Commons Sitting of 18 July 1977

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MR. SPEAKER (LEAVE OF ABSENCE)
Mr. Speaker: I have to inform the House that the University of Wales proposes to do me the honour of conferring on me an honorary degree of Doctor of Laws on Friday 22nd July. I therefore ask for the indulgence of the House and for leave of absence to enable me to attend the university for that purpose. [HON. MEMBERS: "Hear, hear."] I am obliged to the House. I hope that all hon. Members will get one.
ORAL ANSWERS TO QUESTIONS
ORAL ANSWERS TO QUESTIONS
  INDUSTRY

    Consett Number One
    Mr. David Watkinsasked the Secretary of State for Industry what progress has been made in his consideration of developing an industrial site at the situation known as Number One, Consett.
    The Under-Secretary of State for Industry (Mr. Bob Cryer): I am glad to say we are proceeding at once to acquire some 90 acres at Consett Number One. Site development work will start as soon as we have possession of the land. The Government have already announced their intention to build two advance factories
    1118
    at Consett, and these will be built at Number One.
    Mr. Watkins: Is my hon. Friend aware that in that area, where unemployment is consistently double the national average and there are ominous signs for die future, this development is very much to be welcomed? Will he give an assurance that all possible steps will be taken to eliminate any possible inconvenience to people living adjacent to the site?
    Mr. Cryer: Yes, we are fully aware of and understand the fears of local residents that their amenity will suffer. Due care and extensive landscaping will be undertaken by the English Industrial Estates Corporation. I assure my hon. Friend that everything will be done to render the development as inoffensive as possible to neighbouring residents. In special development areas, advance factories are now available for up to five years free of rent as an inducement to provide the employment that my hon. Friend is talking about.
    Mr. Radice: Will my hon. Friend say what steps his Department is taking to implement the NEB Report on investment prospects in the Northern Region?
    Mr. Cryer: There is a Question on that subject later on the Order Paper, and I suggest that my hon. Friend waits until then.

    National Enterprise Board
    Mr. Dykesasked the Secretary of State for Industry if he will make a statement on the recent announcement of board changes at the National Enterprise Board; and whether he expects such changes to produce any split in operational policies.
    Mr. Neubertasked the Secretary of State for Industry when he last met the Chairman of the National Enterprise Board.
    The Secretary of State for Industry (Mr. Eric G. Varley): I last met the Chairman of the National Enterprise Board on 6th July. I have nothing more to add, as far as board changes at the NEB are concerned, to the reply my hon. Friend gave the hon. Member for Christchurch and Lymington (Mr. Adley) on 7th July. Operational policies are primarily a matter for the Board.
    Mr. Dykes: Does the right hon. Gentleman agree that the NEB has been completely swamped by its involvement in British Leyland and the excessive political interference which has bedevilled the NEB's activities since it started? Does he feel that the rest of the work that the NEB is doing is worth while? How many new projects is it likely to take on in the next six months and what is its central strategy, apart from trying to rescue the Government and British Leyland at the same time?
    Mr. Varley: I do not agree that the NEB's work or involvement with British Leyland has swamped its other activities. In 18 months it has made a very good start. As for political interference, the NEB has full operational freedom in accordance with the guidelines which have been fully debated in the House.
    Mr. Neubert: In view of the Chancellor of the Exchequer's undertaking last Friday to contain wage settlements in the public sector, what influence will the NEB have in this field, and has the Secretary of State issued directions on how this might be exercised?
    Mr. Varley: I have not issued directions to the NEB as regards wages policy, but the NEB and other public corporations will understand the Government's views on this matter.
    Mr. James Lamond: Does my right hon. Friend recall that the report on the NEB's first 18 months of operation contained many success stories, including that of Ferranti, in my constituency? Is he aware that the activity of the NEB saved a great many jobs?
    Mr. Varley: That is certainly true. I do not think that it has gone unnoticed by those who work for Ferranti or many of the other companies where the NEB has been involved, such as ICL, Twin-lock, Sinclair Radionics and others.
    Mr. Norman Lamont: Has the Secretary of State studied the evidence of the Treasury to the Wilson Committee suggesting that there is no shortage of finance for British industry but that the trouble is the hostile attitude in this country towards British industry? Does not that remove one of the main arguments for the NEB? Should not Mr. Murphy therefore be given a rather more limited task of making no more invest-
    1120
    ments and simply to see whether he can sell off at a profit investments that it already has?
    Mr. VarleyI do not agree. I have not yet studied the evidence of the Treasury to the NEB. It is the Government's view that the NEB will have not only a continuing but an expanding rôle.

    Secretary of State (Engagements)
    Mr. Greville Jannerasked the Secretary of State for Industry what are his official engagements for 18th July.
    Mr. Varley: Apart from my responsibilities to this House, I shall be meeting a delegation of trade unionists and chairing a number of meetings with my officials.
    Mr. Janner: When my right hon. Friend meets the trade unionists and officials, will he discuss the great problem that still exists in the staple traditional industries of the Midlands, including the footwear industry, which is suffering greatly in the recession? Can he offer any help to this industry?
    Mr. Varley: I shall not be taking the opportunity of discussing the footwear industry with the particular delegation of trade unionists who will be coming here today. However, I can tell my hon. and learned Friend that the very valuable report of the Footwear Industry Study Steering Group, whose findings are now before us, is being urgently considered within the Department. If at all possible, I shall make a statement about that industry before the recess.
    Mr. Speaker: Order. I may as well tell the House that on these shot-in-thedark Questions I propose to call only one hon. Member from each side for a supplementary question.
    Mr. Michael McNair-Wilson: Will any of the trade unionists that the Secretary of State will be meeting come from British Aerospace? If so, will he say whether he has any plans to put before them as regards ways of either the French Government or the British Government buying the remaining unsold Concordes with a view to leasing them out—or, indeed, will he tell us of any other initiatives that he has to ensure that these aircraft are sold, thereby reducing the likely number of redundancies at Weybridge and Filton?
    Mr. Varley: The trade unionists coming today will not be discussing Concorde or specifically the aircraft industry. There is a Question later on the Order Paper about that industry.

    Power Plant
    Mr. Kenneth Clarkeasked the Secretary of State for Industry whether he will make a statement about the future of the power plant manufacturing industry.
    Mr. Whiteheadasked the Secretary of State for Industry if he will make a further statement of Government policy with regard to recent mergers in the power generating industry, in the light of the CPRS Report.
    Mr. Varley: As the House knows, the Government accepted the recommendation of the Central Policy Review Staff, supported by the National Enterprise Board, that it would be in the long-term interests of the country and of those employed in the industry if restructuring took place. It has not at this stage proved possible to find an acceptable basis for restructuring, but we shall continue to discuss with the companies the possibility of bringing it about.
    Mr. Clarke: The right hon. Gentleman has not touched on the announcement to be made at 3.30 p.m. on Drax B. What is his personal position on this matter? Does he accept that there is some sympathy for him on this side of the House in that once again he has argued the logic of his industrial strategy against his right hon. and hon. Friends' wish to spend public money merely in response to political lobbies and he has lost again? Does he not think that his view on the power plant manufacturing industry and that of the CPRS, the NEB and the CEGB has been rejected in favour of the advice of the NUM and the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) and that the best thing that he could do would be to resign and argue his case properly?
    Mr. Varley: I do not want lectures from the hon. Gentleman about whether or not I should resign. I think that he misunderstands the position. The objective was always to bring about voluntary restructuring. We have no powers to bring about restructuring. The hon.
    1122
    Gentleman knows that full well. It is true that the objective was supported by the CPRS, the NEB and the CEGB and, incidentally, by all those who have been engaged in these discussions. Unfortunately, at this stage it has not proved to be possible. However, I hope that at some stage in the future we can get back to discussions.
    Mr. Whitehead: Is it not the case, however, that the proposed merger between Reyrolle Parsons and Clarke Chapman, if it goes ahead, will drive a coach and horses through the recommendations in the CPRS Report? Is it not the case that this is already increasing the hostility between the two separated parts of the boilermaking industry? Is my right hon. Friend aware, for example, that one of them is actually advising its foreign associates to come in and take work in Britain from the other half? Is this not to the detriment of British industry when we should be sharing out the work among British firms?
    Mr. Varley: I think that the companies put out a statement which said that the merger between Reyrolle Parsons and Clarke Chapman was quite independent of the restructuring of the power plant industry. My understanding is that the talks about a merger in the boiler-making side of the industry are still in progress and that the NEB is taking part in them.
    Mr. Nelson: Will the right hon. Gentleman at least ensure, as a matter of good competitive industrial policy, that he uses his influence to ensure that, if GEC makes a bid or produces a tender, the terms of that tender will be published?
    Mr. Varley: I am afraid that questions about particular power stations and power station orders must be put to my right hon. Friend the Secretary of State for Energy. I understand that he will be making a statement at 3.30 p.m. today.
    Mr. Mike Thomas: Will my right hon. Friend accept that a merger on the lines of the boilermakers merger as proposed was never available on the turbo-generating side? That is tragic and is regretted by the Parsons work force and management. Has my right hon. Friend any news of proposals to develop a joint research company and a turnkey project

    1123
    company with NEB assistance? Is he aware that the position taken by the Opposition Front Bench spokesmen on this issue has been specifically disowned by the hon. Members for Newcastle upon Tyne, North (Sir W. Elliott) and Tyne-mouth (Mr. Trotter)?
    Mr. Varley: On the first part of my hon. Friend's question, I cannot give him any information about the possibility of turnkey projects and the other assistance that was recommended in the CPRS Report. I very much regret that it has not been possible to get restructuring at this stage. What we are talking about is not a single power station order. We are talking about getting an industry that is capable of being internationally competitive, having to find about two-thirds of its work from abroad.
    Sir K. Joseph: Has not the Secretary of State, however, by his own arguments, which he is explicitly repeating now, accepted that it is bad for the people of this country and bad for industrial strategy that an order should go to the company that makes most noise rather than to the company that produces the best price for the job?
    Mr. Varley: The right hon. Gentleman is one of the last persons to give me instructions about placing power station orders. Although it is not a specific matter for me, and no doubt the right hon. Gentleman will take the opportunity of raising it with my right hon. Friend, he will know that in November 1971 the Government of the day, of which he was a member, authorised the advance of Ince B power station by single tender to Reyrolle Parsons, because at that time—
    Mr. Tom King: By agreement with GEC.
    Mr. Speaker: Order.
    Mr. Varley: I was only referring, Mr. Speaker, to the right hon. Gentleman's Government. I do not think that the hon. Member for Bridgwater (Mr. King) was a member of that Government. Perhaps he will keep quiet for a minute or two. I do not know whether the hon. Gentleman is involved, but the right hon. Gentleman's Government decided at the time that they would place an order with Reyrolle Parsons for Ince B.
    1124
    If that is the decision that will be taken today, it is entirely in line with the decision to which the right hon. Gentleman was a party.
    Mr. Skinner: Will my right hon. Friend confirm that the CPRS Report was not included in the Labour Party manifesto? Will he also acknowledge that the Opposition are constantly wanting to get rid of jobs? The Opposition have a fixation about that matter, especially when it is with regard to steelworkers, British Leyland workers, Chrysler workers and, indeed, engineering workers, and obviously miners, which would be the case if Drax B were not announced very quickly. In view of that, does not my right hon. Friend think that the Opposition are being hypocritical, because when they were in power they saved Rolls-Royce, using the same criteria?
    Mr. Speaker: Order. The Minister is not responsible for the Opposition.
    Mr. Varley: I happen to think that the CPRS Report was a good report. The analysis that it made was very firm and sensible. What it is talking about in the report is trying to achieve an internationally competitive industry. As to supporting the mining industry, I think that the Government's desire to see a second coal-fired power station at Drax in Yorkshire was first announced by my right hon. Friend the Member for Barnsley (Mr. Mason) in 1969.
    Sir W. Elliott: Will the right hon. Gentleman accept that the management and work force of C. A. Parsons have not been opposed to a restructuring of the industry? Will he further accept that the comments made by myself and by my hon. Friend the Member for Tynemouth (Mr. Trotter) during this long period in which there has been grave indecision, which has affected very heavily the lives of many families in Newcastle upon Tyne, have been criticism of the slowness in the decision being taken?
    Mr. Varley: That rather conflicts with what has been said from the Opposition Front Bench, and it rather confirms the statement of my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas). There has been no undue delay in reaching a decision. In fact, Sir James Woodeson said when he came to see me

    1125
    on 31st March this year that irrespective of a single power station order there would be some redundancies at C. A. Parsons in Newcastle. However, I am not concerned particularly about the workers in one section of this industry. I am concerned about all workers in the industry just as much as I am about the 9,500 workers who work for GEC.

    Steel
    Mr. Hardyasked the Secretary of State for Industry at what proportion of capacity the steel industry is currently operating; and if he expects the position to improve by the end of 1977.
    The Under-Secretary of State for Industry (Mr. Les Huckfield): The United Kingdom steel industry operated at about 69 per cent. of capacity in June. It now seems unlikely that there will be any significant improvement in demand before the end of this year.
    Mr. Hardy: While we all hope that the industry will improve, may I ask whether my hon. Friend is aware that recent statistics show that the Yorkshire and Humberside Region has been more severely affected by the reduction in steel production than any other region, despite the fact that the region contains some of the Corporation's most successful undertakings? Will my hon. Friend advise the Corporation to build upon success rather than to be content with a lesser level of achievement?
    Mr. Huckfield: I am conscious of what my hon. Friend says about Yorkshire, particularly in view of the representations which he and many of my hon. Friends have made. I can assure him that if he has a look at the investment performance and projections of the British Steel Corporation he will see that the Corporation intends to build on success.
    Mr. Michael Marshall: Does the hon. Gentleman agree with the Chairman of the British Steel Corporation, who said in a recent speech that the level of losses at which the Corporation was currently running was unacceptable? If the Minister agrees with this, may I ask what he is doing to try to remove that part of the loss which stems from ministerial delay,
    1126
    as demonstrated over Port Talbot and currently Redcar?
    Mr. Huckfield: The hon. Gentleman will recognise that there is a specific Question on the Order Paper about this. I hope that he will also recognise, if he has read that speech in full, that what the chairman was saying was that we have to continue to try to be a low-cost, efficient steel producer. That is what the investment programme of the British Steel Corporation aims at.
    Mr. John Ellis: Will my hon. Friend look at the position whereby in Scunthorpe we can produce massive quantities of steel at competitive prices yet are short of blast capacity to make iron? Should not plans to improve the blast capacity be made now to take advantage of the upturn when it comes? Will my hon. Friend give British Steel a prod to see that such plans come forward to him for his approval?
    Mr. Huckfield: I am aware of what my hon. Friend has said because he has made sincere and detailed representations concerning Scunthorpe. At present, however, we have received no representations from British Steel concerning Scunthorpe.

    Confederation of Shipbuilding and Engineering Unions
    Mr. Mike Thomasasked the Secretary of State for Industry when he last met representatives of the Confederation of Shipbuilding and Engineering Unions.
    Mr. Varley: I met representatives of the CSEU on 1st July.
    Mr. Thomas: I hope that my right hon. Friend will not misunderstand me if I raise with him the problem—which I am sure was raised with him by the CSEU—of the three shipyards on the north of the Tyne and the current work load there. Is he aware that there are 8,000 employees who depend on new shipbuilding orders? Is he able to give some idea of the work that his Department is doing to bring orders to those yards and to use the intervention scheme as well as the other measures which he has brought forward to help the situation?
    Mr. Varley: We are doing everything we can to help the British shipbuilding

    1127
    industry on Tyneside and other areas where the industry exists. The intervention fund is being used to good effect and has already saved thousands of jobs.
    Mr. Biffen: Can the right hon. Gentleman give an undertaking that British Shipbuilders will be allowed to go about its business and make its own economic judgments free from the kind of grubby regional lobbying that has disfigured the ordering of the Drax B power station?
    Mr. Varley: The Board of British Shipbuilders has operational freedom, and I hope that it will be able to pursue its overall objectives within the terms of the legislation which has been passed by this House. It has already made a good start. I am afraid that, here again, the industry faces severe problems. It is a question of getting work from overseas.

    Industrial and Regional Development Grants
    Mr. MacGregorasked the Secretary of State for Industry whether he is satisfied that the present Government schemes for industrial and regional development grants enable the United Kingdom to obtain maximum benefits from membership of the European Economic Community.
    The Minister of State, Department of Industry (Mr. Alan Williams): Yes, Sir.
    Mr. MacGregor: Is the right hon. Gentleman aware that some companies—I know of at least two in Norfolk—are unable to get EEC grants, for which they would otherwise be eligible, because they are currently excluded from all British Government schemes? Can he say whether any consideration is being given to a national back-up scheme to overcome this problem?
    Mr. Williams: I am aware of the problem. The hon. Member will know that two of the Section 8 schemes—the red meat and the poultry schemes—have made this possible for certain affected sectors of the industry in his area. I am sure that he will also have seen the statement on 15th July by the Minister of Agriculture which forecast such a proposal.
    Mr. Blenkinsop: While I welcome the grants and loans which have come from the EEC under these schemes, particularly to the North-East, may I ask my right hon. Friend to give an assurance that such assistance does not simply result in a cut-back of Government grants which would otherwise be available?
    Mr. Williams: As my hon. Friend is aware, many of the items we have been able to announce in the past three programmes have been financed from the funds we received from the EEC. My hon. Friend will also note that there is to be a debate later today which is of considerable significance because of the possible impact on regional policy.
    Mr. Ridsdale: Why cannot the industrial grants be channelled into North-East Essex, where at present there is an unemployment rate of 10 per cent.? Does the Minister realise that some industry is being tempted away from the area, yet Harwich is one of the most prosperous ports in the country?
    Mr. Williams: I suspect that the hon. Gentleman is guilty of what his hon. Friend the Member for Oswestry (Mr. Biffen) called "grubby regional lobbying". May I say how amusing it is for Labour Members to note that while every Tory is against public expenditure in general they all want more of it in their own constituencies.
    Mr. Kenneth Clarke: Will there he a quick decision one way or the other on the Commission's proposals to give some regional industrial aid outside the national quotas and outside the constraints set by national schemes? In particular, may we have a quick decision on the Commission's proposals to give special aid to shipbuilding and steelmaking areas and to areas dependent on industries affected by Community policy decisions, such as the fishing industry?
    Mr. Williams: The non-quota proposals raise a great many points. I hope to be able to outline them to the House during today's debate. I would like to hear from hon. Members in that context. The House will be aware that these are proposals which have to be discussed and considered by Ministers. The aim is to reach a decision by the end of the year.

    Yorkshire and Humberside
    Mr. Edwin Wainwrightasked the Secretary of State for Industry if he will list the financial assistance provided through his Department to the Yorkshire and Humberside Region during each of the past three years; and if he will give comparable figures; per 1,000 of the population of the financial aid given to Scotland, Wales, and the North-West and North-East Regions, respectively.
    Mr. Cryer: I regret that the information for regional preferential expenditure is only separately available for the Yorkshire and Humberside intermediate area. I shall arrange for the figures for regional preferential expenditure and for expenditure under Section 8 of the 1972 Industry Act to be published in the Official Report.
    Mr. Wainwright: Is my hon. Friend afraid to get the figures out early? Is he quite sure that Yorkshire is getting fair play from the Government? [Interruption.] I am not talking about Drax now. Is not my hon. Friend aware of the huge majority of people in Yorkshire who think that the Government are being too complacent about the large pockets of unemployment and the low wages in West Yorkshire? When will he do something about this?
    Mr. Cryer: I do not want to take up time by reading out the figures, but when my hon. Friend reads them in the Official Report he will see that, for example, regional preferential expenditure between 1973–74 and 1975–76 more than doubled. He will also find that Yorkshire and Humberside has received the largest amount of assistance, at £8·3 million under Section 8 and a total of £40·9 million under the accelerated pro-

    ESTIMATED REGIONAL PREFERENTIAL EXPENDITURE

    1973–74

    1974–75

    1975–76

    Yorkshire and Humberside Intermediate Area:

    Total expenditure

    £ 9·6 m.

    £16·4 m.

    £23·0 m.

    Per 1,000 of population

    £2,064

    £3,527

    £4,947

    Northern Development Area:

    Total expenditure

    £58·3 m

    £75·1 m.

    £121·2 m.

    Per 1,000 of population

    £17,289

    £22,272

    £35,943

    North West Region:

    Total expenditure

    £31·8 m.

    £61·0 m.

    £71·3 m.

    Per 1,000 of population

    £4,849

    £9,302

    £10,872

    Scotland:

    Total expenditure

    £64·6 m.

    £83·0 m.

    *£124·4 m.

    Per 1,000 of population

    £12,408

    £15,943

    £23,895

    1130
    jects and industry schemes combined, in 1976–77. The Government are conscious of the difficulties, which my hon. Friend represents very well, and they are trying their best to ensure that such difficulties as the level of unemployment are reduced. I am sure my hon. Friend will bear in mind that Government powers are limited and that it is, by and large, a question of persuading industrialists to move to these areas and offering suitable inducements. In some cases this works. Where this does not work, the Government are pressing ahead as hard as they can.
    Mr. Madden: Will my hon. Friend, in consultation with his right hon. and hon. Friends at the Department of the Environment, ensure that Yorkshire and Humberside receives its fair share of grants from the EEC Regional Fund and that special factors such as migration, industrial dereliction and so on are borne in mind when the grants are awarded rather than concentrating solely on unemployment statistics?
    Mr. Cryer: My hon. Friend has a point. The EEC regional grants are applicable wherever Government grant aid is also available. For the Yorkshire and Humberside Region there is no incompatibility here. I shall hear my hon. Friend's remarks in mind.
    Mr. Budgen: Does the Minister agree that, if we get out of the EEC Regional Fund more than we put in, we shall lose on other deals in the EEC and that we are unlikely to be a net gainer from any of these schemes?
    Mr. Cryer: I am sure that the hon. Gentleman will be trying to catch your eye, Mr. Speaker, and take part in the debate later on, so that this sort of argument can be adduced further.
    Following is the information:

    ESTIMATED REGIONAL PREFERENTIAL EXPENDITURE—continued

    1973·74

    1974·75

    1975·76

    Wales:

    Total expenditure

    £48.4 m.

    £57.3 m.

    *£64.4 m.

    Per 1,000 of population

    £17,504

    £20,723

    £23,291

    Note: The figures Regional Development Grants, Regional Financial Assistance, the Investment Grant Differential, Local Employment Act residual expenditure and expenditure on land and factories.

    * The figures do not include expenditure by the offices for Scotland and Wales to which certain responsibilities for regional incentives were transferred during the course of the financial year.

    OFFERS OF ASSISTANCE UNDER SECTION 8 OF THE INDUSTRY ACT 1972

    1974–75

    Industry Schemes 1975–76

    1976–77

    Accelerated Projects Schemes 1975–76 and 1976–77

    Totals

    No.

    Value (£m.)

    No.

    Value (£m.)

    No.

    Value (£m.)

    No.

    Value (£m.)

    No.

    Value (£m.)

    Yorkshireand Humber Side Region

    105

    5·9

    81

    4·9

    110

    8·3

    11

    21·8

    307

    40·9

    North West Region

    8

    0·2

    6

    0·5

    42

    2·3

    13

    7·8

    69

    10·8

    Northern Region

    7

    0·1

    2

    0·3

    25

    3·2

    5

    3·1

    39

    6·7

    Scotland

    10

    0·9

    6

    0·1

    55

    6·2

    6

    2·1

    77

    9·3

    Wales

    Nil

    Nil

    1

    *

    14

    0·4

    2

    2·2

    17

    2·6

    * Negligible.

    British Leyland
    Mr. Michael Marshallasked the Secretary of State for Industry what will be the total amount of the next tranche of funds which the National Enterprise Board will make available to British Leyland.
    The Minister of State, Department of Industry (Mr. Gerald Kaufman): My right hon. Friend is considering recommendations put to him by the National Enterprise Board and hopes to be able to make a statement to the House soon.
    Mr. Marshall: Does the Minister agree that, following the departure of Lord Ryder, there is now an opportunity to get away from the personal identification of the NEB and British Leyland in all the terms that we have debated in the House? Will he further consider the suggestion I put to him last time that he should place in the Library a copy of the report from British Leyland to the NEB, if necessary taking out vital statistics which are commercially confidential?
    Mr. Kaufman: The hon. Gentleman's introductory words seemed to bear very little relevance to the Question. My right hon. Friend and I have made quite clear to the House that we shall make available to it all possible information, taking account of the need to maintain and pro-
    1132
    tect the commercial confidentiality of British Leyland.
    Mr. George Rodgers: Has the NEB sought consent to proceed with the development of an assembly hall and foundry at British Leyland Bus and Truck Division at Leyland in Lancashire?
    Mr. Kaufman: If my hon. Friend will contain himself a little longer, he may hear something to his advantage.
    Mr. Richard Page: Is the Minister satisfied that the purchases of components and machine tools by British Leyland are on the open market and are at arm's length, or are any other purchases being promoted by the NEB?
    Mr. Kaufman: British Leyland's purchases of machine tools are conducted on the basis of its commercial judgment. At the same time, I certainly lose no opportunity of making clear to British Leyland the desirability of its buying British whenever possible.
    Mr. Skinner: Will my hon. Friend make sure that when the next tranche of funds goes to the NEB the signature is clearly identified?
    Mr. Kaufman: Perhaps my hon. Friend would provide me with some of his address labels.
    Mr. Hal Miller: Will the Minister tell the House whether any progress has been

    1133
    made with consideration of the way in which British Leyland is to be financed in the future, whether directly by Votes from this House or through NEB financing under its general allocation of Vote?
    Mr. Kaufman: This matter is being very carefully considered at present. It is recognised that there are arguments on both sides. The hon. Gentleman has advanced an argument which has a good deal of cogency. When we make our statement to the House, that will be one of the matters covered.

    Cable and Wireless Ltd.
    Mr. Gowasked the Secretary of State for Industry what further discussions he has had with the directors of Cable and Wireless Limited about the level of their remuneration.
    Mr. Les Huckfield: None, Sir.
    Mr. Gow: Bearing in mind the increasing anomalies between the remuneration of the board of directors of Cable and Wireless Ltd. and of the senior executives, does not the Minister think, particularly following the resignation of the managing director, that he ought to give his urgent attention to the extraordinary situation which exists at Cable and Wireless?
    Mr. Huckfield: As I have already said to the hon. Gentleman on 25th April and 13th June, the Government will prob. ably be giving their attention to these matters after the end of this month.

    Wearside
    Mr. Willeyasked the Secretary of State for Industry what progress the National Enterprise Board has made in Wearside, pursuant to its report on the areas affected by the Plessey closures.
    Mr. Alan Williams: As my right hon. Friend told the House on 27th June, the NEB is making vigorous efforts to pursue the recommendations of its report, not only in Wearside but also in the North-East and North-West generally.
    Mr. Willey: Is ray right hon. Friend aware that the immediate and present problem is that of implementing the Posner Report and that we expect his Department to use its good offices to see that we get a satisfactory reply from the Post
    1134
    Office? If it can help in any way, we would expect the NEB to play its part in producing a formula which will be acceptable to the whole of the telecommunications industry. Does my right hon. Friend accept that this is absolutely urgent and essential in Sunderland, with the highest unemployment in Britain, where we may lose these 350 jobs?
    Mr. Williams: I fully appreciate the concern of my right hon. Friend. He will be aware that in another part of the area I have managed to negotiate another 400 jobs, and it was a great disappointment to me that I could not do the same for his constituency. As to the point for further consideration made in the Posner Report, the Post Office did not feel able, on all advice, to go ahead with it.
    Mr. Grylls: Will the Minister tell us what magic the NEB has that makes it possible for it to run these factories profitably when Plessey cannot?
    Mr. Williams: The hon. Gentleman seems to have a rather peculiar idea of the role of the NEB. I know that he has to some extent, almost mischievously, in relation to the tanning industry made interventions which could have reacted very badly for a tannery that is about to be closed in the Millom area. He should look again at his own activity.
    Mr. Heller: Is my right hon. Friend aware that, while we on Merseyside welcome the report as far as it goes, nevertheless we are rather disappointed with it because it does not indicate how to solve the problem of the 1,000 redundancies which are likely to occur? Some of them have already taken place. Will my right hon. Friend have another look at this in order to get the NEB to be more positive in intervening on Merseyside to provide work on a wider scale for people in an area with the worst unemployment in the whole of the British Isles?
    Mr. Williams: My hon. Friend will be aware that I had very detailed discussions with the firm in order to save as many jobs as we possibly could. As a result of the initiative taken by the Prime Minister, the NEB carried out its investigations and made recommendations. In fairness, it should be said that the Government responded immediately by

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    increasing the incentive to special development areas, which would help Merseyside and the Northern Region, for example, and by increasing the expenditure in the construction industry. But, frankly, when there is no demand for the product of a factory it is very difficult to see how one can save the jobs. The need is for alternative industry to come into the area.

    Small Businesses
    Mr. Luceasked the Secretary of State for Industry what further measures he intends to take to encourage small businesses to expand.
    Mr. Cryer: The need for special measures to encourage the expansion of small businesses is kept under constant review. We are actively considering the extension nationwide of the pilot counselling service for small firms in the South-West, and we have announced our intention to introduce a manufacturing advisory service.
    Mr. Luce: If the Minister is aware that the removal of the existing battery of legislative and tax obstacles to small businesses would do much to create wealth and thereby to create employment, what on earth is he waiting for? Does he realise that a whole mass of small business men feel that they are waiting for Godot?
    Mr. Cryer: We expect from the Opposition the sort of uninformed and prejudiced comment that came from the hon. Gentleman. He ignores the fact that the Chancellor of the Exchequer has recently announced that the preferential rate of corporation tax, specifically designed for small firms, has been raised from a level of profits of £30,000 to £40,000—and that marginal relief has been raised to £65,000. Small firms also qualify for the very generous tax allowances for investment in plant and machinery, which have been described by the CBI—an organisation with which I am sure the hon. Member has some sympathy—as the most generous tax relief system in Western Europe. Small firms also qualify for the wide range of regional preferential expenditure, which in 197576 amounted to £669 million. I should have thought that this was positive encouragement to industry to invest.
    Mr. Clemitson: Does my hon. Friend agree that co-operative and common ownership firms have a particularly important part to play in the small-to-medium size sector? What progress is being made with the setting up, or plans for the setting up, of the Co-operative Development Agency?
    Mr. Cryer: The Co-operative Development Agency is currently being considered by a working party which my right hon. Friend chaired in the first instance. We very much hope that a report from the working party will be available for publication this summer. I cannot give an absolute assurance, but that is the time scale at which we are aiming, so that the co-operative and trade union movement can consider the report and engage in debate on it. We hope that this will result in a further development of the sort of activity that my hon. Friend has in mind.
    Mr. Richard Wainwright: In view of the pressing needs of small businesses, to which the Minister has referred, and his encouragingly larger work load in this specific respect, will he press his colleagues to have a Minister appointed solely to concentrate on the needs and requirements of small businesses?
    Mr. Cryer: Because of my self-effacing nature, I hesitate to draw attention yet again to the fact that I have specific responsibility for small firms. Many organisations representing small firms make their representations to me, and we endeavour to ensure, whenever items of legislation arise, that full consultations are entered into. Certainly the Department of Industry—myself in particular—is open to representations from the small firms sector and welcomes them.

    Manufacturing
    Mr. Arnoldasked the Secretary of State for Industry whether he is satisfied with the prospects for manufacturing industry in the light of the recent CBI forecast.
    Mr. Tim Rentonasked the Secretary of State for Industry whether, in view of the Confederation of British Industry's most recent forecasts, he is satisfied with the prospects for United Kingdom manufacturing industry.
    Mr. Alan Williams: I am satisfied that manufacturing industry has good prospects of achieving a sustained and soundly based expansion. In this context, my right hon. Friend has by Written Answer to a Question by my hon. Friend the Member for Kingston upon Hull, West (Mr. Johnson) given details today of a new product and process development scheme for which £20 million has been initially allocated. The Government also propose to allocate additional sums of £40 million for the ferrous foundry industry scheme and £10 million for the machine tool industry scheme.
    Mr. Arnold: Is it not the case that both employment and investment in manufacturing industry continue to show a long-term decline? How can this situation be rectified until a greater share of GNP goes to profits, not just over one year but over a succeeding number of years?
    Mr. Williams: As I have indicated before, it is strange that Conservative Members profess to be the people who understand investment since they never managed to attain the level of investment that we attained in our last year in office. Contrary to what the hon. Gentleman is saying, the forecasts both from the CBI and from our own surveys are of a very substantial increase in investment in the next 12 months and that possibly for the first time investment will reach the 1970 level yet again during 1978.
    Mr. Renton: Will the Minister pause for a moment and say whether it is really part of Government industrial strategy that private manufacturing investment in this country is likely to increase at a time when profits are still being held down by legislation but wage costs are not? Is that part of the Government's industrial strategy or, like the social contract, is that strategy about to be blown apart by a wage explosion?
    Mr. Williams: Again, I would draw the hon. Gentleman's attention to his rather short memory. It was we who relaxed the controls on prices to enable investment to be taken into account in the pricing policy of firms. I would further draw his attention to the fact that, although Conservative Members vote
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    against measures under Section 8 of the Industry Act, as a result of the use of those measures we have generated £640 million worth of investment under the accelerated projects scheme, £160 million already under the ferrous foundry scheme and £45 million under the machine tool scheme. We seem to understand a little more about industry than do Conservative Members.
    Mr. John Garrett: Is my hon. Friend aware that the fastest declining sector of British manufacturing industry is the footwear industry, where many thousands of jobs hang upon his Department's decision about whether or not to give it funds that were proposed under the scheme of assistance?
    Mr. Williams: Indeed. I am in the middle of a period of consultation with the relevant unions. I am having the final consultations with them this week on the possible implementation of the footwear study report. I can assure my hon. Friend, and many other hon. Gentleman who have an interest in this industry, that the Government are determined to retain a viable industry.
    Mr. Biffen: So that the House may appreciate the reality of the participation by the CBI in the Government's industrial strategy, may I ask the Minister to indicate whether he has had any view whatever from the CBI on the investment represented by the Drax B power station?
    Mr. Williams: I cannot indicate that on this Question. The hon. Gentleman will have a chance to raise that matter on the statement that is to be made later. I would say that at least the CBI takes a slightly more positive view towards Government policy than do Conservative Members.

    West Yorkshire
    Mr. Maddenasked the Secretary of State for Industry what action is being taken to secure industrial development in West Yorkshire, especially in those areas where the operation of the wool textile scheme has created redundancies.
    Mr. Cryer: In addition to the financial incentives to industrial investment on offer because West Yorkshire is an intermediate

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    area, the construction of 36 advance factories has been approved since November 1974.
    Mr. Madden: Is my hon. Friend aware that the Yorkshire and Humberside Economic Planning Council's strategy review for the region calls upon the Government to undertake a coherent strategy for West Yorkshire? Does he believe that the Department's present strategy for West Yorkshire, especially Calderdale and Kirk-lees, constitutes a coherent policy?
    Mr. Cryer: Yes, I do. The Department is expressing concern about the position in Yorkshire and Humberside. As I have indicated in previous answers, we have made positive attempts to remedy the serious unemployment that occurs in pockets within the West Yorkshire area.
    As a West Yorkshire MP representing Keighley, I know only too well the sort of problem that my hon. Friend has outlined. He knows that following his representations I went to the area and discussed the question of the particular problems associated with the narrow Pennine valleys. The Department of Industry, through the English Industrial Estates Corporation, in conjunction with Calderdale, is to embark on a study of converting old factories into modern ones. I am sure that that is the sort of industrial regeneration that will have beneficial effects for the future.

    Nationalisation
    Mr. Adleyasked the Secretary of State for Industry if he has any specific plans for further nationalisation of industry.
    Mr. Kaufman: The Government's policy towards public ownership is set out in their White Paper on the regeneration of British industry.
    Mr. Adley: Will the Minister answer the Question "Yes" or "No"?
    Mr. Kaufman: I have answered the Question. The hon. Gentleman cannot understand the answer.
    Mr. Kenneth Clarke: From the Minister's reply, do I understand that the recent report of the home policy sub-committee of the National Executive of the Labour Party is totally rejected by the present Administration? Does the Minister think that if it comes to a battle with the present
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    members of the National Executive the Government are likely to lose again?
    Mr. Kaufman: If the hon. Gentleman wants to put a question about the home policy committee of the Labour Party, he should address it to Mr. Ron Hayward, who will be able to give him whatever necessary information that he feels is available. As for the Government's policies, the Department of Industry has put before the House, and received its acceptance of, the legislation which brought the aircraft and shipbuilding industries into public ownership, greatly to the benefit of those industries and not at all to the credit of the Conservative Party.
    Mr. Heffer: Perhaps my hon. Friend can advise the hon. Member for Rushcliffe (Mr. Clarke) to have a word with me. Does my hon. Friend understand that at the next General Election the Labour Party will fight its policies on the basis of an extension of public ownership according to the policy and programme carried by Labour's conference?
    Mr. Kaufman: Far be it from me to differ with a member of the Labour Party National Executive on the question of the authority of the Labour Party National Executive. My understanding, however, is that our party will fight and win the next General Election on the basis of the manifesto agreed through the usual procedure—that is, a joint committee of the Cabinet and the National Executive.

    Post Office (Legislation)
    Mr. Ridleyasked the Secretary of State for Industry whether his intended legislation concerning striking in the Post Office will extend to permitting refusal to deliver the mail of individual customers.
    Mr. Kaufman: The scope of the proposals will be settled in the light of consultations with the Post Office, the unions and the Post Office Users National Council.
    Mr. Ridley: Is the Minister aware that it would be scandalous to allow the Post Office workers to continue to discriminate against individual customers' mail? If it is his intention to alter the terms of this in the legislation, will he also include a provision to make it quite clear that

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    the individual customer has the right to go and pick up his own mail if it is caught up in a trade dispute?
    Mr. Kaufman: I cannot remember whether at the time the right hon. Member for Sidcup (Mr. Heath) had yet sacked the hon. Gentleman from his Administration, but the hon. Gentleman, if not a member of that Administration, was certainly a Back Bench supporter of the Administration which in the Industrial Relations Act restored the right to strike to workers in the gas, water and electricity industries. We want to do the same for the Post Office workers.
    Mr. Tebbit: Do the Government have any policy towards the selective withholding of mail from individual customers in pursuit of industrial disputes?
    Mr. Kaufman: The Government believe that people have the right to have their mail delivered when it is posted. That is something, of course, which did not happen during he 1971 strike when the law was violated and the Conservative Party did nothing about it. It was something that did not happen during the 1973 postal boycott, when the law was again broken and the Conservative Party did nothing about it. We want to make the position clear for everyone to understand.
    Sir K. Joseph: Will the Minister answer the supplementary question of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), and not go on about things that he did not ask? Assuming that the Government give the right to strike to Post Office workers, will the Government allow individuals to pick up their own mail if their mail is held up by a strike?
    Mr. Kaufman: The right hon. Member for Leeds, North-East (Sir K. Joseph) would do well to await the form of the legislation when it has been considered and discussed with all the relevant parties. I might point out that the other day my right hon. Friend wrote to the Director-General of the Confederation of British Industry making clear what I have made clear today, namely, the need to protect the security of the mail.
    Mr. Ridley: On a point of order, Mr. Speaker. In view of the extremely evasive and unsatisfactory nature of the hon.
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    Gentleman's replies, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

    Investment
    Mr. Canavanasked the Secretary of State for Industry what estimates he has made of the amount of investment in British industry in the first six months of 1977.
    Mr. Alan Williams: Investment by manufacturing industry in the first quarter of 1977 was £414 million and by all index of production industries £756 million, both expressed at 1970 prices, seasonally adjusted. Provisional figures for the second quarter of manufacturing industry will be available on 25th August and for the other industries in early October.
    Mr. Canavan: Does my right hon. Friend remember how, almost a year ago, the Cabinet accepted an NEDC prediction that investment in manufacturing industry would increase by over 20 per cent. in 1977? As there has been a continuing investment strike in the private sector, the result is that we have no hope of reaching that target. As the measures announced on Friday by my right hon. Friend the Chancellor of the Exchequer amount to only £70 million of additional investment for industry, will the Government take immediate steps to increase the budget and investment powers of the NEB and of the Scottish and Welsh Development Agencies?
    Mr. Williams: It is wrong to talk of an investment strike in this context. The recession worldwide has been slower in turning than most authorities thought. As I have indicated previously, by the fourth quarter of last year investment was up 5 per cent. on the first quarter. This year, on our own Department's assessment, the increase in investment will be between 6 per cent. and 10 per cent., and there will be an additional 20 per cent. next year. According to the CBI, whose assessments run from the middle of this year to the middle of next year, the increase will be of the order of between 10 per cent. and 15 per cent. We are, therefore, seeing a reflection domestically by industry of the rather slow recovery internationally in the world economy.
    Mr. Tebbit: Will the Minister accept, even if his hon. Friend does not, that the 20 per cent. increase in investment was no doubt predicated on the assumption that the Government would keep inflation down to 10 per cent. this year? It is understandable in those circumstances that the investment has not taken place. Will the Minister turn his attention to cases of lack of investment which affect even such established bodies as the British Rail Pension Fund, which now finds it necessary to put money into Louis XIV commodes and French impressionist paintings? What sort of hope is that for the NEB's investment policy?
    Mr. Williams: The level of investment throughout Western Europe has been lower, and it will respond with confidence only when there is confidence in the future pattern of world demand. Opposition hon. Members have shown no enthusiasm for any success in negotiating a further stage of the pay agreement, and they have given no support to the Government's efforts for reducing inflation.
    Mr. loan Evans: Will my right hon. Friend look at the suggestion of my hon. Friend the Member for West Stirlingshire (Mr. Canavan) and ensure that, now that the proceeds are flowing from offshore oil, he will look at the possibility of the National Enterprise Board and the Scottish and Welsh Development Agencies making more investment in manufacturing industry?
    Mr. Williams: The National Enterprise Board and the Scottish and Welsh Development Agencies already have powers to encourage such investment. Certainly at present the NEB has assured the Department that funds are no constraint upon its activities.
    Mr. David Price: Will the Minister bear in mind that I warned the Government at the time of the publication of the Treasury's scenario 2, accepted by the NEDO Council, that this was putting hope beyond expectation? In an Adjournment debate before Christmas I raised the matter and the Treasury Minister agreed with my revised figures. Therefore, it is hardly surprising that the scenario 2 target has not been reached because it was wrong from the beginning.
    Mr. Williams: I am sorry that I missed the hon. Member's momentous analysis of the economic situation. There are one or two factors involved which go slightly wider than those that he has suggested.

    DIRECTOR OF PUBLIC PROSECUTIONS
    Mr. Canavanasked the Attorney-General when he next expects to meet the Director of Public Prosecutions.
    The Attorney-General (Mr. S. C. Silkin): Soon.
    Mr. Canavan: Will my right hon. and learned Friend discuss with the Director of Public Prosecutions whether he should be given powers to prosecute the Grunwick director who, on 21st June, drove his bus into the factory in such a reckless manner as to endanger the lives of pickets, policemen and Members of Parliament, in addition to powers to prosecute Grunwick for failing to submit financial returns under the Companies Act?
    The Attorney-General: As I informed my hon. Friend in a Written Answer to an earlier Question, the matter is one for the police. It would be wrong for me or the Director to intervene. The second part of my hon. Friend's supplementary question concerns a matter which is one for the Department of Trade. Again, it would be wrong for either of us to intervene.
    Mr. Adley: Will the right hon. and learned Gentleman discuss with the DPP the position of people who skip bail and seek so-called asylum in East European Communist countries? Perhaps the Director could reach an arrangement whereby, if such people promise not to come back, he will drop all charges against them.
    The Attorney-General: I have quite enough to discuss with the Director without going into those matters.
    Mr. Watkinson: Does my right hon. and learned Friend agree that there is a great deal of public ignorance about the role of the office of the Director of Public Prosecutions? Will he confirm that this office will be a subject matter of the Royal Commission's inquiry? Will my right hon. and learned Friend also say whether he

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    thinks that it would be useful if he could define his own relationship with the Director, especially on matters of prosecution?
    The Attorney-General: The powers of the Director and no doubt those of the Law Officers in these matters will be an aspect to which the new Royal Commission will be giving its attention. Another aspect will be the procedures operated by prosecuting solicitors, chief constables and the Director in relation to prosecutions.

    JUDGES
    Mr. Liptonasked the Attorney-General how many judges of the High Court and the Court of Appeal have been removed from their offices since 1945 under Section 12 of the Supreme Court of Judicature (Consolidation) Act 1925.
    The Attorney-General: None, Sir.
    Mr. Lipton: Before this section of the Act is allowed to become obsolete, would not now be a good opportunity to exercise it in the case of Sir Philip Wien for his disgraceful summing-up in the Court of Appeal recently—
    Mr. Speaker: Order. The hon. Gentleman knows that, to criticise a judge, it must be when we are discussing the substantive motion which, I understand, is placed on the Order Paper.
    Mr. Lipton: There is already a motion on the Order Paper to which—
    Mr. Speaker: Yes, but we are not discussing it at the moment.
    Mr. Skinner: My hon. Friend is trying to.
    Mr. Lipton: I am not attempting to discuss the motion—
    Mr. Skinner: I thought that my hon. Friend was.
    Mr. Lipton: All I am asking the Attorney-General is that he should bring this section of the Act into life again before it becomes completely obsolete in the case of Sir Philip Wien, for reasons which are well known to this House but which you, Mr. Speaker, will not allow me to elaborate.
    The Attorney-General: I have nothing to add, Mr. Speaker, to what you have already said.
    Mr. Carlisle: Does not the Attorney-General agree that a lot of emotional nonsense has been talked about this case? Does not he accept that, whatever the decision, the intention of judges in the High Court to show a degree of leniency to a man of 18 and of previous good character is one which in principle many of his own Back Benchers have regularly asked of the Court of Appeal?
    The Attorney-General: I am not sure about the extent to which the rules should not apply on both sides. For my own part, I rarely criticise a judge on the ground of his leniency.

    SEXUAL ASSAULT CHARGES (SENTENCES)
    Mr. Molloyasked the Attorney-General whether his noble Friend will convene a sentencing conference to discuss the question of sentences in cases of violent sexual assaults.
    The Attorney-General: Sentencing conferences, at which sentences in cases of violent assaults of all kinds, including violent sexual assaults, may be diccussed, are already convened from time to time for judges, magistrates and others concerned with sentencing policy. In July 1975 a working party to review the scope and content of training of the judiciary and the methods whereby it is provided was set up jointly by my noble Friend the Lord Chancellor, my right hon. Friend the Home Secretary and the Lord Chief Justice. The working party issued a consultative paper in June 1976 and it is hoped to have its final report by the end of this year. The desirability of making changes in the present arrangements for sentencing conferences will be considered in the light of the working party's recommendations.
    Mr. Molloy: Is my right hon. and learned Friend aware that a vast amount of public concern has been expressed about recent cases of violent sexual attacks and the fact that appeal courts have made the most asinine comments, which we cannot discuss because Mr. Speaker will not allow us, and that these

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    have exacerbated the position? Can my right hon. and learned Friend say whether these were unanimous decisions of the Court of Appeal or whether any member of the court dissented? Does he not agree that this House and the public have a right to know? Therefore, in view of the grave dissatisfaction—[HON. MEMBERS:
    "Too long."] My question is not too long for the woman whom the accused man attempted to rape. In view of the grave dissatisfaction amongst the public generally, ought not my right hon. and learned Friend to consult the Lord Chancellor to ensure that an emergency conference on this very disgraceful business is set up very swiftly?
    The Attorney-General: My hon. Friend asked a number of questions which, unfortunately, I cannot answer. I am sure he will understand why. On his last point, I am sure that my right hon. and noble Friend the Lord Chancellor will note what he said.
    Mr. Geoffrey Finsberg: Does the right hon. and learned Gentleman accept that there is a lot of disquiet about the matter which the hon. Member for Ealing, North (Mr. Molloy) raised, leaving aside the emotional claptrap which he spoke? As a mater of urgency, will the right hon. and learned Gentleman try to arrange for an early special sentencing conference?
    The Attorney-General: Anyone who reads newspapers or listens to what is said in this House must be aware that there has been a good deal of disquiet. Whether some special sentencing conference is the answer to it is a different matter. As I have said, I shall bring these matters to the attention of my right hon. and noble Friend.
    Mr. John Mendelson: On a point of order, Mr. Speaker. In view of the fact that the hon. and learned Member for Runcorn (Mr. Carlisle), under the disguise of reproving other people for making a comment which you, Mr. Speaker, ruled out of order, was permitted to give his own opinion and to use vituperative language against those citizens who take a different view from his own, ought not those of us who take a different view from that of the hon. and learned Gentleman to be given the same opportunity?
    Mr. Speaker: The hon. Member for Penistone (Mr. Mendelson) could not have heard his hon. Friend the Member for Ealing, North (Mr. Molloy), who asked the following Question.
    Later—
    Mr. Ashley: On a point of order, Mr. Speaker. Would you clarify your ruling on an earlier matter which occurred during Question Time? Tomorrow I have a Ten Minute Bill asking for the right of the prosecution to appeal in cases of rape and sexual offences. This afternoon you have told my hon. Friend the Member for Lambeth, Central (Mr. Lipton) that we cannot criticise judges in this House. That is a fairly well-known rule, yet you appeared to allow the hon. and learned Member for Runcorn (Mr. Carlisle) to make criticisms about this case. You did not allow my hon. Friends the Members for Lambeth, Central and Ealing, North (Mr. Molloy) to attack. One hon. Member was allowed to attack and two others were not. I should be grateful if, before tomorrow when I propose to do some attacking of my own, you would clarify the rules of order.
    Mr. Speaker: Obviously I am always anxious that the House should not feel that I have been unfair. The position is that the hon. Member for Lambeth, Central (Mr. Lipton) referred to the judge and used the word "disgraceful". While the House obviously is free to discuss the judgment, comments on judges themselves are not in order, except on a substantive motion. I have tried—I try hard enough, goodness knows—to hold the balance fairly between both sides.
    Mr. Lipton: Further to that point of order, Mr. Speaker. The matter is already the subject of a motion. All I complain about is the fact that we have had no time given for discussing the motion. I take whatever opportunity I can of reminding the powers-that-be that this motion exists, and until it is discussed I shall continue to take umbrage.
    Mr. John Mendelson: Further to the point of order, Mr. Speaker. I raised a point of order earlier but I did not proceed with it because you asked us not to waste the time of the House during Questions. It was quite clear when the hon. and learned Member for Runcorn (Mr. Carlisle) made his submission that

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    it was a biased and one-sided submission. It was also more than other Members were allowed to make. The hon. and learned Member's submission was made in defence of the judge. There is more than one way of referring to a judge's decision and a particular case in detail. The hon. and learned Member's praising it is just as much a reference as a criticism would be. Hon. Members on this side of the House should be given some rights and an opportunity of showing that there are strong feelings against the judge's decision. The hon. and learned Member has been allowed to whitewash it, but we are not allowed to criticise it.
    Mr. Speaker: The hon. Member for Penistone (Mr. Mendelson) should bear in mind that the hon. and learned Member for Runcorn (Mr. Carlisle) was referring to the decision. Immediately afterwards the hon. Member for Ealing, North (Mr. Molloy) referred to it also, in directly opposite terms. What I said is in the memory of the House—I objected to the word
    "disgraceful" being applied directly to the judge. Any Speaker would have done the same. I do not want to appear to be unhelpful. I hope that the matter can rest there.
    Mr. Christopher Price: Further to that point of order, Mr. Speaker. You said that any comments on the judge were out of order. You will remember the debate in 1972 surrounding Mr. Justice Donaldson when the comments which described him as a wonderful judge were in order. The comments criticising him were ruled out of order. There are many precedents of this kind, of which this is the most recent. I ask you to take the point that this presents us with very great difficulty. One can say what wonderful people judges are but one can never say what terrible people they are. If derogatory comments are ruled out of order, all comments, even commendations, should also be ruled out of order.
    Mr. English: Further to that point of order Mr. Speaker. The present procedure of the House puts you in difficulty. Could you discuss this matter with the Front Benches and consider the possibility of treating any motion relating to a judge in the same way as motions of confidence or no confidence in Governments are treated? If a motion of no
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    confidence in a Government is put down, it is customary for it to be discussed. The problem with motions relating to judges is that they are not discussed. It is fairly clear that this was a case in which the judicial decision showed incompetence in that there was a lack of knowledge of the registrar of the court in the belief that something was correct which turned out to be incorrect. That must be incompetence on somebody's part, though on whose part I do not know. The matter should he discussed in this House because this House, together with the other place, is the only body capable of dismissing a judge.
    Mr. Speaker: The hon. Member for Nottingham, West (Mr. English) is an expert on our procedures. He knows that this is a matter for the Leader of the House, but I am sure that all those responsible will have listened to him with care. I am grateful that the hon. Member for Lewisham, West (Mr. Price) should have reminded me that my rulings were the same as those of my predecessors. Of course, I shall consider the matter further.

DRAX B POWER STATION
The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): If I may, with permission, Mr. Speaker, make a statement, the Secretary of State for Industry has informed the House that it has not at this stage proved possible to find an acceptable basis for restructuring the power plant industry. At the same time, the Government recognise that the current lack of home orders, together with the relative lack of export opportunities in present economic circumstances, has led to a pressing short-term need for work in sections of the industry. To help with these short-term problems the Government have now decided that it would be right for the Central Electricity Generating Board to place an order for Drax B coal-fired power station and that the order for turbo-generators should be negotiated with C. A. Parsons.
The CEGB had not planned to place an order for the station before 1979 and the Government have agreed in principle to the payment of compensation to the Board in respect of costs incurred in bringing forward the order.

1151
The Government further anticipate that, following the thermal reactor decision, an order will be placed for a nuclear station. The power plant industry will also benefit from ongoing repair and maintenance programmes. The Government believe that the order for Drax B, in addition to benefiting the power plant industry, is a further mark of confidence in the United Kingdom coal industry.
Mr. Tom King: Is the right hon. Gentleman aware that we know that his announcement has been taken in the teeth of the advice of the CPRS, the National Enterprise Board, the CEGB, the Secretary of State for Industry and the Department of Industry and that the Central Policy Review Staff's Report itself said that the ordering of Drax alone would only defer redundancies for two years and that jobs saved in one place would be jobs lost elsewhere? Since the Government's own CPRS Report is now being circulated by our competitors to our overseas customers, saying that there is no future for the British industry unless it is rationalised, and the Government have now decided, far from rationalising, actually to buttress that fragmentation, what hope is there for British companies in the export market?
Will legislation be needed to enable compensation to be paid? Will that compensation include such differences of price as might exist if the General Electric Company decided to quote also for this order? Has he noted the fact that at Question Time this afternoon the Secretary of State for Industry confirmed his support for the CPRS Report, which we strongly endorse, and his right hon. Friend's statement that rationalisation is essential for maintaining an internationally competitive industry? We only regret that through political expediency the Government have just thrown away their best card for achieving that.
Mr. Benn: Discussions have begun with the CEGB and I cannot in detail answer the question about compensation arrangements, because the discussions are in progress. The hon. Member will recall, however, that the previous Government, which he supported, gave an order for a power station at Ince B, with compensation, to Parsons, without a competitive tender. Therefore—[Interruption.] The hon. Gentleman can get up
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again if he wishes, but I want to make it clear that in circumstances not very dissimilar from those which now confront the Government, the previous Government excluded competition and arranged that the CEGB would have compensation to advance the order for Ince B.
The hon. Gentleman also does less than justice to the efforts made by my right hon. Friend the Secretary of State for Industry in seeking to bring about the restructuring of the industry in line with the recommendations of the CPRS and others whose advice was sought on the matter. In the course of many months of meetings, in which my right hon. Friend took a leading part, every possible effort was made to arrive at a restructuring arrangement. In announcing what I have announced today my starting point has been that it was not possible for my right hon. Friend to achieve that objective.
However, I want to make it absolutely clear—as I am sure he has done himself—that the Government believe that the longterm interests of this industry require a firm home ordering programme available to an industry able to compete effectively abroad as well. The problem facing the Government was that, in the absence of a capacity to bring that about, we thought it absolutely wrong to allow an important part of that industry—that at Parsons—to go out of existence and thus pre-empt the possibility of realising a long-term solution.
Mr. Mike Thomas: Is my right hon. Friend aware that no one, except apparently some Conservative Members, takes any joy from the failure of the restructuring talks and that we in Newcastle hope that they will proceed to fruition in due course and on an acceptable basis—perhaps one similar to the boilermakers? Is he aware of the relief on Tyneside and in Scotland that his decision will bring, that it will save at least 1,000 jobs in the short term and will provide a base for getting export work and that what the hon. Member for Bridgwater (Mr. King) suggested would have achieved the opposite and led to a firm in my constituency going out of existence? Will my right hon. Friend ask the CEGB to do what it can to get the work for this order on the shop floor as quickly as possible? We have had to wait a long time for this decision and the work is urgently needed.
Mr. Benn: On the latter point, I have met the CEGB for a preliminary discussion. There are a number of points that it wishes to discuss further with me. My hon. Friend will appreciate that the most important thing is that my statement today should have been made. However, I would not want the frustration of that intent to lead to difficulties. In fairness to other hon. Members representing GEC workers in their constituencies, he will also be aware that this decision was a difficult one for the Government, and that all those concerned, particularly on the trade union side, have shown great understanding of the difficulties facing the Government.
Mr. Hugh Fraser: Is the right hon. Gentleman aware that trade union representatives from GEC felt that they were entirely misled by the Secretary of State when he saw them on Tuesday? Second, is he aware that the House has been misled by his Under-Secretary of State who announced, in reply to a Question from me, that this matter would go out normally to open tender? Third, is he aware that the harm done to our repute in the world, when decisions are taken purely on grounds of political muscle rather than true economic grounds, will considerably damage our overseas trade and is already being exploited overseas by Brown Boveri?
Mr. Benn: It is inconceivable that the GEC workers who came to see me could have been misled, because I began by saying to them that all that I could do was listen to their representations and be sure that those representations were properly reflected. That was clearly understood and there was no doubt in their minds that that was the position.
As for competitive tendering, we gave consideration to that proposal. The view was that in the event of competitive tendering being agreed for this order, the figures submitted would in effect be meaningless because so much would be at stake for the companies concerned, and the outcome might well be a monopoly in which the CEGB could lose out later as the successful company recouped for its uneconomic bid. If the right hon. Gentleman thinks that other countries, in planning their industrial restructuring, do not take account of the same sort of factors as we are taking into account,
1154
he must be very naive about the policies of our major industrial competitors.
Mr. Grimond: Is the right hon. Gentleman satisfied that this decision will help the restructuring of the industry which he says is Government policy? Who is obstructing the restructuring which the Government wish to bring about?
Mr. Benn: I would put it to the right hon. Gentleman like this: if no order had been placed, the future of a large, highly-qualified and well-respected section of the British turbo-generator industry might have been blanked out completely. As I made clear, after my right hon. Friend has been unable to get the agreement that we wished, at least our decision makes a restructuring possible later—as is still our intent.
I am afraid that I cannot describe the negotiations in detail except to say that the differences which existed about how this might be done were important differences of principle among the parties. Had they been other than that, my right hon. Friend would clearly have been able to suceed. There were serious problems which could not be resolved in the time scale necessary to keep this important part of the industry in being.
Mr. Buchan: Does my right hon. Friend accept that, despite the criticism of the Opposition, his statement will be widely welcomed by thousands of workers not only in the turbo-generating industry but in the boilermaking industry? Is my right hon. Friend aware that—whatever nit-picking may be indulged in by the Opposition—his decision is entirely in line with the spirit of the report of the Central Policy Review Staff? Does he further realise that his decision will be widely welcomed by the coal mining industry, and that for all those reasons we from Scotland particularly want to congratulate him?
Can my right hon. Friend give an assurance that, since one of the reasons for bringing forward the order was to save the future of the boilermaking industry, that part of the order will go to Babcock and Wilcox in Scotland?
Mr. Benn: It is expected that the bulk of the boiler work will go to Babcock and Wilcox. In addition to meeting the GEC workers on Tuesday, I visited Renfrew and, although at that time I was unable

1155
to anticipate the decision, I realised that there was real anxiety among the boilermakers—as well as in the turbo-generating industry—about the prospects of the industry. We, as a major energy producer, must necessarily wish to see the industry play an important long-term part in exporting equipment and in allowing us to use the energy that we shall be producing.
Sir David Renton: Has the Secretary of State given formal statutory directive to the CEGB under the Electricity Act on the ground that this is a matter of national interest? If not, what legal power does the Secretary of State claim for the decision that he has made against the advice of the CEGB?
Mr. Benn: I have not given a statutory directive. I have requested the CEGB to advance Drax B.
Mr. Palmer: Will my right hon. Friend say whether the consent of the CEGB to the placing of the order depends on the negotiation of terms for compensation which will be satisfactory to the CEGB?
Mr. Benn: I have had a number of discussions of various considerations with the CEGB—as my hon. Friend knows. One of them was the basis for a restructuring of the industry which the Government hope will be possible. More recently we have been discussing and negotiating with the Board the circumstances that now confront us. These discussions are not yet complete.
Mr. Skeet: Has the right hon. Gentleman considered the implications of his statement on consumers, and is he aware that the decision will cost Eastern Electricity Board consumers £9 a head? Is he also aware that once there is a more efficient station such as Drax B, a number of older stations will have to be closed, with the result that less coal will be used?
Mr. Benn: Drax B will take some time to build and the implications for the older power stations will not come into effect for six to seven years, or however long Drax B takes to build. Now that the decision has been taken, I advise the hon. Gentleman not to bandy about the wild figures that have been used in the course of this controversy because when
1156
we examined the figures with great care, many of those used in the propaganda arguments turned out to be incorrect. Some of those figures came from respectable sources, and we should look at them again.
Mr. Joseph Dean: My right hon. Friend referred obliquely to the GEC work force. Should he not reflect further and see whether he can give them some assurance about the future, bearing in mind that during the last Labour Government—when my right hon. Friend was Minister for Technology—those workers reluctantly co-operated in carrying out a massive reorganisation? There were massive redundancies in an attempt to secure their future which was almost guaranteed by the Government of the day. Is my right hon. Friend aware that they now take a dim view of this?
Does my right hon. Friend realise that I am concerned about workers on both sides and not about one particular company? Will he give some reassurance, because those workers who were here last Tuesday are here again today and want to see my right hon. Friend about their future?
Mr. Benn: I met a large number of those workers, together with my hon. Friend the Member for Leeds, West (Mr. Dean), in my office last week. My hon. Friend can confirm that in that meeting I undertook only to convey their views, and that reference was made to earlier mergers involving GEC from which we all, including me, learned important lessons.
In my statement, I drew attention to the thermal reactor choice that will shortly be made, and the nuclear orders that would flow from that, and to refurbishing and the other possibilities that exist. I found that GEC workers, while expressing their own concern, did not want to see their future being at the expense of a large chunk of the industry in which they work. This is a difficult matter for all concerned.
Mr. David Price: In view of the Chancellor of the Exchequer's statement on Friday, are we to take it that if C. A. Parsons, under stage 3 or post-stage 3, settles for higher wage increases than GEC, the right hon. Gentleman will

1157
reverse the decision that he has just announced?
Mr. Benn: No.
Mr. George Grant: Will the Secretary of State accept bat this statement will be warmly welcomed in the Northern Region and that it is good news in the area of the highest regional unemployment in the country where clouds have been hanging over much of its basic industry? Is my right hon. Friend aware that his statement will do a power of good for the morale of the mining industry, because while it is one thing for the Government to talk about the expansion of coal production the statement was a practical expression of where the market will be?
Mr. Benn: I agree with what my hon. Friend said about the Northern Region and, as the dust settles, I hope that people will recognise that the first proposals for Drax B came from the CEGB in November 1969 and that all we have been discussing is the timing. I hope that those who are concerned with energy policy will recognise that in the United States and the Soviet Union coal production will be boosted to 1 billion tonnes because coal has an important part in meeting future energy demands. That means not just digging the coal but burning it in such efficient new power stations as Drax B. These factors should be taken fully into account by the House.
Sir W. Elliott: Does the right hon. Gentleman accept that the management and work force of C. A. Parsons are not, and have not been, against a restructured industry? Does he also accept that negotiations must have suffered a considerable setback through the vote of the executive of the Confederation of Shipbuilding and Engineering Unions at Scarborough to insist on NEB control of any new company?
Mr. Benn: I have already said that it it not for me to comment on the long and detailed discussions undertaken by the Secretary of State for Industry. However, I repeat that the issues raised here were not small or mean but important ones of principle which made it difficult and, within the time scale, impossible to reach an arrangement for restructuring along the lines that the Government
1158
wished and in accordance with the general recommendations of the CPRS.
These industrial problems are extraordinarily difficult. Both GEC and the workers concerned were also looking at the proposals in the light of experience. Nobody could have tried harder than the Secretary of State for Industry to reach an agreement but it was not possible, in the Government's view, to let an important part of the industry go out of existence because it was impossible to get the restructuring carried through in time.
Mr. Blenkinsop: While I strongly welcome the difficult decision that my right hon. Friend and others have had to take, would my right hon. Friend agree that one important element in the decision was the danger of erecting a complete private monopoly in the industry that might have had damaging effects for the future?
Mr. Benn: That point was one of the issues raised in discussions about the possible implications. It was not the only or primary problem, but it was a problem. The House, which takes an interest in these matters, should recognise that after so much effort it was only a point of real substance that frustrated the realisation of the Government's objective.
Mr. Biffen: Is the right lion. Gentleman aware that many people outside the House will be wholly unconvinced by his praying in aid the example of Ince B? Is he also aware that the ordering of stations ahead of time and the placing of contracts with selected, regionally favoured companies is all part of the industrial malaise from which we have suffered in the past generation? May I ask the right hon. Gentleman a specific question arising from an earlier supplementary question? He said that one consideration that he had borne in mind when taking a decision on tendering was his anxiety to avoid eventually having a monopoly in the industry. Are we to understand that the restructuring will mean that there will be at least two turbo-generating companies in the United Kingdom?
Mr. Benn: On the latter question, I was making a quite separate point and I am sorry if I did not make it clearly. I said that competitive tendering leading to a monopoly, which would have been the outcome here, would mean that

1159
tendering was not competitive. The figures would not be real.
I reject absolutely the theory that this country suffers from an industrial malaise. What is and has been wrong over a very long period is that this country has lost substantial and important parts of its manufacturing capacity which, because they were not present, has put us in the position of having to import what could have been made at home. Every other industrial country has recognised that where there is a short-term dip in demand, it is sensible to expand or, in some cases, to maintain capacity so that industries can make their contribution to the upturn when it comes. I do not accept that the decision that I have announced on behalf of the Government represents part of a malaise. It was a difficult decision, but the right one in the circumstances.
Mr. Kelley: Is my right hon. Friend aware that electricity consumers should be greatly obliged to him for his decision? Many millions of pounds were spent on the original design of Drax B in order to preserve a situation for the second phase development and this capital investment has been lying dormant with the people who consume electricity having to pay loan charges on the investment. Is he aware that we now hope that the second phase development will be brought into operation as quickly as possible?
Mr. Benn: It is true that the new Drax B coal-fired station will be the most efficient for the consumer and that using coal from Selby will be a very good bargain for consumers. It is an indigenous fuel that is not subject to the uncertainties of imported fuel and, from the longterm view of consumers, the decision makes sense.
Mr. Nelson: Does the right hon. Gentleman realise that some of the worst examples of the industrial malaise recognised by my hon. Friend the Member for Oswestry (Mr. Biffen) have taken place in public sector industries, very often at the instigation of the Government? Does he not feel that the decision will be greeted with incredulity in this country and abroad by people who feel that a Government who are borrowing so much cannot possibly afford to sponsor projects in advance of time?
1160
Will he at least ensure that if GEC decides to tender, the terms of its tender will be made public?
Mr. Benn: I do not know how the hon. Gentleman assesses foreign opinion, but for many years I have been reading accounts of other industrialised countries advancing and assisting their industries in order to put them in the position of being able to compete with British industry. If the hon. Gentleman thinks that Governments should never engage in investment in energy industries and that the only investment should be that which market forces provide, he should realise that with that approach we should now have no nuclear energy industry of any sort because every penny for that, from the beginning until now, has come from public resources and I am continually urged by hon. Members opposite to expand investment in nuclear capacity. Their criticisms are reserved for the expansion of coal-fired capacity—for no very good reason.
Mr. Andrew F. Bennett: Can my right hon. Friend confirm that when he met the shop stewards of GEC last week, they pointed out that there were 27,000 employees at Trafford Park 10 years ago and that now there are fewer than 7,000? Is he aware that these 7,000 workers will be bitterly disappointed with the decision? Can he at least tell us what progress is being made with the CEGB about bringing forward the refurbishing of existing power stations that might give these employees some work?
Mr. Benn: I have discussed my hon. Friend's latter point with the CEGB. It was a factor that I especially drew to its attention at the meeting at the end of last week following the Government's decision. I do not dispute what my hon. Friend says about the feeling among GEC workers, except to say that the progressive contraction of manufacturing industry, of which Trafford Park is a vivid example, has been brought about, in part, by mergers that were not agreed by the workers concerned. That has been a big factor in the development of Government thinking, and we have tried to carry the workers of the industry with us. My right hon. Friend the Secretary of State for Industry resolutely tried to do this.
Mr. Budgen: Does the right hon. Gentleman agree that the Ince B and Drax B decisions point to the proposition that all Governments will, to a greater or lesser extent, interfere in nationalised industries and that the only way to stop this tendency is to adopt a policy of rapid denationalisation?
Mr. Benn: Looking back at the record of the Government whom we succeeded—who managed to drive every nationalised industry into severe losses that had to be paid for later by the consumer—I do not think that that bit of advice from that source is likely to be particularly credible to us or to anyone hearing it. The policy pursued by the last Conservative Government was very damaging to nationalised industries.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I propose to call those hon. Members who have been seeking to catch my eye since the Secretary of State finished his statement.
Mr. Dalyell: Will my right hon. Friend accept that many of us think that he has done not only the right thing but the only thing? Following some of the comments from the Front and Back Benches opposite, will my right hon. Friend confront the Opposition with some of the letters and pleas that he has received from subsidiary and sub-contracting industries to make it clear that it was not only C. A. Parsons that was at stake but a great deal of expertise in related industries all round this country? May I also ask my right hon. Friend a question that I do not expect him to answer? Is he aware that I recently asked the Prime Minister—quite seriously—whether the time had not come to abolish the CPRS? Will he reflect on this matter?
Mr. Benn: My hon. Friend will have to pursue his latter point with the Prime Minister. The Government were right to seek a restructuring of the industry. I am sine that the decision, taken in the absence of such a restructuring, to maintain this important capacity was right. I am sure that, on reflection, most people observing this matter at home and abroad will believe that the decision was right. I certainly do, particularly as all the work done by my right hon. Friend the Secretary of State for Industry in the intervening period, far from being wasted, has
1162
formed the basis of the further discussions that will no doubt take place.
Mr. Whitehead: May I put to my right hon. Friend the reservations of my constituents who work in a section of the turbo-generating industry that is in neither the North-East nor Scotland and who accept the political considerations that made him bring forward the Drax B order? There has been a great deal of humbug about this from hon. Members opposite. Is my right hon. Friend aware that my constituents want to know whether the bringing forward of the Drax order has made it more or less likely that the necessary restructuring of the industry —not necessarily on the lines of the CPRS Report—will take place because their jobs depend on that in the next decade?
Mr. Benn: If the Government had decided not to give the order to C. A. Parsons, the question of restructuring would have been pre-empted by a major contraction of a major part of the industry that, I understand, all concerned with the restructuring proposals thought would have a massive and important part to play in the industry. Therefore, we prevented by our decision the foreclosing of a very important option for the future.
Mr. Gerry Fowler: Will my right hon. Friend accept that many of us on this side of the House who are not opposed to public ownership are concerned at the failure to achieve restructuring, with a substantial NEB stake, with the result that we have again the uncompetitive placing of contracts in what purports to be a competitive situation? I say that on behalf of consumers as well as on behalf of GEC workers.
Mr. Benn: I note what my hon. Friend said, but he will recall over the years the method of placing contracts by the CEGB. It tended in earlier years to be a rotation of orders among the different consortia, and in the case of Ince B it was an allocated contract. My hon. Friend will find that what we have done is not so very different from what has been done in the past, given that we are doing it against the background of a slump, when the demand for equipment is below what we know and believe it will be when there is a recovery in home and export

1163
demand. We did not want to see that capacity go out of existence.
Mr. English: The Government have demonstrated by this decision their good will towards the unfortunate employees of an inefficient company—
Mr. Mike Thomas: Untrue, untrue.
Mr. English: Will my right hon. Friend speculate on why, since they have made this decision, the Government recently concentrated all their public expenditure cuts on capital projects and so made a very different and rather more cruel decision in relation to the construction industry?
Mr. Benn: I absolutely disagree with what my hon. Friend the Member for Nottingham, West (Mr. English) has just said about the quality, design, workmanship and skill of Parsons workers. He talked about unfortunate workers of an inefficient company. That was a reference to a company which has a distinguished record at home and abroad in producing turbo-generators. He was absolutely wrong in saying that.
The position facing the Government was that in the absence of a capacity for restructuring we would in the future either have been observing and contemplating the withdrawal of this large section of the industry or considering its retention to permit discussions to continue. That was the basis upon which the decision was taken.
Mr. Hardy: I welcome the decision, but will my right hon. Friend accept that there is much greater concern on the Labour Benches for the efficient use of our energy resources than appears to exist on the Opposition Benches? Is my right hon. Friend aware that the coal to which he referred, which will be mined in Selby in Yorkshire, is of high quality? It is, therefore, essential that the highest possible level of thermal efficiency should be achieved at the new power station. Is my right hon. Friend confident that there will be a significant advance in this area and that that will make a contribution to the future prosperity of the industries which will create Drax?
Mr. Benn: I cannot go beyond saying that the Drax B station, burning Selby
1164
coal, will be a very good technical bargain and a bargain for the consumer, because it will use coal in the most efficient way. The coal being an indigenous fuel, it will meet some serious and unchallenged long-term energy policy requirements.
Mr. Skinner: Will my right hon. Friend confirm that the long-term security of all the workers either at GEC or at Parsons can be met only on the basis of a publicly-owned industry and not according to the whims of either Arnold Weinstock or anybody at Parsons? Will he also confirm that in the 1950s and 1960s, failure to order power stations contributed to the massive closure of pits throughout Great Britain and that, as a result of that, it is important to ensure that there are no further delays?
Mr. Benn: The question of the organisation of the turbo-generator industry is one for my right hon. Friend the Secretary of State for Industry. Any integrated energy or fuel policy which this country needs would give a very high place to modern coal-fired capacity, given the enormous resources of coal that we have and the fact that they are indigenous fuels which we should use in efficient power stations. Drax B will be such a station. Although this matter was raised with me by a number of trade unions with which I discussed it, it is in the first instance for my right hon. Friend the Secretary of State for Industry to deal with it.

BUSINESS OF THE HOUSE
.Ordered,
That, at this day's sitting, the Business of Supply may be proceeded with, though opposed, after Ten o'clock and that, notwithstanding the provisions of Standing Order No. 3(1)(b), Mr. Speaker shall put any question necessary to dispose of proceedings on the Motion relating to Energy, the Motion relating to the Community Budget and the Motion relating to the European Regional Development Fund not later than two and a half hours after each has been entered upon; and that notwithstanding the provisions of Standing Order No. 4 Mr. Speaker shall put any question necessary to dispose of proceedings on the Motion relating to the Police (Amendment) (No. 2) Regulations 1977 at half past Eleven o'clock or one and a half hours after it has been entered upon, whichever is the later.—[Mr. Snape.]

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: With the leave of the House I shall put the Question on all three motions together.
Ordered,
That the draft Weights and Measures Act 1963 (Sugar) (Amendment) Order 1977 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Weights and Measures Act 1963 (Cocoa and Chocolate Products) Order 1977 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Weights and Measures Act 1963 (Cheese) Order 1977 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Foot.]

ORDERS OF THE DAY
  SUPPLY
  [28TH ALLOTTED DAY]—considered.

  EUROPEAN COMMUNITY (ENERGY)
  4.16 p.m.
  The Under-Secretary of State for Energy (Dr. John A. Cunningham): I beg to move,
  That this House takes note of Commission Documents Nos. R/1284/77, R/1292/77, R/1294/77, R/1325/77 and R/1417/77 on Energy.
  Hon. Members will have noted that of the five Commission documents on energy which we are to debate this afternoon three related to energy conservation. I believe that this indicates the level of concern felt within the Community over patterns of increasing energy consumption in Europe. As Minister in the Department of Energy with special responsibility for energy conservation, I should like to thank the Select Committee on European Secondary Legislation for its assessment of the importance of this major area of energy policy.
  The saving and the more efficient use of energy are indeed essential components of both a national and Community energy policy. Without them, we cannot hope to reduce our dependence upon imported energy, particularly oil. That is an important objective now and wilt become more so in the future given the longer-term perspective of declining world oil production.
  Energy conservation is of international concern. President Carter's statement of 20th April about energy policy placed heavy emphasis on the need for energy conservation. At the Downing Street Summit in May world leaders named energy conservation as one of the seven most urgent tasks facing the Western industrialised economies. At the Council of Energy Ministers on 29th March Ministers considered a Commission document on an intensification of the Community's programme for energy saving—Document R /479/77—which the House will recall

  1167
  debating on 17th May. The Council stressed the importance of energy saving and urged the Commission to develop its proposals further.
  The Energy Council on 14th June had preliminary discussions on these three further Commission documents which deal with energy saving. These are R/1284/77, R/1292/77 and R/1294/77. They have been remitted to officials for detailed examination. The House will appreciate, therefore, that the Commission's proposals are still at an early stage of consideration and I welcome the opportunity afforded by this debate to hear the views of the House.
  Mr. Tam Dalyell: There was some doubt at the Energy Committee of the European Assembly when this was discussed about the timetable envisaged. Does my hon. Friend have in his notes any idea of what the Committee would like the timetable to be?
  Dr. Cunningham: I cannot answer that specific question. I can tell my hon. Friend—I shall say a little more about this later—that I emphasise the point that I have just made: that we are in the very early stages of discussion of these documents, and I shall be spelling out our view of them in a moment or two. I conclude from that, as he no doubt will, that it will be some time before final conclusions are reached.
  Let me take each document in turn. R/1284/77 on a Community action programme for the rational use of energy, comprises a draft directive and three draft recommendations based on the work of various specialist groups in which British experts have played a part and which relate to the performance, maintenance and regulation of heat generators and the insulation of the distribution system in new buildings—in other words, pipe-lagging and such work.
  There are considerable problems concerning mandatory measures at this stage in the area covered by the draft directive. It would present administrative and technical problems of harmonisation with existing practices and statutes. The Commission's proposal would, however, be acceptable to us if it were presented as a recommendation rather than a direc-
  1168
  tive. The draft recommendations concern the control of the use of heat in new buildings the rational use of energy in industrial concerns, and the setting up of advisory bodies on combined heat and power and district heating..
  We welcome the impetus given to the strengthening of national programmes embodied in the recommendations, which also appear to be generally supported by other member States. We hope very much that they will be submitted to the next meeting of the Energy Council and be approved by it.
  The second document—R /1292 /77—proposes a draft directive on energy savings from the modernisation of existing buildings—except industrial buildings—with the aim of reducing total final consumption of energy by 5 per cent. Effective implementation of the measures would require member States to set standards and provide financial incentives in cases where the return on modernisation schemes might not attract private investors. The main aim of the measures proposed is to reduce energy consumption for space heating.
  We welcome the objectives of the draft directive, particularly its dual aim of energy savings and job creation. However, again, consideration of its implications is at a very early stage. The proposal would involve significant new public expenditure commitments, and we therefore consider it essential that the United Kingdom should be able to exercise full control over both the speed and degree of implementation of any such measures. As for the Commission's estimates for the job creation potential, our first impression is that they are overoptimistic.
  Generally, our view is that further progress in the area of this draft directive must be based on what member States consider feasible and realistic. This apart, it is premature to form any view on the way that the measure should eventually be expressed. Hitherto, measures on energy conservation adopted by the Council of Ministers have been in the form of recommendations rather than directives, and member States still have to consider whether these proposals would be appropriate in a directive form.
  Document R/1294/77, from the Commission proposes two new regulations, one

  1169
  covering projects on energy saving and the other on alternative energy sources. Both topics are of major consequence to Europe and to us in the United Kingdom. The effect of these proposed regulations would be to enable the Commission, using Community funds, to assist in the demonstration of new technological advances with the aim of promoting more general use of the latest energy-saving processes and equipment throughout the Community.
  We in the United Kingdom are well aware of the risk elements which may inhibit the introduction of new technologies. In considering these two draft regulations with our European partners we recognise that demonstrations, following naturally from research and development work, with support from public funds can be worth while. What is not so clear is which projects really need and merit such support, what is the most efficient way to arrange any such support, and to what extent it should be on a national or a Community basis.
  These draft regulations were on the agenda of the Energy Council on 14th June. We agreed then that the proposals deserved careful further study. We need to find the best way to achieve the goal that is, by general consent, worth achieving. We shall particularly need to give further thought to the financial commitment which may be involved. As they stand, the regulations specify no financial limit, and even though the Commission indicates the level of support it envisages, we shall have to consider what budgetary control procedures would be necessary.
  Another important area needing further investigation is how projects will be selected and by whom. For example, should we aim to ensure that projects attract Community funds only if they are potentially suitable for application generally in the Community? How best can one manage those projects where, as might well be sensible in some cases, there is a mixture of national and Community financial support as well? These are just some of the questions which require close examination.
  Document R/1325/77 gives the Commission's first ideas on fostering the development and protection of energy investment in the Community. After an
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  initial airing, the June Energy Council remitted it to officials for further examination, and again this is still only at a very preliminary stage. The Government have in general an open mind towards the ideas set out in the paper, but we shall wish to have a lot more work done on them. We therefore welcome this early opportunity to hear the views of the House.
  Mr. T. H. H. Skeet: Will the Minister give the current position of the minimum selling price? Have the Government abandoned it, or has it been abandoned in Europe?
  Dr. Cunningham: The hon. Member is anticipating my next remarks. He is probably aware that that is just what 1 am about to come to. Let me stress to him, however, that we have not abandoned our position on the MSP.
  The paper discusses a number of possible methods of support—for example, investment loans, loan guarantees and long-term contracts—and concludes that there will be a continuing requirement for loan finance for energy projects in the Community. It is proposed that loans and loan guarantees should be made to individual projects and that the Commission should be asked to identify such projects. It is also proposed that member States should endorse principles governing long-term contracts.
  The question of loans will have to be examined in the general context of Community loans, particularly in the context of the further examination being given by Finance Ministers to the Commission's recent wide-ranging proposals for a new Community loan instrument to finance priority Community structural investments on a substantial scale. We shall certainly consider the need for a new initiative of this sort for energy investment.
  We do not yet know how big a share of the funding the Commission envisages for energy. The Commission has agreed to provide more detailed proposals for study by Finance Ministers. These will have to be considered in the context of the Community's overall borrowing policy. Our experience in the United Kingdom up to now is that there is little evidence that investment in energy production is hampered by lack of funds. We must also, of course, bear in mind in this context that the European Investment

  1171
  Bank has decided to expand its activities in energy and its governors will be reviewing the size of its capital next year.
  On loan guarantees, we recognise that there could be a stronger case for introducing Community guarantees of loans made under existing Community and national instruments. Again, however, we have not seen any evidence yet that an extension of loan guarantees is necessary. We would anyway need to have a clearer idea of the technical nature of the risks they could reasonably be expected to cover and of the feasibility of assessing and underwriting those risks. We would foresee great difficulties arising in this area of assessing and underwriting risks and, at the very least, we would agree with the Commission's suggestion that the risks taken in guaranteeing loans would have to be limited. The idea of fostering long-term contracts also needs clarification. We need to know much more about the respective obligations proposed for Governments on the one hand and the commercial parties on the other.
  We need to bear in mind the commercial realities, because these may vary from sector to sector. For example, in the gas sector the nature of the business makes long-term contracts between the producers and the distribution organisation—in our case, the British Gas Corporation—more or less a commercial necessity. On the other hand, in the case of oil we understand that by and large in present circumstances oil-producing companies are not particularly interested in looking for long-term deals. It would probably be difficult to try to move against what is the prevailing commercial wind in pressing that idea.
  As for North Sea oil, there is no shortage of funds for investment and longterm contracts are not required to induce and support investment. In contrast, however, the commercial situation in the coal sector, at a time when the market is depressed, means that the idea could perhaps represent a promising avenue of possible support. These are our initial thoughts on the proposals and we shall need to obtain more information on them and hear hon. Members' views before we come to firm conclusions.
  Mr. Peter Rost: The Under-Secretary of State has been non-committal and has not said very much. Will he help the debate to move forward by at least giving an assurance that the Government are committed to the EEC's recommendation that there should be a 15 per cent. energy saving target by 1985 and that the Government will implement proposals that will ensure that that applies to this country, too?
  Dr. Cunningham: I was being careful to give the assurance that we were being non-committal in respect of these documents. As for our commitment to energy conservation—
  Mr. Ronald Brown: Before my hon. Friend leaves that point—
  Dr. Cunningham: Perhaps I may complete my answer to the point raised by the hon. Member for Derbyshire, South-East (Mr. Rost). I shall give way to my hon. Friend shortly. As for our commitment to EEC energy conservation measures, I assure the hon. Gentleman that this is an area in which we have been keen to make progress. I attended the Energy Council to make that point. We committed ourselves to further work by a new committee within the Community. We look forward to progress in that area. It is one of the areas within Community policy in the energy sphere in which we think that there are opportunities to make significant progress rather more quickly than in other areas.
  Mr. Ronald Brown: Am I to understand from what my hon. Friend has continued to say that this country was not consulted on the draft directive in all the months that it has taken to bring it to fruition? Am I to understand that the United Kingdom was not in any way consulted so that its views could be known?
  Dr. Cunningham: That is not what am saying, as I think my hon. Friend well knows. I was saying that we need to be convinced that the two subjects covered by the proposed directives are suitable to be dealt with in the form of a directive rather than as recommendations. We are not alone within the Community in taking that view. Discussions are at a preliminary stage. We shall have to see

  1173
  what views emerge from discussions between officials and at further Council meetings.
  There is no reason to suppose that we are not willing to make progress along generally accepted lines. We need to give careful consideration to the subject before we accept directives. My comments represent our initial thoughts 'm all these proposals. We shall need to give further careful consideration to them and to obtain more information about them.
  The final document—R/1417/77— is a purely descriptive report by the Commission of the energy situation in the Community during 1976. It also gives its view on the outlook for the current year. By its nature it contains no specific proposals for action. It may be that some will find that some of its assessments of the short-term energy supply and demand situation are open to question.
  I draw attention to the view expressed in the document that energy consumption will again rise this year. We need to ask ourselves how much of that increase will really be a function of heightened economic activity and how much will be energy waste. What will be the real level of energy efficiency? Although the document does not propose specific measures, it serves as yet another warning and underlines once again the crucial importance of the energy-saving issues posed by some of the other documents that I have discussed.
  4.36 p.m.
  Mr. Tom King: The Under-Secretary of State has presented these documents in a competent manner. The hon. Gentleman will forgive me when I say that I have heard more exciting speeches in my time in the House. If I may say so without being unkind, it is the first time that I have been persuaded that there might be some merit in the Congress system of writing notes into the record. He has competently explained what is in documents that we already have.
  Although we do not in any sense regret the presence of the Under-Secretary of State, we have some important European documents before us and the absence of the Secretary of State and the Minister of State is to be regretted. The Secretary of State did me the courtesy of explaining why he would not be able to be present.
  1174
  I know why the right hon. Gentleman is not here but I am slightly surprised at his choice of priorities. However, the fact is that he is not here. It is a European debate, and whenever such debates emerge one wonders whether the right hon. Gentleman is all that keen to be present. On the other hand, the Minister of State could not possibly be accused of holding the same views. I think that it was my hon. Friend the Member for Ross and Cromarty (Mr. Gray) who suggested that the Secretary of State and the Minister of State might be paired for the debate. I am not sure whether the Under-Secretary of State will choose to confirm that in his reply.
  Dr. John A. Cunningham: Perhaps I might intervene in the hon. Gentleman's rather acid introduction and confirm, as he has somewhat reluctantly stated, that my right hon. Friend the Secretary of State did him the courtesy of seeing him and explaining in some detail why he would not be able to be present for this debate. My right hon. Friend also wrote to the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond). My right hon. Friend is looking after this country's oil interests, those interests which were so woefully neglected by the previous Conservative Government.
  Mr. King: I do not want to pursue this matter. Unfortunately, the Minister is on rather weak ground. The debate should have started at half-past three, but because a statement had to be made it did not begin until a quarter past four. As the statement was more important, the Secretary of State was here at half-past three and stayed in the Chamber for 45 minutes. He did not ask to see me to explain why he could not be here for the debate. We met about another matter, and his absence during this debate was mentioned in passing. If the hon. Gentleman thinks that this is an acid introduction, I must warn him that I shall start laying the vitriol when I come to comment on what I consider to be more important measures. I assure him that this is a positively benign beginning.
  Whatever one's feelings about Europe, there must be some concern at the way in which energy policy is presented to the House and proceeds through the various stages within the European framework and within the House. The least

  1175
  controversial document is the one to which the Under-Secretary of State referred at the end of his remarks. That is the statistical and forecasting document on energy. It is an accurate record of what happened in 1976 and a forecast of what they expect to happen in 1977.
  Forecasts are normally produced in advance of the period about which they are made. This document did not emerge until the middle of June and we are now two-thirds of the way through the year to which it refers. I assume that it relates to a calendar year and not some new European year about which I have not heard. It is odd that we should be debating forecasts when we are already two-thirds of the way through the year.
  My hon. Friend the Member for Derbyshire, South-East (Mr. Rost), whom I welcome to the Front Bench, will be talking about two particular papers on subjects in which he has taken a great interest over the years. They concern energy saving and the rational use of energy. I shall, therefore, say little about those subjects except to make one point to the hon. Member for Rother Valley (Mr. Hardy), who also takes an interest in these subjects. He must have been as surprised as I was to hear the Secretary of State say that Drax B will burn coal in the most efficient way that it can be burnt. The hon. Member knows as I do that that is palpable nonsense. The Secretary of State meant to say that it would he burnt as efficiently as it could be burnt in a power station of that type. That is different.
  Mr. Peter Hardy: The hon. Member could be a little fairer to my right hon. Friend. The Government are encouraging the National Coal Board and others who might be interested in a more efficient use of energy, as we can see by the fluidised-bed combustion experiment taking place not far from my constituency. The hon. Member will be the first to admit that we are some years away from the application of that developing technology on a commercial scale.
  Mr. King: I believe that we shall have a statement shortly on the Plowden Report. That report shows our position as bottom of the league in thermal efficiency in power stations in Europe. I accept that there are reasons for that.
  1176
  This is a technical and complex subject. But it is a matter of concern when the Secretary of State says that Drax B will burn coal in the most efficient way that it can be burnt, because it is not true. The hon. Member for Rother Valley has made a fair point about fluidised-bed research but I was not thinking about that. There are more efficient ways of burning coal than in conventional power stations. We must recognise that if we are to go for the more rational use of energy. We should keep it in mind.
  I recognise that the documents are further rather tentative and hesitant steps towards a cohesive European energy policy. I recognise that they are, perhaps, the beginnings of the European response to President Carter's initiatives in the United States.
  I wonder whether a Community energy policy is necessary in some areas. I wonder whether it is imperative to have a Community initiative. The snag about Community initiatives is that they can involve considerable delay. They can be taken as excuses for not proceeding with national programmes that may not need Community rationalisation and equalisation. Energy saving is an example.
  I shall remove my acid hat and say something kind about the Under-Secretary of State. Part of his job is to promote a greater understanding about the importance of energy saving. From Press releases and cuttings, I know that he moves around the country trying to persuade industry and others of the importance of energy saving. But we still have a long way to go.
  The gains in some areas are staggering. One can find companies which are alert to the importance of energy saving which say that the first 10 per cent. of the saving can be made almost without effort. They have only to look at their programmes for a short time and they can save 10 per cent. Some companies find that the saving of the next 10 per cent. is almost as easy. It is depressing to think that the majority of British industry is wasting up to 20 per cent. of its energy as we speak now. I shall not go through the many examples of firms that are successful in saving energy. A firm in my constituency worked continuously throughout the period of three-day week without having to close down because it managed to save

  1177
  60 per cent. of the power that it normally used.
  The documents may delay our national efforts. We know that the pay-back in energy saving is one of the most impressive features of it. Not much in the way of financial inducement should be required. Perhaps financial inducement could be used as a further publicity weapon for a short-term programme. It is interesting that President Carter's proposals contain a taper on tax allowances. The allowances start at a high level for improvements but they taper off the more energy that is saved.
  It is interesting to note that the proposals in the documents are close to those which some of my hon. Friends tabled as amendments to the Finance Bill last Thursday but which were not selected. We believe in the importance of giving further encouragement and publicity in support of energy conservation. Whether the European method is the best way to go about it is something that we shall consider when listening to the debate.
  The biggest disadvantage of a European initiative is the delay that it involves. Those listening to the Under-Secretary of State and those who have read the documents will have noticed the types of phrases that are used. They include such words as "needing further study", "the Council of Ministers has been meeting for some time", "We reserve our position" and so on. The Government are obviously not sure how effective some of the measures would be. Balls are being thrown backwards and forwards between officials. One has the nasty feeling that they are being bogged down and that nothing will come out of the proposals.
  The other main issues involved are those of nuclear safety and the protection of energy investment. The need for a nuclear safety code is outlined. Some of the proposals would achieve widespread agreement, but I am not sure that there is particular benefit in having a European as opposed to an international nuclear safety code. Clearly, there have to be international codes as well. This is an area in which we can claim a proud record. Our standards are as high as anywhere in Europe.
  On the question of protection of energy investment, we again have a position of our own. We have different problems from those of other countries in Europe
  1178
  in our energy situation and supply. Support from Europe for the British coal industry is an important factor, and I hope that the Under-Secretary of State will confirm the details of the latest loan or grant from Europe in support of our industry, announced at the end of last week. This latest move is further confirmation of We amount of money that Europe is putting into the British coal industry.
  In studying the further implications of some of these proposals, one sees the statement, which the hon. Gentleman repeated today, that there was agreement with the Community that the risks involved in guaranteeing loans should be limited. That is not a world shattering matter on which to reach agreement. If that is the extent of the agreement reached so far, it shows just how difficult it is to make effective progress.
  As I have said, my hon. Friend the Member for Derbyshire, South-East will be talking particularly about the rational use of energy and energy saving, in which he has taken so much interest. This is the second occasion this Session that we have been able to debate European energy matters, and we hope that our debates and these documents will help create a feeling of the importance of the collaboration with Europe on energy problems and will impart some much-needed impetus to a move forward both in Europe and in our own direct national interest. I hope that we can look to Ministers to play their part in this process so that we can get the sense of urgency that Europe should start to show if it is to respond in the way that it should to the initiative of the President of the United States.
  4.53 p.m.
  Mr. Tom Ellis: I have been interested in energy matters since 1958 when I worked in the coal industry—a time when small hills of coal began to appear in our coal fields. Their appearance aroused my particular interest in energy supply and demand. But it seems to me that most people, both in this country and in Europe, gave scarcely a passing thought to such problems until 1973, when we all had the fright of our lives. I thought then, with the increase in the OPEC oil prices, that we could at last seriously get to grips with what had clearly been a certain trend for a long

  1179
  time. Unfortunately, that mood of 1973 quickly vanished.
  I believe that one of the reasons why it vanished so quickly was that the politicians took no part in leading discussion of energy problems. Indeed, sometimes they seem deliberately to have avoided taking part in such discussion. I have been staggered by the complacency shown by leading politicians in our countries.
  When my right hon. Friend the Secretary of State for Energy went to Brussels at the beginning of the year on assuming the presidency of the Council of Energy Ministers, I tackled him about this apparently complacent attitude on the part of his Department. He dismissed my accusation and pointed to the money that we were sinking into North Sea oil. All that was quite correct, but it did not answer my point. The real issue then and now is that what should be done outside the North Sea is scarcely being tackled. Indeed, the whole question of the rational use of energy has hardly been tackled either in the Community or in this country.
  The hon. Member for Bridgwater (Mr. King) was right to say that these proposals from the Community are innocuous. Indeed the Community's proposals a year ago consisted of five recommendations which were nothing more than exhortations to people to be careful and sparing in the use of energy. It is depressing that there should be this apparent apathy among politicians and that it has been so prevalent for so long.
  Mr. Ronald Brown: My hon. Friend should take heart at the fact that he was able to get a reply from the Secretary of State. When I asked my right hon. Friend in Paris why he was preventing cheap coal from coming into the country for the benefit of the housewife, he promised to write to me. The Minister of State a few weeks ago told me that I would get a letter. I am still waiting. My hon. Friend should, therefore, be honoured to have received a reply.
  Mr. Ellis: I shall not enter into the argument between my hon. Friend the Member for Hackney, South and Shore-ditch (Mr. Brown) and my right hon. Friend the Secretary of State. I hope that as a result of his intervention my hon.
  1180
  Friend will get a reply sooner rather than later.
  Because of this apparent complacency on the part of the politicians, the vacuum created has been filled largely by citizens' action groups. We see the unusual spectacle of thousands of people marching in demonstrations to do with nuclear power. One of the tragic consequences of their filling the vacuum with such protests is that all kinds of accusations and statements are made which are nonsense and, therefore, rational discussion of the problems flies out of the window.
  For example, there is the statement that a handful of plutonium scattered in the atmosphere will destroy mankind, but plutonium is about one tenth as toxic as, say, lead arsonic. This situation has come about largely because of the failure to assess what is actually happening with actuarial certainty. Demand for energy has an actuarial certainty about it so that we can be fairly precise, unless, of course, there were a catyclism that would render the whole thing academic.
  Following all the complacency that has been shown about long-term developments, I am grateful to President Carter for having firmly put the whole subject at the top of the agenda. It is surprising that such an initiative should have come from the President of a country so greatly blessed with enormous reserves of coal, oil and uranium. Yet it is Mr. Carter who has begun seriously to tackle the job that we in our countries have failed to tackle for the past 20 years and certainly since 1973.
  The hon. Member for Bridgwater was a little critical of the approach on a Community basis, and I think that he was right. It is not easy for the Community as such to start introducing policies for the rational use of energy and going into little details when situations differ from country to country. Yet it is important that on a major issue of principle the Community should try to find and develop a Community policy. It is in this sense that we should look at policies emanating from the Community, considering how effective they can be on a Community basis in tackling major issues of principle.
  I want to speak particularly about the breeder reactor. The attack on the breeder reactor is coming from the heart of the American Establishment itself—I

  1181
  suspect that it comes from Mr. Carter himself. He has been logical about it and his sincerity has been matched by his actions. He has halted America's plutonium reprocessing and is re-assessing breeder research in the United States, and so on. While one may say that he can afford to take this action because of America's own resources of energy, there is nevertheless a logical consistency in his proposals.
  As a result of Mr. Carter's concern about the proliferation of atomic weapons, we in the Community are rapidly approaching a major issue that ought to be decided quickly. It has been decided in some countries but, apparently, not yet in the United Kingdom.
  I read recently a statement by my right hon. Friend the Secretary of State for Energy at a conference organised last December by the British Council of Churches. He was speaking about the difficulty of balancing the conflicting demands for oil, coal, gas, nuclear power, the breeder reactor and so on. It seemed to me that my right hon. Friend had still not grasped that the major issue was whether "to breed or not to
  breed". That must be decided clearly in principle, and it has already been decided in some countries. I regret that my right hon. Friend does not seem to have grasped that.
  I suppose that every sensible man will accept President Carter's approach in regard to plutonium since atomic weapons can be made comparatively easily from plutonium. The President's anxiety is therefore clearly valid and sensible. However, President Carter's approach has immediate consequences for this country and the rest of the Community in regard to our supplies of natural uranium and the fact that our low-enriched uranium supplies are in serious jeopardy. I recently read a report in the Financial Times stating that the two-year stockpile of low-enriched uranium had been halved because of the reluctance of other countries, such as Canada and the United States, to supply us with the essential ingredients for what we call conventional nuclear reactors, such as the AGR and the light water reactor. We should make clear to the American Administration that we are facing a very serious position.
  1182
  The remarkable thing is that, while the President's attack on the breeder reactor is logical, one hears entirely different sentiments expressed by the United States Congress. It is important for Europeans to know what is likely to happen in American energy policy in the next 10, 20 or 30 years.
  Mr. Jim Marshall: I have been listening to my hon. Friend's argument with a great deal of interest. He appears to be putting forward two contradictory points of view. He has spoken in glowing terms about President Carter's energy policy, and he will be aware that that policy has been formulated to meet an expected shortfall in the supply of oil in 1985, giving a time period of six or seven years. How does my hon. Friend expect the breeder reactor to affect that shortfall in any circumstances?
  Mr. Ellis: The shortfall in terms of immediate demand is one thing entirely. I am speaking about the long-term actuarial certainty of demand during the next 20 or 30 years. I am not discussing the short-term prospects for the energy situation in the United States or the Community. I am putting forward an important point that has not been tackled by people in this country and some of the other Community countries, although it has been tackled by others.
  If we are to decide on a long-term basis how to meet our future energy demands, we have to say one of two things: either we must be assured of supplies of uranium, from whatever source, or, if we cannot obtain guarantees of supply, we have to say that it is a case of
  "Needs must when the devil drives."
  and we shall have to accept the plutonium economy. This is a major issue which must be decided by a great deal of public debate. The matter should already have been decided, because we could have foreseen some time ago what was happening.
  I wish to comment on the rate at which we should proceed to carry on with building conventional nuclear power stations, building more and more AGRs and LWRs, or go hook, line and sinker towards the fast-breeder reactor. I do not think that anyone can tell us how much uranium there is in the world.

  1183
  Even the experts differ. The fact that Canada is still not supplying us is ostensibly on the grounds of concern about proliferation, but it is possibly because of Canada's fears that its supplies are not so enormous, being enough for 24 years ahead. There is also the problem of Australia.
  We must try to adopt a responsible attitude. We should not rely on adequate supplies of uranium being forthcoming. If uranium supplies are not available, we shall clearly be driven by the devil and be committed to the breeder reactor. Chancellor Helmut Schmidt has said categorically that the German Government are determined to go ahead with this type of reactor.
  The real issue facing us is how to introduce safeguards to ensure that there is no proliferation of nuclear weapons as a result of the proliferation of breeder nuclear power stations. There is a serious practical difficulty here which we have not so far been tackling satisfactorily. I am not sure that the non-proliferation treaty is working as well in its efforts to prevent the spread of nuclear weapons as one would have hoped when the treaty was first signed a few years ago.
  Many things need to be done, even in the straightforward technical aspects of the inspection system that is used. I understand that the total number of inspectors is limited to a total of only 50. The inspectors go as a team to assess on a kind of accountancy basis how much fissile material is present and how much should be present. The inspectors do not do anything to stop fissile material from being diverted.
  Since it is possible to make a bomb within a matter of days, given a supply of plutonium, this makes the whole nonproliferation treaty a lot of eye-wash. We should give great thought to improving the safeguard agreement in the non-proliferation treaty so as to meet the dangers in the supply of low-enriched uranium and the proliferation from breeder reactors.
  I base my arguments on the likely shortfall in 1985 in the generating capacity of nuclear power stations. It is essential for the Community countries to get together about the rational use of energy and statistical material. I take
  1184
  the point of the hon. Member for Bridgwater that we are discussing statistics in the Commission document that are already half a year old. I put a question to my right hon. Friend the Secretary of State 12 months ago about the statistical staff in his Department and asked whether the staff was adequate to provide a sound statistical basis for future forecasts. My right hon. Friend assured me that the number of staff was ample for these purposes, yet the Commission says that it is far from satisfied with the provision of statistical material from this country.
  We should not proceed on the basis of that sort of statistical information. We need a fully thought-through and intellectually honest position in regard to the breeder reactor, for it seems that we are now inevitably committed to that type of reactor.
  5.9 p.m.
  Mr. J. Grimond: The Secretary of State was kind enough to tell me, too, that he would not be here during the debate, and I am grateful to him for letting me know. I also ask to be excused if I have to leave the Chamber rather early in a debate because there is a vital meeting of what is called the "Liberal Shadow Cabinet". No doubt that will determine the futures of all hon. Members, although I understand that the Government's trousers are held up not only by the Liberal belt but by the Ulster Unionist braces. Therefore, whatever we decide may not matter all that much. However, I apologise in advance for my early departure.
  I agree with a great deal of what was said by the hon. Member for Wrexham (Mr. Ellis). I only add that it would be a great pity if the fashionable views of the extreme dangers of a plutonium economy obscured the very important questions that the hon. Gentleman raised. Admittedly the dangers exist and they are serious, but we must look to the future, when oil begins to run down. If the question of what is to succeed oil is to be rationally discussed, we must not exaggerate the dangers that are there.
  We must also make clear the fact that even when oil runs down, although energy may be very expensive to get, there is no reason why there should be an absolute physical shortage of energy. There are

  1185
  masses of coal. The difficulty is the expense of getting it. Further, of course, there may be, as the hon. Gentleman said, possibly a rise in demand.
  I want to make one or two comments chiefly about energy conservation. The first is, I hope, a friendly word to the Commission in Brussels. I speak as someone who was from the start in favour of us going into the EEC. I am still very keen that we should play our full part in it. However, I am somewhat alarmed by much of the stuff that comes from Brussels. One of the great needs of most Western European countries is to reduce the amount of duplicated government, to reduce the weight of paper that comes out and to reduce the number of bureaucrats who write what appears on it. Much as I have criticised our Government for pouring out the stuff, they are now put in the shade by Brussels.
  Many of these regulations that we regularly read are simply duplications of what national Governments already know, and some of them are, to use a homely phrase, simply teaching one's grandmother to suck eggs. Therefore, I hope that the people in Brussels will direct their minds to such subjects that really need European consideration and not simply add to our burdens by unnecessary directives.
  I much agree with the Opposition Front Bench spokesman that although there is no doubt a need for a European energy policy, a great deal of what appears in these documents can better be dealt with by national Governments or, if it is on a wider basis, it may well need something even wider than Europe. Here again, Brussels should look at the way in which it is going.
  Mr. Nigel Forman: In most cases the proposals are contained in what are called directives, which precisely leave matters to national Governments to implement in the best way they see fit.
  Mr. Grimond: That comes under the heading of teaching one's grandmother to suck eggs. National Governments, for whom I have no great respect, have been dealing with things such as double glazing for a number of years. There is no need for a directive on the subject. I say that in passing in a friendly spirit and I
  1186
  am not directing it at our magnificent Government. Also the needs and methods of conservation vary from country to country.
  However, by far the simplest way of saving fuel is making people pay for it. Once they have to put their hands in their pockets and pay the bill, they begin to save fuel. Most of the wasters of fuel are public authorities.
  One can go around this place turning out lights and one can see cars standing about waiting to take Ministers to important luncheon engagements and so on. So long as one does not have to pay for the fuel, one uses all the fuel that one wants and more. It is putting one's hand in one's pocket that makes one thing about double glazing and turning out lights. That also applies to big companies. Much could be done by them, particularly by way of example, if the top people had to pay for the fuel that they consume.
  However, as has been said, there is beyond this a need for a great deal of fuel saving in British industry. I am the last person to say that all the emphasis on fuel conservation is unimportant, but I believe that the first thing to impress upon people is that the example should start from the top, and the top organisations are the public authorities. They are some of the worst wasters of fuel in Western Europe.
  Dr. John A. Cunningham: I hesitate to delay the right hon. Gentleman's attendance at the meeting of the "Liberal Shadow Cabinet". It must be a nice situation when every Liberal Member is a member of the "Liberal Shadow Cabinet". However, I really cannot let the right hon. Gentleman's last point about an example from public authorities go by. It is a fact that the Property Services Agency of the Department of the Environment has given an outstanding example of energy conservation measures in the United Kingdom. We heartily recommend people in other public sectors, in which, as the right hon. Gentleman rightly says, much energy is used, to look closely at the record of the PSA and to learn from it. It has saved millions of pounds of public money by getting ahead with a very aggressive energy conservation policy, and the right hon. Gentleman ought to recognise that.
  Mr. Grimond: I do not underestimate what has been done lately. However, it is a curious commentary on the public services that if they could save millions of pounds, why did they not save it long ago? If the Minister goes into most public offices, not only of central Government but of local authorities, he will not see conspicuous efforts to save energy. In most of them the heating is far above what most people would dream of having in their own homes.
  I move on to two particular matters. I understand that as one drills for oil under the North Sea, before one reaches the oil one goes through many seams of coal. I am told that there are vast reserves of coal under the sea. So far the technology has not been invented that will enable the extraction of coal beyond a certain distance from the shore. However, no doubt this will come, although no doubt it will be exceptionally expensive. This seems to be an area in which there is some need for international experiment and research.
  Again, I do not understimate the importance of research into wave power, wind power and so on. However, I am advised that this is unlikely to make more than a peripheral, though useful, contribution to our energy supplies, at least within the foreseeable future. However, if the vast reserves of coal can be used in some way, they would make a great difference to Europe.
  The other matter to which I want to refer and which I see arising in my constituency is the waste of energy through flaring. I know that the Government are worried about this matter and are trying to persuade the oil companies to find a use for the gas that they are now flaring off. I want to encourage them in this matter, and I hope that they will bring all the pressure that they can upon the electricity and gas boards and so on to make use of the gas now wholly wasted. We used to be told that it was not worth doing anything about it, that it was technically difficult, and that it was expensive. I understand that that is now all being called into question and that, at least for local purposes, we should be able to make use of much of the energy that is flared off into the air.
  I doubt whether Commission documents of this sort will have any public
  1188
  impact, but I wholly agree with the Government that it is necessary to have some public impact. The only sort of impact that I believe would be made on the public would be either to ensure that the public authorities are deeply concerned and continue their programmes of conservation, or to have a total disaster such as that which occurred in New York recently. Although the New York disaster is not exactly germane to the matters that we are discussing, it is a very serious warning about what can happen to a big conurbation if we get our energy policies wrong.
  5.18 p.m.
  Mr. Tam Dalyell: Before the right hon. Member for Orkney and Shetland (Mr. Grimond) hastens off to the meeting that is to determine all our futures—so we are told—I should like to put two points to him. It is very easy to attack the Community for the amount of paper that is produced. However, the right hon. Gentleman and I know very well, although it is not a strictly fair comparison, that there are still markedly more people in the Scottish Office at St. Andrew's House than there are in Brussels. There are comparisons and comparisons.
  The second thing that I want to say to the right hon. Gentleman is a little more serious. Before saying that there are too many people doing too much in Brussels, let us take the example with which the right hon. Gentleman and I were concerned, in rather separate ways, of uranium mining in Orkney. I think that the right hon. Gentleman will agree that the story, briefly, is that some EEC money was allocated by the Commission for uranium prospecting in Orkney. It is unnecessary to go into the details but, briefly, this gave rise to a good deal of dissatisfaction in Orkney, and when the Commission was actually challenged about this it admitted that it had the services of half a geologist to supervise precisely what was going on.
  In some ways one could argue that if European money is to be put into this kind of project, the whole set-up is not too fat but, in fact, is too slim. Brussels will often, and more and more, get the blame for things going wrong when they are perhaps not as well supervised as some of us would imagine they should be. Having given that example, if the right hon.

  1189
  Member for Orkney and Shetland (Mr. Grimond) wishes to intervene I shall give way.
  Mr. Grimond: The uranium mining in Orkney was not stopped by the Commission. The South of Scotland Electricity Board, the Government and the local authorities have handled the matter not too badly. I am not suggesting that Europe should do nothing. What I am suggesting is that there should be a larger and broader policy.
  Mr. Dalyell: That brings me to a point on which in this context we are in some agreement. I wish to repeat a question I put to Mr. Longo and Madame Nadane when they came before the Energy Committee of the European Parliament. I asked them simply whether they were quite sure that this programme of energy-saving was the most suitable project for European as opposed to national action. On that occasion there were two people who were doing most of the questioning. There was myself, from Edinburgh, and an Italian Communist called Mr. Rubinickt, from Bologna. Edinburgh can be covered in snow when Bologna is sweltering. The conditions are different. One accepts the easy reply of the Commission—that there are many things that it has to do and that it has to take into account the different conditions in various Community States. I believe that that response is a slightly easy one and that we ought to ask whether, because the conditions in certain areas are so different a different approach is not needed. This may be an area better left to national Governments.
  This brings me to a point made by the Under-Secretary. Like him, I am concerned about these measures ever becoming mandatory. Harmonisation is very difficult in any area. Let me give one example. I do not want to be frivolous, because this is not a frivolous subject. Document PE 49.445 says on page 9, recommendation 16:
  "As regards the provision of domestic hot water in new buildings, the temperature of the hot water should not exceed 60".
  Let us reflect on that for a moment. There are many of us who shave in an old-fashioned way, not with electric razors. At 7 o'clock or 8 o'clock in the morning we want hot water to do our shaving. Some of us like hot water that is a little
  1190
  over 60 degrees. At 60 degrees it is a bit uncomfortable. Is the Commission really to say that at all times hot water should not exceed 60 degrees? What bothers me is that this is the kind of regulation that conflicts with common sense.
  Mr. Rost: It is 60 degrees Centigrade.
  Mr. Dalyell: I know.
  Mr. Forman: The hon. Gentleman could not put water of that temperature on his face.
  Mr. Dalyell: I think that 65 degrees Centigrade or 70 degrees Centigrade would be more like it.
  Mr. Neil Macfarlane: The hon. Member must have a thick skin.
  Mr. Dalyell: I thought that you, Mr. Deputy Speaker, knowing your shaving habits as I must do, would not care for 60 degrees. Anyhow, the Under-Secretary has great knowledge of these matters and will no doubt clear up my shaving difficulties.
  Dr. John A. Cunningham: I use an electric razor.
  Mr. Dalyell: I thought so. My hon. Friend is a technological man.
  Item 20 says:
  "Undertakings employing more than 100 persons are invited to appoint an energy manager to draw up and implement energy savings programmes and communicate the results obtained to the public bodies each year."
  If such an appointment is to be made in these firms, we ought to be clear about the job specification.
  I should like a British Government comment on what is contained on page 2 of the Commission document. It is said:
  "The estimated investment needed to implement such measures for the whole of the Community may be put at about 120 to 130,000 million e.u.a. for the planned period. It is estimated that this investment corresponds to some 300 to 350,000 jobs a year, and that the resulting direct or indirect creation of jobs amounts to some 700,000 jobs a year."
  I ask the Under-Secretary whether it is the view of the Government that this order of jobs could be claimed. Is it realistic? This is a major programme.
  The Under-Secretary raised the question of how projects should be selected and by whom. It is important to know

  1191
  the extent to which national Governments would be consulted and at what stage. Any consultation that did not take in national Governments at the earliest stage would be unrealistic. I take my hon. Friend's point that in this area we do not seem to be hampered by a lack of funds but that there is a problem of the control procedures on finance, which may be touched on in the ensuing debate on the budget.
  Since other hon. Members wish to speak I shall not go into the subject of the budget now. I shall simply say that the European Investment Bank will be reviewing its capital policies next year. There is something about which I am not clear. We all know that the Chancellor, like other Finance Ministers, is a formal governor of the European Investment Bank, and many of us have had talks with Sir Raymond Bell and other officials. The general question is whether the Government are satisfied that, if the European Investment Bank is to have more interest in providing funds—for example, for steel-dependent areas, though not necessarily in steel industry areas—we can be sure that its policy will be harmonised in some sensible way with the criteria and desires of national Governments. There is a problem here, especially if it is an issue of fostering long-term contracts.
  My general feeling is that there are other issues to which the Commission would do better to turn its collective mind. Instead of going into this matter of energy saving, is it not more important that there should be some European policy on the vexed question of refining capacity. I have seen my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), who is an Under-Secretary of State at the Scottish Office, in the Chamber recently. Many of my constituents work at Grangemouth. There is acute worry there because they are working at about 60 per cent. of capacity. If there are to be other refineries at Nigg, or elsewhere on the European mainland, what are we to say to the trade unions and managers at places like Grangemouth?
  Any excess energy that the Commission has might be better devoted to the question of refinery capacity policy rather than
  1192
  messing around with things that are possibly better done by national Governments. Secondly, I shall not go into the issue of JET, but it seems that the whole future process in this respect would he a much better area for Community activity than is encompassed in the documents we are now discussing.
  Thirdly, without suggesting that this is the debate in which to resurrect the issue of the Channel Tunnel, some of us would like to see a careful assessment of the energy-saving aspects of the project. Various assertions are made about the energy-saving potentialities of a Channel Tunnel. There ought to be some assessment, because otherwise we are arguing in the dark.
  Fourthly, I raise a recondite issue of which I have not given the Under-Secretary of State any warning. I am not sure that it lends itself to a quick answer in Parliament and therefore I ask him to write to me on it. I refer to what has come to be known as the Plombat affair. Other hon. Members have mentioned the safety of the carriage of nuclear materials. My hon. Friend the Under-Secretary of State can be said to represent Windscale in his constituency, and I know that he has given his mind to this issue.
  This is neither the time nor the occasion on which to go into the events of 1968. although one might ask how it is that Au Point, Der Speigel, the Sunday Times and
  a number of other serious newspapers and magazines have been able, in some detail and unchallenged, to go over the events relating to the ship that disappeared with 200 tons of uranium oxide, when the Commission has said time and again that it did not know what had happened. I put that as a side question.
  The question that bothers me much more, and which Governments now have to look at, is how it came about that in the respective States of the Community it apparently was not reported to senior Ministers that this event had happened. This raises a number of highly sensitive issues, such as what precisely Ministers are told and what they are not told. It is quite clear that Mr. Emilio Colombo, who was then the Prime Minister of Italy, was not told, in his capacity as a senior Italian Minister, anything about the events of the disappearance of the "Scheersberg" containing the uranium oxide It is also

  1193
  clear—I take it absolutely on trust because my right hon. Friend the Secretary of State said so to the Energy Committee in Paris—that in a previous incarnation, in 1968, he was told nothing about it, albeit that Britain was not then a member of the Community but was a member of Euratom.
  The question to which some of us really want an answer is why it is that the political heads of Departments were not told about a very sensitive and important issue. Uranium oxide is dangerous when it vanishes. One cannot say whether it found its way to Dimowa, but it is quite clear that people do not pinch these things just for fun. If it was important in 1968, it is all the more important in 1978, when there could be a theft of plutonium.
  What steps are being taken by the countries of Western Europe to make sure that never again can there be a repeat of the Plombat affair and that never again shall secret services, which know the facts, fail to report what has happened to the political heads of Departments or the political heads of Governments? It is intolerable that this information should be kept within the secret services without the responsible Ministers being told.
  My final question is of a very general nature, but I think it is legitimate. My hon. Friends have now had six months' experience, between January and June, of the presidency of the Council of Ministers. Some of us doubt more and more the effectiveness of this merry-go-round of having six months in the chair and then passing it to someone else. Is it really a very sensible way to carry on, particularly in regard to technical matters and the discussion of these highly complex and complicated problems?
  Although the presidency of the Council of Ministers of Foreign Affairs probably has to revolve, I ask the Government to reflect whether some other way could not be found for ensuring a more stable long-term presidency of the technical departments. If the Community is to be enlarged so that we have 12 member States, the presidency will then be for six months every six years. That does not seem to me to be a rational way of conducting European business.
  Mr. Deputy Speaker (Mr. Oscar Murton): I remind the House that this is a very short debate. I understand that only 30 minutes are left before the winding-up speeches are due to begin. It is in hon. Members' own hands.
  5.35 p.m.
  Mr. T. H. H. Skeet: The right hon. Member for Orkney and Shetland (Mr. Grimond) referred a few minutes ago to the plethora of paper which comes to us. I do not mind the quantity, provided that it is leading us in the right direction, but more often than not it leads us into diverse channels and we get into a labyrinth of problems and cannot find our way out.
  I shall concentrate on Document No. R/1417/77, which deals with energy. The picture has been portrayed in a Written Answer of 5th July 1977, at c. 527–8. It indicates which nations throughout Europe have what energy. It is rather instructive to note that Britain and Germany are favoured with coal. The reserves elsewhere are equivalent to only about six times Britain's annual production.
  Britain is also distinctly favoured with oil and has eight times the reserves of the rest of the European Community. The Netherlands and Britain are favoured with natural gas. British reserves alone are in excess of the combined reserves of all the Community countries, excluding the Netherlands.
  France is virtually the only beneficiary of uranium. Little has been located so far elsewhere in the EEC.
  This information leads to a second table, which is consequential. It appears in the Official Report of 30th June 1977, at c. 317–8. Who imports most? Obviously, it is those countries that have little energy of their own. Luxembourg and Denmark have to import 99 per cent. of their total energy requirements. Ireland imports 85 per cent. and Belgium 85 per cent. Then come the major countries of Western Europe—Italy, 79 per cent., France, 74 per cent., and Western Germany, 55 per cent.
  It is quite clear from these figures that the countries in Europe with a scarcity of energy—the documents before the

  1195
  House are trying to determine exactly where they stand—will go for distinctive policies of their own. It is not surprising that the French, having virtually no energy of their own, except a little gas and a little coal, should go for a big nuclear programme. That is perfectly right.
  Looking at the figures for overall energy demand in 1985, we find that the share of nuclear power for France is to be 18 per cent., compared with 10 per cent. for Western Germany, roughly 10·5 per cent. for Belgium, and only 5 per cent. for the United Kingdom. Obviously, we have to make absolutely certain that in the United Kingdom we are not on the wrong path in this respect.
  Among our Community partners France and Germany are opting for a nuclear future. Britain is marking time on its nuclear option, with several possible consequences, and I hope that the Government will weigh them up. What will he the price of electricity in the EEC of the 1980s? Owing to the relative cheapness of nuclear power, both France and Germany may have a competitive edge in exports, and this could he of serious consequence for the United Kingdom if we were to keep entirely to coal without wing ahead more on the nuclear front. It could result in our eventually becoming disfavoured on a cost basis.
  Britain has been lulled into a false sense of security by its energy options. This may mark an error due to ignoring the long lead times required to catch up should coal not fulfil its targets and alternative European sources should not measure up to expectations.
  I am of the belief that the alternative energy options available to us will contribute no more than 35 million to 40 million tons of coal equivalent, or 8 per cent. of our total needs, by 2000 AD. If coal were to let us down, and because of the long lead times required to get our nuclear stations going, we might find ourselves in a very difficult position.
  A third possible consequence is that Britain's oil may not turn out to be an entirely British reserve to be utilised according to our wishes. For its part BNOC has mortgaged a significant part of its potential production to support its recent loan. Ministers have not told us very much about that. When the energy
  1196
  crunch comes, it could indeed be regarded as a Community resource to which all of our European partners would have access provided they are prepared to pay a fair market price.
  The fourth point is that even in a United Kingdom dimension do the figures add up? I should like the Minister to consider the scenario for AD 2000. That is not very far away. Let us assume that the approximate energy demand of the United Kingdom in 1975—coal, oil, gas, hydro and nuclear—came to 320 million tons coal equivalent. if we look at the scenario for AD 2000 the Department has forecast an energy demand of 525 million tons coal equivalent. On many occasions the miners have told us that they will contribute 150 million tons. Oil will rise to 175 million tons. Gas will remain fairly stable at 60 million tons. Hydro or alternative sources work out at 35 million tons and nuclear works out at 50 million tons. That brings the total not to 525 million tons but to only 470 million tons. Anyone who says that the United Kingdom can do without a nuclear future is just plain daft.
  The hon. Member for Wrexham (Mr. Ellis), in an excellent speech, talked about the possibility of the fast breeder reactor. We are, of course, talking about the conservation of uranium. It should be remembered that if one ton of uranium goes into a thermal reactor it has a heat equivalent of 20,000 tons of coal. But if one ton goes into a fast breeder reactor, it has a heat equivalent of 2 million tons of coal. Therefore, if we could move to that stage it would be advantageous.
  Mr. Arthur Palmer: I sympathise with the hon. Gentleman's view about the need for a nuclear future. But he should not overlook Britain's contribution to the nuclear present. When the AGRs are fully in and when we build the two new thermal nuclear stations that are proposed, we shall probably be getting 25 per cent. of our energy from nuclear sources. That is as good as any European contribution.
  Mr. Skeet: I was talking about total energy, which works it out at about 5 per cent. I agree that with regard to electricity we are high up in the list but we have not been told what the next programme will be. I assume that an intermediate one will be AGRs. I hope

  1197
  that the Minister will keep his eye on the longer-term future owing to the long lead times and bring in the CFR 1, which is absolutely essential on the breeder front.
  I mention one other matter which is of essential importance. We are going through a period of temporary glut and the price stability may remain for at least a year, if not longer. But the prospects of the seventies will change materially in the eighties. The key to world demand rests on two States—Saudi Arabia and the United States—with the prospect of the USSR playing a demoniacal political game in the background.
  I would just mention one or two facts about this. President Carter has indicated what he wants to do. He wants to cut back American imports to 6 million barrels a day. In 1976, United States imports were 7·3 million barrels a day and the trend in the most recent publication indicates that United States imports will be 10 million barrels a day in 1980 and 11·8 million barrels a day in 1985. This will be serious for the Western world because if the American import bill goes up and if the production in the Western world, particularly in Saudi Arabia, does not keep pace with it, it could lead to a wild escalation of prices.
  Let us look at the other side of the question, the supply side. There is no incentive for Saudi Arabia to produce another barrel of oil, because it is sitting pretty as it is. Fortunately, it has acted as a very responsible nation up to date. The population is small. Its reserves of oil are vast, probably 177 billion barrels compared with only 17 billion barrels in the North Sea and 31 billion barrels in the United States. The reserve production ratio of Saudi Arabia is 49 years at current rates of extraction, declining to about 16 by 1990.
  Saudi Arabia has a small population, vast reserves and a balance of payments surplus. It could reduce production by 50 per cent. and still run a balance of payments surplus. It could thus stabilise output at a certain level without any detrimental effects on economic development, military commitments and aid programme. One has only to look at current production to find that Saudi Arabia is
  1198
  producing 9·3 million barrels a day. It has been indicated that this ceiling has been lifted temporarily from 8½million barrels a day to about 10 million barrels a day. We come to the rather interesting conclusion that with American imports going up very considerably, with the lack of success of the Carter programme, with the possibility of the Soviet Union entering the market to buy more oil and with the possibility of a ceiling being placed too low, this could mean a disaster for the West.
  Let us look at three major areas, the United States, Western Europe and Japan. Japan has to import more than 90 per cent. of its oil requirements. Oil consumption in Western Europe is 13·5 million barrels a day, of which imports amount to 11·6 million barrels. This is very heavy stuff. I draw a conclusion from this which was supported by the Workshop on Alternative Energy Strategies in the Financial Times on 17th May 1977. If Saudi Arabia decides to hold its production at 9 million barrels a day, there could be an oil crisis in the early 1980s and prices will escalate. If Saudi Arabia ceilings at 20 million barrels a day, the crisis will be deferred until 1990.
  I would have thought that the Commission would be wiser to concentrate on the major issues which must determine the actions of Government. It should say that the general philosophy is not ideal for all the countries of Western Europe collectively, but individually they must have their own particular allowance. Personally I feel that in this country the nuclear future is essential, exactly the same as has been recognised in the United States which has no shortage of oil capacity or natural gas and in Iran which is one of the major suppliers to the United Kingdom. Many countries in the Western world are going nuclear as well.
  But when the crunch comes we in the United Kingdom will not be spared. We are members of the Community of Nine and we shall be asked to make our contribution from the supplies that we have in exactly the same way as the Dutch have been asked to contribute some of their natural gas. If that be the case, I hope that the Government's response will point us in the right direction to a solution that will be favourably received.

  1199
  If, on the other hand, it affords no guidance but simply gives us a history, it may be useful for this House to inform our European partners that it is to their discredit and certainly to ours.
  Mr. Forman: Is not my hon. Friend being a little unfair to the European Commission in that the whole purpose of one of the documents before us—R/1292/77 on energy savings from the modernisation of existing buildings in the Community —is to make what it is claimed would be a 5 per cent. reduction in the total final consumption of energy as a contribution towards the 15 per cent. saving which it is hoped to see in the Community by 1985? This is a very good example of a measure—
  Mr. Deputy Speaker: Order. The hon. Member for Carshalton (Mr. Forman) must not make a speech.
  Mr. Skeet: When we consider what the energy demand will be once Western Europe is through the recession, it is clear that energy savings alone will not do it. It is true that they will make a contribution. But the Minister made a speech the other day in which he asked whether we should look to savings or to new sources of energy. I suggest that he has enough coal and nuclear energy to which he must look first. Savings will not do it and if he rests on savings he will be let down.
  But I listened to your advice, Mr. Deputy Speaker, and I resume my seat on that note because I know that other hon. Members wish to speak in this debate.
  5.51 p.m.
  Mr. Peter Hardy: I am growing accustomed to trying to make brief speeches on energy matters immediately after contributions by the hon. Member for Bedford (Mr. Skeet). This is not the first time in the past few years that I have been called immediately after him, especially when he has been in the mood to provide us with a surfeit of information. On this occasion, I agree with one of his arguments—
  Mr. Skeet: Good.
  Mr. Hardy: It is relatively rare for me to do so. But he was right to point out that, if American oil consumption is not
  1200
  restrained or if its sources do not vary, America and the other oil-consuming nations will face serious problems in the 1980s. No one will dispute that, and most people will welcome the view advocated by the hon. Member for Bedford, which some of us have been expressing for the past five or seven years.
  I wish to speak principally on matters which are perhaps of more mundane interest. I also want to direct one or two questions to the Minister, although I must say that I welcomed the speech by my hon. Friend the Member for Wrexham (Mr. Ellis), and that I go some way along the road to accepting that we cannot disregard the development and growing contribution of nuclear technology. However, the hon. Member for Bedford seemed very conveniently to ignore the grave anxiety, public disquiet and sometimes public disorder associated with nuclear energy. That has given some politicians outside Britain cause for hesitation.
  I am especially concerned to ask the Minister whether we are quite sure that Britain is seizing the opportunities for financial support which our membership of the Common Market offers. I make no comment about the merits or demerits of our being in the Community. But, so long as we are members, we should take advantage of all that is going. It would be useful if my hon. Friend could give some information to assure us that the flow of money is favourable in this area.
  In that regard, I hope that my hon. Friend will tell us whether the Drax proposal will qualify for some of the support from EEC funds. This should be said. If it does, I hope that it is welcomed in Yorkshire.
  There is another area where I believe there is available support. It is that of coking plants. I am told that grants are available for investmennt in coking plants, provided that they are not linked directly to coal mines. If that is a qualification, it is an absurd one which should be challenged.
  We are very anxious about this in South Yorkshire. There is one coking plant which needs to be replaced. It is served by three collieries. In its existing form it causes a great deal of increasingly unacceptable pollution. National Smokeless Fuels is willing to replace it, but it

  1201
  may be discouraged if there is this restricting limitation on the support available. I hope that my hon. Friend will recognise that this is a serious matter in the area and that it is important to three of our collieries. I hope that he will be able to reassure us about it—if not tonight, in the very near future. It is necessary in my area from the point of view of the Government being open and clearly willing to inform the public.
  It is because of my concern about the need for open Government that I refer to document R/1292/77. We have already heard about the need for conservation. I am not sure that the Government have been adequately informative about the need for conservation and the means whereby the ordinary citizen can contribute.
  For example, the Government express doubts about the cost effectiveness of double glazing and perhaps of cavity wall insulation, too. The Minister should realise that scores of thousands of people —perhaps millions—are interested. They lack the means of informing themselves properly. At present the detailed information which they could well do with is not always available. Very often, this means that they are at the mercy of the commercial undertakings. The commercial undertakings are providing a valuable service, but the Department should be very much more informative and should give reliable advice so that people can work out for themselves whether it is worth their while going in for these home improvements.
  Dr. John A. Cunningham: My hon. Friend is being a little less than fair. The Department of Energy produces a wide range of technical information for the general public, especially in the domestic sector. I mention one of the great number of documents which we have produced which is on loft insulation. Another is called "Compare your home heating costs", in which we did a comprehensive and objective review for the first time and made it available to the public. It was an outstanding success and 500,000 copies were taken up. I do not think that his charge that we have ignored the real need to provide the public with information stands examination.
  Mr. Hardy: I am well aware that my hon. Friend personally has made a con-
  1202
  siderable contribution in this area. However, the explanatory document contains the sentence,
  "There are also doubts about the cost effectiveness of the measures proposed, particularly double glazing."
  I accept that that may not be entirely applicable to the domestic market. But the Department should continue to pour out advice. A great many subjects receive a bigger tonnage of newsprint than valuable advice of that kind which can be provided by the Department.
  If the Department's studies are soon completed, I hope that it will allow the extension of housing improvement grants to the means by which energy can be conserved. That would be highly desirable, as well as helpful in the creation of employment.
  We need basically also to question the Community about its attitude to coal. I am aware that it is giving a great deal of support to the means by which we can produce more coal or maintain our current levels of production. But the Community is in danger of encouraging people to produce coal and then not providing the same degree of encouragement and support in order that they consume it. That may mean that the existing high stocks of coal do not disappear at the rate which is desirable in the interests of the Community.
  We have now only two major coal-producing countries in the Community—West Germany and ourselves. But, although the coal industry of Europe has shrunk drastically in the past 10 or 15 years, we are in danger of seeing excessive production from the Community's pits. That would not be desirable. I accept that cheaper coal is available in other parts of the world but I would hate to see Europe a captive of a strip mine prison.
  We need to have a capacity within Europe to survive the price increases that we may face one day from producers in other continents. It is essential that the National Coal Board should enter or seek to enter more vigorously the coal market of the EEC. The classic reply to suggestions of this kind is that the West Germans, who have a substantial export market within the Community, are exporting prime coking coal and we are not in a position to compete to that extent. But not all the coal they are

  1203
  exporting to ourselves and other member States is prime coking coal, and I believe that we should compete rather more vigorously. That would enable us to reduce our stocks of coal.
  Conservatives have been very critical of the miners and the mining industry in Britain over the last few years. They claim that the miners have not maintained the growth in productivity that they have proudly achieved virtually since nationalisation. But the miners know that there are huge stocks of coal, and as long as they know that they are not likely to be quite so keen to mine a little more and make the stocks larger. The existence of the stocks has been a profound disincentive.
  Nuclear power may be a cheap alternative but it would be a grave mistake to think that it can make up the difference of the excessive imports of oil or coal. It is very stupid to believe that we could allow increased natural gas consumption or nuclear power to take up the slack if there were growth in Europe in the next 10 years. That would be a prodigal act. It would be prodigal on the ground that reserves of natural gas are much too short and the existing proposals for investment in termal reactors, of whatever kind, could be outrageously expensive.
  It is only a couple of years since we had a debate on an energy document front Europe that suggested such a mammoth nuclear investment programme that there would have been very little money left for anything else. Many of us drew the attention of the Government to the fact that Europe had to invest in other things as well as nuclear power. I am not arguing against nuclear power, but I want to maintain a balance in the energy field. I want to see proper conservation combined with an adequate desire and determination to ensure that we maintain the proper balance of energy supplies.
  6.4 p.m.
  Mr. John Cockcroft: Listening to this debate I am struck by the uncertainty of economic forecasting in general and in the fuel industries in particular. Over the last two or three decades one is reminded how very often we have been told by the pundits that we have too much fuel, then a few years later we are
  1204
  told we have too little. So often the unexpected happens in history.
  No one would have guessed in the early thirties—and my family has not been unconnected with this—that nuclear energy would result from the Second World War and the atom bomb. No one could have guessed 10 years or 15 years ago that the advent of North Sea oil and gas would have transformed the economic prospects of this country.
  Although I was and remain a dedicated European, I am not sure that it is right to try to have a Community policy on a subject as esoteric and uncertain as the one we are developing—the need to conserve existing reserves. We can assume that these reserves are finite, but new developments, such as the discovery of new resources, could happen so easily.
  These initiatives calling for self-sufficiency, coming partly from America, which is self-sufficient, in theory are commendable, and, as I have said, Britain's prospects could be transformed in the long run. But these directives and recommendations from the European Commission concerning fuel, and in the wider context, raise considerable problems for national Governments. Some of these subjects would be better left to individual member States.
  These documents are unnecessarily complex, very difficult to understand and there is not sufficient debate on them in the House. Often our debates on these matters take place late at night with only a handful of hon. Members present, although I must admit that this is not the case today. But the fuel question needs a great deal of thought and discussion and, if there is to be an EEC policy on this matter, we should be sunre that we do not rush into it.
  I was a member of the Select Committee on the Nationalised Industries which looked at British Rail. One of the arguments put forward for electrification Schemes—including those for Bedford, Liverpool Street and places further north, Crewe to Edinburgh via Weaver Junction, affecting my constituents in Nantwich—was that these wee good on the grounds of pollution and the saving of imported fuels. Hon. Members on the Committee were swayed by these arguments, but maybe in 10 years' time the

  1205
  same Committee will have a different recommendation, because fashions change and very few things last for ever.
  6.8 p.m.
  Mr. Peter Rost: We welcome this debate today. I am only sorry that it is so short that we have not had the benefit of contributions from a number of hon. Members who might otherwise have spoken. I am sorry there was not time to hear from my hon. Friend the Member for Carshalton (Mr. Forman), who has made a special study of energy conservation matters, and my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn), who has contributed a great deal to deliberations on EEC energy policy on behalf of the British delegation. Unfortunately, this is one of the pressures under which we have to operate in such a frustrating manner in this House.
  Although this has been a short debate it has been useful. These documents are regarded as an important initiative from the EEC, which is now showing that it has teeth, and is prepared to propose policies on a wide range of energy conservation matters in the hope that member countries will take them into account.
  It is particularly significant that the documents we are discussing tonight show that the Community is prepared to appreciate the genuine importance of the energy conservation problems facing us —the need to try to reduce import dependence and the need to provide the incentive for longer term self-sufficiency within Europe. By stimulating substitution of energy in the longer term a most useful effort can and must be made to supplement our energy availability by using what we have less wastefully. I regard as realistic, attainable and desirable the Community target of a 15 per cent. reduction in energy consumption by 1985. I hope that the Under-Secretary will give the same commitment on behalf of this country—that the Government are also committed to a genuine attempt to achieve that target.
  My hon. Friend the Member for Bedford (Mr. Skeet), in, as always, a valuable and interesting speech, rightly referred to the long lead times in energy policy which will inevitably create problems in filling the gap, particularly when the oil begins to become scarcer. The energy
  1206
  policy that the Community must develop will have to include a greater acceptance of less wasteful use. That means accepting that the provision of our energy in future will absorb a higher proportion in real terms of our gross domestic product than we have been used to in the past. Therefore, value for money is vital.
  Economic pricing of energy will provide the most important stimulus—the right hon. Member for Orkney and Shetland (Mr. Grimond), in a valuable speech, emphasised that point—but realistic pricing will not be enough. We also need incentives or, at least, the removal of existing disincentives. Conservation should not have to mean doing without. It should not mean hardship or a restraint on economic growth. Quite the opposite. Investment in more rational use of energy can benefit the standard of living and can be cost-effective by leading to more efficient industrial processes and far less pollution. The policy of providing better value for money can often be achieved through investing in energy conservation rather than by concentrating our resources on energy investment and the provision of additional supplies. It is a pity that we have not been set a better example so far in this country.
  I hope that the Under-Secretary will not take my remarks personally. In the Select Committee on Science and Technology, of which I am also a member, he has made valuable contributions to this policy. Unfortunately, since he has taken up his present position, although his determination may remain, he seems to have found it difficult to persuade his colleagues that a national energy policy should have a higher priority. It has not had that priority yet.
  It is a pity that there is still too much complacency in the Government about various aspects of policy outlined in these documents. I regard it as a sad reflection on the Government's policy over the last three years that the EEC has to give us guidelines and should be able to show that we are well down the league table in implementing these policies.
  One table in these documents compares energy conservation in this country with that in the Community, and shows that in two important areas we are doing very badly. The first is thermal insulation and better heating

  1207
  systems in domestic buildings. That is particularly serious because we are so far behind the rest of the Community in any case. Second, we are bottom of the European league in the application of combined heat and power in industry and the public utilities.
  These are serious inadequacies. Table A in the Document 1284 shows that only we and Italy have so far not provided incentives for higher standards of insulation for existing buildings—no tax reliefs or grants. The Minister knows that we have a long way to go. We already have lower standards than the rest of the Community in this area.
  Dr. John A. Cunningham: I hope that the hon. Gentleman will be a little more specific. He knows that in the industrial sector we give 100 per cent. tax allowances for those who insulate existing buildings and that finance is available in the public housing sector for the insulation of council houses under the Job Creation Programme. It is Tory local authorities which will not get on with the job.
  Mr. Rost: The Minister is fighting a rearguard action in trying to defend an indefensible position. I specified domestic buildings. I am aware that when it comes to industrial buildings, like the rest of the Community, we provide the necessary tax incentives.
  This is a serious matter which is causing hardship to those who find it increasingly difficult to pay heating bills and are given no incentive to insulate. The paper which recommends savings on existing buildings says that not enough has yet been done. It does not refer to this country in particular, but it makes it clear that only we and Italy are not providing incentives.
  It is all very well for the Government to say that they are not sure whether this would be cost-effective. Plenty of reports prove that it would. The Building Research Establishment report has confirmed it. The Select Committee on Science and Technology in its recommendations presented to the House two years ago, and still not debated, has confirmed that just such investment would be cost-effective.
  If the Government are serious about an energy conservation programme, why
  1208
  is VAT still applied to do-it-yourself insulation materials? Why is there not a comprehensive improvement scheme for roof and wall insulation? Why are there no tax allowances for domestic expenditure on insulation and heating systems, as the Community recommends and as other countries have. Why are building regulations still of too low a standard? Why are new buildings being constructed with inadequate insulation standards?
  If the Government are using as a pretext the excuse that this would involve public expenditure, it is quite clear that they must look at the priorities. Only this afternoon we had an announcement that the Government will spend £600 million to build a power station that we do not need and that will burn fuel at 35 per cent. thermal efficiency. The money for that, it could be argued, could be employed in other directions that would produce a better return in energy. It could pay for the insulation of 600.000 homes for old-age pensioners or provide a number of fluidised-bed combustion combined heat and power stations. There are all sorts of ways in which the priorities could be thought out again.
  In this country we are also lagging behind in the production of combined heat and power. It has been recognised world-wide that combined heat and power electricity generation achieves by far the greatest fuel savings. We are all aware of the problem, but why is this happening elsewhere and not here? Why is the United Kingdom, as the Plowden Committee pointed out and as statistics show, bottom of the European league in electrical power generation thermal efficiency? Why is the amount of combined heat and power produced in our electricity generating system so much lower than that in other European countries? Why is combined heat and power generation developing more rapidly elsewhere?
  The EEC paper containing the recommendations and proposals that EEC member States should try to do more to promote more rational use of energy by combined heat and power generation is the most important of these documents. I hope that the Minister will tell us whether he agrees that the recommendations are most important. The Government should try to remove the legal, administrative and price barriers that inhibit combined heat and power generation development.

  1209
  That is what is really holding us up. The Government should do more to promote combined heat and power production.
  We know that the, electricity industry is unenthusiastic, but that is not surprising because it has now 30 per cent. to 40 per cent. over-capacity. Therefore, the electricity industry is not keen to see industry generally generating more of its own power. This is not the right approach if we are to use our energy more rationally. We must take a serious look at this and catch up with what is happening elsewhere.
  Mr. Palmer: Does the hon. Gentleman agree that the real difficulty is that the electricity authorities and the generating boards have a statutory duty, first and foremost, to produce cheap electricity and that no Government have been prepared to change that?
  Mr. Rost: I am well aware of that, and that is exactly what I mean when I say that statutory and legal restraints must be removed.
  One could go into these important papers and their recommendations in further detail. Unfortunately, we have no time to delve into them tonight. However, there are a number of questions that I want to put to the Minister. We have had three years of complacency from this Government, with some action but a lot more talk. The EEC is showing us that we are not as good as we thought we were in terms of our policies on energy conservation.
  Are the Government committed to the EEC objective of a 15 per cent. saving in energy by more rational energy use by 1985? If so, and if the Government welcome these initiatives, are they prepared to outline constructive programmes for action as recommended in these documents? Is the Secretary of State prepared to suppress his anti-EEC obsession enough to co-operate with the EEC and to implement more rational energy use policies? Even more important, are the Government prepared to give a positive lead to the Community instead of dragging their feet on these proposals?
  We have much good will to repair in the EEC and the fanatical prejudice of Ministers against anything that comes out of the Community does not help to maintain good will. The Minister should
  1210
  answer clearly and say that he and the Government are now committed to playing their part in the Community proposals for a more rational use of energy.
  Even a Government now struggling in their last dying days and gasping to keep themselves in office for a little while longer should do at least one thing. The least that they can do for the British people and our Community partners is to commit themselves to a future energy programme somewhat more enthusiastically, to show a little less procrastination and a little more positive action. Otherwise the Government and the Secretary of State will deservedly have as their epitaph "three wasted years of wasted energy", and future generations will pay for that dearly.
  6.28 p.m.
  The Under-Secretary of State for Energy (Mr. Alex Eadie): I congratulate the hon. Member for Derbyshire, South-East (Mr. Rost) on speaking for the first time from the Opposition Front Bench. However, he was toiling a little in speaking about the cost of energy, because I remember that during the Standing Committee on the Coal Industry Bill his main criticism was that gas was too cheap, and he argued on that basis. I do not think that the hon. Gentleman carried the majority of the House or even most of his hon. Friends with him. Nevertheless, I congratulate the hon. Gentleman, although I wish that he had been less political and had concentrated on the issue of conservation, to which we all know he has devoted much work and time and to which he has made contributions in the House.
  I am sure that hon. Members will agree that we have had a worthwhile and interesting debate this afternoon. We have covered a wide area of important energy issues. This is not surprising, given the range of subjects in the five Commission documents—from energy conservation, which must be one of the key elements, along with nuclear energy and coal in our own total energy strategy, to far-reaching proposals by the Commission for new loans in the energy sector. These latter are just one part of the larger initiative for new Commission loan operations which are to be considered by EEC Finance Ministers.

  1211
  I should like to emphasise once again the importance which the Government attach to energy conservation and the efficient use of energy. We are pursuing these twin aims effectively here in the United Kingdom, with our partner States of the EEC, and also in the wider forum of the International Energy Agency. The United Kingdom has made and will continue to make a positive contribution to international co-operation in these fields. We welcome the further impetus to the Community conservation programme which is proposed in its latest documents.
  I should also like to say a few words about the document on investment development and protection. The Commission indicates that investment in the energy sector over the next 10 years could well represent about as much as a quarter of all industrial investment in the Community. Clearly, the questions dealt with in the document are important. We find the Commission's paper a useful basis for consideration, but a lot of further work needs to be done on the paper that the Commission has described as
  "first reflections", and I repeat that the Government have reached no firm conclusions on them.
  One of the threads running through the debate was whether the documents should be mandatory or permissive. The significance of the debate is that we wanted to listen to what hon. Members had to say, because their views on the documents are important. It is important that we get hon. Members' views on complicated issues such as conservation, and a number of approaches have been articulated in the debate. I shall try to take up the most important issues and I hope that no hon. Member will consider it a discourtesy if I do not refer to some aspects of his speech.
  A reference has been made to President Carter's energy message. We must get this in perspective. President Carter presented his proposals for energy policy to the Unted States Congress on 20th April. Its main aims are to halve the annual increase in energy demand by 1985 from 4 to 5 per cent. to less than 2 per cent. per annum and to reduce oil imports from nearly 10 million barrels a day to nearly 6 million barrels a day by 1985. The hon. Member for Bedford
  1212
  (Mr. Skeet) mentioned this. The proposals are of two complementary kinds —conservation and supply. In general, the proposals for conservation are more positive and detailed than are those for expanding production and developing resources.
  President Carter underlined the considerable importance that he attaches to conservation during the Heads of Government meeting on 7th and 8th May. America is a democracy and a speech is no more than a speech. Giving legislative effect to the President's proposals is another matter.
  The hon. Member for Bridgwater (Mr. King) knows that we went over this matter thoroughly in our discussions on the Coal Industry Bill recently. The hon. Member for Ross and Cromarty (Mr. Gray) made the point that I am making. The speech has great significance, but we shall have to await its legislative implementation.
  Mr. Tom Ellis: This is the point that I was making. It is one thing for the President to try to persuade Western European countries not to develop a fast breeder reactor, assuring them of supplies of uranium, but it would be a different matter if Congress prevented him from supplying uranium.
  Mr. Eadie: My hon. Friend was one of those who dealt with this question. Some people have given the impression that the President's proposals have been given legislative effect. We welcome the proposals, but they are only proposals. I shall come to the fast breeder reactor later. This subject played an important part in the debate, though it is not mentioned in detail in the documents.
  The big question now is how far President Carter's proposals can be expected to survive the United States legislative process. He mounted a massive campaign to sell his ideas both to the American public and to Congress, but they have already met substantial opposition. For instance, the proposals to tax gasoline would not, even if fully implemented, bring the price up to European levels. Even so, the proposals seem unlikely to survive scrutiny by Congress. Proposals to give rebates to purchasers of small cars have also met opposition in committee. On the other hand, the proposals to increase prices of crude oil to roughly world levels seem more likely to survive.

  1213
  I could deal with the President's proposals in more detail, but we must be realistic and consider the position as it is.
  I am grateful to the hon. Member for Bridgwater for referring to nuclear power, because this gives me the opportunity to make a correction on behalf of my right hon. Friend the Minister of State who, in a debate last month, was asked whether exercise of the return of waste option under the proposed Japanese reprocessing contract would lead to the transport of highly active waste in liquid form. I can tell the House that I am advised that, under the proposed contracts BNFL has the option to return any waste in a form suitable for safe transportation. This would not lead to its transport in liquid form.
  The hon. Member for Bridgwater also asked about the ECSC loans—not grants —of up to £53 million that were announced recently. These are to be made available to the NCB in tranches and related to specific projects. It is not possible yet to say which projects are to be supported.
  The right hon. Member for Orkney and Shetland (Mr. Grimond) referred to energy conservation and seemed to suggest that price levels would have a greater impact than conservation policies. Not all hon. Members share this view and to pursue solely price policies would be an excuse to do nothing about conservation.
  The right hon. Gentleman said that there had to be conservation policies, and, with other hon. Members, said that we should not be tied to a national identity and specific energy conservation policies or directives but we should have an overall policy or a European policy that applied to every country with the conditions and traditions that every country considered appropriate.
  The right hon. Gentleman mentioned gas flaring. The object of our gas flaring policy is to ensure, by means of the consents required under licence, that all possible measures are taken to eliminate or to minimise the wastage of associated gas by flaring. I know that the right hon. Gentleman is very knowledgeable about this subject in the sense that he has a near interest in it.
  This is the only tenable and sensible policy that we can and should adopt
  1214
  against a background of world shortage of fuel resources. Each application for consent to flare is considered in detail and on its merits. But long-term consents are being issued only in cases where the amounts of gas are too small to justify delivery on shore or any other practical means of utilisation.
  Consents for the shorter term may be issued in certain circumstances, for example, until the gas transmission facilities are completed. But this is a detailed matter and I should like to write to the hon. Member about it.
  I told my hon. Friend the Member for Wrexham (Mr. Ellis) that I should like to come back to some of his comments about the fast reactor and President Carter. The hon. Gentleman asked what was the policy of the United Kingdom. I have said in the House before that we are considering the next stage in the development of the fast reactor—whether to have a full-scale demonstration reactor. We are conducting a thorough review of policy, taking into account the prospects for international collaboration as well as the issues raised in the Report of the Royal Commission on Environmental Pollution and by President Carter's recent statement.
  No decision has been reached. It is within the recollection of the House that the recently published White Paper setting out our acceptance of the bulk of the recommendations of the Royal Commission included recognition of the importance of its proposal that there should be a special procedure ensuring full public consultation on major questions of nuclear development. We are considering the best way of achieving that.
  My hon. Friend also commented on the statement by President Carter. President Carter made a major statement on nuclear policy on 7th April this year. One of the main features of the statement was a decision to restructure the United States breeder reactor programme to give greater priority to alternative designs of the breeder and to defer the date when breeder reactors are put into commercial use in the United States.
  I understand that President Carter's proposals are currently being considered by Congress and that the outcome of its deliberations is unclear. But there are two comments that I want to make in

  1215
  response to my hon. Friend. First, despite the cut-back in the American programme, the United States Government still intend to spend an enormous sum of money—about $500 million—on the fast reactor this year. This is a much greater amount than we are spending in this country. Secondly, unlike the United States, we do not enjoy large indigenous reserves of depleted uranium. Our circumstances are rather different. We must take this into account in our policy review.
  I was also asked about JET. The Prime Minister told the House on 30th June that the European Council had decided to remit the question of choice of the site of JET to Foreign Ministers with a view to reaching a final conclusion before the end of July. When the Foreign Ministers meet on 26th July my right hon. Friend intends to continue to press the claim for Culham. I mention this issue because it was raised by my hon. Friend the Member for West Lothian (Mr. Dalyell). I shall write to him about the three other specific points that he raised. In the course of the debate—
  It being two and a half hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to the Order of the House this day.
  Question agreed to.
  Resolved,
  That this House takes note of Commission Documents Nos. R/1284/77, R/1292/77, R/1294/77, R/1325/77 and R/1417/77 on Energy.

  EUROPEAN COMMUNITY (BUDGET)
  6.46 p.m.
  The Chief Secretary to the Treasury (Mr. Joel Barnett): I beg to move,
  That this House takes note of Commission Document No. R/1541/77 relating to the EEC 1978 Preliminary Draft General Budget, together with R/1013/77, R/851/77, R/1226/77, R/480/77 and R/848/77.
  The documents are fairly modest in size. I do not propose to read through them all this evening unless I am pressed. I thank the Scrutiny Committee for its report and for the way in which it received the evidence which I gave to it two weeks ago. I propose briefly to concentrate on the preliminary draft budget, which is summarised in Volume 7.
  I shall say a word, first, about the timetable which was referred to by the Scrutiny Committee in its report and by me in my evidence to the Committee. There are advantages and disadvantages in bringing forward the timetable—in other words, in having the preliminary draft budget earlier in the year than had previously been the case The advantage is that the Scrutiny Committee and the House then have an opportunity to consider it before I or any other Minister has to go to Brussels to the Budget Council. In this case it is this coming Wednesday that I shall be attending the Council of Ministers meeting on the budget. It is a considerable advantage to allow the House an opportunity to discuss the budget and put forward suggestions on the line that the Government should take.
  On the other hand, one is bound to recognise that there are disadvantages in that estimates are much further away from the year in question. In the case of agriculture, for example, it is then necessary for a rectifying letter to be sent by the Commission, probably in about September or October of this year. Nevertheless, I agree with the Scrutiny Committee's report that the advantages outweigh the disadvantages. It is important that the House and the Scrutiny Committee should have the opportunity to consider the matter, and I hope that hon. Members will consider it helpful, in spite of the disadvantages which I have described.
  Mr. John Roper: My right hon. Friend was referring only to Volume 7 which deals with the Commision's budget. Will there be another opportunity for the House to debate the Parliament's budget, particularly as next year we may assume that, being directly elected, it may wish to pay its Members' salaries?
  Mr. Barnett: As my hon. Friend knows, I am happy to discuss almost anything at any time. It is not for me to say what should be discussed in this brief debate. I hope that it will be possible for the House to have an opportunity of discussing other aspects of the Community budget.
  Mr. Neil Marten: The explanatory memorandum with which we have been issued specifically refers to the budget for the European Parliament for 1977–78. If I am able to catch the eye of Mr. Deputy Speaker, I shall certainly refer to that matter.
  Mr. Barnett: I should not like to prevent the hon. Gentleman from speaking about any subject under the sun. That tends to be discussed in the European budget as well. I think that it almost came into the last debate on energy. If I am allowed to reply to the debate, I shall deal with the points that hon. Members intend to raise in relation to the Parliament's budget. The main issues certainly seem to be the questions of the own resources system, the unit of account and the rôles of the Parliament and the Council.
  Perhaps I can deal briefly first with the own resources system. It will apply to the original six members from 1st January 1978. However, the United Kingdom and the other two new members are still operating under the transitional arrangements of the Treaty of Accession and we do not come fully under the own resources system until January 1980. Included witht the own-resources system would be value added tax with up to a maximum of 1 per cent. on a harmonised base, which has been agreed in the sixth directive, although reservations have been entered by both the Belgian and Danish Governments.
  I turn to the problem area, which I hope will not develop into too much of a problem, concerning the unit of
  1218
  account. The preliminary draft budget is presented by the Commission in European units of account. Budgets were previously based on budget units of account which were in turn based on the last declared pre-Smithsonian parity on a gold base. Now, I think sensibly, but with one reservation which I shall express in a moment—
  Mrs. Gwyneth Dunwoody: I should hope so.
  Mr. Barnett: I can tell my hon. Friend that it is a very strong reservation. The unit of account is now based on the value of a basket of Community currencies. It will be clear to the House just what that means from day to day within the Community.
  I agreed at a Budget Council meeting originally that I would be prepared for this country to accept a European unit of account for 1978 and 1979 subject to the very strong reservation that the interpretation of Article 131 of the Treaty of Accession should be such as to ensure that movement towards such a unit of account would not involve this country in any additional expenditure.
  Mrs. Dunwoody: I apologise for interrupting my right hon. Friend so soon, but I take it that he will be dealing with the glib way in which many people—certainly those in the Press—are seeking to suggest that the difference between the ordinary unit of account and the European unit of account can be absorbed without difficulty. My right hon. Friend's remarks seem to indicate that that is not the case for the United Kingdom.
  Mr. Barnett: I have this strong reservation on the move to the European unit of account by the United Kingdom because the whole purpose of the Treaty of Accession was to smooth the path until we came under the own-resources system. I am happy to note that the Commission has agreed with our interpretation of Article 131. It is fortunate that that is so, because if we were simply to accept the view of some other member States about Article 131 and the move to the new unit of account it could cost this country up to about £500 million gross over the two years in question. That is precisely why I have expressed such a strong reservation. We do not accept

  1219
  such a proposition. I hope that that approach will be acceptable to the House.
  I come now to the rôle of the Parliament in relation to the rôle of the Council of Ministers. There are a number of issues on which differences of opinion exist between the European Parliament and the Council, but two are closely related. They are the most important and they concern the question of commitment and payment appropriations, and the maximum rate for them. The Commission has proposed an extension of the system of commitment and payment appropriations, and this has been welcomed by the Scrutiny Committee as a sensible move. It is a sensible move in my view because it gives a clear indication of the expenditure in a given year rather than including in the Budget large sums of money which are unlikely to be spent in that particular year. Basically, therefore, I agree with the move to a greater use of commitment and payment appropriations.
  The Council, however, has concluded that the application of separate payment and commitment appropriations should be as laid down in the financial regulation, but the European Parliament wants the matter to be decided in the context of the budget. Let me explain briefly what the consequences of that would be. At the moment, the matter is unresolved between the Council and the European Parliament. The difference relates to the problem of the maximum rate which limits any increases in non-obligatory expenditure in the Community—that is, largely expenditure outside agricultural expenditure.
  The Commission and the Council agree that the maximum rate should apply to both commitment and payment appropriations, but the Parliament wants it to apply only to payment appropriations. If the Parliament were to have its way, that could mean that it would be able to write very large sums of money into the budget for commitment appropriations, which would then commit the Council in the future to large sums of payment appropriations. I should not like to provide for that kind of situation. Like the rest of the Council and the Commission, I would prefer that the maximum rate, which is designed specifically to limit
  1220
  increases in expenditure on the non-obligatory side of the budget, should apply to both commitment and payment appropriations. That is the line I shall be taking at the Budget Council meeting on Wednesday.
  Mr. Tam Dalyell: Will my right hon. Friend say whether that is the unanimous opinion of the Council?
  Mr. Barnett: My understanding is that it is the general opinion of the Council. I know of no member State that agrees with the Parliament on this issue.
  Mr. Marten: The right hon. Gentleman keeps referring to "the Parliament". If he could refer to "the Assembly" nstead, that would distinguish the body in Europe from our Parliament here. We want to be quite clear which organisation we are talking about.
  Mr. Barnett: I should be astonished if the hon. Member for Banbury (Mr. Marten) was not aware of the organisation of which I am speaking. I understand his point, but I think he knows which Parliament I was talking about.
  I turn, therefore, to the size of the budget. It is the preliminary draft budget, not the final outcome of what will be the budget in 1978. The Commission proposes a budget of 11,850 million European units of account.
  For the reasons I gave in evidence to the Scrutiny Committee, it is difficult to make a straight comparison with 1977. First, it is not a comparison of like with like. We are talking about a Commission proposal whereas there is a need to compare outturn with outturn or, at least, what the eventual budget turns out to be. Secondly, this is a budget proposal whereas our White Paper is based on estimated expenditure. That difference is very important from our point of view. A budget proposal in the European sense means that it does not necessarily follow that that amount of money will be the amount spent in the year. It means that it will overlap years. Therefore, in that context too there is not a fair comparison.
  Many items of non-obligatory expenditure—that is, non-agricultural expenditure —have not been agreed as policy. For example the Regional Fund, which I gather is to be debated in the next debate,

  1221
  is still under review within the Community but the Commission has put in an estimate of expenditure for next year. It has estimated that there will be a large increase in Regional Fund expenditure when clearly we do not know at this stage what will be the expenditure within the European budget on the Regional Fund for next year.
  That applies to a number of other areas of the budget. It stems in a large measure from the difference of approach between the Council and the Commission. The Commission is in favour of putting items into the budget even though there is no agreed policy, on the assumption that there will eventually be an agreed policy and that an allocation will need to be made. The Council believes, as I certainly believe, that we should not allocate token funds of that sort—in this instance they are not so much token funds—to the budget when there is no policy for those funds.
  For all those reasons—not least because in the major part of the budget, which is the obligatory expenditure on the guarantee section of the agricultural expenditure, there is much uncertainty—we are dealing with estimates rather than actual policy. It is not reasonable to make a direct comparison with previous years. We are making estimates in a provisional draft budget. On that basis, bearing in mind all the qualifications and provided that we have, as I believe we should, the correct interpretation of Article 131, our approximate gross contribution would be about £1,100 million. Against that there are receipts, which, like expenditure, are difficult to estimate in these years. Provisionally the receipts might be about £400 million to £500 million, on top of which there would be the benefit from monetary compensatory adjustments of about £300 million.
  Mr. Dalyell: Is it the unanimous view of the Council that it. is against writing in moneys for which there is no clear policy? The reason why I ask the question will be obvious to my right hon. Friend. Those of us who take his view are told from time to time that we are being anti-communautaire.
  Mr. Barnett: If it is thought that if my hon. Friend takes my view he is being anti-communautaire, that puts me in great difficulty. I do not consider that my
  1222
  view is anti-communautaire. However, it is difficult enough speaking for one Government and my hon. Friend has asked me to speak for all nine. I am pretty sure that my view is the view of most members of the Council, but I have not heard it specifically expressed by every member so it is possible that one or two may have some reservations. There may be some agreement with the Commission, but in the main my view is the view of the Council. In that case it cannot be anti-communautaire. My hon. Friend and I can be happy with that spirit.
  I deal briefly with the other main area of concern—namely, agriculture. It is the largest area of budget expenditure. The guarantee and guidance sections together, depending on the method of calculation, amount to between 68 per cent. and 73 per cent. of the budget. As I have always told the House and the Scrutiny Committee, the money put into this area of expenditure is an estimate. That is bound to be so because it is dependent upon the policy that is fixed by the Agriculture Council. The reason why the proportion is so large is well known to the House—namely, price support, which tends to build up surpluses in certain areas of agricultural expenditure.
  As is well known, the major area is milk. For example, milk alone represents almost 30 per cent. of the whole budget and a rather higher percentage of the agricultural section of the budget. I hope I carry everyone with me when I say that the overriding need is to reduce the surpluses. I hope that it will be possible to do so in the near future.
  We are not discussing the agricultural policy, although I should have no wish to prevent such discussion even if I had power to do so. We are discussing an estimate which goes into the budget. We may change that estimate, as some have suggested might be done, but that does not have the remotest effect on the fixed agricultural policy. If we write in smaller figures for an estimate while retaining an open-ended policy, we should have to find the money from supplementary estimates later.
  Mr. Marten: Surely it is the balance between the guarantee and guidance sections that is so worrying. Surely it is the

  1223
  budget or the estimates which are the supreme weapon to achieve a balance between the two sections. It should serve to give more to the guidance section so as to get a restructuring of agriculture in the Common Market.
  Mr. Barnett: I was coming to that. I agree with the hon. Gentleman in the sense that it is true that we need to put greater emphasis on the guidance section so as to do something about the structure of agriculture in the Community. However, if we are not careful there is a considerable danger that increasing guidance section expenditure while doing nothing about the guarantee expenditure would be to replace national budgetary expenditure in some member States. That would operate at our expense. There would be a much smaller proportion of our own budget for agriculture while leaving the guarantee section to grow again at our expense. As a major importer, we must be careful about the balance between the guarantee and guidance sections.
  Although it is important to do more on the guidance front to do something about the structure of agriculture in the Community, that does not mean that we can leave the guarantee section as open-ended as at present. If we put in a smaller figure as an estimate for the guarantee section, one of the problems is that in a way we are avoiding that which the Scrutiny Committee sensibly pointed out—namely, the guarantee section having such a high proportion of the budget. If we put in a smaller figure, we fail to highlight the problems of the guarantee section having that high proportion. If we reduced the estimate and made it seem as if the expenditure was smaller, that would not be helpful to those who want to see changes in the guarantee section.
  There are at least two improvements that I know the Scrutiny Committee will welcome. The first is that on this occasion the Commission has not included provisional appropriations in the guarantee section to cover possible additions for next year. It is not sensible to do so because we do not know what the policy will be for next year. I hope that there will be an improvement in policy that will avoid some of the worst aspects of guarantee section expenditure.
  1224
  Secondly, the Commission has not assumed on this occasion that there will be cuts in MCAs, which it wanted to do last year. Although that is helpful from our point of view, I believe that it is a misunderstanding to suggest that we do not want cuts in MCAs only because they are helpful to us. I believe that MCAs are of benefit to the Community generally. That is because, if one simply reduced our MCAs by a devaluation of the green pound, one would increase the price to the consumer, increase the money paid to the producer and depress consumption. That would lead to increased surpluses. It is not right to say that MCAs at the present level help only the United Kingdom. They help the Community generally.
  Mrs. Dunwoody: Will my right hon. Friend comment briefly on the suggestion that MCAs should be put into a part of the budget which is more easily identifiable?
  Mr. Barnett: I am not sure about that. I note that it is the view of my hon. Friend the Member for Crewe (Mrs. Dunwoody).
  Mrs. Dunwoody: It is not my view. It is a proposal.
  Mr. Barnett: I am not in favour of putting MCAs in a separate part of the budget. That is because if one separated them they would appear smaller than they are. It would be misleading to suggest that they do not form part of the agriculture budget. As always, I am happy to be in agreement with my hon. Friend the Member for Crewe.
  I hope that that brief survey will be helpful to the House. I welcome the Scrutiny Committee's report. I shall be happy to listen to hon. Member's views on the preliminary draft budget. With the leave of the House, I shall be pleased to reply to any questions that are raised.
  7.12 p.m.
  Mr. Michael Shaw: We thank the Chief Secretary for the way in which he opened our short discussion. I assume that he will be winding up the debate and replying to our questions. He and I have met before about the draft budget—or, as he rightly says, the preliminary draft budget—when he was kind

  1225
  enough to see us in the Budget Committee of the Assembly. I hope that by using the word "Assembly" I have pleased my hon. Friend the Member for Banbury (Mr. Marten).
  In several ways this is a Community budget which could be a turning point in the history of the Community's fiscal policy. It is the first budget that has been presented to us by the new British Commissioner, our ex-colleague Commissioner Tugendhat, who has been well received in his new job and for the work that he has already done.
  For the first time, Community expenditure will be fully financed by our own resources. For the first time, the figures used in the budgetary documents will be expressed in European units of account. For the first time, a new financial regulation will be in force which amends the old financial regulation of 1973.
  If we are to fulfil this, the procedural difficulties will be considerable. They will demand more discussion and agreement between the institutions than before. The details covering the working of VAT, the setting up of the EUA and the financial regulation have still to be agreed, and yet the whole basis upon which the budget has been drawn has been on the assumption that such agreement will be reached. It is significant that as these changes are being made, so we are moving towards the direct election of Members of Parliament to the European Assembly. After they have been elected, they will be responsible directly to their electors for the proper discharge of the budget.
  Mrs. Dunwoody: They have had a long time to do it.
  Mr. Shaw: We have to aim for changes. We certainly have to aim for changes in the budgetary procedure over the years. I believe that the changes in the Assembly will come about. It would be a pity if these technical complexities were to so attract our attention that the policies in the budget became overlooked.
  I must comment on one technicality. When I was appointed rapporteur for the regulation adopting the EUA, my first move was to contact the Treasury to confirm that the Commission had given in writing its own interpretation of Article 131 and that it was exactly in agreement with the interpretation placed upon it by the British Government. I was told that
  1226
  it was. I therefore went ahead with the processing of that document in the knowledge that it would cause no additional financial burden to this country. I took that view particularly since Article 131 specifies that its interpretation and calculation shall be by the Commission. There was no contrary view expressed by any other country. It is strange that this matter should now be brought forward, perhaps as a bargaining counter, within the Council. I fully support the Chief Secretary in his view and in the stand that he makes.
  Today we are examining the preliminary draft budget It has been drawn up by the Commission but it is subject to a number of changes. It is subject to changes by the Council, by the Assembly and by the Commission itself. As the Assembly's general rapporteur for the 1978 budget, perhaps I might say a word about our approach.
  Mr. Hugh Dykes: I apologise for interrupting my hon. Friend. He has used the word "Assembly". I understand that that is at the request of my hon. Friend the Member for Banbury (Mr. Marten). Is it not reasonable to stick to the word Parliament "because that was the collective decision of the Parliament?
  Mr. Shaw: I am happy to mix my phraseology to suit everybody. I used the word "Assembly" hoping that everyone, including my hon. Friend the Member for Banbury, would understand what I meant. I shall mix the words and hope to please everyone.
  As has been so often explained, the size of the European budget is so small compared with the Community's GDP and compared with the total of national budgets that it cannot play any part in influencing the fiscal policy of Europe as a whole. None the less, we regard it as our duty to see that proper control and economy exist in all that we propose and do. The main task as a Community is to create European policies based on a growing need and belief that in many vital areas we must act as a Community. We must act together and not as nine individual countries.
  The lesson from that is that the Community budget must be concerned with the efficient implementation of these policies. Thus, the message that I am stressing in

  1227
  the Assembly—or Parliament—is that the annual budgetary process should not concern the Budget Committee alone. It needs the full participation of nearly all the specialist committees and, indeed, of the whole Assembly itself. It is these committees that are responsible for evaluating the necessity and value of the policies, the cash needs for which are disclosed in the budget.
  Mrs. Dunwoody: I am in complete agreement that the committees must have responsibility for the budget in their own work, but, since one cannot tell from the budget document what are appropriations, what are commitments which have been paid, and what are commitments which have not been paid, can the hon. Gentleman tell us how, for example, the Social Committee, of which I am vice-chairman, can compare like with like and decide what is actually happening in the budget?
  Mr. Shaw: That must be largely a matter for the proceedings of each committee itself. I have arranged for the chairman of the Budget Committee to write to each specialist committee asking it to appoint, early, a rapporteur to look into its own sector of the budget so that we we as a Budget Committee can discuss with each specialist committee, through its rapporteur, the details of the part of the budget that affects it. I hope that someone will have been or will shortly be appointed as rapporteur for the hon. Lady's committee, so that we may get a full and considered report of the matters that affect both the budget and her committee.
  Mrs. Dunwoody: I take the point and I hope that we shall soon have a rapporteur. But can the hon. Gentleman say exactly how any committee can report on a document in which at least two columns after the appropriations are left blank?
  Mr. Roper: On a point of order, Mr. Deputy Speaker. How appropriate is it for the House to discuss the proceedings and activities of an Assembly or Parliament which meets on the other side of the Channel? I thought that the House was considering how it should consider the budget of the European Community?
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I understood that the hon. Member for Scarborough (Mr. Shaw) was relating his argument to the budget of the Community.
  Mr. Shaw: Perhaps it would be in the interests of both yourself, Mr. Deputy Speaker, and of the House if I proceeded with my speech. The point has been made on the matter raised by the hon. Member for Crewe (Mrs. Dunwoody). I will talk over the matter with her in greater detail afterwards, if I may. I want to re-emphasise that it is only by the participation of the committees that we can balance the claims for cash presented to us so that the Assembly can honourably and conscientiously fulfil its duty as part of the Community budgetary authority.
  As the Chief Secretary said, the largest element in the prelimary draft budget is, as always, agriculture. The Commission indicates that expenditure relating to agriculture will equal some 69 per cent. of the 1978 budget as opposed to 74 per cent. this year. But, again as the right hon. Gentleman has said, these figures are of necessity at this stage only guesswork. After the harvest there will come an amending letter; after the 1978 price review will come a supplementary budget. Experience indicates that on both occasions the agricultural costs will go up.
  Furthermore, the relative share of agricultural expenditure is likely to increase, because the Council of Ministers tends to cut back on new initiatives outside the agricultural sector—indeed, in the very areas where we are seeking to act as a Community and for the benefit of the Community.
  I want to make a point which I do not think has often been made in this connection. The expenditure on the EAGGF within the general budget accounts for about three-quarters of the total general budget of the Community. In 1976, support for agriculture in the guarantee section was about 6,000 MUAs, yet the total of each individual nation's and Community expenditure was some 17,000 MUAs. In other words, in spite of the size of the proportion of the Community budget, the expenditure we are making in this sector is still comparatively small when compared with the whole amount spent throughout the Community.

  1229
  This could lead Ito another factor which should be looked into—that the money spent through this budget might be pushed in a direction different from the help that is being given to the industry by the individual countries. I think that this is a matter on which we should have much more information than we have.
  I turn now to other sectors that we feel are so important to building a Community policy. We have had considerable debate today about energy policy, although the Under-Secretary of State said in reply that there were certain aspects that had not been touched upon. Nevertheless, they appear in some size in the budget. These policies, so far as they can be, are spelt out in a considerable amount of explanatory matter, in Volume 4 particularly and in Volume 7. If the Council of Ministers decides to change the content of the budget before it passes it on to us as the draft budget instead of the preliminary draft budget, I would ask that a full explanation be given for the reasons for any changes that are made, just as explanations are given in the first place by the Commission for the putting in of the items. Should the items be altered or taken out, I hope that the Council, as it has not always done in the past, will give a full explanation so that the specialist committees will be able to assess and weigh up the pros and cons of the arguments and which way they should lend their support.
  There is a similar situation with regard to research and investment. There is a large section of the budget in which the details are set out. I am glad that they have been set out in a new way which has saved 140 pages in the budget, although, looking at the size of the budget, one would never think that that had happened.
  I want to lay particular stress on two further aspects—the Social and Regional Funds. Both of these funds are due for review, and it comes at a very important time, because they concern the well being and development of the poorer and more difficult parts of our Community. They concern help in renewing employment and retraining, in bringing new work and new jobs, and in bringing new structures to areas of the Community that require help.
  Perhaps the figures that have been put in in this respect are guesses. Perhaps
  1230
  no finalisation of programmes has been made. Even if the Council has made no final decision with regard to policies in this direction, however, it would not be right for the figures not to be included in the budget. To remove them entirely, in spite of what the Chief Secretary says, would be unwise. Indeed, it would be wrong. Clearly, considerable thought must have been given to these matters. There must already be a fairly shrewd idea of the amount of money that the Council and the Commission are prepared to spend in these fields.
  Now that we have an own resources budget, having to forecast income for next year, it is right that we should equally forecast the likely expenditure that is to be set against that income. In most things in this budget the right hon. Gentleman and I are in agreement, but I take issue with him on the matter of the non-inclusion of items if the policy has not been fixed. We have to include figures where we can be reasonably certain that the amounts will be spent and reasonably certain as to the size of those amounts, otherwise we are saying that we shall exclude the figures now so that we can dress up the budget to look as though we have been very highly disciplined in the settlement of the budget this year. Not until later, by means of the supplementary budgets, which tend not to have the same publicity as the original budget, will the sums required to pursue those policies then come before the Parliament and Council and be duly passed. If that happens to any great degree, the complication may arise of the rate of VAT, which may have to be altered.
  I am speaking rather longer than I had intended, but I have been interrupted several times. I wish to deal with two further points. The first is the Audit Court. For the first time, provision is made on the budget for the setting up of the Audit Court. The law for this has now been passed and ratified. Provision has been made, even if only by way of token entry, for the setting up of the court. This will have a greater status than the Audit Board which preceded it, and will be able to employ the resources that it will properly need for the effective audit of the Community's finances. Incidentally, the names of the proposed members of the court have been sent in, except in the case of two countries, of

  1231
  which the United Kingdom is one. Will the right hon. Gentleman say what is holding up our own nomination?
  Mr. Nicholas Ridley: The next General Election.
  Mr. Shaw: Clearly, the quicker we can get the new court established, the better. Several suggestions are going around Europe as to the real reasons for the delay, but it is not for me to speculate, nor would it be helpful.
  We have in the Assembly a control sub-committee which has been set up as a sort of Public Accounts Committee. I have little doubt that that sub-committee will develop into a full committee. It is already beginning to establish its rôle as a watchdog of Community finance. I have always felt that it could never fully do so until the Audit Court had become established and a close link had been forged with it. As a member of that subcommittee, I am therefore doubly anxious for the early establishment of the court
  I turn now to the receipts side of the budget. On a number of grounds—political, accounting and budgetary—I am not very happy about the VAT rate of 0·77 per cent. which is suggested by the Commission for 1977–78. The Commission suggests that this would drop to 0·61 per cent. in a normal year. The higher percentage arises from the time lag in the first year, which reduces the income from what it would have been in subsequent years because the basis of assessments is usually a three-month period. If the basis of assessment was dated on 31st January, the first two months of that quarter would be excluded from the first year, so the revenue available would be that much the less.
  The sum of money is not affected, but the assessment and the presentation in the budget are important. I have contacted the Commission on this matter, and members of the Commission themselves have certain reservations. For example, at least one country has altered the period over which it assesses and collects its VAT. This immediately upsets the pattern. We have arranged to have further discussions on this point, and I hope that we can resolve the outstanding difficulties in a manner acceptable not only to ourselves but also to the Council
  1232
  when it comes to consider the matter. I hope that in the end it will be possible that the form that we agree will allow the use of the same percentage—namely, 0·61 per cent.—as would have been used in a normal year.
  The last point I wish to make is about commitment appropriations and payment appropriations. In discussing the various figures and, in particular, the proposed maximum rate of increase for non-compulsory expenditure and the margin of manoeuvre available to the Parliament, the House will notice the increasing use of commitment appropriations. In order to cater for multi-annual programmes and yet do away with the undesirable carry-forward procedure, ceilings of commitment can be laid down in any one year that will involve a programme of payments covering several years. No longer will it be necessary to put the whole cost of a project in the first year as a payment provision.
  However, the Assembly differs from the Commission in one respect. In looking at the budget and its increases, the Commission—and, it seems the Council—works on the amounts to be committed rather than on the amounts to be paid. There is a difference in character between the two types of appropriation. That is why we in the European Parliament have sought to refer to commitment authorisations rather than commitment appropriations. The budget is, after all, concerned with the estimated revenue coming in, balanced on the other side by the payment appropriation going out. I believe that that is the crux of any budget. We must rest on the supreme importance of the payment appropriation.
  However, this is also a matter that has to be conciliated upon, and there are many other matters too. With good will on all sides, I hope that all these various matters will be reviewed and that a certain measure of compromise will result, but I believe that the new financial regulation is a regulation that has a real meaning and real help to the present and immediate future of the Parliament and that it reflects the changes that have taken place since 1973, when the existing financial regulation came into being.
  I welcome the opportunity for this early debate. It comes before the preliminary draft budget has been examined

  1233
  by the Council and before the representatives of the European Assembly have met the Council in Brussels. That meeting is to take place on. Wednesday this week. This is, therefore, a well-timed debate and I hope that it proves to have been useful.
  7.40 p.m.
  Mrs. Gwyneth Dunwoody: I, too, welcome this debate, because if there is one thing that is constantly clouded in an air of mystery it is the amounts of money that are spent not only by the Common Market but by all its institutions. This House should take more time to debate the amounts of money that are being spent not only by us but by other people.
  I shall not pretend to be able to follow even the small Volume 7 of the preliminary draft general budget with the expertise of either my right hon. Friend the Chief Secretary or the hon. Member for Scarborough (Mr. Shaw), because if nothing else, having studied the section which particularly concerns the Social Fund, I know that it is exceedingly difficult to try to sort out from the figures listed in the budget documents exactly what the real and political implications may be.
  However, I say to my right hon. Friend and to the hon. Member for Scarborough that it is about time that someone explained in very simple terms to the British public that we really shall be net contributors to the overall finances of the EEC, not only this year but to an increasing extent in the coming years. Indeed, our net contribution this year alone, as far as I can see, will be £553 million, and it will rise within three years to £1,000 million, after receipts. That is calculating the contribution before the change to the European unit of account.
  I was grateful to my right hon. Friend for his comments about the European unit of account, because if there is one thing that is extraordinarily misleading it is the suggestion that is emanating from certain Continental sources that the differences between the calculations in the European unit of account and the present unit of account are so small as to be positively minimal. My right hon. Friend has already made clear that the British will be faced with a very considerable burden, which I really dc not think they can
  1234
  accept in any form whatsoever. Indeed, the comparison of both the IMF and the unit of account parities used in the 1977 budget and the EUA parities used for the 1978 appropriations makes it clear that yet again this nation, which we are eternally being told is one of the poorest of the EEC, will be called upon to make an even greater sacrifice at a time when it desperately needs its own resources to do many of the things that we think are tremendously important here in Britain.
  If one looks at the amounts about which we are talking for the extra costs, one finds that it would possibly be open to us to give the equivalent of about £2·per child for each child receiving benefit in this country for the sort of amounts of money that the Common Market is asking us to contribute.
  Mr. Dykes: Will not the hon. Lady, however, also take the point made by the Chief Secretary that the agricultural pound and its relationship to the real £ sterling means that we get an additional amount, which reduces our net contribution to a couple of hundred million pounds in the current period? That is a permanent thing, according to the Chief Secretary a few moments ago.
  Mrs. Dunwoody: I am delighted to follow the Chief Secretary, whom I always believe absolutely because I know him to be a man of great worth and intelligence. I am happy to come to precisely the question of the agricultural funds because if there is one thing that two years in the Agriculture Committee of the European Parliament have taught me it is that there is an astonishing capacity on the part of the European agricultural lobby to persuade the Commission to give open-ended financial commitments.
  One point that the hon. Member for Scarborough did not make strongly enough is that the 68 per cent. that we are told the agricultural funds at present represent is totally unrealistic. I leave aside the fact that at present there are plans going through in the Agriculture Committee which will result in an increased expenditure in improving things, such as the milk programme and negative taxes for the British consumer in many fields, such as isoglucose, and the changes envisaged in imported products. I leave

  1235
  aside all that and say to the hon. Gentleman that, even if one ignores those political decisions, there are still open-ended commitments on citrus fruits and on any kind of agricultural produce that appears to be under any attack from imported agricultural produce.
  There is even a fantastic suggestion under consideration that, because Cyprus sherry is imported into Great Britain, those who make Marsala, which bears no relation to Cyprus sherry, should be compensated for importing it into the United Kingdom. That is the level of political decision-making in the agricultural sector of the Community.
  It is no use our saying "Look how clever we are. We have cut down the amount of money we intend to spend on agriculture and we have increased the amount of money that we intend to spend on the Social Funds" if we do not spell out exactly what that means. In the Social Committee we were very concerned to find out what the budget commitment actually meant in real terms. The Social Fund is supposed to be used for those sectors of Community policy which I should have thought were among the most vital—for the retraining of workers who are unemployed, for the amounts of money spent to deal with youth unemployment and for changes in the structural development of the textile industry and the steel industry. We were told that one of the encouraging things about the budget was that it represented an 11 per cent. increase in the Social Fund.
  However, when we tried to look at those commitments in terms which would make clear where the improvements would come and how the Commission envisages spending those funds in the coming budget year, it became very obvious that that increase might be in the areas in which it is certainly desperately needed but where there are already large sums of money outstanding.
  In other words, the whole accounting procedures of the Commission, particularly in relation to the Social Fund but in fact in relation to all sorts of other policies, are so complex that it is quite impossible for the average committee member to work out how much money has actually been spent in the last year,
  1236
  how much money remains to be spent in the Social Fund and how much money will be an increasing amount available to the Social Fund in the year 1978.
  I do not pretend in any way to be an economist, but it seems quite impossible to suggest that we are improving the economic controls of the Community when, even after presenting everyone with vast volumes the size of that which I have in my hand, individual Members of not only this House but, it seems, of every other Parliament in the Community find it virtually impossible to sort out what is actually happening.
  When I questioned Commission officials I was horrified to learn—I have figures only in documents with French title headings—that in fact the appropriations in this budget for actions in favour of the agricultural sector, but more particularly of the textile sector, are actually less than they would have been in normal circumstances and that the increase will be used up in other ways.
  It seems to me that in a Community that is totally committed to spending two-thirds of its budget on agriculture, and which eternally says that it is deeply concerned about the industrial sector, about regional policy and about social policy but still is not capable of producing changes that would make more money available to those sectors, one has a right to doubt both the sincerity and the commitment of such a budget.
  I say to my right hon. Friend that I am deeply worried about the constant propaganda that comes from the Commission suggesting that the monetary compensatory amounts are so large and that the Commission is being so open-handed to the British people who are benefiting from the largesse provided by the Community as a whole. There is no explanation of the cost to the British people. If there is one interesting fact in this budget, particularly in Volume 7, it is the amount of money, even now, being entered into the budget for the storage of surplus food. Although my right hon. Friend said that he did not wish to discuss the common agricultural policy, the budget makes it clear that the political implications of this policy can and will be translated into considerable expense for the ordinary taxpayer.
  The agricultural policy is not only expected to require vast amounts of

  1237
  money for the storage of surplus food. There is the positive entering of money in large amounts in the budget in such a manner that it is obvious that there is to be little structural change in the agricultural policy in the coming year.
  While we are on the subject, I am deeply concerned by the section in the budget relating to the financial assistance to be given to countries outside the Community. It is obvious, when we look at the figures, that what is intended is that Greece will get a small amount, Portugal will get virtually a derisory amount of assistance and Cyprus will get so little as to be hardly anything at all but the Maghreb countries will get a considerable amount of money from the Common Market, presumably on the basis of the agreements negotiated for them as financial protocols. This is a political question.
  If we are to discuss the enlargement of the Community, there seems to be no excuse for saying "Yes, we would like to see the Mediterranean end of the Community extended but we do not want to do it too soon because the agricultural products of those countries would cause considerable difficulty to existing agricultural producers in the Community." Yet those who use those arguments are also saying "Never mind, we are giving considerable political and economic assistanca to Portugal and Greece to help them, even before they are fully involved in negotiating entry to the Common Market."
  If we look at the figures, it becomes painfully obvious that nothing of the kind is happening. Portugal is desperately in need of our support. It has a democratic system of government which needs our support in every way. Yet the countries of the Maghreb, already getting considerable assistance from other sources, are to be given far more money in total than any of the other nation States. This is a clear indication of the level of political decision-making inside the Community.
  Mr. Roper: I have been trying to follow what my hen. Friend has been saying about Portugal and the Maghreb countries. My reading of page 646 of the budget suggests that there are to be about 410 million E.U.A. for Portugal and only
  1238
  339 million for all three Maghreb countries. Perhaps I have missed a page.
  Mrs. Dunwoody: My hon. Friend will see that the Maghreb countries are receiving in total 172 million units of account whereas individual countries such as Greece, Cyprus and Portugal are getting nothing like that amount of support. Whichever way we look at it, that is not a commitment to a political support system. I am afraid that I cannot accept my hon. Friend's interpretation of the figures.
  What I find very depressing about the debates in which I take part in the European Assembly is the singular lack of reality. Tory Members have said, and will no doubt say again, that all this will be changed by direct elections. The hon. Member for Scarborough welcomed the development of "own resources" as a positive step forward. I believe that it is anything but that. A system which says that anything up to 1 per cent. can be added to VAT to develop a common system is capable of being expanded in such a way that the British people will find themselves committed to even greater expenditure, over which they will have no control.
  If the hon. Member tells me that directly-elected Members will take it upon themselves to play a far greater rôle, all I can say is that, if we develop an assembly of highly-paid positively-removed "Euro-smoothies "who have no idea what the average person has to do in terms of budgetary control in this country, we shall not raise the level of debate, particularly in economic terms, to a greater degree of reality. All that we shall do is to remove it even further from the realms of understanding.
  Those who live on the inflated rates to be found in some European institutions will not be good judges of what is an acceptable level of payment for agricultural produce or any other revenue-raising policy. I hope that the hon. Gentleman will not suggest that after direct elections—when the European Assembly finds itself in even more expensive premises based in Brussels, about which it appears already to be giving commitments—the Assembly will be better representing the British housewife than he or I are doing at present. I do not believe that that will be so.
  Mr. Michael Shaw: Would not the hon. Lady accept that it is possible that she and I might stand as candidates and might become Members of a directly-elected Parliament? Does she believe—I do not—that we shall be any less assiduous in looking after the interests of our constituents than we are now?
  Mrs. Dunwoody: The hon. Gentleman is kind enough to suggest that he should join me. I would welcome his joining me on almost any occasion in almost any place, but I can assure him that I shall not be seeking election to the European Assembly, for one simple reason. I sit in this House as the representative of the people of Crewe. I go backwards and forwards to learn their views and to represent them here. There is no doubt in my mind that that task will be beyond any elected Member when he has a population in his constituency 10 times the size of my present constituency. I have no doubt that if I find the debates of the European Assembly unrealistic now I shall find them positively surrealistic after direct elections. The one thing that frightens me about the budget is that it is the forerunner of a system which we shall soon find totally unsupportable.
  8.0 p.m.
  Mr. Neil Marten: I agree the general tenet of what the hon. Member for Crewe (Mrs. Dunwoody) has been saying. The debate has made us dig into the finances of the Community, and the more one digs, the more disturbing it is, particularly in the light of the economic stringency that we have in this country and that I support for obvious reasons. The more one digs into these great big volumes, the more profligate the EEC is seen to be.
  The Minister has a Council of Ministers meeting on Wednesday. May we have his assurance that on this occasion he will make a statement to the House on Thursday and not on Friday? It would be very convenient for hon. Members if he would do so. Perhaps he will deal with that when he replies to the debate.
  I welcome the debate, but I am afraid that it is too short for this vast subject. The very shortness of the debate results in a number of hon. Members not being present, their feeling being, Mr. Deputy Speaker. that there is little or no chance of being called in a debate lasting only two and a half hours.
  1240
  I agree with the idea of having three EEC debates on one day—indeed, I proposed it to the Scrutiny Committee and to the Leader of the House—but I do not think that we should be taking together with other subjects such a major subject as the budget. I think that the budget should be given a rather longer time than has been allocated.
  I should like to cast a critical eye over the Assembly. I call it the Assembly because that is the word used in the Treaty of Rome, and it is also the word used in the European Assembly Elections Bill, which has been before the House for Second Reading. I think that we ought to pass a very critical eye over the affairs of the Assembly in terms of its budget as direct elections have been proposed. They are not yet with us, of course, and I hope that they will not be with us, but I think that we should look at the Assembly at this crucial time.
  I agree with the hon. Lady that it is very confusing to look at the figures in these budgets, particularly this year, when they are in units of account and European units of account. It is extremely difficult to compare one year with another. I hope that the House will therefore forgive me if I make any technical errors.
  As far as I can understand it, the estimate for the Assembly in 1978 is 86 million European units of account. The Library worked out for me that that sum for 190 Members of the European Assembly—MEAs—is equivalent to £55 million. The cost of our own House of Commons is £15 million for 635 Members and £20 million if we include the House of Lords. There are three times as many Members in the House of Commons as in the European Assembly.
  I should like to draw attention to the rise in expenditure on the Assembly. For the first year of the enlarged Community, 1973, the cost was 25 million units of account. For 1977–78 the cost has risen to 70 million units of account. That is almost three times as much as in 1973. These figures are in units of account, not in European units of account.
  One does not know what the increase will be if we have a directly elected Assembly, and I am greatly worried about the way in which these things are

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  done. Speaking in the Assembly on 16th June, Lord Bruce of Donington said:
  "There is, I believe, a convention established —I do not know how long it will last—for the budget of Parliament to be more or less assented to by the Council on the basis that Parliament will not unduly query the Council's budget either, and with this comfortable arrangement the passage of any budget of Parliament is satisfactorily assured."
  If Lord Bruce of Donington is right in what he says, I regard that as a highly dangerous situation. Indeed, it places on us in this House a much greater duty to look with a toothcomb at the sort of thing that is going on. That is what I propose to do in the short time for which I wish to speak.
  My first point refers to the Members of the European Assembly. I shall not particularise, because I do not know the facts relating to individuals, but one picks up various stories, in addition to which we have a magnificent Press which gives guidance on these matters. I should like to know who exercises control over the money spent by the MEAs. We pay our share in this country, and it is the British taxpayers' money that is in part paying for the MEAs' expenses.
  On 3rd July, the Sunday Times had an article on this very question. It worried me when I read it. That is why I am raising it in the House today, so that perhaps we can cl2ar it up. It is a touchy subject, I imagine. The article states that
  "One MP who previously sat in the Europarliament claims it is possible to make £9,000 a year on expenses. Yet most MPs claim there is little or nothing in it for them."
  There is laughter from those Members who have attended. I do not know who is right, but, according to the article, this MP who has attended says that it is possible to make £9,000 on expenses. If that is so, it is enough to alert one to the whole question.
  Mr. John Prescott: The hon. Gentleman rightly says that this is a very sensitive subject. A number of people are quoted in the same article. The Member referred to in the quotation did not mention the period of time and did not have the guts to be named in the article. I would even challenge the statement and say that it is not possible to make that money. A Member has to stay in a hotel and, with the
  1242
  differential between what is received and what is spent, it would not be possible to make anywhere near that sort of money. A number of hon. Members made statements to the reporter and he did not carry them all in his article, being more concerned with sensational comments.
  I point out that the expenses paid to Members of the European Assembly for secretarial work are subject to a contract with a secretary and that the money is paid by the Assembly directly to the secretary and not to the Member. This House might care to look at that procedure. In addition, Members of the European Assembly have money made available to them for research. It is a pity that this House does not provide us with money for research, which would make us more effective in this country.
  Mr. Marten: The hon. Gentleman has made some interesting points about the House of Commons. I note what he says about the statement in the article that it is possible to make £9,000. I think that all Members of the Assembly who have attended would say that is not so, but the article goes on to state:
  "one Labour Member says that he has made no more than between £2,000 and £3,000 over two years."
  That is quite a lot of money to make out of expenses, and I feel that the subject
  requires examination.
  Dealing with travel expenses, the article states:
  "In April, a month after he joined the British delegation to Europe, Lord Brimelow attended a meeting in London of all the European Socialist MPs. For the two days he was paid an attendance allowed of £106"—
  this is in London—
  "although his only outlay, he says, was on bus fares to and from Lancaster House. 'This was obviously a bit extravagant,' he says."
  I would not question Lord Brimelow, with his long record of public service—
  Mrs. Dunwoody: With the greatest respect, there is one thing that I find vaguely irritating. Many of us take part in debates in the European Assembly. They are of some importance, but they are never reported anywhere in Britain. The sort of remarks that the hon. Gentleman is making may indeed be perfectly justifiable. Many of us are only too happy to

  1243
  deal with our problems about expenses. However, I hope that the hon. Gentleman will accept that those of us who use our expenses for expenses are not making money. I would say that very plainly. The hon. Gentleman may question anything that he likes, but I hope that he will not continue along this line, because there are justifiable defences.
  Mr. Marten: I absolutely accept that. But what I am doing—this is my duty as a Member of Parliament—is to question the control of this money. In order to question it one has to build up a case, and the only case that one can build up is from quotations from a variety of Members of Parliament and respectable people like Lord Brimelow, who was given £106 for two bus fares. That is the sort of nonsense that one expects from the European Community.
  The article goes on:
  "Twenty-six MPs and 10 Peers leave for Luxembourg tomorrow for their monthly stint at the European Parliament. If they choose to fly tourist, their return fare will cost £80. But their allowance for travel expenses will be at least £200."
  Is that true or not? These are the sorts of things—
  Mr. Prescott: That is one of the difficulties with which Members are faced. A point that could have been made is that the tax position of Members of the Assembly is not yet established. We are pressing hard to get a decision about that. What is paid for travel journeys is determined for all the European Members. One of the difficulties with British Members is that sterling has constantly declined, thus affecting sterling payments, which has led to a discrimination between the actual fare paid and the amount paid in sterling. Some steps have been taken to correct this, but that has left us with this kind of anomaly.
  Mr. Marten: I am glad to have that confirmed. I suggest that the right way for people to travel is by some form of warrant so that no money changes hands. Each MEA could get a bunch of warrants just as we do. There should be close liaison between the fees office in Brussels and the Fees Office here so that someone coming from Liverpool does not get a
  1244
  mileage allowance from Liverpool to Brussels when in fact he comes down on a House of Commons travel warrant.
  It is rather like coming down by car from one's constituency. The Fees Office naturally checks one's accounts to see that one is not coming down—
  Mr. Prescott: There is very tight control.
  Mr. Marten: I hope that the Fees Office would do that so that one does not get a return ticket and then travel by car one way. I should be appalled if we were told that such a suggestion was even vaguely right.
  Mr. Dykes: Is my hon. Friend suggesting that hon. Members of this House who are also Members of the European Parliament may pass through the House of Commons on a journey to Europe and actually make a double claim?
  Mr. Marten: I was asked not to go on quoting this article, but that question is raised in the article. I shall pass it to my hon. Friend. For the sake of Members of the European Assembly, it is right that this should be looked into. I put it no higher than that. I am glad that the Chief Secretary nods agreement.
  I turn to trips overseas, which are necessary in any Parliament. I should like to know what the procedure is. When a Select Committee of this House is going overseas, there is very tight budget control. The expenditure has to be forecast and has to go before the Chairman of the appropriate Expenditure Committee. There is fairly tight control. I wonder whether Assembly visits overseas are as tightly controlled as we would wish. It is British taxpayers' money. One comes back to this point all the time.
  The budget does not really deal with the directly elected MEAs. It is therefore difficult to forecast what the increased expenditure will be. But the numbers are going up from 190 to 410 directed elected Members, if that ever comes to pass. However, a couple of guesses have been made on various hypotheses, the best of which puts the increase at an extra £12 million. Therefore, the total cost of running the European Assembly will jump from £55 million to £67 million a year. That is quite a lot compared with the running of this House of Commons.

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  The secretarial allowances have already been dealt with, but I should like to know whether the secretarial allowances are taxable in the ordinary way. Is the money coming from Brussels taxable in the same way as the pay that secretaries in the United Kingdom receive?
  The other point that I should like to raise relates to payments to political parties. I can find very little reference to this in the budget. If payments are made to political parties, I should like to know what control there is over the expenditure once the payment has been made. Are the accounts audited and published? I think that the public ought to know.
  Money paid to political parties is something of which I disapprove strongly. I hope that the sort of sums paid to political parties in the European Community will never come to pass in this country.
  Mr. Prescott: The hon. Member's party receives money.
  Mr. MartenIndeed, the Conservative Party does. I should like to see the accounts properly published so that we can all see exactly what has happened. It is vital to keep on the straight and narrow so far as one can.
  I noticed that last week, or the week before, a group of Conservative agents were taken to Brussels. I understand that the trip was paid for out of some money left over from the referendum by the European Movement.
  Mrs. Elaine Kellett-Bowman: It was freely subscribed.
  Mr. Marten: Does my hon. Friend wish to explain?
  Mrs. Kellett-Bowman: If persons wish to subscribe to a movement in which they believe, is my hon. Friend saying that they should not do so? Is my hon. Friend saying that there is something wrong in people wishing to subscribe after tax income to something like the European Movement?
  Mr. Marten: lf my hon. Friend will read Hansard tomorrow, she will discover that I said nothing of the sort.
  Mrs. Kellett-Bowman: You have now.
  Mr. Marten: My hon. Friend is putting into my mouth words that I have
  1246
  not spoken. I recommend that she reads Hansard tomorrow.
  With regard to European Assembly staff, I understand from the budget that 60 per cent. of permanent posts cover language services—translators and interpreters. The number of days worked in 1976 was 10,684 interpreter work days. That is very expensive and is a very great number of days spent on languages. Most right hon. and hon. Members are Community minded. I am certainly surrounded by them. As they are so Community minded, I am absolutely certain that they would like to overcome this wasteful expenditure on interpreters and translators.
  Since I myself am European minded but hate the Treaty of Rome and all that jazz, I think that the time has come for the Community to move to one language. I believe that that language should be French. French is by far the most spoken language in the Community. It is a most attractive language and it would be a very good example of British Communeautaire if we were to approve French as the language for the European Community. I am sure that M. Debré and M. Chirac would thoroughly approve.
  Mrs. Kellett-Bowman: Will my hon. Friend give way?
  Mr. Marten: Not just now. I shall do so in a moment.
  If that were so, those hoping to run as candidates in direct elections would have to pass a little test of colloquial French. If they did so, they could then get on to the candidates' list in Central Office. I understand that masses of people are queuing up there to become candidates for the European Assembly. It would cut down the numbers if candidates were required to have the qualification of speaking French. So I think that there would be a massive saving of money if everyone over there spoke French.
  Mrs. Kellett-Bowman: Will my hon. Friend accept that he is rather out of date when it comes to new members seeking to join the Community? For example, whereas the older generation of Greeks speak French, the newer, modern, "with-it" Greeks speak English.
  Mr. Marten: Bless them for that! All I say is that they should be made to

  1247
  speak French, like everyone else. is the most beautiful language—
  Mrs. Kellett-Bowman: So is English.
  Mr. Marten: I agree, but French is the language which is largely spoken in the centre and heartland of Europe, which I am sure all my hon. Friends who are in favour of the Community think of as Europe, and France personifies Europe.
  Mrs. Dunwoody: Is the hon. Gentleman not aware that there is now an EEC directive suggesting that the children of immigrant workers should be taught in the languages of their mother countries and that the only people who are not to be given this privilege are the Irish in Britain who, for some reason, are to be deprived of the right to learn Erse?
  Mr. Marten: That may be so and I am sorry to hear about it. But I recall the draft directive to which the hon. Lady referred. I deplored it thoroughly. As one who is interested in race relations, I believe that people who come here from the Commonwealth to take up residence should want to be integrated as much as possible.
  All this duplication, triplication and whatever the word is for sixfold printing, having every document published in six different languages, means that in 1976 the number of duplicated, offset-printed and typographic pages produced by the Assembly, amounted to 83,436,321. That number could have been divided by six. I ask right hon. and hon. Members to imagine what a saving of money there would have been if each document had been in French only.
  Ten per cent. of the staff employed at the European Assembly are employed because of the lack of a single seat for the Assembly. Sometimes the Assembly sits in Luxembourg and sometimes in Strasbourg. According to the Assembly's report on this budget, 10 per cent. of the staff are required for that purpose.
  This is the sort of nonsense which must be sorted out. It is the longest running farce in Europe, and the people responsible for it are sitting round me now. I say that because they have done nothing about it. They have not blocked it or had a "demo" about it. They go on and on from one place to another. I hope that they realise how very foolish
  1248
  they look in the eyes of those of us who sit outside the Community.
  Then there are visitors to the European Assembly, sometimes to Strasbourg and sometimes to Luxembourg. In 1976, there were 21,627 visitors to the Assembly. I dread to think what the cost was. But it is a good propaganda exercise, of course.
  Then there is the matter of Press cuttings on direct elections. It is said with pride that 16,000 articles on direct elections have been collected. I cannot imagine what is done with them. It is a beautiful piece of bureaucracy. But it is bureaucracy gone totally mad.
  What evaluation is made of the work of the staff at the European Assembly? I have been there. They can be seen all working very hard. But what is the worth of what they achieve?
  Then there are the expenses of the propaganda for direct elections. May we know what they amount to and how the money is being used in various countries?
  There is a nice little item in Chapter 15 under Item 1490. It is fascinating to learn that 145,000 units of account are to be spent on a creche, day nurseries, holiday camps, domestic help, etc. British taxpayers, hard pressed as they are, are paying for a proportion of that—
  Mrs. Kellett-Bowman: Lady Members asked for one here.
  Mr. Marten: British taxpayers are paying a proportion of that. There would be an outcry if the British Parliament put into its Budget expenses for domestic help and holiday camps. It is a ghastly thought to have to go on holiday with some of my colleagues, anyhow, but it would be unthinkable for the Government to subsidise the cost of doing so.
  Then I look at the Commissioners and their pay. A Commissioner who is married and has two children is now getting net, after paying tax, about £42,000 a year. After he has done five years and retires, he get "redundancy" pay for three years amounting to £23,000 a year. That is quite an expenditure which ought to be looked at. After all that, he gets a pension of £12,000 a year when he reaches the age of 65.
  The European Community, especially the Assembly part of it, is becoming rather a sick joke in the eyes of the average British person. What does the

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  Assembly achieve? I know that people work hard. They produce many reports. I admire what they do. But what does it all achieve?
  When it is directly elected, if it is—God forbid—with all those additional people there, what will it achieve? There will be a great deal more cost, but I doubt whether it will achieve very much. It has become and will continue to he, as the article in The Sunday Times describes it, a bit of a "gravy train".
  I am appalled by what is contained in the budget, and I can only suggest that the British Inland Revenue together with a Select Committee of this House looks at the whole position, otherwise its name will get worse and worse as the years go on.
  Several Hon. Members Several Hon. Members rose—
  Mr. Deputy Speaker: I draw attention to the fact that we have had one hour and 40 minutes' debate, with only four speeches. We have to end this debate at 16 minutes past nine. I ask for the co-operation of right hon. and hon. Members.
  8.27 p.m.
  Mr. John Roper: I shall not take up what I consider to be the rather squalid attack made by the hon. Member for Banbury (Mr. Marten) upon hon. Members of this House and their behaviour in the European Parliament. However, I intend to turn later to one or two remarks about the Parliament itself.
  When we come to consider the budget of the Community, the first feature of it that one notices is that, despite some of the remarks made earlier, it is a remarkably small one. We hear talk about very substantial expenses—they are substantial and perhaps too high in certain areas—but overall the budget represents only 2·3 per cent. of the total national Budgets of the nine members of the Community.
  We have to consider two specific items in the budget which will occur in the coming year and which are of special importance. The first is that on 1st January 1978 the Community will go over to a system of own resources—that is, if the reserves which have been placed by the Belgian and Danish Governments are
  1250
  withdrawn and there is a satisfactory system for VAT collection throughout the Community. I hope that my right hon. Friend the Chief Secretary will comment on those reserves, because obviously this is an important matter which could block the move to own resources.
  The second matter which is of considerable importance is the proposal that the budget should be based on the European unit of account. We should understand the problem that exists for the Community as a whole before we consider the problem for this country in particular. For the Community as a whole, the fact is that by the end of the year all that will be left of the IMF unit of account will be—rather like the Cheshire cat—just a grin. It will have totally disappeared and it will not have provided a satisfactory basis for continuity of Community accounting.
  The regulation that will be required to introduce the European unit of account will need unanimous approval by the Council of Ministers. I am glad that my right hon. Friend will be able to exercise his influence to ensure that it goes in the right direction.
  There is a paradoxical situation in the explanatory memorandum from the Treasury which shows, on page 3 of Annexe A, that the budget itself can be adopted by a qualified majority—by 41 weighted votes out of 58. That means that one would require 18 votes to block it. The United Kingdom, and even the United Kingdom and Ireland—Irish interests are not dissimilar from our own here—will make up only 13 votes. We could have a situation where the Council of Ministers adopted by qualified majority a budget in the European unit of account when the Council of Ministers had not agreed unanimously to the regulation introducing that unit of account. Perhaps the Minister will explain how this paradox could be resolved, either when he replies or when he returns from Wednesday's Council.
  I am pleased that after a transitional period of two to three years we have moved to a position in which there is a distinction between appropriations for payment and appropriations for commitment. The final stage of introduction of this system is an important advance.

  1251
  My hon. Friend the Member for Crewe (Mrs. Dunwoody), when discussing the budget and in particular what might be called the enormous telephone directory that we have received of some 700 pages, said how difficult it was to get through this document. Once again I pay tribute to the helpful explanatory memorandum from the Treasury, because it sets out very clearly the difference between the commitment appropriation and the payment appropriation for 1977 and 1978. There is possible confusion in this— in the Social Fund where there would appear to be an increase from payment appropriation from 141 million European units of account to 536 million European units of account between 1977 and 1978. This is not an increase of 400 per cent. as would appear at first sight. It is simply that the Community will pay its bills more rapidly in future and that in 1978 we shall have a once-for-all payment.
  It is worth saying that the figures written in for commitment appropriation relating to the Regional Development Fund have increased from 398 million European units of account in 1977 to 750 million European units of account in 1978. At this stage, that is only what is to be in the budget. The Council of Ministers has not yet agreed on this figure, but I very much hope that this will be finally agreed.
  These are the sort of areas where we want to see the development of Community spending, and similarly in industrial and energy policies where there has been an increase from 93 million European units of account to 250 million European units of account, an increase of 300 per cent. This also has not yet been agreed, and I hope that it will be.
  In reading the report, I rather like the new word which has appeared for MCAs. MCAs are now referred to as "agrimonetary expenditure". This is not a word that is on everybody's lips, but it is a bit clearer than MCAs.
  The hon. Member for Banbury made a number of remarks about the European Parliament. I leave aside his references to Members' expenditure. It was interesting to see in different parts of the budget that the lowest increase of 4·36 per cent. is attributed to the European Parliament.
  1252
  That suggests reasonably good housekeeping, though no doubt there could be improvements. But in making comparisons between the costs of this House and those of the European Parliament one must take into account the totally different situations—the fact that Members have to travel much greater distances, by air rather than by train, and the fact that there have to be translations.
  Whatever the hon. Member for Banbury may say about the French—I agree with much of what he said—for most people it is difficult to debate in a foreign language. An effective Assembly with effective committees must have translations. I know from the Council of Europe, where there is not total availability of translation, the difficulties faced by Members whose language is not spoken in the Assembly. They are inhibited from intervening in debates.
  Mrs. Kellett-Bowman: Would not the hon. Gentleman agree that there are already sufficient languages in the Community and that we must ask anyone else who wishes to join the Community to accept one of the existing languages? Otherwise, the expense of translation will be prohibitive.
  Mr. Roper: That is an interesting point, but it goes against my argument that people should be able to take part in debates in their own language. That does not necessarily mean a translation of all languages into one's own, but one should be able to speak one's own language and have it translated into a limited number of languages. The solution will be found in some such arrangement. Although younger Greeks are fluent in English, it would be unfair to restrict membership of an Assembly to those fluent enough in a foreign language to be able to take part.
  Page 20 of the document refers to the Community's powers to borrow. The President of the Commission has for some time proposed that the Community should have greater powers so that it can develop some of its programmes. I hope that that will be agreed soon as it will add flexibility in regional, social and industrial matters.
  My hon. Friend the Member for Crewe mentioned commitments outside the Community, quoting from page 646. It is true that in the reference to budgetary

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  amounts alone there is a discrepancy between the figure of 60 million units of account for Portugal and 172 million for the Maghreb countries, but if one totals the amounts granted in the budget and the amounts in the European Investment Bank, the interest on which is subsidised by the Community, one sees a dramatic change, as there is provision in this period for 350 million units of account in loans to Portugal and only 167 million in loans to the Maghreb.
  We have had a discussion which might have been relevant to this debate about what happens in committees in the European Parliament. Although tonight's debate has been useful, it might have been more so if there had been a Committee of this House consisting of Members of the European Parliament and other hon. Members interested in European matters. I hope that in due course the Select Committee on Procedure will recommend something of the sort.
  8.40 p.m.
  Mr. Hugh Dykes: I agree with the last suggestion of the hon. Member for Farnworth (Mr. Roper), depending on how it was precisely worked out.
  This debate has strayed from the initial examination of the budget as presented by the Chief Secretary into a detailed analysis of some particularities of the European Parliament. I do not feel that it is appropriate in the short time available to carry out a detailed examination of how the European Parliament functions—whether in its expenditure, the expenses of individual Members or its operational characteristics—in a debate on the Community budget. That would be out of place because this fascinating and interesting subject needs a lot of time to itself. Therefore, one can touch only fleetingly on one or two details.
  I should not like in any way to follow the inference of my hon. Friend the Member for Banbury (Mr. Marten) in casting not aspersions in a particular and personal way on individual Members but a general slur on the way in which expenses may be paid in the European Parliament. I agree with my hon. Friend's anxiety, but for a different reason. The main faults are partly the way in which the system of expenses payment is con-
  1254
  structed but mainly, as in all these matters, a reflection on the poor relative economic position of this country compared with the leading members of the Community. It is all very well to quote individual figures and expenses and to say that they seem lavish, sizeable and considerable. They seem so only in British terms; in Continental terms they are reasonable. The dilemma is that one cannot differentiate and have lower payments for relatively poorer nations and higher ones for the better-off.
  Mr. Marten: I should like to make it absolutely clear that in quoting from the article in The Sunday Times I was saying only that there was enough in that article to make people anxious and that the matter therefore needs to be cleared up —nothing more and nothing less.
  Mr. Dykes: Obviously, my hon. Friend the Member for Banbury was agreeing with that article, but his idea of issuing warrants and instruments to enable journeys to be made seems to be the rational way of developing this. The problem will become even more alarming after direct elections, when salaries will start to be paid and there will be the important relationship between salaries and expenses. I hope that the House and other European Parliaments will apply a searchlight to that.
  I should like to say something about the budget, but I do not have time to go into details. Incidentally, two and a half hours is an unsatisfactory time for such a debate because there is a tendency for some hon. Members—who have already spoken previously—to speak for too long.
  The budget represents a groping and faltering step in the right direction through the onset, for the first time, of own resources. That is not the same as the creation of an autonomous Community budget in the intrinsic sense of that adjective. I hope that the budget will develop as soon as possible not only in size but along the lines of autonomous decision-making and decisions on spending under the various heads.
  As for the procedures for the budget in the European Parliament, the way in which they are scrutinised by national Parliaments is unsatisfactory. It is a Byzantine and mysterious process within the European Parliament. My hon.

  1255
  Friend the Member for Scarborough (Mr. Shaw) has done the House a great service in explaining some of the mysteries. However, the discrepancies in assessments, and the fact that the final budget is different from the preliminary draft produce enormous obfuscation and an opportunity for deliberate obfuscation by the Council of Ministers. I hope that parliamentarians, national and European —and perhaps, to a lesser extent, even the Commission—will work hard together to overcome this central problem.
  The development of the budget is an urgent and pressing matter and, therefore, it is related directly to the paradoxical and rather illogical argument about the contribution. The hon. Member for Crewe (Mrs. Dunwoody) complained about the net contribution made by the United Kingdom. However, we shall perpetually be complaining about the contributions of various member States, and if the United Kingdom remains one of the laggard economies in the Community we in particular shall complain about the contribution.
  However, since our contribution to the Community budget by definition replaces current or future items of national expenditure, this is not really a contribution in the sense of a direct financial burden. It is a payment into a common budget for, I hope, the common good. The way that it is distributed is partly connected and partly separate, but even that can be decided at a political level in a satisfactory way if the member States' economies do what they should have done—and what they always did up to the time of the oil crisis at the end of 1973—namely, by and large and with some detailed exceptions in performance, move together.
  Economic convergence and development of the Community budget go hand in hand. This is not a strategic budget in the national sense of a budget with deficits, surpluses or coming into balance as a result of deliberative economic management performance. It is a passive receipts and payments budget whose original political aim was to prop up the inefficient farmers of Germany and France. That motivation is declining fast, although agricultural expenditure remains high at about 70 per cent.
  1256
  I hope that the budget will transform itself from an artificial passive budget into an autonomous budget that is more dynamic in its deliberative effects and that it will be decided more collectively with the European Parliament having a more direct say over the whole of the budget. At present, the European Parliament has a direct say in less than 10 per cent. of the budget. It should become a positive instrument for the good of all the citizens of the Community.
  Lest my hon. Friend the Member for Banbury be alarmed, I should stress that this has nothing to do with federalism. It is a real long-term expression of the Community in practical terms, developing common funds to counter such problems as unemployment and doing things for the common good that national Governments cannot do.
  8.47 p.m.
  Mr. Tam Dalyell: Owing to the amount of time available, my speech is necessarily "itsy-bitsy", so I shall put seven brief points to my right hon. Friend who will choose to reply to some, all, or none, according to taste.
  The first is that many of us on the Budget Committee are worried about what will happen if there is a bumper harvest. Commissioner Spinelli, from his knowledge of Italy and the Commission, and others outlined the acute problems that such a harvest would render and, since it looks as though there will be a bumper harvest from Italy to Scotland, can my right hon. Friend say what contingency financial plans have been prepared?
  The second matter concerns the Treasury. Ministers will know from long correspondence with Director-General Schuster that there is a real problem in energy financing matters in the Community in relation to energy expenditure by national Governments. The Treasury has taken the view that if more funds are put into certain common research projects, much less will be available for institutions in Britain doing similar work. This is a long story and I do not expect an off-the-cuff answer, but there are real problems here and I hope that Treasury Ministers will look at them and the role that they have.

  1257
  This is a matter that could well be discussed on 20th July. It is a question of priorities and I hope that Britain will be particularly sympathetic to the Community's feeling that, if there are any cuts, energy should be protected.
  The third point was raised by the hon. Member for Scarborough (Mr. Shaw) who, like me, is vice-chairman of the sub-committee on control. I agree with what the hon. Gentleman said about the audit court, but we want some philosophy established on the question of confidential documents because this is a grey area. The Chief Secretary knows what happened on the malt issue and that should not be repeated.
  There must be clearly established guidelines about the availability of documents. I am not persuaded of the value of a massive handover of secret documents, but there are occasions when some rules should apply as they do with our Public Accounts Committee. Have Treasury Ministers any view on these delicate issues?
  Fourthly, there is the worry about Article 131. I have sympathy with my right hon. Friend's point of view. But is there not a danger that, as with JET, if we are not careful we shall slip into a system of generalised blackmail and tit for tat? That would be very unhealthy for the development of the Community?
  Fifthly, many of our problems arise from the fact that the pound sterling is undervalued. More and more of us believe that a proper rate for the pound, without any damage to British export potential, would be ․1·90 or even․2. There are many people in Brussels who think that the fact that the pound is undervalued is the source of many of our current problems.
  Sixthly—this I regard as an important question—my right hon. Friend—I would comment on his personal assiduity in coming to the European Parliament—has now had six months' experience as President of the Council of Ministers. I understand why the Foreign Ministers should be appointed by rotation, but I would ask whether, on reflection, he thinks that this revolving presidency for six months every so many years—it will be six months every six years, presumably, if
  1258
  Greece, Portugal and Spain accede—is a sensible way of conducting the necessarily highly complex, delicate financial affairs of the Community. It hardly seems that six months is a suitable period to get together not only Ministers but a whole set of different officials.
  Can one run an efficient policy on this basis? Has not the time come to inject some ingredient of permanency into this revolving presidency, particularly in relation to financial affairs?
  Lastly, come enlargement, will there be the same automaticity in the various organs of the Community, particularly the financial organs, which has hitherto been taken for granted? Should the position not be made plain to any of my fellow Scots who think that a separate Scotland hived off from the United Kingdom would automatically be entitled to representation as Scots on the Council of Ministers, the Commission and on all the organs of the Commission? That would be unacceptable if for no other reason than that it would be unworkable.
  8.53 p.m.
  Mr. John H. Osborn: It was my intention to speak in the earlier debate on energy. I shall now take the opportunity in this debate of dealing with two points. I have been interested in regional policy and energy. On the budget, the Chief Secretary outlined the global picture and my hon. Friend the Member for Scarborough (Mr. Shaw) outlined the work which is going on in the committees of the European Parliament. My hon. Friend is rapporteur for the budget, and there are rapporteurs in the committees who will look at the various issues. That work is going on now. That is why the timing of this debate is so important. It is right that there should be this debate in the House of Commons now.
  I regret that agriculture still dominates the budget. Either 60 per cent. or 69 per cent. is devoted to agriculture. Bearing in mind, however, that the Community budget is so small, should we not reconsider this proportion? Energy research, which might include industry and transport, is only 4 per cent. of the overall budget. The Regional Development Fund is still only 6 per cent. of the overall budget, although there has been an 88 per cent. increase.

  1259
  The increase which we are concerned with, in thousand million units of account, is from 10·2 to 12·4 on appropriation of commitment, a 21 per cent. rise. The increase in the appropriation as to payment is from 9·58 to 11·85, a 23 per cent. increase. These increases are considerable.
  Over the next decade, energy and agriculture will be subjects of vital importance both for the Community and for the world as a whole. We had a valuable debate on energy earlier tonight, and before that there was a debate on British energy policy. When I was in Strasbourg I was able to see these matters from the European viewpoint and I could see the impact of the British approach on the problems which are dealt with there. It is possible in that way to see how the views we hold here fit in with the views of our German and French counterparts.
  In our earlier debate, this afternoon we discussed five draft proposals on energy, covering financial aid to demonstrate energy-saving projects, new sources of energy, modernisation of existing buildings, the performance, maintenance and insulation of heat generators, and the general view of energy in the Community. Whatever we do in the Community, particularly in relation to energy, must coincide with the international approach and particularly that of the OECD and IAE.
  Our discussions earlier were perhaps related to the cost of energy. Constituents saw me at the weekend complaining that electricity had gone up by 60 per cent. and gas by 30 per cent. over the last three years. Some of my constituents have put in control mechanisms, insulation and double glazing to cut down their energy bills. Too many people do not realise, however, that the world faces an energy crisis and that over-dependence on oil could create difficulties for us in five, 10 or 15 years hence. There is a need, therefore, to look elsewhere for energy. The problem is that the demand for oil threatens to outstrip supply. North Sea oil is a product that we might want to sell to the rest of the Community and assist our balance of payments.
  The Community is an economic entity. In energy and agriculture it wants to be less dependent on outside sources of supply and to avoid the vagaries of the
  1260
  market. [Interruption] If you will interrupt me and tell me when I should sit down, Mr. Deputy Speaker, in order that the Minister can make his winding-up speech, I shall be happy to do so.
  Mr. Deputy Speaker: That is not a matter over which I have any control.
  Mr. Osborn: I understood, Mr. Deputy Speaker, that I could speak for another six minutes without preventing the Chief Secretary from replying.
  Mr. Deputy Speaker: As a postscript, I suggest that the hon. Gentleman addresses himself to the budget.
  Mr. Osborn: I shall certainly take your advice, Mr. Deputy Speaker. In fact, the budget has items of expenditure on research and energy. Earlier today we were debating underground gasification and expenditure on geothermal energy. There have been debates on the various research organisations' work on hydrogen as an energy carrier. One or two items have been excluded, perhaps, such as wave power and tidal sources of energy. However, the implications are that there are many items of expenditure in energy, industry and research that are better handled as part of a Community budget, not as additions to national expenditure.
  Obviously, if I wanted to criticise I should refer to Articles 321, 322, 323 and 324 dealing with hydrocarbon exploration and the exploitation of uranium deposits: and there is the need to consider the stocking of coal in power stations. Those are matters that are probably better dealt with as Community items. They should not fall on the budget of any one nation.
  There has been considerable discussion today on whether it is possible to cut out the flaring of gases. There is an item in the energy and research budget for their processing, refrigeration and compression of liquid petroleum gases which might be of use to the Community.
  The real issue is that Governments feel that they should have under their own control expenditure in these sectors. I very much hope that Treasury Ministers who will be speaking at the Council of Ministers—we must bear in mind that

  1261
  already there are threats that the Commission's proposals for research will be cut—will bear in mind that collective expenditure and the avoidance of duplication could be much more economical in the long run.
  In these areas of Community expenditure we must bear in mind that regional development is of value. Although certain countries can afford to contribute to less fortunate regions in their own lands, it is better to look at the Community as a whole and ensure employment and a reasonable standard of living in those areas. Such development should be considered on a Community basis rather than on a national basis. Therefore, I hope that when considering the budget we shall try to concentrate on the small items that will give us a return in the long run, such as ensuring our foodstuffs, energy for our industry and energy to help with our food supplies, energy being a great factor in agriculture. We must ensure that our collective institutions are financed, even at the expense of national institutions, providing that national institutions work for the Community on a contract basis
  I regret that in research terms the Commission looks only at the expenditure by the Community institutions and not at overall expenditure by national Governments as well. I very much hope that we can use the debate to focus attention upon the small items of expenditure and endeavour to draw a fair comparison with the expenditure of the other eight member States. If we do so, we have these issues in perspective.
  9.5 p.m.
  Mr. Nicholas Ridley: I am sure that the House would like to express its pleasure that my hon. Friend the Member for Scarborough (Mr. Shaw) is the rapporteur of the Budget Committee. I am sure that we can feel that our money is in safe hands because of the trouble and care that he takes.
  A theme of this short debate has been that hon. Members feel that the proportion of the budget which goes to agriculture guarantees is far too great. I do not think that anyone would dissent from that, nor that nearly 8,000 MEUAs is a large sum of money. I cannot agree with the Chief Secretary that the MCAs do
  1262
  nothing but good, not only to this country but to the whole Community. It is clear that there are no pig farmers in either Heywood or Royton. That must be taken as certain. He will find that there are various other livestock producers who are not as happy about MCAs as he.
  He may argue that cheap food is a useful political plank for the Labour Party. I have never understood why members of the Labour Party are so in favour of cheap food while cheap television tubes or footwear do not seem to please them. I have never understood that ideological difficulty. We should all like to see pressure for the reform of the agriculture policy.
  Another thing that has emerged from the debate is the devastation upon Community affairs that the Government's disastrous handling of the British economy has caused over the last four years, particularly the fall in the value of the pound. As my hon. Friend the Member for Banbury (Mr. Marten) said, those who attend the Assembly are able to secure a profit on their expenses because the money with which they are reimbursed is worth more than the money that the Chancellor of the Exchequer inherited in 1974. I agree that that needs to be examined, but it is not a major problem. My hon. Friend said he wished to look at that with a fine tooth comb. That would be a physical feat.
  I turn to the question of MCAs and the green pound. The fall in the value of our pound has caused the problem. The difficulty of getting the green pound down again bedevils the whole of the Community as well as the British farming community. It is clear that the CAP was not designed to have people such as the Chancellor of the Exchequer causing wide swings in currency values. That has made the system almost unworkable.
  A third area that has been affected is that of the value of the European unit of account. We welcome that there are now 1·5357 EUAs to the pound but we wonder how soon it will get out of line again. The hon. Member for East Lothian (Mr. Dalyell) thinks that it might go up. If that is so, it will put the relationship out of line again. We shall have continual change and the problem of the value of different currencies. The value of our budget contribution has been affected.

  1263
  There seem to be so many figures. The hon. Member for Crewe (Mrs. Dunwoody) said that there was an air of mystery about the figures. Indeed there is. I take the figures from the House of Lords Select Committee, which is more likely to be right on a matter such as this. Their lordships have nearly always succeeded in getting at the truth, and I am sure that they have on this occasion.
  In the year for which this preliminary draft budget is intended, we are to contribute £1,092 million and are likely to get back £530 million, meaning a net contribution of £562 million. This is becoming quite a hefty sum and the right hon. Gentleman must control it as hard as he can. We shall support him in his efforts to get that figure under control.
  Moreover, if it had been indexed, as it were, and had taken into account the fall in the value of our currency, it would be another £200 million—I may be wrong in my figures, but it is difficult to get at them—totalling nearly £760 million. By 1980 indexation will apply when Article 131 runs out—that is, if we get away with it even until then. The right hon. Gentleman is stacking up a nice little problem for the next Conservative Chief Secretary, both on present figures and on present forecasts.
  This is a situation with which we all ought to be concerned. We must be concerned not only with the Community budget but about the fact that our share of it has become disproportionately large. That in part relates to matters which several of my hon. Friends have raised and partly to the fact that agriculture plays such a great part, which brings us back to the need to look at the common agricultural policy again. The only solution to the problems caused by the changing value of currencies, particularly the fall in the value of the pound, is to move towards economic and monetary union.
  I ask the Chief Secretary to look at the cost of the collection of value added tax by national authorities. To my surprise, we are to spend 649 million European units of account to pay back national tax authorities for collecting just 1 per cent. of VAT. I suppose that for us the figure will be about 40 million EUAs. I cannot believe that to pay out
  1264
  1 per cent. of our VAT is really going to cost 40 million EUAs. It seems an unnecessary sort of subsidy. Will the right hon. Gentleman cast his steely eye on that part of the budget?
  The hon. Member for Farnworth (Mr. Roper) said much with which I agree. He suggested that we should move towards allowing the Community to borrow more. At the moment it can only borrow 1,000 million EUAs. But we have to ensure that it can develop a proper budgetary process and begin to influence economic affairs. One would like to see most urgently the harmonisation of national taxes so that we did not have to pay the beastly taxes that this Government have put upon us. It would be nicer to have Community taxes than Barnett's taxes.
  Finally, we have to get back towards the freedom of movement of capital. It is steps such as these that will make the Community budget a real budget and move towards a solution of the many problems that bedevil the Community and its economic progress.
  9.14 p.m.
  Mr. Joel Barnett: The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has one simple philosophy. When he does not know what he is talking about —which was very obvious from his speech—he has a party political "go". That is crystal clear. That will be the reaction of anyone who reads his speech in Hansard I see one of his hon. Friends nodding. I have only two minutes in which to reply, but in passing let me assure the hon. Gentleman that my electors are perfectly happy to have cheap pigmeat and any other kind of cheap food that we are able to provide for them.
  In two minutes I shall not be able to reply to the many excellent contributions to the debate, including speeches by my hon. Friends the Members for Farnworth (Mr. Roper), Crewe (Mrs. Dunwoody) and West Lothian (Mr. Dalyell). As I shall be unable to answer many of the questions that have been raised in the time available, I assure all hon. Members that I have taken very careful note of the points made and I shall bear them very carefully in mind when I represent this country in Brussels on Wednesday.

  1265
  Many hon. Members have spoken about the European unit of account. My hon. Friend the Member for Farnworth was right in his analysis of the situation, but, despite the fact that the budgets can be adopted by a qualified majority, the fact remains that the financial regulation to change the unit of account to the European unit of account requires unanimity. Since I am opposed to it, that might be difficult.
  The point made by the hon. Member for Banbury (Mr. Marten) was very effectively answered by many hon. Members on both sides. I assure him that a directly elected member of the European Parliament will pay United Kingdom taxes on his salary whatever its size.
  It being two and a half hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to the Order of the House this day.
  Question agreed to
  Resolved
  That this House takes note of Commission Document No. R/1541/77 relating to the EEC 1978 Preliminary Draft General Budget, together with R/1013/77, R/851/77, R/1226/77, R/480/77 and R/848/77.

  EUROPEAN COMMUNITY (REGIONAL DEVELOPMENT FUND)
  9.16 p.m.
  The Minister of State, Department of Industry (Mr. Alan Williams): I beg to move,
  That this House takes note of Commission Documents Nos. R/1611/76, R/1334/77 and R/1613/77 on the European Regional Development Fund.
  There are three documents before the House. Two of them are retrospective: the Scrutiny Committee's report on the first annual report of the European Regional Development Fund, and the second annual report of that fund. Perhaps more importantly, the third document is the Commission communication concerning the guidelines for Community regional policies. As this looks ahead to proposals that will apply in the next phase of EEC regional policy on the basis of this third document, I think it reasonable to say that we may possibly be at a watershed in terms of the policy of the EEC. The first three-year period of the fund expires at the end of this year. The Commission is considering what changes should be recommended, and member Governments will have to consider those changes. The reports look back on what has been done, and the Commission's proposals raise many interesting and somewhat controversial issues.
  I was in Brussels on Thursday last week to discuss certain aspects of regional policy with some of the Commissioners, and I shall be having further discussions with Commissioner Giolitti, the Regional Commissioner and Commissioner Vouel, the Competition Commissioner, in the next two weeks. It is, therefore, appropriate that we should have this debate today so that I have this opportunity of hearing the views of hon. Members on both sides and that I should be able to take these into account and relay them to the Commissioners when I meet them in the next 10 days or so.
  It is useful to look backwards first to the two annual reports to put the discussion in perspective. The fund began operating in 1975, and I am sure that all hon. Members will commend the Commission on the efficiency with which it has operated the fund during that period. The

  1267
  fund operates through national Governments, and assistance must be coordinated with the national Governments' regional aid programme. Aid can be given, in somewhat different conditions, for infrastructure and industrial projects. To be eligible, industrial projects must fall within the framework of regional development programme projects of member States and must receive national aid. All applications have to be submitted by member Governments. Inevitably, as with our own Section 8 scheme, there is a difference between the rate of payment and the rate of commitments, because the commitments are for projects spread over several years, but at present our own commitments under the fund take up almost all our share of the quotas. There is a small amount still in hand, but we have half of this year left.
  Payments from the fund are on a quota basis, and the United Kingdom's share is 28 per cent., which inevitably makes us net beneficiaries. With these additional funds in 1975 we were able to take the additional funds into account in devising advance factory programmes, for example. The announcement on 27th June of extra assistance to special development areas was able to take account of the receipts that we know are coming from industrial projects.
  Hon. Members may wish to know that applications for fund assistance have been made in many instances for Government advance factories, so that so far the commitment of the fund in this respect amounts amounts to £5·8 million in England, £2·8 million in Scotland, £3·3 million in Wales and £1·2 million in Northern Ireland These are all commitments relating to advance factories.
  Mrs. Winifred Ewing: Would the Minister care to comment on the principle of additionality?
  Mr. Williams: I think that the hon. Lady must let me get a little way into my speech.
  Mrs. Elaine Kellett-Bowman: Is the Minister aware that, if local authorities and those best acquainted with regional problems could have their say, advance factories would be very low on their list of priorities? They
  1268
  would prefer the elimination of bottlenecks to these advance factories, many of which are unoccupied.
  Mr. Williams: That is not necessarily the information that we receive from local authorities. It may be so, in the hon. Lady's experience, in relation to particular local authorities. I can only tell her that local authorities in general are eager to be participants in any advance factory programme.
  Concerning additionality, the system that we operate, as the hon. Member for Moray and Nairn (Mrs. Ewing) is aware, is retrospective. This applies in most of the member States. What happens is that, because of the way in which the scheme works, there are projects on the industrial side that have been approved for assistance under our system of regional aid and subsequently are approved by the Commission. They have already received the incentive that has led to the investment. The investment is committed. Therefore, the additional funds that are now available from the Common Market are added to our resources for regional industrial development, and such things as extra advance factory programmes are financed out of these additional funds and․
  Mrs. Kellett-Bowman: Will the Minister give way?
  Mr. Williams: I shall give way in a moment. Perhaps the hon. Lady will let me finish a sentence. On the infrastructure side, as hon. Members will be aware, the system operates somewhat differently. I shall come to the question of infrastructure shortly.
  Mrs. Kellett-Bowman: On the Minister's own admission, the incentive has already been given, in his estimation, by our own regional development programmes. Therefore, on his admission, there is no additional incentive by reason of the European Regional Development Fund. Will he admit that that is so? The money goes direct into the coffers of the Treasury and offsets the budget deficit rather than giving additional help to the regions, because the right hon. Gentleman's Government have prohibited local authorities from making any additional investment by reason of the fact that they have regional aid.
  Mr. Williams: The hon. Lady is confusing two different circumstances.
  Mrs. Kellett-Bowman: The hon. Lady is not.
  Mr. Williams: The hon. Lady might care to listen, and others might care to listen if she gives them the opportunity.
  The fact is that the regions are not deprived of extra assistance. If the hon. Lady follows the logic of what she is saying on the industrial front, she will realise that if the investment is already committed the regions are not losing any investment.
  Mrs. Kellett-Bowman: They are gaining nothing.
  Mr. Williams: Of course they are. They are gaining the finance that the Government use to build extra advance factories, for example, over and above those that are already in the programme. [Interruption]
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. If the hon. Member for Lancaster (Mrs. Kellett-Bowman) is hoping to catch my eye in due course, perhaps she will restrain herself until that moment comes.
  Mr. Williams: Therefore, on the industrial front the region has the benefit of the investment that originally gave rise to the funds from the EEC, and, secondly, it has the benefits of the projects that the Government are additionally able to finance from the fact that these EEC funds are available. There is, therefore, additional benefit to the regions.
  On the infrastructure side, again the benefit is felt by individual local authorities, because what happens here is that the local authority receives the finance and is able to use that against its own borrowing requirement. However, Opposition Members are continually lecturing the Government about the need to keep within public expenditure programmes. As the finance that comes from the EEC counts against that same public expenditure ceiling, inevitably we must take this into account, and therefore, while it saves the local authority in terms of its borrowing requirement, it cannot become extra infrastructure in our total programme.
  Mrs. Winifred Ewing: Is the Minister saying that our practice in the United Kingdom is the same as the practice in other member States?
  Mr. Williams: It certainly is, on the industrial side. If the hon. Lady would care to look at the practices of other countries, she would find that none of them gives the finance to the project which has given rise to the EEC grant.
  Mr. Kenneth Clarke: Would not the Minister agree that some other countries, notably Italy, make a far more convincing demonstration of the additional benefit that European regional aid gives to their depressed regions? Although the right hon. Gentleman has given a clear exposition of the case, will he accept that it does not carry great weight within Europe and that some people feel that if the Government had given a more convincing demonstration of their acceptance of the principle of additionality, we might have had some further development of European regional policy?
  Mr. Williams: I cannot accept that proposition at all. We can clearly point to projects which have arisen over and above original programmes as a result of the Government's policy in relation to industrial projects.
  Mr. John Evans: Will my right hon. Friend accept that Italy has a rather strange record of public expenditure in many areas? Will he take it from me that there is some suspicion about Italian public expenditure? Will he also accept that the most centralised country of all, France, will not publicly disclose where the regional allocation funds from the Community are going?
  Mr. Williams: I am grateful to my hon. Friend. I am sure that if hon. Members would look at the practices elsewhere they would find that our practices are not out of step with those prevailing within the rest of the EEC.
  Let me now turn to infrastructure and demonstrate some of the benefits we have received. The fund has provided £10·6 million towards the £90 million Kielder reservoir in the North of England. In Wales there has been redevelopment of the site of the Dupont steelworks at Briton Ferry by West Glamorgan County

  1271
  Council. There has also been an allocation of £1¾Q million for infrastructure projects in the Ebbw Vale area. A contribution of £1·2 million has been made towards the construction of the £10 million Hoscar sewage treatment works in the North-West. A contribution of over £3 million has been made towards the new marine terminal for handling iron ore and coal at Hunterston. In Northern Ireland there has been a contribution of £2·7 million towards the cost of connecting the new Kilroot power station to the national grid.
  In addition, there have been various individual industrial projects and service industry projects which have been supported. Obviously all hon. Members, regardless of their views on the Government's role, will welcome the supplement which we receive from the Regional Fund. I was pleased that earlier this year the Regional Policy Committee was able to visit the United Kingdom to see some of the areas which are the recipients of these benefits. It is of paramount importance that those now trying to frame policy in the EEC, not only those in the Regional Committee but those dealing with competition, should understand the basic fact that our problem is substantially different from the regional problems of many other parts of the Common Market and that, as a result, our policies have to be tailored to deal with that situation.
  Our problem is that we are the oldest industrialised country, which is now restructuring its industry․
  Mrs. Kellett-Bowman: Will the Minister give way on this point of dereliction?
  Mr. Williams: I am not on the point of dereliction.
  Mrs. Kellett-Bowman: You are.
  Mr. Williams: The point of considerable importance to the regions is that regeneration depends very much on our ability to regenerate the traditional industies—[Interruption] I wish that the hon. Member for Lancaster (Mrs. Kellett-Bowman) would let me finish a sentence. She does not need to bounce up and down. I have noticed that she wishes to intervene, and I shall let her do so presently.
  1272
  I would like to get beyond a comma. A full stop makes a pleasant interlude every now and then.
  It is important to us that we retain our ability to provide the regional development grant for replacement investment as well as for original investment. This will be of considerable significance in the future in relation to the competition directorate and, taken in conjunction with the document before us, it gives a very worrying view of how regional policy could develop if certain thoughts within the Commission were allowed to become paramount.
  Mrs. Kellett-Bowman: I am grateful to the Minister for giving way. Although he may not have realised it, he was referring to the very considerable problem of dereliction which afflicts certain parts of the country, particularly my own area in the North-West. Is he aware that when we raised this crucial problem of industrial dereliction in the European Parliament his own colleague from the North-West, the hon. Member for Newton (Mr. Evans), voted against our attempts to get assistance for dereliction from the European Parliament?
  Mr. Williams: The hon. Lady should watch the antics of some of her hon. Friends in this House. Only a week ago they were trooping into the Division Lobby against assistance under Section 8 of the Industry Act 1972. An individual speech and an individual vote against a particular policy which the hon. Lady supports is very little compared with some of the irresponsible antics indulged in by the Conservative Front Bench and by some of her colleagues.
  The important point to bear in mind in approaching the new phase is that all member Governments have already indicated that they want the fund to continue. The Commission has put forward its policy proposals, and it is these which are, I suggest, of particular importance to the House.
  Until now the fund has not acted as an expression of Community regional policy, because there is no Community regional policy as such. The policy document can perhaps be seen as the first step in this direction, and we need to be generous and recognise it as a first tentative step. It is a comprehensive survey

  1273
  and contains some interesting innovations. Obviously we shall want to give it careful consideration, but there are certain features of it that I feel I should spell out to the House.
  First, let us look at the suggestion that there should be a biennial report prepared by the Commission on the economic and social development of the Community's regions, on the basis of which the Council would set priority objectives for regional development, to be followed at Community level, and the Council would then fix guidelines for both Community and national regional policies.
  I am sure that it was put forward in the belief that it would bring about more quickly a degree of equalisation in the development of the various regions. Frankly, I am not convinced that the method is soundly based. The problems of the regions throughout the EEC are highly diverse, and in our own country they are very long-lasting by the nature of the industries which are already in those regions. The restructuring of basic traditional industries is necessary, and this can be achieved only over a longterm period.
  I can see value, certainly, in the exchange of experience and information between member Governments and the Commission, but I am convinced that it would be over-optimistic to expect successful results from an untested, complicated and rather mechanical form of Community policy-making. There is no Community experience to back up the belief that its approach to regional policy would be better than the approach which successive Governments have pursued in this country.
  I suggest to the House that it would be rash in the extereme to subordinate our own judgment, based on a great deal of experience of the particular problems of our regions, to that of the Council, in which our colleagues, although they may have long experience of the problems of their own member countries, have had experience of problems which are largely different from ours. In passing, I point out that the Council has never yet devoted as much as half an hour to the problems of specific regions.
  I am also convinced that the proposal is unrealistic for other reasons. Let us compare the expenditure on regional
  1274
  assistance from United Kingdom sources with expenditure from Community sources. The net benefit to the United Kingdom from the first three years of operation of the fund is about £60 million, or £20 million a year. That is what the Community contributes to this country over and above our own share of expenditure. Our estimated net expediture on regional aid to industry in 1977‣78 is over £380 million. In addition, we spend at least as much—in some cases it is difficult to break the figures down—on infrastructure developments in the regions. Therefore, we are comparing a national rate of expenditure of about £800 million a year with receipts from the fund of £20 million a year.
  There is no doubt, on any assessment of the scale of expenditure on regional policy, that the responsibility for regional policy rests now, and must continue to rest, with national Governments. It would not be sensible to give a power to make the decision on how we deal with the problem to those who are not meeting the costs.
  Sir Anthony Meyer: There is an enormous difference between sums that come from the Community and the sums which the Government devote. But is it not a fact that every £1 that the Government pay to regional aid is £l which has to be imposed on every industry within the United Kingdom, whereas every £1 that we get from the Community is a net benefit?
  Mr. Williams: I appreciate the point that the hon. Gentleman is trying constructively to make, but I would point out that it is only this limited sum which is a net benefit. We make compensatory payments into the budget which offset any other receipts we have from the fund.
  Mr. John Evans Mr. John Evans rose․
  Mr. Tam Dalyell Mr. Tam Dalyell (West Lothian) rose․
  Mr. Williams: I shall allow my hon. Friend the Member for West Lothian (Mr. Dalyell) to intervene in a moment.
  Mr. John Evans: My hon. Friend's comment that the Council had not spent half an hour discussing regional policy is a condemnation of the Council and not of the Commission. Does he not

  1275
  also accept that the Commission's proposal to collate the statistics which apply throughout the nine member countries, in order to see what each is trying to do with regard to regional policy, is a worthwhile exercise? Does he not also agree that the power will rest within the Council and not within the Commission? If necessary, the power of veto still applies and the Council can veto any proposal.
  Finally, does my hon. Friend accept that some of us are not all that happy with some aspects of the British Government's regional policy, particularly the policy which gives enormous handouts to oil companies to go and prospect for oil in the North Sea? Perhaps that policy is wrong also.
  Mr. Dalyell Mr. Dalyell rose․
  Mr. Williams: It would be technically appropriate for me to interject at least half a sentence. Points of interjection on points of interjection are not normally accepted by the Chair. Having interrupted, my hon. Friend the Member for West Lothian is now welcome to make his comments.
  Mr. Dalyell: I seek clarification on the half-hour point. Was my hon. Friend's argument that the Council had not spent half an hour discussing regional policy, or was it that the Council had not spent half an hour on a particular region such as Wales or Scotland? If that is the situation, I do not see why the Council as a Council should discuss specific cases. General policy, yes, but specific cases, no.
  Mr. Williams: My hon. Friend is absolutely correct in his interpretation. That was what I was going to say in response to my hon. Friend the Member for Newton (Mr. Evans). I said that the Council had not dealt with the problem of specific regions. I am particularly pleased that we had the visit from the EEC earlier this year, because in devising regional policy it is essential that certain typical regions—so far as it is possible to devise a typical region—should be considered in depth before policy decisions are arrived at.
  My hon. Friend the Member for Newton said that at the end of the day the Council would take the decision. That
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  is absolutely correct. No one is criticising—
  Mrs. Kellett-Bowman Mrs. Kellett-Bowman rose․
  Mr. Williams: I have explained to the hon. Lady that it is helpful to allow the odd sentence to slip through before there is an interjection. I am still trying to deal with the previous two interjections. The hon. Lady has interjected three times now, not counting the various sedentary squawks that we have had to deal with during the debate. I am happy to conduct the debate in a reasonable manner. I have been speaking for 25 minutes, and I have hardly been allowed to develop a single argument. I am still dealing with only the first section of the proposal from the Commission.
  I come next to one of the matters to which my hon. Friend the Member for Newton referred—statistics. I agree with my hon. Friend that it is a very good suggestion that we should have a better statistical base in the EEC. The Government want to co-operate in any way possible. But the fact that this is needed in itself suggests that we should be cautious of solutions which so far have been devised within the Commission and which clearly, therefore, do not have an adequate statistical base. For that reason, we shall co-operate in the development of adequate statistics. But we do not want to be landed with policies and priorities which are not based on a full analysis of the problems. We believe that the development of a communal regional policy must be more pragmatic.
  The third matter concerns the greater co-ordination of regional aid. Here again we accept the need to avoid distortions of competition. We have to be careful, to the extent that the treaty was drawn up 20 years ago and that regional policy has become of much greater significance in the EEC—not just because of our membership but because of the economic developments in the EEC—than it was when the treaty was first drawn up. Therefore, I hope that those exercising control of the competition policy will bear this in mind. The June statement of the European Council echoed the call in March of the Council
  "to encourage high levels of investment in member States."
  We certainly proclaim that regional aids are a very effective way to assist in

  1277
  encouraging new investment and that it is greatly needed, especially at present when unemployment is running at unprecedented rates here and in Western Europe. There is a further proposal for a regional impact assessment. This is another innovation which is very interesting, and I am sure that it will gain the support of the House. The suggestion is that an assessment should be included in major Community policy proposals indicating the effect of the proposals on the regions. Therefore, this would apply even where the subjects under discussion were apparently and superficially completely separate from the regional issue. It would be sensible to go ahead with this, and we intend to encourage the Commission in its basic proposals.
  There are certain amendments to fund regulations. Many of these are detailed, but some are important changes. First, the sums allocated to the fund in future will not be specified in the regulations but will be separate items in the Community budget. I shall not go into the details of the changes in units of account and European units of account, both of which are involved in these calculations. However, the net effect is that the fund allocations will rise from about £200 million this year to about £430 million in 1978. The United Kingdom has a 28 per cent. quota and, therefore, our receipts will increase from £56 million to about £120 million, though these are gross and not net figures.
  In conjunction with this, the Commission put forward a proposition for a non-quota element. This is extremely important, and it is very difficult to assess how it should operate. I put forward a few thoughts on this because it is very important in the context of expanding the EEC when more Mediterranean countries, with their greater demands on the Community budget, become members.
  At present the moneys allocated are on the basis of quotas, and these are specified in the fund regulations. The proposal is that the bulk should be paid on existing quotas but that there should be a 13 per cent. element of non-quota allocation available for distribution at the discretion of the Community. It may be that certain projects for which this would be used would be highly advantageous, but on the other hand it raises a difficult
  1278
  question in so far as this non-quota element does not reflect the priorities that are reflected by the quotas and, therefore, it undermines the regional priorities of the Regional Fund. In so far as it is decided that the non-quota element shall be allocated virtually in conformity with existing quotas, it becomes irrelevant and unnecessary. We remain to be convinced that a non-quota scheme is either practicable or necessary.
  I was interested by the suggestion that it could be used for an interest rebate scheme, but there are technical problems in relation to this. I do not want to prejudge the issue, and I shall welcome the views of hon. Members on the various propositions in the document.
  The document is basically one for consideration and further analysis by member States. There is ample opportunity for the views of hon. Members expressed here tonight to be included in the representations that the Government will make. I welcome further guidance from the House about the way in which hon. Members wish to see further discussions develop.
  9.47 p.m.
  Mr. Kenneth Clarke: The Minister of State gave a very careful and matter-of-fact description of the history of the Regional Fund and his first thoughts about the proposals for developing the fund that have been put forward by the Commission. But his review was cautious and guarded. He invited comments from hon. Members, but his own comments were heavily tinged with scepticism.
  I have had a certain sense of disappointment in listening to the Minister. I am disappointed with the development of regional policy in the EEC so far. If the Minister's guarded and sceptical approach is carried through in the Community, we shall be further disappointed about the rate of development in the foreseeable future.
  When we joined the EEC and then confirmed our membership in the referendum a great deal was made of the benefits expected to accrue to us from regional policy. I was not alone when campaigning during the referendum in making a considerable point about the advantages of this once we confirmed our membership. Although we have had a new

  1279
  regional policy since 1975, the rate of progress and the benefits so far have not been overwhelming.
  The first Commissioner in charge of this field of policy was an excellent British Commissioner, now Lord Thomson of Monifieth. The policy he initiated in 1975 comprised a modest three-year budget for the Regional Fund and a general policy which consisted only of hints of what might develop in the long term. Looking back briefly over the documents and reports of the first two years of its operation since 1975, one cannot expect a great deal because of the general economic atmosphere, which has not been conducive to rapid development of regional policy. The Community was plunged into a deep recession and a major symptom of that throughout Europe was the great increase in the level of unemployment—more than 5 million individuals in the Community as a whole.
  In some ways over the last two or three years the most rapid increases in unemployment have taken place in the developed areas. As a result, there has been less pressure to give regional aid to under-developed areas in some countries and where there has been pressure in areas in need of assistance, national Governments at a time of recession are only too anxious to demonstrate to their own electors what they are doing for them rather than to see a rapid development of Community policy.
  If there is a revival of the European economy, we may expect the traditional disparities in unemployment levels between regions—to reappear fairly quickly, in this country and elsewhere. With the changes that the recession may have caused, there may be new areas with new pools of lasting unemployment that need special attention. I shall only touch on the disparities in growth that have persevered throughout the recession between individual member countries. But once we have a revival of the economy, the problems of great disparities in economic activity between different regions will remain to be tackled on a serious scale.
  In deciding how we go forward in European regional policy, one has to decide the basic question whether we are satisfied that this regional problem should be tackled increasingly at Community
  1280
  level and not just at national level, and whether it should be tackled in an increasingly supranational way or appended to the individual national policies. Although we have been a member of the Community for some time, the problem is unresolved. It certainly is unresolved in the Minister's mind. Whenever the debate moves into the area of supranationality, he is obviously a considerable sceptic.
  Mr. Alan Williams indicated assent?
  Mr. Clarke: The Minister nods in approval. He is clearly not satisfied that there is great scope for tackling this problem on a Community level much beyond the present position. There will be a great variety of opinions among my right hon. and hon. Friends as well, hut my personal opinion on that key question, which determines one's approach, is that this area should be tackled increasingly at Community level and that there is considerable scope and advantage to everyone in a silghtly more supranational element.
  The problem of disparities between the regions is a Community-wide problem. The Minister is tight to point out that the causes may be very different in different places. Many of the other member countries have predominantly agricultural areas where there is a decline in employment on the land, no tradition of industrial activity and a need for such activity. The pattern in this country is of declining or temporarily depressed industrial areas where necessary changes have to be made from traditional industries.
  I shall consider and re-read the Minister's attempt to distinguish our problems totally from those of any other member country, but I am not sure whether our problems are so drastically different from those of parts of industrial Belgium, Holland or Germany. Although the causes of regional disparities may be very different in different parts of the Community, one can say that the symtoms of different regions are very much the same. What the member countries all have in common, from Greenland to the Mezzogiorno, with Clydeside on the way, is pockets of territory with persistently high unemployment, lower rates of increase of earnings compared with surrounding areas, inadequate levels of investment in new industries and a great need for resources to be applied to the

  1281
  problems to reduce disparities with surrounding areas.
  Mr. John Evans: Does the hon. Gentleman agree that the three major recipients of Community aid are Italy, Ireland and the United Kingdom? Surely he will not attempt to compare the problems of rural deprivation in Southern Italy and the West of Ireland with the problems of Clydeside, Merseyside, Tyneside and the industrial regions of the United Kingdom, which have a specific and different problem.
  Mr. Clarke: The hon. Gentleman has chosen two countries where, I accept—Italy in the Mezzogiorno and Ireland as a whole—problems are entirely different. But I cited others. Although the causes of disparities in regional economic activity may be different in individual countries, the effects are basically the same and we can identify our depressed regions with other areas where there is persistently higher unemployment, a slower rate of increase in earnings and a need to bring those areas in line with the level of economic activity in the rest of the Community, if possible.
  The problems are the same throughout the Community and this is one of those matters where it may be more beneficial to use the greater resources that can be applied by the Community as a whole. However, there must be more to it than that. Uppermost in my mind—with my views on the development of Europe—is that it is essential that there should be some reduction in the disparities between economic activities in different regions of Europe and a reduction in the disparity in economic activity between different member countries before we can make worthwhile progress with economic and monetary integration —and I regard that as desirable.
  Even if one does not share that aim, there is an advantage to be had by all member countries if by co-ordinating their approach to the common problems of regional disparities they can stop the competition in inducements and subsidies to investment that tend to take place between member countries if they all continue to tackle the matter individually. The Minister talked about the competition policy of the EEC and the importance of regional policy to it. In a supposedly free and open market where
  1282
  we are trying to remove barriers to competition, there is understandably a tendency for member countries to compete with each other in the levels of subsidy and inducements to investment which is totally inimical to free competition and is mutually harmful. That will continue if member countries keep bidding themselves up in an attempt to induce the transfer of mobile employment from one depressed area to another in a different member country. If one could stop competition in inducements in a supranational way, that might also make Governments less vulnerable to the political lobbying that leads to the support of such investment projects as the one announced earlier today, although that was in a non-regional context. Selective regional assistance has also been used by this Government, and no doubt by governments of other member States, to support projects for political rather than economic reasons.
  Although I am not over all as alarmed or sceptical as the Minister about the idea of tackling the problem at Community level or even looking at a degree of supranational activity, which was always the intention professed by the Government at the time of our entry to the EEC, I concede that there are dangers. One of the main dangers is that, if one builds up great Community activity alongside national activity, there are great dangers of public expenditure being driven up to intolerable levels by the duplication of effort. If European regional policy were to be developed and built on top of the present expenditures, of individual national Governments, the massive public spending that would result would probably mean a disproportionate amount of resources being devoted to regional policy—an amount unacceptable to all members, including us, at a time when all member countries are concerned about levels of public spending and the need to keep it under restraint.
  I realise that this gives rise to the point raised by the hon. Member for Moray and Nairn (Mrs. Ewing) about additionality which has greatly vexed the Community, because if we carry on increasing the size of the regional fund the principle of additionality could lead to massive increases in public expenditure. If one deals with this problem at

  1283
  a Community level, or even a supranational level, the amount of resources channelled through the European Regional Fund must ultimately mean a corresponding reduction in resources expended by national Governments.
  The one point of the idea of additionality that ought to survive is that, if we are to have a European regional policy developed, it should more clearly be seen to be providing funds to the depressed areas of this country. The Minister does not argue that we are not deriving considerable benefits from the Regional Fund, even though it is operating on a disappointingly small scale. If we develop a European regional policy, it is important that its application to European funds is clearly identified. Where its benefits in new industrial development are going to parts of this country, there is no reason for the population of those parts not to be given a direct appreciation of the benefits that the fund is bringing.
  Mr. Dalyell: What the hon. Gentleman says will be read widely in the Commission and elsewhere in Brussels. When he spoke of what happened earlier today, was he referring to the decision on the Drax B power station? If so, is he aware that many people believe that this was the right decision on technical grounds and that it is unfair to say that it was taken on political grounds?
  Mr. Clarke: I do not accept that I was being unfair, but there are more appropriate debates in which we could discuss this matter.
  Mr. Dalyell: The hon. Gentleman should withdraw what he said.
  Mr. Clarke: I shall not withdraw. I do not share the hon. Gentleman's opinion that it was the right decision on technical grounds. Whether technically right or wrong, it was arrived at because of crude political lobbying that overrode all technical considerations. However, Drax is not strictly a regional matter and I shall not allow myself to be drawn into debating those other instances in which regional funds have been applied for reasons that had little to do with economic policy or industrial strategy.
  1284
  Having given my reactions and views on how I should like to see the European regional policy develop—and my views are different from those of the Minister —I should like to review what is happening and proposals for developments. Since 1975 the problems, as opposed to the smooth advances, have turned largely on the problem of additionality and whether the British Government and others could satisfy the Community that the money being spent from the European Regional Fund was a bonus being spent as additional aid over and above national measures and not used simply as a substitute for expenditure by the Governments themselves.
  My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) and the hon. Member for Moray and Nairn have expressed doubts about whether the British Government have been using the money as additional aid over and above their own effort. There is a reasonable suspicion on the part of the Germans and others that the British Government are using taxpayers' money from other member countries and spending it on regional development projects on which they intended to embark in any case.
  Mr. John Evans: The hon. Gentleman is making a fair point that I hope to develop later. Is he aware that the previous Commissioner with responsibility for regional policy, the present Lord Thomson, is on the record as saying that the British Government's attitude to additionality was in accordance with the common wishes, principles and proposals that had been outlined?
  Mr. Clarke: I do not have that reference and I look forward to hearing it if the hon. Gentleman can turn it up. I have read the speeches of Lord Thomson when he was a Commissioner, and there have been times when he has expressed considerable doubt about whether the British and other Governments were accepting the principle of additionality which they had adhered to in theory but which seemed difficult to identify in practice.
  Mrs. Kellett-Bowman: Will my hon. Friend accept that the observations of the hon. Member for Newton (Mr. Evans) are misleading in that Lord Thomson has

  1285
  always alluded to the fact that the British Government were within the letter of the law but that other nations and the Commission were convinced that they were outside the spirit of it?
  Mr. Clarke: I am obliged to my hon. Friend, because what she has said has always been the thought at the back of my mind and has been my understanding of the position. Perhaps the hon. Member for Newton (Mr. Evans) will provide Lord Thomson's words rather than his interpretation of them.
  It may be that the Government have complied, but there has been considerable scepticism on the subject. The Italian Government, who have a 40 per cent. quota and are therefore under a heavy duty to identify what they are doing, gave convincing evidence that their expenditure in Southern Italy was clearly additional to resources that would otherwise have gone to that area. The Danish Government followed suit over Greenland and elsewhere, but in Britain the position is less clear.
  All applications are made by member Governments. In every member country infrastructure grants are paid over directly to the public and local authorities, as the Minister has described. In the case of infrastructure grants, there seems to be some clear and welcome addition to the resources which the local authorities would otherwise have, although they have been somewhat affected by the cash limits which my hon. Friend referred to which have been applied by local authorities.
  When it comes to investment by private companies, all applications are made by the United Kingdom Government and all the proceeds received from the fund have gone to the United Kingdom Government. The Minister of State has put forward the Government's consistent line that this has been taken into account in assessing national expenditure on regional policy.
  The British Government, as a bookkeeping exercise, have always identified their advance factory building programme as the area to which these extra resources are going. I believe that has been queried in Europe, and I am not sure whether the matter has been made clear.
  1286
  There are doubts even though the Minister has consistently put forward the case that he has put forward today. Those doubts have inhibited the development of regional policy in Europe. If the British Government, which had a great deal to gain from the development of regional policy, had been clearer in applying the principle of additionality, we might have seen a more rapid development of the Regional Fund. When looking at this matter from a selfish national viewpoint, the Regional Fund and policy seem to be one part of the Community's activities from which we are bound to, be net beneficiaries. There would be a little less to fear in this country than in some others from its rapid development.
  Mr. John Evans: The hon. Gentleman will see in Document 1611/76, at page 23, paragraph 57, that Commissioner Thomson in his annual report on the European Regional Development Fund deals with the question of additionality and makes it clear that the United Kingdom has stated that its receipts from the fund will enable it to go ahead with a greater level of regional investment than otherwise would have been possible. Will the hon. Gentleman also accept that, as chairman of the Regional Policy Committee of the European Assembly, Commissioner Thomson made a statement accepting the British Government's position in front of that committee in answer to questions from the hon. Member for Lancaster (Mrs. Kellett-Bowman) on two or three occasions?
  Mr. Clarke: I cannot easily find the reference. I shall look at it in Hansard tomorrow. I hear what the hon. Gentleman says. If the British Government had been in breach of their obligations, no doubt further steps would have been taken by the Commission.
  It seems to me that the application of the principle of additionality by the British Government was not of the clearest. We were intended to be the second major beneficiary under the national quota system. We would have benefited if the Government had made the point clearer.
  Mrs. Kellett-Bowman: My hon. Friend will see from paragraph 57, that Commissioner Thomson said only that the United Kingdom had "stated", not that he accepted that fact. I was present when

  1287
  these points were raised in the Regional Policy Committee. The Commissioner is a very polite man but he has not yet expressed his conviction that the British Government accept the spirit of this law. He merely accepts that these are the statements that they made.
  Mr. Speaker: The hon. Members for Newton (Mr. Evans) and Lancaster (Mrs. Kellet-Bowman) are among six hon. Members who have indicated their desire to speak in this short debate. I am beginning to get worried that if there are too many interruptions somebody will not be called.
  Mr. Clarke: I am obliged to my hon. Friend for giving me a second chance to find the reference, and I see that she is quite right. The document states that:
  "All member States have declared themselves in favour of the principle involved and have already taken certain steps to implement it. These are described briefly and the Commission is looking forward to further developments in the course of 1976 which it will follow closely."
  However, that does not seem to me to indicate a raptured endorsement of the Government's adoption of the principle of additionality. I am not saying that a Conservative Government would have gone much further. I am only saying that one of the consequences of the attitude of the last couple of years is that we have not seen much development of the Regional Fund.
  I turn now to the part of the debate dealing with proposals for the extenson of the fund and the development of the policy. An increase of 88 per cent. is proposed in the budget for the disposal of funds through the Regional Fund. That is a greater increase than in any other area of Community policy. The Minister of State gave his reaction to the proposed increase in the non-quota area. He did not give any indication of the Government's official reaction to the proposed increase in the overall size of the fund. Since the Minister seemed sceptical about everything he commented upon, I hope that his silence on this matter indicated that in the Council of Ministers the British Government will not be totally averse to an increase of resources for the regional policy.
  The EEC budget is not a budget as we understand it. It is more of a bid for political resources put up for decision by
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  the Council of Ministers. It is not a firm guarantee that the money will be expended. The Ministers will decide in that respect. I welcome the fact that the Commissioners are directing their attention to expansion on the industrial front rather than agriculture.
  An important part of the increase is that concerned with non-quota aid. It is proposed that 13 per cent. should be outside the existing national quotas and should be applied to particular areas by the Council on proposals from the Commission. There are certain areas where this could help in this country. Specific aid could be channelled to industries such as steel and shipbuilding. Other suitable candidates would be areas which were affected by policy changes in the Community, and that seems to me to include areas dependent on the fishing industry.
  My first reaction is to be totally hostile to some parts of what is proposed. The Commission is looking at the possibilities of a system for taking shares in the risk capital of companies through existing national regional development bodies. I do not expect any Conservative to be enthusiastic about projects of that kind.
  The Minister seemed sceptical overall, not so much about increased Community expenditure but at the suggestion that there would be more Commission and Council control and less national control of what was going on. This is all a bit of a long-term bid. I doubt whether the Commission is expecting this part of the budget to be adopted straight away, and no doubt it is experiencing considerable difficulty in getting the non-quota part of the budget accepted.
  I am disappointed however that the Minister turned this increased Community control down out of hand, and for the reasons I gave earlier I would not be totally adverse to the idea so long as there seemed to be considerable advantage in dealing with the problem at Community level. Let me underline my two reservations, however. First, I do not think that there is any way in which the British Government can consider such increased expenditure without contemplating it against a background of some corresponding reduction in expenditure on regional policy at home. One cannot allow the European regional budget to double while maintaining the same

  1289
  regional effort at national level without inevitably incurring greatly increased expenditure. Therefore, any increase in the resources channelled through the Community's regional policy must imply a hard look at our own national expenditure in an attempt to find a corresponding reduction.
  I am also worried at the way in which non-quota assistance might be handled in these circumstances. That might lead not only to increasing expenditure but to some increase in bureaucracy and administration. I am not clear whether applications for non-quota aid will still be submitted through member States. Those are applications for aid in areas that fall within whatever priorities have been chosen by the Council. I think that it is right to continue to channel applications for aid from the European Regional Fund through member States. Member Governments should make the applications. My principal reason for saying that is that if it were otherwise we would be bound to develop a huge bureaucracy in Brussels administering various applications for aid in respect of projects pouring in from different member countries.
  It is said that the EEC is a bureaucratic giant in its present form, but only 40 people or thereabouts are employed in the administration of the entire regional policy at Brussels. In this respect, as in one or two others, Brussels is something of a model in how to avoid bureaucracy and excessive administration compared with many Departments of State in this country. I trust that application through member Governments will be continued in any expansion, even for non-quota aid, the member Governments providing the initial sifting.
  Subject to that, surely the whole idea of expanding the budget and having a non-quota system is worth some reasonable and friendly discussion. The whole quota basis of dividing up the proceeds of the regional policy derives from a rather basic piece of horse trading when the fund was set up. The whole quota system is a difficulty that tends to inhibit development of the policy.
  What do I think about the regional policy itself? I speak of the policy as opposed to the fund. The Minister referred to moves towards co-ordination and monitoring. What have we had so
  1290
  far? The so-called "regional programme" from 1975 has not amounted to a row of beans. Each country has had to submit a regional development programme before the end of 1977. The one submitted by our Government is a general description of the United Kingdom's regional policy, which is not worth reading by anyone who has read the journals or followed the subject in this country.
  Mr. Alan Williams: Will the hon. Gentleman take it from me that we have been assured by the Commission that it is one of the best programmes submitted by any of the national Governments?
  Mr. Clarke: I accept the right hon. Gentleman's assurance. However, that underlines the case that the regional development programme has not taken us very far. I accept that others have been even more sketchy.
  We have had the Regional Policy Committee of the EEC for some time. A number of senior officials and experts sit on it. It is supposed to compare and co-ordinate regional policies and define Community objectives. The committee does not seem to have gone very far either. It seems that there is some point in having a more effective monitoring system, a system not exactly in line with what is proposed by the Commission but something in that direction with some priorities and guidelines being proposed from the Council on proposals from the Commission.
  My personal reason for being interested in that approach, although the Minister of State has clearly rejected it, is that it seems that it would minimise competition in lobbying for subsidies and the susceptibility of national Governments to parochial regional lobbies or firm political lobbies in favour of projects that, if favoured by one national Government, could be expensive for other industries under other national Governments.
  The Minister rejected this concept. His response to the idea of guidelines for national policy was rather to imply that they would inhibit the growth of United Kingdom regional policy. He pointed to the massive expenditure by United Kingdom Governments on regional aid that might be inhibited by European guidelines. However, we have had no indication as yet about the form of the guidelines that would be laid down by the

  1291
  Council. I do not expect guidelines to operate in the way that the right hon. Gentleman anticipates.
  I should not be surprised if guidelines coming from the Council tried to curb excessive expenditure by United Kingdom Governments on regional policy where there was suspicion that some United Kingdom assistance for investment smacked of being an internal subsidy for investment producing unfair competition for other member States. Those are my first reactions, and I look forward to hearing the reaction of hon. Members in considering where we should go from here.
  As we continue to discuss these matters, we shall come across many important problems in respect of regional policy. As the Minister said, we are now at something of a watershed. I find it astonishing how little discussion seems to have taken place within the Council and within the European Community on these
  1292
  problems. It is worth bearing in mind that Britain has had the Presidency of the Community for the past six months. It is astonishing that during our Presidency no meetings have been held of the Council of Ministers to discuss industrial policy. It is important to the United Kingdom to get the industrial side of the Community moving more quickly.
  I was told in an answer on 11th July that progress in European industrial policy in a number of areas was carried forward at official level. I have no idea whether we shall ever hear what progress was carried forward. I am glad, however, that the Minister had meetings this week with the European Commission to consider taking industrial policy matters further. I hope that the Government's scepticism will grow into downright lack of interest. If we can only agree to a further development and expansion of European regional policy, this country will, in my opinion, be a beneficiary.
  10.20 p.m.
  Mr. John Evans: I welcome the opportunity to participate in the debate. As chairman of the Regional Planning and Transport Committee of the European Assembly, I am entitled to draw attention to the unsatisfactory way in which the House debates important European legislation. The two Front Benches have taken over one hour of a two-and-a-half hour debate. The document is dated 23rd June 1976. We have not debated regional policy for over 12 months. The House should find more time to discuss such important matters.
  Mr. Alan Williams: My hon. Friend will recognise that I was interrupted at least 10 times in my speech. I was asked about details which took time to explain. He will recognise that the impact of these proposals, if they go forward in their present form, is so profound that I felt it right to take time to explain to the House.
  Mr. Speaker: The two Front Benches took 44 minutes. I hope that no one else will imitate them.
  Mr. Evans: I am not criticising either my hon. Friend the Minister or the Opposition Front Bench. I criticise the management team for allowing so little time for important debates on European matters. The Scrutiny Committee does a tremendous job but the amount of time that it can give to a number of documents limits its action, so that it can give them only a cursory examination. It then recommends that they be debated on the Floor of the House.
  We have had three short two-and-a-half-hour debates—on energy policy, the Community budget and now the development of the Community regional policy. One cannot help but recognise the futility of the exercise. Back benchers must ask themselves what they are supposed to be doing. Are we supposed to be influencing Ministers and arming them with views to express in the Council of Ministers and the Assembly, or are we making speeches that we hope will be read by our constituents? I am sure we are doing the latter, whereas we should be doing the former. Only time will tell whether we influence Ministers.
  Regional policy is one of the most important subjects for debate. President Jenkins said in February:
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  "We must see regional policy not just as a matter of renewing and spending a tiny Regional Fund, but as one of the main dimensions of Community economic policy as a whole."
  If the Government and the Opposition Front Bench believe that regional policy is one of the main dimensions of Community policy, more than two and a half hours should be given for debate.
  The European Assembly could teach the House in that respect. The Assembly has specialised committees which consider in depth the proposals which come from the Commission on a wide variety of subjects. The Commissioner responsible and his director-general visit these committees, and we can participate in the formulation of policy.
  The House of Commons could look at the question of appointing specialist committees to cover the same general areas as are covered by the European Assembly specialist committees so that we could discuss Commission documents in depth. My committee will begin consideration of the document on regional policy in December, and we shall spend about 10 times as long on that consideration as the House is spending on it in this debate. I am sure that most hon. Members appreciate that this is of considerable importance to the development of Community regional policy but that under the present system there is no way in which we can influence the attitude of the House of Commons in this respect.
  But we can at least impress upon Ministers that we are determined to ensure that Mr. Jenkins' aims are taken seriously and that we believe that regional policy must become the main plank of the Community's economic policies. What is important about Mr. Jenkins' statement is that, whilst in the past we may have had funds but not a regional policy, this latest document of policy, slender though it is —and one must accept political reality, just as the Commissioner responsible must do so—is the embryo of a regional policy which, given political will, determination and influence, could develop into a policy with profound implications for the future.
  With this in mind, we should have had more time to consider the important point made by the Commission about the necessity of ensuring co-ordination of Community funds which have a regional

  1295
  impact. In the past, various funds of the Community have not been used in the best interests of the regions of the Community, but if we can get the co-ordination that is needed we can get a much bigger impact.
  My hon. Friend mentioned the regional impact certificate. This again could have significance. I have a classic case in my constituency. When the Commission decided that the Community should be self-sufficient in cane sugar, 1,000 beet sugar workers on Merseyside stood to lose their employment. If we had then had a regional impact certificate based on that decision to become self-sufficient in cane sugar, there might have been second thoughts. It is nonsense on the one hand to grant aid from the Community to Merseyside but on the other hand to take decisions resulting in over 1,000 workers losing their jobs. It is, therefore, important that the Government should inform the House of their reaction to certain important innovations that the Commission is proposing and which will give a new dimension to effective Community regional policy.
  Do the Government accept that from 1978 the Regional Development Fund will be budgeted annually? Because it is non-compensatory expenditure, the Assembly will have greater say over it. I am sure that we all recognise the significance of that development in that the Assembly will, not by stealth but by natural progression, acquire further powers.
  Do the Government also accept the principle of fixing the amount of money available annually? While next year's sum of 750 million units of account is an increase, do the Government share the opinion of many of us that it is chicken-feed, especially compared with the amount of money available for agriculture? Do the Government intend to fight in the Council of Ministers to increase that sum substantially?
  While it is proposed that the national quotas should remain the same—28 per cent. in our case—there is the new proposal that the Commission should have 13 per cent. of the total for Community projects. My hon. Friend attacked this concept, but will he not recognise that it has been welcomed almost unanimously
  1296
  in the European Assembly because the idea behind it deals with the problem of additionality? If the Commission were in a position to look at various significantly important regional problems in certain areas, it could fund direct 100 per cent. Does my right hon. Friend recognise that this is the first step on that road? I agree that it is complex and controversial, but nevertheless it is part and parcel of an answer to the European Assembly.
  One other important amendment is proposed to the present Article 4(1) (b), which provides that assistance to infrastructure is confined to those infrastructures directly linked with industrial, handicraft or service activities. The Commission proposes removing this restriction and allowing assistance to infrastructures which contribute to the development of the region in which they are allocated.
  As I understand it, this would mean that Community funds could be used for the clearance of derelict industrial land in certain areas. I am sure that the Commission will appreciate that this is something of considerable potential significance to areas such as the North-West of England which have vast areas of industrial dereliction. Does my right hon. Friend appreciate and support this point? Will the Government back this in the Council of Ministers? Again, this is something for which we have called constantly within the Regional Development Committee of the European Assembly.
  I also ask for my right hon. Friend's views on the rather controversial issue of the raising of funds for regional development on the international market. As I understand it, this has had a rather lukewarm reception, but the proposal is that, because of the considerable budget difficulties that we are likely to have over the next few years, this is an area in which considerable sums for regional development could result. Although certain Governments, as I understand it, are watering this down, will my right hon. Friend appreciate the political significance of tapping this new source, which could have a tremendous impact on the regions?
  I turn briefly to the question of additionality. This is something that we have

  1297
  long discussed, in both the Parliament and the Regional Policy Committee of the European Assembly. I want to make my point clear. Certainly Commissioner Thomson made clear that the British Government were acting within the guidelines laid down, but in this respect may we be informed that the Government accept the new Article 18, which is designed to ensure that member States clearly identify receipts from the fund in their national budgets?
  I stress this to my right hon. Friend. I recognise that the problem is complex and that it is easy to make political capital at the expense of the Government concerning this matter. My right hon. Friend has cleared the point about constraints on public expenditure, but will he appreciate that it is essential that we make clear to the citizens of the more prosperous countries within the Community that the money that they are putting their hands into their pockets to provide is being used quite clearly to assist in the problems of certain regions of the EEC? Ultimately, if we cannot prove that conclusively to those citizens, they will say to their politicians "We shall not agree to any increase in the European Regional Development Fund."
  I accept that this is a complex and difficult problem and that as far as possible the British Government have clearly demonstrated that they have used the additional resources to provide better facilities, but the Minister must accept that there is some dubiety and some doubt in the minds of some of our colleagues. We must clear that up completely, otherwise we shall never win the argument about increasing the fund.
  As regards the distribution within the United Kingdom, I should like to point out that in the past three years the Northern Region of England has received in excess of 100 million units of account, Scotland has received in excess of 81 million units of account, Northern Ireland has received in excess of 52 million units of account, Wales has received in excess of 45 million units of account and the North-West Region of England has received just over 30 million units of account. That is not a fair distribution within the United Kingdom. The North-West of England has considerable problems. We have a greater population than any of those other regions, and I put it as
  1298
  strongly as I can that after 1978 the North-West must receive a fairer share of the Regional Fund.
  Mr. Alan Williams: Is my hon. Friend referring to infrastructure funds or to industry funds? If he bears in mind the point I made originally, he will remember that the Industry Fund allocation is purely nominal and goes into the kitty for use in other ways. The figures are not very meaningful.
  Mr. Evans: I am talking of global figures in all the accounts. I am pointing to the disparity between the North-West's allocation and the amount allocated to the other regions. This is a view which is shared by all hon. Members representing the area, irrespective of party.
  I ask my right hon. Friend to appreciate that there is considerable concern, not only in the United Kingdom but throughout the regions of the Community, over the lack of consultation which takes place with regional bodies. This is a complex problem. Might I suggest that he has discussions with the regional authorities in the United Kingdom about next year's allocations? If we get an elected Assembly in Wales and Scotland, there will be no way in which he will be unable to discuss with those two bodies the allocation of funds from the Community to those countries. If there are to be discussions, I hope that my right hon. Friend will ensure that they will be equitable and will be held in advance of the applications to Brussels. There is strong feeling about this throughout the Community countries. On many occasions I have spoken to delegates from various countries who have made this point to me.
  We are embarked on a new procedure. The regional policy is in an embryo stage. We can talk about economic and monetary union and about common defence, foreign transport and energy policies, but unless we tackle this problem of eradicating difficulties within the regions all the rest is so much eye-wash. The people of the regions want to improve the quality of their life. They want to get rid of dereliction and to beat unemployment. Unless we can work on these matters, all the rest will fade into insignificance. The dreams of so many will become nonsense. The regional policy, as Roy Jenkins said in February, should be the cornerstone of the Community's economic policy.

  1299
  Unless we get a worthwhile European regional policy, the whole thing will collapse like a pack of cards.
  Mr. Speaker: I must correct a statement I made earlier. The two Front Benches took 64 minutes, not 44 minutes. I appeal to hon. Members who catch my eye to remember that it will be difficult to enable everyone who wants to speak to take part in the debate unless there are shorter speeches.
  10.38 p.m.
  Mrs. Winifred Ewing: It is a pleasure to follow the hon. Member for Newton (Mr. Evans), who is the chairman of the European Regional Committee, on which I too serve. I have a great admiration for the work that the hon. Gentleman does. In Commissioner Jenkins' opening speech he said that we had to have a Community with a human face. There seems little doubt that it is the regional policy which, if anything, will give the Community that human face.
  The United Kingdom delegation comprises both pro- and anti-Marketeers. I am in a rather special position because of my Scottish connections. We have a wide range of opinion on the delegation which is unique, because most of the other delegations are made up of those who support the Community. There is talk of greater centralisation in the Community and of economic and monetary union. It is rather like the Australian emu, the bird that runs in circles and never gets off the ground because it is too heavy to fly. If we are really to look at the Community with a view to its harmonisation in our terms, we have to look to the regional policy of the Community as a counter-reaction to its natural centralisation tendencies.
  At the height of the Roman "common market," Jesus of Nazareth, according to the reports in the New Testament, said:
  "To him that hath, there shall be added; from him that bath not, there shall be taken away even the little that he hath."
  That may be quite a good summary of the problem facing the Community, because, to change the metaphor to ragtime, the rich get richer and the poor get poorer. The gap between the average per capita income of people in Ireland, the United Kingdom and Italy and that of the other member States has been
  1300
  divorcing them from the rest of the Community over recent years, according to the Delmotte Report, which is accepted as being full of veracity. This trend in Europe is not really assisted by the free movement of men and markets. It speeds up the trend. This is the great problem for the Community.
  My party went on record at an early date, before Britain agreed to stay in the Community, as warning that the efficient enterprises of the Hamburg-London-Paris axis would expand while the less efficient and less sophisticated industrial enterprises on the periphery would fall and go into still greater decline. This causes certain problems, because the people in the areas which are declining are aware, perhaps because of the Community's interest in them, of their decline and are aware of the greater expansion elsewhere. There is a resentment which builds up from this.
  As a result of some of the measures that we are up against, member States find themselves in conflict with the treaty law, as did Belgium when she tried to assist certain of her regions. Others find that, while there is nothing in conflict with the treaty, the sheer fact of the existence of the Community has certain consequences. For example, if France decided that she would like to encourage a certain industry to come, that industry, because of the existence of the Community, would have other choices open to it down the road a few hundred miles away in other populous areas. We have a new situation to some extent because of the existence of the Community.
  Then, of course, some of the policies work against the underdeveloped areas. A large share of the FEOGA grant payments has gone to the farmers in the cereal and dairy produce sector. The inequalities are therefore more exposed to publicity in a democratic sense. If there is an awareness of an attempt to be just to the 250 million people, and injustice is still staring them in the face and getting worse, a vacuum can sometimes arise, such as we have seen in Italy, where there is great discontent on certain matters and a possibility of Communism and Fascism holding greater sway.
  The British Government, along with the Governments of all the member

  1301
  States, have the responsibility of putting forward the carefully researched applications. There are many regions in my part of the world—for example, the Highland Region—which are very much on the ball in regard to making applications and researching them very ably.
  It is said that instead of considering the applications the British Government sifts them according to the existing United Kingdom regional objectives. The West of Scotland suffers from a great deal of urban deprivation. It is the most urban deprived area in Britain, perhaps one of the most deprived in Europe. England also has areas of this kind. It is natural for the United Kingdom Government to set as their first priority the curing of, or the attempt to cure, these problems.
  Areas like the Highland Region feel that they have put forward perfectly reasonable projects within the criteria that are laid down, yet they do not seem to meet with much success. We must face the fact that the United Kingdom Government administer the fund according to their own existing political objectives. One may say that that is fair enough, but it might not be in accordance with the greater ideal of the Regional Fund of the Community. It is saying that rather than look at the number of applications or what a particular member State may put forward, we should consider the actual question of need.
  It is well known that with regard to applications local authorities cannot deal directly with the Community. They must have their application approved by the member State. I would take an example which is perhaps not so extreme. Let us imagine that the United Kingdom Government decided that a certain region, or part of a region, were to be abandoned to the sheep and the summer visitors. There would be very little that the local people, or the elected representatives of the local people, could do because they cannot deal directly with those who administer the fund. They must always pass through the sifting process of the member State.
  I am not attacking the Government. There is nothing unique about the United Kingdom. This is the system which obtains. Across the board, however, among all Members of the European Parliament, there is a growing desire that
  1302
  local authorities should be able to deal directly with their causes, applications and projects.
  No one can suggest that the United Kingdom's record of making applications places us in the top 10. Ireland, France, the Netherlands and Italy have beaten us into the ground by the skill with which they have put forward projects. It is, therefore, galling to a region which goes to the immense trouble and expense of researching very good causes to find that other member States are more prepared to put projects forward. If one puts forward a lot of projects, one feels that the Regional Fund will at least have a choice. But if one puts forward a few projects one feels that whatever the Government sift through will be accepted. I therefore believe that we are under-using our application strength.
  I shall not delay the House with regard to additionality. I have already referred to this and the Minister has replied fully. However, it is my experience from going to the European Parliament that the British Government are looked upon as regarding this not as an addition but as a replacement.
  I refer right hon. and hon. Members to the Highland Region's excellent paper, which it supplied to me, the Commission and the Regional Committee. It says that, to a local authority, the aid from the fund is advantageous only in reducing the local authority's liability for loan charges, not in creating extra projects and extra work. That is a severe blow to the interests in the Community. It is certainly a source of antagonism towards it from the civil servants engaged in the Highland Region, who are very well informed about which regions of the United Kingdom have put forward projects, and they are able to give chapter and verse of the projects put forward. I should like the Minister to give me some indication of the number of applications made by the Grampian and Highland Regions which have been turned down. I should like that information, because I have found it impossible to acquire it otherwise.
  I want next to make a point on a subject which is of burning concern to my regions—I have two; I am rich in that way, having two counties. They have pointed out that Big Brother, in the shape

  1303
  of the EEC, decided to ask national Governments to submit programmes for their own regional aid plans and that the British Government submitted to the EEC a draft regional development programme. It is interesting to note that this document has not had much publicity. It is as though the Government would like to keep it very quiet.
  Mr. Dalyell: Secret.
  Mrs. Ewing: It is not a secret entirely, because it has been published in the Trade and Industry, published by the Department of Industry. Anyone who writes for a copy can get one. It is a lengthy document. It is important. Perhaps I might be allowed to quote briefly from it; I cannot quote more than a few lines, because time is short. It says:
  "regional development in the United Kingdom is concerned primarily with the attraction of new modern industry into the traditionally industrial areas, rather than with fully co-ordinated programmes directed to the industrialisation of particular rural areas."
  Similarly, the section dealing with Scotland places emphasis on the special problems of Strathclyde and the need for industrial regeneration in other central areas such as Dundee and parts of Fife It says, very generously, that the Highlands are not entirely ignored but that it is plain that they will have to wait on all the other priorities. That may be fair. It may be unfair. But I can tell the House how the highly sophisticated Highland Region faces grave peripheral problems of unemployment, depopulation and, possibly, the total destruction of the fishing industry round its shores.
  The new Regional Fund is due to end at the end of this year and it is, therfore, very important in this debate that those of us taking part should put forward our suggestions for improvements now. Probably October is about the realistic month for improvement suggestions to be too late, in our experience of the workings of the EEC. So any suggestions will have to be taken on board by the Minster tonight. That is the problem for us, unless we are to reconvene early in October, and I have heard rumours that we are not coming back until the end of October. This is possibly the last chance that we have to ask our Government to
  1304
  put forward formal suggestions for improvement and to fight for them.
  I urge the Minister to take note of some suggestions. The emphasis on manufacturing leads to a bias in favour of urban or semi-urban areas. If we accept that infrastructure should be supported in rural areas, of whatever category, I suggest that a limit of 30 per cent is too low. Perhaps we should consider a possible increase to 50 per cent. or even 60 per cent.
  The artificial requirement that infrastructures should be granted aid when it is to help more than one industry has no realism when applied to Scotland and, presumably, to other parts of the United Kingdom. Take oil, for example. People who have benefited from having oil have only that one industry. Maybe they are very glad to have it, but it is unrealistic to require that there should be more than one industry.
  Then there is the small project rule. There is to be an upward limit of a certain amount of money, or of 10 jobs. But 10 male jobs on the Isle of Barra, in the village of Dallas in my constituency, or even in Lossiemouth—a town with a population of 8,000—are very important and worth having. They may save a shop or a local garage. This is a matter of considerable importance, and the small project attitude is something that the Government should consider if we are looking at the question of the Regional Fund helping the peripheral areas.
  When there is an influx of people into an area that is doing well, there is also an inflow of problems. This has been the case with the oil boom. A situation has developed in which local trades cannot get apprentices in local skills because of the opportunities created by the new industry. For areas like Scotland, the rules of the EEC Fund do not make any sense.
  One of the problems is that some of the member States tend to have one Minister to deal with this whole field. I am not necessarily saying that this is good or bad, but we have a problem in channelling the best information to get the most out of the fund because we have not just one Minister but many Ministers responsible over a wide range of subjects. That does not help us to be as efficient as Italy or Ireland.

  1305
  I agree with the hon. Member for Newton, who is chairman of the Regional Committee, in his remarks about the size of the fund. The fact that the fund for the common agricultural policy is so large has discredited the Community in the eyes of many people, and I doubt whether this fund will work at the end of the day. Had the Regional Fund been a big spender, the man in the street would have felt so much more that this was something to do with him. Farmers in Scotland do not like it. The French farmers may like it because they are the inefficient ones. It is not a success story. Without change, it will mean the disintegration of the Community. Admittedly, the fund works in a different way, but it is a drop in the bucket compared to what successive British Governments have spent, without being able to solve Scotland's Regional problems. Without a total reappraisal of the fund, the Community deserves to disintegrate.
  The Prime Minister reappraised it recently in the light of food prices. People who say that that is due to world prices should consider Norway's experience and the growing animosity of the man in the street. The pro-Marketeers said many misleading things during the referendum campaign about fishing, prices and so on.
  There is good motivation in the Community. To have a human face, however, it needs a different and bigger Regional Fund. It is extraordinary that the Community should allow the regional death of towns around the coasts of Scotland and Ireland. These communities are simply asking for what any maritime nation would consider a normal proportion of the sea. Thy Community cannot have a human face while it talks about the Regional Fund and yet countenances regional death.
  11.3 p.m.
  Mrs. Elaine Kellett-Bowman: I was particularly interested by two comments of the hon. Member for Newton (Mr. Evans), who said that we have not been able to discuss regional matters in this Parliament. He will note that this debate, being on a Supply Day, has been arranged by the Opposition. I was even more fascinated by his statement that he committee of which he is chairman will be considering these
  1306
  policy guidelines in September. As I pointed out to him with some feeling at the last meeting of the Regional Policy Committee, that will be action after the horse has bolted and the decisions have been taken. I tried to get that across to the hon. Gentleman so that we could bring the matter forward when it really counted, before decisions are made. I was also interested in what the hon. Gentleman said about industrial dereliction, because he voted against those proposals when I made them in the European Parliament.
  Although I shall be criticising some aspects of the Regional Fund, particularly the way in which the Government manipulate it for their own political ends, it can be a success story if we have the will. I see no reason why we should not, because on this depends not only the future of the Community but the future and the cohesion of the United Kingdom, by which I lay great store.
  That the fund got off the ground at all and then kept up to schedule in the face of almost overwhelming odds is due to the driving force of George Thomson, who is now, alas, a Member of another place. I say "alas" not because he does not deserve that honour but because our House is the poorer for his absence. With his tiny team of only 44 "A" grade staff —which was referred to by my hon. Friend the Member for Rushcliffe (Mr. Clarke)—and a total complement, including secretaries, of only 130, he managed to pay out the whole amount due to be expended by the Regional Fund in the first year of 1975 to within a matter of pence.
  Unfortunately, the fund as envisaged by the Commission and by the Regional Policy Committee—of which I was not then a member—was a very different animal from the one that emerged after the so-called Wilson renegotiation.
  Mr. John Evans: Will the hon. Lady give way?
  Mr. Speaker: Order. The hon. Member is not fair. There are other hon. Members who wish to speak in the debate.
  Mrs. Kellett-Bowman: The hon. Member for Newton has had his chance. The original proposals passed by the European Parliament in 1973 were for a Regional

  1307
  Fund based on impartial criteria—namely, a low per capita product, a high rate of unemployment, a high rate of outward migration—from which my area of the North-West has suffered devastatingly and which has led to an unbalanced population structure—a high percentage of workers engaged in agriculture or a declining industry such as textiles or shipbuilding. Unfortunately, these sensible criteria fell victim to the Wilson renegotiation and the Government obtained carte blanche to decide which regions should benefit and to what extent. All applications had to be channelled through the Government, who, unfortunately, sent aid to politically sensitive areas such as Scotland and the North-East.
  Nobody in his or her right senses—not even the hon. Member for Moray and Nairn (Mrs. Ewing) could have believed that the whole of Scotland, including Aberdeen with its vast oil activity, should be a development area, but so it was until the Grimsby by-election persuaded the Government to downgrade Aberdeen and to upgrade Grimsby to full development area status—although the problems of the intermediate areas in the North-West were worse than those of Grimsby. Unfortunately, I am still alive and there was no by-election in Lancaster or there might even have been a change there to development area status.
  The net result has been that, whereas for every unemployed person in Scotland there has been a regional development grant of £97, and £128 for every unemployed person in Northern England, the grant in the North-West has been only £33. I forbore to mention Wales in deference to you, Mr. Speaker.
  Another undesirable feature of the present application of fund rules is that there is no guarantee that the money handed over by the fund will, in fact, provide the additional help to the regions which is so badly needed and for which the fund was created. The fund should be, as Lord Thompson said, a bonus over and above national expenditure to help to overcome the regional imbalances which are getting worse. However, in the case of the United Kingdom—and in the United Kingdom alone—the money from the fund simply goes straight into the botomless pit of our Budget deficit, and
  1308
  that is extremely disheartening for the regions.
  The problem is that, under the fund regulations as at present constituted, it is permissible to use the money to reimburse national spending provided that overall national spending is increased by that amount. The snag is that it is impossible to prove how much the Government would have spent had there been no fund, so that the United Kingdom Government are now able to use the cash simply to finance our own Budget deficit. All our partners know and bitterly resent that.
  Local authorities are particularly frustrated by the Government's reduction of aid to any project by the precise amount of the Regional Fund money which has been allocated to it. They arc also frustrated by the Government's absolute prohibition of a local authority undertaking any additional work as a result of regional aid being given to a project in its area. The only tiny benefit that local authorities receive—the Minister did his best to blow it up into a gigantic benefit—is that they are saved interest on the amount of money that notionally comes to them from the fund. What a puny reward for the amount of effort that goes into making applications to the fund, and what a gigantic con trick perpetrated by the Government on every development area.
  The case is even worse for an intermediate area such as my own which has a substantial tourist interest. Grants for aiding tourism can be given only to projects eligible for national aid. This is a point that we discussed with the Minister not long ago. Unfortunately, under our national rules such aid is not available for tourist projects in intermediate areas. They are therefore doubly disadvantaged. They get no national aid and no Community aid.
  Yet the Government cynically put forward such projects, raising hopes locally, in the certain knowledge that the Commission will be obliged to turn them down under the existing rules. Then Ministers, some of whom do not particularly like the EEC, can blame the Community. They reckon that they have done their part; others think otherwise.
  I hope that paragraph 29 on page 19 of the second report of the Regional Fund indicates that the rules will soon be

  1309
  changed, because it is high time that the Government changed their rules or that the rules of the EEC were changed to accommodate the chicanery of the Government that we have to endure.
  Many hopes have been pinned on the revision of the fund rules that is taking place. I was astounded to hear that we shall be discussing this matter in the Regional Committee in September. My colleagues and I are great believers in getting in what is known in the North-West as the "first blow". We therefore produced a booklet some months ago indicating the ways in which we thought that the fund should be reformed.
  I am happy that the Commissioner has taken on board some of our points and has accepted our view—this is vital—that one of the cheapest and most effective forms of regional policy in this country is our system of industrial development certificates. He is bringing forward ideas for Community-wide regional IDCs and taking that strategy further by proposing congestion taxes. He has also taken on board our idea of introducing an ex-quota sum into the fund so that, if there is something that a regional authority believes is of vital importance, it will not be stymied by the Government and prevented from bringing it forward. In the past, although the Commission could say "No" if it disagreed with a proposal, it could not make positive proposals of its own. With a 13 per cent, ex-quota sum—though we should have preferred 20 per cent—projects of vital importance to a region will be able to be brought forward.
  If local authorities had been consulted, they would not have asked for the vast advance factory building programme that has sprouted up all over the country with no industries to fill those factories. The councils would have gone for eliminating the bottlenecks.
  That brings me to the problem of industrial links. In my region we had a problem with the building of the Brier-field link road. We were able to obtain assistance for building an advance factory and the servicing of the site, but the requirement for a direct link with industry held up the project because we could not get a road to the site. That problem has now been resolved, but it is ludicrous that it should have occurred at all.
  1310
  There are points that the Government should be taking on board. They should know the desperate longing of the regions. The regions do not want always to be the recipients of handouts, but they want to be given a hand so that they can stand on their own feet. These are the things that intermediate areas such as mine want desperately. We want to make our contribution, but unless we have some assistance we cannot do so. We bitterly resent the Government's collaring the cash and not giving us the benefits. We ask them to have a change of heart and give us greater help to help ourselves.
  11.15 p.m.
  Mr. Tam Dalyell: Can we establish a question of fact on an issue which has been running through this debate? Various hon. Members have asserted that we are under-using our application strength. Are we? It is about time that some facts and figures were given on this topic.
  Mr. Alan Williams: Perhaps I can enlighten my hon. Friend. Our total entitlement is about £150 million for the whole period. We have already received or had committed to us £137 million. There is no problem in finding sufficient applications.
  Mr. Dalyell: So we ought to get that hare out of the way. It is simply not true that we have been under-using our application strength.
  Mrs. Winifred Ewing: I think that the hon. Member for West Lothian (Mr. Dalyell) is referring to a point that I made. I am grateful to the Minister for answering it. However, Italy and Ireland have submitted a greater percentage of applications than we have and, therefore, the fund has had a wider choice of applicants. We have received our entitlement but on the basis of fewer applications than some of the other member States.
  Mr. Alan Williams: The hon. Lady is probably accurate. The result depends on the method adopted by individual Governments. We try to work according to a well-established set of priorities, and we try to make our applications conform to those priorties.
  Mr. Dalyell: I turn, then, to the question of the local authorities. The Central Region seems to have been very successful

  1311
  in its direct approach proposals. I am surpised that the Highland Region has found difficulties. In his meetings with Mr. Giolliti, will the Minister raise the question of help for the steel areas? Viscount Davignon has appeared before the Budget Committee to explain that the Commission has now devoted, as a priority, considerable sums to steel areas, though not necessarily to the steel industry itself. What is the Government's view on that? How do they see the role of the European Investment Bank, which is apparently to produce matching funds? I ask this because my right hon. Friend the Chancellor of the Exchequer and other Finance Ministers are governors of the Bank. To what extent will the Bank's policy be integrated with that of the British Government and the policies of other nation-States?
  Mr. Alan Williams: Already the steel industry has received just over £8 million from the fund. We are major recipients of funds from the EIB. Because of the peculiarities of the requirements of foreign exchange protection, nearly all of this support goes to the public sector and, therefore, to the nationalised industries.
  Mr. Dalyell: In spite of all the criticisms that are made about using European funds for national objectives, my view is that it would be silly not to do that. At least we should integrate those policies, or two separate organisations would be trying to do the same job.
  I turn now to the speech of the hon. Member for Rushcliffe (Mr. Clarke). I take part of his argument that there is a feeling in Europe that not sufficient credit has been paid for what is being done. Therefore, while I agree with my hon. Friends that the two policies must be integrated to avoid people tumbling over each other doing the same thing, where European money is being used we should make the effort, acknowledge it and use it not just for chores but for some fairly attractive political objectives. We must be careful to give credit where it is due. As my hon. Friend the Member for Newton (Mr. Evans) said, one notices that the French give no credit at all for getting considerable European funds. On the other hand, the Germans and the Benelux countries take a different approach.
  Mr. Michael Marshall: Does the hon. Gentleman agree that the loans now coming to the British steel industry are being fitted into the Davignon arrangement, so that money is increasingly geared to get some sort of agreement on rationalisation within the European steel industry? Does he agree that that approach has some promising overtones given the threat from external sources such as Japan?
  Mr. Dalyell: It is very promising that considerable sums are allocated not only to the steel industry but to the steel areas. One gets the impression that a real effort is being made to help those areas. It is perhaps on that basis that the objectives should be sifted.
  This is my third bite at the cherry and I shall restrict myself to one other question which I put to the Chief Secretary and the Under-Secretary of State for Energy after his experience of the Presidency of the Council of Ministers in another area. Do my right hon. and hon. Friends feel that it is sensible to have a revolving Presidency? Now that there is the prospect of Twelve instead of Nine—if the hon. Member for Moray and Nairn (Mrs. Ewing) had her way it would be Thirteen—can we accept any automaticity as hitherto in the membership of the Commission, the Council of Ministers and the various organs of the Community? Given enlargement, do we not have to think once again whether in the technical sectors the institutions are right and whether the revolving Presidency is a sane way of getting rational policy?
  11.22 p.m.
  Mr. John Corrie: As one sits here one contemplates the differences between this place, the Mother of Parliaments, and the European Assembly. Although this place may have been in being much longer, it could certainly learn a lesson or two from its younger sister in Europe with its timed speeches and different working hours.
  There have been many grumbles in the EEC about the CAP, but the problem can be solved only by structural changes. We cannot buy ourselves out of the problem in the agricultural sector. We cannot continue spending 68 per cent. of the Community budget on the agricultural sector and about 6 per cent. or 7

  1313
  per cent. on the Regional Development Fund. Thousands of small, inefficient units must disappear in the agricultural sector if we are to make it plausible. That will cause further major problems in the rural areas. Added to that, as the hon. Member for Moray and Nairn (Mrs. Ewing) said, the fishing industry is in ruins. There has been severe over-fishing by all nations, including Britain. Unlike the hon. Lady, I do not think that EEC policy alone can save it.
  All these factors mean immense changes within rural areas and in areas of industrial dereliction. Sadly, it appears that it is easier to build on green field sites than to return to areas in which industry has been previously. The Regional Development Fund will undoubtedly play a major part in the rebuilding of Europe in the coming years. In the past three years Great Britain has done especially well from the fund.
  In one or two respects, however, I cannot agree with the Minister. I cannot agree that advance factories are the answer to areas of dereliction and unemployment. I pass one factory daily which was built six months ago. It is slowly being demolished brick by brick and pane by pane. It has never had anyone in it. Only last week the Secretary of State for Scotland said that in the past three years 50 per cent. of the advance factories built in Scotland had been unoccupied for some time and that 25 per cent. of them are unoccupied at present and have never been occupied. I suggest that we look at the sites, find the jobs and build the factories afterwards.
  Another matter that worries me is that because the money is paid into the national Exchequer no credit is given to the European fund although many jobs and schemes are paid for or helped out by European money. No credit is given to the European fund although, the money has come from Europe and the fund. I do not want to go back into the problem of additionality, which has been covered already.
  My local authority suggests to me that any money that it gets from the Regional Development Fund is taken off its rate support grant. Is that right? If that is the situation, I wonder how it will fit in with document R/ 1334/77, which states on page 46:
  1314
  "Member states shall repay to the Com-mission the amount of the Fund's assistance that has been paid in relation to a national aid that has been repaid by the investor".
  Does that mean that money will have to go back to Europe, or is my local authority wrong? A number of problems must be examined. There is no point in spending money from the Regional Fund on projects that would be built anyway. That is why additionality is so important.
  More co-ordination between the Regional Fund, the Social Fund and FEOGA is needed. It is pointless to pour out money to prop up inefficient farming when at the same time the regional policy tries to persuade the same people to move to different jobs in the same area.
  I have a particular interest in the Regional Fund. I am rapporteur of the committee examining the coastal regions of the Community and their problems. I am also a member of the fisheries subcommittee which is run by the hon. Member for Durham (Mr. Hughes). He does the job well. Our job is to report back on the problems of these areas. Britain has the longest coastline of the Community. There are hundreds of islands, Britain also has the largest fishing industry. We stand to gain most.
  The problems break down into four categories. First, there are areas that are running down because of the collapse of industry in them, particularly the fishing industry. Secondly, there are areas which have never had industry, such as the outer isles where jobs must be created. Thirdly, there are the most difficult areas where short-term, high-employment industries have moved in and then ceased, such as oil rig construction. An example is Ardyne, which had 3,600 workers last month and now has only 300 and there is no prospect of further work. Fourthly, there are areas of natural beauty that should not be spoilt by industrialisation. Creeping pollution is the problem in such areas. Compensation should be paid to those who live in them.
  All these areas face increasing problems. Families that are born and bred in these areas want to stay; that is their right. Help must be given to them to do so. The help that is given in areas requiring job creation must be labour-intensive rather than capital-intensive

  1315
  industrial development. Transport structures must also be assisted.
  There should be more contact between the regions and the Commission so that a region can press its case if a border line decision has to be made at national level. There must be some playback on how the fund is working, how the money is being spent and whether it is doing the job that it is supposed to do. Perhaps the Government should look at that. There should be more publicity about what is coming out of the Fund and on every project that received money from it.
  It is also to be hoped that in future it will be possible to return to the Commission's 1973 concept— that the criteria of eligibility for assistance should be laid down on a Community-wide basis and not necessarily reflect only national priorities. Most of us in the House are Europeans first and nationalists second.
  11.29 p.m.
  Mr. Michael McGuire: I came into the Chamber part way through the speech of my hon. Friend the Member for Newton (Mr. Evans), who is chairman of the European committee which deals with regional affairs. He was arguing a point which, like all North-West hon. Members, he made before he was a Member of the European Parliament—that the North-West Region has, by whatever measuring stick one uses, been treated badly under the regional aid policy as adopted by the United Kingdom Parliament. Judging by the documents before us, the imbalance and unfairness towards the North-West are not changing. I feel it in my bones, although I have not the analytical competence to prove it conclusively.
  One can see mirrored in the documents the same imbalance in the total that the United Kingdom receives and disburses as was originally perpetrated. Yet the North-West has a population about the same as Scotland and Wales together, being a region of 7 million people. It has been and continues to be badly treated. Is there any way in which the Government intend to get this situation rectified so that the North-West gets its fair whack?
  I have had the impression for a long time as a Back Bencher that we are at the stage where one has to be a Phila-
  1316
  delphia lawyer, an economist and an accountant and everything else in order to be able to digest, or even briefly glance through with some understanding, the multitude of documents from Brussels. Perhaps we need to have regard not so much to reforming the European Parliament but to making its Regional Affairs Committee a more refined body so that it can respond more accurately to the sensitive needs of regions within regions, such as we have in the North-West. How we can do it I do not know.
  I think that we in this House must reform our own procedures. I do not think that 635 Members dealing with everything and anything are equipped properly to digest these detailed matters. In that sense we give a big advantage to Members, like my hon. Friend the Member for Newton, who sit in the European Parliament in that they can study these specialised subjects in more depth, although I know that in doing so they are having to neglect, although they do not want to, some other subjects in which they were once engaged as Back Benchers.
  We have to look at this as a House of Commons problem and find out how best we can deal with the whole question of the legislation and all the paper we are getting from Brussels, thereby making ourselves more usefully employed. We are kidding the public if we give the impression that we can absorb, interpret and then speak our minds about all these things, making a useful contribution to the thought about them. A Committee is now sitting under the chairmanship of my hon. and learned Friend the Member for Warrington (Sir T. Williams) considering how we can more usefully do our job, and we must take the subject on board because the job is getting more complex all the time.
  I return to my point about the Regional Affairs Committee of the European Parliament disbursing regional aid within regions—in this case, of the United Kingdom. As I have said, the imbalance and unfairness to the North-West are continuing. Do the Government accept that reading of the situation? Perhaps they think that we are being treated as fairly as we could be. Document R/1613/77 states on page 29:
  "The Northern Region of England received most from Fund assistance in 1976••In 1975 the North was in third place."

  1317
  There is also a breakdown in the document showing the various regions of the country, and there we find that the Northern Region, Northern Ireland, Scotland and Wales got about 90 per cent. of the share. I repeat that the population of the North-West Region is approximately that of Scotland and Wales combined. If those other four regions receive, as they do, about 88 per cent. of the total, the North-West must do very badly, and I do not see any sign of our doing better in the months to come.
  Unemployment on Merseyside, part of which is in my constituency, is twice the national average, and in my constituency itself it is slightly more than three times the national average. What tool do the Government use to isolate the problems within the North-West? I think that the hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) will agree with me that not all the picture of the North-West is black and that there are areas where unemployment is less than the national average. But in others it is three times as much. I do not think that the Government have a tool sufficiently sensitive to respond to the needs of the regions.
  I think that the hon. Lady the Member for Moray and Nairn (Mrs. Ewing) demonstrated that we still largely battle for our own corners irrespective of whether by any measuring stick a region can justify special help. We are continuing with a system that is a bad system. I know that it will be said that the hon. Member for Ince is indulging in these tactics as much as anyone else, but I am trying to point out that we are dealing with sensitive problems and that the instruments that we use must be equally sensitive. The European Parliament is in exactly that position with national bargaining, with each Member making the best case he can for his own country instead of his own region, as in this House.
  I am not saying that the neglect of the North-West is the fault of my right hon. Friend the Minister. I believe that the fault lies with Parliament generally. It lies in having these competing interests, which in the European Parliament are nationalistic in tendency rather than regionalistic. Thus the North-West and other areas with above-average
  1318
  unemployment have done very badly. I refer especially to Merseyside. It is a distressed region.
  From leading delegations to him and from conversation that I have had with him, I know that my right hon. Friend has demonstrated a sense of urgency, which has been lacking in the past, but the proof of the pudding is in the eating and our position is worsening. I hope my right hon. Friend can assure me that he has taken on board our special problems and that the Government have an instrument to give us some relief quickly.
  We shall otherwise continue the charade of discussing regional policy, whether in the European Parliament or in the Mother of Parliaments, as we call this place. Incidentally, tonight I met a delegation from Iceland who reminded us that our Parliament is 340 years behind that of Iceland. I hope that our Parliament can do the job that I believe it should do, and that is to make regional policy far more sensitive to the needs of the regions. Within the regions there are extra-special problems, and I am not convinced that our Government have yet come to grips with them.
  11.40 p.m.
  Mr. Richard Page: In the couple of minutes at my disposal I should like to make two points.
  Whatever hon. Members' feelings are towards the Common Market, I think that there must be agreement that the European Regional Development Fund operates and gives tremendous opportunity to overcome a lot of longstanding regional problems. If it can provide aid for our regions and overcome the traditional areas of poverty and deprivation, it can act like a crutch and after a period it can be thrown away, the outside aid can be withdrawn and the region, then firm on its own economic two feet, can achieve some self-sufficiency.
  The official handout says that the fund is
  "to correct the major regional imbalances within the Community."
  As the Member for a northern constituency, I cannot really complain. We have had a very fair share of the cake from the Regional Fund. I understand that it is running at an even higher proportion this year. Obviously, I must commend it and hope that it continues.

  1319
  That is the theory of the scheme. However, I share the suspicions of my hon. Friends that this aid is not, as it should be, subsidiary extra support to regional aid but is being used instead of Government support which should be put into the regions.
  I am also very curious to know whether we are really achieving these strides towards regional self-sufficiency or whether in many cases the fund is merely providing temporary work, in very similar vein to our own job creation schemes. When the support is removed, will the region be left, hopefully with a better environment and some improvements in its infrastructure but with no lasting increase in job prospects? That is the point that concerns me.
  I wanted to develop that point a little more, but I must move on quickly to talk about the relationship of the regions with the European Regional Development Fund. I believe that we must develop a very firm line here, and it must be agreed with the direction and administration of the fund. If that is not done, I can foresee that the fund—it has the potential in this case—could link up directly the regions to the Community centre. The fund could create a linking of the regions with the EEC centre, if that were allowed, over the heads of central Government. We should consider now whether any such development is desirable or whether we should keep the controls firmly in the hands of the Ministers responsible.
  Possibly I am being just a little dramatic and this sort of development may not occur. It may also take a slightly different form, with the projection of the present two Commission information offices, in Cardiff and Edinburgh, which would bring an expansion of information offices into the regions. With co-ordination and a little natural communication, a network of Commission offices could soon be operative. In turn this would ensure co-ordination of Community policies, with the European Regional Development Fund being very much viewed as the linchpin, to make it go one way or the other.
  1320
  The Minister mentioned impact groups. These should be carefully tied down, because we could be losing control of our regional funds to the EEC.
  I have been very brief because I know that the Minister is waiting to make one or two comments. On these points I do not want to be considered to be critical of the EEC fund. It has tremendous potential for the nation and I want to see it succeed. If by early action we can ensure that it is more effective, so much the better for our country.
  Mr. Alan Williams: I have less than two minutes in which to respond to the debate. It has been helpful to me to hear the views of hon. Members. At the outset I gave my views on the areas of controversy. The hon. Member for Workington (Mr. Page) touched on a key point when he asked whether we want to lose control of our regional policy. Before we rush too quickly along the supranational course advocated by the Opposition Front Bench, I would point out that 43 per cent. of our population is in assisted areas. It is, therefore, a matter of considerable politicial importance if the economic welfare of those areas is to be determined other than in this House.
  My hon. Friend the Member for West Lothian (Mr. Dalyell) asked about the problems of the revolving Presidency. I know that he would not expect me to answer that now. If he expects me to do so, he will be disappointed. I will certainly try to follow up the matter in correspondence. My hon. Friend the Member for Newton (Mr. Evans) raised the question of derelict land. As I am sure he is aware—
  It being two and a half hour after the commencement of proceedings on the motion MR. DEPUTY SPEAKER put the Question, pursuant to the Order of the House this day
  Question agreed to
  Resolved
  That this House takes note of Commission Documents Nos. R/1611/76, R/1334/77 and R/1613/77 on the European Regional Development Fund.

  POLICE (PAY AND ALLOWANCES)
  11.46 p.m.
  Mr. Michael Alison: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Police (Amendment) (No. 2) Regulations 1977 (S.I., 1977, No. 1006), dated 11th June 1977, a copy of which was laid before this House on 20th June, be annulled.
  The Opposition are glad of the opportunity afforded by the familiar device of a Prayer to discuss police pay in the context of the Police (Amendment) (No. 2) Regulations 1977. The regulations imposed—I use the word advisedly—a stage 2 settlement on the federated ranks of the police service against the wishes of the Police Federation and its members. As such, it is in my view the end of an extremely sorry chapter in the saga of relations between the Government and the police service. I do not think that at any time since the police strike of 1918 has police confidence in its sponsoring Government Department, the Home Office, or morale generally in the service sunk so low.
  It was not of the Opposition's choosing that we should be debating these regulations at close to midnight at this stage in the parliamentary Session. On two earlier occasions recently we pressed for a debate but the Governmen declined at the last moment and took the business off the Order Paper. The reason was that on those earlier occasions the Grunwick picketing violence was at its zenith and thus the almost intolerable strain placed on police officers was only too painfully manifest in the television reporting of the scenes in North London which millions of viewers saw.
  The risk to police life and limb, placing their work on a par with other hazardous occupations such as mining or seafaring, was horribly exemplified by the murderous attack on that young police constable who, I believe, was at one time within an inch of losing his life. The Government realised what a debate on this imposed pay settlement would have looked like at the height of the Grunwick picketing as police officers were being borne on stretchers to ambulances.
  The first point to be made is that the police have had no pay increase since
  1322
  September 1975. Second, since then the index of retail prices has risen by about 30 per cent., so that police pay has dropped by that amount in real terms since the last pay rise. Third, police officers in some parts of the country are drawing family income supplement—the bottom end "safety net" for low wage occupations. Fourth, even the 1975 pay settlement failed to bring the average police constable's pay up to the Willink Royal Commission standard—that is, 104 per cent. of average adult non-manual male earnings.
  Now, two years later, police pay must have sunk to about 70 per cent. of that average. What a way to pay the police force in a period of growing violence and criminality not seen in these islands for at least 200 years. In elaboration of this appalling slippage in police pay, I understand that the distinguished economist who advises the Police Federation has reported to it that a study of
  "the Police Force Statistics return for 1975–76"—
  a technical document—
  "reveals that for 41 police authorities in England and Wales the total salary and wage bill was £280·24 million for an average daily strength of 82,360. This gives a weekly average of £65.26."
  That was at the time of the 1975 settlement. I hope that the Under-Secretary's Home Office review body, in considering the future pattern of negotiations for police pay—and particularly the settlement due on 1st September this year—will note that at least one distinguished economist reckons that the weekly average for the police at the time of their last settlement was only £65.26. At the same time the comparable average for adult non-manual male workers, the group with which the police are meant to be compared, was £10 a week more. That was in 1975. By September 1977 the comparable average is likely to be at least £30 more than the £65 the police were getting at their last settlement. This shows the shocking extent to which the police have fallen behind in comparability terms since their last settlement.
  Yet the regulations that we are looking at tonight are utterly barren of any glimmer of recognition that the police, faced with quite exceptional strains, have faced quite exceptional slippage. I do not imagine that there is any group of people

  1323
  dependent upon the public service recognising their relativity—because they have no trade union to fight for them—which has suffered slippage to the extent to which the police have suffered in relative terms since 1975, yet no mention is made of this in the regulations and no concession is made to their claim for a stage 1 increase. There is nothing specific about fringe benefits. It is, indeed, the end of a very sorry chapter.
  But it is not the end of the story, and it is ironic—I think that my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) will agree with me on this—that the negative and unhelpful attitude which the Government have displayed in this imposed stage 2 settlement will leave a great vacuum of legitimate discontent and of unsettled dues to be carried over into the new era of collective bargaining which the Chancellor ushered in with his statement last Friday. Indeed, I believe that the Government may before long rue the day that led them to hold down the police service so fiercely in stages 1 and 2, leaving this yawning gap between the actual position and real merit as we move into this freer area of collective bargaining.
  The hon. Lady will know that the 12-months rule, as it applies in connection with the existing regulations, expires in September this year. It therefore behoves the Minister, since the application of the regulations will expire before the House meets again in the autumn, to take away some of the sour and bitter taste which the regulations will leave in the mouths of the police service by spelling out, first, what undertakings Ministers —from the Prime Minister, in his exchanges with the Police Federation in Downing Street, downwards—have given in the context of the discussions which have led up to the regulations we are discussing tonight. What undertakings have they given about a better deal after September? What are these undertakings in terms of possible fringe benefits and in terms of a better pay deal than the 5 per cent. they are getting under the regulations?
  What silver lining can the hon. Lady, with her golden tongue, impart tonight to these leaden regulations with which we are faced? I hope that she will produce a silver lining, because the regula-
  1324
  tions standing on their own simply will not do.
  Secondly, can the hon. Lady commit the Home Office and the present Home Secretary to the view that, in the context of the unprecedented strain now placed on the police service and the profound loss of morale and confidence resulting from its slippage in the earnings league, police pay must be considered as one of the cases representing, in the Chancellor's own words on Friday, "the most serious difficulties" which alone can be tackled by above-average settlements in the next 12 months?
  The hon. Lady should bear in mind that according to the professional economic advice available to the Police Federation, and no doubt to her own Department, police pay would need to increase this coming September by 26·5 per cent. to re-establish the relativity with average adult non-manual male earnings which the September 1975 settlement represented. The figure will be much higher by mid-1978. If we take the mid-term of the 12 months starting September 1977, I imagine that it would have to increase by well over 30 per cent. in order to get back to the relative position of September 1975.
  It will not do to expect the police service to help keep down the average level of settlement in the public sector to single figures, because it is in an exposed and vulnerable position and must be among those who have what the Chancellor called
  "the most serious difficulties"
  Thirdly, where and how does the hon. Lady envisage that negotiations for the next pay date—lst September 1977—will take place and in what forum? Will it be directly between the Home Office and the Police Federation? Will the review body which the Home Secretary has decided to set up, and of which the Secretary of State for Scotland gave us notice earlier this week, have produced its recommendations about the negotiating forum by September? If not, how and in what way will the hon. Lady's Department negotiate the 1st September pay claim with the federation?
  We all know that a new economic era was ushered in by the collapse of the social contract and the return to free collective bargaining as announced by

  1325
  the Chancellor on Friday. We now know the details. It is certainly likely to usher in a new era of industrial wage negotiations, and it is extremely unlikely that it will be free of dispute. It certainly will not do for the Government—I hope that the hon. Lady will note this—to use the police service, as they have done in the post, as the fall guy in their attempt to keep public sector settlements down. There will be too many police officers falling in the streets in the coming months, as there have been in the past, for this to be a realistic policy.
  The police must be paid properly, otherwise the police service will be unable to maintain the thin blue line between the law-abiding citizen and the violent mobs of which we have only too unpleasant testimony and evidence in the Grunwick dispute. I hope that the hon. Lady will therefore do something to encourage the service and the public about the way that the police should be treated in future.
  11.59 a.m.
  Mr. James Dempsey: I understand from the Order Paper that we are discussing the application of the present stage 2 pay policy to police officers. That is why the hon. Member for Barkston Ash (Mr. Alison) referred to the 5 per cent. and to the allowance of £208.
  What I would ask: my hon. Friend the Minister to look at now is the future. We hear a great deal today about the thoughts of great people, especially of great men. I wonder whether we can have any thoughts from my hon. Friend about what is to happen to police conditions of service now that we are about to embark upon an orderly advance to free collective bargaining.
  I should like to draw attention to the fact that the pay of a police officer completing his first year of service is exactly £2,276. That is about £45 a week gross; it cannot be more than £30 a week take-home. How anyone can survive on that at present is beyond me. Even an officer who has fulfilled his years of incremental increases and has now reached the ceiling of his earnings after 15 years receives only £3,194. That is about £64 a week gross, not take-home. When all deductions are made, it will probably be slightly more than £40.
  1326
  That is no way to encourage people to join our police, and I should like to know from my hon. Friend what her views are on the possibility of raising police rates of pay substantially after this stage of the pay policy comes to an end on 31st July. There are several ways in which she can help.
  I am surprised that it should take anyone 15 years to reach the maximum of his salary. Even the period that it takes a teacher to reach the maximum has been reduced. Here is one area in which my hon. Friend could lend her weight, which would be of considerable assistance to police officers.
  Anther aspect which irritates me is that of overtime rates—the "special" rate, as it is known. The special rate is a "phoney" for underpaying people who work additional time. The special rate for a police officer works out at about one and one-third times his normal hourly rate. If he worked anywhere else he would get time and a half, and on a Saturday it would be double time. In certain industries, if he worked on a Sunday it would be treble time. In my view, there is adequate room for my hon. Friend to apply her mind in that direction without getting involved too deeply in whatever arrangement is made after 31st July.
  My right hon. Friend the Chancellor of the Exchequer said that he did not want earnings to rise above 10 per cent. If it is to be 10 per cent., I hope that my hon. Friend will give some thought to all the fringe benefits that exist. I do not know how to compare other people's work with that of a police officer, but I know that a friend of mine, who happens to be a joiner, earns as much as £136 per week when he is working overtime. He does not work a night shift. He does not work on Saturday night and on Sunday night, as the policeman does, yet he can take home that sort of figure, and quite within the pay policy. If it can be within the pay policy for a joiner, it should be within the pay policy to give a police officer decent, reasonable trade union overtime rates. I ask my hon. Friend to look in this direction with a view to helping in the struggle for better conditions of service and increased pay for our police officers.
  I have had some association with the police. For years I was a convener.

  1327
  That is why I am speaking in this debate. I know many of the conditions to which they must submit themselves. I know the nature of their work. I know their irregular hours. I have seen the contribution they make to safeguard the lives of people and property in our society.
  In this life we get only what we pay for. If we pay for the right men and women, we shall have the right police force to preserve law and order and to submit themselves to inconvenience. We should remember that on Christmas Day, or on New Year's Day in Scotland, and at the time of the West of Scotland annual holidays which are taking place now, every place is closed down except the police stations. The police do not enjoy these statutory holidays with their wives and kiddies. They do not go away to celebrate and enjoy the holiday that they have earned after working a year.
  Surely we should bear these things in mind. The police are ordinary men and women with families and parents, and we should ensure that their advantages are such that we may look forward with great confidence to their services to our community. I have no greater feeling of security than when I see a policeman coming down the street. If we want law and order, we must ensure that these men and women, giving such exemplary service at irregular times, are well and truly and satisfactorily rewarded for doing so.
  12.7 a.m.
  Mr. Ivor Stanbrook: I warmly support the sentiments expressed by the hon. Member for Coatbridge and Airdrie (Mr. Dempsey). These are reflected in the hearts and minds of all people in this country.
  In these regulations the Government are not doing justice to the police. The 5 per cent. increase is grossly inadequate. This is a question not of the cost of living but of law and order. Law and order is very much under attack today—the crime rate is rising, and there is disorder and lawlessness on the streets. It is time the Government considered these aspects rather than the cost of living.
  My hon. Friend the Member for Barkston Ash (Mr. Alison) referred to the report of the Willink Commission, which suggested that police pay should be 4 per cent. above average industrial earn-
  1328
  ings. If Governments since then had adhered to that recommendation we would not have had the difficulties that we face today. We would not have had recruitment problems, or such a rise in crime, and the police would have been far more contented.
  Unfortunately, because we do not pay the police enough we have had considerable recruitment difficulties, and we do not have as much choice of the right men for the purposes we require. The rate that we now pay them is only 70 per cent. of average industrial earnings, instead of the 104 per cent. that we should be paying. Is it any wonder that we are nearly 5,000 short of establishment in London, and that that figure is rising. I understand that figures reported only this week show a further drop.
  Outside Grunwick the other day 4,000 Metropolitan policemen—one-fifth of the total—were on duty to deal with something which should not have occurred in a proper law-abiding society if the Government were determined to maintain law and order and not to give encouragement, as some Labour Members have done, to the lawless elements involved in that affair. We have never needed good policemen so badly. That is why these regulations are fearfully inadequate.
  But the position is even worse than my hon. Friend said. Overtime has made a great difference to police officers, at least in London. It is a matter for wonder that people who work long hours in order to earn more money should not get credit for doing so. It is to our shame that police officers are working 10 or 20 hours extra a week to earn a living wage. Any London police officer knows that if overtime were removed it would make a great difference to his take-home pay and to meeting his weekly budget.
  Mr. Joseph Harper (Comptroller of Her Majesty's Household): That applies to any industry, not just the police.
  Mr. Stanbrook: But the position of the police is fundamental to law and order and far more important than that of any other section of the community, except perhaps the Armed Forces. We have to have ordered priorities. The fact that the police are happy to work overtime to increase their salaries is a matter of shame to us, because of their special position.

  1329
  Instead, as the Government claim, of ensuring that expenditure on police emoluments is not cut, they have made a cut by means of overtime. There is now a new system of control of overtime for Metropolitan Police officers. In a Written Answer on 7th July this year, the Home Secretary said:
  "The Commissioner has recently decided to introduce a new system for the control of overtime worked in the Metropolitan Police. The effect of this will be to maintain the total financial provision for overtime in the force at the same level in 1977–78 as it was in 1976–77. While it is not possible to say precisely what effect these new controls will have on the number of hours overtime worked by individual officers, I understand that, on average, any effect could be small. The Commissioner does not intend that the new procedures should inhibit the operational needs of the force in any way."—[Official Report 7th July 1977; Vol. 934, c. 628.]
  He may not intend it—he is a new man, and I hope that he is learning rapidly—but that is what the new arrangements will mean. There will be an inhibition of operational needs as a result of limiting cash payments for overtime to the level of last year, if only because of the fall in the value of money.
  One has to go to Regulation No. 25 of the main regulations—the Police Regulations 1971—to see why it will not be possible to limit cash payments in this way without creating great injustice to police officers and inhibiting police work. After all, when a police officer is engaged upon an investigation and his normal hours have been passed he would not be expected to give up work and to return home saying that his day was done. An officer is not specifically ordered or told to continue his work on an investigation. Of course not. We expect him to continue, and that is the normal thing. Being the men that they are, the police carry on investigating and working on their duties. For that reason it is simply impossible to lay down precisely how much overtime will be done by a police officer. As a result of that, the regulation that concerns overtime, regulation 25, is fairly flexible and clear. It says:
  "where a member of a police force…remains on duty after his tour of duty ends…. he shall be granted…in respect of each unit of time during which he so remains on duty after his tour of duty ends…an equal period of time off."
  A unit of time is 15 minutes. The significance of that regulation is that while
  1330
  every policeman is entitled to time off in respect of overtime, that time will be given only where the exigencies of the service, in the opinion of the chief officer, permit. The regulation continues:
  "If…time off is not granted within such time (not exceeding 3 months) after that week as the chief officer of the police may fix, the member…shall be granted for each unit of overtime worked during that week for which time off has not been granted an allowance of a twenty-fourth of a day's pay"
  In other words, the position is that where a policeman remains on duty after his normal hours he will be granted time off if the exigencies of the service permit. However, if time off is not granted within three months the police officer will be paid cash in lieu. Therefore, if the Commissioner of Police for the Metropolis really intends to limit the amount of money that is paid in respect of overtime he will have a difficult operation to conduct. He will have to adjust the time off within each three-month period to reduce the balance of time for which there will be cash payments to the level required. The Commissioner will then have to predetermine, somehow, how much overtime will be worked. Anyone who says that operational requirements will not be affected does not know anything of police work.
  That is the situation. Quite clearly the spirit of the regulations will be broken by the new controls that have been announced by the Home Secretary. I tabled a Question to the Home Secretary on that point. I asked:
  "in view of the fact that certain divisional commanders of the Metropolitan Police have imposed limits on cash payments for overtime worked by the Criminal Investigation Department officers to a fixed proportion of that paid in 1976 to all officers in the same division, if he will take steps to insist on observance by divisional commanders of the letter and spirit of Police Regulations covering this subject."
  The right hon. Gentleman replied.
  "Arrangements for the control of overtime in the Metropolitan Police, and their administration by divisional commanders, are matters for the Commissioner of Police of the Metropolis."—[0fficial Report, 15th July 1977; Vol. 935, c. 277–8.]
  Apparently the Home Secretary had not read the regulations to see the difficulties that will arise operationally. I have been told that a divisional commander at Tower Hill has calculated how much money was spend on overtime last year

  1331
  and the proportion of that which was paid to the CID—which was 11 per cent. —and has said that of the money now available 11 per cent. will be available for the CID.
  What nonsense is this? What better way could there be of interrupting, disorganising and confusing police work? It will be impossible to apply these rules from day to day. No chief of police or divisional commander will be able to say that a policeman may do one hour's overtime because the time off that he may be granted has been allowed for within the next three months, and that sufficient cash will be left to pay for the rest of his overtime. The chiefs will say that the work must be done. They will send the men out and the result will be a thoroughly dissatisfied police service and greater confusion and dissatisfaction than ever.
  In the end, it will mean that individual officers will be paid far less than at present. The estimate of one London division is that its officers will suffer by £11 a week because of this arbitrary limit of cash payments on overtime. Officers will be reluctant to do overtime, and their take home pay will be considerably reduced.
  If the Government wish to avoid that they should look at the regulations and the control of overtime again and say that while the police must adhere to any incomes policy, separate regulations will be introduced and will not apply to overtime that is properly and legitimately worked in the interests of the people.
  12.22 a.m.
  Mr. Eldon Griffiths (Bury St. Edmunds): I congratulate my hon. Friends on their valuable contributions to the night shift. My hon. Friend the Member for Barkston Ash (Mr. Alison) put the case for the police service eloquently and effectively. I endorse every word that he uttered and I hope that the Minister will take his remarks seriously. I also thank my hon. Friend the Member for Orpington (Mr. Stanbrook) for having raised so wisely the problem of overtime in the Metropolitan Police, which is having a serious and damaging effect on the morale of the CID.
  1332
  The House knows my interest. Over the weekend, the miners made clear their views about the next stage of the incomes policy. Today, the doctors have done so. This debate is the first opportunity for the view of the police service to be heard.
  It is all the more sad and disgraceful that the Government have deliberately organised the debate so that the House will be virtually empty—once again, there is no member of the Liberal Party in the Chamber—and the vast majority of the Press will have no opportunity of recording it for the benefit of the public and the police service. It is another example of the shabby way in which the Government have dealt with police business in the past two years.
  I am sure that the majority of hon. Members agree with me that the first social service that a Government owe to the people is the maintenance of law and order. We are not doing very well. Law and order in this country is at risk as seldom before, and the police are not winning the battle. I do not say that they are losing it, but they are barely holding their own.
  Perhaps I can put it in simple terms —in terms of some things that have gone up and of others that have gone down. The crime rate has gone up massively. Violence has gone up alarmingly. Political and industrial unrest have gone up, and are likely still further to increase. Simultaneously, police recruiting is down. Police cadet numbers are down. Police overtime is down. Police pay is disgracefully down. The only thing in the police service that I know to have gone up is the numbers who are leaving the service.
  There was one sad example tonight of a police constable with 11 years service in this House. He has resigned the service not because he wishes to do so; he loves his job with the police. He has gone to be an electrician, because in that way he will get more pay. He is not alone. All over the country hundreds of well-trained and dedicated men are now voting with their feet. They are leaving the service at a time when crime and violence and unrest are rising against us.
  The order introduces the first pay increase that the police have had since September 1975. That fact alone is a disgrace. I wonder whether there is

  1333
  another occupation that has had no increase since September 1975 and that would have stood for it as the police have. Any other group—the face or surface workers in the coal mining industry, the transport workers, the power workers—faced with the fact of no pay increase since that date, would have been on the streets. If the police had followed the example of other more violent groups and had been hammering at the doors of this place the Government might have met their just demands.
  The police, however, have been handicapped and exploited because of their sense of responsibility. They have not been prepared to use the same industrial muscle as other groups have used to get their own way. I had never imagined that the police service of this country would vote, as it did, to take the power to strike. That decision was taken at the Police Federation conference, and the decision was almost unanimous. It was taken with great reluctance, because no police officer that I know wishes to take strike action. The fact that the decision was taken is a measure of the Government's failure to deal with the just demands of the police service, that most loyal and dedicated body of police officers in the world, who have been driven down the road to industrial action.
  This settlement has been imposed, and that, too, is quite wrong. When the Prime Minister was adviser to the Police Federation, a post that I have the honour to fill today, he warned on one occasion, when a Conservative Home Secretary saw fit to impose a relatively minor settlement in respect of police widows' pensions, that if it could happen in that small field it might come that a Home Secretary would seek to impose an entire pay settlement on the service. That warning was prophetic, although at the time it was uttered no one in the police service and no one in the Government imagined that it would ever come true.
  How sad it is, how ironical it is and how disgraceful it is that it should be the Administration of the same right hon. Gentleman, the present Prime Minister, that has now imposed this settlement. In effect, it has stuffed down the throat of the police service a settlement that its lawfully and democratically elected statutory body rejected as wholly inadequate. The settlement fails, because it is
  1334
  imposed. I must tell the House that it is not acceptable, for the classic reason that it is far too little and it has come far too late. It is too little by any measure.
  I put before the hon. Lady three specifics. The first concerns the measure of inflation. I shall not weary the House by quoting Professor Nevin's figures, but clearly the police service has fallen far behind. While most of the others have been able to keep pace with inflation, the police service has found itself falling further and further behind.
  Secondly, the settlement is not acceptable in terms of the measure of comparability with settlements that have been received by others. The police service was excluded from phase 1. It did not get the £6 award that was available for all other workers. In phase 2 the police were awarded the £2·50 or the 5 per cent., depending on rank. Since phase 2 the Home Secretary has claimed again and again—indeed, he has boasted —that there are to be no exceptions. In fact, there have been exceptions. The seamen were made an exception because they threatened to strike. The Windscale power workers were an exception because they went on strike.
  Under phase 2 the police could and should have been given the fringe benefits that hour after hour and week after week were negotiated between the federation and the Government, which at the end of the day the Government refused to provide. It was stupid and insensitive on the part of the Home Office to fail to uphold that package of fringe benefits, which could have brought about a settlement within phase 2.
  Above all, the settlement is too little and too late by the real measure of what our police service is worth. In any settlement we must have regard to the relevance and importance of the occupation. When I see some of the facts as provided by Professor Nevin I am bound to say that the police have had a shabby deal. Between 1960 and 1975, when policy strength in England and Wales increased by 47 per cent., the number of indictable offences known to the police increased by more than 180 per cent. That is a measure of the increasing work load that the police have had to bear. For every 100 vehicles on the roads in Britain in 1960 there were 185 by 1975.

  1335
  Again, that is an illustration of the increasing work load on the police.
  In the six years between 1969 and 1975 the number of crimes of violence against the person in England and Wales increased by no less than 88 per cent. It is not, therefore, surprising that over the decade 1965–75, when the number of fatal accidents in British industry fell by 40 per cent., the number of claims by police officers in respect of criminal injuries inflicted on them when on duty increased more than 15 times. That illustrates conclusively that the police have not had in their salary anything like recognition of the added work load.
  As my hon. Friend said in his admirable speech, the real test of the order is whether the Under-Secretary of State will be able to look forward and at least partially make amends for the shabby treatment that has been meted out over the past two years. I hold her to that for two specific reasons. First, the Home Secretary, at the Scarborough conference of the Police Federation, was asked by its chairman "Are the police a special case or are they not?" The Home Secretary categorically replied that in his view the police were a special case. I ask the Under-Secretary of State to say how those words are to be translated by the Government into facts, figures and money under phase 3 of the incomes policy.
  Secondly, the Prime Minister, at a meeting at No. 10, which I attended with representatives of the federation, said that in his view the police should return to the Willink formula. The hon. Lady no doubt has access to the record of that interview with the Prime Minister. Is it now the intention to honour the Prime Minister's undertaking that, one way or another, the route must be found to return the police service to the levels of the Willink formula?
  I shall put numbers on that formula Simply to return to the levels of the 1975 settlement—the minimum that must be achieved in a September settlement—it will be necessary to add about 26 per cent. to the present pay of the police. That is based on the relation between the police pay and the average weekly earnings of adult male non-manual workers.
  In addition to that, to deal with the way in which the police have fallen
  1336
  behind it will be necessary to take account of the new earnings increase in the projected phase 3. If that is to be 10 per cent., as suggested by the Chancellor, an additional 10 per cent. on top of the 26 per cent. will be required. If the settlement turns out to be 15 per cent. or higher, the necessary movement in police pay will be about 40 per cent.
  On top of that, to deal with the problem of prices the best advice that I can get is that a further increase of 6.5 per cent. will be needed. So, simply to return to the levels of the 1975 settlement, an increase of not less than 40 per cent. will be required..
  That is only the beginning. It is not a matter of returning to the 1975 position; it is a matter of returning to the Willink formula. Unfortunately, the 1975 settlement represents a substantial erosion of the Willink formula. I should be happy to provide the figures. Broadly speaking, there was an erosion of about 9 pet cent. between the Willink settlement of 1960 and the 1975 settlement. For a sergeant at his maximum, there was an erosion of about 6 per cent.; for an inspector at his maximum, there was an erosion of about 7 per cent. Those are the amounts by which the allegedly generous settlement of 1975 itself eroded and degenerated the settlement of Willink in 1960..
  I have to say to the hon. Lady that it will be by no means sufficient for the Government to come forward in September and suggest a return to the 1975 settlement. What the Federation is looking for—rightly, in my view—is, first, a return to the Willink formula; which will throw out figures substantially higher than 40 per cent. It may be that in order to achieve this there will need to be two bites at the cherry. It may be that in September the Government will come forward and there will be negotiations, and that a return involving the substantial figures that I have mentioned—close on 40 per cent.—will be acceptable on the understanding that the first bite of the cherry is the 1975 settlement and the second bite, lying ahead, is a return to Willink early in the new year..
  But if the hon. Lady's officials imagine for a moment that the 1975 formula will suffice they will have to think again. The best possible way in which to make this order acceptable to the police service is

  1337
  an early return to 1975, a forward commitment to Willink, and an understanding that in the future the police service will be properly rewarded for the four things that set it apart from virtually every other occupation in this country..
  The first of these principles is the constant commitment of the police constable to his duty—a 24-hour responsibility; the second is the unique danger that he, as a civilian under discipline, must accept; the third is the need for a career structure with adequate differentials; the fourth is the anti-social hours of police work itself. These four principles will need to be recognised, and recognised generously, in any future settlement the police service is to do its vital job.
  l do not envy the hon. Lady her task in having to reply to the debate. I have no doubt that she will do it competently and fluently. But I say this to her personally; the police service today is in turmoil. The police are our only effective guardian against a breakdown of law and order. A very heavy responsibility lies on the Government for having damaged police morale, and I hope that tonight the hon. Lady will try to undo some of that damage in the interests of all our citizens.
  12.43 a.m.
  The Under-Secretary of State for the Home Department (Dr. Shirley Summer-skill): This is the fourth time in a matter of weeks in which the House has had occasion to discuss police pay. It was the subject of a debate on 16th May. A few days later, on 19th May, my right hon. Friend the Home Secretary made his statement about his intention to make the regulations awarding a pay increase to the federated ranks of the police in line with phase 2 of the Government's pay policy. Then, as recently as last Tuesday, the House debated the prevention of crime—a subject which naturally gave rise to further discussion of police pay.
  If the House is devoting more time to the police, that is to be welcomed. No topic is of greater importance to the well-being of our society. One general point does, however, bear constant repetition, and I should like to start with it. The police in this country perform a uniquely difficult job, and they perform it to a standard that is unparalleled anywhere else. Whatever our differences with the
  1338
  Police Federations, we shall not lose sight of that. I want, therefore, to emphasise right away that the Government are wholehearted in their support for the police.
  The hon. Member for Barkston Ash (Mr. Alison) mentioned the Grunwick dispute, That dispute has been made much more difficult than it need have been by the activities of extremists of one kind or another, who have exploited a genuine industrial dispute in order to achieve their own ends. We deplore that and applaud the work of the police in containing the very difficult situation that has developed at Grunwick.
  Before I turn to the regulations I am able to say something more about a review of the negotiating machinery for police pay. My right hon. Friend the Secretary of State for Scotland told the House on 12th July that the Home Secretary, the Secretary of State for Northern Ireland and he had decided to set up a review of the police negotiating machinery, and he announced the terms of reference. I am pleased to be able to inform the House that distinguished Lord of Appeal, Lord Edmund-Davies, has accepted an invitation from the Secretaries of State to chair the review. The other members of the review will be appointed as soon as possible and I hope that the review body will be able to start work quickly. If the agreed machinery can be introduced quickly in the light of the review body's recommendations, as we hope, it will then be for that body to look at pay.
  Mr. Eldon Griffiths: The hon. Lady has announced that Lord Edmund-Davies is to be the chairman and I hope that she will be able to announce the names of the other members quickly. I am interested in her suggestion that when it emerges the new machinery will be able to deal with pay. However, if it is not available before September, and that seems most unlikely, how does the hon. Lady propose that the pay settlement in September should be dealt with? Is it to be done directly with her Department? Let me say to her quite bluntly that there is no way in which the Police Federation is going back to the Police Council.
  Dr. Summerskill: As the body has only just been set up, I cannot anticipate how quickly it will be able to report. Naturally, we would urge it to report as quickly

  1339
  as possible, I cannot say exactly when that will be, but I hope that it will take the point that the hon. Member has made.
  I turn now to the regulations. The decision made by my right hon. Friend to make and lay these regulations was taken only after long and careful consideration. But the House will recall that the Police Federations for England and Wales and Northern Ireland withdrew from the negotiating body, the Police Council. After careful consideration in consultation with the official side of the council, an offer was made to the federations. This reflected the most that could be offered under phase 2 of pay policy and also offered improvements in certain fringe benefits when pay policy permitted. As I say, that offer represented the limit under phase 2, and its rejection brought about an impasse.
  As my right hon. Friend explained to the House on 19th May, members of the police had received no increase in pay since September 1975. My right hon. Friends the Secretaries of State considered that something had to be done to get the money already offered into the pockets of the police and their families. The process of consultation has therefore been completed and the regulations brought into effect with as much speed as practicable.
  The regulations were, of course, made without the concurrence of the Police Federations, but the Home Secretary is required by Section 4(4) of the Police Act 1969 to take into consideration any recommendation made by the Police Council and to furnish members of the council with a draft of each set of regulations. This was done before the announcement was made in the House on 19th May. A recommendation made by the Police Federation was accepted by my right hon. Friend and a revised draft was then circulated. There were no further recommendations of substance made and the regulations were made on 11th June, coming into operation on 27th June. I have made it clear that a better offer to the police for the current year just could not be made under phase 2.
  Hon. Members have naturally asked me about the next round. It is far too soon to say a great deal about the settlement in the next round, which will be due
  1340
  as from 1st September, but I should like to give some indication of our approach.
  There will be some scope for flexibility in negotiations in the next round. My right hon. Friends the Secretaries of State are as anxious as anyone to ensure a settlement that rewards members of the police service fairly for the demanding and responsible work that they carry out with the skill and devotion to which hon. Members have rightly paid tribute. I assure the House that the case for police pay put by the federation will be carefully and sympathetically considered.
  I must emphasise, however, that the police, like everyone else, are affected by the economic circumstances of the country. They will benefit if the rate of inflation is brought down. They cannot be left outside the pay policy on which the Government's efforts to tackle inflation depend. The negotiations on the next round of police pay must, of course, be conducted on the basis of the pay policy on which my right hon. Friend the Chancellor of the Exchequer has so recently made his statement.
  I have listened very carefully to the proposals of the hon. Member for Bury St. Edmunds (Mr. Griffiths), but tonight I cannot give any specific undertakings. However, I should like to make one or two points against the background of the Chancellor's statement.
  My right hon. Friend the Home Secretary accepts that in relation to the cost of living police pay has fallen below the level of September 1975. He also accepts that the increase in crime has increased the work load on the police and, in consequence, the stress to which they are subject. This stress is exacerbated by the increasing violence in society, bringing with it an increased risk of injury, or worse, to police officers.
  One of the problems that the discussions of recent months have highlighted has been the fact that there has been no agreement about the current level of police pay. A survey conducted by the then Joint Secretaries of the Police Council showed police earnings in March 1976 at a level which the Police Federation subsequently would not accept. The figures were, of course, averages and it was therefore inevitable that some individual police officers would be earning less than the average figure. Of perhaps

  1341
  more importance in the context was the fact that throughout the Police Federation left out of account in its calculations the value of the house or rent allowance to which every police officer is entitled. I am afraid that my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey), who is obviously extremely concerned with the pay figures of individual policemen, did not mention that aspect in his speech.
  Hon. Members who have seen the cost of mortgages rise, rates rise, and the cost of maintenance of property rise, will appreciate how valuable an asset a free house really is; and this is a benefit that the police receive effectively tax-free. I hope, therefore, that the federation will feel able to take this properly into account in future discussions on pay. The Government consider—and I am sure the House would agree—that any fair assessment of earnings must include the value of housing.
  The Police Council has set up a working group to establish the current level of police pay and a new earnings survey is being, conducted. It will be some weeks before the considered views of that working group are available. The Police Federation is unfortunately not participating in its work, but I understand that the federation itself is preparing a case on pay, and we await the results.
  With regard to the points raised by the hon. Member for Orpington (Mr. Stanbrook) about overtime in the Metropolitan Police, my right hon. Friend the Home Secretary has not issued any directive that overtime in the Metropolitian Police should be reduced. The Commissioner has recently decided, as a matter of good judgment, to introduce a new and more effective system for the control of overtime in the force. The financial provisions for overtime in the force as a whole this year are the same as those made last year and there is certainly no intention that these new controls should in any way interfere with the operational needs of the force.
  If the money currently set aside in the force's estimates to cover overtime proves insufficient to meet these needs, because of the number of special events in London
  1342
  this year, or for any other reason, it will be increased. A fair pay settlement can be achieved only by negotiations conducted in a cool and rational spirit. For my part, I very much hope that a settlement can be achieved which will be satisfactory to all sides. Those who, like my right hon. Friends, are well aware of the need for a police force with high morale and confidence in their role in maintaining law and order, know the great importance of reaching an agreed settlement.
  Mr. Alison: In the context of the background to the forthcoming negotiations, will the Minister clear up a couple of points? Can she reassure us that the fringe benefit offer that was associated with the pay offer that has now come into the regulations—obviously fringe benefits cannot come into the regulations—will be carried forward automatically as a standing offer in the next round of pay negotiations? Can she reaffirm the Government's support, as the Prime Minister said, for the Willink formula of 104 per cent. relativity as to average adult male non-manual earnings?
  Dr. Summerskill: The fringe benefit were part of the stage 2 negotiations, which, as the House knows, did not reach a satisfactory conclusion. Consequently, we have these regulations. I cannot anticipate stage 3 beyond what I have said this evening. It would be wrong, so soon after the Chancellor's statement, to make any dogmatic statements about what stage 3 will hold. I hope that hon. Members will study what I have said. The matters to which the hon. Member for Barkston Ash has referred will obviously be considered during negotiations on stage 3.
  A fair settlement is essential if we are to maintain law and order. Sorry though my right hon. Friend was that agreement could not be reached on phase 2 increases, implemented by these regulations, he thought it imperative that the police should receive the increases that pay policy permits. I am sure that even those who consider this to be insufficient would not wish to prevent the regulations being carried tonight. Then the House, the police and the Government, can look forward to stage 3.
  Question put and negatived

  INDUSTRIAL DEVELOPMENT CERTIFICATES
  Motion made, and Question proposed,
  That this House do now adjourn.—[Mr.Frank R. White]
  1.0 a.m.
  Mr. Hugh Fraser: I wish to explain how the refusal of an industrial development certificate will increase national unemployment and add several million pounds to our balance of payments deficit.
  I raise the matter of the loss of at least 300 jobs caused by the refusal of the Secretary of State for Industry to grant an industrial development certificate to the French firm of Manitou to build its rough terrain fork-lift equipment in the town of Stafford.
  With national unemployment running at around 1½million and rising, it is a serious matter. The loss of jobs is not just a local loss; it is a national loss. Having been refused Stafford, Manitou manufacture remains in France. With the sales of Manitou equipment booming in this country—it is now major in the agricultural as well as the constructional field, with sales likely to top the £8 million mark this year—not only have jobs been lost; our balance of payments will be worsened by about £4 million, and knowledge of the Government's idiotic decision will adversely affect potential EEC investment in this country.
  I have never believed in the industrial development certificate. Statistics of IDCs granted—and about 1,000 were granted last year, as opposed to nearly 1,800 in 1973—simply do not reveal the number of investments frustrated or abandoned because of them. Of these figures, of course, the Government keep no record.
  Of all the controls on industry imposed by post-war British Governments, the industrial development certificate is the most arbitrary, the most centralised, and the clearest epitome of the principle of the "gentlemen in Whitehall knowing best".
  It is a veto imposed by central Government on local county or district planners and local aspirations, on local industry and on local work forces. It is a veto set to defy business judgment,
  1344
  the forces of supply and demand, and the whole harmonious process by which new industries grow and develop through a myriad of individual commercial judgments. It attempts to apply and applies macro-economic considerations to what must be micro-economic decisions.
  If ever there were a dead hand, it is that of the IDC. It is a principle that has frozen development, cost real jobs, and littered the country with unused advance factories, empty because too few want them, and costing the taxpayers millions of pounds. There are now over 80 such advance factories unlet or abandoned in the development areas, and yet the Government have announced plans to build a further 100.
  Not only hell but most of Whitehall is paved with good intentions. When IDCs were introduced, with the Town and Country Planning Act 1947, they were hailed as instruments to bring jobs to the depressed areas. It has not worked that way. The depressed areas remain depressed. All that has happened is that dynamism has been denied to the strong, and by that denial there has been no national spill-over of investment into the less fortunate areas, while with few exceptions the depressed areas still remain clusters of declining industries, unenlivened by major new investment.
  In my own constituency of Stafford and Stone, and in Whitehall, I have fought both particular and general battles to get the dead hand of the IDC lifted. A few years back the Government—I think a Conservative Government—did something to ease the problem. The limit of factory space that was free of the veto was first lifted to, I think, 10,000 sq. ft. and it is now 15,000 sq. ft. It took months of meetings and persuasion.
  Of two major cases of denial of IDCs to manufacturers in my constituency, we won one by advising a scientific instrument firm simply to threaten that it would go overseas. The Minister—I think Conservative—climbed down and an IDC was granted, and 400 or so jobs were gained for the people of the Stafford area. The other case, the topic of this evening's debate, was lost. The French firm of Manitou refused to accept an alternative site, Government grants, and inducements in a fringe or intermediate development area. The Minister refused to climb down. Manitou refused to budge. As I

  1345
  have said, it remains manufacturing in France.
  At this point I should like to quote a few lines from the letter that the Secretary of State for Industry sent to me on 20th December 1976. He said:
  "I have looked into this case carefully."
  —that is, the Manitou case—
  "You will know, of course, that the main purpose of the IDC control as an instrument of our regional policy is to encourage mobile industrial developments to locate in the assisted areas. In this case it was decided that the project must be regarded as mobile and capable of being located in an Assisted Area. The IDC for Stafford was refused accordingly."
  I draw attention especially to the words in the last sentence that I have quoted from the Secretary of State's letter, that
  "the project must be regarded as mobile and capable of being located in an assisted area."
  For pure Whitehallese, that sentence just about takes the bun. Without respect to 19,400 Ministers and civil servants employed by the Department, it is crappy, political, macro-economic nonsense.
  Are component manufacturers mobile? Are lines of communications mobile? Are skilled work forces mobile? Is worker accommodation mobile? Are traditions of good labour relations mobile? Mobile! The only sort of mobility that would be relevant would be for the Minister and some of his acolytes to resign.
  Already Manitou aims to sell 1,500 or so units of its 34,000 world production into the United Kingdom. Already engines from Bradford, electrical systems from British CAV and many components are being exported to France for re-import into this country. Some 60 per cent. of machinnes are British made. If Manitou had been allowed into Stafford adjacent to the Black Country, 85 per cent. of components would have been British.
  Indeed, the potential gain—or now loss —in jobs nationwide might have been considerably greater than the 300 Stafford jobs that I have mentioned. In addition, of course, are all the temporary jobs lost to construction workers in the building of a new £500,000 factory which Manitou was prepared to undertake itself.
  What, then, can be done? In his letter to me of December 1976 the Minister said that if Manitou apply again for an IDC in 1978 it will be carefully considered. In Stafford dstrict at the last June count we had 1,397 people registered as un-
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  employed. By the autumn that figure will inevitably be higher. Having perpetuated such an error, the least the Minister can do is to write to Manitou this very week and say that any new application will be immediately and favourably considered. This week he has been eating humble pie by the pound. He may as well eat it now by the kilo. If he does not, the Secretary of State and his ministerial colleagues will brand themselves as political and doctrinaire bureaucrats, indifferent to unemployment and hostile to local enterprise. Fortunately, the present Government will not be much longer in office.
  My own appeal to the incoming Government is to abolish the whole IDC rigmarole. Of course, there must be a policy to help depressed areas, but, it is not that enshrined in the IDC doctrine. Faced by rising unemployment, faced by the need of more investment from within the EEC and from multinational companies, driven by the need for more wealth creation in a freer society, let the IDCs be the first faggots to light a bonfire of unnecessary and literally counter-productive Socialist controls smothering every personal, local and national initiative.
  1.8 a.m.
  The Under-Secretary of State for Industry (Mr. Bob Cryer): In the midst of the invective that I have heard from the right hon. Member for Stafford and Stone (Mr. Fraser), I must say that I am grateful to him for raising this subject so that we can clarify the position on what has become a somewhat confused issue.
  The right hon. Gentleman not only raised a number of misleading notions tonight; I noticed that on 24th May the Stoke Sentinel headed an article
  "Frightening away 350 new jobs".
  The right hon. Gentleman has repeated that sort of claim. Before I take up the specific case and answer the points that have been made, I should say something about IDC control generally, because it is important and the right hon. Gentleman criticised it on a number of counts.
  First, it is important to maintain those instruments of our regional policy—both financial incentives and the IDC control—which will help industrial development in the assisted areas. The right hon. Gentleman himself said that there must be a policy to help depressed areas. That is

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  right. The IDC control is one of those policies that were retained by successive Conservative Governments as well as Labour Governments.
  Secondly, the IDC control helps us to identify projects that have a genuine choice of location and to encourage their location in the assisted areas. Of course, we recognise that many projects for which IDCs are sought will have clear ties to existing locations; for example, source of supplies, customers' locations, and staff immobility. We accept this. We also take full account of the needs and resources of the location sought by the company concerned, especially if it is in one of the areas of high unemployment outside the assisted areas.
  There will be occasions when, in striking a balance between all these factors, it is clear that a project can be considered to be mobile and should be encouraged to locate in the assisted areas. This is the purpose of the control, and in such cases the IDC will be refused even though it may cause disappointment in the alternative areas which have been considered. I should emphasise that the IDC control does not provide any power to direct a project to a particular location—only to withhold approval of the provision of new industrial floor space for it. It is a flexible system—far from the system of Whitehall domination which the right hon. Gentleman suggested—and it may be possible for a firm to acquire existing industrial premises in the area of its choice or to operate within the IDC exemption limit, which was raised by the present Government above the previous limit in May last year because we wanted to see a more flexible application of the policy.
  I turn to the specific case raised by the right hon. Gentleman and deal with the applications by Manitou (Site Lift) Limited. These events started more than two and a half years ago, and, in commenting on these applications, one of my difficulties is that the Department deals with applications for industrial development certificates on a confidential basis with the companies concerned. It would be wrong to discuss the case on the basis of information that the Department had received from the company in confidence. However, a certain amount of information
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  has been well publicised by the company and provided to other parties interested in the project. Therefore, I can comment on a number of items.
  First, when the application was started, the level of unemployment in the Stafford travel-to-work area was 2 per cent. That was half the percentage in assisted areas generally and less than that of the West Midlands area generally, with 2·3 per cent., and a national average of 2·7 per cent.
  I repeat what my right hon. Friend the Secretary of State said when he wrote to the right hon. Member last December, namely, that the IDC was refused because Manitou's project was considered to be mobile and capable of being located in an assisted area. The right hon. Gentleman poured some scorn on this, but "mobile" clearly means that it is not fixed to a specific area, as coal mining, shipbuilding or an industry with a particular geographical or transport centre would be. On the other hand, without prejudging the matter, my right hon. Friend gave an assurance that any proposals made to the Department by the company in the future would receive most careful consideration.
  Mr. Hugh Fraser: Would the Minister, therefore, accept an immediate proposal by Manitou, if it came in?
  Mr. Cryer: I am not sure what the right hon. Gentleman means by "immediate". If the company wrote to the Department —and I shall come to the contacts that we have had—we would give the matter careful consideration.
  When an application for an IDC is refused, we are always ready to reconsider it in the light of any additional information which the applicant submits. This was made clear to Manitou when officials of the Department met the company in February 1975 to discuss why the application had been refused, and these reasons were given to the company in writing also. However, the company did not press the matter then, and there was also no approach from the company following the correspondence with the right hon. Gentleman at the end of last year.
  However, following the refusal of the IDC for Stafford in February 1975, far from Manitou refusing to budge, the company investigated the possibilities of an

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  assisted area location in the North-West, and it applied for and received an industrial development certificate for the project. But I regret that, in the event, the company subsequently decided not to proceed, and more recent Press reports indicate that the company has decided instead to expand its import, distribution marketing operations.
  The fact that Manitou is a foreign-owned firm did not, of course, affect the decisions on thir IDC applications. Productive investment by both foreign and British-owned firms is considered important if we are to improve our industrial efficiency. However, it is a part of our regional policy tht foreign firms considering new investment in Britain should, where possible, be guided to the assisted areas and encouraged to locate there; such propjects are less likely to have ties to particular parts of the country. This policy was successfully followed in the case of Manitou, for the proposal to assemble fork-lift trucks in Britain was a completely new project, with no tics to existing operations, and the company did —following the initial refusal—decide to locate the project in Winsford in an intermediate area.
  Indeed, the company found a site, with assistance from the regional office, and the IDC was granted within six months of the original application for Stafford. The Department contacted the company this year, but there has been no positive response.
  Mr. Hugh Fraser: Perhaps I could help here. I was under the impression that the company, having been refused at Stafford, was helped to the Winsford area, was then rejected, and left the country.
  Mr. Cryer: The IDC was granted for Winsford in Cheshire, and we made it quite clear when we issued the IDC that there were no further difficulties as far as we were concerned. The decision to abandon it was taken because of the economic climate and not because of IDC refusal at Stafford or the assistance to go to Winsford.
  A recent article in the Stafford Sentinel, which suggests that 300 or more jobs were lost to Stafford and subsequently went to Ancenis, near Nantes, in France, is quite incorrect. The number of jobs projected in Stafford was fewer than 70, and at Winsford it was below 90.
  Mr. Hugh Fraser: As the Minister knows, there is a five-acre site in Stafford, and within two years the company expected employment to grow from 70 to 300.
  Mr. Cryer: We were told that the number of jobs was 70, and that was the number given in the application. We have to take account of the actual basis of the application. We realise that this number is not always accurate, but the figure given for Stafford was 70 and for Winsford 90. The company may have had more grandiose ideas for the future, but the application that we received was for 70 jobs. When considering the failure of the company to take up the position—for whatever reason—it would seem wiser to concentrate on the projected number of jobs available and not on future projections.
  There is little more I can say on this particular case except to emphasise what the company was told in February 1975 and the hon. Member was told in December 1976, that any further proposals put to us by the company in future will receive the most careful consideration. This is still the position.
  However, in the time left at my disposal, it would be appropriate, I think, to say a little more about the industrial development certificate control and general industrial and regional policy. Between January 1974 and May 1977, 852 IDCs have been granted in the West Midlands and only 16 applications refused —none in 1976 and 1977, to date. The equivalent figures for Staffordshire are 173 and seven. Most of the projects for which IDCs were refused were considered to be mobile to the assisted areas; the rest were for private speculative developments for which IDCs are not normally granted except when they come within the arrangements announced in February 1976 for the replacement of empty obsolete factories in urban areas.
  The right hon. Gentleman talked of empty advance factories littering the countryside in the assisted areas and of there being no inducements, but it is our experience that industrialists would rather go to a site with an advance factory than to one without. We do not have Draconian powers to force them. We could only ask Manitou to go to Winsford. Although some advance

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  factories are standing empty we are constantly dealing with inquiries. In the Northern Region, a very depressed area, where unemployment is much greater than in staffordshire, more people are now employed in advance factories than in the shipbuilding and mining industries put together. Delegations from the assisted areas often seek further advance factory building.
  As I have said the IDC exemption limits below which the control does not operate were raised in May 1976—removing many smaller developments, in an attempt to make the policy as flexible as possible. I can assure the right hon. Member that the control will continue to be operated flexibly and with under-
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  standing, taking full account of the contribution of a project to industrial efficiency and of the need to encourage industrial investment both inside and outside the assisted areas.
  Some discrepancies arose in this case, but every encouragement was given to Manitou to establish a project in this country. Our information differs from that of the right hon. Gentleman; Manitou's decision not to establish was not connected with the refusal of IDC permission. If the company wished to make a fresh approach to the Department we should certainly give it careful consideration.
  Question put and agreed to
  Adjourned accordingly at twenty-three minutes past One o'clock.