Commons Sitting of 21 July 1978

Preamble
The House met at Eleven o'clock
PRAYERS
[Mr. SPEAKER in the Chair]

INNER URBAN AREAS BILL (LORDS AMENDMENTS)
Mr. Speaker: Before I call the Chancellor of the Exchequer to make his statement, I have a brief statement to make about the Lords amendments to the Inner Urban Areas Bill.
I must point out that Lords amendment no. 14 imposes a charge which under our Standing Orders requires to be sanctioned by a Money Resolution moved by a Minister of the Crown. No resolution has been agreed to.
A similar situation arose in April of this year in regard to certain Lords amendments to the Shipbuilding (Redundancy Payments) Bill. I advised the House then, as I have to advise the House now, that in those circumstances a decision to agree to amendments of this nature would be absolutely unprecedented. Standing Orders 89 and 90, which govern our procedures in this matter, are so unquestionably observed that I do not think that the House can properly discuss an amendment which contravenes them.
In view of this, although it is clear that the House must come to a decision on Lords amendment no. 14, I can see no way in which a debate on it could conceivably be in order. Without therefore in any way passing judgment on the merit of the amendment, I am certain that I have no option open to me, when we reach that amendment, but to call on the Minister to move that the House disagrees with the Lords in the amendment and, when he has done so, to put the Question straight away.

PAY, PRICES AND DIVIDENDS
Mr. Speaker: Chancellor of the Exchequer—
Mr. Madden: On a point of order, Mr. Speaker. Although I am confident that the Opposition parties will have a copy of the statement that we are about to hear, those of us on the Back Benches have been told by the Vote Office that the Command Paper in question will not be available until the Chancellor's statement has been completed. In the interests of good government and open government, and to give us an opportunity to ask more informed questions, can you give any sensible explanation why the Command Paper is not available before the Chancellor makes his statement?
Mr. Flannery: Further to the point of order, Mr. Speaker. Is it taken for granted that we should have to listen to the Chancellor, absorb what we can and then dash out to get in a queue for the Command Paper and dash back in to ask questions? That is the undignified position in which we are placed.
Mr. Gow: Further to the point of order, Mr. Speaker. Just before Prayers, I asked the Vote Office whether I could have a copy of the Bill which apparently is to be presented by the Chancellor. I was told that I could not have a copy until after the Chancellor had sat down at the end of his statement. By what authority is the Vote Office unable to hand out a Bill until after the Chancellor has finished?
Mr. Speaker: At least I can answer that last point of order. The Bill has not yet been presented, so it would be impossible for a copy to be available. With regard to the other points of order, the Chancellor is making a statement—that is all that we are dealing with at the moment. So far as I know, we are using the customary procedure. The right hon. Gentleman will make his statement, then hon. Members may question him accordingly.
Mr. Lee: On a point of of order, Mr. Speaker. With the greatest respect, that does not settle the matter because it seems as if there are two categories of Member in the House—those who are privileged to have information in advance and those

1013
who are not. Under which Standing Order are some hon. Members given preferential treatment in regard to such statements and under which Standing Order are others excluded?
Mr. Speaker: I thought that everyone in the House was aware that it is an old courtesy, long established, that copies of statements are given to certain leaders of parties before they are made in the House. That is all.
Mr. Geoffrey Finsberg: Further to the original point of order, Mr. Speaker. A Command Paper dealing with pay policy is shown as listed outside the Vote Office. That perhaps is the point at issue. Why can that not be made available before the Chancellor speaks? I refer not to his statement but to the Command Paper which is there printed and parcelled up.
Mr. English: Further to the point of order, Mr. Speaker. It is conceivable that the Command Paper might have some financial implications before my right hon. Friend made his statement. If so, would it not have been more sensible for the Chancellor to make his statement, for us then to defer these proceedings until later in the day and to come back when we have read the White Paper and considered his statement and ask sensible questions instead of having to ask questions at such short notice?
Mr. William Clark: Further to that point of order, Mr. Speaker. You said a few moments ago that the leaders of various parties receive statements beforehand. This is not so, if I may respectfully say so. I understand that the leader of Plaid Cymru receives statements before they are made, but the leader of the United Ulster Unionist Party does not. Not only are there differences between Back Benchers there are also differences between leaders of parties.
Mr. Speaker: It is not for me to get involved in that.
11.10 a.m.
The Chancellor of the Exchequer (Mr. Dennis Healey): With permission, Mr. Speaker, I will make a statement on the Government's policy for winning the battle against inflation.
The policy I announced on 15th July last year comes to an end in 10 days'
1014
time. It has been an impressive success. Inflation has been reduced to 7·4 per cent, well under half the rate a year ago, the lowest inflation rate for six years and far lower than that which the present Government inherited in March 1974. In fact, Britain's inflation rate is now about the average for industrial countries—about the same as that of the United States, lower than that of France and Canada, although still higher than that of Germany and Japan.
The standard of living has not simply been maintained, as I then promised. It has risen by some 5 per cent. for most men and women in Britain during the current pay round, partly as a result of the tax cuts and improvements in social benefits which the falling rate of inflation has enabled the Government to make. Some of these tax cuts and increases in benefit have still to take effect. In particular, retirement pensions will be worth £31·20 for a married couple in November—an increase of almost 20 per cent. in real terms compared with the level we inherited four and a half years ago, and the child benefit will amount to £4 a week for every child when the increase next April is added to that in November. As a result of all the fiscal changes since last October and taking account of child benefit changes, a family on £75 a week with two children, will have an increase in net income of some 12 per cent. by next April—equivalent to a wage increase of about 15·5 per cent.
The fall in our inflation rate has also made possible a substantial increase in national growth. Industrial output was rising at an annual rate of well over 4 per cent. in the last three months. Unemployment has been on a falling trend since September last year.
The nation owes a debt to trade unionists and employers alike for the common sense they have shown in observing the Government's guidelines in the last 12 months.
Inflation will remain around 8 per cent. for the rest of this year at least. We must now ensure that it does not rise into double figures again next year. This means that earnings must increase substantially less in the coming pay round than in the current round.
Our aim should be to keep the increase next year to half what it has been this

1015
year. The climate for pay negotiation is now very much more favourable to moderate settlements than it was a year ago. Nevertheless, the Government cannot rely on this alone. They must give a clear lead: they must accept the responsibility for fixing guidelines which will enable us to keep inflation in single figures. The White Paper to be published today therefore sets a guideline for pay settlements for the coming round at 5 per cent.—half the level of the guideline in the current round.
The White Paper sets out some limited exceptions to this guideline. The form of the guideline offers negotiators the same flexibility as they have had in the current round to structure their settlements in the way best suited to their particular circumstances. I hope employers and uinons will use this flexibility according to their needs—in particular, to restore differentials where appropriate.
In a small number of cases in the public sector the Government have already recognised that some exceptional increase is required. The increase in national earnings resulting from these exceptions is expected to be only about 0·15 per cent. in each of the next two years. There may be a small number of other groups for whom similar treatment might be appropriate when they reach their settlement date. But it would be self-defeating if more than a few groups were accorded such treatment and the Government will therefore carefully examine any proposals put forward in this area to see how far the same considerations apply.
To help those on the lowest incomes, the Government would be ready to see higher percentage increases where the resulting earnings were no more than £44·50 for a normal full-time week, which is the present-day equivalent of the minimum pay target set by the TUC four years ago plus the 5 per cent. The Government expect those on higher earnings in the same or other industries to accept the relative improvement in the position of the lowest paid which follows.
The Government will expect negotiators, as in the current year, to respect their existing annual settlement date. In the very exceptional case which may arise where a highly fragmented bargaining situation needs to be rationalised, the Government will be prepared to consider synchronising settlement dates providing
1016
that the overall level of the settlement takes account of any costs involved.
Self-financing productivity deals will be permitted on the same conditions as in the current round.
Much attention has been focused on the possibility of reducing working hours and the contribution this might make to increasing job opportunities. We welcome the recent TUC initiative on the reduction of overtime working. However, if a reduction in hours led to an increase in labour costs the result could only be to reduce employment. In general, therefore, the Government could accept a reduction in hours as part of a pay settlement only on condition that the settlement as a whole does not lead to any increase in unit costs above what would have resulted from a straight guideline settlement on pay.
As in the current round, the Government will do everything possible to ensure that the guidance set out in the White Paper is observed throughout the public sector. In the private sector the Government rely on employers and unions to act with responsibility and moderation as the CBI and TUC have assured us they will. However, the Government will, if necessary, take account of any failure to observe the guidelines in exercising their discretion in the fields of statutory assistance and other appropriate discretionary powers. The pay clauses in existing Government contracts will remain in force and will continue to be included in new contracts. The Government will, of course, as promised in March, be ready to hold discussions with the CBI about the operation of these arrangements for the future.
The Government regard continuing price control as an important part of the battle against inflation. Over the coming months the Price Commission will maintain an active programme of investigations into individual companies and will also examine, at the direction of the Government, pricing practices in different sectors of industry. The Commission not only has a duty to identify excessive price increases and to recommend the steps needed to correct them, but in doing so to take full account of the wider economic background against which such price increases are put forward.
The present statutory powers to control dividends expire on 31st July 1978. The

1017
Government will introduce a Bill to extend the statutory control for a further 12 months from 1st August 1978 on the present basis, with the present provisions for exceptions and one new provision. From 1st August 1978 no company will be required by the controls to increase its dividend cover above the highest level achieved since the current controls began. This will enable companies to increase their dividends in line with profits or in line with the statutory limit, whichever is the higher, but they will not be permitted to distribute funds accumulated in the past. A separate announcement giving details of this provision will be made.
The Government are convinced that the British people will not throw away the gains they have made over the last three years in the battle against inflation. The guidelines laid down in the White Paper offer negotiators the opportunity to use their freedom in collective bargaining to reach settlements with responsibility and moderation. By doing so they will encourage the regeneration of British industry, maintain living standards and make possible a continuing fall in unemployment.
Sir G. Howe: Clearly the House will wish to reserve until the debate next week its comments on much of the general matter dealt with by the Chancellor, but may I ask him whether he is not aware of the fact that his repeated reference in his statement to the continuing fall in unemployment has a rather hollow ring in light of this week's unemployment statistics? Are not those unemployment statistics one of the most important reasons why, certainly from this side of the House, I endorse absolutely the need for realism, moderation and responsibility in pay bargaining?
Does the Chancellor recollect that when he made a similar statement last year he said many times that the object of his announcement was to secure an orderly return to normal collective bargaining? Does he not recognise that that is exactly what was not achieved because of the strict, fixed rigidity with which his 10 per cent. guideline ultimately came to be applied? Is he not aware, therefore, that our greatest concern is lest the 5 per cent. figure announced this year should be applied with similar rigidity and similar
1018
results, with a similar failure to return to normal collective bargaining?
Does not the right hon. Gentleman accept that it is absolutely essential—and more and more so as each year goes by —to begin restoring differentials and real rewards for higher skill, harder work and higher enterprise, and that this policy must not be allowed to stand in the way of the real importance of restoring differentials in that way? Does he not recognise that there is an in-built conflict between his statement that the Government wish to achieve a relative improvement in the position of the lowest paid and his statement that the Government wish to achieve an improvement in differentials? As much as we should like to do it, we cannot achieve both at the same time.
Is the right hon. Gentleman aware that we deplore the continued and, as seems likely, extended use of sanctions and black-listing in support of the policy in the year ahead? Does he not realise that that itself is contributing to the growth of economic distortions and unreality and is itself constitutionally improper?
Does not the right Gentleman also accept that we deeply regret the Government's decision to continue with the restraint on dividends by statute? Does he not recognise that that income accrues overwhelmingly, through insurance companies and pension funds, to the benefit of pensioners, and that the continued restraint of that increment which has already been severely restrained, represents a real and continuing threat to the pension prospects of million of working people?
Finally, does not the right hon. Gentleman recognise that this policy, if applied with the rigidity that characterised last year's approach, represents a programme for continued detailed restriction and restraint of the economy which can only continue to do severe harm to its real potential for achieving success? Does he recollect telling his party colleagues on the day after his Budget Statement this year that he looked forward to introducing in July a very nice Budget? May we take it from today's statement that he has abandoned all hopes of fulfilling that rash promise?
Mr. Healey: I will try to deal with all the points raised by the right hon. and

1019
learned Member for Surrey, East (Sir G. Howe).
First, this week's unemployment statistics do not represent a check to the slow but steady fall of unemployment over the last nine months. Unemployment now is 64,000 less than it was last September, 27,000 less than it was last July, and job vacancies are 54,000 higher than they were last September. My right hon. Friend the Secretary of State for Employment explained, in presenting the unemployment figures this week, some of the factors which led to the apparent bulge. I gather that the House will be debating this subject on Monday, when no doubt it can be explored further.
But there is no doubt that if we want to get unemployment down we must get inflation down and keep it down. I say, with respect to the right hon and learned Gentleman, that the kind of flexibility that he asks for, the free-for-all in the private sector to which the Leader of the Opposition committed herself recently, would not be compatible with keeping inflation down, and I think that he and she both know it.
I would have wished the pay policy in the current round to be more flexible than it was. It was a great deal more flexible than in the first round, and the next round, as I explained, will be more flexible than the policy in this round. It is essential to combine flexibility with a moderate growth in earnings, and the sort of policies that the right hon. Lady and the right hon. and learned Gentleman have been recommending recently would lead only to a pay explosion in the private sector and to deep resentment among those working in the public sector that they were being discriminated against.
The House should recognise that differentials have been compressed a great deal ever since 1967, and the compression was brought about in the first place under a regime of free collective bargaining, for reasons which have been fully explained in articles in the Department of Employment Gazette. Differentials were somewhat expanded in the current pay round, and I hope that they will be further expanded in the next round. But these expansions must be compatible with keeping the overall increase in national earnings at the level which I have stated.
1020
Finally, on the question of dividends, I think that the Conservative Opposition must recognise that it will be very much more difficult for union leaders to observe the moderation and responsibility which they themselves wish to observe if they see dividends increased by 10 or 100 times the rate at which pay should be increased in the next round. The Conservative Party must recognise that this is a fact of the pay bargaining situation. If it sincerely believes, as it sometimes says it does, that it wants to keep increases in national earnings down, it should support the Government next week in their Bill for continuing control of dividends.
Mr. David Steel: Is the Chancellor aware that the Liberal Party agrees that the success over the last 15 months in reversing the very severe trends of inflation has been greatly beneficial to the country and, indeed, has been quite remarkable, and that that ought to be maintained? Therefore, despite its detailed shortcomings, we shall support the proposals in the White Paper.
Secondly, will the right hon. Gentleman confirm that it is the Government's policy, as hinted by the Prime Minister yesterday, that pay and price restraint should be sought on a long-term basis? If that is so, is it not time that the Labour Party overcame its hang-up against a statutory basis for such a policy? Does not he accept that that would be far better than the series of temporary and different pay and prices policies over the last 10 years, that it would avoid the use of discretionary powers, that it would enable us to establish a statutory minimum level of earnings, and that we should create some sort of national refereeing body to which special cases could be referred?
Thirdly, we cannot accept that it is equitable to try to maintain dividend controls by statute but pay controls by guidelines. The same policy should be applied to both.
Finally, I ask the right hon. Gentleman to observe and confirm that each pay and prices policy introduced over the last decade by successive Governments has resulted in the Opposition of the day offering the people the illusion that somehow if they come to office they will scrap all these controls. Does he not agree that it is time that the House accepted

1021
that pay and prices policies of some kind are here to stay and that we should get down to the task of deciding how most fairly they should be established?
Mr. Healey: I am grateful to the right hon. Gentleman for what he said and, indeed, to the Liberal Party for the support it has given to the Government on pay over the last three years, despite disagreements with certain aspects of the policy. I am grateful to him for offering the support of the Liberal Party for the policy in the coming year.
The right hon. Gentleman advocated a statutory basis. I think that it will be necessary for the Government, unions and employers to reach an agreement in the summer of each year on the permitted level of wage increases in the following year that is compatible with the desired level of inflation, but I do not believe—and we have often argued this—that to attempt to control wages by law would be either feasible or desirable. It has been tried by previous Governments and in all cases the operation of the law against trade unions has proved ineffective and has been withdrawn. No one knows that better than the right hon. and learned Member for Surrey, East, who tried to do it as a Minister in the last Government.
Secondly, I do not believe that it is possible to define a pay policy with the necessary strictness required to involve the law in its application and still have the degree of flexibility that is needed to deal with many of the problems with which we have to deal.
On the question of dividend control, I only ask the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) to consider with his right hon. and hon. Friends what the effect will be if the lapsing of controls leads to very large and provocative dividend increases right at the beginning of the current round, and to reflect very carefully before they take a final decision on how they will vote next Thursday.
The right hon. Gentleman is right, of course, in his last point about the Opposition. The opportunism of the Conservative Party was best illustrated by the fact that only the other day the right hon. Lady the Leader of the Opposition said that the Government must operate the
1022
strictest and most draconic controls in the public sector and yet, on the occasion of the first public sector increase, for the police, which followed that statement, her right hon. Friend the Member for Penrith and The Border (Mr. Whitelaw), on her authority, asked the Government to award a 40 per cent. increase this November. Opportunism and self-contradiction could hardly go further.
Mr. Wrigglesworth: Is my right hon. Friend aware that the most important point, which people in the country have certainly appreciated, is that the incomes policy of the last year has led to a real increase in their incomes? For the first time for a considerable period they have had a real increase in their disposable incomes and therefore the policy that my right hon. Friend has introduced to the House this morning will be widely welcomed.
Is my right hon. Friend also aware that there is considerable concern, certainly on the Labour Benches, that some productivity agreements and some changes in differentials might lead to an erosion of the policy? Will he tell us what discussions he has had about the means of monitoring these agreements during the forthcoming year to ensure that the 5 per cent. norm is not breached?
Mr. Healey: I think that my hon. Friend was absolutely right in saying that the policy over the last year, which we were told by the Opposition could not possibly work, has produced not only a very dramatic fall in the rate of inflation but a very substantial increase in living standards, an increase in output and an increase of employment.
I know that there were doubts in many parts of the House about the risk that productivity agreements would prove a general loophole for breaches of the policy but, of the major agreements that we have registered, only one in nine has included a productivity feature. The CBI agrees with the TUC that real increases in productivity have been derived from the possibility of self-financing productivity deals. What this country needs more than pay restraint are increases in productivity.
The Department of Employment monitors these productivity deals, and in the public sector it has been able to assure itself already in detail that the deals

1023
have produced the increases in productivity which were envisaged.
Mr. Hordern: Is the Chancellor aware that the further restraint on dividends will adversely affect the pensions and future pensions of over half the working people of this country? Will he say what estimate he has made of the cost to the Exchequer of fulfilling the guarantee of index-linking to inflation the pensions of the nationalised industries and of the local authorities?
Mr. Healey: Dealing first with the hon. Gentleman's last point, have not made an estimate, but if he will put down a Question I shall seek to find an answer.
I would not deny that there are some disadvantages in dividend control, just as there are some disadvantages in pay policy, but I think that the advantages in employment and output which follow from a fall in the inflation rate far outweigh any marginal disadvantages which may flow from some aspects of the pay policy which produces it.
Mr. English: Paragraph 24 of the White Paper, dealing with the public sector, does not mention the Government's reactivation of the Pay Research Unit, which will have practical effect in 1979. Do the Government intend to follow its recommendations concerning non-industrial staff in the Civil Service, or do they intend to follow this White Paper?
I ask my right hon. Friend to remember, in his answer, that the industrial civil servants do not come under the Pay Research Unit. One would imagine that they might have cause to object if civil servants above them were getting a higher rate of increase.
Mr. Healey: The Pay Research Unit, as its name implies, does not make recommendations. It seeks to establish the facts about pay relationships between non-industrial civil servants and others. The Government have undertaken to reactivate the Pay Research Unit and to consider its report when the time comes. The various sections of the White Paper describe the considerations which will be in the Government's mind when that report is received.
Mr. Ridley: When the Chancellor and the Prime Minister went on their inter-
1024
national junketings to Bremen and to Bonn, did they ask the leaders of those countries with lower inflation rates how they had done it without having any of this pay policy nonsense? Did they also say, to those leaders whose countries' inflation rates are higher than ours, that they would be better off if they had a policy such as he has just put before us, and what reply was received?
Mr. Healey: I think that quite a number of people who heard the hon. Gentleman's opening remarks will regard his triviality as being pretty distasteful, but I make no complaint about it. We are very used to it.
As to the attitude of other Governments to our own pay policy, I can tell the hon. Gentleman—and give him evidence—that we have been congratulated by all the Governments that I have met in recent years, and by the IMF and the OECD, on the perseverance with which we have pursued our pay policies, and the success which these pay policies have had in reducing the rate of inflation.
Germany, which has a very low inflation rate, has a pay policy of a type towards which I hope that we can move. It is based on an annual consensus between both sides of industry and the Government on what is desirable. I believe that it may be possible for us to move to a more flexible arrangement of that nature in the future when we have got our inflation rate down, and when we have destroyed the inflationary expectations which were released during the past two years of the Conservative Government.
Mr. William Hamilton: Will my right hon. Friend agree that, whatever policies are pursued in this field, there is bound to be rough justice, and that in order to carry public opinion with him in these matters it is very important that abundant evidence is shown that we are protecting the lower paid in the matter of anomalies and flexibility? Will he give an assurance that in the forthcoming year there will be no further independent inquiries, which only seek to put off problems for one or two years in the future?
Mr. Healey: My hon. Friend is, of course, right to say that any pay policy involves rought justice, but I think that experience has shown that a pay free-for-all involves very much rougher justice, in

1025
which the distribution of reward bears little relation to the needs of those concerned and is related simply to bargaining power in situations of conflict. I think that an increasing number of trade unionists have come to that view and have expressed it at their union conferences.
I indicated that we shall be giving special help to the lowest paid by the provision to allow increases above 5 per cent., provided that they do not produce total earnings which are above £44·50 I think that this will be welcomed by those on whom otherwise it might bear. The Government's tax and benefit policies which have already been announced, and which have already come into effect, will ensure that the low paid will gain over the next 12 months more than the high paid, particularly if they have families.
Mr. Maurice Macmillan: I congratulate the Chancellor on having achieved a fall of one percentage point in inflation from the 8·4 per cent. that he claimed in October 1974 to the 7·4 per cent. that he is now claiming—an admirable achievement. May I ask him three specific questions?
First, what proportion of the low paid, on £44·50 a week, will be paying income tax? Secondly, is the Chancellor at all concerned about the extent to which pension fund managers, such as those concerned with the National Union of Railwaymen, are being driven to buy works of art as a hedge against inflation, rather than invest in productive industry?
Thirdly, may I ask the Chancellor, in connection with his reference to the use of statutory discretionary powers, to realise that any use of statutory powers given in relation to the functions of a Government, if used for the purposes of price control, will represent a gross extension of the prerogative, and that is tantamount to government by decree?
Mr. Healey: If I may try to pick my way through that rather confused and rambling series of observations and take up the right hon. Member's first remark, I thought that he intended to compare the inflation rate of 7·4 per cent. with the rate of 13 per cent. which we inherited from the last Government on an annual rate
1026
or the more than 18 per cent. on the three-monthly rate which the right hon. Member quoted in my regard. The fall in the rate of inflation which this Government have achieved has been impressive by any standard. It must be slightly shaming to the Conservative Party, which left us with the consequences of two years' explosion of the money supply and threshold agreements guaranteeing that the increase in oil prices would feed straight through into wages. Against that background, the achievement of this Government on behalf of the British people has been impressive and will be welcomed by all members of the community, especially housewives.
Mr. Heffer: In view of the fact that none of the Government's policies in the past three years could have been achieved without the support and agreement on a voluntary basis of the Trades Union Congress, will my right hon. Friend explain why in the White Paper the discussions with the TUC have been, to say the least, drawn very sketchily? He has said nothing in his statement this morning about the attitude of the TUC. Is he not aware that there has been building up, especially amongst the rank and file of trade unionists, a feeling that their sacrifices over the last three years have now reached the stage where they no longer want norms of any kind but want free collective bargaining and to get back to the position where they as trade unionists can bargain plant by plant and company by company on the basis of the profits made by those companies so that they are able to deal with the situation as they see it? Will my right hon. Friend also say what discussions there have been with the TUC on a quid pro quo basis for further voluntary pay restraint coupled with a reduction of working hours, which is fundamental if we are to help tackle our still much too high level of unemployment?
Mr. Healey: Let me say first to my hon. Friend that I agree entirely that it would have been quite impossible for the Government to help to bring down inflation if they had not had the co-operation of working men and women over the past four years and if that co-operation had not been led by the leaders of the trade union movement.

1027
On guidelines for pay, my hon. Friend will recollect that the TUC found it impossible to endorse a guideline last year but that, despite its doubts and misgivings, its members observed responsibility and moderation in making settlements over the past year. But that responsibility and moderation did not involve a sacrifice. It made possible an increase of 5 per cent. in living standards over the last 12 months—an increase in living standards which will continue to improve in the months ahead.
My hon. Friend and those who share his very sincere view must recognise, as I think the overwhelming majority of men and women recognise, that pay increases of 30 per cent. or 35 per cent. in confetti money which lead to no real increase in living standards but which produce an increase in unemployment are not in anyone's interests. The memory of the year when this took place combined with the knowledge of the improvement in living standards under pay policy in the last 12 months will have an immense impact on the approach of trade unionists to pay bargaining in the coming round.
Mr. Paul Dean: Will the right hon. Gentleman confirm that I am correct in saying that the biggest group of people who depend for part of their standard of living on dividends are pensioners and policy holders? Will he agree that it is grossly unfair for the Government to guarantee inflation-proofed pensions for public servants and, indirectly, for the nationalised industries while they deny to private occupational pension schemes the means of doing likewise for their pensioners? Is not that perpetuating two classes of pensioners?
Mr. Healey: The hon. Member will know, surely, that the Government not only inflation-proof the retirement pension but increase it more than the increase in inflation over the previous year, if, as in the current year, earnings rise more. It is true that a large number of retired people get part of their pension from dividends. But it is also the case that a large number of very wealthy people derive immense income from dividends. If such people are to get increases of 100 per cent., 200 per cent. or 300 per cent. it will be very difficult for ordinary working people to observe the moderation in pay which is required.
Mr. Gerry Fowler: Does my right hon. Friend agree that, for reasons to which he alluded, the longer pay policy continues, the more acute will be the difficulty as between the public and private sectors and that we have to find some long-term solution to this rather than simply dealing with special cases, as we have tended to do of late? Does my right hon. Friend agree also that damage is done to pay policy by the resentment which is caused by certain well-publicised cases of people who clearly have evaded it, for example, by taking highly paid non-executive directorships when they have no discernible ability, and that there is a need for more restraint in these matters?
Mr. Healey: I agree with my hon. Friend's last remarks. As for the relationship between pay in the public and private sectors, there are enormous problems, and what has tended to happen over the postwar years is that at one period the public sector has drawn ahead, at another period the private sector has, and then there has been a catching-up process. If we could find a way to reduce or eliminate this type of leap-frogging, it would be desirable. But it is also extremely difficult to organise, though one seeks to do the best that one can.
I am surprised by the attitude of the Conservative Party to dividend control. The last Conservative Government introduced it in 1973 and maintained it during the last 18 months that they were in power. Every one of them voted for it. Why on earth do they complain about our continuing it now?
Mr. Baker: Is it right to conclude from the right hon. Gentleman's statement that for the large groups of public sector employees such as local authority employees, National Health Service employees, Post Office workers and those involved in the teaching profession, when their settlement dates come up it will be the Government's firm intention to ask them to settle at 5 per cent?
Mr. Healey: Yes, of course. I made that quite clear in my statement—with the one exception that where people achieve a settlement, even though it is above 5 per cent., which produces a result meaning that weekly earnings will be no higher than £44.50, the Government are prepared

1029
to accept an increase higher than 5 per cent.
Mr. Flannery: Will my right hon. Friend accept from me that there will be a widespread welcome among Government supporters and working men and women for dividend control? Will he accept, further—[Interruption.] We do not expect it from the Opposition, obviously. Will my right hon. Friend accept, further, that the massive and provocative increases given to the so-called top people were hardly the sensible prelude to his talk this morning about helping the lower paid and are bound to leave a bad taste in the mouths of those who actually produce the goods? Will he accept from me, finally, that he ought to trust the trade unions more to negotiate freely, bearing in mind that he has paid quite fulsome tributes to them this morning for the restraint that they have shown over the recent two or three years? Will my right hon. Friend comment on what I have said?
Mr. Healey: I certainly understand my hon. Friend's feelings and that of many of his hon. Friends about the recent increase in top salaries. However, I fear that this increase had become inevitable. After a period of six to eight years in which managers of the public sector received no increases at all, it was not in the interests of my hon. Friend, or the party that he and I represent, for us to discriminate in this way for ever against the public sector. We need good managers in the public sector no less than in the private sector, and the adjustments that were recently promulgated therefore were necessary.
On the question of trust, I have great confidence in the common sense of trade unionists—the rank and file and the negotiators on the shop floor—but it would not have been possible to secure a halving in the increase in earnings unless the Government had been prepared to say honestly what they implied in terms of a figure. I regret the necessity, but we could never have expected to secure it unless we were prepared to do that. Many members of the trade union movement dislike this type of policy, but I do believe that they will consider all the factors in the situation, realise the necessity for keeping inflation down, which is the key
1030
to creating more jobs, and will observe some moderation as they have in past rounds.
Mr. Alan Clark: Although the Chancellor pays lip service to the concept of differentials, his real concern is the low paid, or what he rather quaintly calls "needs". Who determines "needs" and why is this separate from status, skills and the danger of certain jobs?
Mr. Healey: I find that strange coming from a member of the party which believes in means tests in every part of social life. The hon. Member seems to think that there is something irrational in taking account of the needs of various sectors, yet his party is all for means testing. He must concede that the Government have a right to determine need. People working on earnings of £30 a week—and there are many of them—have needs of which the hon. Member cannot conceive. It is the lack of imagination in the Conservative Party which has most affronted the ordinary men and women of this country.
Mr. Norman Atkinson: Would the Chancellor acknowledge that the inclusion of a 5 per cent. pay limit is sheer political masochism? The only beneficiaries of such a statement are the Conservatives.
Mr. William Hamilton: Nonsense.
Mr. Atkinson: Will the Chancellor acknowledge that those workers without dependent children are being asked to take a cut in their living standards? Does the Chancellor realise that he is placing workers in the public sector at a disadvantage compared with those in private industry? For those reasons, his statement is bad economics and bad politics.
Mr. Healey: I appreciate my hon. Friend's rhetoric, as always. I do not think that the Opposition Front Bench would regard me as a masochist. They might try to attribute to me one of the other—
An Hon. Member: A sadist.
Mr. Healey: I am surprised that my hon. Friend regards me in that light but I suppose that I shall just have to grin and bear it. I know that he and some of his hon. Friends hold their views sincerely but they are not widespread on

1031
these Benches or in the trade union movement or in the country.
Mr. Hall-Davis: Will the Chancellor recognise that one of the main reasons for the widening gap in living standards between this country and our European partners is the lower productivity of British industry? Therefore his policy should be actively to encourage productivity deals rather than to use the word "permit" as he did in his statement.
Will the Chancellor say whether any payments from profit-sharing schemes introduced under the Finance Bill will have to be included in the 5 per cent., or whether they will be exceptions?
Mr. Healey: Profit-sharing income does not count as earnings; therefore it does not count in the 5 per cent. I agree that our productivity is lower than that of most of the countries with which we compete and has been so for more than 100 years. However, it is interesting to note that the lowest increase in productivity in this country was in the 10 years leading to the First World War when we had no Welfare State and very little income tax. Therefore, some of the panaceas put forward for dealing with productivity have very little basis in our history.
Mr. Madden: Will my right hon. Friend agree that the lack of emphasis placed on the difficulty of the low paid by Opposition Members demonstrates graphically their scale of priorities? Will the Chancellor say more about the approach that he will adopt to tackling the problems of the low paid, which constitute the biggest pay scandal in this country? There are millions of workers in this country in full-time occupations who draw miserably low pay. What figure would now prevail compared with the TUC's low-pay target of £30 in 1974? Will he ensure that there is maximum flexibility, not only on pay but on the 12-month rule in order to remedy the difficulties of low-paid workers?
Mr. Healey: I do not think that changing the 12-month rule will give particular help to the low paid. If advantage of that were taken by higher-paid workers it could damage the living standards of low-paid workers very severely. As I said in my statement, the £44·50, beyond which earnings which include an above-
1032
5 per cent. increase should not rise in the next round, does represent the TUC's £30 low-paid target, adjusted for earnings since that date, plus 5 per cent. for next year.
Mr. Madden: But not inflation.
Mr. Healey: No, not inflation. It is adjusted for earnings. It is in fact a low-pay target that is adjusted for the way in which earnings have risen since then, plus the 5 per cent. for next year. That will give a valuable degree of flexibility. But the low paid will benefit from this additional flexibility only if those who are a little higher up the earnings scale do not use their advantage as a base on which to rebuild differentials. That is absolutely essential. If they did so inflation would wipe out all the gains of the low paid and we would once again be trapped in the vicious circle of rising wages and rising prices.
Several Hon. Members rose—
Mr. Deputy Speaker (Mr. Oscar Murton): Order. There is a considerable amount of business to be conducted today and the House will have an opportunity to return to these matters next week. I shall call two more speakers from each side.
Sir B. Rhys Williams: The Chancellor placed emphasis in his statement on the importance of child endowments in his projection of living standards. Why does he not follow the logic of that policy by immediately increasing the rates of benefit for the children of those in work to compare with those paid to those out of work? This would help the low paid without reducing differentials. It would restore the incentive to go back to work and help selectively to meet the pressure for higher wages from the very people who are most affected by inflation.
Mr. Healey: That is precisely the purpose of child benefit.
Mr. Litterick: Will the Chancellor of the Exchequer agree that it is an inevitable consequence of wage restraint in our kind of economy with our inadequate institutions that more and more people should feel that the policy is unfair because they have had a bad deal out of it? Will the Chancellor take note of the established fact that the 5 per cent., like

1033
tion is coming; otherwise we would not used, will be used in a simplistic way by employers? They will say that as the limit is 5 per cent. they will give 5 per cent. to everyone and in doing so will cause an even greater sense of grievance in terms of the number of people who feel aggrieved and the length of time that those grievances have been held? Is he aware that there are workers in my constituency who have had pay increases deferred for two years? Because of the operation of the 5 per cent. rule, it now looks as if it will be three years.
Mr. Healey: My hon. Friend the Member for Fife, Central (Mr. Hamilton) was right when he said earlier that any pay policy has rough edges and appears unfair to some. However, I noticed that at their union conferences, Mr. Tom Jackson and Mr. Sid Weighell, both of whom represent low-paid workers, feel that they get a very much better deal out of the sort of policy that the Government have had over the past three years than out of the sort of free-for-all that has been recommended by the Leader of the Opposition.
With regard to undue rigidity and applying the guidelines, I said in my statement that I hoped that employers would take advantage of the flexibility, as some have in the present round. For example, in the last round the Ford settlement, which covered a large number of workers, gave a spread of increases ranging from over 8 per cent. to nearly 14 per cent. I hope that that will be more possible in other industries in the coming year.
Mr. Alexander Fletcher: Is the Chancellor aware that his policies have so eroded differentials that in the midst of high unemployment there is a serious shortage of skilled labour, particularly in Scotland and other development areas? This shortage is in itself causing unemployment to remain high because, clearly, unskilled people cannot find work if skilled men are not around to be employed. When will the right hon. Gentleman realise that no previous Chancellor in history has said more from the Government Dispatch Box and achieved less for the British economy?
Mr. Healey: I can see that the hon. Gentleman thinks that a General Elec-
1034
tion is coming, otherwise we would not have that sort of charity from him. If the hon. Gentleman is in touch with industrialists, he will recognise that one of the problems is that industry has not trained anything like enough skilled workers in the past. We are now seeking to improve the training of skilled workers. I do not deny that the compression of differentials has also had an effect, but, as I said earlier, a great deal of that compression took place under free collective bargaining, particularly in the motor car industry.
Mrs. Wise: Does my right hon. Friend accept that an obsession with unit costs obscures the true cost of unemployment to the community at large? Does he acknowledge that demand and purchasing power could safely be allowed to rise if we had a policy of planned imports? Will he confirm that in their reaction to the proposals on dividends the Conservative Opposition are saying that dividends should rise at a greater rate than profits, whereas my right hon. Friend's White Paper clearly says that dividends will be allowed to rise in line with profits?
Mr. Healey: I agree with my hon. Friend's last point. My hon. Friend talked about my being obsessed with unit costs, but any stimulus which I give to the economy will leak into imports if our unit costs rise higher than the unit costs of other countries. Therefore, a fiscal stimulus will produce jobs in other countries rather than in Britain unless we can keep our unit costs down. There is no way around that problem through import controls.
Mr. Dykes: On a point of order, Mr. Deputy Speaker. I apologise for detaining the House, and I certainly would not argue with your judgment that it is time to call a halt at some stage, and I appreciate that questioning has gone on for some time, but lest the Chancellor should feel that his policies are wholly correct, after the controlled rage of the hon. Member for Tottenham (Mr. Atkinson), may I point out that a number of other hon. Members, including myself, wished to put serious points about some aspects of today's announcement? In view of the points of order made at the beginning, will you confirm that no penalty was imposed by you on those hon. Members

1035
who had to go outside briefly to get a copy of the statement in order to prepare their questions to the Chancellor if they got in?
Mr. Deputy Speaker: I have issued no cards to anyone.

BILL PRESENTED
  DIVIDENDS
  Mr. Chancellor of the Exchequer supported by the Prime Minister, Mr. Michael Foot, Mr. Eric G. Varley, Mr. Albert Booth, Mr. Joel Barnett, Mr. Roy Hattersley, Mr. Robert Sheldon and Mr. Denzil Davies presented a Bill to provide for section 10 of the Counter-Inflation Act 1973 to continue in force until the end of July 1979: And the same was read the First time; and ordered to be read a Second time upon Monday next and to be printed. [Bill 181.]
ORDERS OF THE DAY
  INNER URBAN AREAS BILL
  Lords amendments considered.
Clause 2

  LOANS FOR ACQUISITION OF OR WORKS ON LAND
  Lords amendment: No. 1, in page 2, line 9, at end insert
  ";but the council of a designated district shall not make a loan as respects land situated in the same county or region as that district without first consulting the council of the district in which the land is situated."
  12.3 p.m.
  The Under-Secretary of State for the Environment (Mr. Guy Barnett): I beg to move, That this House doth agree with the Lords in the said amendment.
  Hon. Members may recall that I gave an undertaking to deal with this point when we considered it on Report on an amendment moved by Conservative Members. The Government moved this amendment in another place to provide that a district council wishing to make a loan outside its area must first consult the district council in whose area the land is situated.
  Mr. Michael Alison: I am grateful to the Minister for responding to the debate which we had in Committee. We are very happy that he decided to accept this amendment.
  Question put and agreed to.

New Clause "A"

  LOANS AND GRANTS TO COMMON OWNERSHIP AND CO-OPERATIVE ENTERPRISES
  Lords amendment: No. 2, in page 3, line 34, at end insert new clause "A"—
  "A.—(1) Where a designated authority are satisfied that the establishment by any persons of a body which is intended to meet the requirements of—

  (a) paragraphs (a) to (c) of subsection (1) of section 2 of the Industrial Common Ownership Act 1976 (common ownership enterprises); or

  (b) paragraphs (a) and (b) of subsection

  (2) of that section (co-operative enterprises), would benefit the designated district, they may

  1037
  make a loan or a grant or both to those persons for the purpose of enabling them to establish that body.
  (2) The Secretary of State may, either generally or with respect to particular cases, give directions as to the making of loans and grants under this section and, in particular, as to the imposition of conditions.
  (3) Subject to subsection (2) above, a designated district authority, in making a loan or a grant under this section, may impose such conditions as they think fit and may, in particular, impose a condition requiring the repayment of all or any part of the loan or grant—

  (a) if any other condition is not complied with; or

  (b) in such other circumstances as they may specify."

  Read a Second time.
  Mr. Guy Barnett: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: With this we may take Lords amendments nos. 8, 10, 12 and 13. I call the attention of the House to the fact that privilege is involved in Lords amendment no. 2
  Mr. Barnett: Lords amendment no. 2 fulfilled another of the Government's undertakings which was made by my hon. Friend the Member for Keighley (Mr. Cryer) on Report. The clause enables designated district authorities to give financial assistance to facilitate the setting up of a co-operative or common ownership enterprise.
  Amendments nos. 8, 10, 12 and 13 are minor consequential changes to other clauses to reflect the fact that the explicit statement of the power to make directions is now contained in this new clause. The amendments make the appropriate changes to the references in subsequent clauses. Hon. Members welcomed the principle of the proposed new clause when we discussed it previously, and I am sure that they will wish to agree with this amendment.
  Mr. Geoffrey Finsberg: I welcome this series of amendments, which goes a long way to meeting some of the points raised in Committee.
  As the Minister knows, much of this stems from the Industrial Common Ownership Act 1976 and the Co-operative Development Agency Act. Much of the problem which occurs in inner cities can be overcome by a getting together of
  1038
  small units to work co-operatively in order to try to make a go of what in the past sometimes not operated. The wholesale redevelopment of areas, such as in the city of Birmingham, resulted in a lot of small firms having to disappear because they were not satisfied about going into new flatted factories. This concept will be of great assistance, and it ought to make a positive contribution towards reducing unemployment in the inner cities.
  Mr. Ivor Clemitson: On behalf of my hon. Friends and myself who originally tabled the amendment on Report, I thank my hon. Friend for fulfilling the pledge made by my hon. Friend the Member for Keighley (Mr. Cryer).
  Mr. George Morton: I am grateful for this opportunity to speak, since the attention paid to my constituency recently has brought forward to the public eye the issues of the inner city areas. Moss Side represents the inner city problem well.
  I first record my respect for my predecessor. Having worked with him for some years, I know what a valiant and dedicated man Frank Hatton was. It is a matter of deep regret that his service in this House was so short. In that time, by his diligence and humanity he earned the respect and affection of many people in the constituency and elsewhere. In the past few weeks I have been told by large numbers of his constituents of their appreciation, and I endorse their feelings.
  As a councillor, and as a Member of this House, Frank Hatton represented the inner area of Manchester for over 20 years. During that time he saw large areas totally rebuilt. While housing and physical conditions have greatly improved, there remain particular problems of poverty and unemployment. The falling population of the city of Manchester has caused a concentration in the city of families in need. In two wards of the constituency over 50 per cent. of the families are below the poverty line.
  For this reason, I welcome the opportunity given by this Bill and by the inner city partnership to revive the inner areas of Manchester and increase the number of jobs. Inner cities are unpredictable and the people of Moss Side surprised some people last week. Visitors to the constituency from the press and elsewhere

  1039
  have presented the difficulties of part of the area as a major insoluble problem of the whole. I consider this to be inaccurate and damaging to the people who live in the constituency.
  There is no doubt that some new housing has caused problems. Some deck access accommodation has proved unsuitable for families, but these problems are being tackled. Unsatisfactory houses in parts of the area will not be improved by labelling the whole district a disaster area. This denigration of the district is much resented by the many people there who are struggling to create a new community.
  Moss Side is a constituency of contrasts, containing prosperous suburbs as well as inner area poverty. It is a lively part of the city and contains one of the largest sectors of higher education in the country. The strength of the area can be seen in the schools, where children's work is exciting and substantial. This is to the credit of the determination of the city council, and particularly of my predecessor in his time there, in building new schools and providing excellent staffs and equipment.
  For many decades, Moss Side has accepted immigrant groups from any parts of the world. One of the most admirable aspects of the constituency is the great tolerance and understanding in which people live and work together as neighbours. We are proud of our record as a multiracial community, but we are aware of the danger of complacency.
  The high unemployment among school leavers bears particularly heavily on young black people. Many of them feel that they are rejected because of the colour of their skin. They lose confidence and it is hard to persuade them that they are suffering from the defects of the economic system. They will be persuaded only by effective measures to create employment.
  The Bill will create job opportunities in such areas. The opportunity that we have in expanding the Bill in this way to provide co-operative ventures is appropriate to an area where the community needs much greater development. The need in all aspects of a newly developed area is for the community to be developed, for people to work together and for them to work with the local coun-
  1040
  cil and central Government. I therefore welcome the amendment.
  Mr. Reginald Eyre: It is my pleasure, in accordance with the traditions of the House, to congratulate the hon. Member for Manchester, Moss Side (Mr. Morton) on his maiden speech. His predecessor was held in great respect and affection in the House and the hon. Gentleman has spoken with warmth and understanding about the problems affecting his constituency in the great city of Manchester. We look forward to his contributions on this subject in future.
  It is entirely correct that the amendment should be made. Every possible effort to stimulate initiative and enterprise, whatever form it takes, must be made. The latest unemployment figures underline the seriousness of the situation. They show that the number of those on the dole has risen to 1·5 million and that the number of vacancies is falling. It is also clear that 600,000 to 700,000 jobs have been artificially, and probably temporarily, created so that the true figure of unemployment in this country is probably about 2 million. That figure more accurately represents the scale of the problem that we have to tackle and it underlines the importance of encouraging the founding and survival of every sort of enterprise that can create jobs.
  It is well known that the most dramatic rises in unemployment have taken place in the large towns and cities and, inadequate as the Bill may be, it is in the densely populated industrial centres that the problems must be tackled if we are to avoid social unrest, especially as more and more young people become available for work and find disappointment.
  12.15 p.m.
  In considering the contribution that the amendment might make, it is necessary to recognise the necessity of hundreds of new small businesses being brought into existence in our large towns and cities. Of course, the economic climate must be favourable if business starters, in whatever category, are to come forward to take all the risks of founding new businesses, making new products and providing new services.
  The Conservative Party has made clear that the present burdens of taxation and legislation will prevent the formation of

  1041
  new small businesses in sufficient numbers to have a real impact upon the very large problem of unemployment. Against this unsatisfactory legislative and taxation background, the effects of the Bill, even if it is improved by the amendment, will be puny and inadequate and the task of tackling the enormous problem of unemployment in our large towns and cities, to which the development of new small businesses could make such a great contribution, will be delayed.
  A proper attack will not take place until the policies that we have advocated can be applied in their entirety. Nevertheless, the amendment is welcome as a tiny step in the right direction.
  Mr. John Sever: I join the hon. Member for Birmingham, Hall Green (Mr. Eyre) in offering to my hon. Friend the Member for Manchester, Moss Side (Mr. Morton) the House's congratulations on his enlightening and warm maiden speech. It is gratifying to note that he has chosen to say something about inner city problems, which confront him and those of us who represent cities, on the first occasion that he has spoken to us. I join other hon. Members in looking forward to hearing further contributions from my hon. Friend.
  I welcome the Bill, but can the Minister elaborate on how he envisages the future development of co-operative ventures, particularly in inner urban areas? I was happy a few days ago to be able to explain to some constituents, who were anxious to form a small engineering concern in Birmingham, the ways in which the Government have in the past year or two promoted the interests of small businesses through this Bill and recent measures to encourage people to get together in co-ownership schemes.
  I should like to see the Government actively participating in helping to bring people together in the first place to form the co-operatives which will be so welcome. Can the Minister indicate how such schemes might be promoted by the Government?
  Mr. Guy Barnett: I join other hon. Members who have congratulated my hon. Friend the Member for Manchester, Moss Side (Mr. Morton) on his excellent maiden speech. I wish that my hon. Friend had managed to reach the House at an earlier stage of our discussions of the Bill because he spoke with authority about the problems of his constituency. I join him in paying tribute to his predecessor, the late Frank Hatton, who made a first-class contribution to our deliberations and I look forward to hearing more from my hon. Friend, who spoke with such authority and sincerity. I wish my hon. Friend the best of good fortune in this House.
  This has been a brief but interesting debate, and I wish that I were in a position to respond to the request of my hon. Friend the Member for Birmingham, Ladywood (Mr. Sever), but I think he will agree that the questions which he has put to me, important though they are, are matters for my right hon. Friend the Secretary of State for Industry. He will recognise that through recent legislation and a number of initiatives taken by the Government we take very seriously the need to encourage in every possible way the development of small industry, co-operatives and common ownership ventures. Let me instance the conferences which have been held throughout the country for small firms and also the initiatives taken by the Government in fiscal proposals which will be followed by others in an attempt to assist those who, through self-help and co-operative enterprise, can help in these areas.
  I agreed with the sentiments expressed by my hon. Friend the Member for Moss Side about the importance of morale in urban areas. What is often said outside is unhelpful when what is needed is the development of morale among the people. One of the best things we can do in achieving that end is to assist cooperative enterprise, voluntary initiative and self-help in those areas. I thank those who have spoken for their appreciation of the amendments.
  Question put and agreed to [Special Entry.]

Clause 3

  DECLARATION OF AND CHANGES IN INDUSTRIAL IMPROVEMENT AREAS
  Lords amendment: no. 3, in page 3, line 39, leave out "industrial".
  Mr. Guy Barnett: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker (Mr. Bryant God-man Irvine): With this amendment we may also take Lords amendments nos. 4, 5. 9 and 15 to 20.
  Mr. Barnett: This set of amendments will enable designated district authorities to declare as improvement areas parts of their districts that are predominantly commercial. They thus extend the improvement area concept that was originally developed to deal with older industrial areas to cover run-down commercial areas.
  When the amendments were discussed in another place my noble Friend Lady Birk indicated that we did not think the works for which aid can be given—landscaping, demolition and so on—would be so relevant to commercial areas as to industrial areas. But on further consideration we have concluded that there may be sonic areas in which the powers can be useful and we are content to let the amendments stand. In looking at proposals for improvement areas, particularly commercial ones, we shall need to be well satisfied before approving them that they are areas in which normal market forces will not lead to appropriate improvement.
  These amendments were supported on all sides when moved in another place and I hope that they will receive equal support here.
  Mr. Alison: I tried to discern the sparkle in the Minister's eye as he moved this amendment. It is a curious volte-face by the Government in view of the position they took throughout the previous stages of this Bill, in the White Paper, in the Secretary of State's Second Reading speech, in the Divisions that took place after extended debates in Committee and in the expressions of opinion by Ministers in another place—all of which repeatedly emphasised that priority in this Bill must be given to industrial devel-
  1044
  opment and industrial needs. The view was that commercial aspects were secondary and should not have the same priority, and indeed would be counter-productive in their impact on development in the assisted areas.
  Despite all that, the Minister today, at this late stage of the Bill, has blandly told us that we should forget all the decisive arguments against this kind of change because the Government now accept it. This is one of the clearest indications one could possibly have that the Government are determined to get this Bill, even though their amendments here undermine the whole philosophy behind the Bill as presented on Second Reading because they need it fundamentally as an electoral measure.
  Let me remind the Minister of one or two things that were said on previous stages. When the Secretary of State for the Environment on Second Reading, commented specifically on a proposal by my hon. Friend the Member for Ealing, Acton (Sir G. Young) that commercial considerations should feature alongside and be equal with industrial considerations and factors, the right hon. Gentleman said:
  "I think that it is right to reflect our attempt to attract industry and retain it in these areas —and give a general thrust of assistance to industry policy—in the context of this Bill.— [Official Report, 9th February 1978; Vol. 943. c. 1694–5.]
  In other words, industry was to be the first priority.
  Then the Minister will remember vividly a debate in Committee on 7th March when my hon. Friend the Member for Acton tabled an amendment to insert specifically the words "commercial and" before the word "industrial". The Under-Secretary of State for Industry said:
  "It would be anomalous if assistance were to go to all commercial activities in the inner cities, including inner cities in the non-assisted areas, but not to those activities in the assisted areas generally, but which must continue to have priority.—[Official Report, Standing Committee A, 7th March 1978; c. 246.]
  The Minister was advising the Committee not to allow commercial considerations to be written into the Bill because it would have the anomalous result that one would be giving assistance to commerce in the non-assisted parts of urban areas which would be denied to assisted

  1045
  areas—an important consideration. The Minister refused to accept the amendment and caused a Division to take place which the Government won. They again threw out the concept of the introduction of commercial considerations.
  We then had the events in the other place where the Minister firmly turned down the amendment moved to insert the word "commercial". But in a later debate, on 10th July, when an amendment sought to leave out the word "industrial"—which is the amendment we are now considering—the Minister, as reported in column 1314 of Lords Hansard of 10th July, gave three specific reasons why she was not happy that "commercial" in this negative sense should be introduced into the Bill by removing the word "industrial". Her point has not been answered by the Minister today in this House. He has simply said that everything the Government have said on this matter in the past was wrong. The Minister implied "I shall not explain why we are taking this step. We simply intend to lie down and let all these amendments be made".
  It is a paradoxical situation. It can only suggest that the Government are determined to get this Bill through, even though the whole philosophy and purpose of the Bill has been fundamentally altered. The Minister may wish to comment on that. The Bill now falls more into line with what the Opposition were pressing, and we welcome that, but we cannot understand why the Minister made us divide in Committee and why so many column inches of Hansard were taken up in arguing the opposite case. We cannot understand why we are expected to accept these amendments without any explanation from the Government showing why they considered this step to be wrong initially.
  Finally, I wish to deal with a technical point. Will the Minister advise the House why in a number of crucial and key places the word "industrial" has now been dropped from the Bill—properly, in our view—but why it still appears in one or two places, although not in the text of the Bill? The word appears in the schedule at page 11. Line 2 contains the title "industrial improvement area", and line 3 the phrase
  1046
  "Procedure for declaring area to be industrial improvement area."
  So within the first three lines of the Schedule the word "industrial" appears twice. The first appearance of the word in the body of the schedule is in line 10 where the deletion is proposed by the Government. In clause 3, on page 3, line 36, there appears the title "Industrial improvement areas" and that has been left as it stands. The phrase "improvement area" appears in the text of the Bill for the first time on page 3, line 39, from where it is to be deleted.
  12.30 p.m.
  So we have the curious situation in which the interpretation clause on page 10 will now refer to
  "industrial improvement area', in relation to a designated district authority, has the meaning given by section 3(2) above;".
  It is no longer to be "industrial improvement area", but simply "improvement area". Clause 3 is entitled "Industrial improvement areas" but there is to be no further reference to "industrial" thereafter. Is the deletion a technicality by which the title is left unamended when the text is amended? It seems slightly misleading and the Bill may be defective if all references are not deleted.
  Mr. John Lee: The hon. Member for Barkston Ash (Mr. Alison) is obviously getting a little nervous about a possible General Election. Nevertheless, we on the Government side would like to know the reason for the switch in the Bill. In particular, I should like to know what financial difference it will cause. Have the Government attempted to assess, by reference to local authorities, the likely implications of the change and of the additional expenditure which is to be incurred?
  I do not oppose the change, but we are entitled to know more about it. We should like to know which cities are most likely to be affected. My hon. Friend the Member for Birmingham, Ladywood (Mr. Sever) is here today. He and I represent areas which are likely to be affected by the Bill. We have been taken aback a little by a change of this nature at this late stage. The Opposition are getting some fun out of it, and I cannot blame them, because it is not clear why the

  1047
  change is being made and what its practical effects will be.
  Mr. Guy Barnett: Let me deal first with the technical point raised by the hon. Member for Barkston Ash (Mr. Alison). The reason for the apparent selectivity of amendments is that the side notes and headings are not part of the Bill. Those words will be altered in line with the amendments that I hope the House will now agree to. I hope that the hon. Member is satisfied that there is no difficulty or problem here.
  The hon. Member was being a little unfair, not to say a little churlish, in what he said. He will recognise that during the passage of the Bill the Government have attempted—this does not always happen with legislation—to listen to the arguments that have been advanced from both sides and, so far as possible, to improve the Bill in the light of them. Since it went into Committee in this House it has been improved as a consequence of those arguments. I should have thought that the hon. Gentleman would welcome that. We would not be making the amendments if we had not been convinced that there was a place for some assistance where commercial development might be involved.
  The hon. Member quoted my right hon. Friend the Secretary of State as saying that he saw industry as having the priority. I stick to that. I virtually admitted it when I introduced this brief debate. It continues to be the case. In industrial improvement areas there might be commercial properties. The more we thought of that fact the more we felt it was necessary not to define improvement areas too narrowly in a way that would cast doubt on our ability to assist commerce, as well as industry, where redevelopment work was proceeding.
  That is why we have now proposed that the House should agree to the amendment. I insist that the purpose is still to regard the development of industry as of prime importance. Such action as my right hon. Friend takes in improving industrial improvement areas will continue to be taken with that fact borne in mind.
  I do not think that I need to deal with any other point except to explain to my hon. Friend the Member for Birmingham, Handsworth (Mr. Lee) that the Bill does
  1048
  not by itself involve any increase in expenditure. I stress "by itself". The purpose of the Bill is to give certain local authorities in special areas and local authorities that will be designated under the Bill certain powers to assist industry, although the Bill does not propose increases in the expenditure of public money.
  Mr. Lee: I follow that, but presumably there is some purpose behind this late change. Presumably there have been consultations, and presumably the local authorities—I appreciate that their political composition might change—have given my hon. Friend some indication of the expected increase that this change is likely to make in their disbursements. Can he say something about that?
  Mr. Barnett: No, I have had no such indication. It is much too soon to get any reasonable assessment of the global sums that are likely to be spent as a result of this small change. These decisions will be made initially as a consequence of initiatives by local authorities and partnership committees. At this stage it would be most difficult to estimate the increase in expenditure that could arise.
  Mr. Eyre: Having listened to the embarrassed nature of the Minister's explanation, particularly to the hon. Member for Birmingham, Handsworth (Mr. Lee), I must conclude that there is a deeper reason for the Government deciding at such a late stage to stop resisting this amendment, which has been put forward so forcefully so many times during the Bill's progress.
  It seems clear to me that the acceptance of the amendment in the way that the Minister has done this morning gives the game away. The reason must be that the Government have decided that it is no longer possible to cover up the relatively trivial nature of the aid that will be made available under the Bill.
  So that no one shall be misled, the cumulative effect of the relevant factors must be understood in assessing the value and quantity of aid. First, a limited, very small sum is available for the whole purposes of the Bill. Secondly, there are long lists of names of towns proposed as beneficiaries. No fewer than 43 boroughs and towns having industrial areas, which is

  1049
  the prime reason for choice are named. Thirdly, there is the fact that the major part of the limited funds available is to be allocated to seven partnership areas. Fourthly, even within those selected areas —the Greater Manchester and West Midlands metropolitan county are examples —the annual amount that may possibly be received under the Bill is the equivalent only of a 1p rate product.
  When all those factors are understood and taken into account, it can be seen that the help available is tiny, even to the most privileged partnership areas, the first category boroughs and towns in the aid league. Also, the help available to the second league of programme areas is hardly noticeable. Those poor boroughs and towns in the third league that the Government have established will receive so little help that, when judged against the background of their problems, it is hardly worth mentioning.
  Therefore, I perfectly well understand why the Minister has been so embarrassed and diffident today about this change. It is because he realises that the total benefit in aid available under this Bill is so small, has been spread in so many directions, that a little further spreading in this way will make no difference. The whole matter is of very trivial consequence, which is a poor prospect for all those large towns and cities with such serious problems. The Bill makes hardly any contribution to dealing with their problems. They will have to find solutions out of their own enterprise. That is the true reason why the Minister has so casually accepted this further spreading at such a late stage.
  Mr. Guy Barnett: May I merely say—
  Mr. Deputy Speaker: The hon. Gentleman will need the leave of the House to speak again.
  Mr. Barnett: With the leave of the House, may I say that everything the hon. Member for Birmingham, Hall Green (Mr. Eyre) has just uttered is flatly contradicted by his political colleagues in Birmingham and every other partnership authority of which I can think?
  Question put and agreed to.
  Lords amendments nos. 4 and 5 agreed to.

Clause 4

  LOANS AND GRANTS FOR IMPROVING AMENITIES
  Lords amendment: No. 6, in page 4, line 11, at end insert—
  "( ) the clearance or levelling of land;"
  Mr. Guy Barnett: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: With this we may take Lords amendment no. 7.
  Mr. Barnett: These are two Government amendments moved in the Lords to deal with points that were raised there. They extend slightly the range of environmental works that can be aided in improvement areas, and cover the clearance of land, where this falls short of full landscaping, and the painting and repair of buildings and structures, where this improves the amenity of the area. These are, I believe, useful extensions to the works for which help can be given.
  Mr. Geoffrey Finsberg: We cannot let this matter go through without more explanation. Lords amendment no. 7 was moved by Lord Sandford and was carried against the wishes of the Government on a Division, so how the Minister can say that it is one of two amendments put forward by the Government is puzzling. We need to examine the arguments advanced by Baroness Birk in another place, telling their Lordships why they should resist the amendment, which concerns painting and cleaning.
  12.45 p.m.
  I think that the Baroness does not understand very much about inner urban areas, because in discussing the question of environment she said that making a building fit for industrial use
  "it not only fulfils an industrial purpose but certainly adds to the social environment because it is in use, is in good repair, looks very much better and adds to the quality of life of the locality as opposed to something that is not."
  Then she contradicted herself, saying:
  "I find this very difficult, but my own personal sympathy will always be to extend things to cover amenity areas. But we are dealing

  1051
  with a Bill which is revitalising and encouraging industrialisation in the inner areas."
  She went on to advise the House not to accept the amendment, and then said:
  "The amendment refers to regular painting and ties that up with the fact that the clause covers cleaning."
  I do not think that anyone who understands industry can begin to accept Baroness Birk's next statement as being sensible. She said:
  "We distinguish this from cleaning, which can be a major task and one which is not always normally regarded as essential to maintaining the fabric of a building in sound condition".—[Official Report, House of Lords, 30th June 1978; Vol. 394, c. 603.]
  Anyone who has anything to do with buildings—the Property Services Agency, anyone—will say that regular cleaning is essential to maintain the fabric of a building. Yet the Minister's advice to the other place, overturned, was not to do that sort of work.
  In his usual pleasant way, the Minister tells the House "We don't wish to resist these two amendments; they were both our amendments in another place", without telling us that one amendment was carried after a Lib-Con pact against the Government. We welcome the fact that it was carried, but it would have been better if the Minister had come clean.
  Mr. Alison: Come clean?
  Mr. Finsberg: That was not meant to be a pun. I do not think that the Minister would want a pun at this stage.
  There is a difference between the two amendments. The Opposition are glad that the Government have not tried to overturn them. But it would be interesting to know why the Minister, who showed throughout Committee a fair and firm understanding of the problems, found his sentiments not echoed by his colleague in another place.
  Mr. Sever: Will my hon. Friend the Minister elaborate a little on subsection (2)(c), which refers to
  "the cleansing of watercourses, whether natural or artificial, or the reclamation of land covered with water".
  Presumably that would refer to areas of canal development. Given that most canals are in the ownership of the British Waterways Board, is it envisaged that local authorities with boards such as that
  1052
  and with other public undertakings would be encouraged to provide assistance?
  Mr. Deputy Speaker: The Minister is not in a position to make any comment on that matter, because it is not part of the amendment. The Question is, That this House doth agree with the Lords in the said amendment. As many as are of that opinion—
  Mr. Alison: On a point of order, Mr. Deputy Speaker. Is it in order for the Minister to catch the eye of the Chair for a second time to reply to the point made by my hon. Friend the Member for Hampstead (Mr. Finsberg)?
  Mr. Deputy Speaker: It would be perfectly in order for the Minister to obtain the leave of the House and speak on the amendment.
  Question put and agreed to. [Special entry.]
  Lords amendment no. 7 agreed to. [Special entry.]
  Lords amendments nos. 8, 9, and 10 agreed to.

Clause 8

  LOANS FOR SITE PREPARATION
  Lords amendment: No. 11, in page 6, leave out lines 33 to 35 and insert:
  "by any statutory undertakers or other authority".
  Mr. Guy Barnett: I beg to move, That this House doth agree with the Lords in the said amendment.
  This is a Government amendment moved in the Lords to correct what now appears to be a slightly misleading piece of drafting in subsection (3) of clause 8. In making specific reference to one type of authority in Scotland, the subsection appears to exclude from the scope of the clause statutory undertakers in Scotland. This is not, of course, the intention and the amendment was intended to simplify the wording and make this clear.
  Question put and agreed to.
  Lords amendments nos. 12 and 13 agreed to.

New Clause "B"

  GRANTS TO NATIONAL VOLUNTARY BODIES
  Lords amendment: No. 14, in page 9, line 14, at end insert new Clause B"—
  "B. The Secretary of State may, with the consent of the Treasury make grants for assisting persons engaged in promoting or assisting schemes and research relating to, and dissemination of information in respect of, the enhancement of the physical environment and the promotion of employment in designated districts."
  Mr. Deputy Speaker: In accordance with the ruling given by Mr. Speaker at the commencement of business today, I call on the Minister formally to move to disagree with the Lords in this amendment. When that has been done, I shall put the Question forthwith.
  Mr. Guy Barnett: I beg to move, That this House doth disagree with the Lords in the said amendment.
  Mr. Geoffrey Finsberg: On a point of order, Mr. Deputy Speaker. In regard to what is now proposed by the Minister, may I ask you to rule on a statement by the Minister in the other place on 30th June that if the amendment was pressed there
  "I do not intend to put myself or my noble friends into a position in which we appear to be opposing the interests of the voluntary sector."—[Official Report, House of Lords, 30th June 1978; Vol. 394, c. 616.]
  Is it not right to say that, by not having put down a Financial Resolution, the Government are doing by the back door what they were not prepared to do by the front door and are saying that they are not interested in voluntary bodies in the inner urban areas?
  Mr. Deputy Speaker: The matter was dealt with by Mr. Speaker at the beginning of today's proceedings, and I think
  1054
  that it would be improper for me to add anything further.
  Mr. Eyre: Further to that point of order, Mr. Deputy Speaker. Would it not be reasonable for the Minister to give some further explanation, since it is clear from the debates in the other place that the interests and concerns of voluntary organisations were of great importance to the working of any reasonable and effective policy, and there was great concern in the other place that some opportunity should be afforded for the voluntary organisations to be given a more prominent and effective part in the working of the system under the Bill?
  In these circumstances, would it not be right for the Minister to explain why he has not seen fit to introduce a proposal which would have enabled those matters to be dealt with on the basis of the discussion in the other place?
  Mr. Deputy Speaker: There is nothing to be added to what Mr. Speaker has already said this morning.
  Question put and agreed to.
  Lords amendment no. 15 agreed to.
  Lords amendment no. 16 agreed to. [Special Entry.]
  Lords amendment no. 17 to 20 agreed to, one with Special Entry.
  Committee appointed to draw up a Reason to be assigned to the Lords for disagreeing to one of their amendments to the Bill: Mr. Alison, Mr. Guy Barnett, Mr. Geoffrey Finsberg, Mr. Freeson and Mrs. Ann Taylor; Three to be the quorum.—[Mr. Guy Barnett.]
  To withdraw immediately.
  Reason for disagreeing to one of the Lords amendments reported, and agreed to; to be communicated to the Lords.

INDEPENDENT BROADCASTING AUTHORITY BILL
Lords amendments considered.
New Clause "A"

  EXCLUSION OF 1973 s.4(2) AND (5) AS RESPECTS PROCEEDINGS IN PARLIAMENT AND PROCEEDINGS OF LOCAL AUTHORITIES ETC.
  Lords amendment: no. 1, in page 1, line 11, at end insert new clause "A":
  ("A.—(1) Nothing in section 4(2) and (5) of the said Act of 1973 (of which subsection (2) provides for the exclusion from programmes broadcast by the said Authority of the opinions of the Authority and any programme contractor, and of certain persons connected with the Authority or such a contractor, about matters of political or industrial controversy or relating to current public policy and of which subsection (5) provides for the exclusion from such programmes of certain religious matter and of certain publicity for charitable or benevolent institutions) shall apply to a programme broadcast by the said Authority so far as the programme consists of proceedings in either House of Parliament or proceedings of a local authority, a committee of a local authority or a joint committee of two or more local authorities.
  (2) In the preceding subsection "local authority" means any of the following bodies, namely, a local authority within the meaning of the Local Government Act 1972, a local authority within the meaning of the Local Government (Scotland) Act 1973, a district council in Northern Ireland, the Common Council of the City of London and, without prejudice, to the effect of the said Act of 1972, the Inner London Education Authority.")
  12.56 p.m.
  The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I suggest that it will be convenient to take at the same time Lords amendment no. 2.
  Dr. Summerskill: Yes, Mr. Deputy Speaker, that being the consequential amendment to the Long Title.
  The clause which Lords amendment no. 1 would insert into the Bill has a familiar ring to it. I described this Bill on Second Reading as a modest measure, and we return to it today to find that it was made even more modest in Committee, where the provision exclud-
  1056
  ing subsections (2) and (5) of section 4 of the Independent Broadcasting Authority Act 1973 in relation to broadcasts of parliamentary proceedings was lost on a Division. It is clear from the debate in Committee that the clause was voted out of the Bill not because of any real disagreement with the proposal it contained but, as it appeared, in the hope that the Government would introduce a more far-reaching amendment of section 4(2) of the 1973 Act on Report.
  We were not prepared, however, to use this Bill as a vehicle for amending section 4(2) more radically. The future of section 4(2) is a complex matter which will be dealt with in our forthcoming White Paper and in the ensuing legislation. In any event, it seemed clear that a more radical amendment would have been out of order. Nor were we prepared to seek to reinstate the lost clause. We regarded the proposal it contained, which emanated from the Second Report of the Joint Committee on Sound Broadcasting, as a sensible measure but one which was preeminently a matter for Parliament, and we did not think it appropriate to seek to overturn the decision taken in committee.
  However, on the initiative of Lord Winstanley and Lord Taylor of Gryfe, the view was taken on all sides in another place that the lost clause should be reinstated, and we have today a further opportunity to consider it. The proposed clause is somewhat wider than clause 2 as it was first introduced in this House. The point was made in another place that broadcasts of the proceedings of local authorities ought to be treated in the same way as parliamentary broadcasts for the purposes of sections 4(2) and 4(5) of the 1973 Act.
  My noble Friend the Minister of State agreed to consider this in consultation with the local authority associations, and the result was that on Report in another place he moved the clause which we are now considering. I hope that this House will agree to this amendment and that it will also echo the tribute paid in another place to the speed with which the local authority associations responded to our request for their comments on the proposed extension of the provision.
  Mr. Julian Critchley: These amendments are as modest as the

  1057
  Minister and as innocuous as the Bill itself, the purpose of the Bill, of course, being to extend the life of the Independent Broadcasting Authority owing to the Government's failure to make use of the expert information which they have received from various committees and bodies on the future of broadcasting itself.
  The Minister referred obliquely and briefly to the forthcoming White Paper, which, I gather, is to be published on Tuesday, and spoke at the same time of future legislation—an optimistic assumption if one bears in mind that an election may well intervene.
  If the newspapers are to be believed—of course, those of us who occasionally write for newspapers think that they are always to be believed—the content of the White Paper to be published on Tuesday with regard to the IBA will suggest that the fourth channel will go to the OBA and not to ITV2, as was the first suggestion of the civil servants in the Home Office when they worked on the Annan recommendations and in their turn made a recommendation to the Home Secretary. The first draft was sunk by the Whitehead torpedo mark 2 and the second draft will see the light of day on Tuesday.
  However, this is of only academic interest. It will certainly be not an historic White Paper but an academic one only. I am sure that the election will intervene, the election will result in a Conservative victory, and the fourth channel, long awaited by the British people, will go to ITV2 and not to the Open Broadcasting Authority.
  Mr. Michael English: Does not the existence of Lords amendment no. 1 totally disprove the suggestion made to this House when we approved the broadcasting of our proceedings that no change in the law was necessary as a result? Their Lordships seem to have noticed something that the Government persistently said was not necessary.
  More than 10 years ago, the Driberg Committee, which first considered the broadcasting of our proceedings, said that changes in the law would be necessary for various reasons. Other examples have cropped up. The broadcasting organisa-
  1058
  tions are probably not as well protected—certainly not by statute—from cases for defamation as the press is protected.
  The last example is the question of contempt of another court. We as Members can make statements on which, in accordance with the Bill of Rights, we cannot be proceeded against in any other court, but it does not follow tha someone reporting our proceedings cannot be so proceeded against.
  The Government should have been honest at the time when there was an attempt almost to rush through Parliament the present method of broadcasting the House; they should have admitted that changes in the law would be necessary, instead of denying it, as the Parliamentary Secretary to the Privy Council Office denied it. Only a few weeks later we are faced with such a change. The Government are agreeing to it only a few weeks after they say that no such change would be necessary.
  Dr. Summerskill: With leave of the House. Section 4(2), as I said, is examined in the White Paper and it was not thought right to start piecemeal tinkering with the section in this Bill. I am sure that what has been said will be taken into consideration when the White Paper is generally discussed. Obviously I cannot say more on that, although the hon. Member for Aldershot (Mr. Critchley) has done his best to provoke me into indiscretions.
  This is purely a Bill which at the moment has to be considered on its own, unrelated to the White Paper, until, as I said, legislation of a very large kind follows the White Paper.
  Question put and agreed to.
  Lords amendment no. 2 agreed to.

COMMUNITY SERVICE BY OFFENDERS (SCOTLAND) BILL
Lords amendments considered.
Clause 2

  FURTHER PROVISIONS ABOUT COMMUNITY SERVICE ORDERS
  Lords amendment: no. 1 in page 2, line 45, at end insert
  ("and, where appropriate, the particular days or times of day when the work is to be performed")
  1.4 p.m.
  The Under-Secretary of State for Scotland (Mr. Harry Ewing): I beg to move, That this House doth disagree with the Lords in the said amendment.
  This amendment, is undesirable both in principle and in its practical effect. It is undesirable in principle because it involves the court in the detail of the implementation of a sentence. This is not the court's traditional role which is to decide on the weight of a sentence and to leave the implementation to others. However, the crucial reason for rejecting this amendment is that it would have a very undesirable effect on the implementation and operation of the community service order scheme.
  First, courts would have to know, before making an order with a requirement that the work be carried out at certain times or on certain days, whether work was available on those particular days or at those times of day. This would be an additional burden on our already hard-worked courts. Of course the court could have certain information about jobs at the time of the making of the order, but what it could not possibly know in advance is whether work would continue to be available at the specified times throughout the currency of the order, which could be up to 12 months.
  It would be necessary for the offender to be brought back before the court if work ceased to be available at the specified time on the specified day and the order had to be changed in consequence. This might happen for any number of reasons. Bringing the offender back before the courts every single time this happened would place an undesirable extra burden on the courts. It would also mean a great deal of extra and unnecessary work for the social worker supervising the order and it could have a most demoralising effect on the offender, who would be before the court again through no fault of his own.
  The Bill as originally drafted left the responsibility for arranging when the work is to be done with the local authority officer, that is to say, the social worker supervising the implementation of the order. However, there was nothing under the Bill as introduced to prevent the court from expressing a view on what days or times of day the work should if at all possible be carried out. I am sure,
  1060
  especially given the relationship of mutual trust and co-operation which has been built up in the pilot schemes between the courts and community service organisers, that the social worker would do his best to implement the court's wishes.
  There is ample scope for the courts and the social workers to come together formally, under the local advisory committees which have been established, or informally to discuss the implementation of community service orders generally and of individual orders. I believe that this approach offers a far better prospect of harmonious co-operation between courts and social work departments than the mere rigid framework proposed by the amendment.
  An added complication is that clause 3(1)(b) requires the offender to
  "perform for the number of hours specified in the Order such work at such times as the local authority officer may instruct".
  The amendment, which gives the court power, in appropriate cases, to state when the work should be done is therefore impossible to reconcile with clause 3(1)(b).
  The Bill originally provided a sensible and flexible arrangement. The amendment imports an undesirable and potentially cumbersome provision into the Bill.
  Mr. Alexander Fletcher: Like the Minister, I have no desire to go over ground which has been thoroughly covered before, but I am disappointed that he continues to take what I consider to be a narrow administrative view of this amendment, because it and Lords amendment no. 2 highlight two of our main reasons for supporting the Bill and two of our main objectives.
  The first is to deal more effectively with certain types of offence, such as offences of hooliganism and vandalism, and to break new ground in dealing with those offenders, I hope—I make no apology for saying this—at less cost to the taxpayer than the cost of imprisonment.
  The second objective, which follows on from that, is that we wish to take into account the fact that in Scotland the prison population, as a proportion of the total population, is among the highest in Europe. If these objectives are to he achieved, this small Bill must make an early impact on Scotland and quickly earn the respect of the community as a whole. That is what the amendment seeks

  1061
  to achieve and it is why we have consistently argued the point in favour at all stages of the Bill. It is aimed, after all, at having some effect on these sorts of offence which are repeatedly committed and which repeatedly occur on particular days, at particular events; and football matches have been rightly mentioned. The amendment would perhaps help offenders to kick the habit because of their enforced absence from whatever activity turns them on.
  We should remember also that we are dealing perhaps more with the social misfit in the Bill than with the hardened criminal. The amendment takes account of the problems of the social misfit's bad habits, and perhaps even of the bad company in which he may well find himself. We believe that it is in the best interests of the offender himself that we should take account of these factors. It is a very simple but, we think, very important point and one which is worthy of a broader view from the Minister.
  Question put and agreed to.
  Lords amendment: No. 2, in page 3, line 10, at end insert—
  ("(2A) Upon making a community service order the court shall have regard to the desirability of relating the work to the nature of the offence.")
  Mr. Harry Ewing: I beg to move, That this House doth disagree with the Lords in the said amendment.
  The Government urge the rejection of the amendment because it is undesirable in principle and unnecessary. It is also badly drafted and does not make a great deal of sense.
  The amendment is undesirable because it seeks—and I stress the word "seeks" for reasons which I shall give in a minute—to take the courts into areas in which it is not their traditional role to operate. It could involve them in a great deal of extra work in finding out in detail what work is to be carried out by an individual offender. Courts have enough to do as it is without this additional burden.
  The amendment is unnecessary because courts can already make a recommendation or express a view either formally or in informal discussion with the social worker on what sort of work would be appropriate for a particular case. I have
  1062
  every confidence that the community service organisers will do all that they can to make work arrangements which accord with any such view expressed by the courts. They have already shown in the pilot schemes how alive they are to the need to win and maintain the trust of the courts. In addition, the courts will be able to exercise a general oversight of the sort of work available in their area as they will be represented on each area's community service advisory committee, along with trade unions, police and others, including many of the work-providing agencies. This amendment, phrased in a general way, adds nothing to these powers.
  Finally, the amendment is badly drafted. In fact, it achieves nothing. All it says is that courts must "have regard" to the
  "desirability of relating the work to the nature of the offence".
  It gives the court no powers to do anything. It certainly does not empower them to set down in the order the nature of the work to be performed under it. There is a danger that this imprecision could cause confusion, and I believe that we in Parliament have a duty to ensure that the legislation we pass is not open to this charge.
  It is worth putting on the record that only this morning, before I came into the House, I received a letter from the Strathclyde regional social work department, signed by the community work organisers for Inverclyde district and for Dumbarton and Clydebank district, who are both officers with extensive experience of operating the experimental schemes we have been running in Scotland. They strongly urge the House not to accept either Lords amendment no. 1 or Lords amendment no. 2.
  1.15 p.m.
  Mr. Alexander Fletcher: The Minister made some play of the drafting of the amendment. We seek to achieve two ends. We wish, first, to make statutory reference to the relationship between the courts and the local authority social work departments and to do this properly in the Bill, while giving the maximum amount of flexibility about what the arrangements should be. At present there is no reference to what procedures might operate between the courts and the local authority.

  1063
  We think it is in the best interests, not least of the local authorities and the social work departments, that this provision should be made in the Bill itself. We seek to do this because we want to encourage the courts and the local authorities to co-operate to the fullest possible extent to help make a success of community service orders. We also want to remove the suspicion that social work departments might provide a soft option for these types of offender.
  It was not at all helpful of the Minister to produce a letter from the social work organisers in Strathclyde, because that underlines the need for the social work departments to be very careful to ensure that they do not carry the full weight of responsibility for anything that goes wrong with the Bill and, in particular, with the execution of community service orders in Scotland. Therefore, I should have thought that it would be greatly in their interests to try to share this responsibility with the courts.
  That is the purpose of the amendment. We do not want any legislation that will provide more discouragement for the police in the execution of their work. There is evidence in Scotland that this is happening and has happened for some time. In the interests of the citizens, of the police in their work, and of every one involved in trying to make a success of the Bill, there should be some statutory relationship between the courts and the local authorities.
  Question put and agreed to.

New Clause "A"

  ANNUAL REPORTS TO BE LAID BEFORE PARLIAMENT
  Lords amendment: No. 3, in page 8, line 14, at end insert new clause "A"—
  ("A The Secretary of State shall lay before Parliament each year, or incorporate in annual reports he already makes, a report of the working of community service orders.")
  Mr. Harry Ewing: I beg to move, That this House doth agree with the Lords in the said amendment.
  An amendment in these terms was proposed in the Scottish Standing Committee by Conservative Members and opposed by the Government on the grounds that it was unnecessary. The Government also originally opposed the
  1064
  amendment for the same reasons in the other place. However, there was a great deal of support for the amendment from all quarters in the other place, and the Government have decided to accept it.
  Mr. Alexander Fletcher: I am very pleased that the Minister has accepted the view that was expressed in Committee. I do not want to be in any way grudging in my expression of pleasure at the fact that the Minister has moved to accept the amendment. The Government having had time to consider the matter, had this debate been delayed for a week or two, perhaps the Minister would have felt able to support the previous two amendments.
  Question put and agreed to.
  Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their amendments to the Bill: Mr. Thomas Cox, Mr. Bernard Weatherill, Mr. Alexander Fletcher, Mr. Ted Graham and Mr. Harry Ewing; Three to be quorum.—[Mr. Harry Ewing.]
  To withdraw immediately.
  Reasons for disagreeing to certain of the Lords amendments reported, and agreed to; to be communicated to the Lords.

CINEMATOGRAPH FILMS (COLLECTION OF LEVY)
1.20 p.m.
The Under-Secretary of State for Trade (Mr. Michael Meacher): I beg to move,
That the draft Cinematograph Films (Collection of Levy) (Amendment No. 6) Regulations 1978, which were laid before this House on 5th July, be approved.
The Cinematograph Films Act 1957 provides for a statutory levy—popularly known as the Eady Levy—to be paid by cinema exhibitors in Great Britain. The levy is collected by Her Majesty's Customs and Excise from box office takings and is paid to the British Film Fund Agency, a statutory body established under the Act, which distributes it to makers of British films and other organisations to do with the British film industry.
The rate at which levy has to be paid is prescribed in the Cinematograph Films (Collection of Levy) Regulations 1968, as amended and is currently one-ninth of

1065
the price of admission in excess of 12½p, the calculation being made net of VAT. This portion of the net admission price which is not liable to levy had stood at 7½p since 1968, until it was increased last year in order to afford a measure of relief.
The regulations also provide for certain exemptions, the most important of which is in respect of cinemas whose takings in any particular week, or whose average weekly takings—calculated from the beginning of a levy period—are less than £900. Each successive period of 52 weeks constitutes a levy period.
The yield from the levy has been in the region of £5 million each year for some years past. This yield has remained more or less constant because the rise in admission prices has been balanced by a significant decline in the number of people going to the cinema. In recent years, large numbers of cinemas have closed, and in many areas the public are effectively denied access to cinema films.
Despite the relief given last year, many cinema exhibitors are operating either at a loss or at an unacceptably low margin of profitability. The trade associations concerned have therefore made representations that exhibitors should be afforded some further relief from levy liability.
I have recently had discussions with the two trade associations representing exhibitors, and we intend to undertake a joint accountancy investigation into the ability of cinemas to pay levy and whether some alternative method of calculating liability would be preferable.
I am also awaiting a further report from the Interim Action Committee on the Film Industry, which is considering, amongst other subjects, the exhibiting of films in the United Kingdom. Meanwhile, however, we have had to consider what steps would be immediately appropriate.
The Department of Trade not only has a statutory obligation in section 2(3) of the Cinematograph Films Act 1957 to pay regard to the prevailing economic circumstances of both exhibitors and makers of British films in deciding the level of levy, but also to consult the Cinematograph Films Council. This has been done, and the council has recommended, in view of the pressures exhibi-
1066
tors are under, that the total amount which would otherwise be payable by exhibitors in the coming levy year should be reduced by £1 million.
In recommending the particular methods for affording this relief, the council was mindful of the importance of giving help where it would be most effective—primarily the smaller cinemas which attract smaller audiences. But it also had to have regard to the damage to the production industry if larger cinemas operating on a marginal profit were obliged to close because, as I have explained, the Department has a parallel statutory obligation to the economic interests of makers of British films.
It was the Cinematograph Films Council's recommendation that the two methods provided in the proposed regulations would combine to achieve the best effect. First, total or partial exemption from payment of levy is presently allowed when a cinema's takings in a particular week fall below £900, or where they fall below an average £900 a week over the levy period.
Obviously, the main beneficiaries of this exemption are the smaller cinemas, though, regrettably, larger cinemas sometimes fail to attract big enough audiences in the course of a week to take even these small amounts. The council recommended that this exemption figure should be raised from £900 to £1,100, thereby increasing the number of cinemas which would pay no levy at all in any one week or more. It has been estimated that this increase should benefit the exhibitors to the order of some £650,000 in a year.
Secondly, any exhibitor paying a levy only does so at present on a percentage of the price of the cinema seat in excess of 12½p Further benefit can accordingly be given to the exhibitor by raising this levy-free portion of the seat price. The council recommended that this levy-free portion should be raised by a sufficient amount to increase the relief afforded by a further £350,000, making a total of £1 million.
It is, of course, not possible in advance to be exactly certain about the number of cinemas in the coming year which will be left paying levy once the exemption figure has been raised to £1,100. Thus there must be an element of estimation in

1067
considering how much the levy-free portion should be increased. It is estimated that an increase from 12½p to 17½p should produce approximately the desired relief.
This total of £1 million is, of course, industry money. Only if cinemas were able to reduce their prices—which is unlikely—would any reduction in the levy produce lower Exchequer receipts, and that because of the reduced VAT that would be incurred.
It is in the light of the economic circumstances of exhibitors and the advice of the Cinematograph Films Council that these draft regulations now come before the House. Their purpose is thus to reduce the amount of levy otherwise payable by exhibitors by approximately £1 million and to do that, first, by increasing from 12½p to 17½p the portion of the payment for admission net of VAT which is not liable to levy, and secondly, by increasing from £900 to £1,100 the amount by reference to which total or partial exemption from payment of levy is allowed.
On that basis, I recommend this order for approval of the House.
1.28 p.m.
Mr. Cecil Parkinson: I start by declaring two interests. The first is a personal one in that I am a very enthusiastic film-goer, although nowadays—like the Minister, I suspect—I do not have quite as much time to go to the cinema as I used to have or I would like to have. Secondly, I have a constituency interest in that Elstree studios and ATV studios, where many films are made, are in my constituency, and it is a matter of pride to me and my constituents that some of the most successful films in Britain have been made in the constituency.
I think that the Minister will agree when I say that the film industry at the moment is troubled. It is a much-examined and much-reported-upon industry. I looked up the list of reports commissioned and issued since the war, and there is a staggering number of them. It is an industry in which there is a certain amount of controversy. But there seems one area about which there is no controversy—the Eady Levy—which must be widely accepted as being perhaps the best thing that has been done for the industry since the war. Wherever
1068
one goes and to whomever one speaks, there seems to be agreement about that.
It is interesting that the levy does not just support the making and the production of films but that quite substantial and worthwhile amounts have been diverted from it in recent years to the Children's Film Foundation, the National Film School, the Film Institute Production Board and the National Film Development Fund. This levy is playing a very important part in producing or financing the training of technicians and in the production of specialist films, as well as in the production of a range of British films.
There is controversy about whether most of the levy should go to the most successful films. Some people argue that it is slightly illogical that the films which make most money should also receive an additional topping up from the levy. I was interested to read the 1973 report of the Cinema Films Council, in which this topic was considered. It said that the present arrangements were not satisfactory and that it felt that if there were a change in them, and if a substantial part of the levy ceased to be an addition to earnings and if it were diverted to backing new films, it would probably do more damage than good. On the whole, it felt that although this was a subject which deserved consideration, the present method of distributing was the best yet devised.
As the Minister suggested, the problem is to strike a balance between the exhibitor and the maker of films. There is obviously absolutely no point in producers producing films if there are no cinemas open in which they can be shown, and the Minister has to make this delicate judgment about the amount of the levy that should be taken out of the industry and redistributed. The present suggestions will result in just another such redistribution.
I should like the Minister to tell us whether last year's redistribution has still resulted in a levy of approximately the £5 million to which he referred, or whether that redistribution produced a reduction in the levy. Those figures certainly were not available to me. I think it is a measure of the industry's problems that the Minister is now having to come back to the House with regularity to seek this distribution.

1069
It is interesting that the figures of 7½p and £700 were fixed in 1968 and stayed until 1977, when they were increased to £12½p and £900, yet within a year the Minister is having to come back to suggest yet further redistribution. It is an example, one would suggest, of the mounting problems of the exhibitors, and especially of the problems of the smaller cinemas. Perhaps the Minister would confirm this.
The industry seems to have difficulties at the moment. There is nothing particularly new about that. There are some who doubt whether the suggestion of a British Film Authority, as proposed by the former Prime Minister's working party, will help. The industry certainly does not seem to be short of controlling bodies or consultative bodies, any more than it has been short of reports, but it still seems to retain its problems.
I was interested—particularly in the light of the Chancellor's performance today, when he came to the House and gave us all the impression that the Government had inherited a great number of problems and spent the last four years solving them—to read a letter which the Association of Independent Producers sent to the Chancellor in August 1977. I should like to quote very briefly from one paragraph of that letter. It said very simply:
"The 1974 Finance Act did more to destroy the film industry than any other single event in our history. We forced highly paid actors, actresses, producers, writers, directors and other talent to go and live and work outside the United Kingdom. There is no industry without the creative talent and, consequently, we created more unemployment than we had ever seen in the industry before, and we have lost the foreign revenue earned by the talent, and we don't collect any tax at all. We hope you will do everything to help to restore the position we had prior to 1974, because none of us are better off in real terms when valuable talent, labour and capital are forced out of the country by excessive taxation."
That is one very important group in the industry which regards the present Chancellor of the Exchequer as the source of most of its problems and as the person who was responsible for the most disastrous measures ever introduced by a Government, which damaged the film industry.
Labour Members, few though there are in the Chamber, may not be terribly im-
1070
pressed by a group which sounds as wellto-do—but is not, in fact—as the Association of Independent Producers. Perhaps, however, they would be more interested in the views of a man whose Left-wing credentials are absolutely unimpeachable, namely, Mr. Alan Sapper, who would in no way regard me as criticising him by describing him as an extreme Left-winger. Mr. Sapper would be proud of that label.
I was very amused when in 1975 I received a letter from Mr. Sapper in which he said, in effect, that the 1974 Finance Bill, one of the Chancellor's first measures —identified by the Association of Independent Producers as a disaster for the industry—was indeed a disaster for the industry.
Mr. Sapper wrote to me urging me to use my influence on the Labour Government—I was very flattered by that suggestion—to get them to change their minds. He went on to point out to me one of the enormous problems which had arisen for the industry. He pointed out that on the very large earnings associated with talent in the film industry—he was talking about foreigners who work here—this would result in a United Kingdom effective rate of tax of 62·25 per cent. He went on to say:
"This must be compared to the maximum tax rate of 50 per cent. which Americans pay to the US Government."
He went on to argue with me that we really must do something, otherwise all these very talented people would either leave this country or refuse to come to it.
In my reply to Mr. Sapper I said that I was very sympathetic to his case and that I would make a bargain with him. I said that I would argue about the disincentive effects of high taxation for foreigners in this country if he would use his much greater influence with the Labour Government and point out to them the high disincentive effects of taxation on talented British people. I pointed out that it was utterly absurd for him to be writing to me, asking me if I was aware of the damage that high taxes do to foreigners, while at the same time being in the business of promoting high taxes for talented British people. I made him an offer. I said in my final letter to him:
"I am surprised that you, as a Left-winger, can apparently cheerfully write a letter of the kind you wrote to me but continue to

1071
urge discriminatory policies against other sections of the community which will have exactly the same effect on their industries."
Mr. Sapper did not reply to my letter, and I was not surprised. He obviously feels that high taxes are very bad for foreigners but very good for the British, for some peculiar reason.
The Conservative Party shares the view that direct taxes, and the rate of them, in this country have a major disincentive effect on investors. We agree with the Association of British Film Producers that our present tax system militates against private investment in British films. We believe, as the Chancellor believes half the time, that direct taxes must be cut. For the other half of his time, having advocated cuts, he criticises us for advocating them. We believe that a reform of the tax system in this country is a major necessity if industries such as the British film industry are to attract private investment and to attract talented people whose services are in demand all over the world, and who will just clear off, as Mr. Sapper points out, if we retain our present tax system.
The Opposition support the introduction of these regulations. However, a lot more than this will have to be done if the British film industry is to become viable, profitable and worthwhile, because the tax system operated by the present Government has had a very damaging effect on this important industry.
1.40 p.m.
Mr. Meacher: It is clear that the hon. Member for Hertfordshire, South (Mr. Parkinson) has had stored in a drawer a speech about the film industry which he has been itching to make. The fact that scarcely anything of what he said is relevant to these regulations is another matter. Perhaps I ought to say, since nearly all that the hon. Gentleman said related to levels of direct taxation which have nothing to do with these regulations, that taxation has not reduced the high level of foreign investment in the British film industry which is related to these regulations and the benefits of Eady, nor has it affected the fact that the quality of both personnel and facilities in the British film industry is as high as anywhere in the world.
Perhaps I might reply to the one point relating to the regulations which the hon.
1072
Member made, which was to ask the effect of last year's relief in practice this year. I can tell him that as from September 1977, the exemption limit was increased from £700 to £900 and the exempt part of each seat price from 7½p to 12½p. This relief was considered necessary because the fall in attendances was seriously affecting the profitability of cinemas, and further closures would have deprived the public in some areas of access to films. Total relief of £1 million was aimed at, and it was estimated that each of these reliefs would reduce the yield by about £500,000, although it was realised, as I said when I introduced the regulations a year ago, that there was some element of double counting.
It is impossible to say that any given measure of relief appears to have been achieved until after the end of the levy year, for obvious reasons. But accepting various imponderables which are involved in forecasting, my Department is fairly confident that there is not likely to be a significant shortfall from the proposed £1 million relief. This is also the advice of the Cinematograph Films Council.
The levy yield for 1977–78 under present regulations will be about E5·6 million. As I have indicated, the proposed changes will reduce this to aid film production in 1978·79 by a further £1 million. But the amount left will still be about £4·6 million, which I am glad to say will be more than in most years in the past, even with this reduction. Therefore, I think that we have got the balance right. I think that the hon. Member for Hertfordshire, South was right when he repeated what I had said, that we were seeking essentially to find a balance.
As I indicated, we are looking at the long-term effects of the Eady levy by agreeing with both the CEA and the AIC, which are the two trade associations representing exhibitors, to undertake a joint accountancy investigation of the capacity of the exhibitors to meet the levy and to see whether there are better alternatives.
Question put and agreed to.
Resolved,
That the draft Cinematograph Films (Collection of Levy) (Amendment No. 6) Regulations 1978, which were laid before this House on 5th July, be approved.

PROTECTION OF DEPOSITORS (ACCOUNTS)
1.44 p.m.
The Under-Secretary of State for Trade (Mr. Clinton Davis): I beg to move,
That the draft Protection of Depositors (Accounts) (Amendment) Regulations 1978, which were laid before this House on 6th July, be approved.
I must say at the outset that I shall be extremely interested to hear the next contribution from the hon. Member for Hertfordshire, South (Mr. Parkinson). Having heard his last contribution, it would not surprise me if the main burden of his remarks proved to relate to merchant shipping and aviation.
The Protection of Depositors Act 1963 imposes various requirements on those who take deposits at interest, but it does not extend to the clearing banks and the building societies, which are regulated separately. One of the Act's requirements covers the provision of detailed accounts, by which depositors can gauge the financial standing of deposit-takers. The Protection of Depositors (Accounts) Regulations 1976 contain the detailed requirements and subsume certain accounts requirements in the Companies Acts.
The Companies Act 1976 altered or superseded certain clauses in earlier Companies Acts which are referred to in the Protection of Depositors (Accounts) Regulations. In the light of this, the references in the regulations need to be brought into line with the Companies Act 1976. That is all that the regulations in the statutory instrument set out to do. In no way do they alter the substance of the accounts requirements.
1.47 p.m.
Mr. Tim Renton: I was interested to hear the hon. Member's description of these regulations. A feature of them which must strike anyone reading them is that, apart from their title and the note at the end, it is possible to read them without having the slightest idea what they are about. To that extent, this is quite a remarkable document.
In his famous work seeking greater clarity in legislation, my right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) stressed the
1074
necessity of trying to avoid legislation by reference. Regulations of this sort, which are obviously important in that they seek to protect depositors, are a very good example of what my right hon. and learned Friend had in mind when he wrote so strongly against legislation by reference.
I am concerned that for the person who is to be protected by the regulations or the person who is taking deposits to whom the regulations refer, there should now be such a lack of clarity in the relevant legislation that misunderstanding and incomprehension can follow.
The Under-Secretary of State will remember our debates on the Companies Bill in 1976. At that time, I and others of my hon. Friends spoke about what we regarded as the very unclear parliamentary drafting in that legislation.
These regulations change the previous regulations of 1976 to bring them into line with the same ill-drafted Companies Act of 1976. I remind the Under-Secretary of State that section 3 of the Companies Act 1976, which alters accounting reference periods, was a provision about which we had some debate when we considered the legislation in Committee. The Opposition said that it was extremely obscure.
Section 3(1) provides:
"Subject to subsection (3) below, at any time after the end of a period which was an accounting reference period of a company by virtue of section 2 above or this section the company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year ('the new accounting reference date') on which that accounting reference period ('the previous accounting reference period') and each subsequent accounting reference period of the company is to be treated as coming or (as the case may require) as having come to an end."
To my mind, that extremely obscure section is now being made relevant to these extremely obscure regulations.
We must all be worried about the lack of clarity which is coming more and more into our law, especially our company law. We must face the fact that on this and other matters we are dealing with interim measures that are simply stopping up the increasing gaps in company law, without bringing forward any fundamental changes to deal with those gaps.

1075
Two years ago the Under-Secretary told us strongly and passionately that the Companies Act 1976 was only an interim measure and that we should see a major Companies Bill in a later Session. I remember saying at the time that I very much doubted that, and the Under-Secretary told me that I was wrong. Now, two years later, at the end of a Session, at the end of a Government, there is still no Companies Bill. It is a matter of great regret that the Government got caught up in the toils of the Scotland Bill and the Wales Bill and failed to bring forward a Companies Bill to which they had committed themselves so absolutely, and which they mentioned in the Queen's Speech at the beginning of this Session.
There is a considerable lack of clarity in the legislation to which this regulation refers. It is proper that we should be debating it on the day after the publication of the Department of Trade's White Paper incorporating a draft Bill on changes in company law. This is just the draft Bill that the Government would have sought to bring forward if they had not got bogged down in devolution.
I am very worried that the same lack of clarity appears to pervade certain sections of this new draft Companies Bill in the White Paper. The Under-Secretary shakes his head. He will probably say that this is not relevant to today's debate, but we have not debated company law for more than two years—
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. I hope that the hon. Member will not try to debate it today.
Mr. Renton: No, Mr. Deputy Speaker. I merely want to enlarge for a moment or two on the lack of clarity in this instance. The Under-Secretary should look at the draftsmanship of these regulations and of the draft Bill that his Department is bringing forward. I refer to clause 57(5)—
Mr. Deputy Speaker: Order. I think the hon. Gentleman would be better employed in directing his attention to the statutory instrument.
Mr. Renton: I am simply saying that this lack of clarity which permeates the draft legislation published yesterday on insider trading is a matter of great con-
1076
cern to all those who are affected by company law and the draft regulations that we are debating.
I hope that the Under-Secretary will take up this point. Obviously I hope that he will not be in office to bring forward any more company legislation, but if he is, I hope he will meet the Government's commitments and cease to have interim measures. I hope that he will bring forward properly drafted legislation to fill the gaps that are becoming increasingly evident in company law.
1.52 p.m.
Mr. Cecil Parkinson: I remember when I had been in the House only three weeks I was told of a mythical academy for new Back Benchers. This academy gave lessons about speaking on nothing at short notice and staying in order in the process. The passing-out test was supposed to be that an hon Member walked through the Members' Lobby, picked up a statutory instrument that he had never seen before and then made a 10-minute speech on it. If he could do that, he graduated from the academy.
When I look at this legislation I feel that this is the sort of measure that would fail most people. However, my hon. Friend the Member for Mid-Sussex (Mr. Renton) made an interesting, relevant and important speech on it. There is a lack of clarity in the legislation and in much of the rest of companies legislation as well. These regulations which we are amending today were sold to the Standing Committee only on the basis that the Government knew that they were an interim answer.
But the only time available two years ago was to modify the Protection of Depositors Act a little, which came as a response to the London and County Securities report. Now we have further amending regulations to amend that unsatisfactory set of regulations.
What happened to the White Paper "Supervision of Deposit-taking Institutions"? We seem to commission Select Committees to produce White Papers day after day. This White Paper was actually presented to the House on 3rd August 1976. It has never been debated by Parliament. What has happened? Has any work been done on the Committee's proposals? Shall we ever see a result from

1077
that worthwhile White Paper? What has been happening since the Companies Act 1976?
These regulations effectively bring in the 1976 provisions on company accounts and group accounts. They provide that all accounts presented under the Protection of Depositors (Accounts) Act must be in accordance with the 1976 Act. That Act. has been in existence for two years. Have companies been presenting their accounts in compliance with the 1976 Act or in compliance with Acts that have superseded that Act in the intervening period? Why, after two years of having this gap, is it necessary to plug it now?
1.58 p.m.
Mr. Clinton Davis: The hon. Member for Hertfordshire, South (Mr. Parkinson) referred to an interesting academy from which he and his hon. Friend the Member for Mid-Sussex (Mr. Renton) must have graduated, not just with honours but with doctorates of philosophy—the academy of irrelevance.
I understand the desire of the hon. Member for Mid-Sussex to embark on a major debate under the heading of this statutory instrument, but it is difficult to do that and remain in order. No doubt he will have an opportunity to do so on the Consolidated Fund Bill at 5.30 a.m., when we shall all listen to him with interest. However, I shall try to ensure that my hon. Friend, the other junior Minister at the Department of Trade, replies to that debate.
The main point that the hon. Member made was that there was a lack of clarity in the statutory instrument. Reading it, I think that it is a model of clarity. I will not read it aloud because that might tend to destroy my argument. The point about this statutory instrument is that it is not a matter of substance. As I said in my speech, it simply cross-references where it is necessary to cross reference.
I do not believe that those involved in this area will be exposed to any peculiar difficulties such as those which the hon. Member for Mid-Sussex mentioned. In this situation I do not think it would be possible to do anything but cross-reference where one is faced with this particular problem. Therefore, I do not think that that is a point of substance.
1078
I was asked whether the legislation was lacking in clarity. I suppose that the hon. Gentleman's attack above all was directed at the Parliamentary draftsman. I think that there is some substance in what he said, because I have joined with him in criticisms of that kind in the past. But it is not always very easy, when one has technical legislation, to express it in easily comprehensible terms. I think that the hon. Gentleman knows of this problem. The Parliamentary draftsman does strive to overcome it, sometimes not with the greatest possible degree of success. But I do not believe that that relates to this problem.
The hon. Gentleman will have to seize another opportunity to embark upon his wider criticisms of the Companies Act 1976, as he will have to in relation to the major Companies Bill. I am sure that the hon. Gentleman will have been delighted to have read the White Paper published yesterday, to which a major Companies Bill is annexed.
I should add that I believe that the hon. Gentleman should be less selective than he was in his criticisms. I recommend that he reads the Industrial Relations Act of his own Government's time and also the European Communities Bill, which that Administration did not deign to amend in one material particular at all.
I now come to the other professor, the hon. Member for Hertfordshire, South. He asked about a White Paper, which has nothing directly to do with my Department. It is a matter for the Treasury, and no doubt the hon. Gentleman will raise the matter with a Treasury Minister.
Mr. Parkinson: I was in fact quoting from a speech which the Minister himself made when he introduced the regulations explaining that he felt that this particular White Paper would result in legislation which he implied would be the responsibility of the Department of Trade. I reckon that the Minister should not slide away from this but should try to give us an answer or else not refer to it next time he makes a speech upstairs.
Mr. Davis: The hon. Gentleman cannot dictate to me the speeches that I shall be making as a Minister over the next five years. That is a rather irresponsible argument. The hon. Gentleman is right.

1079
There was some debate—I do not remember the particular context of it—in which this question arose. I sought to respond to it. But what I am saying is that it is a Treasury responsibility and I believe that the legislation, the stage that it has reached and so on, is a matter for Treasury Ministers. I am not briefed this afternoon to deal with it, and I cannot.
I was asked whether companies have been presenting accounts pursuant to the 1976 Act or based on previous legislation. My understanding is that it is based upon the 1976 Act. I hope that that clarifies the position, and I have every confidence that the regulations will now be commended by this enormously well-attended House.
Question put and agreed to.
Resolved,
That the draft Protection of Depositors (Accounts) (Amendment) Regulations 1978, which were laid before this House on 6th July, be approved.

DIPLOMATIC AND INTERNATIONAL IMMUNITIES AND PRIVILEGES
Resolved,
That the draft European Space Agency (Immunities and Privileges) Order 1978, which was laid before this House on 10th July, be approved.—[Mr. Luard.]

DOMINICA TERMINATION OF ASSOCIATION
2.5 p.m.
The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Evan Luard): I beg to move,
That the draft Dominica Termination of Association Order 1978, which was laid before this House on 10th July, be approved.
Some hon. Members present will recall the occasion, as I do, when the West Indies Act was introduced in 1967. They will remember that that Act created a totally new status for our dependent territories, that of associated State. An associated State was new in that the Government of the territory concerned acquired total independence and autonomy over all of their internal affairs, but the British Government retained responsibility for foreign affairs and defence.
That was a major and new departure in our colonial history, and one which seemed to many of us to be the appropriate one which met the needs of that time and which corresponded to the situation of very small territories which did not themselves then wish to take total independence.
Most of us recognised then that this might not be an immutable arrangement, and that with the passage of time and with changes in the attitude and aspirations of the Governments and peoples concerned, it might be necessary to look at modifications in the future. Four years ago this House considered an order similar to the one which we are discussing today, which had the effect of giving independence to one of the six associated States which were then created.
Today we are considering a similar order for another such territory, Dominica. The order will be made under section 10(2) and section 10(3) of the West Indies Act 1967. It will terminate the status of association of Dominica with the United Kingdom with effect from 3rd November 1978 and will provide that with effect from the same date Dominica shall cease to form part of Her Majesty's dominions. Dominica will then become an independent sovereign republic, to be known as the Commonwealth of Dominica. It is understood that an application will be made for membership of the Commonwealth.

1081
The West Indies Act requires that any order made under section 10(2) must be laid in draft before Parliament and approved by a resolution of each House of Parliament. As I said just now, Dominica will be the second of the West Indies associated States to move to complete independence by means of an Order in Council under section 10(2) of the Act.
The West Indies Act was designed to provide the smaller members of the now defunct West Indies Federation with a new type of relationship with Britain, something between that of a colony and that of a totally independent State, under which they could enjoy a complete autonomy in internal affairs. The relationship was to be entirely voluntary. For that reason, we have consistently maintained at the United Nations—I have myself used this argument at the United Nations—that the associated States are not dependent territories falling within the area of competence of the Committee of 24. It was recognised that the status of the territories could be subsequently changed at the will of the territory concerned, or Britain, or both, and section 10 of the Act was designed to set out the conditions under which those requests could be made.
In 1967 it was still our hope that every effort would be made to build some new form of regional political association in this area. For this reason, under section 10(1) of the West Indies Act, it was made easier for the associated states to move to independence in association with the other Commonwealth countries in the region than to move to independence independently. But attitudes among peoples and Governments in the area have now changed. All the Governments concerned, including the independent Commonwealth Caribbean countries and the British Government, recognise that there is no immediate prospect of the emergence in the region of the sort of political structure which could provide the framework for close regional integration.
Meanwhile, territories of similar or smaller size and resources in other parts of the world have moved to separate independence and have been admitted to the United Nations. It is, therefore, entirely understandable that some of the
1082
associated States are now beginning to be impatient to acquire that same independence for themselves.
Section 10 of the West Indies Act provides for two alternative means by which the associated States can pass to independence. Under section 10(1), the Government of the territory itself can unilaterally seek to terminate the status of association regardless of the wishes of the United Kingdom Government. In that case, it needs to secure a two-thirds majority in a referendum. Alternatively, under section 10(2) the British Government can, through an Order in Council, such as the one we are discussing, terminate the status of association. Although no conditions are laid down for the use of this latter procedure in the Act, all hon. Members will agree that the British Government would be justified in taking this action only if they felt confident that they had the consent and support of the Government and the people of the territory concerned.
That is the test that we have applied in the case of Dominica. The Governments of the Caribbean community, because they recognise the increasing desire for full independence among the associated States, have supported resolutions calling for the use of section 10(2) to grant separate independence to these territories. Our main concern, therefore, has been to ensure that what is proposed had the consent of the people as a whole.
The Government of Dominica first requested the termination of association by means of the section 10(2) procedure in 1976. Following the publication in Dominica of a Green Paper and policy statements and discussion documents by both parties, it was agreed that a constitutional conference should be convened to discuss the terms of a new constitution which might be brought into effect on the termination of association, without prejudice to the position of any of the parties on the method and timing of termination of association—a matter which we knew might be of some controversy among them.
The conference took place in May 1977 and I presided at it. That is why I am handling the debate—my hon. Friend the Minister of State was not available to preside at the conference, though he normally deals with Caribbean affairs. I

1083
have continued to take an interest in the matter since the conference.
At the conference, representatives of both parties made clear that they had no objection in principle to the termination of association. Their differences were not about the principle of independence but about the details of the proposed constitution and the method and timing. Some of these differences were resolved at the conference, but others were not. I therefore said at the end of the conference that discussions should be continued in Dominica and that if broad agreement emerged I would recommend to my colleagues that association should be terminated, but that if serious differences remained between the parties a further process of consultation might be necessary.
In order to establish the will of the people of Dominica, 3,000 copies of a paper summarising the constitutional proposals in laymen's language were circulated in Dominica last year as a basis for discussion.
As a result of discussions in the year following the conference, considerable progress was made in narrowing the differences between the Government and the Opposition, but the gap was not entirely closed. In order to bridge the gap, the Minister of State agreed with the Government of Dominica that the dependent territories adviser in the Foreign Office, Mr. Posnett, should visit Dominica to discuss the remaining issues and to form an assessment of the state of public opinion. Mr. Posnett's report was published on 5th July as Command 7279 and copies have been placed in the Library.
I take this opportunity to express the Government's appreciation of the careful and conscientious report that Mr. Posnett has produced and all the work he has done in this important matter. Hon. Members will, no doubt, have read the report and I shall not repeat all the conclusions, but I agree with his view that the question of independence has been debated in Dominica at unusual length and that there is no reason to believe that a significant number of people wish to retain the status of association with the United Kingdom.
Mr. Posnett also reported that further progress in narrowing the constitutional differences seems unlikely but that the
1084
constitution proposed by the Government of Dominica is a good one and is similar to others in newly independent countries in the area. It contains substantial safeguards and, since the termination of association was clearly implied in their manifesto at the last General Election in 1975, the democratically elected Government of Dominica are justified in their request for an order to be made under section 10(2) to take effect from 3rd November 1978.
Above all, I agree with Mr. Posnett's conclusion, which is the essential one for the House to consider, on the wish of the people of Dominica. He recorded that at the constitutional conference last year, both parties expressed their support for the principle of independence. I must stress this point. I remember well from my discussions with the leaders of both parties that neither party contested the general principle that Dominica should become an independent State, though they had other differences about the precise details of the constitution and questions of timing.
Mr. Posnett wrote:
"There is no doubt in my mind that in this they correctly reflected the views and aspirations of their people. I met no more than one or two people who were opposed to independence as such. Several people, especially the younger generation, seemed impatient at the slowness of the progress to independence. They felt that waiting would not help. They had to learn how to stand on their own feet without support, conscious of their own full responsibility, and the only way they could do this was by terminating the association with its implications of British protection."
I do not have the same first-hand knowledge and experience that Mr. Posnett was able to obtain, but, as far as I am able to judge from what I have read and learned, I believe that that is the view of the majority of people in Dominica. There may be some who are not particularly closely concerned or very well informed about this question, but the majority of thinking people have taken for granted that independence is to come and have welcomed that fact.
Two resolutions have been passed in the House of Assembly of Dominica calling for the termination of association. More recently, on 12th July, a resolution was passed requesting and consenting to the promulgation of a new constitution for Dominica on the termination of association, along the lines agreed at the

1085
constitutional conference, but as amended in subsequent discussions. All these resolutions received the support of at least two-thirds of the democratically elected representatives of the people of Dominica. This should be carefully noted by the House. It would in itself be regarded by many people as sufficient endorsement of the desire for independence in Dominica as expressed by constitutionally elected representatives. It is for these reasons that we propose the passage of the order.
May I make one important point quite clear. We are not talking about the ending of a relationship with Dominica if we pass the order. We look forward to a still closer and more mature relationship with an independent Dominica. We shall continue to give substantial aid to the country after independence.
We shall soon be discussing the level and composition of post-independence aid with the Government of Dominica with a view to making a specific commitment at the time of independence. We certainly do not envisage any reduction in the level of our project aid or technical cooperation in the foreseeable future and we shall probably, in the light of our discussions with the Government of Dominica, maintain some budgetary aid for a time after independence.
Moreover, I am glad to say that there are signs of further progress towards regional co-operation which will be of assistance to an independent Dominica. This must be a matter of concern to us all. We are not letting Dominica loose as a small and defenceless territory in a world without friends. She will take her place in an area where important moves are taking place to bring about closer regional co-operation.
The Government of Barbados have advanced a number of proposals for common services, including a joint coastguard service in the area, a joint marketing and air-freight service, upgrading of the regional police training centre in Barbados and joint collaboration in overseas representation after independence. My hon. Friend the Minister of State has been holding discussions this week with the Barbados Minister of External Affairs, who has clearly expressed his Government's view that the continuation of the status of association could be an impede-
1086
ment to the further development of their policy for closer co-operation. They are thinking in terms of co-operation mainly among independent States in the area.
The British Government will give all possible support, including the provision of aid funds where appropriate, to this most welcome initiative from Barbados, and to other promising regional initiatives. We may therefore be entering on a new era of much closer regional co-operation among Governments, that are increasingly fully independent, engaging in voluntary association with each other. The development of such regional co-operation will ease the transition to independence for Dominica.
The significance of the step to full independence is much smaller for an associated State than for a dependent territory because even under the existing status of association the responsibilities of the British Government today and for the past 10 years have been limited to external affairs and external events.
There is at present no perceived external threat and in practice our duties on their behalf have not been onerous. Delegated authority has been given to the associated States to act on their own behalf in those areas of external affairs in which they have the greatest interest. In other words, we are not proposing any major change in the existing situation. Some of the responsibilities which are at present undertaken by the British Government will now be replaced by intra-Commonwealth and intra-regional cooperation. It can truthfully be said that the termination of association will amount to very little more than the formalisation of the status quo.
What we are discussing today is not the handing over of political responsibility to the Government of Dominica because that has already been done—it took place 11 years ago in 1967, when the associated statehood was created. We are not, like Pontius Pilate, washing our hands of our obligations. As I said earlier, we shall maintain our aid programme and other close links. We are, in response to an overwhelming body of opinion in the Caribbean, abandoning an anachronistic relationship and re-engaging in a modern relationship which is mutually acceptable. We look forward to welcoming Dominica as a free and equal fellow member of the Commonwealth.

1087
I am sure that the House will wish to join me in wishing the Government and people of Dominica well at this important moment in their history. I seek the approval of the House for the draft Order in Council terminating association with Britain.
2.22 p.m.
Mr. Richard Luce: I begin by assuring the Minister that the Opposition do not wish to oppose this Order in Council, although I have in the past few weeks carefully considered its provisions. As the Minister has already implied, there have been a number of anxieties on the island about the process by which they undertake this new status. I wish briefly to air the main anxieties which have been expressed, and I hope that the Minister will clarify the position.
Dominica has a distinguished history. Records tell us that Christopher Columbus claims to have discovered this island for the first time on 3rd November 1493. It changed hands several times between the French and the British in both the 17th and 18th centuries. Therefore, it can claim to have close links with two major members of the EEC. We have a long association of great friendship with Dominica. I understand that 15,000 Dominicans live in the United Kingdom, which shows that there is a considerable common bond between us.
I wish to focus my questions to the Minister on two main areas. Is there clear evidence that the people of Dominica want independence? We must consider this question against the background of the West Indies Act 1967. Where there is evidence of overwhelming support for independence, we must not stand in its way. In this case, in Dominica over the past couple of years there has been a great deal of discussion and considerable anxiety has been expressed by the leader of the Freedom Party, Miss Charles, about the constitutional arrangements as opposed to the principle of independence.
We should consider this matter against the background of certain established facts, some of which the Minister has already made clear. In the 1973 General Election in Dominica no party opposed the principle of independence. The second fact is that during the constitutional conference over which the Minister presided
1088
the principle was again accepted by the main parties to the discussion.
In 1977 two votes took place in the House of Assembly in Dominica—one in March in which the voting was 16 to 3 in favour of the proposal to terminate, and one in October 1977 in which the voting was 16 to 5. They were two separate votes. The problem is based not on the principle of independence but on the difficulty of reaching an understanding about the constitutional arrangements.
A further factor relates to what has become known as the Posnett report. I wish to join the Minister in paying tribute to a distinguished diplomat who has produced a thorough and interesting report. It is no fault of his that there are still some doubts and anxieties about the constitutional arrangements between, on the one hand, the Government side in Dominica and, on the other hand, the Freedom Party.
If there are doubts, is it not right to consider asking the Government there to call a General Election? I understand that the Posnett report considered this matter, and I believe that Miss Charles felt that this was not a sensible procedure and would only confuse the issue still further. But if there is any doubt, as there has been in the past few months, about the constitutional arrangements, would it not have been sensible to invoke section 10(1) of the Act to enable the people to have a referendum? Could the Minister say why the British Government and the Dominica Government decided together not to proceed with this method of consultation in view of the anxieties expressed?
I turn to the constitutional problems. I have had the pleasure of meeting Premier John of Dominica and some of his Ministers. I have not had the pleasure of meeting Miss Charles, although there has been considerable correspondence between Miss Charles and a number of hon. Members on both sides of the House. She should be congratulated on her diligence and tenacity in examining thoroughly all the constitutional aspects of the proposals.
The discussions have been lengthy and a wide number of issues have been raised, such as the type of State. I note that Miss Charles would like to have a republic. There have been discussions about

1089
the role of the Head of State, the composition of the Assembly, the Public Service Commission, the Public Appeals Board, the Electoral Commission and the methods of amending the constitution. All these issues have been thoroughly aired.
Nevertheless, having had all these discussions, it appears that there are still reservations on the part of Miss Charles on two main constitutional issues. Will the Minister clarify the position? One question concerns the powers of the President. There have been considerable modifications as a result of the representations made by Miss Charles. One idea is that the President should be appointed after consultation between the Government of Dominica and the Opposition in that country and that there should be consideration of a secret ballot of the Assembly for the election of the President. Where do the differences lie between the Dominican Government and their Opposition on this matter?
The second matter relates to the appointment of the Electoral Commission on which, it appears, there is still anxiety. Although it is proposed that there should be three members of the Electoral Commission, it is proposed that one, the chairman, should be a lawyer, and that two of its members should be appointed by the President, after consultation with the Prime Minister and the Leader of the Opposition in Dominica. I understand that there is still a difference of opinion on this matter between the two parties. Perhaps the Minister could say how large is that difference. In general, this constitution is broadly in line with many other constitutions adopted in the Caribbean and other parts of the world when countries have proceeded to independence.
As for the future, I am sure that all hon. Members wish Dominica well. I welcome the fact that Her Majesty's Government have decided to continue with the provision of aid. I assume that Dominica will be able to acquire membership of the Lomé Convention. I welcome warmly the fact that Dominica has decided to apply for membership f the Commonwealth, and I also welcome the Minister's remarks about regional cooperation, to which I attach the greatest importance.
1090
I, too, had the pleasure of meeting this week the very distinguished Foreign Minister of Barbados who explained that it is the objective of his Government and of many of the neighbouring Governments to develop as much functional cooperation in the area as possible. That would no doubt be welcomed, not only by Dominica but by many other States. It would be in the interests of us all, and I hope that the United Kingdom will do its best to assist in the process.
We have obviously, in the light of this Order in Council, to consider the implications of the experience of Dominica with other associated States in the Caribbean, should they wish, as some do, to proceed to independence. We must consider carefully where there is difficulty or anxiety about the method of proceeding to independence, or a difference of opinion on constitutional matters or on the principle of independence. The process of consultation as provided for in section 10(1) of the Act is something we must seriously consider in order to allay anxiety and make sure that all these countries have the opportunity of a full say.
We on the Opposition side join the Minister in wishing the people of Dominica well and in expressing the hope that when independence comes, as I understand it will on 3rd November, 485 years, if my mathematics is right, after Columbus is supposed to have discovered the island, it will come in a spirit of unity between the Government and Opposition parties. We hope that they will find it possible to reconcile their final remaining differences before that day comes, a day that we shall all welcome.
2.33 p.m.
Mr. Arthur Blenkinsop: It is only right that on an occasion such as this, those of us who in the past have had the good fortune to visit the island and be acquainted with some of the people involved in the discussions should speak and wish the island and its people well in the future.
I was one of those who went out there at the time of high hopes for the possibility of a British federation of the West Indies. That, however, was many years ago, and many things have happened since then. Those of us who went at

1091
that time attempted to put forward ideas for development and so forth and we were deeply concerned at the plight of islands like Dominica, those with genuine difficulties of terrain and climate. It rains very heavily from time to time in Dominica, but it does that here. Dominica provided the Minister for Communications in the early federation, and he had to deal with one of the challenging and difficult problems that then existed.
It is vital that there should be the closest possible relationship and economic understanding between all the territories in the area. For the islands most immediately adjacent to Dominica—the French islands of Guadeloupe and Martinique—and for the wider range of islands in the Caribbean, as well as some of the mainland territories, it is still important that some common understanding should be reached.
It is more likely to be achieved after the confirmation of full independence than it was during our earlier efforts at securing various forms of association. I am glad to hear of Dominica's intention to retain links with the Commonwealth in the way that other independent members have done.
I hope that those associated with development will succeed in tackling the challenging problems which face people living in that territory. One feels that one wants to represent the voice here today of those many hon. Members who are anxious to ensure that in the future support, aid and advice will continue to be available to Dominica from this country.
2.37 p.m.
Mr. Laurie Pavitt: Unlike my hon. Friend the Member for South Shields (Mr. Blenkinsop), I have not had the pleasure of visiting the island of Dominica, but I feel that the island has had the pleasure of visiting me. Of the 80,000 inhabitants of Dominica roughly 40,000 now live in Britain and Europe, and I sometimes think that most of them reside in my constituency.
I want to thank my hon. Friend the Minister of State for the courtesy he has shown over the last 18 months in meeting the anxieties that have been expressed by the members of this ethnic minority who are now domiciled and settled here and who, with independence coming, face cer-
1092
tain problems. My hon. Friend has leaned over backwards for some considerable time in attempting to set their minds at rest on these problems. It is only fair that the House should realise that his time, trouble and effort have not been wasted but have been deeply appreciated.
The hon. Member for Shoreham (Mr. Luce) has raised most of the important queries, and I therefore need not weary the House with them. I am, however, concerned at the future operation of section 10(1) of the 1967 Act, but I am certain that these points have been considered.
Independence is not in doubt, but the ways and means by which the new Government will work and the democratic safeguards that will be provided need to be examined. Having met Miss Charles, I am impressed by her devotion to her people. Often she has put forward a minority point of view, but she has done so with great sincerity. Although she might not have won the case every time, in the last 18 months she has earned a good deal of respect both in the British Government and in Dominica.
The hon. Member for Shoreham raised the question of the practicalities of the Public Service Commission. In developing countries there is always a worry about nepotism and about the extent of democratic control when a great deal of authority can be concentrated in one family. I echo the tribute paid to the marvellous job done by Mr. Posnett. His report indicated that he appreciated this fear on the part of the minorities.
Let me quote from the letter by Miss Charles who expresses her reservations that
"the chairman of the PSC was the Governor's brother and his niece was executive secretary of the Tourist Board … The Governor's other brother is also deputy chairman of the PSC, his nephew is chairman of the National Bank and his niece is personnel manager of the National Bank."
Such problems are for the Dominicans, not for us. Nevertheless, Mr. Posnett and others were right to give full consideration and weight to that kind of problem. My only hope is that when independence is established and the first teething troubles are over, such problems will be satisfactorily settled in the island itself, as they should be, and not from outside.

1093
I join my colleagues in welcoming this step and looking forward to continued co-operation throughout the Commonwealth. The Commonwealth Parliamentary Association has done a good deal over the past 10 years. We have had many representatives from Dominica here in our seminars. Through contact with other Commonwealth countries and ourselves in the Palace of Westminster, they have been able to gain a considerable understanding of parliamentary techniques and democratic processes, as worked out not only in the Mother of Parliaments but in the Westminster system which so many of our independent territories have adopted. I am confident that when Dominica becomes an independent nation and part of the Commonwealth, that process will continue and that we shall continue to have these exchanges.
I hope that one personal exchange may enable me to follow in the footsteps of my hon. Friend the Member for South Shields so that I, too, may be able to enjoy the sunshine instead of the rather dull days of the Palace of Westminster.
We extend our best wishes to the new Government of Dominica and hope that the teething troubles are not too severe. We hope that the outcome will be a good deal of increased happiness and self-confidence for a newly emerging nation in that part of the world.
2.42 p.m.
Mr. Anthony Nelson: Like the hon. Member for Brent, South (Mr. Pavitt) I echo the welcome that has been given to the order. I have not had the pleasure of visiting Dominica, but I went with a Commonwealth parliamentary delegation to a number of other Associated States in the Caribbean at the end of last year. Many of the problems and aspirations of those island States are similar. To the extent that the order will provide the Dominicans with the impetus and potential to fulfil many of their national aspirations, and the spur which only full independence can give to an island country, I very much welcome it.
I would utter a cautionary comment about section 10 of the West Indies Act 1967 and the various facilities under the Act by which independence can be granted. There is often a temptation to
1094
have the internal political difficulties of countries resolved or even manipulated by different use of the various sections and subsections of the Act. Although it was clearly in Parliament's mind at the time of passing the Act that there should be different procedures leading to independence being granted, I feel very strongly that we should not use one system as opposed to another simply to meet a partisan preference within the country concerned. We have an important responsibility to remain as far as possible objective and impartial in deciding by which procedure and method independence should be granted.
In this respect, I pay tribute to the Government for the negotiations and hard work they have put into the order. I have a little more experience and knowledge of their work and negotiations with certain other Associated States. I know that these are delicate and sensitive matters. The willingness to create the greatest possible accord amongst all the various individuals and parties in the countries concerned is a very difficult and time-consuming responsibility which is not always publicly appreciated. Therefore, on this occasion, I should very much like to thank the Minister and the Government for the work and negotiations they have put into the order, as previous Governments have on earlier orders.
I apologise to the Minister for not having been able to be present for his initial remarks, owing to a constituency engagement. If he has not already had an opportunity to do so, will he expand on the question of aid? My hon. Friend the Member for Shoreham (Mr. Luce) referred to the possibilities of and hopes for increased regional assistance, but there was a good deal of talk a year or more ago about the United States taking a much more direct and sizeable financial interest in the development future of the Caribbean. I believe that Mrs. Rosalynn Carter in particular took an interest in the area.
Some negotiations and discussions may have taken place between the Foreign Office and certain representatives of the United States Government about future aid for the Caribbean. This is an immensely important possibility in the vacuum of decolonisation, for want of a better word.

1095
One vivid impression that I brought back with me from my visit to the Associated States last year was of the tremendous potential for producing their own food in many of the islands and, one must say with regret, the sad failure to match that potential. It is a tragedy that one island should be importing from another coconuts and pineapples when it could easily produce many of them itself.
Although successive British Governments have provided aid and direct technical assistance to try to encourage such industries to get off the ground, there can be no doubt that in most of the Associated States the performance in trying to meet their own food requirements by home production has been woefully inadequate. I think that nearly all the Governments and parties in those States would admit that. There are climatic and other problems which militate against a change, but it seems to me that there is great potential for the islands to provide a more stable and prosperous economy on which to secure and build their independence.
With the departure of the United Kingdom and its declining personal interest in the islands' future, it seems very important that we should encourage all prospects of the United States taking an interest in providing aid and assistance. It may well be that the United States is sorely in need of a triumph in its foreign policy. I suggest that there would be an easy one if it adopted a better approach towards the Associated States and the former Associated States in the Caribbean. Whether this is done through various banks or regional banks remains to be seen. But I should like to feel that with respect to Dominica and the remaining Associated States, the Government are making every effort to encourage the United States Government to participate closely in the development of a variety of islands which are much closer to the United States than to us.
I repeat my welcome for the order. Approving such orders is a curious parliamentary circumstance. We shall see fewer and fewer of them as time goes on. Therefore, they provide interesting occasions. I welcome the order and thank the Government for the work they have done in bringing it forward.
2.48 p.m.
Mr. Luard: The debate has shown that there is in general a very warm welcome for the independence of Dominica. At most, one or two hon. Members, particularly the hon. Member for Shoreham (Mr. Luce), have raised certain doubts about aspects of the constitution, or questioned whether we could have handled the procedures rather differently.
First, the hon. Gentleman asked whether there was clear evidence that the people of Dominica wanted independence. When the Government party contested the last election in 1975, the seeking of independence was a major plank of its platform. The party won 46 per cent. of the vote. The other party that contested the election did not fight on a policy of opposing independence. Either it did not mention it particularly or it wanted independence on its own terms.
I have said that we ourselves were very much concerned about that question, which is, of course, the key question for the House and this country as a whole in considering whether we should accede to the request to approve an order of this kind. It was for that reason that, when there were difficulties—not, I repeat, on the principle of independence but difficulties about certain constitutional questions, some of which were not finally resolved at the constitutional conference —we came to a conclusion on the best way to satisfy ourselves that the people in general at least wanted independence, and roughly on the terms that were being suggested. Mr. Posnett was accordingly sent out and he undertook this careful and detailed report, reaching the conclusion which I read out earlier. He came very definitely to the conclusion that the majority of the people did want independence and there was no major movement against it, though there might be doubts on particular points.
I come now to some of the questions raised on those points. The hon. Member for Shoreham asked why we had not used the provisions of section 10(1) of the West Indies Act under which we could have demanded a referendum, with a two-thirds majority. The first point to he made is that to have demanded that would have been in some sense discriminatory against Dominica and other Associated States. This is not a test

1097
that we have ever expected in the case of other dependent territories or colonies. If the Government of the day wish independence and if the general process of constitutional advance has reached a stage where independence is required, we introduce legislation in this country.
I explained earlier why certain alternatives were put in section 10 of the West Indies Act. Those alternatives take account of the possibility of a unilateral move by one side or the other. If the Government of a territory had themselves unilaterally wanted independence, possibly against the wish of the British Government, we could legitimately have required that Government to show through a referendum and a two-thirds majority that they had the overwhelming consent of the people.
That was not the case with Dominica. Therefore, the Dominican Government having requested independence, we had to consider that request. One of the major considerations for us was whether that request had general support within the community. Indeed, it might have been much more difficult for us. There might have been a 50–50 split among the population, or the Opposition party might have been totally opposed even to the principle of independence. But that was not the case in Dominica. None the less, we felt that we should undertake a fairly careful survey of the wishes of the people.
Mr. Posnett reached the conclusion which I read out. In those circumstances, I feel that both the Government and this House are quite justified in proceeding with this order under section 10(2) of the West Indies Act.
I should point out here that it would have been difficult to have a referendum on the specific issues which have been in dispute, which are on particular constitutional questions. Most of them have been resolved, and I think it important to emphasise this. In many cases they have been resolved because the Government of the day have made concessions and accepted the view of the Opposition. But even in the few remaining cases it would have been very difficult to put the points to a referendum.
Many of us would think it not very satisfactory to try to resolve constitu-
1098
tional questions by way of a referendum, and in any case it would certainly not have resolved the issue whether the people of Dominica wanted a monarchy or a republic. It would have been a very complicated situation if we had different answers on various constitutional points and then had to decide whether we wanted to give independence on that basis. It was more sensible to take the course which we took and try to resolve the differences between the major parties on each of these issues. To a considerable extent, we have succeeded in doing that, as I shall try to show in a moment.
The hon. Gentleman raised two particular points which, I agree, have been the two most important single issues in the discussions that we have undertaken. One concerned the method for electing or choosing the president. The hon. Gentleman mentioned both the powers and the method of election. I think it right to say that there has been little difference between the parties on the powers of the president. Both agreed that they did not want a purely constitutional president who would have no powers or effective influence and who would merely be a figurehead.
The difference was about the way in which the president should be chosen or elected. There was a difference in that the Opposition asked that the president should be elected—in the way that the President of the United States is elected. This was not welcome to the Governmen and I can entirely understand their views on this. If that had had been accepted, one would have established a situation in which the Government and Prime Minister of the day might find themselves in continual conflict with the president. A president elected by the normal election process would probably have been a political figure, with strong political views of his or her own, and this could have been a built-in recipe for confrontation and deadlock between the Government of the day and the president.
For those reasons, as I understand it, the Government were unwilling to accept that course and proposed instead that the president should be a person of stature, someone respected by both major parties, who would have a constitutional role to play, but of an entirely independent kind.

1099
They therefore proposed a system which, I think, is by no means unfair—that the president should be agreed, if possible, by consultation between the two major parties. Most of us would agree that, if that could be arranged, that would be he ideal way in which the president should be chosen. He would be above politics and acceptable at least to the two major parties within the system.
The difficulty about that method is that one or other of the parties—perhaps the Opposition—could deliberately refuse to agree to any name that was put forward. On this issue also I should say that the Government have been very conciliatory over the past year or so in virually telling the Leader of the Opposition that she could name almost anyone she liked and they would consider whether that name was acceptable to them. I believe that the Leader of the Opposition has produced only one name so far—the name of a member of her own party.
One can see from that experience that there are many possible difficulties which can occur through a process of consultation of that kind. Therefore, the Government proposed, and it is provided in the constitution, that in that situation it would be for the Assembly itself to elect the president. One still sincerely hopes that it will elect a non-party person of stature who will win and retain the respect of both the major parties. I cannot say that the difference was entirely resolved, but I think that Miss Charles, the Leader of the Opposition, is now at least reconciled to the situation on that question.
The other point which was raised by the hon. Member for Shoreham was precisely the point about which Miss Charles was most concerned. She has reiterated her concern about this in the last few weeks, and it has been mentioned in correspondence with Members of the House and others in this country. I refer to the question of the Electoral Commission. One can understand the concern of any opposition party about the way in which the Electoral Commission is composed. It can be very important for the future of the country. I am afraid one has a situation in the Caribbean in which many opposition parties are suspicious—rightly or wrongly, and, I think, often wrongly—of the intentions of the Government of the day. Therefore, they are particularly concerned that there shall
1100
be provisions in the constitution which will absolutely satisfy them that subsequent elections will be conducted in a fully fair way and not to their disadvantage. Therefore, it is entirely understandable that the Leader of the Opposition, Miss Charles, should have wanted to be assured that the Electoral Commission would operate fairly, impartially and effectively.
Originally, both parties agreed that there should be three members of the Electoral Commission, with one to be appointed by the President. The other two, in the eyes of Miss Charles, should be appointed by each of the two opposition parties, so that she could be assured that at least one would be sympathetic to her point of view and could raise objections about alleged irregularities in the election process. Mr. John, the Premier, had wanted a system under which all these people would be expected to be impartial people rather than party representatives and they would be mutually agreed, or if necessary appointed by the President.
That was the major issue which Miss Charles has recently been raising. I am happy to be able to tell the House that that point has now been agreed to the mutual satisfaction of the parties and that once again the Prime Minister and the governing party have virtually accepted the Opposition's view. I heard only today that it has now been agreed that there will be an Electoral Commission with four members, with two appointed by each party. If the Opposition party were simply to refuse to nominate members at all as a deliberate obstructive strategy, which I hope would not happen, it would then be possible for members to be appointed by some other means, but still with the hope in the final outcome of an impartial commission which could be relied on and trusted to ensure that the election took place fairly.
Mr. Luce: I am grateful for the Minister's full answers to my questions, and I welcome the fact that further progress has been made on these two outstanding points. It is a tribute to him, as my hon. Friend the Member for Chichester (Mr. Nelson) said, as well to the Dominican Government and Miss Charles that a major reconciliation has been achieved. I assume that the final constitution is now

1101
in draft form and that if there are further differences of opinion, there is no further scope for reconciliation—or is there a further period for discussion?
Mr. Luard: There is a draft constitution—I have a copy here—but it is still capable of amendment in small respects. That will be the case for the next two or three weeks at least. That is why this change can be incorporated in the constitution now.
My hon. Friend the Member for South Shields (Mr. Blenkinsop) has the advantage over me and most other hon. Members of actually having visited Dominica. His words, based on his experience, will be particularly welcome to its Government and people. My hon. Friend the Member for Brent, South (Mr. Pavitt) also has a special kind of experience because many members of the Dominican community live in his constituency. I know his long-standing interest in and concern with this question.
Mr. Pavitt: Will my hon. Friend give an assurance that in these negotiations efforts will be made adequately to safeguard the rights of the people who now live for most of their time in this country when the new constitution comes into being?
Mr. Luard: Yes, I can give that assurance. Their situation will depend very much on their own will. If they wish to go back, and retain their citizenship, they will enjoy all the rights of other people in Dominica. Like others in the Caribbean, they may intend to settle here more permanently. As is the case with other newly—independent territories, they will have to make a choice about their citizenship. The residents of Dominica will become citizens of the new State and cease to be citizens of the United Kingdom and Colonies, as always happens on independence.
I thank the hon. Member for Chichester for his kind remarks about our role, though it has been much more the work of the Minister of State than of me. I was involved in the constitutional conference and I have been consulted by my hon. Friend from time to time on the basis of that experience, but he has had much more of the burden of the negotiations.
1102
I agree that these are difficult negotiations and that we have an important role to play, for the reason that I gave just now—that there is often some mistrust between the two main political parties in territories of this kind. One cannot be surprised that the Opposition party wants to be satisfied that the country will go to independence under constitutional arrangements which will safeguard their position in future and ensure a free, fair and reasonable democratic system. They may sometimes make exaggerated demands because of that fear.
The Government party in Dominica was very conciliatory about many of the points made. I have here a whole list of matters on which the Government gave way to the views of the Opposition. It includes some of the most important questions. On the question of a monarchy or a republic, the Government thought that Dominica should be made a monarchy but gave way to the view of the Opposition that it should become a republic. Similarly, they accepted the Opposition's views about the system of elections for senators, about the way in which the referendum could be conducted on constitutional changes, with only a simple majority, and the matter I have just mentioned concerning the way in which an electoral commission should be set up.
Therefore, the Government in Dominica have been fairly conciliatory, but I agree with the hon. Gentleman that the British Government will often have an important role to play and will no doubt have similar negotiations with other Associated States which want to move towards independence. We must do what we can to reconcile the view of both parties and to ensure that these States move towards independence on the basis of a free and fair constitution.
Regarding the hon. Gentleman's question about aid, we are to have discussions with the Government of Dominica about the level and type of aid that will be granted after independence. Last year we spent about £1½ million, which included £660,000 on project aid, £650,000 on budgetary aid and £135,000 on technical co-operation. Dominica also benefits from British aid provided on a regional basis, especially the financial and technical

1103
support that we provide for the Windward Islands banana development programme. Dominica also benefits from other regional activities such as the Caribbean Development Bank, to which we contribute, and the European Development Fund. She will benefit from the Lomé agrement to which we expect her to accede. She receives assistance from Canada and she will no doubt apply for, and probably receive, aid from the United States when she becomes independent.
My right hon. Friend the Minister of State for Overseas Development has been having discussions within the last week or so on the whole question of regional aid in the Caribbean. Most speakers in this debate have expressed the hope that there will be better regional arrangements in all matters of this kind.
I hope that I have now answered the main points that were raised in the debate. I repeat what I said at the beginning: it is gratifying that there is a general welcome in the House for this important step forward and I am sure that not only the House but people in the country in general join in wishing the best possible success and happiness to the people of Dominica in the future.
Question put and agreed to.
Resolved,
That the draft Dominica Termination of Association Order 1978, which was laid before this House on 10th July, be approved.

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

STATUTE LAW (REPEALS) BILL [Lords]
Order for Second Reading read.
3.10 p.m.
The Parliamentary Secretary to the Law Officers' Department (Mr. Arthur Davidson): I beg to move, That the Bill be now read a Second time.
I am happy to ask the House to give a Second Reading to a Bill which I am sure will be widely welcomed by the whole House. It gives effect to the ninth joint report of the Law Commission and the Scottish Law Commission on statute law revision. It continues the programme of consolidation and revision undertaken by the commissions with a view to the general simplification and modernisation of the law.
I am delighted to inform the House that the Bill repeals no fewer than 222 whole Acts of Parliament and parts of 136 Acts and of one Church measure, on the best of all possible grounds—that they are no longer of any practical use. The statutes affected, set out in schedule 1, date from as far back as 1421 and come up to date to as recently as 1977.
A glance through the Bill will indicate that many statutes of immense historical significance are being repealed. Amongst the repeals is that of an Act called the Ministers of the Crown (Parliamentary Secretaries) Act 1960. At first glance, I thought with horror that this might mean repealing Parliamentary Secretaries on the ground that they are obsolete or of no further practical use. I am happy to say that that is not the case. If it was, there would be no one to move these difficult Bills in the House.
Amongst the measures repealed is an Act of 1535. The repeal remedies an injustice done to Sir Thomas More which took away a conveyance on the ground that he had obtained his land in Chelsea by fraudulent means. That measure seems to suggest that in the course of the reign of King Henry VIII there was in existence a "dirty tricks department", and a very effective one at that. It is good that that injustice should be remedied 500 years after the birth of a very distinguished Lord Chancellor.
I am sure that the Bill will be generally welcomed. It is another step on the road to decluttering and decongesting the

1105
statute book, and I am sure that for that reason it will receive universal welcome in the House.
Question put and agreed to.
Bill accordingly read a Second time,.
Bill committed to a Committee of the whole House.—[Mr. Graham.]
Bill immediately considered in Committee; reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
Bill accordingly read the Third time and passed, without amendment.

STATUTORY INSTRUMENTS, &C.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): In order to save the time of the House, I propose to put together the Questions on the six motions to approve statutory instruments.
Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.

NORTHERN IRELAND
That the draft Roads and Road Traffic (Northern Ireland) Order 1978, which was laid before this House on 19th June, be approved.
LAND DRAINAGE (SCOTLAND)
That the draft Land Drainage (Scotland) Amendment Order 1978, which was laid before this House on 22nd June, be approved.
HOUSING (SCOTLAND)
That the draft Housing (Percentage of Approved Expense for Improvement Grants) (Scotland) Order 1978, which was laid before this House on 28th June, be approved.

EUROPEAN COMMUNITIES
That the draft European Communities (Definition of Treaties) (No. 5) (Joint European Torus) Order 1978, whch was laid before this House on 3rd July, be approved.
That the draft European Communities (Privileges of the Joint European Torus) Order 1978, which was laid before this House on 3rd July, be approved.

WEIGHTS AND MEASURES
That the draft Weights and Measures Act 1963 (Various Goods) (Termination of Imperial Quantities) Order 1978, which was laid before this House on 28th June, be approved.—[Mr. Graham.]
Question agreed to.

CUSTOMS AND EXCISE (IMPORT PROCEDURE)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Graham.]
3.15 p.m.
Mr. Julian Ridsdale: I welcome this opportunity, Mr. Deputy Speaker, to discuss the new customs clearance procedure which was adopted by Her Majesty's Customs and Excise on 1st April—perhaps a significant day—and also how glad I am to have my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) to join me in the debate, because the new customs procedure has been causing trouble not only to Harwich but also to Dover.
At the outset of this short debate, let me say at once that my criticism is directed entirely at the system and not at the stiff of Customs and Excise. The system to which I refer is a computer system which is operated manually at the moment, and which later will be operated mechanically. But at the present time it is causing a great deal of trouble.
I do not wish to direct criticism at the staff of Customs and Excise, as I have already said, because I know that they are doing the job as well as they have always done it, but the present system has brought about some unacceptable problems. There were brought to my notice soon after the scheme began in April, and then very much more forcefully in June. Since then I have drawn these problems to the Government's attention, as has my hon. and learned Friend, because we have been very concerned about the extra costs and about many of the other difficulties which have resulted in holding up trade at the ports. It is only now that I have been able to succeed in getting this adjournment debate, although I have been trying since the middle of June.
Before the scheme was introduced, it was hoped that it would lead to a general improvement in procedure and clearance time. To date, the scheme has certainly not done this. Some growing pains were expected, but they seem to be continuing. In June I received reports that the scheme was too heavily oriented towards the satisfaction of documentary requirements and collecting the associated trade statistics and not nearly enough to the free

1107
movement of goods and the meeting of commercial wishes.
The criticisms of the scheme—which I say again are not criticisms of persons—are, first, that it is too slow to meet reasonable commercial requirements. Indeed, when I went to the port of Harwich and talked to the wharfingers and the port users, they were wholeheartedly condemning the lack of understanding of their commercial requirements, which was putting extra costs on them. They were unanimous in saying that the machinery does not function effectively. They told me that it was cumbersome in operation and lacked resilience to deal effectively with varying traffic volumes and inquiries. Entries do not appear to be taken in logical order at all times. Clearance can be obtained for today's entries before yesterday's. Prior to the introduction of the scheme, assurances were given that there would be a strict rotation.
It has been very irritating to the wharfingers. The criticisms that I am putting forward are not simply from one or two but from the general body of people who work there and are the users of the port of Harwich. Clearance times have been erratic and inconsistent, varying from two hours, which is an acceptable time, to 36 hours, which is certainly not acceptable. Obviously, a 36-hour wait for clearance causes extra cost not only to the port users but in respect of the goods themselves in coming through. As I say, it is resulting in increased costs which would be more acceptable if there were greater productivity outside free hours and at weekends.
In June, a port user told me "This is a difficult point to quantify, but the impression is of a lack of fully trained staff, insufficient staff and, therefore, insufficient supervision." The difficulty is the lack of trained staff for the new manually operated computer. It is not that there is not the staff there already. They are doing jobs which they were doing better before. It seems that the mechanical working of the computer has not been as good as it might have been.
The results for one dock are summed up by the director in charge who said that there were
"varied clearance levels which at worst are inadequate to support our seven-day operations."
1108
That was in June. This week, I received a report from the same director that Continental firms are threatening to take away their business from Harwich to other ports which take only four hours whereas in Harwich it has got around that the time taken is two days. This is very serious, of course. That is the impression which has been given because of the recent problems. I hope that the Financial Secretary will be able to allay the impression which has got around and to assure users that the time taken is much less than the reports which I have had.
What is needed is a regular seven-days-a-week customs service. Sometimes I wonder whether the Treasury realises that the customs service at the moment requires a seven-day operation. It is essential to have people clearing goods not on a five-day week, which is usual Government procedure, but on a seven-day week all the way round. I hope that the right hon. Gentleman will be able to give some assurance on this matter.
Business through Harwich is growing all the time. But the port users must keep clearing their goods all the time through a seven-day week. Continental firms say "Now that your country is in the Common Market, surely you can improve on the service and make it more comparable with what happens on the Continent." Complaints have come from Denmark. Apparently the Danish system is based on clearing goods to a manifest-type entry on arrival with a period of time allowed to enter goods fully at a later stage. Clearance is effected within minutes rather than hours. With such a system, they simply do not understand our problems when we are full members of the EEC. There is no doubt that we have to do all that we can to look at this manual system and to improve its efficiency.
I welcome the fact that last week there was a local meeting between customs officials and representatives of the wharfingers and the Port Users' Association. I hope that this means that at last there is a breakthrough to solving these problems. I seem to get assurances from the Government, and the problems seem to be solved, but then they occur again from time to time. That is why I thought that it was vital to have this debate in order to discuss these matters

1109
in public so that people might realise what was happening.
I hope that the Financial Secretary will be able to allay the serious fears which have arisen and give the port users and wharfingers some assurance that their problems will be dealt with speedily and satisfactorily. In this connection, I especially welcome the presence of my hon. and learned Friend the Member for Dover and Deal, because the problems do not exist only at Harwich. I underline again that I am not criticising individual customs officials. I am criticising the system which has brought these problems to Harwich as well as to Dover, which probably are our two busiest ports. If we wish to get trade going, and to keep down costs, having introduced these computer-type systems, we must see that they operate efficiently and much more quickly than we are doing at the moment.
3.25 p.m.
Mr. Peter Rees: I congratulate my hon. Friend the Member for Harwich (Mr. Ridsdale) on selecting such an important topic for debate, and I thank him for allowing me to intervene briefly.
This scheme affects the port of Dover as acutely as the port of Harwich. There may be friendly rivalry between the two ports, but they are united in their concern about the implementation of the new scheme of customs clearance. Whatever theoretical advantages it may have, it has not been designed with the problems in mind of a port that is open for 24 hours a day. This is particularly so in the case of ports such as Dover and Harwich which are dependent on roll-on, roll-off traffic.
I do not know whose fertile mind was responsible for devising this scheme, but I do not think that sufficient thought and preparation were given to it before it was introduced. Nor do I believe that there are sufficient numbers of trained customs officers available to implement it properly. I emphasise that in my general observations I do not propose to direct criticisms at the individual service of individual officers.
As a result of the lack of forethought and preparation, a great strain has been imposed on the import agencies in Dover
1110
and on the drivers of roll-on, roll-off vehicles. I have met representatives of the import agencies in their offices and in the Eastern Docks, and I have also met the drivers in the docks and in their canteens. Those who operate the port are under strain, and although they are too loyal to say so in public, I believe that the customs officers are, too.
My hon. Friend the Member for Harwich has explained lucidly the consequences of the scheme. When documents get fed into the system it is difficult to trace them through. Vehicles get delayed by up to 36 hours. I have been under great pressure to submit a range of individual cases to the Ombudsman for his consideration. I hope that the Financial Secretary's reply to this debate today will make that unnecessary.
Beyond that I do not think that the system was designed with sufficient thought for perishable goods, particularly wine. There has been acute concern about this in East Kent. I have been in touch with the Financial Secretary on this matter for some time and I do not think it necessary for me to run over the various points again. Instead I shall just remind him that I have recently sent him eight practical suggestions for improving the scheme. I hope that he has had time to consider them and that he will give a definitive and favourable answer on these points. It is extremely important that these suggestions should be adopted and implemented before October.
The consequences of this scheme are that a great deal of capital equipment, in the form of expensive lorries, has been tied down. As a result the import costs are added to, and the ultimate cost is passed on to the consumer. We are talking about a definite and perceptible increase in the costs of importation.
I hope that the Financial Secretary will recognise that there is a very distinct problem for ports such as Dover and Harwich. I do not want to open up a gulf between our ports and the deep-water ports but our problems are different from theirs. Our problems are more akin to those of airports—of Heathrow and Gatwick—which have 24-hour import procedures.
I do not expect a complete answer today. We have provided constructive

1111
criticisms to the Financial Secretary and I hope that he will adopt most of them, if not all, and implement them in the near future. If he does not, there is a risk that the port of Dover will be clogged with vehicles and that delays will prove intolerable. This will mean a diversion of traffic to other ports which are not similarly disadvantaged.
3.29 p.m.
The Financial Secretary to the Treasury (Mr. Robert Sheldon): Both the hon. Member for Harwich (Mr. Ridsdale) and the hon. and learned Member for Dover and Deal (Mr. Rees) repeatedly mentioned that the criticism which they had to make was of the system itself and not of the customs officers. I am grateful for their comments on the ability and work of the customs officers, with whom they have had to deal as, indeed, I have had to deal.
The hon. and learned Member for Dover and Deal pointed out that there were distinct problems for the two ports of Harwich and Dover which make them a little different from some of the others. I fully agree with that. I have regarded some of the particular problems that have come on to my desk in that light. On this occasion, as on any other, I am happy to take note of the constructive criticism of the hon. and learned Member for Dover and Deal, and the eight points contained in his letter of 18th July. I have examined that letter and I have some preliminary thoughts on it, although I cannot give my final conclusions at this stage. I welcome his understanding of the need for a closer investigation than is possible between the time when he wrote the letter and this debate. I accept what he said in the letter, that it is in everyone's interests that the new procedure should work as smoothly as possibly. All of us in this House are at one on this matter, as we are on most of the matters with which we are dealing in this debate.
The Customs and Excise introduced the new procedure on 1st April this year. That new procedure brought in computer processing. Eventually this will cover all major ports. It was developed over quite a lengthy period—about three years£and a number of initial tests took place in a number of ports throughout the country.
1112
As the hon. Member for Harwich mentioned, there was wide consultation before the introduction of the system. Indeed these consultations are still going on. The reason for the introduction of the new system was that Customs and Excise should be able to identify those importations which offer the greatest revenue risk or the risk of evasion of other controls. In this way customers can concentrate its checks accordingly in order to give an easier passage to those importations which do not have the same level of risk. These import procedures are carried out at each port and are known as the "entry processing unit", the entry being the customs declaration form.
In coming to accept this system, Customs and Excise has had to change the procedures, and it was this change which obviously created particular problems. Eventually we expect, and in many cases we now obtain, a much better overall service to the trade. There is, of course, the advantage to the Department of the reduction in the cost of operation of an increasingly growing traffic. Standardisation is an important feature of the system. We hope that it will lead to a position where no distortion of trade will arise as a result of differences in the various procedures of Customs and Excise throughout the country.
But the aim must be to devise a standardised system which will produce a satisfactory service at the busiest roll-on, roll-off ports such as Dover and Harwich. Customs and Excise has been in close touch with the port authorities and has had a great deal of assistance both centrally and locally. I also welcome the views that have been put from so many of these quarters.
There are a number of particular difficulties in Harwich and Dover in relation to this roll-on, roll-off traffic—for example, the groupage containers and the question of perishables. The clearance time for such traffic has been longer than I would wish to see and, indeed, Customs and Excise and the trade would wish to see. I know the effect that this can have on costs. As a result, Customs and Excise places a high priority on trying to achieve a rapid clearance of these goods. As both hon. Gentlemen know, a number of meetings have been held on this matter. We are looking urgently at certain areas of particular difficulty.

1113
I mentioned perishables, because obviously a rapid treatment is essential. Customs and Excise has procedures whereby urgent entries can be flagged by the agents so that they receive priority. This is usually quite effective, although its success obviously depends on its not being overused. The number of instances of priority must be a relatively small proportion of the whole, otherwise priority does not have much meaning.
We have introduced at Dover a system of colour tagging for perishable goods and this is leading to improved clearance times. Changes within the entry processing unite at Harwich have led to generally acceptable clearance times. The customs would like to see some goods cleared in less than three hours—preferably in less than two hours. We hope to meet these targets, even though the number of controls to which some perishables are subject can make entry processing rather complex.
The other main area where delays have occurred has been in groupage containers. These carry a number of consignments destined for different importers. The responsible agent may choose whether the examination is to be carried out at the port of importation or at an inland clearance port. A random sample of entries is chosen for physical examination and the results of the examination will be analysed so that, in due course, the customs will be able to decide where controls can be eased. Where a large number of consignments are carried in one container and each consignment is the subject of an entry, the proportion of containers selected for examination will be greater than average.
The random selection, however, represents only a part of the entries selected for examination, and discretion is used in exercising the further checks in order to minimise the number of groupage containers selected for examination. We are looking at other ways of varying the clearance methods of containers.
Pre-entry is one of the easiest ways of speeding up clearance. Agents are allowed to present entries up to four days before the arrival of the goods. That is the definition of pre-entry. As much of the processing of the documents as possible can be done in advance before the
1114
goods arrive. The customs recognise that in some ports there was a loss of confidence in this facility just after the new procedures were introduced when it seemed that pre-entry had little effect on clearance times. A number of people felt that they were doing this work for little, if any, benefit. Agents were concerned that it increased the risk of documents going astray. They felt that they got no benefit from the system.
The customs are anxious to encourage the use of pre-entry which makes it possible to get more work done during the daylight hours rather than at night when the goods may come in. It is easy for the customs to organise and it can result in a rapid availability of the necessary clearance. The need to provide an efficient service round the clock at Dover, Harwich and other ports is fully recognised, but it makes sense to do at night only those jobs that have to be done then. It is more suitable for us to use our staff during the day and of course they prefer to work during the day.
One modification that we have in mind in order to achieve this result is to encourage agents to pre-enter and for us to return the pre-entries after the initial processing so that the agents can attach the related documents when they arrive and re-present a complete package. The customs are also looking at ways of giving priority to the final processing of pre-entered consignments. I am pleased to say that the proportion of pre-entries at Dover has now returned to much nearer the level that existed before 1st April.
One of the problems that caused some annoyance and grievance was the occasional tendency for some documents to go astray in the entry processing unit. This happened largely because staff were unfamiliar with the system. As experience has been gained, the problem has diminished and the customs have taken steps to ensure that missing documents are quickly found by allocating staff specifically to this duty. As the hon. Member for Harwich mentioned, there were certain teething troubles, but I hope that this problem will disappear fairly rapidly.
Lost or misplaced documents lead to lengthy clearance times. This can be particularly frustrating for agents who, quite rightly, want to know what has happened to their entries. The time taken to clear

1115
an entry after the arrival of goods can be reduced if agencies pre-enter, or if the goods are of the type requiring priority treatment. Nevertheless, the clearance time for a particular consignment will depend on a number of factors—such as the kind of control, the correctness of the entry—which is most important because a number of the entries are filled in incorrectly and this causes great problems—and the need for physical examination.
The rapid clearance of any one item provides no certainty of rapid clearance of a similar item. The introduction of a computer will provide greater certainty about clearance times, as it will be easier to discover how a particular entry is being processed. Meanwhile, the customs authorities are considering whether changes to the entry processing unit organisation could be made to lead to more predictable clearance times. The customs authorities have adjusted their procedures in a number of ways, and there will be further modifications in the light of circumstances and experience.
There are a number of causes of delay over which the customs authorities have no control. As an example, if entries are not presented soon after a ship has berthed some apparent delay in clearance is inevitable, no matter how quickly the entry is dealt with. When goods have to be examined, considerable time can sometimes pass before they are presented to the customs officer. At Dover in particular delay can arise because of general congestion in the port. Such congestion is caused not only by the constraints within the port but by delays in removing vehicles after customs clearance.
The customs authorities are confident that they are able to achieve a satisfactory performance within a reasonable time scale. The new procedures which are somewhat slow, as I admit, are settling down and the customs authorities are closely monitoring what is happening in all ports. The procedures introduced on
1116
1st April make way for the phasing-in of a computer system in the major ports. Dover, for example, will be linked to this computer in October this year and Harwich in November.
The introduction of advanced data processing is generally welcomed by the trade and port authorities and will further reduce clearance times. Improvements to the system are being prepared for the future, and it is eventually intended that traders should be able to key in entry data directly to the computer and to interrogate the computer to know what has happened to the entry, as now happens in the system which has been operating successfully at Heathrow. Full trader input —the ability of each trader to make his own input to the computer—will not be available for some time, but we are currently examining ways of offering limited access by the trader to the computer soon after this programme has been completed at major ports in April 1979.
I appreciate the concern which has been voiced about the new procedures. I welcome the eight points put to me by the hon. and learned Member for Dover and Deal. I could give him a brief answer now, but I think it would be better for me to write to him in detail after further examination.
I understand the interest and involvement of both hon Gentlemen in this subject. I assure them that the customs authorities are urgently examining the specific difficulties in some ports and are co-operating with the port users and trade organisations in seeking to overcome them. Both hon. Gentlemen have carried out a service to the House in bringing to public attention some of the aspects of this problem. I try to make myself as fully acquainted as I can with this problem, and I hope that we shall be able to improve on the procedures.
Question put and agreed to.
Adjourned accordingly at sixteen minutes to Four o'clock.