doth disagree with the Lords in the said amendment.

Mr. Speaker

I think that it is for the advantage of the House to take with this Lords Amendment No. 2, in Clause 2, page 3, line 3, at end insert— (3A) No order shall be made under subsection (I) above unless the Department of Manpower Services for Northern Ireland thinks it expedient to do so with a view to adjusting the level at which the Northern Ireland Redundancy Fund stands for the time being and having regard to the sums which may be expected to be paid from that Fund in any future period.

Mr. Walker

Both amendments deal essentially with the same issue.

Perhaps I should remind the House of the purpose and background to the Bill, as that will make plain the reasons for my opposition. From the outset the Government have made their intentions quite clear. This Bill is an enabling measure which of itself does not reduce the redundancy rebate. However, we have been perfectly open about the fact that we intend to use the enabling power to reduce the rebate to 41 per cent. at the first opportunity. We have also been quite open about the reasons for this. A reduction in the level of rebate will have the direct effect of reducing the public sector borrowing requirement and contributing in a small way to the restoration of the economic health of the country.

As the House already knows, the Opposition amendment to require the affirmative resolution procedure to be used for subsequent orders made under the Act was accepted, and, as the Bill stands, the presentation of any order to vary rebate, whether up or down, will give the opportunity of full debate in both Houses and, indeed, such an order must have the consent of both Houses before it is passed.

However—here we come to the nub of the argument—a further amendment to allow the reduction of rebate only where the Redundancy Fund was in deficit was rejected by the House. On that occasion I reminded the House that circumstances can and do change. The present exceptionally difficult economic circumstances require equally exceptional measures to help put them right. We should not forget that this Bill is part of the Chancellor's package aimed at reducing public expenditure, and its contribution, however small, is important.

The amendment to Clause 1 is that No order shall be made under subsection (1) above unless the Secretary of State thinks it expedient to do so with a view to adjusting the level at which the Redundancy Fund stands for the time being and having regard to the sums which may be expected to be paid from that Fund in any future period". The amendment to Clause 2 is consequential upon the amendment to Clause 1, and its sole purpose is to maintain parity between the legislation of Great Britain and of Northern Ireland.

These amendments may be different in form from those already rejected by the House, but there is no doubt that they are intended to achieve a similar effect. We cannot now accept from another place a principle which has already been rejected by this House. For this reason alone the Government would oppose the amendments.

However, more important is the fact that these amendments are directly contrary in purpose to statements made by the Government about the proposed first use of the enabling powers. I have been quite frank with the House throughout both as to the intended use of the enabling powers and the reasons for such a use. Naturally we wish to be able to return to a situation where rebate could be increased and, as I said on a previous occasion, we look forward to the day when this will be possible, and we hope that it will be early.

For the present, however, the circumstances that I have described both on this and other occasions, make it necessary to seek to cut back the rebate at an early date. I ask the House to oppose the amendment.

3.45 p.m.

Mr. Barney Hayhoe (Brentford and Isleworth)

I hope that the House will not accept the Minister of State's advice but will agree with the Lords in this amendment. I have been disappointed with the hon. Gentleman's negative and unhelpful attitude during the course of proceedings on the Bill, with the exception of his agreement in Committee to the affirmative rather than the negative procedure for making variations in the rebate, which was the original proposal.

Putting that on one side, the Government have adopted a negative attitude throughout. This is a reasonable and simple amendment. The Minister, when dealing with this matter in the other place, accurately described its purpose. I think that I am in order in quoting the Minister when he said that the idea and purpose of the amendment was to ensure that power to vary rebates is used only as may be necessary from time to time for the management of the Redundancy Fund".—[Official Report, House of Lords, 21st June 1977; Vol. 384, c. 548.] That is an eminently sensible reason for the use of the power. Indeed, the use of the power to vary the rebate for any other purpose is beginning to go away from the whole basis upon which the prime legislation was passed by this House—namely, to set up a fund financed from industry, the purpose of which was to provide help to those firms and, through those firms, to individuals who, for one reason or another, were made redundant.

What could be more reasonable than to impose in the legislation the condition that this power to vary the rebate should be used only for the management of the Redundancy Fund, not for any other outside reason? By what convoluted distortion of the purposes of the Department of Employment does the Minister come before the House to ask for the rejection of this amendment? How can one argue that this is something to do with the purposes of the Department of Employment? Will the rejection of the amendment help in dealing with the problem of redundancy? Will it make it easier for people confronted with redundancy to meet that difficulty? Will it help the firms concerned to make proper arrangements for those who are to become redundant? Of course not. Will it provide any additional power for the government regarding redundancy? Of course not. If the amendment is rejected, the Government will be able to use the Fund perhaps for purposes which Parliament did not have in mind when the Fund was originally created. If anything, rejection of the amendment will make matters worse.

If rebates to employers are reduced for reasons other than the management of the Redundancy Fund, what will be the result? An extra burden will be placed on industry, particularly on small businesses which have already made clear their repugnance towards the way that the Government propose to use these powers. Rejection of the amendment will impede the sensible redeployment of people within industry. That point was made with considerable eloquence by Lord George-Brown in another place.

It will add to the barriers facing firms which are thinking of taking on new employees because any prudent employer now has to look at all the commitments that are being entered into if someone new is taken on. One of those commitments will be greater if the Government get their way, the Lords amendment is not accepted and, as a result, the Government produce a proposal to reduce the rebate that is accepted by both Houses of Parliament. Those circumstances would add to the future commitments of an employer when taking on extra staff.

We should examine the purpose behind the Minister from the Department of Employment coming to the House and asking it to reject this sensible and reasonable amendment. It has nothing to do with the essential functions of those Ministers. They are doing someone else's dirty work. There is little doubt that the Ministers from the Department of Employment are coming to the House at the behest of the Treasury.

The Lords amendment is being resisted by those Ministers for contradictory reasons. The Minister resisted the Lords amendment today because he said that it went against the ideas that the Government have about the use of this power. He also said that it would be against the principles which the House had established on earlier votes on the Bill. In other words, he thought that there was something of substance in the amendment which would frustrate what he believes to be the will of the Government and the House.

The Minister in the House of Lords said that the amendment should be resisted because it does no more than add unnecessarily to the wording of the Bill".—[Official Report, House of Lords, 21st June 1977; Vol. 384, c. 549.] The Ministers should get together and make up their minds. In the Lords the argument was that the amendment does little and therefore does not matter. In the Commons the Minister says that it means something of importance which will cut the basis of the Government's approach to the legislation. I suppose that muddled thinking of that kind is not surprising in the circumstances.

Although it is, as the Minister said, a relatively small and perhaps unimportant piece of legislation, the refusal to accept the amendment illustrates much that is wrong with the way in which we make political decisions in Government and Parliament.

The amendment makes the management of the Redundancy Fund the reason for varying the rebates to employers. Ministers do not want to be so constrained. They want power—and the Minister freely admitted this—to use the Fund for purposes other than those that Parliament had in mind and that it decreed in the legislation when the Fund was established. Perhaps Ministers will face some questions in the courts of they decide to go ahead and attempt to get parliamentary authority for varying the rebate in such a way that it could be argued that it was against the purposes and intention of the original legislation.

I am no lawyer, but when I read the speech by the Minister of State when he introduced the legislation I believe that it was never the intention to vary the rebate in order to produce some money as part of the package and terms agreed with the International Monetary Fund. There was nothing said about that in the original legislation. Indeed, if even the slightest suggestion had been made that the Government were seeking to set up a Redundancy Fund which they could use later as a method of injecting a small item into a package of economic measures which would convince the IMF that the Government were at last beginning to adopt a more sensible attitude towards public spending and the management of the economy, no hon. Members would have had anything to do with it. It was never in any one's mind that these powers would be put to that use.

Mr. David Mitchell (Basingstoke)

My hon. Friend referred to a small item. Does he accept that if small businesses are faced with having to make redundancy payments it is no small item? It may be the difference between continuing in business and going bankrupt.

Mr. Hayhoe

That is an important argument. Although the amount of money involved in terms of the national economy is very small indeed, the way in which this power could be used might prove to be that additional burden on a small employer that would drive him from a position of survival to one of liquidation.

Sir Anthony Meyer (Flint, West)

Further to the point raised by my hon. Friend the Member for Basingstoke (Mr. Mitchell), is it not the case that the absence of any arrangement whereby employers can set a sum aside to reserve to meet a contingent liability for redundancy payments, except out of already taxed profits, is a further factor which menaces a firm which is approaching the point of insolvency? Should we not have a provision in the Bill whereby sums can be set aside in reserve as a contingency for redundancy?

Mr. Hayhoe

My hon. Friend the Member for Flint, West (Sir A. Meyer) makes an important point. It would be helpful if some help could come through fiscal provision from the Government towards the establishment of reserves by businesses to meet the requirements placed upon them by possible future redundancy.

It is interesting that the helpful suggestions about improving methods of dealing with redundancy are coming from this side of the House. Ministers from the Department of Employment, who should be concerned about this, are acting as errand boys for the Treasury and collecting money in a way which is improper under the Redundancy Fund legislation.

Ministers make a nonsense of dealing with public affairs. This minor item was inserted into the Chancellor of the Exchequer's package last year. They have never produced a rebuttal of our case that the proposal was a mistake anyway. It was based on an assumption last July that the Fund was running into deficit. It was decided that to avoid an extra burden falling upon public funds some changes should be made. The figures upon which these calculations were based last July were later shown to be inaccurate. It was then established that the Fund was moving not into deficit but into increasing surplus.

There might have been some justification for the Minister coming to the House and asking for powers to reduce the rebate when the Fund was sliding into deepening deficit. But there is no justification for Ministers seeking to reduce the rebate to employers at a time when the Fund is growing into a steady and increasing surplus. I think that it now probably has a surplus of over £12 million. Perhaps the Minister will give the latest figures. However, I know of no statistics that do other than indicate that if things were left as they stand, the Fund would gradually be increased in size.

4.0 p.m.

Therefore, the Minister's proposal that he wants these powers and wants the Lords amendment resisted so that he can use the powers to reduce the rebate in order that the Fund should move even more sharply into surplus is quite wrong. The Minister is wrong to come to the House and ask for agreement to such an outrageous proposition.

I suppose that one of the reasons for this is that Ministers in the Department of Employment will not acknowledge the errors that they made a year ago, or the errors that were made by those scurrying around looking for some candle ends, important though it is to do that from time to time when in Government, and to look for some contribution to make to the package. Perhaps the Ministers are too frightened of the Treasury to acknowledge their error of last year and to come to the House and say "We made a mistake then. We should now like to forget the whole matter, and we shall withdraw the Bill", or at least "We shall accept the Lords amendment."

The Bill with the Lords amendment included might well be a measure that would command wider support in the House, because to have the power by the affirmative procedure to vary rebates is not of itself wrong. To have the power in the circumstances in which the Government are asking for it and without the restraints upon the use of that power which are implicit in the Lords amendment is something that should be denied to the Government.

Perhaps the Treasury—never renowned for its concern about parliamentary opinion—has insisted that the Department of Employment Ministers, whatever the mistakes they made earlier, must now deliver the goods that they promised, wrongly, over a year ago. I doubt whether there is one hon. Member of this House, outside the Treasury team and the doers of their dirty work, the Ministers of the Department of Employment, who would resist this sensible and reasonable amendment if it were not for the activities of the Government Whips. I am absolutely certain that no one in the House could deploy an argument based upon the realities of the Redundancy Fund which would be an argument against the amendment.

It is, therefore, not parliamentary practice that we are seeing from the Ministers of the Department of Employment today but a pigheaded, puerile pedantry and—using Churchill's words—one that I hope up with which this House will not put. Let it vote accordingly later.

Mr. Geoffrey Finsberg (Hampstead)

I shall be brief. I start by apologising to the House for the fact that I have to attend a Select Committee shortly and may not be able to hear the Minister's reply.

I must confess that I found the Minister's argument unconvincing. I have had something to do with redundancy rebates, long before I became a Member of the House, because I was engaged as a member of the CBI in the discussions that we had on the original Redundancy Payments Bill.

What saddens me perhaps more than anything else is the way in which this until now valuable and uncontroversial matter has been dragged somewhat into the party-political arena. It is a pity that that has happened, because up to now it has not been such a matter. Both sides of the House have recognised the value of the legislation, which was clearly the brainchild of Ray Gunter, to whom the House owes a debt of gratitude.

First, the Minister had to eat his words, because on the first occasion the House wisely threw out the Bill. It was then clearly only on the insistence of the Treasury that the Bill came back. The Committee looked into the matter and decided that if there were to be any form of change, it should at least be by the affirmative resolution procedure, as my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) said.

However, unfortunately the Minister, as is so common nowadays, could not accept amendments in Committee. Because the Government have no majority in Committee, they frequently run a risk, because the so-called minority parties cannot be bothered to turn up in Committee—nor, indeed, can they be bothered to turn up in the House today. Of those great supporters of the Socialist Party, the Liberals, or those great nationalists, not a one is present today when the problem of redundancy is being discussed. They nauseate me occasionally. When the Government want support, they are glad to drag them here. When the Liberals or others want Socialist support, they are happy to have it. When it is merely a House of Commons matter, they cannot bother to turn up.

I am disturbed that what we are discussing was argued through in Committee very reasonably and argued through in another place, with some very telling arguments from some of the noble Lords who understand these matters, yet back in the House of Commons we are faced at the last moment with a starred Government motion. It may be that the Treasury had not quite realised what the other place had done. As my hon. Friend said, the Minister there used one line of argument, which was, at least, a standard line and one that is used frequently by Ministers of all Governments. That was "You do not really want to add these words. They do not mean anything, other than making it a bit longer. They are probably not drafted properly. You do not really want them."

If a Back Bencher on either side is prepared to run the risk of moving such amendments and carrying them, he then puts the Government Department, irrespective of which Government, in a very difficult position. I have done it myself on at least two occasions. The Government either have to swallow their pride and tell their draftsmen to put the matter right, or have to summon up the big battalions, saying "Although the Back Benchers may be right, we do not want it. We want none of it. Out." I fear that that is what has happened today.

From experience I should have thought that the Minister of State was a good House of Commons man. However, I do not think that he can reconcile the arguments that he used today and the words used by his representative in another place. They have two entirely different meanings. We are occasionally told that we are living in an Alice-in-Wonderland situation, but when two Ministers speaking for the same Department use two entirely different arguments, it is a bit difficult for mere mortals who are not in the exalted situation of Ministers with their Civil Service advisers to know exactly what is meant.

The Minister would be doing a service to the House if he could at least reconcile the arguments. He might finish by saying that his noble Friend was talking rubbish or was given the wrong brief by his Department and did not really know what he was doing. They cannot both be right. One must be wrong. It would be nice if the Minister would say "I am sorry: I was wrong or my noble colleague was wrong, but the important thing is that the House of Commons is not wrong. Having heard the arguments deployed, and although the words may not be necessary, on balance we shall accept them because they are in the right spirit and are not against the intention of the Bill. They are merely adding to the safeguards that Parliament requires."

I should have thought that unless and until the Minister is translated to Great George Street, to the Treasury, which is the coffin of most people, he would be a Department of Employment man and a House of Commons man and would stand up for the rights of his Department. My hon. Friend made the very fair point that up to now the Fund has been accepted by industry as a good thing. I must warn the Minister that if he is about to use the Fund as an instrument of Government financing policy, he will not be particularly helpful to the closer dialogue between Government and industry for which the Prime Minister is asking. Industry does not want its money used for the roulette table of other Government Departments. That is really what the Minister is seeking power to do. He wants to throw the Redundancy Fund chips on the table to back some other Government Department in its mistakes.

Like my hon. Friend, I am no lawyer. However, it seems to me that it is at least a possibility—putting it no higher—that the courts, which, fortunately, are still above all of us, might hold that the original intention of the Act was being wronged by the Department if it tried to use its powers to spend money for another purpose.

Cutting through all the verbiage of what the Minister said in this House and in the other place, the fact is that the money in the Fund is not the Government's money. It is not money that they can spend. It is wrong for the Minister to say, as he has on more than one occasion, that this is part of the public expenditure cuts campaign. That statement is rather an old record now, because it is clear that the Government are rapidly back-tracking. The Government will abolish some of the cuts that they have made to provide marvellous sweeteners to satisfy the Liberals to keep the Government in power a little longer. I hope that the Minister will reconcile the two sets of arguments and accept that there is nothing wrong with the Lords amendments.

If the Government continue to do this sort of thing, they will make industry highly suspicious of their real intentions. Then the Government will have no case for saying that industry is not supporting them. Industry is glad to support any Government who act in the national interest, but when any Government start using special funds to support other purposes, industry has the right to say: "Enough! That is not part of the deal we have tried to make with you". I hope that the Minister will take that point on board.

Mr. David Madel (Bedfordshire, South)

I had hoped after all the debates we have had on the Bill that the Government would have been able to say today that they had looked at this matter again and had agreed to accept the amendment. The amendment is carefully drafted and I do not think that it affects in any way the Department's general strategy. The fourth line of the amendment states that the Secretary of State shall have regard to the sums which may be expected to be paid from that Fund in any future period. So often when we have had these debates Ministers have referred to the Chancellor's economic measures, the general strategy and July 1976, but since then we have moved much further in general economic terms.

It is clear from newspaper reports that the International Monetary Fund will be visiting us again in the autumn and it will find that our position has changed. If the Government continue to say that we had to take this action in July 1976 because that is what the Chancellor said, they are laying far too much stress on something that happened 12 months ago and are disregarding the fact that the economic position of the country has changed.

There has been general party agreement on redundancy payments in the 12 years since the 1965 Act. I appeal to the Government that the very least they can do is to accept the amendment and look at it again in the next Session if they wish—if the Labour Party is still in office. I hope that the Minister will tell us what is the present surplus in the Fund. In the debate in the House of Lords the Minister gave the figure of £12.7 million, which represents an increase on the figure given in earlier debates in this House.

I wish to draw attention to two points made by the Opposition Front Bench in the House of Lords on 21st June. Moving the amendment, Lady Elles referred to Section 122(4) of the Social Security Act 1975 and to Section 86(5) of the Employment Protection Act. She pointed out that before making an order varying the amounts that may be paid under those two sections, for example under the Employment Protection Act, the Secretary of State has to take account of such matters as the general level of earnings, the national economic situation, and so on". She also pointed out that the amendment that we are discussing closely follows Section 122(4) of the Social Security Act 1975. When replying from the Government Front Bench, Lord Wallace of Coslany told Lady Files: The Redundancy Payments Bill should be considered on its individual merits."—[Official Report, House of lords, 21st June 1977; Vol. 384, c. 541–50.] We need go no further than that statement.

If we accept the Minister's remarks, the words of Lords Amendment No. 1 should be carried out and the amendment accepted. The amendment is merely treating the Redundancy Rebates Bill on its merits. The example given by Lady Elles of the Social Security Act 1975 is exactly the same us what we are asking for in this amendment. Given what the Minister in the Lords said about the Bill being considered on its merits, I cannot see why the Government cannot accept the argument of their own Minister in the other place and accept the amendment.

In the last two months the Government have made many announcements about training programmes and the help that they want from industry, the money that they want industry to put into training, and the number of school leavers that they want industry to take on. I think that industry will respond to these announcements. We gave a general welcome last week to the new training measures that the Secretary of State announced, but getting support from industry is a two-way process.

I have not heard of any industry that does not accept this amendment, especially smaller industries. Would it not improve the atmosphere of co-operation with industry which the Government are seeking if they accepted the amendment? If the Government could not accept it for all time, could they not accept it for one year? We could then see whether the figure of £12.7 million remained. Let us see what requirements there are for payments out of the Fund in 1978.

4.15 p.m.

I appeal to the Government to be reasonable. It does not do the Government any good to have a party quarrel on redundancy rebates. Since 1975 the Opposition have done their level best to reach agreement with the Government on these matters. We are conscious of the important contributions that small businesses must make if we are to get more young people into jobs. If the Minister looks at the number of new businesses in Telford new town, for example, he will find that the overwhelming majority of them employ only a small number. Yet Telford is supposed to be a show town. Surely the last thing that the Government want is a new town to be struck by redundancies. Small businesses are the main prop of that town. The most sensible thing that the Government could do would be to accept the amendment as a way of further improving co-operation between the Government and industry.

Mr. David Mitchell

The Bill that the Lords amendment is designed to amend was intended to ensure that employers would contribute more if an employee was made redundant. The Lords, through this amendment, are seeking to ensure that the Government will increase the employers' payments to the Redundancy Fund only if the Fund is short of money, and that they should not use it as an economic regulator.

I wish to put three points to the Minister. The use of the Redundancy Payments Act as an economic regulator is an abuse of Parliament. Parliament gave its approval to that legislation after spelling out very clearly the purposes which it was to fulfil. I am very critical of a number of these purposes and a number of the ways in which it operates. There should be a radical overhaul and amalgamation of a whole series of benefits, including redundancy payments, unemployment benefits, wage-related unemployment benefits and other things of that sort to help people in job transition.

Let us consider the way in which Parliament was persuaded to accept the Act. A special fund enabling payments to be made to employers when they had redundancies was established so that the strain on the employer should not be too great. I believe that the Miinster is in the position of a trustee. He is the trustee of that Fund and he must see that it is available to fulfil the purposes that Parliament had in mind when it voted for the Bill. As a trustee, he is sponsoring a provision to enable the Fund to be used as an economic regulator and not solely to provide finance for the original purpose.

I am reminded of the circumstances surrounding the Road Fund in the 1930s—when the Minister and I were very young and long before we became active in politics. There were substantial feelings of anger then when it was discovered that, rightly or wrongly, the Government of the day had raided the Fund to use the money for purposes other than those for which it was intended. The Minister is asking us today to endorse a similar approach. He wants to agree to this Fund being used for other purposes, and it is a concept which we reject. If we accept what the Minister wants and he makes an order he will, in effect, be increasing unemployment.

I wonder when the hon. Gentleman plans to put a new name over the door of his office in St. James's Square. No longer is it the Department of Employment. It is now to be the Departmen of unemployment. That is certainly the sad rôle which the hon. Gentleman fills, and he is taking a further sorry step on that road this afternoon. He sits on the Front Bench, lonely. The House should be sorry for the hon. Gentleman. We know him as a kindly and genial man. More than anyone he he would like to see unemployment fall. But there he sits, accompanied only by two colleagues with him on the Front Bench, and with not one Labour Back Bencher present in the Chamber. He sits there lonely and isolated because his supporters dare not put their heads into the Chamber to listen to proposals which will increase unemployment.

The Government will go down in history as the Government of unemployment. I had planned to challenge Labour Members, particularly those below the Gangway, on whether we should see unemployment reach 1.5 million by August. I believe that that will be the result of the Government's policies. However, there is no Labour Member here for me to challenge. I had intended to offer them evens in a wager, and if there had been no takers, to go up to 2 to 1, and then 3 to 1. But there are no Labour Members here to take it up. Perhaps Ministers are barred by token of their office from accepting bets.

One of the ways in which the Bill will increase unemployment is by its timing. Spread across industry as a whole, it does not involve large sums of money. But for the individual employer, given the time at which he has to pay out the money, it represents a burden. No employer dismisses people frivolously. No employer likes to see idle machinery or empty workshops. An employer does not make a profit out of that. He will dismiss people only if he is in a serious financial situation. The unfortunate aspect is that just at the time that his position is at its most serious, when he has to reduce part of his labour force, he will be taking on a liability that will so reduce his cash flow that he will probably have to dismiss even more of his workers.

More firms have gone bankrupt in the last year than at any time since records were kept. The number has risen by 110 per cent. since 1972–73. Therefore, firms are getting into financial difficulties, and it is just when things are at their worst that those firms will be hurt by this legislation.

I see a parallel here with the Employment Protection Act. The Government seem to believe that if they make it more expensive to dismiss staff, the staff are less likely to be dismissed. There are many special disadvantages for an employer in dismissing someone, and so many advantages to the employee, that employers are wary of taking people on. That means that there is not the growth of new jobs that there should be.

This factor operates most severely on the small business because it is the small business which is most reliant on retained profits to enable it to keep pace with inflation and to finance its expansion. At a time of inflation, every business tends to be cash hungry. Even a village store with £4,000 of stock, requires £4,800 for the same amount of stock a year later when inflation is running at 20 per cent. A medium-sized enginering works, which has £40,000 of work in progress, will require an extra £8,000 12 months later.

Businesses constantly need more and more money to maintain the same volume of output and therefore the same number of jobs. With price control and competition artificially suppressed, they are unable to make the same profit and they are driven to borrow from the bank. The small business cannot go to the Stock Exchange for more money. Instead it relies on ploughed-back profits backed up with bank borrowing. The amount that a business can borrow from the bank depends on the value of the business. Here the Minister is warning us that he will bring in an order which will decrease the value of every business, thus decreasing the collateral which is available for bank borrowing.

A bank manager wants to know what a company's liabilities will be if it gets into trouble—for example, if the proprietor walks under a bus and the business has to be sold. Among the liabilities is the redundancy payment. Many small businesses with older proprietors realise today that their redundancy payment liabilities for long-service employees are nearly as great as their assets. I could prove that if the Minister wished me to do so.

Therefore, small businesses reliant upon bank borrowing will have a balance sheet to take to the bank which shows greater liabilities, liabilities which are being increased as a result of the Bill. The bank will refuse to lend more money and will clamp down sooner than hitherto. When the provision comes into operation, therefore, it will result in a number of firms going bankrupt and people being thrown out of work, with further demands therefore on the Redundancy Fund.

If the Minister has not taken this point on board, the Treasury should have done so. The Minister is involved today in compounding a felony, the felony of using the Fund as an economic regulator and the felony of adding to unemployment, which is one of the worst and most sorrowful burdens that he has to bear on his shoulders.

4.30 p.m.

Mr. Esmond Buhner (Kidderminster)

One of the Minister's reasons for resisting the amendment was that it came from the other place. Had it been backed by the Duke of Dorset or the Dukes of Omnium and Gatherum, there might have been some justification for that line, but it is no bad thing to recognise that there is often more varied industrial experience in the Upper House than there is here and that the content of debate there is often much more relevant

The amendment is absolutely unexceptionable. It requires the Secretary of State to take into account the size of the Redundancy Fund and any major changes in the number of redundancies before making an affirmative order. The work of the sector working parties has shown that there is an enormous amount of overmanning in British industry and that in some industries—notably shipbuilding, steel, telecommunications and textiles—there is every reason to fear massive reundancies over the next few years.

We have been told that the Fund is in surplus, but we have not been told what the call on the Fund may be. It is meaningless, therefore, to talk about a surplus if an analysis of forthcoming demand is not attempted. Therefore, if the amendment concentrates the Minister's mind on what will happen as well as what is happening, it will be wholly desirable.

However, as we have been told, the Government's purpose is to use the Fund for other purposes. My hon. Friend the Member for Basingstoke (Mr. Mitchell) has pointed out what happened to the Road Fund. The right hon. Member for Down, South (Mr. Powell)—I am sorry that he has left—argued that the Land Fund was a fiction, although Dr. Dalton, when Chancellor of the Exchequer, had said that it was to be a perpetual memorial to those who had fallen in war. By the mid-fifties more than £140 million was set aside for that purpose and the avaricious Treasury saw it as money on which it could lay its hands. Spurious arguments were used in the House to justify the raid.

It is increasingly difficult to see where good management ends and manipulation begins. We should do everything possible to make Ministers and the Civil Service accountable. One does not need to run even a comparatively small business to know how difficult it is to follow the movement of cash. Certainly we long ago lost control of the way in which the Treasury moves money from one Department to another.

If the Redundancy Fund were simply to become a column in the accounts to allow the Treasury maximum flexibiilty, that would lead only to greater cynicism in industry. Those who served on the Standing Committee on the Employment Protection Bill remember how proposition after proposition flowed from the Government to make labour more of a fixed cost and more expensive. It was difficult to argue that any one of those propositions was not sensible, but taken together they could only make for more unemployment.

What is happening with the Redundancy Fund bears that out. If the cash is increasing when unemployment is increasing, that can only mean that there is a far greater reluctance to take people on.

Mr. David Mitchell

Can my hon. Friend persuade the Minister to tell us what estimate he has made of the additional numbers who will be made unemployed by this legislation?

Mr. Bulmer

It would be helpful if the Minister answered that question. To be fair to him, my experience is that these things are not quantifiable and that the answer cannot be given. But we know in our guts, and those who run businesses know, that an enormous wet blanket has been laid on the creative spirit of industry. Some of it was done for good reasons, but Ministers refuse to accept the consequences of their actions and to realise the truth of what we said at the time. Unfortunately, a Conservative Government will probably have to clear up that mess.

If the Government get this Bill, it is no secret that they will reduce the employer's rebate. This will be yet another burden on small business and on all business. The amendment may be a straw, but we have to consider every straw today to see which will break the back. If this one does not actually break the back, it may induce a slipped disc. Anyone who has suffered from that disability knows how immobilising it can be.

There is increasing resentment in industry at changes in the rules and this sort of unilateral reduction. An employer taking someone on up to now could have expected that if his estimate of sales was not met and he could not continue to employ so many people, he would at least get this contribution. Now he will not. But on top of that, if the redundancy is brought about by Government action—for instance, the 25 per cent. increase in VAT—that bitterness is even greater. Not only have the Government created the situation that caused the redundancy, but they have reduced the compensation.

Those of us who work in industry have the depressing feeling that not only the Government but the Civil Service have no understanding of how industry works and that in the Treasury and the Department of Industry there is no one of assistant secretary rank or above with even one year's experience in manufacturing industry. That is not a sensible way to run a country.

We want the Redundancy Fund to be just what its name suggests. We want the Government to be accountable for its use and criteria established to prevent its misuse. Since the amendment goes a small way in that direction, I support it.

Sir A. Meyer

It is said that the road to hell is paved with good intentions. We know that the intentions of the Minister of State are always good, though we are not always so confident about some of his colleagues. Much of the present unemployment and of the additional unemployment that, alas, can be expected is due to legislation enacted with excellent intentions. Legislation that had much more questionable motives—notably the Employment Protection Act—has been and will be responsible for much more unemployment.

We see the same situation in housing. The present Government seem concerned solely with those who have a house, a tenancy, or a job and not at all with those who have no house, who would dearly love a tenancy, or who are desperate for a job. It is with that in the forefront of our minds that we should consider every item of legislation affecting employment, including the Lords amendment.

None of us will maintain that this Bill, amended or unamended, will play a major rôle in increasing or diminishing unemployment, but it will make its contribution. The effect of the Bill as it left this House, after unsuccessful attempts by the Opposition to amend it, was to introduce yet another factor of uncertainty into the calculations that employers have to make in deciding whether to take the big risk now involved in taking on extra workers. Everything that the Government do increases the risk to employers contemplating increasing their work force.

This measure made its own contribution. We on the Conservative Benches moved amendments which would have had some effect in mitigating that uncertainty, but those amendments were rejected. Now the Bill comes back to us with a very carefully drafted amendment which was made in another place and which would make a small but none the less appreciable contribution to diminishing the uncertainty. The Lords amendment is undoubtedly valuable in that connection.

If the Government are serious in what they contend the Bill is intended to achieve in its entirety, I cannot believe that they can bring themselves to reject this amendment, other than on the grounds that it comes from another place, that it was not drafted in the Department, and therefore it is unacceptable. If they are serious in their desire to ensure that this measure does not add a further aggravation to the uncertainties facing employers and to the likelihood of increasing unemployment and decreasing job opportunities for those who desperately seek jobs, I cannot for the life of me see how they can fail to accept the amendment.

Mr. Kenneth Lewis (Rutland and Stamford)

The Lords amendment appears to seek power to vary the rebate only for the management of the Rdeundancy Fund. That seems to be good economics as well as good politics, but the Minister wants to increase his political power in this rather minor matter. I say that because he cannot want bigger and wider economic powers, since those economic powers would not rest with his Department. He could have those powers only if the Chancellor of the Exchequer or the Cabinet as a whole allowed him to have them. Therefore, he wants wider political power.

Why does the Minister want the power? He cannot want it to increase the rebates to employers. If that were so, he would have to ask the permission of the Chancellor if he went beyond the Fund, and in certain circumstances—in the present circumstances—he clearly would not obtain permission from the Chancellor. Therefore, the political powers that he seeks, that he thinks he might want at some time or another, are powers to reduce the rebates paid to employers.

This is where we differ from the Minister. We are entitled to do so on a number of grounds. First, the effect on youth employment of jobs not becoming available is dramatic. The more people agree with their employers to become redundant, the more jobs there are available for young men and women to come into industry.

4.45 p.m.

Therefore, if the Minister used the powers that he seeks, the first effect would be that the redeployment of labour, which is so essential, would be affected to the disadvantage of youth, on whom his Department is spending a great deal of money. The Department has rightly given a great deal of attention to the problem of youth, as have the Government as a whole and both sides of the House.

When the Government seek powers, we must assume that they might use them. The effect on employers is that they will be cautious about seeking redundancies and trying to provide new jobs for old. Because they will be uncertain whether it will cost them more money, they may not make redundancies necessary to bring about efficiency.

One of the advantages of the Redundancy Fund is that employers who have people who are not pulling their weight—not always because they do not want to, but perhaps because their ability is less than was expected—can replace them in the interests of the firm's productivity, to the benefit of the other employees. The efficiency of the firm can be affected if the employer is put in the position of not initiating redundancy when it might be desirable.

Another effect is that the very powers sought by the Minister create a certain mental attitude in the employer, who assumes that the Fund might become a tax matter—that it is no longer just an industrial matter, no longer a Fund serving industry regardless of the Chancellor of the Exchequer. He must think always of the possibility of this becoming another impost upon him by the Treasury.

What about the effects on employees? There is the general effect that if rebates are reduced, the charge on taxation is not only on the employer. We sometimes tend to think that when there are increased Treasury imposts upon business and industry generally, through the Budget or some other means, they are simply a charge to the employer. In fact, they are spread across the whole of taxation so that everybody contributes. Everybody has to pay. Therefore, it affects the employee in the works through his pay packet. His taxes either cannot be brought down or, at worst, may have to be put up.

Secondly, some employees who want redundancy and who actually seek it will not get it. I do not think that the Minister himself would pretend that redundancy is simply a matter for the employer. Quite a lot of people ask the employer to make them redundant. This is very often a good thing. When an employee wants to leave because he will be paid out from the Redundancy Fund, there is no dispute about it. There is no difference of opinion even with the unions. That employee leaves, and then there are the opportunities for somebody else to come in.

I have already mentioned the effect upon the recruitment of young men, which is vital. Finally, there is the effect upon the hon. Gentleman as a Minister and upon his Department. What the Minister is providing in the Bill is an opportunity for the Chancellor and someone else to interfere with a matter which concerns the Department of Employment and the Secretary of State for Employment. Once he does that he is giving up his influence down the line with employees and employers in so far as they are concerned with labour and labour relations.

The Fund should be the concern only of the Minister and the Department. It should not be the concern of the Chancellor of the Exchequer or the Government as a whole. It should not be a matter in which they can interfere, in not accepting the amendment, the Minister is allowing—almost inviting—interference.

I cannot understand why on earth the hon. Gentleman should refuse to accept the Lords amendment. It is very sensible. The Minister may have certain reservations about it. They cannot be earth-shaking reservations. Surely it is not a principle for which he would go to the stake. There is no reason why he should not accept it, yet he is refusing to accept a simple, sensible, ordinary amendment that one would normally expect to go through the House without any difficulty at all.

I begin to wonder why. Is it a part of the Lib-Lab pact? Is this the sort of little mouse that the public is to be shown as worth paying to see as part of what is available in the Lib-Lab zoo? Is this because of some agreement that has been made with the Liberal Party, whose members are not present today?

Mr. Hayhoe

At least the Liberal Member who takes a particular interest in these matters has indicated to me that he and his party will be voting on our side when the Division comes. On this issue, certainly, the Lib-Lab pact has been well and truly broken.

Mr. Lewis

It would be very interesting, if we won this vote today, to see whether tomorrow there was a vote of confidence on this little question. The Liberal Party would then have to switch its allegiance and vote with the Government. It just goes to show either that the Government were stupid to resist such a simple amendment, or that, if they are not stupid, they must have a reason for doing so. I think the Government are very misguided in not conceding, as so often happens when Bills go to another place, a proposal by the other place which is an improvement and would not be likely to cause any difficulty to the Government in the long run. They ought to accept it.

Mr. Fred Silvester (Manchester, Withington)

This poor little Bill is a strange kettle of fish. By accident of the timetable of the House and the untimely demise of the devolution Bill it has had more time on the Floor of the House than was originally intended. As a result, its subject matter has been well canvassed, but we do not seem to be getting anywhere.

Despite the fact that my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) has described it as a little mouse, there is at the heart of this continued debate about the amendment a very important principle which the Minister well knows, and I am a little surprised that he does not accept it.

As my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe) said, there was originally an error in the accounting for the redundancy payments. Certainly there was an urgent consideration at the time of the International Monetary Fund loan. All those things have been affected by the passage of time. The Redundancy Fund is now known to be in surplus of over £12 million, and that surplus has steadily grown over the years.

The Government tell us that the economic circumstances are about to turn a corner, and that things will get better to the extent that I should have thought they could manage to find a sum of £11 million, and yet in these circumstances a very important principle is being thrown away. I am sorry to underline it because it has been said umpteen times, but it has to be said yet again.

The Redundancy Fund was set up as a kind of trust. It was a separate sum of money which was put by for a specific purpose. The parties to that agreement—the parties in industry and the parties in Government—undertook that the Fund would be available for that purpose. There have been examples, such as the Road Fund, the Land Fund and so on, of funds being set up and raided, but that is not an excuse for the Minister to follow those bad precedents.

We are faced with a number of problems in industry and one of the most important relates to what we do when unemployment arises. This Fund is at the heart of that problem. In addition to what happens to the money, or how much money there is, we have to consider the degree of confidence that reposes within the system that we set up. The Redundancy Fund was set up with that confidence. This paltry sum is being used to break that confidence for no very good reason that the Minister has been able to put forward.

The money is not necessary for the health of the Fund, because the Fund is in surplus. It is not crucial to the Government's economic package—if it is dependent on that, the Government may as well pack up and go home now.

There is also an unfortunate side effect about which I am getting more and more anecdotal evidence. I refer to the employment drag. Firms that would previously have taken on small quantities of labour are now seriously concerned about their labour commitments. This situation arises not only from the Employment Protection Act, although I think it has been accelerated by it. We are concerned with the whole problem of the commitment which arises at the time of redundancy, as my hon. Friend the Member for Basing-stoke (Mr. Mitchell) so eloquently put it, in the case of small businesses.

These are the real circumstances with which we are dealing. Everyone has complimented the Minister, nice man that he may be. I do not compliment him. Nice man or not, it is he who bears the responsibility for this decision, and this is a wrong decision. I think that in his heart the Minister knows it is a wrong decision. It may be a matter on which on some previous occasion he has had to give way for some other purpose. We have pursued it through the House time and time again. It has been rejected in the House of Lords and has now come back in another form, so that we are at it yet again.

It is a silly, squalid little measure, and I am very sorry indeed that the Minister has decided to pursue it.

Mr. Harold Walker

With the permission of the House, I shall try to reply to some of the points raised in the debate.

I find it extraordinary that such a straightforward measure, aimed at a modest reduction in public expenditure—that is the purpose which has been frankly and openly stated on so many occasions during the passage of the Bill—should have generated so much debate, and abuse at times, this afternoon.

The hon. Member for Rutland and Stamford (Mr. Lewis) described it as a "little mouse". If that is the case, why should we have been detained so long with so many speeches? I regret that some of those hon. Members are not here to listen to the reply that I hope to make to their points.

The amendments would have the effect of frustrating completely the intentions and purposes of the Bill. What has been overlooked in so many of the speeches is that we are not debating and discussing redundancies. We are discussing public expenditure. That is what the measure deals with. It has been overlooked that this is essentially an enabling measure.

The hon. Member for Rutland and Stamford said that the only purpose of introducing an order would be to reduce the employer's rebate. When I put the Bill to the House for its Second Reading, I pointed out that the one advantage it had over the original Bill was that it would enable us to increase the rebates by order, and that we hoped to be able to do this rather more quickly than would have been the case with the previous Bill, which would have had to involve primary legislation. The Bill has the advantage of flexibility. I assure Conservative Members that it is our intention as soon as circumstances permit to introduce an order to enable employers to have bigger rebates.

5.0 p.m.

Another point that was made repeatedly, most strongly by the hon. Member for Hampstead (Mr. Finsberg), was that it was quite wrong to use the Redundancy Fund in the way that we propose and that it was completely contrary to the stated purposes of the Fund and the arrangements for its administration at the outset in 1965. That ignores completely the fact that successive Governments since 1965, including the last Conservative Government, count the surpluses and deficits of the Redundancy Fund according to the circumstances at the time, against the public sector borrowing requirement. In other words, since its inception it has been consistently used as an element in the public sector borrowing requirement. I hope that the House will not ignore that fact.

I am grateful to the hon. Member for Basingstoke (Mr. Mitchell) for some of his personal remarks. I hope that they were not influenced by the fact that he and I are regular pairs. I do not believe that they were.

The hon. Gentleman was right when he said that he recognised the amendments would thwart the use of the Bill for economic purposes. He thought that the Bill should not be used for that purpose and felt that the Bill should be preserved to allow only variations in rebate to be used in connection with the management of the Fund.

I pointed out that it is our purpose to use it for economic policy purposes. I find it rather extraordinary that, despite all the public statements by Conservative Members, particularly those on the Front Bench, about the need for reductions in public expenditure, almost invariably when the Government come forward with proposals for reduction in public expenditure they oppose and attack them. I find it extraordinary particularly in this case. Conservative Members have said that we are merely carrying out the dirty work of the Treasury—as though cutting public expenditure was dirty work. I can understand that point of view from some of my hon. Friends, but I find it hard to reconcile that attitude with some of the public statements by Conservative Members.

Much has been made of what was said in another place by Lord Wallace.

Mr. David Mitchell

Does the Minister intend to deal with the point that I made about the fact that, by reducing the collateral against which small businesses can borrow from the banks, the Bill will therefore create unemployment?

Mr. Walker

I was not sure whether it was right for me to attempt that. I am not sure whether the hon. Gentleman's point was relevant to the debate or to the responsibilities that I have within my Department. I should like to reflect on what the hon. Gentleman has said and, if appropriate, to draw it to the attention of my right hon. Friend the Chancellor of the Exchequer.

The hon. Member for Basingstoke among others mentioned the impact of the Bill on small businesses. Indeed, it was the hon. Member for Flint, West (Sir A. Meyer) who made the point about enabling firms, particularly small firms, to set aside reserves that would be tax free to enable them to meet redundancy contingencies as they arise. I promised that I would deal with this at some time or draw it to the attention of my right hon. Friend the Chancellor. Perhaps I ought to try and deal with it now.

I understand that this point has been considered on a number of occasions. It was considered neither right nor practicable to allow companies to establish tax-free reserves in order to meet unquantifiable liabilities that might never arise. It is the view of the Treasury that because the present system already takes some account of companies' tax relief in respect of employers' earnings-related contributions, from which the Fund is financed, employers themselves should contribute to redundancy payments.

Hon. Members spoke of the difficulty that small firms might find themselves faced with in meeting the redundancy payments in view of their reduced liabilities. Perhaps hon. Gentlemen who discussed that have overlooked the provisions of Section 32 of the Redundancy Payments Act which in certain circumstances where financial difficulty arises allows the Fund to meet the whole of the employer's liability initially and for arrangements to be made afterwards that would be mutually convenient for the repayment of the employer's part that has been paid out of the Fund.

Mr. Hayhoe

Will the Minister confirm that all the payments into the Fund, which are used either for the rebates or, in particular instances, for the total payments of the redundancy payment, come from industry and that according to the legislation that money can be paid out only by way of redundancy payments? The Opposition have always wholly rejected the suggestion that this is something to do with public expenditure. It has not. It has an effect on the public sector borrowing requirement, but not on public expenditure.

Mr. Walker

The hon. Gentleman is right when he says that the total income from the Fund is derived from employers' contributions. That is certainly true. But the hon. Gentleman must recognise that public expenditure is obviously related to the public sector borrowing requirement. It has been a practice of successive Governments to use the surpluses and deficits as an offset in one way or another against the public sector borrowing requirement. That is an element of public expenditure.

Conservative Members made much of what was said in another place by my Noble Friend Lord Wallace, speaking on behalf of the Government. For obvious reasons we have searched carefully for reasons why we might let the amendment stand. We are not opposing the amendment merely for the sake of doing so, or because it comes from another place.

My only reference to the fact that the amendment came from another place was that it came into direct conflict with the principle that this House already established and that it came into conflict with the previous amendment of the Opposition, which we had rejected. It is not the case that we want to oppose the amendment for opposition's sake. We searched carefully to see whether we could allow it to stand, because we were anxious to see progress on the Bill. We examined the amendment's effect extremely carefully.

The firm legal advice that is now tendered to me, in the light of the examination since Lord Wallace spoke in another place, is that the amendment would frustrate one of the main purposes of the Bill. The hon. Member for Bedfordshire, South (Mr. Madel) mentioned the parallel provisions of the Social Security Act 1975. As my noble Friend said in the other place, it would not seem inappropriate to follow the precedent of the Social Security Act. It would be wrong to confuse the present Bill and the use to which it will be put in the first instance with the provisions of an Act related to the collection of contributions.

Reference was also made of the fact that the Opposition Front Bench spokes- man, moving the amendment in the other place, referred to the provisions of Section 86(5) of the Employment Protection Act. What the amendment ignores is the criterion laid down in the Employment Protection Act—that the Secretary of State, in adjusting the level of payment, shall have regard to the national economic situation. It is right that we should have regard to the national economic situation.

Notwithstanding what my noble Friend Lord Wallace said and what has been quoted, I would point out that on 28th June, during discussion on the consequent amendment to ensure consistency in the Northern Irish legal position with that of Great Britain, my noble Friend said I am bound to make it clear that the Government remain opposed to the principle underlying these Amendments, which are directly contrary to statements made about the intended first use of the enabling power to effect a reduction in rebate."—[Official Report, House of Lords, 28th June 1977; Vol. 384, c. 1042.] I quote those words because it was suggested that there was a contradiction between what my noble Friend said in the other place and what the Government have said in the debate today. Those words show clearly that there is no inconsistency between us.

This Bill should be considered on its individual merits, and I have emphasised so often throughout its passage that we have been at pains to explain the reasons underlining it and the use to which it will be put.

At no time can we foresee circumstances in which the enabling power would be used without reference to the Fund and the demands that will be made upon it. The prudent administration of public money demands that we keep a careful watch on these matters. Ultimately the final determination remains with Parliament under the affirmative procedure.

The amendment would defeat the purpose of the Bill, if the wording is intended to mean that the power to vary the rebate may be used only as a management power, irrespective of other considerations, such as the state of the economy as a whole. My advice is that the purpose of the Bill, which was approved by both Houses on Second Reading, would be frustrated by the amendment. Therefore, I ask the house to reject the Lords amendment.

Question put, That the House doth disagree with the Lords in the said amendment:—

The House divided: Ayes 143, Noes 130.

Division No. 188]	AYES	[5.12 p.m.
Allaun, Frank	Ellis, John (Brigg & Scun)	Mitchell, Austin Vernon (Grimsby)
Archer, Rt Hon Peter	English, Michael	Molloy, William
Ashton, Joe	Evans, Fred (Caerphilly)	Morris, Alfred (Wythenshawe)
Atkinson, Norman	Evans, Gwynfor (Carmarthen)	Morris, Charles R. (Openshaw)
Bates, Alf	Evans, Ioan (Aberdare)	Murray, Rt Hon Ronald King
Bennett, Andrew (Stockport N)	Ewing, Harry (Stirling)	Newens, Stanley
Bidwell, Sydney	Fernyhough, Rt Hon E.	Oakes, Gordon
Blenkinsop, Arthur	Flannery, Martin	Ovenden, John
Boardman, H.	Fletcher, Ted (Darlington)	Padley, Walter
Booth, Rt Hon Albert	Ford, Ben	Palmer, Arthur
Boothroyd, Miss Betty	Forrester, John	Park, George
Boyden, James (Bish Auck)	Fraser, John (Lambeth, N'w'd)	Parry, Robert
Bradley, Tom	Gilbert, Dr John	Radice, Giles
Bray, Or Jeremy	Golding, John	Richardson, Miss Jo
Brown, Hugh D. (Provan)	Gould, Bryan	Robinson, Geoffrey
Brown, Robert C. (Newcastle W)	Hardy, Peter	Rodgers, George (Chorley)
Buchan, Norman	Harrison, Rt Hon Walter	Rodgers, Rt Hon William (Stockton)
Butler, Mrs Joyce (Wood Green)	Hatton, Frank	Rooker, J. W.
Callaghan, Jim (Middleton & P)	Heffer, Eric S.	Ross, Rt Hon W. (Kilmarnock)
Campbell, Ian	Hooley, Frank	Sedgemore, Brian
Canavan, Dennis	Hughes, Rt Hon C. (Anglesey)	Short, Mrs Renée (Wolv NE)
Carmichael, Nell	Hughes, Robert (Aberdeen N)	Silkin, Rt Hon John (Deptford)
Cartwright, John	Janner, Greville	Silverman, Julius
Cocks, Rt Hon Michael	Jenkins, Hugh (Putney)	Skinner, Dennis
Cohen, Stanley	Johnson, James (Hull West)	Small, William
Coleman, Donald	Johnson, Walter (Derby S)	Spriggs, Leslie
Colquhoun, Ms Maureen	Jones, Barry (East Flint)	Stallard, A. W.
Concannon, J. D.	Jones, Dan (Burnley)	Stewart, Rt Hon M. (Fulham)
Conlan, Bernard	Kilroy-Silk, Robert	Stoddart, David
Corbett, Robin	Lambie, David	Stott, Roger
Cowans, Harry	Lamborn, Harry	Strang, Gavin
Craigen, Jim (Maryhill)	Lamond, James	Taylor, Mrs Ann (Bolton W)
Crawshaw, Richard	Latham, Arthur (Paddington)	Thomas, Dafydd (Merioneth)
Cronin, John	Lestor, Miss Joan (Eton & Slough)	Thomas, Ron (Bristol NW)
Crowder, F. P.	Lewis, Ron (Carlisle)	Thorne, Stan (Preston South)
Crowther, Stan (Rotherham)	Lyons, Edward (Bradford W)	Tuck, Raphael
Cryer, Bob	McDonald, Dr Oonagh	Varley, Rt Hon Eric G.
Davidson, Arthur	MacFarquhar, Roderick	Walker, Harold (Doncaster)
Davies, Ifor (Gower)	MacKenzie, Rt Hon Gregor	Walker, Terry (Kingswood)
Davis, Clinton (Hackney C)	Maclennan, Robert	Ward, Michael
Deakins, Eric	McMillan, Tom (Glasgow C)	Williams, Rt Hon Shirley (Hertford)
Dean, Joseph (Leeds West)	Madden, Max	Williams, Sir Thomas (Warrington)
Dempsey, James	Marshall, Jim (Leicester S)	Wise, Mrs Audrey
Dormand, J. D.	Maynard, Miss Joan	Woof, Robert
Douglas-Mann, Bruce	Mendelson, John	Young, David (Bolton E)
Duffy, A. E. P.	Mikardo, Ian
Dunn, James A.	Millan, Rt Hon Bruce	TELLERS FOR THE AYES:
Dunnett, Jack	Miller, Dr M. S. (E Kilbride)	Mr. Frank R. White and
Edge, Geoff	Miller, Mrs Millie (Ilford N)	Mr. James Hamilton.
NOES
Adley, Robert	Dodsworth, Geoffrey	Jopling, Michael
Arnold, Tom	Fairgrieve, Russell	Kershaw, Anthony
Atkins, Rt Hon H. (Spelthorne)	Farr, John	King, Evelyn (South Dorset)
Banks, Robert	Finsberg, Geoffrey	Kitson, Sir Timothy
Bennett, Sir Frederic (Torbay)	Fisher, Sir Nigel	Knight, Mrs Jill
Bennett, Dr Reginald (Fareham)	Fletcher, Alex (Edinburgh, N)	Lamont, Norman
Benyon, W.	Forman, Nigel	Lawrence, Ivan
Berry, Hon Anthony	Fowler, Norman (Sutton C'f'd)	Lawson, Nigel
Biffen, John	Freud, Clement	Le Merchant, Spencer
Boscawen, Hon Robert	Goodhew, Victor	Lester, Jim (Beeston)
Bottomley, Peter	Gray, Hamish	Lewis, Kenneth (Rutland)
Bowden, A. (Brighton, Kemptown)	Griffiths, Eidon	Macfarlane, Neil
Boyson, Dr Rhodes (Brent)	Grylls, Michael	Macmillan, Rt Hon M. (Farnham)
Braine, Sir Bernard	Hamilton, Michael (Salisbury)	Marshall, Michael (Arundel)
Brocklebank-Fowler, C.	Hampton, Dr Keith	Marten, Neil
Brooke, Peter	Hannam, John	Mather, Carol
Brotherton, Michael	Harrison, Col Sir Harwood (Eye)	Maude, Angus
Buck, Antony	Hawkins, Paul	Mawby, Ray
Budgen, Nick	Hayhoe, Barney	Meyer, Sir Anthony
Churchill, W. S.	Henderson, Douglas	Mills, Peter
Clark, Alan (Plymouth, Sutton)	Hodgson, Robin	Miscampbell, Norman
Clarke, Kenneth (Rushcliffe)	Hordern, Peter	Mitchell, David (Basingstoke)
Clegg, Walter	Howe, Rt Hon Sir Geoffrey	Moate, Roger
Cooke, Robert (Bristol W)	Howells, Geraint (Cardigan)	Molyneaux, James
Costain, A. P.	Hunt, John (Bromley)	Monro, Hector
Crowder, F. P.	Hutchison, Michael Clark	Moore, John (Croydon C)
Dean, Paul (N Somerset)	Johnston, Russell (Inverness)	More, Jasper (Ludlow)
Morgan-Giles, Rear-Admiral	Rifkind, Malcolm	Stewart, Ian (Hitchin)
Morrison, Charles (Devizes)	Roberts, Michael (Cardiff NW)	Stokes, John
Morrison, Hon Peter (Chester)	Roberts, Wyn (Conway)	Stradling Thomas, J.
Neave, Airey	Ross, Stephen (Isle of Wight)	Tebbit, Norman
Newton, Tony	Rossi, Hugh (Hornsey)	Thatcher, Rt Hon Margaret
Nott, John	Rost, Peter (SE Derbyshire)	Thompson, George
Page, Rt Hon R. Graham (Crosby)	Salisbury, Tim	Townsend, Cyril D.
Page, Richard (Workington)	Shaw, Giles (Pudsey)	Vaughan, Dr Gerard
Pardoe, John	Shelton, William (Streatham)	Viggers, Peter
Penhaligon, David	Shepherd, Colin	Wainwright, Richard (Colne V)
Peyton, Rt Hon John	Silvester, Fred	Weatherill, Bernard
Pink, R. Bonner	Sims, Roger	Whitelaw, Rt Hon William
Powell, Rt Hon J. Enoch	Sinclair, Sir George	Wilson, Gordon (Dundee E)
Price, David (Eastleigh)	Smith, Cyril (Rochdale)
Rees-Davies, W. R.	Speed, Keith	TELLERS FOR THE NOES:
Rhodes James, R.	Spence, John	Lord James Douglas-Hamilton and
Ridley, Hon Nicholas	Stainton, Keith	Sir George Young.
Ridsdale, Julian	Stewart, Rt Hon Donald

Question accordingly agreed to.

Lords amendment No. 2 disagreed to.

Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their amendments to the Bill: Mr. John Golding, Mr. Barney Hayhoe, Mr. Fred Silvester, Mr. A. W. Stallard, and Mr. Harold Walker; Three to be the quorum.—[Mr. Harold Walker.]

To withdraw immediately.

Reasons for disagreeing to certain of the Lords amendments reported, and agreed to; to be communicated to the Lords.