Commons Sitting of 12 February 1979

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr.SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  ORAL ANSWERS TO QUESTIONS
  Mr. Speaker: It would be a help if we could have even greater brevity than Welsh Members normally show.
  WALES

    National Coal Board (Northop)
    Sir Anthony Meyerasked the Secretary of State for Wales what representations he has received from individuals and organisations concerning the operations which the National Coal Board proposes to carry out at Northop.
    The Under-Secretary of State for Wales (Mr. Alec Jones): My right hon. and learned Friend has received a total of five letters over the past four years.
    Sir A. Meyer: Is the hon. Gentleman aware of the great anxiety felt by people living in the village of Northop that the present planning permission may be taken to cover permission to start a mine in the immediate vicinity of the village, and that they will have no effective way of protesting against it?
    Mr. Alec Jones: I understand the great anxiety to which the hon. Gentleman refers but one has to try to strike a balance between the need to recover about 700,000 tons of steam coal, providing 50 additional jobs, and the environmental impact. The responsibility is principally that of my right hon. Friend the Secretary of State for Energy. If there were statutory objections, a public inquiry would of course be held.

    Liquor Licensing Laws
    Mr. Knoxasked the Secretary of State for Wales what are his statutory powers in relation to the liquor licensing laws in Wales.
    The Under-Secretary of State for Wales (Mr. Barry Jones): My right hon. and learned Friend has no such powers.
    Mr. Knox: I accept that, but the Secretary of State must have an interest in this question. Does the Minister agree that great benefits would accrue to the people of Wales, and indeed to tourists in Wales, if the recommendations of the Erroll report on liquor licensing were implemented? Will the hon. Gentleman try to persuade the Home Secretary to introduce such legislation?
    Mr. Barry Jones: The hon. Gentleman has raised a very sensitive subject. This is a matter for my right hon. Friend the Home Secretary.

    Public Transport
    Mr. Ronald Atkinsasked the Secretary of State for Wales whether he is satisfied with the state of public transport in Wales; and if he will make a statement.
    Mr. Barry Jones: Like all hon. Members, my right hon. and learned Friend and I would like to see improvements. But we are satisfied that, within the resources available, a good service is being provided by the organisations concerned, including the county councils, which have a statutory duty to ensure that an adequate public transport system exists within their areas.
    Mr. Atkins: Can my hon. Friend assure us that the central Wales line, the Cambrian coast line and the Shrewsbury-Cardiff lines will be kept open? If they are to be kept open, will my hon. Friend prevent them dying through lack of maintenance?
    Mr. Barry Jones: I am aware that my hon. Friend feels very deeply about this matter. British Rail is responsible for operating the passenager rail network. There are no proposals to close any of the passenger lines in Wales.
    Mr. Gwynfor Evans: Is the hon. Gentleman aware of the growing unhappiness of old-age pensioners about their

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    ability to travel by public transport when they have no private transport available? In many places in my constituency they can do no more than go to the chemist four or five times a year because that uses up their allocation. Can this matter be reconsidered?
    Mr. Barry Jones: This is a real problem in many parts of Wales. I should stress that the Government have already made clear their desire that there should be an off-peak half-fare concession for pensioners as a standard on local bus services. At the same time, the level of concession is a matter for the local authorities, which receive financial assistance from the rate support grant.
    Mr. Anderson: Is not one of the most salient factors of our rail system in Wales that not one mile of rail is electrified? In view of present uncertainties about the future availability of oil, will the Welsh Office press, at the highest level, for speeding up electrification in the Principality?
    Mr. Barry Jones: The future electrifiction of the rail network is primarily a matter for my right hon. Friend the Secretary of State for Transport. He is reviewing the situation with British Rail.

    Advance Factories
    Mr. Ioan Evansasked the Secretary of State for Wales how many advance factories were built in 1978; and how many are being proposed for the future.
    The Secretary of State for Wales (Mr. John Morris): Sixty two advance factories were completed by the Welsh Development Agency and the Development Board for Rural Wales in 1978. At 31 December 1978 a further 141 units were under construction. Work is already scheduled to start during 1979 on another 151 units. Last week I announced a new programme of factories to be built by the DBRW. I hope shortly to approve a further advance factory programme by the WDA.
    Mr. Evans: I thank my right hon. and learned Friend for that encouraging reply. Will he keep up the programme of building advance factories to meet future demands of industrial developers? Will he have special regard to the general requirements of the valleys of South Wales—the mouths, the heads and
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    the hearts of the valleys of South Wales —and in particular see that advance factories go up again in the Hirwaun industrial estate and the Aberamman lands estate, which is being developed by the WDA?
    Mr. Morris: Certainly, the needs of the valleys were very much in mind in all the allocations that have been made. As regards my hon. Friend's special plea for his area, he will know that nine units are under construction in the Cynon Valley travel-to-work area, and a further four units are in the pipeline. I shall bear in mind not only my hon. Friend's needs but those of the valleys all over Wales in a future allocation that I hope to make shortly.
    Mr. Wigley: Is the Secretary of State aware that many factories announced 18 months ago for Gwynedd have not yet been started and do not appear to be ready to be started for several months? Is he satisfied that there is a sufficient controlling mechanism over the WDA to ensure that the programmes, once announced, are carried out?
    Mr. Morris: I know the hon. Gentleman's concern, which I share. I discussed the matter with the chairman of the WDA only in the past few weeks. I am glad to say that by far the greater part of the factories programme for Gwynedd will be completed before the end of 1979. Already this year eight units at Holyhead have been started. There have been substantial difficulties in the area because of the difficulty of acquiring suitable land.
    Mr. Kinnock: Whilst I welcome the efforts of my right hon. and learned Friend and his Department and of the WDA to make provision for advance factories in Wales, can he tell me, in the interests of Wales, whether there is any material evidence to suggest that following the setting up of the Welsh Assembly there would be "better employment opportunities for Wales", in the words of the chairman of the "Yes for Wales" campaign?
    Mr. Morris: Matters for the general economy will remain at Westminster and will be the responsibility of the Secretary of State. That is made abundantly clear. But I very much hope that within its block grant the Assembly will so organise

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    itself as to ensure that there will be from that quarter assistance to develop the economy generally as regards housing, roads and matters ancillary to the development of the economy as a whole.
    Mr. Wyn Roberts: Can the right hon. and learned Gentleman confirm or deny the report in Saturday's edition of the Western Mail that the Development Board for Rural Wales has no more advance factories to let? Can he say whether the programme of advance factory building is running on time?
    Mr. Morris: I am glad to see that the hon. Gentleman shares my interest in the DBRW. As I was announcing and building advance factories over the years, the hon. Gentleman and others were criticising me for building factories and not being able to let them immediately. The DBRW was enormously successful in letting a vast number of advance factories last year. That is why, with that confidence, and knowing that my judgment was justified, I was able to announce a new tranche in excess of 24 factories. I announced a new programme of advance factories for Mid-Wales in the past fortnight, as the hon. Gentleman would know if only he had watched the press.
    Mr. Abse: With reference to his reply to my hon. Friend the Member for Bedwellty (Mr. Kinnock), does my right hon. and learned Friend agree that not one penny more will be given under the block grant to the Welsh Development Agency to create one job? Therefore, why does he not deny the spurious claims being made by the organisation that he supports?
    What criticism is my right hon. Friend making of the WDA now, when he speaks of greater efficiency in the disposal of its funds? Is he unable to control or direct the WDA? Is he asking, as usual, for thousands more new civil servants to come into existence because he goes around Wales claiming that he cannot do his own job and control the WDA?
    Mr.Morris: As my hon. Friend knows, I am the last person to claim that I am not able to do my job. I have never suggested that there would be any excess money as a result of the Assembly. If he would do me the courtesy of listening to what I have to say, my hon. Friend would know that what I said was that
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    the economy would be, and would remain, a matter for the Secretary of State and the central Government agencies—that is, the other Secretaries of State. But other matters which appertain to the economy, and are ancillary to it, such as housing, the building of roads and good hospitals, will be for the Assembly, and I hope that in that way it will help the economy.
    It is not for me to deny or support everything that is said in the campaign. I have made my position perfectly clear from the start, although my hon. Friend is trying to misquote what I said quite clearly a few minutes ago.
    Mr. Speaker: We took a long time over that question. We shall have to move faster.

    Education
    Mr. Gerry Fowlerasked the Secretary of State for Wales what is the intended relationship between the proposed Advanced Further Education Council for Wales, the Welsh Assembly, and the Secretary of State; and if he will make a statement.
    Mr. Barry Jones: The Education Bill now before the House provides for the Council to be appointed by the Secretary of State for Wales and to advise and make recommendations to him on the matters specified in the Bill. It also provides for his functions in this respect to be transferred to the Welsh Assembly Upon its establishment.
    Mr. Fowler: Is it not extraordinary that we are proposing to set up another nominated body, even if it be nominated by the Assembly in due course, when we are creating an Assembly partly to get rid of nominated bodies? Would it not be more rational to have no new Council but to give its powers to the Assembly, albeit leaving the Assembly the right to co-opt additional members to its education committee when dealing with advanced further education?
    Mr. Barry Jones: I look forward to hearing my hon. Friend developing his views upstairs in Committee when we reach the appropriate clauses, but I disagree with him. When the education functions in Wales and the Council pass to the Assembly, it will probably be for the better in Wales. I believe that a further education council for Wales will be

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    needed whatever the result of the poll on 1 March.
    Sir Anthony Meyer: As only six people turned up to hear the hon. Gentleman and his right hon. and learned Friend, when they came to Deeside, to explain what devolution would do for Wales, will he return there and explain how a Welsh Assembly will bring education closer to the people than it is now, when the function is exercised by the county councils?
    Mr. Barry Jones: Of course it could bring education closer to the people. If there were elected Assemblymen from various parts of Wales who were looking at the education problems of Wales, there is no doubt in my mind that there would be a better response from the localities to needs in the areas. I understand that when the hon. Gentleman holds his meetings he does not even get six people attending.

    Water Supplies
    Mr. Wigleyasked the Secretary of State for Wales if he is satisfied that there exists generally in Wales a water supply of adequate standard to meet domestic and industrial requirements.
    Mr. Alec Jones: Yes, Sir.
    Mr. Wigley: Is the Minister aware that there is a great body of concern in Wales over the recent announcement by the Welsh Water Authority of a 15 per cent. increase in its charges, when the Government are advocating a 5 per cent. limit on wage increases? In view of this apparent taxation without representation, what do the Government propose to do to secure better control over this type of price increase?
    Mr. Alec Jones: I am not sure what that has to do with the standard of water supply, but I take the hon. Gentleman's point. The responsibility for water charges rests with the water authority. As the hon. Gentleman has probably seen, it has suggested that its percentage increase spread over two years would come within the guidelines. One factor is that last year there was a substantial reduction in water charges in Wales as a direct consequences of the Water Charges Equalisation Act, which we introduced.
    Mr. Cledwyn Hughes: Is my hon. Friend aware that one of the problems
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    that afflict small businesses and the owners of shops is the very high charges in relation to the negligible amount of water that they use? Will he confirm that it is within the power of the Welsh Water Authority to install meters? Would he regard that as a sensible step forward in relation to industrial and commercial premises?
    Mr. Alec Jones: It is certainly within the authority's competence to install meters, but I am not yet convinced that to install a meter for every consumer in Wales would be in the best interest of all consumers. Undoubtedly, some commercial and industrial users which do not have meters now would benefit from their installation.

    Unemployment
    Mr. Wyn Robertsasked the Secretary of State for Wales if he will list the employment exchange areas in Wales where unemployement is above the Welsh national average.
    Mr. John Morris: In January 1979, 18 of the 40 travel-to-work areas in Wales had an unemployment rate above the Welsh average. With permission, I will publish details in the Official Report.
    Mr. Roberts: What prospects of future employment does the Secretary of State hold out for those areas? Will he be the main provider of employment, or will it be provided by the Assembly? Is he aware that there is much confusion in the Welsh mind as to who will be the provider of jobs—the Assembly, as propounded by the "Yes" campaigners, or the right hon. and learned Gentleman, as he puts forward in his own claim?
    Mr. Morris: I am sorry that the hon. Gentleman, who I understood had been following the debates on the Wales Bill, has suddenly become so confused. I regret that. However, one day I shall take him aside and explain to him what has been explained time after time in debate, that matters for the economy remain at Westminster. If he does not know that now, he will never know it.
    Mr. Hooson: Does the Secretary of State agree that the pattern of unemployment tends to show some differences from the past, in that the success of the Development Board for Rural Wales indicates that there is a tendenecy for more

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    and more employers to want to go to rural areas? There is, therefore, a change in the pattern. Does the right hon. and learned Gentleman intend to provide more funds for the Board?
    Mr. Morris: The Board has had an increased amount of funds. It has been exceedingly successful. The fear put into the officials and the board of the DBRW by the Opposition has been a matter of great regret. They have recanted. But it is a deathbed repentence on their part. These important weapons—the WDA and the DBRW—are performing a real and important role in developing the economy of Wales. I give them every support.
    Mr. Kinnock: Whilst totally accepting the view of my right hon. and learned Friend that improvements in the social and transport environment and the infrastructure of Wales will have an impact on the economic prospects of our country, will he say from where, under an Assembly, additional resources could be gained, without loss to those who are still desperately in need, to promote such improvements to a greater extent than he and local authorities try to do now?
    Mr. Morris: I am sure that my hon. Friend followed the discussions in detail. He should know by now that the block grant will be negotiated on, I hope, a basis that will recommend itself to him, namely, the basis of need—need in the past and need in the future. That is the basis of the negotiation. I find it odd that my hon. Friend should be going around Wales saying that there will be a dimininution of £1,000 million in the moneys for Wales.
    Mr. Kinnock: I never said that.
    Mr. Morris: That is my understanding. If my hon. Friend did not say it, all the better.
    No one should be under any misapprehension. The basis of negotiation will be the same—the needs of Wales—but the mechanism will be different. I do not suggest that there will be any extra money. [HON. MEMBERS: "Hear, hear."]—I wish that my hon. Friends who say "Hear, hear" had heard the debates, when we made it abundantly clear, time after time, that negotiations would be on the basis of need. No Socialist in the House would demur from the basis of need as the method of apportionment.
    Mr. Speaker: Order. Hon. Members are taking too long. I am the only person who can say nothing.
    Following is the information:

    January 1979

    Travel-to-Work

    Total Unemployment Rate

    Area

    per cent

    Aberdare

    9·0

    Abertillery

    12·9

    Anglesey

    13·5

    Bargoed

    11·9

    Blaneau Ffestiniog

    13·2

    Caernarvon

    9·7

    Cardigan

    16·7

    Fishguard

    12·5

    Lampeter

    16·0

    Langollen

    8·9

    Milford Haven

    9·8

    Monmouth

    10·2

    Pembroke Dock

    12·3

    Porthmadog

    11·4

    Rhyl

    13·9

    Tenby

    14·7

    Tywyn

    13·7

    Wrexham

    12·9

    (Welsh Average at January 1979=8·6 per cent.)

    General Hospital (Construction)
    Mr. Kinnockasked the Secretary of State for Wales what is the current estimated cost of constructing and commissioning a 300–bed general hospital in Wales.
    Mr. Barry Jones: It varies according to site conditions and other factors but will not be less than £10 million.
    Mr. Kinnock: Is my hon. Friend aware that that would be a small price to pay if such resources could be allocated for bringing much needed relief and a new service to the people of Gwent—specifically, my area of Gwent—and mid-Glamorgan? Does the Minister find it defensible, in those cicumstances, at a time of extremely limited resources, that roughly twice that amount will have to be spent evey year for the maintenance of an Assembly which the people of Wales do not want, whereas they desperately need new hospitals?
    Mr. Barry Jones: I know of my hon. Friend's interest in the district general hospital for his valley. I know that he and others of my hon. Friends will be meeting me about it in the near future. I look forward to a discussion on that issue.
    Yes, I find it defensible. Perhaps my hon. Friend should look at the huge underspend on housing in Wales over

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    the past few years. I should think he would agree that in the Welsh Assembly it might be possible to obtain greater savings so as to build more district hospitals.
    Mr. Grist: Will the Minister explain how the underspend will be remedied under a Welsh Assemby and what the difference will be for the local authorities?
    Mr. Barry Jones: I am not sure that I can say why my hon. Friend needs a hospital in his valley. However, I can say why I think the underspend could be controlled better. If men and women are elected in their constituencies and come to Cardiff specifically with housing in mind, they will take an interest in such a way as to make sure that the technical officers who run the housing programmes do not underspend.
    Mr. Cledwyn Hughes: If there is a "No" vote on 1 March, is there any guarantee that my hon. Friend will get his hospital any sooner?
    Mr. Barry Jones: My right hon. and learned Friend and I know that if by some mischance Opposition Front Bench Members were transferred to the Treasury Bench there would be no prospects of getting such a district hospital.

    Government Expenditure
    Mr. Gristasked the Secretary of State for Wales what proposals he has to increase expenditure on those sectors of the Welsh economy as detailed in table 4.3 of the Government's expenditure plans, Cmnd. Paper No. 7439.
    Mr. Alec Jones: The Government's plans for expenditure are as shown in the table mentioned in the question.
    Mr. Grist: In view of that and previous answers this afternoon, how can the "Yes" campaigners for the Welsh Assembly promise more jobs, better housing and much better health services, all of which involve greater expenditure? Will not that mislead the people of Wales?
    Mr. Alec Jones: I do not know. I have read a good many speeches on both sides in the campaign. I have seen far more fantasies than facts, and a great deal more heat than light. It is certain
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    that within the block grant announced by my right hon. and learned Friend, the Assembly, as an elected body representing men and women from all over Wales, is more likely to accept and fix priorities in keeping with the needs of Wales.
    Mr. Anderson: Is my hon. Friend prepared to act an an umpire between my right hon. and learned Friend the Secretary of State, who said that the block grant would be assessed on the same basis, as at present, and my hon. Friend the Member for Flint, East (Mr. Jones), who said that there would be more hospitals after an Assembly was set up? How can we possibly get more hospitals and roads if the block grant is the same? How can we get more from the same, or even less?
    Mr. Alec Jones: I believe that the quality of decisions will be improved as a result of the democratic process.
    Mr. Wyn Roberts: The Minister must be joking.
    Mr. Alec Jones: On many occasions we have debated decisions and priorities decided by nominated bodies and bureaucracy.[Interruption.] Few hon. Members —including some of my hon. Friends who are bellowing from behind—accepted the priorities which I might personally have supported.
    Mr. Wigley: Is the Minister aware that the table of housing allocation of funds to Wales shows that Wales receives about £50 million less—on a per capita basis—than it would if it had the average for the United Kingdom? On a needs basis, the housing stock in Wales is older than that of the United Kingdom. Therefore, there is a greater shortfall. Does not that indicate a need for a better mechanism for allocating funds to Wales, which the Assembly would provide?
    Mr. Alec Jones: One thing stands out in the housing figures. I have reported it to the House on several occasions. For two consecutive years there were considerable underspends on housing in Wales. However, the figures referred to show that there would be an annual average increase in spending on housing of 5 per cent over the four-year period. Last year—and next year—the allocations for house building in Wales were such

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    that all local authorities were told to proceed with their capital programmes intact. If they failed to do so it was their fault, because they failed to live up to the needs in their areas.

    Welsh Assembly
    Mr. Gwynfor Evansasked the Secretary of State for Wales what increase has occurred in the capital cost of the buildings and the services for the Welsh Assembly since the original estimate was made.
    Mr. Alec Jones: The estimated cost of adapting and equipping the Exchange is £·5 million at 1978 prices. The estimate for additional office accommodation remains the same as given in the explanatory and financial memorandum to the Scotland and Wales Bill.
    Mr. Evans: Is the Minister aware that some hon. Members have been unscrupulously misleading the Welsh public by asserting that impoverishment would be caused to them by the imposition of £20 million on them as a result of the Assembly? Will the Minister confirm the parliamentary answer which I received which said that the cost to the people of Wales and other parts of the United Kingdom would be about 1p per head per week—less than the cost of a packet of cigarettes per year and less than the cost of one pint of beer per year?
    Mr. Alec Jones: As I mentioned earlier, there have been far too many fantasies and far too few facts given on this subject. But certainly I confirm the parliamentary answer given to the hon. Gentleman on this subject. However, the additional cost is not £20 million, but £13·5 million. That figure is the fact. The other is the fantasy.
    Mr. Roderick: Is my hon. Friend able to give the House the costs of providing new accommodation for local authorities in Wales in the last three or four years? Will he explain to the House why there has been less fuss here about those costs than about the costs of the Assembly?
    Mr. Alec Jones: I do not have to hand the figures for local authority capital spending on new offices in recent years. What is a certainty is that whenever any local authority proposes such expenditure the Welsh Office is inundated
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    with objections from those who believe that it is a wasteful use of public money.
    Mr. Michael Roberts: Will the Minister confirm that if expenditure in Wales is worked out on a United Kingdom basis, based upon all families and people in the United Kingdom, it appears to be very little per head for the people of Wales? Will he also confirm that the £13·5 million running costs will come out of the block grant for Wales?
    Mr. Alec Jones: Yes, and the cost of the Exchange and that sort of thing will be taken into account in deciding the block grant. It is natural that one should work out the expenditure on a United Kingdom basis, because, after all, that is how the block grant itself will be decided —according to the need of the United Kingdom. Therefore, it is fair that the costs should likewise be allocated on a United Kingdom basis.

    Local Authorities (Expenditure)
    Mr. Abseasked the Secretary of State for Wales whether he intends communicating with the Gwent council on the issue of the implementation in Gwent of section 137 of the Local Government Act.
    Mr. John Morris: No, Sir. I have already made public my views on the use of this section for voting money to oppose the implementation of the Wales Act.
    Mr. Abse: Is it not quite clear that this is a matter of the Secretary of State's failure to communicate despite his intemperate attack upon the stalwart Gwent Labour county councillors, who came into the movement before he had even considered joining it? Is it not because his statement is a complete bluff and that he lacks both the legal and the political power to coerce Gwent county council? Does he agree that when ratepayers are being called upon to bear grievous burdens—the £15 or £20 million which will come out of the block grant or will have to be found from somewhere—it is right that Gwent county council should spend a mere £1,000 in order to save them from the expensive folly in Cardiff which he is attempting to impose upon them?
    Mr. Morris: Certainly I would not like to compete with my hon. Friend in making intemperate remarks. He has made some this afternoon.

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    I find it odd that ratepayers' money is being used for essentially political purposes. It was hardly ever the intention of Parliament, when this discretion was given to local authorities, that they should do this. I wonder what the next stage is. I wonder whether the money could be given direct to the Conservative Party or to Aims of Industry. I wonder what my hon. Friend's reaction would have been when he was campaigning for the "Yes" side in regard to the EEC for many years, and whether he would have allowed money to have gone in that way.

    Hospitals (Industrial Disputes)
    Mr. Michael Robertsasked the Secretary of State for Wales what steps he has taken to reduce the detrimental effects of industrial action on the lives of the patients, nurses, doctors, administrators and others who work in hospitals in Wales.
    Mr. John Morris: Action to minimise the detrimental effects is the responsibility of individual health authorities, with which I am in daily contact. I have sought to sustain their efforts and those of all who are working to maintain the service. Last Thursday my hon. Friend the Under-Secretary of State met all the health authority chairmen, who believed that services would be maintained. I cannot praise too highly the efforts of the dedicated staff who are doing their utmost in difficult circumstances.
    Mr. Roberts: Does the Secretary of State accept that the industrial action taken in the hospitals of South Glamorgan, for instance, is probably having a much greater effect on nurses and on patients and their relatives than the unions anticipated when they reluctantly undertook these actions? Does he, therefore, consider it worth while calling the unions together to discuss with them and the area health authorities how best to remove the worst and most detrimental effects to patients?
    Mr. Morris: I know that the hon. Member is concerned about this matter. I think that we must move in the best way for the whole of the service, and for patients in particular. From my intervention in his speech in the House last week, the hon. Gentleman will know that while negotiations are taking place nationally, of which I am fully cognisant
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    and to which I am a party, it is best for local matters to be discussed and dealt with locally. The Opposition spokesman, wrongly informed as he was, joined issue with my right hon. Friend for having intervened locally. That is not the best way of doing it. I am keeping in very close touch. I am watching the situation very carefully. I shall do whatever is necessary.
    Mr. Ioan Evans: Whilst we are concerned about the industrial action, will my right hon. and learned Friend consider that the low-paid workers in the Health Service have a case? Has he seen the report today by doctors who are expressing deep concern about the effect that an Assembly will have on the Health Service? There is a feeling that if an Assembly is created and the Health Service is administered by that Assembly we shall move away from Nye Bevan's desire to have a uniform Health Service for the whole of Britain.
    Mr. Speaker: Order. The hon. Gentleman is moving on to a totally dfferent question. This question concerns industrial action in Wales. There will be a further opportunity to discuss the other issue.
    Mr. Grist: Does the Secretary of State agree that the people of Cardiff and Aberavon are having to bear a grossly unfair penalty for having elected his right hon. Friend the Prime Minister and himself?
    Mr. Morris: I thought that the hon. Gentleman had a useful contribution to make. Obviously that is not so.

    Welsh Development Agency
    Mr. Cledwyn Hughesasked the Secretary of State for Wales what plans have been approved by the Welsh Development Agency for further industrial development in Anglesey; and if he will make a statement.
    Mr. John Morris: I have already asked the Agency to submit a further programme of advance factory building for my approval. In considering the appropriate balance of provision throughout Wales, I shall bear the needs of Anglesey fully in mind.
    Mr. Hughes: I am grateful to my right hon. and learned Friend for that prospect. However, will he bear in mind that the

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    recent decision not to proceed with the expansion of Anglesey Aluminium indicates that some special effort is needed to bring new employment to the island, in view of the present unsatisfactory level of unemployment?
    Mr. Morris: I know how hard my right hon. Friend worked for the expansion, and I know the disappointment that we all share that it is not to come about. However, the company is still seeking other ways of expanding its operations. My industry department is in touch with the company and has indicated that the Government would consider giving financial support to any viable project that the company may propose to establish downstream activities in Anglesey.

    Public Bodies (Ministerial Appointments)
    Mr. Roderickasked the Secretary of State for Wales how many persons he appointed to public bodies in Wales in the past 12 months.
    Mr. John Morris: I had sole responsibility for 225 such appointments in the period 1 February 1978 to 31 January 1979.
    Mr. Roderick: Can my right hon. and learned Friend claim to know all these people he has appointed? Can he think of a better way of running these public authorities?
    Mr. Morris: Even though I traverse a great deal of Wales, I cannot admit to knowing everyone. I think that there is a better way. The best way of all is to ensure that, where possible, decisions are taken not by nominated bodies but by democratically elected people.
    Mr. Gwynfor Evans: How much do these quangos cost annually? To whom are they democratically accountable, and to what extent?
    Mr. Morris: Speaking from memory, I think that they expend about £400 million to £500 million each year. However, if the Assembly comes about it will control the expenditure of about £1,400 million, including the work of the nominated bodies.
    Mr. Wyn Roberts: Does the right hon. and learned Gentleman agree that even if we have an Assembly—which is most un-
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    likely as things stand, in view of the way in which the campaign is going—there will still be nominated bodies, or does he think that the jobs of those bodies will be taken over by the Assembly?
    Mr. Morris: I am sorry that I must continue to try to educate the hon. Gentleman, even after the prolonged discussions that we have had on the Wales Act. Of course it will be possible for some of these bodies to remain. It will also be possible for the Assembly to subsume some of these bodies. As regards those that it can subsume, it will be a matter for the Assembly to ensure the best way of conducting those functions, be it through a body or directly through the Assembly. However, I hope most fervently that as many as possible of these bodies will come under direct democratic control.
    Mr. Ioan Evans: Does my right hon. and learned Friend realise that the latest opinion poll in Wales confirms all the other opinion polls in saying that there will be a "No" vote? In view of the fact that there may well not be an Assembly after 1 March, will my right hon. and learned Friend address himself to the problem of nominated bodies, bearing in mind that there are those of us who are opposed to an Assembly who have put up alternative suggestions whereby there could be greater democratic accountability by nominated bodies?
    Mr. Morris: I enjoin my hon. Friend not to put too much faith in polls—no more than the Conservative Party should. One of the encouraging features of the latest poll was the increase in the Labour vote, contrary to some other polls. We should be encouraged by that. I am glad that my hon. Friend wants to ensure that nominated bodies are controlled. This is of the essence of the case which I am putting forward about the need for more democracy in Wales, and I look forward to that.

  CIVIL SERVICE

    Dispersal
    Mr. Viggersasked the Minister for the Civil Service what are the Government's current intentions regarding the redeployment of Civil Service jobs in the light of the Hardman report.
    The Minister of State, Civil Service Department (Mr. Charles R. Morris): The Government remain committed to their programme of Civil Service dispersal to the locations already announced.
    Mr. Viggers: Is not the position that the Government have promised 5,500 jobs to Glasgow without knowing from where the jobs are coming? Is it not a major scandal that civil servants have had this threat hanging over them for two years, that the move might cost as much as £500 million, and that in practice the Government have decided to drop the proposal? Will they now admit that they have dropped the proposal?
    Mr. Morris: The Government's dispersal programme is going ahead as envisaged. If there are civil servants who are anxious about their position in the Civil Service dispersal programme, they can consult their controlling officers to discover whether their Departments are involved. But the dispersal programme is going ahead.
    Mr. Madden: Is my right hon. Friend concerned about the apparent ease with which senior civil servants can redeploy themselves into lucrative jobs in private industry? Does my right hon. Friend agree that there should be a bar on senior civil servants joining companies which have received large amounts of taxpayers' money from Government funds? Will he publish in full the present rules and regulations relating to the seeking of jobs in private industry by civil servants?
    Mr. Speaker: Before the Minister replies, I might point out that I allowed the supplementary question although it is not related to the original question on the Order Paper. The Minister may take that as a tip.
    Mr. Morris: I am grateful for your protection, Mr. Speaker, but I give the House the undertaking that I shall publish and make available the rules under which senior civil servants take up such appointments.
    Mr. Christopher Price: Will my right hon. Friend put it to the Government that the Hardman report is completely out of date in today's circumstances? Is he aware that it was conceived at a time when there was a tremendous disparity between London and the other regions,
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    but that today parts of the borough of Lewisham, for example, have unemployment rates of more than 10 per cent. and far worse unemployment than exists in some parts of the development areas? Will my right hon. Friend look especially at the dispersal of the office of the Government Chemist to Cumbria, which is the biggest piece of nonsense in the Hardman report, and will he see whether he can make some arrangements to redeploy back into areas of severe unemployment in London some of the jobs dispersed as a result of decisions taken many years ago?
    Mr. Morris: I appreciate fully my hon. Friend's anxiety about the job prospects of his constituents in Lewisham. However, at present 1,900 Civil Service jobs are vacant in London. Civil Service dispersal makes a real contribution to solving the structural economic difficulties which exist in provincial areas.

    Mr. K. Brown
    Mr. Jesselasked the Minister for the Civil Service if he will make a statement on the provision being made for Mr. K. Brown, details of which have been sent to him by the hon. Member for Twickenham.
    Mr. Charles R. Morris: I have studied very carefully the facts of this very sad case, and I am confident that Mr. Brown has received, and will continue to receive, the maximum benefits that the rules of the Civil Service pension scheme provide for cases of this nature. However, in addition, I have also undertaken to seek advice on the legal position generally and on the amount of any ex gratia additional payment that it might be proper to make from public funds.
    Mr. Jessel: I thank the Minister for that answer, as far as it goes. However, since it was whilst serving his country abroad as a Foreign Office official in Swaziland that Mr. Brown's appendicitis was mis-diagnosed and, as a result, he had one leg amputated above the knee and a major internal operation, leaving him permanently crippled and with his life virtually ruined, do the Government accept in principle that he should be paid a very generous lump sum by way of compensation?
    Mr. Morris: Again, I emphasise that I have a great deal of sympathy with

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    this particularly distressing case. I hope that hon. Members in all parts of the House will be assured that additional compensation will be considered carefully and compassionately. However, I cannot prejudge the legal advice which I am seeking. Therefore, I cannot make any firm commitment at this stage about the amount of any additional payment.
    Mr. Wrigglesworth: May I thank my right hon. Friend for the concern that he has expressed? Is he aware that Mr. Brown's union is very concerned about this case, which, as has been made clear, is a very tragic one? It has dragged on for a very long time. Therefore, will my right hon. Friend try to expedite his inquiries so that a generous settlement can be made as soon as possible?
    Mr. Morris: Certainly I undertake to proceed as urgently as possible with this case.

    Trade Unions
    Mr. Canavanasked the Minister for the Civil Service when he expects next to meet representatives of the Civil Service trades unions.
    Mr. Skinnerasked the Minister for the Civil Service what recent meetings he has had with Civil Service trade union leaders; and if he will make a statement.
    Mr. Charles R. MorrisMy right hon. and noble Friend the Lord Privy Seal and I met last week with representatives of the non-industrial Civil Service unions. Frequent contact is maintained with representatives of all the Civil Service trade unions.
    Mr. Canavan: Is my right hon. Friend aware that many civil servants and, indeed, other public service workers, such as nurses and teachers, are complaining that their wages have fallen behind those of comparable workers in the private sector mainly because of the excessive wage restraint of recent years? In view of the fact that their complaints are backed by the independent findings of the Pay Research Unit, is it not a dishonest farce for the Government to have agreed to reconstitute the Pay Research Unit unless they also give a firm commitment to implement its findings from April of this year?
    Mr. Morris: The Government's position in regard to the pay of the Civil Service has not been wholly ungenerous. In 1975, on the basis of a Pay Research Unit report, we conceded pay increases of up to 30 per cent. In all stages of the Government's pay policy since then—in 1976, 1977 and 1978—civil servants have received the maximum available under those phases of Government pay policy. We have reactivated the Pay Research Unit. We are now processing the reports emanating from the unit.
    Mr. Skinner:Does my right hon. Friend accept also that those civil servants who form the bulk of the Civil Service trade unions are in the relatively low-paid category, such as those who serve behind DHSS counters, some of whom receive less in wages than they are paying out—and that is not to make an argument for reducing unemployment benefit, but rather the other way? Is my right hon. Friend aware that there is talk of industrial action? I suppose that that is the last thing the Government want at present.
    Mr. Morris: Let me take up one phrase that my hon. Friend used. He described certain groups of civil servants as "low paid". This will be established only when we have processed the Pay Research Unit reports. There are 450 of those reports, the last of which was updated on 7 February. We are only in the process of examining those reports at the moment. This is by no means the time to be talking of industrial action.
    Mr. Hayhoe: Will the right hon. Gentleman make it clear when next he meets Civil Service trade union leaders that Government public relations officers are not available to them for the purpose of advising them on ways of busting the Government's pay policy? Does he regard this as a suitable opportunity to comment on the most disturbing press reports which have appeared about the activities of a certain public relations officer in the DHSS?
    Mr. Morris: I appreciate the point which the hon. Gentleman is making about my right hon. Friend the Secretary of State for Health and Social Security, who has responsibility for the decisions which were taken in that case.
    Mr. Ovenden: Although my right hon. Friend needs more time to process the reports, is he not in a position to say what broad level of pay increases is represented by the PRU findings? Will he give us an assurance that he will accept the findings and not try to tie the Civil Service to a 5 per cent. limit, which would be totally out of line with the findings of the PRU?
    Mr. Morris: My hon. Friend suggested that I was seeking more time to process the reports. I am not. We are going through the normal process of negotiation. We reactivated the PRU towards the end of 1978 and it has been collecting the evidence of fair comparisons. We are now processing that evidence. The operative date for the next pay settlement is 1 April. Let us complete the negotiations before anyone suggests a mad leap into industrial militancy and conflict.

  LORD PRESIDENT OF THE COUNCIL
  Mr. Adleyasked the Lord President of the Council if he is satisfied that he has sufficient powers to enable him to carry out his responsibilities; and if he will make a statement.
  The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): Yes, Sir.
  Mr. Adley: The House will be glad to hear that. In view of the Prime Minister's predeliction for gerrymandering and the Government's obvious determination to stay in office—until October if they can—will the Lord President give us, in as clear, short and precise a way as he answered my original question, an assurance that the Government have no proposals to amend, alter or play around with the Parliament Act?
  Mr. Foot: The suggestion in the second part of the hon. Gentleman's question is absolutely ludicrous. We have no such proposals. On the first matter, the hon. Gentleman is under a considerable misapprehension. It is not only that we intend to stay in power for the rest of this year, but that we intend to be in power for several years to come.
  Mr. Lee: What does my right hon. Friend and the Government propose to
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  do about their Lordships' decision to louse up the Rhodesian sanctions commission inquiry?
  Mr. Foot: That does not really arise from the original question, but I agree that it was a serious decision made by another place and it is most regrettable that their Lordships should have come to a conclusion which was in conflict with the motion passed by this democratically elected House. It is always highly regrettable when another place, which has no responsibility in this sense, decides to take action in such direct conflict with a decision of this House. I am sorry to say that that is bound to lead to further difficulties in future.
  Mr. St. John-Stevas: The right hon. Gentleman will appreciate that the difficulties are not in the future, but have already arisen. On the important question of the sanctions commission, which concerns this House intimately, can the Lord President tell us what action the Government propose to take?
  Mr. Foot: The Government will come forward with proposals for dealing with the situation. The House of Commons made a decision to set up a commission, and we shall abide by that decision. I hope that the hon. Gentleman will do the same.
  Mr. Lawrence: Is the right hon. Gentleman aware that industrial action is yet again being taken in Her Majesty's Stationery Office? Can he say how often such industrial action has taken place and harmed the activities of Parliament while his Government have been in power? Since the right hon. Gentleman has a special responsibility in this matter, can he tell us what he is doing about it, bearing in mind that it has been shown again that the Government have no special relationship with the trade unions which can avoid industrial action?
  Mr. Foot: I repudiate the last part of what the hon. Gentleman said. No doubt these will be matters for discussion and debate later this week and for several weeks or months to come. I certainly regret any industrial action which interferes with the flow of documents to the House. That has happened afresh in the past day or two. We are taking every possible step to try to overcome the problem. The hon. Gentleman asked what

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  further steps we were taking. We have had an investigation into the matter, and I believe that if all parties will follow the sort of recommendations contained in the report of that investigation we can overcome the difficulties.

  REFERENDUMS (WALES AND SCOTLAND)
  Mr. Ioan Evansasked the Lord President of the Council what are the target figures to determine a "Yes" vote in the referendums to be held in Wales and Scotland.
  Mr. Foot: The electoral registers are not required to be published until 15 February. Target figures cannot be established until after that date.
  Mr. Evans: Will my right hon. Friend join me in appealing to the people of Scotland and Wales to turn out in force on 1 March, recognising that those of us who are opposed to the establishment of the Assemblies made the strongest demands for referendums? Will my right hon. Friend ensure fair play by making representations to ensure that there are no party political broadcasts before the vote?
  Mr. Foot: It would be a gross interference by the Government in the normal way in which these matters are conducted if we intervened to try to ban party political broadcasts. That would be a grave infringement of the way that these matters are normally conducted, and I am surprised that my hon. Friend should recommend such an undemocratic practice.
  Mr. Gwynfor Evans: Is the Lord President aware that a BBC poll published on Friday night showed that many of the people of Wales do not think that the Government are in favour of an Assembly for Wales and that many people in Wales do not know what is the Government's attitude? I absolve the Lord President from responsibility for that, but does he not think that those findings reflect sadly upon the inactivity of the Government in putting across their policy?
  Mr. Foot: I assure the hon. Gentleman and the House that the Government's views have been made well known in the House, and the more widely they can
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  become known throughout Wales and Scotland, the better. Several of us will be taking special steps in the next two or three weeks to ensure that our views are still more widely known.
  Mr. St. John-Stevas: Will the Lord President be kind enough to tell the House that, in the event of there not being the necessary qualifying 40 per cent. of the electorate voting affirmatively in the referendums, the Government will not only lay an order in the House, as required by the Act, but will support the order to annul the Act?
  Mr. Foot: The Government will abide by the decision of the House. I revert to the reply that I gave the hon. Gentleman a few minutes ago. I only wish that he had shown the same democratic spirit as regards the resolution that we passed on the Bingham report.
  Mr. Arthur Latham: Will my right hon. Friend accept my congratulations on the precedent established in Wales and, presumably, Scotland, in the delivering to every household of a printed leaflet, financed by the Government, explaining how people can qualify and obtain postal votes? Will my right hon. Friend have a word with the Home Secretary and the Secretaries of State for Scotland and Wales to see whether we can follow that practice for general elections in the United Kingdom?
  Mr. Foot: There is a great deal to be said for what my hon. Friend has suggested, and I think that we should have discussions along those lines. I believe that the whole House will welcome the action that we have taken, since I trust that the whole House wishes every elector in Scotland and Wales to know what his possibilities are in the referendums?
  Mr. St. John-Stevas: Is the Leader of the House aware that I entirely agree with him that both of us should abide by the decision of the House of Commons? I shall be happy to follow his example in that respect, but can he tell us what is the position of the House in a situation where their Lordships have rejected the Commons proposal for a sanctions commission? Does he intend, on behalf of the House, to set up a commission of hon. Members of this House only?
  Mr. Foot: I have already told the hon. Gentleman that the Government will

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  make proposals to the House in the light of the decision of another place. All that I was asking the hon. Gentleman to do was to say—and I am glad that he has said it, even if it was a little grudgingly—that he respects the decision of this House. We have to take that into account. We deeply regret that their Lordships should have decided not to pass their resolution because it gives rise to strains and stresses between the two Houses, and when this House goes out of its way to pass the sort of resolution that we approved it is most unwise for another place to neglect it as it did.
  Several Hon. Members
  Mr. Speaker: Order. I allowed the question of the hon. Member for Chelmsford (Mr. St. John-Stevas), but it was related to an earlier question. I must tell Members on the Front Benches that the same rules apply to them as apply to Back-Bench Members.
  Mr. Canavanasked the Lord President of the Council whether he is satisfied with the arrangements being made for the forthcoming referenda in Scotland and Wales; and if he will make a statement.
  Mr. Foot: Yes. Instructions have been issued by the Scottish and Welsh Offices to returning officers and arrangements are proceeding satisfactorily.
  Mr. Canavan: Is my right hon. Friend aware that some reliable estimates of the discount required for a fair application of the 40 per cent. referendum rule are as much as five times the official Government estimate of 2½ per cent.—because of additional double registrations, illness, disability and removals? Will my right hon. Friend take that into account, because he must bear in mind that there are many people who, through no fault of their own, will be virtually incapable of exercising their right to vote on 1 March?
  Mr. Foot: It is true that all these difficulties were discussed, as my hon. Friend has legitimately pointed out. All these factors will be taken into account when the Government make their statement, I hope before the recess, on the matter that has been raised, although I know, Mr. Speaker, that I must not refer to a previous question. The matter was referred
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  to obliquely by my hon. Friend earlier. We shall take all these factors into account. These are some of the difficulties that have arisen from the decision that the House made. We have to abide by that decision.

FISHING VESSEL "TARRADALE II" (LOSS)
Sir John Gilmour Sir John Gilmour (by private notice) asked the Secretary of State for Trade if he will make a statement on the loss of the motor fishing vessel "Tarradale II".
The Under-Secretary of State for Trade (Mr. Clinton Davis): The fishing vessel "Tarradale II" sailed from Peterhead at 1520 hours on Thursday 1 February, bound for the Norwegian fishing grounds, with a crew of seven on board. On Friday 2 February, the skipper of "Tarradale II" reported to his owners, via Stonehaven radio, that he had commenced fishing off Norway. The last known contact with the vessel was with Stonehaven radio at 1600 hours on the same day. Her position at that time was about 170 miles east-north-east of Peterhead. On 2–3 February, storm force 10 winds were reported locally. This was more severe than had been generally forecast.
At about 1500 hours on Wednesday 7 February, the agents for the ship reported to the Aberdeen coastguard that the vessel was overdue. Coastal radio stations in Scotland and Norway immediately broadcast an alert. In addition, United Kingdom and Norwegian helicopters en routine flights in the area were asked to keep a look-out for the vessel.
A co-ordinated air search of the fishing area was also undertaken and an RAF Nimrod commenced searching at 0830 hours on Thursday 8 February, assisted by aircraft from Danish, German and Norwegian rescue services. At 1500 hours on Saturday 10 February a Nimrod sighted a fishing marker buoy, fish boxes and wreckage in the possible area of loss. These were recovered by a Norwegian coastguard cutter on Sunday 11 February and are being taken to Aberdeen for possible identification. Search action was finally concluded at dusk on Saturday 10 February.
I very much regret having to inform the House that the "Tarradale II" must now

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be presumed lost. My Department has accordingly commenced a preliminary inquiry into this casualty. I am all too well aware that tragedies of this kind cast a shadow over the whole of the fishing community and I am sure that hon. Members will particularly wish to join with me in expressing deepest sympathy with the families and relatives of the crew of the "Tarradale II".
I would say, in conclusion, that I have agreed to the Fishing Industry Safety Group's recommendation that there should be a special radio communication channel for the exclusive use of fishing vessels. It is proposed that this will operate overnight, between 1700 hours and 0900 hours, on 2381 kHz. It is not intended to replace distress calls on the frequency of 2182 kHz, but will enable vessels to make quick contact with the shore in the event of difficulties developing. It should also encourage more frequent contact, thus helping to establish the whereabouts of vessels while fishing.
Urgent talks are to be held between my officials, the Scottish Fishing Federation and the Post Office on the detailed arrangements for the scheme. These will commence on Thursday 15 February. It is hoped that the scheme will operate from 1 April 1979, initially for a period of two years.
Sir J. Gilmour: I thank the Minister for that statement. Although, as he will know, the vessel sailed from Peterhead, almost the entire crew came from East Fife and, therefore, my constituents and I would join with the Minister in his condolences to the families concerned. I would also like to pay tribute to the search undertaken by the Nimrods, by other fishermen and by the coastguards.
Is there any possibility that this new frequency, due to come into force from 1 April, can be brought forward, say, to the middle of March? As the Minister will know, this is the second time that a vessel has been lost in the same area, and the matter is giving great concern. Will priority also be given to the possibility of an efficient marker buoy for discovering wrecks, so that some of the vessels that founder can be raised and we can try to find out the cause of the trouble?
Mr. Davis: I am sure that the whole House will join with the hon. Gentleman in the remarks that he has made and the
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tribute that he has paid to those engaged in the search and rescue operation. It is difficult to bring forward the date, because instructions and guidance have to be given on the operation of this new system. It is important, in order to have proper effect, that the system should be readily understood. If the matter can be brought forward, this will be done. We are giving the matter the most urgent consideration, as I have already indicated.
The hon. Gentleman mentioned the question of the marker buoy. I presume that he is also referring to the emergency radio beacons—the EPRBs. This matter was considered again by the Fishing Industry Safety Group at a meeting a few weeks ago. The group is not convinced that a fully efficient system is yet capable of being brought into operation. Until that happens, there would be no point in making a system mandatory.
Mr. Robert Hughes: I should like to associate myself with the remarks of sympathy for the bereaved, as I am afraid we must now accept they are, made by the Minister and by the hon. Member for Fife, East (Sir J. Gilmour). Although I do not represent the constituency from which the crew came, I have close associations with that part of the country.
I congratulate the Minister and the Fishing Industry Safety Group on its proposals to try to achieve a much better system of reporting and quick action when a vessel goes missing. Is it possible to set up a full-scale search when a vessel does not report in? Often in these waters, at this time of year, the length of time a survivor is in the water makes a difference between life and death. I realise that this would be expensive and difficult. But given the good will of the fishing industry over reporting in every day, could more not be done to achieve earlier identification of a missing vessel, as opposed to a vessel that has simply not reported?
Mr. Davis: I am grateful to my hon. Friend for the observations that he made about the new system. I pay tribute to those representatives of the industry and various Government Departments represented on the Fishing Industry Safety Group in making this proposal. The suggestion that my hon. Friend makes is not practicable, because we must depend upon fishermen reporting in. In this respect,

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the system breaks down. Regrettably, fishermen do not comply with instructions, sometimes, possibly, for very good reasons.
It would be impossible to mount a search and rescue operation every time the present system, which is voluntary, breaks down. One of the reasons why I want to see the new system brought into operation as quickly as possible is that it will, we hope, encourage people to adopt more efficient reporting-in systems.
Mr. Grimond: I join in the expressions of deep regret over the loss of this fishing boat and in the sympathy expressed to the families of those lost. Were the initial calls from the boat picked up anywhere else except Stonehaven?
I am glad that the new frequency is to come into operation. Will it cover virtually all the sea areas around the coast of Scotland? Will the Minister confirm that this fishing boat was presumably lost so far away that the helicopter rescue services could not have reached the scene of the tragedy?
Mr. Davis: So far as I know, the call from the boat was picked up only in the place that I have mentioned. The intention is that the trial period of two years will operate not simply around the coast of Scotland but far wider. As for helicopters, as I said, United Kingdom and Norwegian helicopters were on routine flights in the area, but it was not possible, as I understand it, for helicopters operating under the search and rescue aegis to get to the scene in time. It was just not possible.
Mr. Younger: Is the Minister aware that I should like to associate my right hon. and hon. Friends with all the expressions of sympathy for the relatives of those concerned—which we warmly endorse? Will he, in the discussions that he mentioned, pay particular attention to the time lag in this case? Does he agree that, even allowing for the difficulties about reporting and so on, it seems an extraordinary length of time from 4 p.m. on 2 February until 7 February, when the vessel was reported missing? Does he not think that a completely fresh look at reporting is urgently needed?
Mr. Davis: The question of reporting in has, of course, been in the forefront
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of the considerations of the Fishing Industry Safety Group, but unfortunately the industry has not found it possible to conform with any regimental procedures which were originally devised, so they broke down. We can only exercise persuasion and influence to try to bring some reason to bear on this matter. I hope that what I have announced will be of some assistance in that direction.
As for the extraordinary lapse of time, to which the hon. Gentleman rightly referred, that will be in the forefront of the minds of those carrying out the preliminary investigation and any possible formal investigation which will have to follow. It would not be appropriate for me to comment on that, save to say that I understand that the owners in this case had issued certain instructions for reporting in. There appeared, however, to be no reporting in within the periods to which I have referred.
Mr. James Johnson: May I associate myself and, I am certain, all English Members with fishing constituencies with the deep sympathy expressed from all parts of the House for the bereaved of these men who have gone down? May I turn my hon. Friend's attention to what he said about the EPRBs, the emergency radio beacons? He said that his advisers in the fishing group were not yet fully convinced about the need for or the efficiency of these beacons. I thank him for having had two of his advisers in Hull looking at an EPRB indicator made by a firm in my constituency. We do not ask my hon. Friend, as the Minister, to make the use of this device mandatory, in the sense that the Norwegians, the Canadians or even the Americans do, but if he is satisfied with the findings of his two advisers who went to Hull, will he give it his blessing? We think that it will make an enormous difference throughout the fishing industry.
Mr. Davis: I am obliged to my hon. Friend, who has courteously drawn these matters to my attention over a fairly long period and who has shown a long interest in this topic. The situation in the other countries to which he referred is somewhat different, and does not, therefore, persuade those in the industry that we ought to make mandatory the system that my hon. Friend would like. However. there is nothing to prevent owners

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of fishing vessels from installing these devices. I am sure that it would be helpful. I agree with my hon. Friend on that. Perhaps those who are concerned will recognise the great interest, not simply in the industry but among the wider public, in matters of this kind, as has been shown in the House today. Perhaps they will take that to heart.

CARDIFF HOSPITALS (REFUSE DISPOSAL)
Mr. Michael Roberts: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter which I believe should have urgent consideration, namely,
"the seriously deteriorating condition in Cardiff hospitals—Ely, Whitchurch and the Royal infirmary."
The Whitchurch hospital is in my constituency, Mr. Speaker, the Ely hospital you will know very well, and the Royal infirmary is in the constituency of the Prime Minister. However, all these hospitals serve the people of the whole of the city of Cardiff and its surrounding areas.
This matter is specific, in that officers of the Department of the Environment at the city hall have inspected the growing piles of rubbish which have been collecting at these hospitals and others, and at these three hospitals they have actually issued certificates stating that the rubbish piles constitute a serious health hazard. This is not a speculation in the press; it is specifically certified by experts that the serious health hazard exists.
The matter is important, because the patients could not possibly be evacuated to any other hospital if it were decided that these three had to be closed. It is important also because the Royal infirmary has the only major accident unit in the area to deal with all accidents and emergencies.
The matter is urgent, because the situation could deteriorate in other hospitals and areas. The additional factor which makes it extremely urgent is that the emergency procedures have broken down. Although the hospital workers are perfectly prepared to allow people to come in and remove the piles of rubbish which constitute the health hazard, there is a
794
dispute between the dustmen and the city authority which precludes this from being done.
Therefore, we face the total disruption of hospitals in the Cardiff area.
Mr. Speaker: The hon. Member for Cardiff, North-West (Mr. Roberts) gave me notice before noon today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the seriously deteriorating condition in Cardiff hospitals—Ely, Whitchurch and the Royal infirmary."
May I take the unusual step of telling the House that this Standing Order No. 9 application applies to my own constituents, who are mentioned in it? The House will understand, therefore, that I have listened with anxious care to the hon. Member and to the serious statement that he has made.
The House will also be aware that my powers are very limited and that I have to decide only whether this matter shall be discussed by this House tonight or tomorrow. After the most anxious consideration, I have to tell the hon. Member that I cannot submit his application to the House.

PUBLIC SERVICES (HAMPSHIRE)
Rear-Admiral Morgan-Giles: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the total paralysis of local government services in the Winchester area."
The words "total paralysis" are not mine; they are those of Mr. Shaun Hilliard, the area organiser for NUPE, in a press statement on Wednesday last, printed in the Hampshire Chronicle of last Friday. His statement said that an all-out strike was to be held in a particular part of Hampshire, that it would be designed to "paralyse and totally disrupt" the area, and that no prior warning would be given.
The matter is specific, as anyone who visits Winchester can see. We have had

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our fair share of disruption during the last few weeks. Our garbage has been stacking up in the streets, and there have been difficulties with hospitals, ambulances, schools, and so on. By and large, it has not been unreasonable and not as bad as in some other places. The Winchester people, after all, are decent and reasonable people. But from a statement by the union this morning it is apparent that Winchester is to be the chosen area for the all-out strike action, and disruption is now a great deal more widespread.
The situation is rapidly getting worse. The streets are ungritted, and we have this morning had a sudden and considerable snowfall. The gravediggers have joined the strike, as have many other council manual workers, although I am glad to say that at present the housing maintenance people have not. There is an increasing health risk from rotting garbage.
I had a telephone call this morning from the warden of an old people's home in Winchester. When she looked out of the window she was horrified to see one of the elderly residents out on the slippery pavement with her walking stick and a big bag of garbage, trying to get the garbage down to the end of the road to dispose of it.
On Sunday, the local branch of the National Federation of Self-Employed mustered beside King Alfred's statue at 9 a.m. With 40 or 50 volunteers and privately owned trucks, they spent the whole morning clearing away rotting garbage from the commercial premises in the centre of town, where it was most expensive and offensive. They did a good job, and shifted about 10 tons of the worst garbage to one of the emergency dumps that had been arranged by the council outside the city. This action was used as a pretext by the union spokesman to escalate the strike and cause total paralysis in the words that I have quoted.
A great many of my constituents are confused and bewildered. The members of the National Federation of Self-Employed who carted the rubbish away yesterday are asking me whether they did the right thing. People concerned with the cathedral are asking me whether I
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saw the television broadcast by the Archbishop of Canterbury over the weekend and also know of the remarks made by the hon. Member for Paddington (Mr. Latham) about the Archbishop being a hypocrite. Many people heard the Prime Minister recently saying that strikes should be a weapon of last resort, and are asking how this situation can occur in Winchester.
The Winchester council workers are also confused. They are reasonable people. I am as much their Member of Parliament as I am of any others in Winchester, and I am sorry that they feel that they have a sense of grievance. But I am even more sorry that they should be led into taking militant action, which I believe is foreign to their instincts and contrary to their interests.
Other groups of volunteers are seeking to help in the hospital—
Mr. Speaker: I am sorry to interrupt the hon. and gallant Member, but he must not make the speech that he would make if I had granted his application.
Rear-Admiral Morgan-Giles: Thank you, Mr. Speaker; I shall take a short cut. Above all, the National Federation of Self-Employed and the volunteers who yesterday joined them ask whether there is any reason why their action should be considered provocative, and whether there is any obligation on private citizens to seek the approval of NUPE before clearing the streets of their city. Yesterday's events have had wide publicity, and constituents and people from other areas have telephoned to ask me the same question.
In conclusion, the matter is specific, urgent and important. The public, not only in Winchester but over a wide area, are asking how much longer they have to be pushed around like that.
Mr. Speaker: The hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) gave me notice this morning that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the total paralysis of local government services in the Winchester area".
I listened with anxious consideration to the facts outlined about the circumstances in Winchester. After careful consideration, I cannot submit the hon. and

797
gallant Gentleman's application to the House. I am not saying that it shall never be discussed; I merely have the right to say whether it should be discussed tonight or tomorrow.
Mr. David Price: Following your ruling, Mr. Speaker, would it be an abuse of a point of order to ask, in view of what my hon. and gallant Friend said, whether the Government would indicate that within the next day or two they would make a statement about the position of volunteers in this difficult time? We are all being asked the same question as my hon. and gallant Friend, and it would be an enormous help to have guidance from a Minister.
Mr. Speaker: I have had no request, but I am sure that the hon. Gentleman's words will have been heard.

STANDING ORDER No. 9 PROCEDURE
Mr. Powell: I wonder whether you would think it right, Mr. Speaker, to use your influence to secure the reference to the Committee on Procedure of a renewed consideration of our procedure under Standing Order No. 9. Without disrespect to any hon. Member, it might be felt in many quarters of the House that the procedure leads to unfairness towards Members generally on the part of those who, in some cases, seek to make
798
applications to you. I do not cast aspersions; I ask whether you would think it helpful to the House once again to secure the reconsideration of the procedure by the appropriate Committee.
Mr. Speaker: The words of the right hon. Gentleman will have been heard, and I am sure that they will be noted by those who are responsible.

BILL PRESENTED
  CONFIRMATION TO SMALL ESTATES (SCOTLAND)
  Mr. Michael Clark Hutchison, supported by Mr. Hamish Gray, Mr. Malcolm Rifkind, Mr. Neil Carmichael, Mr. Ian Campbell, and Mr. James White, presented a Bill to amend the law relating to small estates in Scotland; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 16 February and to be printed [Bill 821.

BUSINESS OF THE HOUSE
Resolved,
That, at this day's sitting, this House shall not adjourn until Mr. Speaker shall have reported the Royal Assent to any Act which has been agreed upon by both Houses.—[Mr. Graham.]

ORDERS OF THE DAY

  CREDIT UNIONS BILL
  Order for Second Reading read.
  3.59 p.m.
  The Minister of State, Treasury (Mr. Denzil Davies): I beg to move, That the Bill be now read a Second time.
  This Bill provides a statutory framework for credit unions, together with a system for their registration and supervision. Credit unions are not widely known in Great Britain, although they have been successful in Northern Ireland and abroad.
  A credit union is a self-help association, run on mutual lines, in which members agree to pool part of their savings, in order to provide themselves with a source of low-cost credit. Interest—in the form of dividend—is paid upon money invested in the credit union, and, from the funds accumulated from those savings, loans are made to members upon which they pay interest to the credit union. Members of a credit union will have a "common bond"—the significance of which I will explain later—and only members of a credit union can borrow from it.
  The loans that a credit union makes are made on a personal basis and borrowers do not necessarily have to give security. Credit unions are, in effect, therefore, financial co-operatives whose main object is to provide their members with loans for everyday requirements—whether goods or services—at the lowest posible rates of interest.
  Northern Ireland and the Republic of Ireland, New Zealand, the Caribbean and Latin American countries and the United States all have strong credit union movements. Since 1969, credit unions in Northern Ireland have been regulated under the Industrial and Provident Societies Act (Northern Ireland) of that year. The terms of the Credit Unions Bill now before us owe much to the experience gained in administering the Northern Ireland credit union legislation.
  There are already more than 50 credit unions operating in Great Britain, 10 of which are registered under the Companies
  800
  Acts, and four under the industrial and provident societies legislation. But the Companies Acts do not provide an entirely suitable statutory framework. Neither does the Industrial and Provident Societies Act, as it stands at present. The majority of the credit unions so far established in this country have, therefore, preferred to operate as unregistered societies. Moreover, neither the Companies Acts nor the Industrial and Provident Societies Act provide the kind of prudential or supervisory requirements nowadays regarded as appropriate to a financial organisation of the savings and loan kind.
  The Crowther committee on consumer credit considered credit unions in its report in 1971, and concluded that there was a
  "… case for encouraging the credit union movement and for taking steps to make its existence, its aims and methods widely known in the hope it may take root here …"
  Since then, support for the concept of credit unions and for the need for legislation has increased. I would like to pay tribute to the work done in this direction by my hon. Friend the Member for Farnworth (Mr. Roper), who sought to introduce a Credit Unions Bill in 1972 and who has frequently since then spoken on behalf of the credit union movement. Support for the Bill has been given by the National Consumer Council and by the two organisations which sponsor and encourage credit unions in Great Britain—the National Federation of Credit Unions and the Credit Union League of Great Britain, which is affiliated to the World Council of Credit Unions.
  A basic feature of a credit union is that it is owned and run by its members on a democratic basis. It will normally be run through committees which are elected by the members. Credit unions are non-profit-making in the sense that, having made provision for interest on the savings placed with them by their members, and for running expenses, they do not aim to make any profit on lending other than a marginal amount to provide and service their reserves for the ultimate protection of members. In a credit union there is normally very little restriction on the purpose for which loans may be made to members. The loans may, for example, be for household goods, season tickets.

  801
  and so on. There will, however, be statutory limits to the amount which a member can borrow, and the loan will normally have to be approved by a committee of the credit union concerned. Subject to the limitations which the Bill lays down, the arrangement for repayment of the loan will also be determined within the credit union itself.
  Hon. Members will no doubt ask how safe is this kind of lending, bearing in mind that loans are often unsecured. The experience of existing credit unions suggests it is very safe indeed. For example, in the few cases where credit unions registered in Northern Ireland have been dissolved, there has been no loss of money whatsoever, nor have any defalcations been reported. By the end of 1977 there were 97 credit unions registered in Northern Ireland, with a total membership of nearly 85,000, total assets of £16 million and total loans outstanding of £14 million.
  There are several reasons for this good record. The first is that members of a credit union already have something in common. They may, for instance, live or work in the same place, or be members of the same church or group. This means there is a degree of co-operation and trust among them, and a network of personal acquaintance. Borrowers are generally no strangers. A credit union can usually assess their creditworthiness on the basis of at least some personal knowledge. Deliberate defaulting is also rare, because the money belongs to workmates, friends, or neighbours.
  A second factor is that a well-run credit union is more than simply a savings and loan club. When someone comes for a loan, for example, the credit committee may give advice on how rapidly it would be sensible to repay this and other debts. A third point is that most credit unions are comprehensively insured against fraud and theft.
  These features will be reinforced by the many prudential rules in the Bill, which will substantially reduce any remaining risk of insolvency. I shall come to these later. In addition, the credit unions have agreed that they should have some sort of scheme for share and deposit protection, comparable to those which other institutions are setting up under the impulse of the Banking Bill. We are discussing with the credit union organisations what form this should take.
  802
  I turn now to the Bill itself. If it is accepted that the credit union movement should be given a full opportunity to develop and expand, a new statutory framework is essential.
  Hon. Members should be aware that this Bill needs to be considered together with the Industrial and Provident Societies Act 1965, because it provides an extension of the provisions of that Act to cover credit unions. The provisions of the Bill will be administered by the Chief Registrar of Friendly Societies and the assistant registrars for England, Scotland and Wales.
  Registration of a credit union will be accomplished under the Industrial and Provident Societies Act 1965. Provided that the rules of the credit union contain those matters specifically required by the Bill and provided also there are the requisite number of members—a minimum of 21 and a maximum, normally, of 5,000—registration will be effected if the registrar is satisfied on two main factors. These are, first, that the objects of the applicant society are those, and only those, of a credit union, and, secondly, that admission to membership is limited to those persons who satisfy the conditions of a common bond, which must be set out in the credit union's rules.
  The Bill defines what are to be the objects of a credit union. They are the promotion of thrift among the members of the society, by the accumulation of their savings; the creation of sources of credit for the benefit of the members of the society at a fair and reasonable rate of interest; the use and control of the members' savings for their mutual benefit; and the training and education of the members in the management of their financial affairs.
  Clause 1(4) lists the common bond qualifications which are appropriate, as being one or more of the following: following a particular occupation; residing in a particular locality; being employed in a particular locality; being employed by a particular employer; or being a member of some other bona fide organisation. The Bill also makes provision for such other qualifications as are approved by the registrar. This will enable the registrar to approve other forms of common bond, from time to time, which are appropriate to a credit union.

  803
  It is also necessary to ensure that the common bond is a real one. A society whose only qualification for admission to membership was one which was so wide as to lack any real element of community would not provide the necessary foundation of mutual trust and co-operation. For example, a requirement that all members must reside, or be employed, in Greater London would be unlikely to be acceptable as a qualification for registration even though, on the face of it, it might be said to meet the criterion of residence in a particular locality.
  So, Clause I gives the registrar some discretion to consider the circumstances in deciding whether the qualification is appropriate to support the existence of a common bond in any particular case.
  There is one exception to the "common bond" requirement for joining a credit union. Provided the rules of the credit union concerned so allow, a person may be admitted to membership of a credit union if he belongs to the same household as someone who is already a member and who fulfils directly the specified qualification for membership.
  When the registrar is satisfied that the rules, objects and common bond provisions of the applicant society conform to the statutory requirements for registration, and he is also satisfied as to the society's name, an acknowledgment of registration is given. The credit union thereupon becomes a body corporate under its registered name by which it may sue and be sued, with perpetual succession and a common seal, and with limited liability.
  I should also mention that the Bill makes special provision for the re-registration of those few credit unions already registered under the Industrial and Provident Societies Act, and for conversion of credit unions registered under the Companies Acts into societies registered under the new provisions in the Bill.
  The registered rules of a credit union, like those of any other industrial and provident society, are broadly equivalent to the memorandum and articles of association of a company.
  Within the limitations of the Bill, a credit union can make whatever provisions in its rules for the society's
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  management that it wishes. It must, however, include those particular matters which are set out in schedule 1 to the Bill.
  In addition to the name, objects, registered office and membership qualifications, the following matters must also be covered in the rules: how meetings are to be held, and how rules are to be made or altered; the methods of appointing and removing a committee of management and of officers, their powers and remuneration; the maximum shareholding of a member, and the mode of withdrawal of shares; how loans to members are to be made and repaid; audit of the society's accounts; provision for the withdrawal of members, and for terminating the membership so as to keep members within the permitted maximum, and for the repayment of shares of, or loans to, any member whose membership is terminated in this way; the manner in which the society may be dissolved.
  Membership of a credit union will be limited to individuals; a body corporate may not be a member. Each member must hold at least one fully paid-up share in the credit union; though he cannot be required to hold more than £5 in fully paid-up shares as a condition of membership, a member may hold up to a maximum of £2,000 in shares in a credit union.
  To join a credit union, a person must qualify through the common bond. However, it will occasionally happen that a member may cease to be within the common bond of his union. For example, if the common bond is employment by a particular employer, a member may leave that employment and thus might no longer qualify for membership. In such a case, where a member ceases to enjoy the common bond qualification, he will be allowed nevertheless, to continue as a member, provided that the number of such persons does not at any time exceed 10 per cent. of the total membership of the credit union.
  One of the principles of all registered co-operative societies—and credit unions will be no exception—is the entitlement of each member to cast one vote, regardless of the number or value of the shares he holds, on any matter which falls to be decided by vote. This is specifically provided for in clause 5(7).

  805
  The Bill provides that each society must have a minimum of 21 members and a maximum of 5,000 members. The registrar has a discretion, however, to permit the maximum to be exceeded.
  The actual operation of a credit union is, like that of any mutual society, very much a matter for the society itself. The registrar has powers to intervene in certain circumstances but, provided it keeps within the law and remains financially sound and viable, a credit union will be left to manage its own affairs without interference by the registry. The Bill does, however, make certain provisions in relation to the administration of a society, and I shall refer briefly to those matters now.
  First, I will mention some provisions with regard to those who put their money into a credit union. As distinct from a company, a credit union, in common with other industrial and provident societies, is not required to provide in its rule for the number or value of shares which it may issue. Every member must hold at least one fully paid-up share, and he may hold shares up to a maximum of £2,000, but he cannot be required to hold more than £5 in fully paid-up shares as a condition of membership. In practice, there-force, the share capital of a credit union will vary from time to time according to the shares allocated.
  All shares have to be of £1 denomination, and the dividends payable are not to exceed 6 per cent. per annum, or such other rates as may be specified from time to time. Shares are not transferable, the only exception being that they may be transferred by nomination on the death of the holder. Shares are withdrawable, but they may be issued only on terms enabling the credit union to require not less then 60 days' notice of withdrawal. There is, however, as I understand it, nothing to prevent a credit union in practice waiving this notice of withdrawal.
  Generally speaking, a credit union will not be able to accept money on deposit, but there is one exception. No one under the age of 16 can be a member of a credit union, but a credit union is to be allowed to accept sums on deposit up to a specified total amount from young persons under 16, which will be held in a separate fund on trust for them and invested so
  806
  as to produce an income, which will be distributed as interest to the depositors.
  There are a few provisions relating to those who may wish to borrow from a credit union. A credit union may only lend to a member, who is of full age, for a provident or productive purpose. It is left to the credit union concerned to provide, by its rules, whether, and if so what, security is required, but, if present practice is followed, most loans will be unsecured.
  The total amount which may be lent to any one member at any one time may not be more than the sum of his paid-up shareholding at the time, plus £1,250. This last figure may be varied from time to time by an order made by statutory instrument. Thus, if a person's paid-up shareholding is £250, his total borrowing must not exceed £1,500. In practice, the amounts borrowed are, on present experience, usually likely to be very much smaller than this.
  Any loan must be repaid in full within two years if it is unsecured, or within five years if it is secured. Again, these periods may be varied by statutory instrument from time to time.
  The statutory limit at present proposed for interest charged on loans is 1 per cent. per month on the reducing balance, and, although the rate charged by a credit union may be less than this, the rate may not be exceeded.
  The Bill makes provision for the holding and investment of a credit union's surplus funds, the funds received or accumulated from members, which are not currently required for its purposes.
  Apart from working cash, such funds will be kept in banks designated for the purpose by the Chief Registrar or invested in investments according to the manner laid down by the Chief Registrar in an order made by statutory instrument. This order will, I expect, be somewhat similar to the authorised investments orders made under the Building Societies Act 1962.
  In addition to holding a proportion of its funds in liquid and near-liquid form, the building up and maintenance of adequate reserves is obviously essential for the sale and successful operation of a credit union. The Bill therefore requires that at least 20 per cent. of any profit in any year of account is to be transferred to a general reserve, until such

  807
  time as the reserve is equal to at least 10 per cent. of the total assets of the credit union. Thereafter, the general reserve is to be maintained at not less than 10 per cent., but not more than 20 per cent., of the total assets.
  This provision for the building up and maintenance of the general reserve has first call on a credit union's profits. After that, not less than 90 per cent. of any profits remaining must be applied in payment of a dividend to members on their paid-up shares; or as a rebate of interest paid by or due from members who have received loans; or, provided that a dividend of at least 3 per cent. is paid to members on their paid-up shares, up to 10 per cent. of the year's profits may be applied for any social, cultural or charitable purpose.
  Exactly how the profits are to be applied within these guidelines is determined by the credit union itself—that is to say, by its members in general meeting.
  The bulk of a credit union's income will come, of course, from lending to its members, and the Bill provides that this will be completely free from tax.
  Credit unions will also have some income from investment, but this will be relatively small. It will be subject to corporation tax at the special rate of 40 per cent. which applies to all industrial and provident societies. The dividends that a credit union pays its members will be subject to personal tax, but because these dividends have not so far been taxed in Northern Ireland—with the knowledge and approval of the previous Government—the dividends paid by existing credit unions throughout the United Kingdom will, as provided in the Bill, be exempt from tax.
  The registrar is also to be given powers which may be exercised in the interests of members of a credit union or those who are likely to become members. These powers broadly correspond with the powers which he already has in relation to other societies, in particular building societies and friendly societies. For example, he may, with the consent of the Treasury, if he considers it in the interest of members or potential members, suspend the operations of a credit union, by prohibiting it from borrowing money,
  808
  from lending money, from accepting new subscriptions or making repayments of shares, or from doing one or more of these things.
  Mr. John Lee: Concerning the registrar's powers, will my right hon. Friend indicate the sorts of circumstances in which he would envisage that the registrar might permit a maximum to go beyond the statutory provision of clause 6(2), namely, 5,000?
  Mr. Davies: I think that they would be fairly exceptional circumstances, as far as one can see at the moment, but if credit unions were to develop and the 5,000 limit appeared to be a little low—that might take a considerable time—no doubt the registrar would consider exceeding the maximum. But, apart from one or two specific cases, it is very unlikely at the moment that the maximum limit would be allowed to be exceeded.
  The registrar may also cancel or suspend the registration of a credit union in certain circumstances, for example, if it appears that there no longer exists a common bond among its members.
  There are also fairly wide powers to appoint an inspector to investigate and report on the affairs of a credit union as well as to petition for winding up.
  I have touched only upon what I think to be some of the more important provisions of the Bill, but I hope that this will have been of some assistance to hon. Members in providing a broad outline of the proposals in it.
  Credit unions have the twin virtues of providing a source of low-cost domestic credit while encouraging saving. In recent years, we may have overlooked the value and advantages of such institutions operating on a smaller, more human scale, and particularly of institutions which embody mutual co-operative principles of self-help. The Bill will rectify that omission and provide a statutory framework within which credit unions can be recognised, supervised and made accountable. This is a goal for which credit unions themselves have fought, and I believe that it is a worthy one.
  4.19 p.m.
  Mr. Peter Rees: I am sure that the whole House is grateful to the Minister of State for the

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  moderate and lucid way in which he expounded the Bill. The debate on the Bill might he regarded as a tranquil interlude amid rather more contentious business. Some people outside the House might even wonder why we should be devoting our time, at this juncture in the nation's affairs, to a matter apparently of such small importance, but I hope that the speech of the Minister of State—and, indeed, the contributions from each side of the House—will persuade those in the country outside that this is a small but important matter.
  Credit unions, as the Minister of State, I hope, has demonstrated, are both interesting and useful phenomena. I pay tribute to the hon. Member for Farnworth (Mr. Roper), who has drawn to the attention of the House the possibilities of credit unions. I have no doubt that he will take personal satisfaction in this Bill.
  The House will have become used to industrial co-operatives, and so we perhaps could describe credit unions as banking co-operatives. But in so describing them I should not like to be thought to be encouraging either the NEB or the right hon. Member for Bristol, South-East (Mr. Benn) to take a closer interest in them.
  Mr. John Tilley: Why not?
  Mr. Rees: Because I believe that credit unions have flourished without undue Government interference or supervision. So far as possible we should encourage that. Where it is necessary to regulate and provide a legal framework, it is the duty of the House to do so. But, subject to that, I believe that if people can regulate their own affairs and can develop a useful, practicable and profitable vehicle for saving and for credit, they should be allowed to do so without excessive public interference.
  The history of credit unions shows that they have flourished without undue attention from this House. As a matter of historic interest, I remind hon. Members that credit unions were first devised in Bavaria in the middle of the last century. They were exported to the United States and to Quebec, and they found their way back to these islands through Ireland, where I suppose they have become the successor to the gombeen man. I have no doubt that the right hon. Mem-
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  ber for Down, South (Mr. Powell) will have pertinent comments to make about that. They have also come back through the West Indian community in Great Britain.
  The Minister of State told us how the Crowther committee gave them a favourable nod, and I suppose that the House today is taking up the story where the committee left off. The Minister of State commended them to the House as providing a form of low-cost domestic credit. At this juncture in our affairs, with the minimum lending rate at 14 per cent., that must be a laudable and praiseworthy objective, and one that I am sure will commend itself to the country. Perhaps as a result of the combination of this debate and current financial circumstances more people will be induced to take a closer look at credit unions and their advantages for themselves and their families.
  The Minister of State referred to the objects of the credit unions and he quoted from clause 1(3), which demonstrates clearly what they are all about. I have some slight reservations about subsection (3)(d), which states that one of the prescribed objects of a credit union must be
  "the training and education of the members in the wise use of money and in the management of their financial affairs."
  Without seeking to introduce a contentious note, that strikes me as being a little paternalistic, not to say patronising. It smacks a little of a committee of prosperous members of that Edwardian middle class, presided over, perhaps, by the Webbs, devising a form of uplift for the Edwardian working class. I hope that we have moved beyond those days and that if there is to be training for the members of the society in the management of their financial affairs it will be merely as a pleasant by-product of a credit union rather than a prime objective.
  Mr. J. Enoch Powell: Did the hon. and learned Member for Dover and Deal (Mr. Rees) happen to notice that in his opening speech the Minister of State omitted the words
  "the wise use of money"
  from his quotation from subsection (3)(d), which suggested to me at the time that he, too, might be sharing some of

  811
  the sensations experienced in this connection by the hon. and learned Gentleman?
  Mr. Rees: I noticed that, but since, as I said, I did not want to introduce a note of acrimony into what I hope will be a constructive and friendly debate, I did not wish to make excessive use of the Minister of State's sensitivities on this point. It is fair, however, to bring to the attention of the House the precise wording of the object prescribed in the clause. If a credit union cannot demonstrate that one of its prime objects is the training and education of its members in the
  "wise use of money and in the management of their financial affairs",
  the registrar would be within his rights, or even bound, to deny it registration. But perhaps this a minor matter best probed in Committee. I am glad that the right hon. Gentleman's sensitivities on this point are the same as mine and, I suspect, the same as those of the Minister of State.
  I suppose that the first question that we ask is whether we need legislation of this kind. Certainly we Conservatives do not applaud legislation for its own sake. However, I understand that there has been pressure from a steering committee of the credit unions, over which the hon. Member for Farnworth presides, because it feels that they need to be legitimised in some way. Perhaps they feel that it enables them to exercise a closer claim on the loyalties of those who might participate, especially if credit unions are to expand. I am not entirely certain whether I understand their fears and anxieties on this point, but perhaps I had best leave the matter to the hon. Member for Farnworth to tell us in what way the committee feels that the position of credit unions would be made more secure under the Bill.
  I well understand that there is a problem about how credit unions should be fitted into an extremely complex legal and financial mosaic. Somehow they must be reconciled with the Industrial and Provident Societies Act, the Consumer Credit Act and the Banking Bill, of which my hon. Friend the Member for Hitchin (Mr. Stewart) will be able to tell the House something since he has been on the
  812
  Standing Committee examining the Bill. We shall no doubt have to explore in Standing Committee how this Bill fits into this complicated jigsaw.
  We shall have to explore such esoteric questions as how far the committees or members of credit unions should be regarded as debt counsellors for the purpose of the Consumer Credit Act, but I do not think that it is necessary to take up the time of the House on that subject now.
  The next question is whether, in deferring to the steering committee of credit unions and in helping credit unions to achieve the laudable objectives set out in the Bill we may not be trussing them up a little too tightly.
  The Minister of State, with his customary fairness, has drawn attention to some of the restrictions, limitations and safeguards which are to be built in. I merely draw the attention of the House —briefly now, because this matter is more appropriate for examination in Committee —first to the limitation on dividends in clause 7(6), and, secondly, to the provision for 60 days' notice of withdrawal. I was not entirely certain from what the Minister of State said whether this is merely an enabling provision for the committees to impose a 60-day limit or whether it is mandatory. The Minister of State has a keen eye for these legislative details, and perhaps mine is a little blurred.
  I am a little perturbed, too, about the inability of credit unions to accumulate their investment income because of the restriction in clause 8 about the requirement that they are to sell any land required as a security as soon as may be, under clause 11(4), and, finally, at the power of the registrar to suspend the operations of a credit union.
  This has always been found to be a particularly difficult power for any registrar to operate. I call to mind particularly the operation of the power in relation to insurance companies. There will always be the temptation, so as not to prejudice the existing members of a credit union, not to exercise such a power until the horse has bolted from the stable.
  Hon. Members may feel that, having made these points on the limitations imposed by the Bill, if I should now suggest that, if credit unions are to expand

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  this framework might not be adequate, I am being inconsistent. I hope not. It may be that what has been devised by the Minister of State is suitable where a credit union involves 21,210 or maybe 2,100 members. The House knows that the present limits are now set at between 21 and 5,000 members. However, the registrar has a discretion to accept a greater number of members for a credit union. If the experience in other countries is anything to go by, it could be that if credit unions catch on we could be faced with credit unions with many more members.
  I understand, for example, that the Caterpillar Credit Union of Illinois has 55,000 members, while the Navy Federal Credit Union, again a United States organisation, is worldwide in operation, presumably because it recruits from the United States Navy and has about $500 million of assets. If credit unions expand to that extent, we shall have to consider whether the framework of this Bill is appropriate and whether we should not go over to something that is more akin to our Companies Acts.
  I hope that whoever replies to the debate on behalf of the Government will say what will be the registrar's policy if a particular credit union is so successful that it wishes to expand beyond the 5,000 members mark, and whether he will insist that a new credit union is formed or will feel that a credit union of, say, 10,000 members can be comfortably contained within the provisions of this legislation.
  If the figure goes beyond the 5,000 mark, the House may wish to impose rather more restrictive conditions on those who form the committee of the credit union. Indeed, we may have to consider whether there should be any restriction or regulation on the transmission of money between various branches. If a credit union has as many as 55,000 members, it will be not much less than a clearing bank, although perhaps devoid of some of the functions of a clearing bank. It will be necessary to see whether it should be supervised in a closer and more professional way.
  I now turn to the subject of taxation. I hope that the Minister of State will forgive me if I say that I thought he skated a little cursorily over the thin ice of that pond. We are told that the profits of a registered credit union are not to be sub-
  814
  ject to corporation tax or income tax. That may seem to be a massive privilege and one that offsets all the limitations and restrictions imposed by this Bill.
  I wish to remind the House—and I hope that the Minister will be able to confirm this later—that most credit unions will probably not be subject to corporation tax or income tax in any event because of the principle of mutuality. I am referring to the mutual interest of all the members involved who will be borrowing from and lending to each other. This is not a massive privilege. I also notice that interest on loans is not to be taxable.
  Mr. Denzil Davies: I should make it clear—and I shall expand on this later if I have the opportunity to do so—that the Inland Revenue has taken the strong view that without legislation credit unions will not benefit from the exemption of mutuality to which the hon. and learned Gentleman has referred. Without this legislation giving them a specific exemption, they would be taxable and would not gain the mutual benefit exemption.
  Mr. Rees: We are grateful to the Minister for making the position clear. He is right to state the Inland Revenue's view. I can only say to the House, with a certain diffidence, that I should have thought that the mutuality principle did apply. There has been no test case taken, so far as I know, and no doubt the hon. Member for Farnworth will be able to confirm this. Certainly, so far as I know, no case has gone to the general or special commissioners—and certainly none has been heard by any higher court which supports the proposition just advanced by the Minister of State.
  I do not think there is a great gulf between us on whether credit unions should be exempted in the future. This Bill will put the matter beyond doubt. It may be a matter of academic interest for tax lawyers as to whether credit unions should or should not have been subject to tax in the past. But if a credit union is not eligible for registration, or if it is de-registered, the point may become somewhat acute. I have no doubt that such unions will take advice and test the position in the courts.
  I see from the Bill that interest on loans to members is not to be taxable. I would have thought that such interest

  815
  would also be subject to the mutuality principle. The Minister has said that income from outside sources is to be taxable. It may be that my attention wandered at that point in the Minister's speech, but I was not sure at what rate it would be taxable. Perhaps he will say whether it is to be at 40 per cent.
  Mr. Denzil Davies: Yes.
  Mr. Rees: I am grateful to the Minister for that information. If that is so, there may be a case—and this point is more appropriate for Committee—whether they should be entitled to at least a measure of relief for their management expenses against their outside investment income. I do not think that we have a concluded view from this side of the House, and we should like to hear the arguments deployed in more detail.
  The next, and perhaps the most important, point to be considered is how the distributions of a credit union to its own members should be treated. The Bill appears to say that credit unions which now exist, or new credit unions that take over the business of established credit unions, will not be subject to tax on any distributions which they make to their members. This is certainly the position that has obtained until now in Northern Ireland, and it may be the position that has obtained until now in Great Britain. However, henceforth new credit unions, whether formed in Northern Ireland or Great Britain, will be subject to tax on distribution to their members.
  This may be a point of some importance since they are obliged after a certain level is reached to distribute their surpluses. This will bear hardly on new credit unions and will provide an incentive to people to try to join old credit unions rather than to form new ones. I do not believe that such a move would necessarily be for the good of the credit union movement. Indeed, it will increase the pressure to push credit unions beyond the 5,000 members mark. Therefore, there is an inconsistency which we shall have to explore. The position is a little untidy, but that is not the important point. The important point is that there should not be discrimination between old and new credit unions. We shall have to press the Minister more closely in Committee about why he feels that this distinction
  816
  should be drawn. I do not know whether the Minister of State now wishes to add to his earlier remarks.
  Mr. Denzil Davies: Perhaps I may ask the hon. and learned Gentleman—I do not necessarily wish to have an answer now, and I appreciate that there is a certain inconsistency—whether he is arguing that in all credit unions dividends to members should be free of income tax or that dividends to members should be taxed in respect of all credit unions.
  Mr. Rees: The Minister of State is right to press me on this matter. There are two logical positions. One can argue that the exemption should apply to all credit unions, notwithstanding what has happened in the past, or to none. I concede that the Conservative Administration tolerated, connived at and perhaps even encouraged the exemption from tax for credit unions in times past. All one can say is that logically all should be exempt on distributions to members or none. We should like to hear the arguments deployed a little more fully, because the Minister of State will readily concede that he merely indicated the position without advancing any arguments for either course of action.
  Since I have not had the chance to consider the matter in the light of any further arguments to be advanced by the Minister of State, I prefer to reserve our position. This was a point which the Minister did not explore very fully in his introductory remarks and perhaps this is a matter which we shall wish to examine in Standing Committee.
  In conclusion, I shall say that we on the Opposition Benches support credit unions. We support any measure that will give them legitimate encouragement and, therefore, in principle we welcome the Bill. We have reservations about the details, but these we can explore in Committee. We welcome the introduction of the Bill and we hope that it has a fair wind tonight.
  4.40 p.m.
  Mr. John Roper: I begin by declaring an interest in the Bill, albeit a totally non-pecuniary interest. For the past eight years I have advised, in an honorary capacity, the Credit Union League of Great Britain on matters associated with credit union legislation.

  817
  More recently I chaired the credit union steering group, bringing together the various credit union organisations in this country.
  The debate marks an important milestone in the efforts of the league and the National Federation of Credit Unions to obtain a satisfactory legislative framework. In a moment I hope to come back to the point raised by the hon. and learned Member for Dover and Deal (Mr. Rees) about why it is necessary to have a satisfactory legislative framework for credit unions.
  I begin by paying tribute to the considerable efforts made by my right hon. Friend the Minister of State and his officials in the Treasury to understand the practice and problems of credit unions and to incorporate the result of their understanding in the provisions of the Bill. I should also like to mention the helpful advice provided by not only the Chief Registrar of Friendly Societies for Great Britain but those in the Department of Commerce in Northern Ireland responsible for the administration of credit unions and the registrar in that Province. As I believe my right hon. Friend said, that advice led to a number of important changes in the Bill.
  The hon. and learned Gentleman, in the historical excursion with which he began his speech, went back to Bavaria. Indeed, one of the roots of the credit union movement is the Schultze-Delitsch in that country. It is interesting that, according to the autobiography of Ed Filene, who was a prosperous Bostonian largely responsible for the development of the credit union movement in the United States, he discovered the idea of small-scale credit co-operatives on a world tour during the opening years of this century. He made the discovery in India, where, in the province of Bengal, a Scottish agricultural development officer had started small-scale credit co-operatives. It is perhaps approprate that what Filene learnt from a British—I was going to say colonial British—administrator in Bengal in the early part of the century has gone round the world and, in a sense, is now coming back to this country through the Bill—although, of course, we have learnt from other movements such as Desjardins, started by the French in Canada, and the German tradition.
  818
  I should like to say a word about the points made by the hon. and learned Gentleman on the need for legislation. Quite clearly, whenever we consider additions to the statute book, a case must be made for them.
  There are three reasons for legislation. The first is to find an appropriate form of corporate law in which a cooperative body such as a credit union can fit. The Companies Acts sit somewhat heavily on a co-operative body. That is why we have a separate body of co-operative law and the industrial provident societies legislation in general. That legislation does not provide for a financial co-operative's making small-scale loans to members. For example, it is not able to make unsecured loans. Therefore, there is clearly a need to amend the existing industrial and provident societies legislation if there is to be a corporate structure for credit unions.
  Secondly, as the hon. and learned Gentleman hinted, within the new framework of legislation for financial institutions in general, which was introduced by the banking legislation and which, as the right hon. Member for Down, South (Mr. Powell) is noting with some glee, derives from the EEC directive on financial institutions, there is a need to make provision for credit unions.
  Thirdly, there is a case for protecting against abuse the good name of a body such as a credit union which is acting on a relatively small scale, in a voluntary way in many cases. If we did not have —as we do in this legislation—restrictions preventing people from using the words "credit union" unless they operate in a proper way, a way laid down in statute, there would be a risk of abuse of the concept of a credit union. We could have people setting up something which they called a credit union but which operated in a totally unscrupulous way. If such institutions are to develop, which I think would be a good thing, we need a legislative structure.
  It is interesting to note that in almost all Commonwealth countries—I have checked most of them—there is already credit union legislation, much of it broadly falling within the general structure of their co-operative and industrial provident society legislation.
  I should like to make one or two comments about the matters contained

  819
  in the Bill and then say something about the general position of credit unions in the United Kingdom in the light of the Bill. As my right hon. Friend said, the Bill draws very largely on the legislation adopted in Northern Ireland in 1969. Indeed, that was the basis for the Private Member's Bill which I submitted to the House in 1972. The Government have taken advantage of this opportunity to make a number of changes. Many of them were foreshadowed by last year's White Paper, and many are based on the experience of credit unions, both in Northern Ireland and this country, since the passage of the original Act in Northern Ireland. Indeed, I think that power is taken in the Bill to enable these improvements to be made in Northern Ireland by statutory instrument in due course.
  Almost all of the changes are welcomed by the credit union movement as providing a firmer and more secure framework for the small-scale financial co-operatives. I would rather call them financial co-operatives than banking co-operatives. The concept of a bank is rather precise. I thought that the use of the phrase "banking co-operatives" by the hon. and learned Member might be misconstrued by the public.
  I am convinced that in the early stages of the development of the credit union movement it is right to have certain restrictions on their scale of operation and on the financial size of a member's participation in a credit union or, indeed, his borrowing from it. I should, however, warn my right hon. Friend that the figures quoted in the Bill—£2,000 and £1,250—as the limits of shares and the limits of borrowing beyond a member's shareholding were fixed about three years ago. In the light of inflation it may be necessary to increase them in Standing Committee so that they are more realistic.
  The role of the registrar, referred to by my hon. Friend the Member for Birmingham, Handsworth (Mr. Lee), is very important in connection with credit unions, as has been seen in Northern Ireland, where the registrar has played a particularly constructive role. Certainly, until a credit union reaches a membership of about 800 to 1,000 it is likely to be run largely by volunteers with limited professional assistance. In that
  820
  situation a clear legislative framework and satisfactory rules approved by the registrar—and, if necessary, the intervention by the registrar as outlined in clauses 15 to 18—are safeguards which I believe should be welcomed.
  I should now like to turn to two matters to which reference has already been made and which will no doubt take up some time in Committee. The first is the question of the best method of protecting the shareholdings of members of credit unions. There would appear to be two kinds of risks to which members' shareholdings might be subject—the first the risk of loss through fire or theft and the second the risks of loss through financial mismanagement or through a credit union's getting into financial difficulties.
  Although clause 14 makes some provision for insurance arrangements, I hope that in Committee we shall be able to look at the matter more carefully and, in particular, examine ways whereby it would be made obligatory for credit unions to provide insurance against loss of their members' savings through fire and theft.
  I hope that in the foreseeable future arrangements will be developed so that all credit unions have to provide obligatory insurance for their members' share accounts, as is already the case in most other countries, and as will apply to many of the other financial institutions covered by the Banking Bill. It may be difficult for what is at present an embryonic credit movement in this country to establish such an arrangement overnight, but it does not seem to me at all unreasonable for credit unions to be expected to do so within the next five years or so.
  The second subject, which was treated in a most interesting way by the hon. and learned Gentleman, and which will no doubt take up a good deal of our time in Committee, is the question of taxation of credit unions. The problems of mutuality when it comes to individual organisations are very complex. Although it is true that credit unions would presumably have been able to pursue the idea of mutuality, through the special and general commissioners, to lay down a satisfactory tax structure for them in a Bill of this sort may well be more

  821
  satisfactory than that somewhat risky alternative, particularly in view of the limited funds available to organisations such as credit unions to take cases through several stages of litigation. Unlike my right hon. Friend and the hon. and learned Gentleman, I am not expert at the tax bar. One of the points to which we shall need to return in Committee is the one that the hon. and learned Gentleman made about the need for relief for management expenses, which I do not think is totally satisfactorily dealt with in the Bill.
  On the more general problem of relief on share interest, my right hon. Friend has a most difficult task to be fair to the existing credit unions—especially those in Northern Ireland, which has so far enjoyed a very favourable tax regime—without creating unacceptable anomalies in the treatment of credit unions and comparable financial institutions. Clearly, the movement is very unhappy about the situation that will now be created, in which there will be a distinction between new and old credit unions. I know that in Northern Ireland this matter has given rise to serious concern. We shall no doubt return to the matter in Committee, where I hope it will be possible to find a satisfactory solution, although I think that it will be a difficult task.
  I now turn briefly to the broader issues of the movement's future in this country. It is still relatively small in scale, although the remarkable progress that has been made in Northern Ireland since 1969, in a period which has not been very likely to be conducive to the growth of a new social movement, but where the movement has grown so that it now has assets of about £16 million, is an indication that the passage of legislation may well provide an important spur to growth in this country.
  There are some—the hon. and learned Gentleman referred to them in passing—who point to the United States credit union movement and in particular the rather atypical giant credit unions there. They suggest that the British credit union movement will suddenly follow their example. The hon. and learned Gentleman referred to the navy credit union. I was interested to learn recently that it has two branches afloat in aircraft carriers of the United States navy and has a branch in the British Crown colony of
  822
  Hong Kong—and, for all I know, in other places.
  Having said that, I think it is worth remembering that 80 per cent. of credit unions in the United States have fewer than 1,000 members. The typical American credit union is not one of the giants but is something much more closely linked to a particular workplace or community. Although there are the giants, somewhat atypical, they should not be allowed to distort the general national picture. Rather less than 10 per cent. of American credit unions have moved from the bread-and-butter business of credit unions into such matters as credit cards and share draft arrangements.
  I believe that, in spite of the extra range of financial services already provided in the United Kingdom, there will be a place for credit unions in Britain and that additional competition in the provision of financial services can only benefit the consumer. In particular, we may see a fairly rapid development of credit unions associated with people's workplaces. This has proved an important aspect of credit union development in Australia and Canada.
  When in the United States recently I was interested to see that both the Senate and the House of Representatives had their own credit unions. I hope that the day will not be too far off when we establish a Palace of Westminster credit union. I was glad to hear what my right hon. Friend said about the fact that those ceasing to enjoy membership of the common bond could retain their membership of the credit union.
  The Bill is no guarantee of the successful growth of credit unions in this country. However, its passage will ensure a fair base for their future competition in the financial market place in bringing basic financial services to their members on a co-operative basis.
  I am very pleased to have heard Second Reading moved in the way that it was on behalf of the Government and to hear the words of support from the Opposition.
  4.57 p.m.
  Mr. J. Enoch Powell: If I had dozed off and then woken with a start to see you in the Chair, Mr. Deputy Speaker, and to hear myself called to follow the hon. Member for Farnworth

  823
  (Mr. Roper), I should certainly also have seen the hands of the clock move to about midnight and reached instinctively for the latest piece of EEC legislation. It is, indeed, ironical that even in this debate the hon. Gentleman and I have found ourselves dogged by the subject, but it is at any rate a relief to be only tangentially concerned with it, and I am glad to follow someone who is so much better informed on this subject not only than I am but, I think, than most hon. Members.
  As the explanatory memorandum asserts, and as the Minister of State made clear in his opening speech, in this legislation the House is following a precedent set by Northern Ireland. For once, Northern Ireland has been in this respect the pacemaker for the kingdom.
  The Bill will, however, also alter the law governing credit unions in Northern Ireland. Indeed, if hon. Members look at clause 30(4), a newly devised but useful formula, they will realise that the various stages of this Bill are effectively the only opportunity that hon. Members representing Northern Ireland constituencies will have to influence the law that will apply in Northern Ireland.
  Therefore, I should be obliged if before the Committee stage the Minister of State could possibly provide a brief analysis which would show how the law as it will result from the Bill as it stands differs from that obtaining now in Northern Ireland under part III of the Industrial and Provident Societies Act (Northern Ireland) 1969. That would be a convenience not only in Committee but in the consultations which it will be the duty of my hon. Friends and myself to hold with those who are managing credit unions in the Province.
  There is, however, a mysterious rumour—perhaps it is no more—going about which perhaps the right hon. Gentleman could clear up before we end this debate. I was told in a communication from one of the credit unions in Northern Ireland that the board of the Irish League of Credit Unions had a meeting with officials of the Department of Commerce in Belfast, who informed them that credit union legislation in Northern Ireland
  "would not always have to run parallel to credit unions on the mainland and that it was
  824
  the intention of the Northern Ireland administration to commence drafting a consolidated Credit Union Act for Northern Ireland credit unions. This Act would be completely separate from the Industrial and Provident Societies Act."
  I find that statement—it is evidently an impression which has been gained by credit unions in Northern Ireland—difficult to square with the purpose and content of this Bill. While obviously consolidation is always useful, I should have hoped that the result of legislation would not be to continue the development of the law in the two parts of the kingdom on different lines but to bring them into one corpus. Perhaps any misunderstanding on that score could be laid to rest by the right hon. Gentleman.
  Incidentally, it may be that this and other misunderstandings have been assisted by the fact that whereas in Great Britain the Association of Credit Unions covers Great Britain only, in Northern Ireland the relevant association, which is the Irish League of Credit Unions, covers credit unions which are operating in two different countries under different codes of law—perhaps under codes of law which will continue to be different. It might well be that it would be to the advantage of credit unions operating in Northern Ireland to form their own association, especially now for the purpose of dealing with this legislation and with the changes which will flow from it. I say that in no desire to create division where division does not exist but simply because it is obviously more convenient for collective representations to be made in respect of one system of law only.
  Clause 30, to which I have already drawn attention, provides for certain reciprocal arrangements between the Treasury and the Northern Ireland authorities to be made under subsections (1) and (2). I wonder whether the Minister of State could explain a little more fully what is the purpose of those reciprocal arrangements. It may be that they are simply to facilitate the operations of Northern Ireland credit unions, whose members are resident, either temporarily or permanently, in Scotland and in England, and vice versa, or there may be some deeper purpose in these reciprocal arrangements which are to be made under clause 30. If the right hon. Gentleman can obtain the information in time, I

  825
  wonder whether he could give some enlightenment on that matter, as it may be of guidance in preparing for the Committee stage.
  Certainly there is one feature of clause 30(1) which, for those not in the know, may require a little elucidation. The clause refers to the Treasury making reciprocal arrangements
  "with the Department of Commerce or such other authority as may be specified … by any measure of the Northern Ireland Assembly."
  There is, however, no such body as the Northern Ireland Assembly. It may be that we are not within sight of the existence of such a body as the Northern Ireland Assembly. Nor would the Treasury, I believe, under present arrangements, deal direct with the Department of Commerce for Northern Ireland. The Treasury, as is well known to cognoscenti, is in fact a Minister, although it does not sound like a Minister. One Minister would presumably deal with another Minister—in this case the Secretary of State for Northern Ireland.
  The secret—or part of the secret—is that all these terms are reinterpreted by a schedule to the Northern Ireland Act 1974, the constitutional Act under which we are at present working. I shall not repeat, other than formally, my protest against writing into current Acts of Parliament provisions which relate to hypothetical and improbable circumstances, but perhaps the Minister of State would indicate how these reciprocal arrangements will be made and between which actual authorities they will be agreed; for it is obvious from the commencement clause—clause 31—that the reciprocal arrangements are intended to be made without appreciable delay, so that they clearly cannot be made as a result of anything done by the Northern Ireland Assembly. Perhaps the right hon. Gentleman will indicate how this will be organised.
  Not unnaturally, a good deal of what has been said already—and I am sure that this will hold true of the remaining stages of the Bill—has related to taxation. It is unfortunate that clause 23, relating to taxation, is the only clause which was not in the form of the Bill previously published in Command Paper 7303 issued in the summer. Certainly we should have come better prepared and better briefed
  826
  on this subject if that clause had featured in the White Paper edition of the Bill. It might even be that the hon. and learned Member for Dover and Deal (Mr. Rees) would have been in a position to answer the question put to him by the Minister of State; but he and I have been under the disadvantage that it was only when the Bill appeared that we were able to concentrate our minds upon the problem of taxation.
  As was indicated, the impact of this clause on credit unions in Northern Ireland will be severe. Owing to arrangements which were made locally under the Northern Ireland Administration, the outside income of credit unions—if I may use that convenient but inaccurate expression; I hope that it is understood—has borne only 20 per cent. corporation tax instead of the proposed concessionary 40 per cent. and members of unions have been free from taxation altogether on the share interest which they received.
  Incidentally, I wonder whether I am right in thinking that hon. Members who received loans from credit unions were not able to offset against tax the interest that they paid on those loans. I have seen a suggestion to that effect. It would perhaps bear upon the principle of mutuality and might be relevant to our subsequent debates if that were the case.
  I gather that the arrangements so far for credit unions in Great Britain have not been on the same advantageous lines tax-wise as those prevailing in Northern Ireland.
  Mr. Roper: As I understand it, the position in Great Britain is far from clear. The credit unions are not a homogeneous group. Some of them are incorporated and some are unincorporated. Some may have enjoyed the same position as those in Northern Ireland. Certainly there is no clear position for the credit unions in Great Britain.
  Mr. Powell: I am much obliged for that clarification.
  It is obvious that if we are now enacting what is in effect to be a United Kingdom code for credit unions—and surely a matter such as this should be regulated upon a United Kingdom basis —there must be uniformity in taxation.

  827
  Whatever might be the private feelings of the citizen about taxation in general or in particular, those whom my hon. Friends and I represent have no desire to be differentiated, for good or ill, in matters of taxation, from their fellow citizens in the rest of the United Kingdom. So we start upon the problem which is undoubtedly present with that presupposition.
  However, the solution which has been proposed in the Bill is unsatisfactory. It is unsatisfactory because it treats differently for tax purposes individuals who are in the same position: an individual who becomes a member of an existing credit union will be treated differently for tax purposes from an individual who, in identical circumstances, becomes a member of a new credit union. That seems to offend against one of the canons of taxation—that taxpayers in like situation should be treated alike.
  It also creates two classes of credit union, as well as two classes of taxpayer—the pre-1979 and the post-1979 credit unions. I wonder whether it can be in the interests of the development of this movement, to which evidently the House generally looks forward, to place disadvantages upon new credit unions. As the hon. and learned Member for Dover and Deal said, it must obviously stimulate the growth in size of existing unions. It may even generate pressure towards increasing the upper limit upon the size of unions. What it must do is to deter the creation of new credit unions. I do not think that this can be desirable.
  Credit unions reflect a common bond of many different kinds, sometimes connected with the place of work—I gather that that is the norm in the United States—at other times connected with place of residence. Almost without exception, the credit unions in Northern Ireland represent common residence and have, in fact, become credit unions for localities or communities. Surely we do not want to introduce into the Bill anything which will freeze the development of the movement exactly at the point which it has reached. If there is benefit in the spirit of this process— that was a view which the right hon. Gentleman the Minister of State evidently espoused—we ought to place no obstacle in the way of the establishment of new credit unions and new varieties of credit
  828
  unions. Yet here we are placing the most gross obstacle in the way by saying that existing credit unions are to live under one dispensation but the members of new credit unions will suffer comparative disadvantages.
  On the other hand, it would clearly be harsh for the credit unions in Northern Ireland suddenly to be brought into the full rigour of the proposed regime of taxation.
  I hope that it is in the light of the three factors which I have brought out—first, the desirability of a uniform United Kingdom tax system; secondly, the desirability of not making two classes; and, thirdly, the desirability of shielding the Northern Ireland credit unions from the wind of tax liability—that we ought to seek a more satisfactory solution in our deliberations in Committee.
  That said, I welcome, on behalf of my hon. Friends and myself, the introduction of this Bill. We believe that it will be beneficial in the Province from which we come, and we welcome it as another step towards uniformity of law and uniformity of practice between that part and the other parts of the United Kingdom.
  Obviously, there are many matters that will be dealt with in Committee; but if the right hon. Gentleman can contrive to respond to some of the points which have been put to him this afternoon before the close of the debate we shall enter upon the Committee stage better prepared.
  5.15 p.m.
  Miss Betty Boothroyd: The right hon. Member for Down, South (Mr. Powell) rightly indicated that Northern Ireland had been in the vanguard in the establishment of credit unions. He posed a number of questions about their future functioning under the proposed legislation. Alas, I am not in a position to respond to many of his questions. However, I believe that he is far too modest in saying that his knowledge of this matter is limited and that he was not particularly well briefed. He seemed to me to be particularly well briefed. No doubt he will go on posing his questions to my right hon. Friend the Minister of State, perhaps during this debate and certainly in Committee, so that, rightly, we are able to resolve this matter between

  829
  Northern Ireland and the rest of the United Kingdom.
  Those of us who are interested in the credit union movement and anxious to see that it flourishes in this country welcome the Bill as a worthwhile measure of social legislation. My hon. Friend the Member for Farnworth (Mr. Roper) introduced the subject into the House many years ago. I think that it was as a result of the basic work that he had done that almost a couple of years ago I initiated an Adjournment debate on this subject. Because of the procedures of the House, all that could be done at that time was to give the subject a general airing. Even so, it received a good deal of publicity. I probably had as much correspondence from individuals interested in this matter as on any other subject during my membership of the House. There is a great deal of interest in the whole subject.
  In replying to that Adjournment debate, the Minister of State naturally had to walk a tightrope over the question of legislation, but it appeared obvious then that the Government favoured such a development. Now, a couple of years later, it is with some satisfaction to me, at any rate, that the proposed legislation is before us.
  I am pleased, too, that the Minister of State introduced an international flavour in discussing the credit union movement, because it flourishes not only in Australia and Canada but in other countries throughout the Commonwealth. There are Commonwealth countries in which certainly the movement meets with success and performs a very valuable function. It is also very successful in those parts of the Commonwealth which are not, perhaps, as socially and economically developed as others.
  A good deal has already been said about Northern Ireland, so I shall not develop that point. However, I believe that in Eire there are about 280,000 members of credit unions, with assets totalling about £50 million.
  In all these countries there appears to be a legal framework. The framework and regulations which ensue from it have stimulated growth. We certainly look forward to similar success here for those unions which already exist.
  As I see it, the most important aspect of credit unions is that they encourage
  830
  regular savings. However small those savings are, regular savings are important. In turn, the way in which this operates also encourages a spirit of self-help and it fosters the community spirit. However, I share the sensitivity of the hon. and learned Member for Dover and Deal (Mr. Rees) in his point about clause 1(2)(d) and the wise use of money. Certainly I want to see fostered an educational objective by providing members with experience of financial management, but we must not be too paternalistic about the use of the words in the subsection.
  While savings are commendable, the loan facilities are also important. It may be no surprise to hon. Members to learn that half of Britain's working families do not have a bank account or a building society account. In times of real need, when a crisis arises and ready cash is needed, or when some unforeseen event strikes the family, it is in seeking to borrow money to cover that type of eventuality that people who have few savings and no collateral in terms of a bank account have to pay the high interest rates usually charged by the finance houses or the extortionate rates demanded by moneylenders.
  Those of us with bank accounts are able to provide some evidence of a track record, albeit not a very consistent one, and there is at least some collateral there. But the real problem for low-income families and small savers is not that they are unreliable borrowers. The contrary is the case. There is a good deal of evidence to suggest that it is not the poorest borrowers who default frequently. However, they lack the evidence to reassure those commercial lenders that they are reliable in their repayments. In this respect, therefore, the small borrower is assisted through credit unions.
  It needs to be emphasised that there have not been any cases of fraud. The existing credit unions are managed by very honest people who are leaders in their own communities and who are seeking to help their communities. But there is a potential danger that even one case of fraudulent practice could tarnish the image of the credit union movement and do considerable harm to its growth and to the individuals working in it. The earlier clauses in the Bill which provide for the legal framework obviously stem

  831
  from the realisation that there is at present little protection under the law in terms of a framework which is an essential ingredient for the movement's prosperity.
  Clauses 5 and 6 deal with membership and the rules of credit unions. The minimum membership is to be 21. This is quite realistic, bearing in mind the distinctive feature of credit unions, which is that those who form their membership have a common bond. The members of a credit union are known to each other. They work in the same shop or factory. It may be that they belong to the same voluntary organisation. They may be members of the same tenants' association or immigrant group. There is an interdependence and, because of this feature, it is necessary to have a fairly low minimum membership. Many of them are in small communities. If the members make up a tenants' association, it may be that there are few people involved. The same often applies to those on the shop floor in a small factory. So I do not challenge the number, but it will be interesting in Committee to discover how the number has been arrived at.
  I was grateful for my right hon. Friend's explanation about the procedure to be followed when because of a member's mobility he moves out of the neighbourhood or changes his job and has to break the common bond and withdraw from the credit union. No doubt a good deal further will be said about this in Committee.
  Moving on to clause 10, I hope that my right hon. Friend will explain the thinking behind the sum of £1,250 which is to be the total amount of a loan to a member. I confess that I did not understand his opening remarks, and I hope that he will say how the sum has been arrived at. Has it been arrived at by examining the loans to members in similar societies in Northern Ireland or Canada. and has their experience been drawn upon?
  I do not wish to delay the Bill any further. As I said earlier, we had a debate on the matter some time ago. The Bill does not seem to be particularly contentious. At least that is the impression of the hon. and learned Member for Dover and Deal (Mr. Rees). I hope
  832
  that any creases in it can be smoothed out easily in Committee.
  It may be that the Bill is not too contentious because of the back-room work which has been put in over many years by the Treasury and by representatives of the credit unions and because of the early agreement which was reached on the rules for operation and supervision. I understand that the draft Bill has received support not only from the organisations directly concerned but also from the National Consumer Council, which acknowledged that such legislation would provide a proper foundation for the successful operation and the further growth of the credit union movement.
  All that I need say in conclusion, therefore, is that I hope to see the Bill make speedy progress not only this evening but in Committee, too.
  5.25 p.m.
  Mr. Jim Craigen: I, too, welcome the Bill. My colleagues in the Co-operative parliamentary group feel that this is a very useful measure which will do a great deal to develop the role of credit unions as genuine self-help co-operatives and assist them at the same time in encouraging sensible borrowing arrangements and mutual aid to the members of credit unions.
  The credit union movement has developed quite distinctly from the traditional consumer co-operative movement in this country. However, they have common aims in the operation of the co-operative principle. Unfortunately, until now they have not had the advantage of operating under the industrial and provident legislation.
  Tribute has been paid to my hon. Friend the Member for Farnworth (Mr. Roper) for his efforts to achieve a framework of legislation through a Private Member's Bill a few years ago. In essence he was trying to do for Great Britain what Northern Ireland had done for itself back in 1969.
  I take up a comment by the hon. and learned Member for Dover and Deal (Mr. Rees) about the timing of this Bill. I suppose there is never an appropriate time to deal with what appears to be a small piece of legislation. Yet, ironically, the Bill comes along at a, significant time when we are all concerned with inflation and the means of reducing it. I have no

  833
  doubt that in the years to come this legislation will do a great deal to accommodate those who do not readily find themselves catered for by the banks. hire purchase or the money-lending institutions. Moreover, it has the advantage of ensuring that the borrower knows the true cost of his borrowing.
  It is understandable that the Government should be sympathetic to the credit unions, since they are non-inflationary. They make loans out of existing savings and therefore do not create additional credit in the way that the banks do or more particlularly in the way that the credit card system is operating and creating a massive expansion of credit.
  Many detailed matters will be dealt with in Committee, and reference has been made already to the special problem of taxation on the dividend on members' share capital. I agree with the right hon. Member for Down, South (Mr. Powell) that it is quite wrong to operate double standards between new credit unions throughout the United Kingdom and those already in existence in Northern Ireland. Moreover, the idea of taxing all the dividend on share capital paid to members is unlikely to facilitate the type of growth which the Government clearly envisage for credit unions. such a liability to tax obviously will inhibit that initial growth and may oblige the credit unions to break through the 6 per cent. maximum dividend since they will come up against competition from the building societies and the National Savings Bank, for example. The answer is surely for the Treasury to exempt, say, the first £6 of interest on share capital. That would make it possible for any member of a society registered under the industrial provident legislation to invest the modest sum of £100 in fixed interest shares without being liable to tax.
  The cost of such an exemption to the Treasury would be insignificant, particularly bearing in mind the savings that would be involved through the Inland Revenue not having to deal with thousands of forms returning only minimal amounts liable to tax. If the Government are serious about wishing to see the increased development of credit unions, I suggest that such an exemption would be a considerable act of faith which would facilitate their growth.
  834
  Without detracting from earlier legislation on industrial common ownership and the Co-operative Development Agency, I suggest that this Bill will lead to the biggest development of co-operative organisation in the post-war years and do much to develop the idea of social and financial co-operation.
  I welcome the Bill and I hope that it will be strengthened in Committee, particularly in respect of the taxation provisions.
  5.32 p.m.
  Mr. Michael McGuire: The story of credit unions is not well known, but, while it has not been spectacular, it has been a success. Credit unions have a record of solid achievement and it is incredible how little is known about them in this country.
  The right hon. Member for Down, South (Mr. Powell), quite properly from his point of view, always looks at the connection between Northern Ireland and Great Britain. He skated over the fact that although legislation already exists in Northern Ireland, credit unions did not really start there. The movement started in the Republic. I am not sure when it spread north or whether the credit unions existed in Ireland when it was a united country.
  Mr. Powell: I am advised that the first credit union in Northern Ireland was established in Londonderry in 1961. There had been credit unions in the Republic a few years previously, but much later than the 1920s.
  Mr. McGuire: Credit unions have certainly been much more a feature of life in Ireland than in this country.
  I agree with my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) that the Bill will give an impetus to the co-operative principle. My hon. Friend is always magnanimous and, although he wants to pay tribute to the Co-operative Party, to which he proudly belongs and of which he is such a capable spokesman, I think that he will agree that the Bill will lead to an extension not of the Cooperative Society movement but of the spirit of self-help—though in a different form from the self-help that most of us know in our working-class communities.
  Immediately before becoming an hon. Member, I was a pit secretary and, before

  835
  that, a miner. We had our mini versions of self-help, including help with funeral expenses. That is an area that will become increasingly important because the State grant for burials is abysmally low and needs to be substantially increased. Our self-help schemes were well received and most members appreciated them, particularly when their families were in trouble. However, we had nothing like the framework of credit unions.
  The Bill will strengthen credit unions. I do not suggest that the movement lacks respectability, but the Bill will reassure people that legislation exists to guarantee various aspects of credit unions' affairs and it will encourage their growth.
  I join the tributes to my hon. Friend the Member for Farnworth (Mr. Roper). He has been a good advocate of credit unions and, as the right hon. Member for Down, South said, my hon. Friend probably knows more about this subject than anyone else. He would probably disclaim that because he is a modest man, but it is generally acknowledged.
  I know a little about credit unions because their headquarters is in Skelmersdale, which has one of the biggest single groups of members. There is a group in London which may have just a few more members than the Skelmersdale group. The movement in Skelmersdale has been a success story. The great value of credit unions was demonstrated when we had the massive blow of 3,500 jobs being lost in the town a few years ago. The credit unions were able to help the casualties of those factory closures in a way that even the best organised tontines and working men's clubs did not have the capacity to match.
  The credit unions have gone from strength to strength. The national organiser, Mr. Len Nuttall, is a personal friend of mine and he told me recently that even in advance of the Bill, which redeems a promise given by the Government, he is busier than ever. I hope that he has to take on more assistance and that credit unions will become as well known here as they are abroad.
  My hon. Friend the Member for Farnworth said that the American Senate and the House of Representatives have a credit union. He suggested lightheartedly
  836
  that perhaps we may soon have one in the Palace of Westminster. I do not know what our common bond would be, but apart from hon. Members and their Lordships we have about 2,000 people looking after us and it may be that the common bond would be the fact that we all work here.
  The Bill includes a provision that 10 per cent. of the members of a credit union can leave the common bond and retain their membership. In view of recent opinion polls, we may have to stretch that a bit in the Palace of Westminster, but polls are volatile and, when the good things that we are trying to do get through, the polls may turn back in our favour.
  A number of matters have cropped up in the debate on which we shall need reassurance. An important one is the question of taxation, and the exemption suggested by my hon. Friend the Member for Maryhill would be an act of faith that would positively encourage the growth of credit unions. This could be done without our feeling that we were conferring an extraordinary benefit on credit union members.
  I give my support to the Bill. It should have a speedy passage tonight, judging fey the number of hon. Members present. I hope that it will have an equally speedy and not particularly contentious passage in Committee. The result will be a Bill which will make credit unions much better known. They should be better known. The Bill will facilitate their growth. We will have helped positively to make a great success story out of what is at present a modest but solid success story.
  5.41 p.m.
  Mr. Ian Stewart: I am happy to follow the hon. Member for Ince (Mr. McGuire) and other right hon. and hon. Members in welcoming the Bill. The hon. Member for Ince was right in saying that a certain obscurity surrounds credit unions in this country. I have learnt much about them in the past few weeks since this Bill appeared on the horizon. I have learnt more today listening to some of the instructive speeches that have been made.
  Some hon. Members have made incursions into the history of the credit union movement. I want to make one lesser

  837
  incursion into history in my congratulations to the hon. Member for Farnworth (Mr. Roper) for his work to promote the idea of credit unions in this House in recent years. He has an impeccable financial background. He and I, 24 years ago, used to sling our hammocks in the same mess deck of HMS "Theseus". Between us, if I remember rightly, was the hammock of my hon. Friend the Member for Blaby (Mr. Lawson). How could anyone, having that sort of background, speak with greater knowledge and authority?
  There is little quarrel with the main body of the Bill. Like other hon. Members who have spoken, I welcome the objectives that the Bill sets out as justifying the development of credit unions. The emphasis on Scottish thrift and Victorian self-reliance appeals to the instincts of one with my Presbyterian ancestry. Hon. Members have been right to emphasise how helpful could be the development of credit unions in making finance available to those who have found it difficult to borrow from traditional sources. The remarks of the hon. Member for Glasgow, Maryhill (Mr. Craigen) were apposite on this point. If all goes well, the credit unions set up under this legislation could prove a useful form of co-operative activity.
  I do not know exactly what is meant by the phrase in clause 10 about lending for
  "a provident or productive purpose".
  I hope that it does not refer only to funerals, illnesses and such like. It seems to me that much more general, unexpected or unusual demands on credit, such as the cost of moving house, a holiday, a wedding or some family occasion may be financed in future by members of credit unions through borrowings from them.
  Mr. Michael McGuire: The hon. Gentleman mentioned funerals, to which I referred in an aside. I spoke of how people try to provide for that eventuality. The hon. Gentleman will be aware that the present scheme of credit unions provides a free insurance scheme which caters essentially for that purpose. It is provided as an extra benefit provided small conditions are met.
  Mr. Stewart: I agree that the guarantee fund idea and the arrangements under it providing for lump sums in such circumstances are a benefit of the system and
  838
  could be one of the factors which enable the movement to develop.
  The hon. Member for West Bromwich, West (Miss Boothroyd) emphasised, rightly, the value of the common bond and the personal knowledge between members of a credit union and potential borrowers which resulted. If that is preserved throughout the structure of credit unions, as governed by this Bill, all will probably be well. Doubts arise perhaps in cases where the common bond may become diluted or so extended that it is not meaningful. That may be one reason why there have been problems in other countries.
  It is true that there have been few credit unions in Great Britain. The hon. Member for Farnworth, with his great experience of the subject, explained why the legislative framework had not been suitable to credit unions in the past. Several hon. Members have contrasted this situation with that in Northern Ireland, where credit unions in the past 10 years have flourished and have more than doubled in number. The savings that they contain have risen more than eightfold in that time.
  This Bill is in many ways parallel to the provisions for Northern Ireland. It contains many detailed items which we shall need to examine in Committee. These include the criteria for registration, methods of supervision, rules for accounting, the size of membership, the use of funds, procedures for suspension and amalgamation, and so on.
  My hon. and learned Friend the Member for Dover and Deal (Mr. Rees) picked on the problems which may arise from anomalies in treatment for taxation. This point was also made, with his usual clarity, by the right hon. Member for Down, South (Mr. Powell). I do not wish to rehearse the points which have been made. It is clearly an area to which we shall have to pay further attention. I can think of a number of detailed implications. I give one example. If one credit union has a tax advantage over another, what would be the position on amalgamation? Would this preferential tax position carry through if one of the parties to the amalgamation had the tax advantage and the other did not? These sorts of matters, although proper for Committee stage, need to be mentioned now, not only to give the Minister and his

  839
  advisers notice of the issues we shall want to discuss but because they are typical of the difficulty of all regulatory legislation of this kind. When, a few months ago, we were discussing the equivalent stage of the Banking Bill, I had not realised the degree of complexity that could emerge when one considered detailed provisions in Committee.
  Another area to which we shall have to pay attention is the relationship of the Bill to other legislation. I mention the Consumer Credit Act. Will credit unions need to be licensed under part III of that Act? Will they be governed by the subsequent parts of the Act on seeking business, advertising, agreements and so on? Perhaps there is a clear answer. I ask this question because there is a strict requirement under the Consumer Credit Act that the true cost for all lending should be expressed at an annual rate of interest in very specific terms. In clause 10 of the Bill there is a limitation of 1 per cent. a month, but it is not expressed on an annual basis. This is the sort of issue on which we need to check.
  Another point comes to mind. In one of the schedules to the Banking Bill we already exclude credit unions in Northern Ireland, but, I imagine, for technical reasons, we are not yet ready to exclude credit unions which may be set up under a hypothetical Credit Unions Act 1979. I would think that a Credit Unions Act 1979 is at least as imminent a possibility as a Northern Ireland Assembly, referred to in clause 30. Perhaps we are allowed in legislation to anticipate the future to some extent. Obviously credit unions do not impinge on the Banking Bill but they are part of the financial framework which flows from it.
  Another point which is reminiscent of some of our debates on the Banking Bill relates to clause 3, which provides that
  "a person shall not, unless registered as a credit union … use in reference to himself a name, title or descriptive expression containing the words 'credit union' or any cognate term or any derivative of those words".
  Does that prevent anyone from describing himself as the treasurer of the XYZ credit union? I am sure that that is not the intention—it is tightly drawn and one can see that the intention is that unscrupulous people should not be allowed to use this term to make their activities respect-
  840
  able—but if it were to cause technical problems for credit union officers, that would be an absurdity.
  More importantly, we need to consider the position of credit unions within the country's financial structure. I hope that the Bill will enable credit unions to grow so as to enhance that structure rather than threaten it. There have been unexpected financial developments in recent years, such as the dramatic growth of the building societies and the pension funds.
  Probably few people would a few years ago have expected those bodies to reach their present size, yet both have developed by attracting funds from a large number of small contributors. That is exactly the basis that we are now planning for the future of the credit unions. Nowadays, the building societies and the pension funds are major components of our financial system. Credit unions may, and I hope will, also play a more significant part in future.
  That is why there has been some point in the discussion tonight of comparative international figures. I have been told that one-sixth of all the consumer credit in the United States is provided through credit unions. That is a high percentage. We have heard figures for the numbers of credit unions in Ireland, parts of the Commonwealth and the United States. I believe that there are almost 4,000 in Canada, covering almost one-third of the adult population. We must therefore be concerned about size.
  There are some anxieties about clause 6. As drafted, it appears to suggest that the Chief Registrar could have wide powers to circumvent the limit of 5,000 members for a credit union. As I said, the common bond factor might quickly become diluted in that case. That may not be the way in which the Chief Registrar will operate—creating joint credit unions on the pattern of other countries—but the powers seem to exist, so we should be aware of the dangers.
  The other area of anxiety relates to the functions of credit unions. Wisely, the Bill is fairly tightly drawn here. In America, what is called "correspondent credit unioning" has developed, under which credit unions interlock and provide reciprocal arrangements, thus creating a wider financial framework than the local or narrower common bond which was first

  841
  envisaged. They have even gone into money transmission with cheque-like instruments, the status of which is at present subject to litigation. In this respect the Bill is, and should be, tight.
  I hope that the Bill will prevent the exploitation of the credit union movement in undesirable ways. If we can avoid those dangers, it could have a substantial and valuable part to play. Parliament should be aware of the implications and the dangers, but I hope that it will not be frightened of accepting the Bill, after looking at it carefully and ensuring that it provides the proper basis for the development of credit unions.
  Regulation is obviously needed, and it must not be so tight as to stifle the movement altogether. Nor should it be so loose as to permit the uncontrolled proliferation of credit unions and their entry into areas of finance from which they are at present excluded in this country. I hope and believe that the Bill will achieve that balance.
  The acid test in such a matter is whether a Member would welcome such institutions in his constituency. I have not been able to discover that there are any credit unions in Hitchin—
  Mr. Deputy Speaker (Sir Myer Galpern): I have one at home, but my wife does all the borrowing.
  Mr. Stewart: You have possibly put your finger on one of the complications of credit unions that I was too tactful to mention, Mr. Deputy Speaker. But, avoiding the domestic aspect, from the constituency point of view, if there are not credit unions in Hitchin now, I hope that there will be in future. I shall have no hesitation in encouraging them.
  Subject to some of the anomalies which have been mentioned and questions which have been raised, which we can pursue in Committee, the Bill has been welcomed on both sides of the House. I trust that it will have an uncomplicated passage.
  5.56 p.m.
  Mr. Denzil Davies: Hon. Members on both sides of the House have welcomed the principles of the Bill. Some of their points are better left for Committee, but I shall try to deal with the major ones now.
  842
  The hon. Member for Hitchin (Mr. Stewart) asked whether the Consumer Credit Act applied to credit unions. Yes, it does, except that there is provision for the exemption of organisations which lend money at a certain rate of interest. In other words, because the interest is 12 per cent. the credit unions come within the exemption laid down by order in 1977. That exemption is not specific to credit unions. It is common to other organisations as well. Thus, basically, that Act applies, subject to the exempting order.
  On a technical point, the hon. Member asked whether a person would be able to describe himself as the treasurer of the XYZ credit union. The drafting may not be entirely accurate here. We shall look at that and see whether any change is necessary.
  The hon. Member also mentioned, as other hon. Members have done, the membership limit of 5,000 and the powers of the registrar. The registrar will have a fairly wide discretion. At the moment, I do not think that there is any problem. Most credit unions are far below the 5,000 limit. There may be one or two—there is certainly one in Northern Ireland—above that limit, but generally they are well below it and will stay below it for a long time. These matters may have to be considered again eventually, but not in the immediate future.
  The hon. and learned Member for Dover and Deal (Mr. Rees) asked why we needed legislation. I assure him that Treasury Ministers in this Government are not over-enthusiastic about promoting legislation, since we have now been legislating for almost four years. I ask that question, too, when any proposal for legislation is made.
  However, my hon. Friend the Member for Farnworth (Mr. Roper) answered the point about why a statutory framework is necessary. There is one in Northern Ireland which has encouraged and helped credit unions, and it is only right that they should be encouraged statutorily.
  The hon. and learned Member also asked about the 60-day notice of withdrawal. This is a backstop to enable a credit union, if it wishes, to lay down such a limit. It does not have to do so and in most cases it would not, but if it wanted to stop a run on the credit union

  843
  —a rare situation—it would have this power.
  The hon. and learned Member also mentioned accumulating investment income. One does not want credit unions to turn themselves into discretionary trusts accumulating all their discretionary income. They do not exist for that purpose. The same goes for selling land. They are entitled to own land for their own purposes, but one does not want to turn them into a kind of property company.
  Mr. Peter Rees: The Minister said that he did not wish to see credit unions develop into accumulating trusts, but there is a certain inconsistency between that proposition and the provision in the Bill that stipulates that they must accumulate part of their income until they have built up a certain reserve fund. I ask somewhat plaintively why they may not also accumulate their investment income to build up their reserve fund.
  Mr. Davies: I did not gather that the hon. and learned Gentleman's question was directed to building up the reserve fund. I thought that he was criticising the fact that they could not accumulate investment income. They obviously have to build up their reserves.
  My hon. Friend the hon. Member for Farnworth, from his great experience, made some important points. He thought that insurance should be made obligatory. We are examining insurance and the protection of deposits. It is difficult to deal with that in the context of small credit unions, but we shall no doubt come back to it in Committee.
  The right hon. Member for Down, South (Mr. Powell) raised a number of points on the Northern Ireland constitutional position and taxation. Before the Committee stage I shall provide him with a synposis of the difference between the present position and the position under the Bill.
  On clause 30(4), if the Bill becomes law it is intended that the Department of Commerce in Northern Ireland will bring forward legislation by an affirmative resolution—similar in substance, though there may be slight technical differences—to apply the provisions of the Bill to Northern Ireland. I do
  844
  not wish to encourage the right hon. Gentleman to put down too many amendments in Committee, but because of clause 30(4) he has the opportunity to influence the content of the affirmative resolution.
  Mr. Powell: The right hon. Gentleman may have made a slip of the tongue when he said "affirmative" resolution. I think that he means legislation subject to negative resolution.
  Mr. Davies: I stand corrected. Under the normal procedures it would be subject to negative resolution. But my point is that, although there may be one or two technical differences, the legislation will not substantially differ from the Bill, and the right hon. Gentleman will be able to influence the content of the Bill as it goes through the House.
  The right hon. Gentleman correctly suggested that in clause 30(1) the mutual arrangements are to enable Northern Ireland credit unions to have members in Great Britain and vice versa. That is not exclusive to trade unions, and applies to other provident and industrial societies.
  The point on the Assembly is that, if and when it is set up, it will be able to change the persons or authority whom the Treasury would consult. Under clause 31, the Treasury consults the Department of Commerce. If the Assembly were set up and wished the Treasury to consult its own officials rather than the Department of Commerce, it could do that under clause 31.
  Mr. Powell: Does that mean that at present it is with the Department of Commerce that the Treasury consults? If so, is it not an abnormal form of legislation to provide for a Minister—the Treasury is a Minister—to consult a Department? I do not necessarily expect the Minister to respond.
  Mr. Davies: It is not particularly abnormal. The consultation is between Treasury Ministers and Ministers of the Department of Commerce. But I shall consider whether this is the correct form of drafting.
  It has not been easy to resolve the taxation problem. There are three areas of taxation. The first is the mutual profit or the profit from the internal

  845
  activities of the credit union, taking money from and lending it to members. Under common law the position has not been clear. The hon. and learned Member for Dover and Deal might be prepared to write a strong opinion that that profit is not taxable on the mutuality principle. But the Inland Revenue would not accept that argument. We have considered this carefully. Ministers can only work with the advice of the Inland Revenue, and it is strongly of the view that the mutuality principle does not apply. There is great doubt whether these profits are taxable. That is unsatisfactory. For a long time these profits have not been taxable in Northern Ireland. In the United Kingdom, some bodies have been taxed and some have not. There is no uniformity, and taxation matters should not be dealt with in that way. The Bill makes it clear that throughout the United Kingdom the surplus of the internal profit is exempt from taxation.
  There is then the outside income, which is usually small in relation to the total. This incomes comes to the credit union from depositing surplus funds with a building society or bank. In Northern Ireland, in the past that income has been taxed at two-thirds of the basic rate. This was the result of some confusion several years ago about the true nature of credit unions. In the rest of the United Kingdom there has been no problem. That income has been taxed at 40 per cent., which is the normal rate for industrial provident societies. Again, the position in Northern Ireland was different, and it was only right that, where possible, taxation arrangements should be similar throughout the United Kingdom. There was no reason why in Northern Ireland outside investment income for credit unions should be taxed at only 20 percent.
  The dividend paid by credit unions to their members is the most difficult problem. Again, in Northern Ireland, as a result of administrative decisions not backed by law, which were taken some years ago, dividends received by members of credit unions were exempt from tax. Dividends or interest received from small or large bodies are generally taxed. That should apply throughout the United Kingdom, but in Northern Ireland members of existing societies have in the past received
  846
  dividends exempt from tax. We have tried to solve this problem and achieve uniformity in the legislation. The solution is not perfect. I shall be interested in other solutions put forward in Committee. But the only fair solution, in view of the position in Northern Ireland, seemed to be to exempt from tax all existing dividends of members of credit unions.
  Mr. Peter Rees: I understand the Minister's proposition on the past and future surpluses of a credit union. But what about that part of the surplus that is income from some other source, such as a building society or bank? Has there been any distinction between that income when distributed to members and the internal profits of a credit union? If there has been any distinction, does the right hon. Gentleman propose that that distinction should be carried forward when taxing profits of new credit unions? Is it to be treated as franked investment income, and can a member claim his personal allowances against such dividend income?
  Mr. Davies: Perhaps we should leave such intricacies for the Committee stage. There is a distinction between internal profits and outside investment income. The latter is taxed at 40 per cent., but when it comes into the credit union that is the end of it. But I shall look into this point.
  I have tried to explain to the House the difficulties that we have faced with these taxation proposals, and we shall look forward with interest to see what solutions are put forward in Committee. We are prepared to look at other amendments in order to get as much justice and uniformity as possible. But I certainly do not believe that these proposals will inhibit the growth of credit unions in Northern Ireland or anywhere else. I do not believe that people will be deterred from setting up credit unions because they must pay tax on their dividends.
  Finally, I welcome the general agreement in the House that this is a desirable Bill. Credit unions provide individuals with a reasonably cheap form of credit, an ability to save and to use their savings when the money is needed. I hope to see them grow, though I do not want to see them grow to the size of the Pentagon Credit Union or the Navy League Credit Union in the United States, and I do not

  847
  think that is likely. On the other hand, one wants to see them grow, and, with the statutory backing provided in this legislation, I hope that we shall see considerable growth over the next few years in the credit union movement.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

CREDIT UNIONS [MONEY]
Queen's Recommendation having been signified—
Resolved,
That, for the purposes of any Act of the present session to enable certain societies in Great Britain to be registered under the
848
Industrial and Provident Societies Act 1965 as credit unions, it is expedient to authorise—

(1) the payment out of money provided by Parliament of any increase attributable to the said Act of the present session in the administrative expenses of the chief registrar of friendly societies and any assistant registrar of friendly societies; and

(2) the payment into the Consolidated Fund of any fees received by any such registrar by virtue of that Act—[Mrs. Ann Taylor.]

WAYS AND MEANS

  CREDIT UNIONS
  Resolved,
  That for the purposes of any Act of the present Session to enable certain societies in Great Britain to be registered under the Industrial and Provident Societies Act 1965 as credit unions, it is expedient that charges to corporation tax be imposed by provisions relating to the taxation of societies registered as credit unions in Great Britain or under the corresponding Northern Irehnd legislation.—[Mrs. Ann Taylor.]

PRICE COMMISSION (AMENDMENT) BILL
6.15 p.m.
Lords Amendments considered.

Clause 1

  AMENDMENT OF PRICE COMMISSION ACT 1977
  Lords amendment: No. 1, in page 1, line 17, at end insert—
  "( ) In section 4(5)—
  (a) after paragraph (a) inserted—
  "(aa) that the whole or part of the increase ought not to be so restricted because of an increase in the costs of imported raw materials,"
  (b) after paragraph (i) there shall be inserted—
  "(ia) it shall be the duty of the Commission, in a case falling within paragraph (aa) of this subsection, to give to the relevant person a variation notice allowing so much of the increase as they consider ought not to be restricted for the reason mentioned in that paragraph.".
  ( ) In section 5(4) (application of section 4(5) in relation to notifications in respect of prices) for the words "and for any other reference to the increase there were substituted a reference to the price" there shall be substituted the words "and as if—

  (i) in paragraph (aa), for the words from "the whole" to "restricted" there were substituted the words "a particular increase in the price ought not to be restricted by virtue of section 5(3) of this Act";

  (ii) in paragraph (ia), for the words from "so" to "as" there were substituted the words "the increase in the price which"; and

  (iii) for any reference to the increase (except those in paragraphs (a), (aa) and (ia)) there were substituted a reference to the price;"."

  The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan): I beg to move, That this House doth agree with the Lords in the said amendment.
  Question put and agreed to.

Schedule 1

  REPEALS
  Lords amendment: No. 2, in page 4, column 3, leave out lines 4 to 10 and insert "Section 4(5)(b) and (ii)."
  Mr. Maclennan: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mrs. Sally Oppenheim: These amendments, moved so swiftly by the Under-Secretary without any accompanying remarks, represent a considerable and humiliating climb-down by the Government. The fact that the Government have been forced to move these amendments in direct contradiction to their position in this House on all stages of the Bill is not so much an indication of any wish to be reasonable and accept the legitimate concern of people in industry and elsewhere as a reaction to the fact that they did not think they could defeat in this House the previous amendment moved in another place. Thus, they have demonstrated clearly that they can no longer get even a one-clause Bill through both Houses of Parliament without significant and important amendment. Therefore, they have lost control not only of events in the country but in the House as well.
  Despite the Secretary of State's remarks on Third Reading that the basic principle of the Bill would be achieved only if it was returned unscathed from another place, he has not so far indicated anything to show that he now considers that the basic principle of the Bill has been undermined by the amendments proposed. Similar amendments to those that were carried in another place stood on the Order Paper—
  Mr. Deputy Speaker (Sir Myer Galpern): Order. I am sure the hon. Lady is fully aware that the House has already agreed to amendment No. 1. We cannot discuss that one again. We are discussing amendment No. 2.
  Mrs. Oppenheim: I, too, am discussing amendment No. 2. Similar amendments appeared on the Order Paper in Committee in this House dealing with raw materials and the question of the Price Commission's complete discretion in this respect. Those amendments were supported by Members of all four parties. That was an indication of the concern that was felt throughout this side of the House for the position of companies in circumstances where raw material costs rose beyond their control and where they might have been penalised.

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  The Government amendment which we are now discussing and the one before, which we are not debating, do not go as far as we would have wished, and they certainly do not make this measly little Bill any more acceptable to us. Nevertheless, they represent an important concession on the Part of the Government. The situation which existed previously, in which a company could have its prices frozen at a time of rising raw material costs beyond its control, and with the whole question of an interim award lying entirely within the discretion of the Price Commission, is now substantially changed as a result of the amendments.
  In another place the Government spokesman maintained, in his resistance to the original amendment, that the ability to pass on raw material costs was dependent upon whether the Price Commission considered that the company was efficient. What more irrelevant qualification could there be? One has only to look at the record of industry in the past year. In a period when The Economist commodity index in sterling terms rose by 25 per cent. and labour unit costs rose by more than 15 per cent., the retail price index rose by only 8·4 per cent. Clearly, industry does not need any advice from the Price Commission about the efficient absorption of costs. Indeed, the fact that that degree of absorption took place last year makes it all the more dangerous, in investment and growth terms, that more pressure should be put on industry this year.
  In another place, when the amendment which we are now discussing was moved, the Government acknowledged what the Secretary of State has strenuously denied at every stage of the Bill—namely, that the Price Commission needed a more precise obligation than the one in section 2 of the parent Act to take account of raw material cost increases. The Price Commission's discretion must be more circumscribed than it was originally, and that is the effect that these amendments seek to accomplish. Their significance lies in the fact that the Price Commission will not merely be permitted to take account of raw material cost increases but will be specifically exhorted to do so. This exhortation may well be interpreted in the courts—if a company were to bring legal action against the
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  Price Commission—as laying a mandatory duty on the Price Commission.
  The other important concession inherent in these amendments is that made in another place, that an increase in Government rates would automatically be an allowable cost under section 2 of the Act. Two important concessions have been made which, even though not exactly spontaneous, are nevertheless welcome. As a result, this vindictive little measure, which, according to the latest opinion polls, has singularly failed to impress the electorate—as I predicted—is rendered slightly less obnoxious than it otherwise would be.
  Mr. Michael Neubert: It may come as a surprise that anybody else should be interested in the fate of this Bill. I call upon the Under-Secretary of State to give some explanation of his silence this evening, because these amendments—
  Mr. Deputy Speaker: Order. The Minister has not been silent. He has moved "That this House doth agree with the Lords in the said amendment". We have already agreed to amendment No. 1, so we are dealing only with amendment No. 2.
  Mr. Neubert: Perhaps the Under-Secretary will go beyond the mere moving of the amendment and give some explanation to the House, first of its purpose and secondly how it is that within the space of less than a fortnight the Government are prepared to accept an amendment to the Bill when in Committee on 31 January they were adamant that the Bill must stay as it was, inviolable, except for the point that the Government conceded to the Scottish nationalists that it ought to be reviewed at the end of one year.
  May I also ask, Mr. Deputy Speaker. why it is that the amendment is set down as the only business for the evening, with nothing to follow? It is only 6.20 p.m. Could not the Under-Secretary fill out a little of the time left to us by explaining the purpose of the amendment?
  Mr. Giles Shaw: In so far as we are discussing, under the amendment, the schedule to the Bill, may I ask the Under-Secretary of State—or, indeed, the Secretary of State. if it is worthy of his

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  time to reply—to say whether he considers that it is now necessary to issue, possibly within a revised schedule or in some other way, definitions of what is meant by "imported raw materials"? Without such a definition there could be a certain amount of difficulty in establishing how far the concession, which we so much welcome, is to run.
  I have three specific questions to put to the Minister. First, would raw materials include those materials which are not directly raw but part-processed, such as steel for manufacture, which is clearly not raw steel but is in the form of tinplate, or whatever it might be?
  Secondly, would they also include, in terms of importation, imports from within the Community? I assume that they would, because imports are now generally considered to be both within and without the Community. It may be important fur that to be defined.
  Thirdly, in relation to the commitment given by the noble Lord, Lord Jacques, with respect to rates, may I ask the Secretary of State whether such a concession would apply also to changes in subsidy which would directly affect price? I have in mind certain agricultural produce, such as milk, butter and so on, which reflects the subsidy. If the subsidy is removed, one assumes that consequentially the price Increase thus generated will be admissible under the Bill.
  The Secretary of State for Prices and Consumer Protection (Mr. Roy Hattersley): I hope, Mr. Deputy Speaker, that I can remain within the rules of order, in discussing the amendment to the schedule, by at least observing the rule of brevity.
  Three things need to he said about the second amendment, which the Government commend to the House. First, like the first amendment, which was passed unanimously and without discussion, it reflects exactly an amendment which was tabled in Committee by the Scottish National Party and which I said was acceptable to us at that point, although it was not called by the Chair. The point made in the schedule, therefore, is not a new point but one that was conceded by the Government in Committee, although it was one on which a vote was not possible since the appropriate
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  amendment was not selected for debate. The idea that the point made in the schedule, or anywhere else in this item of business, is a new concession is pure and absolute fantasy.
  Mrs. Sally Oppenheim: Why was it not introduced by the Government in Committee?
  Mr. Tim Smith rose—
  Mr. Hattersley: May I answer the hon. Lady, who talks all the time from a seated position and therefore has precedence over her hon. Friends who get up in a well-mannered fashion? The hon. Lady asks why we did not concede the amendment in Committee. You, Mr. Deputy Speaker, ought to answer that, with respect. We did not concede it because you did not call it. Had you called it, we would have conceded it.
  Mr. Tim Smith: How can the Secretary of State say that, when he said on Second Reading that any concession of that kind would be completely inconsistent with the principle of the principal Act, which, as he knows, says in section 2 that all these matters are for the discretion of the Price Commission?
  Mr. Hattersley: The hon. Gentleman is almost right, but his error invalidates his question. He is quite right in saying that I could not possibly commend this amendment to the schedule to the House, or the principal amendment, were it to impede the Commission's discretion. If the hon. Gentleman will do the House the courtesy of reading the Act and discovering the parts of it to which these amendments apply, he will see that the passing of these amendments in no way impairs the Commission's discretion, and therefore I have been able to concede them.
  Mrs. Sally Oppenheim: As the right hon. Gentleman has misheard and misrepresented my remarks, I shall now make them clear to him in the form of a question. What I was asking was this: if the Government had accepted the principle of the amendment and the only reason why it was not moved or voted upon in Committee was that it was not called, why was it not introduced by the Government in Committee in another place? Why did the Government have to wait for the Report stage to introduce it, and after a singular defeat in Committee in another place?
  Mr. Hattersley: All that the schedule seeks to do, and all that the amendment to which it relates seeks to do, is to emphasise what already exists, which is the Commission's obligation to take into account, where it regards it as appropriate, increases in the price of imported raw materials. It is a fine point whether the House would wish to do it, and whether the Government would approve it, simply to emphasise a point that is already in the parent Act.
  I am perfectly happy to see it emphasised if that suits the convenience of the Scottish National Party, if it is to the pleasure of the Upper House and if it gives some consolation to the hon. Lady. I am also perfectly prepared for it not to be emphasised, since it appears in the parent Bill already. In that sense of principle, I am agnostic about the amendment.
  My agnosticism enables me to answer the point asked of me directly by the hon. Member for Pudsey (Mr. Shaw), which was whether part-processed materials are to be included in the schedule, whether imports from the EEC are to be included in the schedule and whether subsidies which apply to the prices of imported raw materials—I take it that the hon. Gentleman means foodstuffs and things related to the common agricultural policy and to the green pound and other things which are subsidised in one form or another—are to be taken into account.
  I am happy to say that those questions arc wholly for the discretion of the Price Commission, because the amendment leaves the Price Commission's discretion unimpaired. In those terms, I am happy to commend it to the House.
  Question put and agreed to.

STATUTORY INSTRUMENTS
Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.),

CIVIL AVIATION
That the draft Aviation Security Fund (Amendment) Regulations 1979, which were laid before this House on 14 December, be approved.—[Mrs. Ann Taylor.]
Question agreed to.

ART TEACHERS (SCOTLAND)
Motion made, and Question proposed, That this House do now adjourn.—[Mrs. Ann Taylor.]
6.27 p.m.
Mr. Donald Stewart: I am sorry that the Minister concerned is not on the Treasury Bench, although I have only just arrived here myself.
I am glad to have the chance of airing this matter, because it has been going on for some time. Indeed, the art teachers in Scotland are considerably angry that nothing has been done about it. The background is that in August 1977 the Scottish Teachers Salaries Committee, the STSC, decided to recognise all first-class and second-class honours degrees from England, Wales and Northern Ireland approved by the Council for National Academic Awards as being equivalent to an honours degree of a Scottish university for salary purposes.
This decision has since been described by The Times Educational Supplement in Scotland as one of "stupendous folly and shortsightedness". Such a description could not be more apt when one considers the effect it has had on the Scottish art education scene, for what the STSC did with its decision was to recognise 83 per cent. of the total student output of English art schools as being eligible for honours salaries in Scotland. The 83 per cent. figure comes from the annual report of the CNAA.
At a stroke, the STSC has declared Scottish art teachers to be second-class teachers of their subject and so devalued Scottish art education that it is no longer in the interests of young Scots to study this subject in their own country. For that reason, quite a number of art teachers have been advising their students to go south of the border, to secure their qualifications there and then to come back to Scotland to enjoy the higher degree status.
The irony of the position is that the English qualification, the CNAA honours degree, is inferior to the Scottish Diploma of Art, as it has much lower entry qualifications—five O-levels as opposed to the Scottish three higher and two O-grades. Or, given equivalent entrance qualifications, it can entail a year's shorter study

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—three years as opposed to the Scottish diploma's four years. Both require an additional one year's teacher training.
The minimum qualifications for the English course are five O-levels, and for the Scottish course three higher and two O-grades, or two A-levels and three O-levels. The English course consists of a one-year foundation course and a three-year degree course. The Scottish course consists of a four-year diploma course. Teacher training lasts for one year in each case. The final qualification for the English course is an honours degree, and 99·5 per cent. of those graduating from English art schools do so with an honours degree. That is shown in the CNAA annual report. The end result of the Scottish course is the diploma.
The Minister said the other day that the responsibility lay with the STSC, and there is some substance in that. But its decision affects Scottish art teachers and makes them second-class teachers of the subject—that is, second class to those with five O-levels who complete a course which is shorter by one year. This greatly impairs the diplomate's promotion prospects. What education authority would even consider an apparently lowly diplomate when it could secure an honours graduate?
A young Scot at this moment can study in Glasgow, Dundee, Edinburgh, Aberdeen, or in any English art school. But a student who studied at Glasgow after June 1975 for an honours degree would have had only a 25 per cent. chance of success. The reason is that the Scottish Education Department has demanded that there should be a Scottish dimension to CNAA degrees awarded in Scotland. The figures for Scottish universities for other subjects are 25 per cent. honours and 75 per cent. ordinary degrees. The conclusion from that is that the STSC has, with this decision, devalued Scottish art education.
The Minister must accept some responsibility for the fact that the Scottish Education Department and the EIS have compromised. My impression is that the institute does not want to hear anything about the matter. The STSC has been involved from the beginning, and, as the Minister said, it has some responsibility in the matter.
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A petition has been presented to the Minister, signed by 1,543 Scottish art teachers. There are 1,969 art teachers in Scotland, according to the Scottish Education Department's most up-to-date figures, and that means that 78 per cent. of art teachers in Scotland are highly dissatisfied with the present situation. It is grossly unjust that English students and Scottish students who study south of the border should have this advantage. I can quote a case from my own constituency of a young girl who was advised to go south of the border and who is now going on to one of the highest art schools in the country. She would not have got anywhere had she remained in Scotland.
Scottish art teachers are pressing only for elementary justice. The EIS may well continue to stall on the matter. Perhaps because of its involvement the STSC will continue to wash its hands of the matter. I maintain that the Minister is responsible for seeing that this injustice, which is creating great ill feeling among art teachers in Scotland, is remedied as quickly as possible.
6.34 p.m.
The Under-Secretary of State for Scotland (Mr. Frank McElhone): I am surprised not only at the early hour of the Adjournment debate but, given the number of hon. Members who wrote to me about the subject, at the fact that there has been only one contribution. I apologise to the right hon. Member for Western Isles (Mr. Stewart) for having been half a minute late for the start of the debate, although I heard the substance of what he had to say on a subject that he has raised with me before, particularly during Question Time last week.
I am grateful to the hon. Member for raising the subject and giving me the opportunity to put on record the facts of this issue. There has been a good deal of misunderstanding about what has happened and where responsibility lies. I am glad, therefore, to be able to give a more detailed reply than was possible during questions on 7 February.
I deal first with salaries. The assessment of teaching qualifications for salary purposes is a matter for the Scottish Teachers Salaries Committee. The committee, which is established under the Remuneration of Teachers (Scotland) Act

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1967, is composed of a management side representing education authorities and the Secretary of State and a staff side composed of nominees of bodies representing teachers. The committee can put forward to the Secretary of State only recommendations agreed by both sides. It is important to bear that in mind in considering the composition of the STSC. On receipt of recommendations, the Secretary of State has to prepare a memorandum setting out the provisions which have been recommended. After further consultation with the committee, he is then required to publish this memorandum as a Scottish teachers salaries memorandum with an order directing that the relevant remuneration of teachers shall be determined in accordance with it.
The staff side suggested in July 1977 that guidelines should be issued to education authorities describing in general terms the honours degrees taken outside Scottish universities which should be recognised for salary purposes. The management side agreed, and on 22 September 1977 a circular was issued which recorded the committee's agreement that the definition of an honours graduate would be extended to include those teachers who held a degree with first or second-class honours of a university in England, Wales or Northern Ireland or approved by the Council for National Academic Awards. A definition expressed in this way applied to honours degrees in art in the same manner as to other honours degrees. Since the two sides of the committee had agreed, the Secretary of State had no discretion to reject or modify their recommendation, and the Scottish teachers salaries memorandum 1978 issued in December contains the relevant provision in part B of appendix V.
Two questions arise at this stage. First, what was the effect of the decision on holders of such degrees? Its effect was that the holder of a first or second-class honours degree approved by the Council for National Academic Awards would be placed on point 4 of scale 1—the secondary school scale—and like honours graduates of Scottish universities could progress to point 13, the final point on the scale.
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Secondly, what was the effect of the decision on Scottish students and Scottish teachers of art? The short answer is that it had no immediate effect, because to date there is no holder of a first or second-class honours degree in art awarded by the Council for National Academic Awards who has obtained that degree at a Scottish college. That position wil change very soon, as I shall explain when I come on to the question of provision of courses.
The holders of qualifications from the Scottish art colleges at present have either a diploma or an associateship. The diploma has for many years been regarded as broadly equivalent in status to an ordinary degree. The holder of a diploma on appointment to scale 1—the secondary school scale—is placed at scale point 3 and can progress as far as point 12. The holder of the associateship which was introduced in 1972 and is awarded only by the Glasgow school of art is treated in the same way as an honours graduate and on appointment is placed on scale point 4 and can progress to point 13 at the top of the scale.
It is important to establish that there are some Scottish art teachers who, because they took the associateship qualification, are already paid as honours graduates. This point was recently made by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), and I told him that an opportunity was provided in 1972 for the three art colleges to involve themselves in associateship to give an honours degree. However, only the Glasgow college thought fit to take up that course. That is why some associates with honours degrees are covered in terms of salary at present.
I turn to the subject of training. The provision of courses is a matter for the Scottish central art institutions, subject to the approval of the Secretary of State. All four colleges have traditionally awarded a diploma. The associateship was introduced only by Glasgow school of art in 1972, although the colleges in Dundee and Aberdeen had approval, if they so wished, to introduce a course leading to that award.
The present position is that Glasgow already offers a course leading to a degree and an honours degree of CNAA in art

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and design; Dundee already provides courses which lead to a degree and an honours degree of CNAA in design and a college diploma in art; Aberdeen offers courses leading to a college diploma in art or design, but has submitted proposals to CNAA for validation of courses in both areas at degree and honours degree level; and Edinburgh offers courses leading to a diploma in art or design, but is negotiating with Heriot-Watt university for validation of these courses at degree and honours degree level. Thus, the pattern of course provision will eventually be the same, though the arrangements for validation will vary.
All the colleges will in due course provide courses at degree and honours degree level, and no further diplomas will be awarded. It is not possible at this stage to say what proportion of students will receive honours degrees and what proportion ordinary or undifferentiated degrees. The proportion would be likely to vary from time to time depending on the abilities of particular groups of students, hut in general the proportion would be like that awarded in similar areas in the university sector.
In England and Wales, courses leading to the diploma in art design were at one time validated by the National Council for Diplomas in Art and Design. Traditionally, a high proportion of those taking the diploma did so with honours. When the CNAA took over the functions of the National Council in 1966, it accepted as equivalent to an honours degree those diplomas which had been taken with honours. Such decisions were quite properly for the Council for National Academic Awards to take. It is a matter for it, and I make no comment on the relative merits of the courses in Scotland compared with those in England and Wales.
At this stage I should like to deal with the petition from Scottish art teachers which has been received by many Members of the House. The petitioners say that they would like to upgrade their diplomas of art and convert them to English CNAA honours degrees. They then go on to compare the entrance qualifications to both types of courses and the length of the courses. There are a number of factual corrections which can be made to the petition. First, there are
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no English CNAA degrees; there are only CNAA degrees. Secondly, an entrant to the English course with five O-levels would be expected to undertake a year's foundation course before undertaking the three-year degree course, and, as I understand it, not all foundation year students are admitted to the degree course. Thirdly, such an entrant would then, of course, require four years in all before taking his degree.
On the main issue, that of the conversion course, I hope, however, that the petitioners will obtain some satisfaction. The colleges of art in Glasgow, Dundee and Aberdeen are at present considering the question of bridging courses to enable Scottish diploma holders to convert them into honours degrees. Any course proposals would first need the approval of the Secretary of State; thereafter the form and content would be subject to the approval of the Council for National Academic Awards. In addition, the Council for National Academic Awards has consulted the colleges about retrospective recognition as degrees of the diplomas and associateships as degrees and honours degrees. I am pleased to inform the House that a final decision may he reached towards the end of this month. I have no doubt that when further progress has been made in the discussions on bridging courses and on the question of retrospective recognition of diplomas and associateships, the Scottish Teachers Salaries Committee will wish to look at the matter of assessment of qualifications for salaries again. But such assessment will remain a matter for the Committee, not for the Government.
I have dealt with this problem in the many replies I have given on this matter on other occasions. It has been suggested that only an English person can obtain the salary that goes with an honours degree and that in this context he or she can do so relatively easily. However, I have already told the House that opportunities were presented as long ago as 1972 within the three art colleges and that only Glasgow undertook to accept such a course.
Mr. J. Grimond: Is the Minister saying that when the present negotiations are completed and approved by the Secretary of State, the main point of the petition will be met and the grievances removed?
Mr. McElhone: My right hon. Friend the Secretary of State for Scotland is attempting to meet this point by encouraging agreement with the CNAA and the colleges to undertake bridging courses. The teachers already in posts in schools will be able to obtain such courses. The question of young people coming through the colleges is a different matter. I am referring to teachers who are now working in Scottish schools, and they will have the opportunity to take bridging courses leading to honours degrees.
In the meantime, the subject of salaries is essentially a matter for the Scottish Teachers Salaries Committee, which is an independent body.
Let me recall the history of the matter. It was the staff side which advocated this proposal—a proposal which largely emanated from the EIS representatives—and the management side then agreed. When such a matter goes before the Secretary of State he has no jurisdiction to change what has been agreed, and he must accept the decision.
I hope that the Scottish Teachers Salaries Committee will re-examine the matter of qualification for salary, because it is essentially a matter for that committee. This is a complex issue, but I have already told the right hon. Member for Western Isles that a decision will be reached before the end of the month.
The right hon. Gentleman has done a service to the House in raising this matter, and I hope that following my full and detailed reply the position will now be clear to art teachers. I hope that that reply will be satisfactory to the teachers and that the right hon. Gentleman will receive his just reward.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Mr. Speaker has asked me to tell the House that the remaining Adjournment debates will be called in the order in which notification of them was received in Mr. Speaker's office.

AGRICULTURE (SOUTH-WEST ENGLAND)
6.49 p.m.
Mr. Peter Mills: I am grateful for this chance to highlight some of the problems of the countryside, particularly in the South-West. I wish to thank the Minister of State, Ministry of Agriculture, Fisheries and Food for coming to the House at such short notice to reply to this debate.
My first point relates to the loss of agricultural land, which is undoubtedly taking place at an alarming rate. We have a large population which needs to be fed, and it is important that we should take far more notice of what is happening in the countryside, especially when valuable agricultural land is disappearing from the market. I understand that nearly 65,000 acres of land per year is being lost to roads, reservoirs, playing fields, housing and so on.
I ask the Minister to note this loss of agricultural land. I hope that the Ministry will take a much firmer line to see that this land is not lost—and it is lost for ever once it has gone under concrete. I hope that the Minister will strengthen his resolve to ensure that this loss is halted.
In my constituency recently, land was wanted in several places for reservoirs. On land that is flooded, it is impossible to grow food again. Land has also been used for roads and even playing fields. The extension of cities into rural areas also means serious loss of land.
My second point refers to what I call blighted agricultural land, which is a serious problem. Perhaps the Minister has heard of Dr. Alice Coleman and her work. Around our cities can be seen at least a mile, or perhaps two miles, of land that is no longer suitable for agricultural use. There are simply horses grazing there. Farmers face difficulties in farming that land properly when so many people come out of the cities and towns, leave their rubbish and are not very careful about the crops that are growing there. Consequently, there is this blighting of agricultural land all round our cities. As we travel around, we find that it is a fact. If we see horses simply grazing

865
in the fields, we can be sure that that land has been blighted and is no longer of agricultural use. Again, perhaps the Minister will take note of that.
Thirdly, there is the problem of farm accommodation. People, particularly in the South-West, are not only farming the land, but their wives and perhaps their sons and daughters are providing farmhouse accommodation for tourists. They are providing such things as farm museums, which are most interesting, and equestrian centres. The demand for horse riding and pony trekking is growing.
All this is right and proper. It all helps the rural scene and brings more money into the area. But one of the difficulties is—my hon. Friend the Member for Honiton (Mr. Emery) has similar difficulties and would agree with me on this—that we do not have the proper signs directing people to such places. Perhaps the Minister could have a word with the Secretary of State for Transport to see whether the proper signs can be erected, particularly on motorways and other places, directing tourists to such centres and accommodation. This applies not only to farmhouse accomodation but to hotels and restaurants. All over the South-West we find that it is a difficult problem.
Fourthly, there is the problem of caravans. I am not anti-caravan. I used to own a caravan for a long time and thoroughly enjoyed it, but there is no doubt that the numbers of caravans touring around are growing and causing many problems, particularly in the South-West. One way in which the Minister can help is by encouraging planning authorities and others to see that more sites are made available again with signs directing people to them.
In France signs are erected perhaps three, four or five miles away from a caravan site, directing the tourist to the right place. If there were more sites on farm land—properly licensed sites with proper signs directing the tourist to them—we would not have people wandering around, towing their caravans all over the South-West, causing endless bottlenecks and difficulties. Perhaps the Minister could do something to help. He has great powers of persuasion, and therefore if he spoke to the Ministers con-
866
cerned in the other Departments he could do something about it.
I believe that there is great need for further encouragement of forestry, particularly in connection with shelter belts, which help in the production of food and act as shelter for cattle and sheep. It is wrong for us as a nation to neglect forestry considering the enormous amount of timber required.
Much scrub land could be drained and planted with trees. That would have the spin-off of providing more employment and help in rural areas. I believe that that is very important. Perhaps the Minister could encourage the Forestry Commission not to sell off forestry workers' cottages or houses. This merely adds to the depopulation that is occurring. We should encourage forestry where there is scrub land. This would help the whole of the rural scene, stop the depopulation and provide more employment.
We must have a decision on fishing soon from the Minister of Agriculture, Fisheries and Food. I believe that my hon. Friend the Member for Honiton would agree with me on that. The European Community must come to a decision. Many of the fishermen around the coast of the South-West are deeply concerned about what is happening over fishing limits and all the other problems which need a decision.
As one of the members of the Select Committee on European Legislation, I know also that there is a whole host of legislation which will assist the fishing industry once a major decision is made on fishing limits and so on. I hope that the Minister will encourage his right hon. Friend to get a decision in Brussels on these matters.
Lastly, I am concerned about the depopulation of our rural areas. It is important that we have a prosperous agriculture. The Minister has a role to play here. If we have a prosperous agriculture, depopulation of our rural areas will not continue. I say nothing against retired and elderly people who come into our remoter villages in the West Country. but we want those villages to be filled with people who are working in agriculture. I know that it is difficult to stem the tide, but we must have a prosperous agriculture, which would help stop the depopulation

867
of our villages in the remoter villages of the South-West.
We need a fair end price for our products. We certainly need a knowledge of what is required of the farming scene— the type of production, whether more milk, more cereals, more pigs, more beef or more sheep. The Minister has brought out a White Paper on the subject, but it does not clearly spell out what is required. The agriculturist cannot be expected to guess. He needs encouragement and guidance from the Minister on what is needed.
We certainly need better marketing, as the Minister will agree. As we see in particular when we look at the more sophisticated marketing arrangements in the Community, we need more encouragement of better marketing if we are to have a prosperous agriculture, as well as right end prices and a knowledge of what is needed.
There are two small matters about which I, as a farmer, am very concerned when I look at the rural scene. They are matters that are perhaps forgotten by the House. One is the tremendous drop in the use of lime, which is essential if we are to have the right yields. As you know, Mr. Deputy Speaker, being a farmer as well, one can go on drawing lime out of the ground for some time
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without putting it back, but then the land starts to become sour. Therefore, I ask the Minister to look again at the problem of lime usage. Otherwise, we shall see the production of our crops start to fall.
The second matter is that of drainage. Because of the very wet weather in the South-West and elsewhere, it is important to look at the matter again. We can see land going back, as we say in Devon. That is very sad, because after a time it becomes sour and useless and does not produce the crops that are required.
If money is tight, if things are difficult in agriculture, one tends to forget about liming land, because one can make do for a bit. One also tends to forget about drainage. But it is absolutely essential to ensure that our drains are kept up to standard and that land does not become waterlogged.
I hope that the Minister will appreciate that I have asked him no difficult questions. I have been seeking to encourage him and his Ministry to do a little more in the various areas that I have suggested. If those things are done, agriculture will be prosperous, which is vital to the nation as a whole. I have said many times in the House, and repeat once more, that the consumer's best friend is a prosperous agriculture.

ROYAL ASSENT
Mr. Deputy Speaker (Mr. Bryant God-man Irvine): I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Price Commission (Amendment) Act 1979.

2. Tyne and Wear Passenger Transport Act 1979.

AGRICULTURE (SOUTH-WEST ENGLAND)
Question again proposed, That this House do now adjourn.
7.4 p.m.
Mr. Peter Emery: I congratulate my hon. Friend the Member for Devon, West (Mr. Mills), a fellow Devon Member, on having the initiative to seize this vacant time in the business of the House to raise matters of great concern to him and the South-West. I am even more delighted personally, because, as he and my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) are both particularly interested primarily in agriculture, I normally refuse to seek to intervene in agriculture debates. The chances of three Devon Members being called during such a debate are small, and if I caught the eye of the Chair it is probable that one of my hon. Friends would not be able to contribute. Therefore, I am most grateful that this evening, when there is plenty of time, my hon. Friend has initiated a debate particularly concerned with aspects of agriculture.
My hon. Friend is probably the greatest expert in the House on farming. I say that begging Ministers' pardon, but I think that even they would concede that that is so. In best debating style, I follow up my hon. Friend's point that what is best for the consumer is a healthy and successful agriculture industry. What he failed to underline, and what so few people who are not concerned with farming ever understand, is the vast amount of money now needed for investment in farming. Compared with other investments in the whole of the industrial and commercial sectors, that investment as a whole probably brings the lowest return per £1,000. In other words, the capital
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intensiveness of farming today is immense and the return on the investment is as low as it is on anything in the investment market.
I particularly agree with my hon. Friend about the use of land. Every year that goes by, the ever-increasing fall in the amount of usable land because of the demand for housing, roads and other community needs is of major concern. I want to speak of one area about which Devon and the West are particularly concerned. We have always been in need of major road improvements. That is still true west of Plymouth and along the A35, the southern link between Dover and Exeter, where there are conditions that would be unacceptable in the North-East or North-West. We need improvements to the A30, a major link which in many areas is down to only two lanes of highway.
However, I hope that the Minister will consult the Secretary of State for Transport to try to ensure that as often as possible when improvements are carried out—not necessarily the building of motorways, but dual carriageway improvements and bringing roads up to modern standards—the old road is used in conjunction with the new dual carriageway or improvement. That is one of the easiest ways to save a vast amount of land which is now lost to agriculture when the planners seek perfection. I do not doubt that for the best possible roads there are better methods than those that I suggest, but the planners forget about the loss to agriculture. There can he such loss when they choose a marvellous new line and a marvellous new landscaped motorway as opposed to running a second road parallel to existing roads.
I reinforce my hon. Friend's point about signs on motorways. I have had battles with the Secretary of State for Transport about road signing. The last thing any of us wants is a massive increase in street furniture. We need some standardisation of the method of signalling on those large overhead motorway signs which provide tourist information.
I turn now to the subject of caravans. Here I am a little more concerned than my hon. Friend the Member for Devon, West about the problem being caused in certain areas. Because of a lack of planned caravan sites, of the type that we have seen

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on the Continent—with proper drainage and electricity—more and more farmers living off the beaten track are turning a field over to about five touring caravans during the summer. No planning permission is necessary.
This means that some of the narrow lanes of Devon have caravans driving down them, creating a considerable traffic hazard. These lanes were never designed for such traffic. This is something which should be properly licensed and controlled so that adequate provision is made on these sites. Caravans cannot simply be stuck in a field miles off the beaten track. The caravans have to make these journeys, away from the main centres, because of a lack of space elsewhere. On any evening in June, July, August and September every layby on the A30, A303 and the A35 is filled with caravans.
Turning now to the question of agricultural housing, I am concerned about the advice being given by agricultural officers to county councils, and subsequently housing authorities, concerning planning permission for new houses on a farm. I know of a number of instances where problems have arisen on smallholdings when the father wishes to encourage his son to remain on the farm. The time was when the son and his wife would move into the family house and bring up their children there until the grandparents passed away. Such conditions are no longer acceptable to young farmers. There is a need to allow the building of another bungalow or a cottage on the property to ensure the continuation of the family in agriculture. This is something which is a major part of farming throughout the country and particularly in the South-West.
The advice from the agriculturists has been that a new cottage must be built immediately adjacent to existing farm buildings. In two instances families have asked me whether they could obtain planning permission to build elsewhere on the farm because they did not want to live cheek by jowl with father. If a building is two miles from the main farm buildings, that is of no account nowadays. It may have been 50 years ago, when one had to saddle a horse or walk that distance. Then there was every
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reason for fresh housing to be adjacent or contiguous to the farm buildings. That is not the case today.
I do not want the Minister to imagine that I am advocating ribbon development. Nor am I suggesting that we should have houses splattered all over the countryside. There has to be a slightly more modern approach on the part of those making judgments about these planning permissions.
I wish to dwell briefly on the question of inshore fishing. I refer to the small fishermen sailing out of Beer, Branscombe, Sidmouth and even Exmouth. These all fish about four to 10 miles offshore. They have been seriously affected by some of the EEC regulations and by some actions of the Government, particularly with respect to herring. These fishermen claim, rightly I think, that the small shoals on the inshore side have nothing to do with international fishing problems. These men represent small communities who have lived on inshore fishing for many years. They have been especially concerned about the apparent lack of consideration given to them over conservation measures. I have seen the Minister about this problem and I know that he has discussed the issue with those concerned. However, I still find that there is worry among these people.
I know that the Minister has come to the House this evening especially for this debate. My hon. Friend and I thank him most sincerely for postponing his evening's schedule. I hope he appreciates that the points we have raised have not been brought up in any spirit of animosity or major criticism. All of those in the House who are interested in agriculture want to co-operate as much as possible to ensure that we continue to have the most prosperous industry, one that is expanding for the benefit of the whole community.
7.20 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. E. S.Bishop): Given a choice of subject to cover in an Adjournment debate, I should have mentioned the subjects raised tonight. Had I been invited to suggest who might take part, I should have thought of the hon. Members for Devon, West (Mr. Mills), and Honiton (Mr. Emery).

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I should declare an interest in the matters raised. My Ministry deals with agriculture, fisheries, forestry and food. As I was born there, I am a West Country man by birth and interest. I enjoy living in my present constituency. I am represented by a first-class Member of Parliament. However, I always appreciate the opportunity, all too rare, to visit the areas of the South-West which both hon. Gentlemen represent.
I am grateful for the short notice that I had of this debate. I feel like the layman who was asked to give a sermon in the absence of a minister. He said "Today I shall say what the Lord puts in my mouth; the next time I shall try to do better." Perhaps that remark sounds rather odd from someone named Bishop.
The points raised by the hon. Gentlemen always engage the interest and concern of my Ministry. I shall not deal with them in the same sequence. However, I appreciate the concern expressed by the two hon. Gentlemen, who stayed behind in school, when others had gone, to raise points which concern them and their constituents.
The items raised on land use, conservation, leisure, forestry, farming, food production, fishing and fish farming all engage the concern and interest of the Ministry. I do not suppose that there has been an occasion in recent times when so many of these matters have been dealt with by people who were concerned in so many ways. At the moment, there is the Northfield report, which is concerned with the ownership and use of land and the problems of persuading more young people to come back to or engage in farming. That is important. We await that report in the near future. We have also received the Strutt report, which is concerned with agriculture and land use. That is being issued just after the report of the Countryside Commission.
A few weeks ago I was privileged to take in Committee the Second Reading of the Forestry Bill, which is now before the House. Hon. Members will know of the Countryside Bill, which is also before the House. A number of these matters are receiving attention at the same time. It is right and proper that they should. Last week saw the publication of the White Paper "Farming and the Nation".
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I do not need to stress in present company the importance of agriculture. I know of the interests of the two hon. Gentlemen. The report points out that production from home agriculture will continue to provide nearly two-thirds of the food we grow here and more than half the country's total food supplies. Agriculture contributes about 2½ per cent. of the national income. It ran to £3,165 million in 1977. In addition, 660,000 people are employed in the industry. They represent a similiar proportion of the working population. Agriculture is one of the most productive industries in the country. The labour force is less than 3 per cent. of the total. Agriculture is so productive that the working population of farmers and workers—I pay tribute to both—has been producing about 3 per cent. of the GNP. I do not know of any other country where such a limited labour force produces that output. That is good.
I do not need to go back to the times of Tom Williams, who brought in the 1947 Act. Under all Governments, agriculture has had growing confidence. It faces the problems of weather, the world situation and harvests elsewhere. But there has been increased productivity. The point of the White Paper is to ensure that that continues. It looks ahead at the prospects and the way in which we should go. That is most important.
We want to make sure that agriculture can do the job that it must do in this country. It is important that agriculture should provide food for our own people. That helps the balance of payments situation. I am also keen that it should provide exports as well. Not even our own industry realises the potential in increasing exports. I am involved in this. I receive Ministers who come to Britain to see our agriculture. Some of them come from the biggest nations. Not long ago I met Ministers from the Soviet Union, India, the United States, and China, all in a few days. They and others realise just how productive we are. If other industries had the productivity record of agriculture, we should not have the problems that we now face. Those are the facts.
We must maximise our resources. I refer to the important matters raised by the hon. Member for Devon, West. He referred to the problems of the rural

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scene, especially in the South-West. Those problems exist in all areas. The problem is to look at the resources and see how, together with manpower, money. materials and land, we can maximise the output of agriculture and forestry. He was right to emphasise those points.
The hon. Gentleman mentioned the significant area that is lost to agriculture and food production each year. The Ministry is conscious of that. The total area of agricultural land in the United Kingdom is about 19 million hectares. Between 1971 and 1978 the average recorded loss of land from agriculture was about 50,000 hectares per year. That is a significant area. About half, mainly poorer quality land in Scotland, was transferred to forestry and woodland. The remainder went to urban, industrial, highway and recreational uses and other purposes. The Ministry is keen to ensure that any change of land use is known to us and that we have an opportunity of putting a point of view about future uses.
We must ensure that, as far as possible, only land which is not useful for agriculture is used for other purposes. I take note of the point made by the hon. Member for Honiton about road routes and the need to use existing routes as far as possible. I am sure that that point will be borne in mind by my right hon. Friends the Secretary of State for the Environment and the Secretary of State for Transport.
We must bear in mind that when land is taken out of agricultural use it is often irreversibly lost to other forms of development. That is very important. The Government intend to pursue vigorously their policy of protecting agricultural land, especially that of better quality, and to bring into use, wherever possible, derelict and disused urban land. We feel that authorities buying agricultural land under the community land scheme must have regard to the needs of agriculture and forestry, and they have already been advised to make arrangements accordingly.
It is desirable that land which is earmarked for development but which is unlikely to be developed until, say, more than seven years have elapsed should be kept in full agricultural production under normal agricultural tenancies. We are
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very anxious about these matters, not only to avoid losing agricultural land to further development but to bring it back into use.
In my own constituency, Newark in Nottinghamshire, which covers about 450 square miles of countryside and has over 80 villages and other communities, we have some very useful aggregates and sand and gravel workings. Here again, the public are very anxious that this land should not be lost to agriculture. We have plans for reinstatement. I think that is a point that we should all bear in mind.
The hon. Gentleman raised the subject of leisure use and so on. This has become increasingly a point of interest and concern at the same time, because we recognise that there will be some constraints on farming in areas around towns, and there is the demand for access for recreation, especially in the national parks in the delightful areas which the hon. Members represent in the South-West, with Dartmoor, Exmoor and other areas there. Further afield there are the national parks, the Scottish national park direction areas and other designated areas, areas of outstanding natural beauty and all those places which we appreciate. Millions of people are attracted to them, not only from within this country but from abroad.
Some controversy has been generated about land use. This was evident in the debate that we had a few days ago on the Countryside Bill. The Government have initiated studies into the ways in which the physical and social environment of areas can be reconciled with economic factors and agricultural production. As the White Paper "Farming and the Nation" points out, there have been studies by the Countryside Review Committee and the Advisory Council for Agriculture and Horticulture in England and Wales, and they have been supported by various upland and other management experiments initiated by the Countryside Commission. Then there is Lord Porchester's study on Exmoor. The recommendations in that have been taken into account in matters before the House at present.
The Forestry Commission has also played a notable part in making sure that we maximise our resources for producing the timber that we want. Most

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people recognise that we import far too much timber and that we must do much more to maximise the limited resources of this country.
I certainly endorse any tributes paid to the Forestry Commission and all connected with forestry and timber-growing in Britain. The Forestry Commission is concerned not only with forestry. One recognises also the timber pursuits. I recall that in the last year about 24 million visits were paid to our forests and their leisure areas. This has become an increasing feature in our countryside.
I recognise that many local authorities which are involved with open spaces and country parks also make their contribution. It is probably fitting that I represent the area of Sherwood Forest. When I am abroad and talk about my constituency, I only have to mention that I represent Sherwood Forest for people to know what kind of constituency I have. I may be following Robin Rood in other ways. I would not like to progress too far down that forest trail. I also have other Forestry Commission areas. I know how much these are valued and used by the public.
As I say, the Forestry Commission is involved not only in the growth of our forests. It has been concerned with the recent publication "The Wood Production Outlook in Britain", which talks about our use of forestry land into the 1980s. The Forestry Commission is also anxious about the development of leisure. Other authorities are also involved in this—the Ramblers' Association, the National Farmers' Union, the Country Landowners Association and others—and they have been consulted in regard to the Countryside Bill in order to get the maximum possible agreement.
The hon. Member for Devon, West mentioned motorways and farmhouses. Motorways are increasingly used by people who wish to get quite quickly to what used to be some of the remoter areas. They are some of the most pleasant areas of this country. Farmhouses are providing accommodation. This is a maximum form of recreation as well as providing some economic return to the farmer and his wife in areas which many more people are beginning to appreciate as the years go by.
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The hon. Member referred to caravans and the need for more sites. This is important, but there are problems as well. One needs very carefully to blend caravans into the rural scene so that they do not become offensive, and to do so in such a way that people can enjoy up-to-date amenities. That is very important. It is not good enough to leave a comfortable home and to go and live in accommodation which is not up to standard, so our local authorities and others have a very important role in that respect. I am sure that the points made by hon. Members will be drawn to the attention of my right hon. Friends and will be taken into account. They were quite right to stress the importance of blending caravans, country cottages, forest cottages and other types of residential accommodation for holiday times into the rural scene.
It is important that the land with which we are concerned is cared for as much as possible. The hon. Member for Devon, West mentioned the use of scrub land. He is right. He is concerned, as we all are, with the maximum use of marginal land. This is a matter which is always receiving the attention of the Ministry. The hon. Member spoke of the need for drainage. I am not able to tell him without prior notice what is in the pipeline regarding drainage, but I note his point.
The hon. Member for Honiton referred to having accommodation for relatives and others near or in the environment so that they have that benefit. We have done a great deal in two respects. First, we have dealt with the tied cottage. I shall not go into that matter in great detail, except to say that it concerned the right of farm workers to some kind of security in or near their place of work and the need to have some regard to their needs in retirement, and that measure has passed smoothly on to the statute book. I think that the work of the Agricultural Dwelling House Advisory Committee has done much to sort out some of the problems which were anticipated but have not, thankfully, arisen in the form that we had thought they would arise.
I come to the point made about the changes in the countryside. I know of these from the area I have the honour to represent. We see changes in the rural

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areas, with the markets going in some places, vicarages diappearing or being sold, a church may become redundant, with team ministries, and so on. Perhaps I ought to declare an interest here as a Church Commissioner who is involved with some of these problems. The closure of schools is another factor.
We are all saying—the hon. Members belong to a party which is always claiming this—that we are spending far too much public money and must cut down, yet when we look at things not on the social plane but on the economic plane we get this clash of trying to save money on the one hand and, on the other, trying to keep traditional and established institutions going. It is very difficult to put the two together.
When we witness these changes where schools, churches and vicarages are closing and some of the traditional scenes in our villages are disappearing, the public are rightly concerned. But this is a challenge to us all to see in what way we can keep some of the traditional characteristics of our countryside going into the next century. These are some of the matters about which I share the concern which hon. Members have expressed.
The hon. Member for Devon, West mentioned fishing. One of my first acts on becoming Minister of State was to go round our fishing ports in order to become acquainted in greater depth with our fishing industry. Our fishermen are members of an industry which is largely fragmented. In the areas concerning the hon. Gentleman and the hon. Member for Honiton, the South-West, I know of some of the problems, having been to Penzance, Plymouth, Brixham and other ports to discuss them with local fishermen.
Of course, many fishermen regard anyone who fishes from a beach only a few miles away as almost a foreigner. We do not have to talk about members of the Community as being foreigners. Many fishermen regard other fishermen not very far away as being foreign or strange to their patch.
The South-West has a special interest in fishing, and the mackerel fishing there is extremely important. I know that there has been concern about the transhipment of mackerel. However, this provides
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a valuable export outlet for our fishermen. We have taken steps by conservation and other means to ensure that our limited resources are maximised as far as possible and protected from over-fishing and undue exploitation.
I take the point about the value of the fishing industry in the South-West. I always recall how my father used to fish for mackerel off the coast of Weymouth, Abbotsbury and Dorset generally, and he engaged my deep attention and pleasure when he recalled the fishing in those days. Now, of course, we are in a period of some uncertainty. For several years we have been involved in close consultations with our partners in Europe to bring about a review of the common fisheries policy. We are making progress on this, although not as much as we should like.
It is important not least to bring about a greater degree of confidence and security to our fishermen in all parts of the country. When we recognise the very valuable contribution which we make to the resources of the CFP—more than 60 per cent. of the resources comes from within our 200-mile limit—it is natural that our fishermen want to ensure that they get the sort of future in fishing which represents the very significant contribution which we make to all those resources.
The hon. Member for Devon, West made an important reference to agricultural marketing. As a former Minister in my Department, he will recall some of the organisations which are already making a contribution to our marketing scene. He will be aware of the work of the Central Council for Agricultural and Horticultural Co-operation and bodies of that kind. There are bodies such as the marketing boards—the Meat and Livestock Commission, the Home Grown Cereals Authority, the Apple and Pear Development Council, the Eggs Authority and others—all of which are responsible for the promotion of various sectors in a very commendable way. They have an important role not only now but in the future, but it is essential that we ensure that farmers can seek to supply at competitive prices what the buyer wants, whether the buyer is a processor, a wholesaler, a retailer or a direct consumer. Obviously farmers will need to adjust their production to meet the demands of their customers.

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This is very important. Sometimes my right hon. and hon. Friends and I are accused of protecting the consumer more than we do the producer. But a careful balance must be kept between the producer and the consumer. If the producer gets too high a return, he is encouraged to over-produce and a surplus results. If the consumer has to pay a high price, resistance tends to come in and again we have surpluses. So there is this need to keep a careful balance all the time between supply and demand.
The hon. Member for Honiton also spoke about the importance of land use. I am sure that some of his comments about the use of old roads, carriageways and new routes will be borne in mind by my right hon. Friends who are responsible for those matters.
As we move into the era of microprocessors and chips, we have an increasing challenge to make sure that if people are working shorter days and weeks and retiring earlier the additional time which they have on their hands is spent with a sense of satisfaction. Therefore the increasing amount of leisure available to people will be an important factor in the future. In this connection the rural scene, rural crafts and the environment of our rural areas and our leisure interests, whether they be in the forests or the national parks, will take on an increasing importance.
Our job in the future will be an exciting one but also a demanding one as we try to reconcile the needs of food production, of our timber production and of our fishing industry to maximise output as far as possible, thereby cutting down on the balance of payments, and at the same time to leave enough room in our society so that those who have more time to enjoy their leisure shall be able to do so to the maximum extent possible. That is a challenge which my Ministry is meeting, as are other Government Departments, and I am sure that all right hon. and hon. Members will play their part in ensuring that we maximise to the full our limited resources as a country.

NURSES(PAY)
7.47 p.m.
Mr. William Hamilton: I am delighted to have this opportunity to ventilate a subject which is very dear to my heart and to that of my hon. Friend the Member for Ealing, North (Mr. Molloy). We both happen to be Members sponsored by the Confederation of Health Service Employees, which represents more than 200,000 National Health Service workers, including nurses, especially mental health nurses, and few people are more dedicated or more responsible and moderate in the claims which they make on our society.
Not for the first time in the past 20 years, our nurses are in an angry and frustrated mood. In that context, I wish to quote some comments made on this matter in The Guardian of 1 November last referring to documents presented to the Department not only about the wages of nurses but about their general conditions of work inside our hospitals and other related matters. The article said:
"The nurses are right to make a fuss. The National Health Service does need more resources."
Some of the complaints that the nurses were making were not new. They had been made almost ever since the National Health Service was established.
The article went on to refer to wastage in the profession:
"Disenchantment in fact comes so early that studies in the 1960s showed that 30 per cent. of nurses hung up their uniforms before completing their training. Similarly, too many nurses have always been put on the wards too early."
It went on:
"It says something about modern educational values that we are still prepared to spend ten times as much on the education of a university graduate as a nurse."
It said in relation to the building of hospitals and the dereliction that is so evident in so many hospitals:
"One third of our hospitals were built before 1900; but equally, it is foolish to ignore the advances we have made. One third of our district-general hospitals are now in new or remodelled buildings. At the end of last year another 117 schemes costing over £500,000 each were under construction. We have twice as many nurses as we had at the start of the NHS."
I put that on record because it is important to see the claim for increased

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remuneration in the context of the whole Service.
Nurses are even threatening strike action, of a sort as yet unspecified. I speak for myself when I say that I desperately hope that that situation will never arise because it would seriously damage the impeccable image of nurses in the community at large. It would be a thousand pities if the nurses took any action that destroyed or tarnished their image.
It was with amused contempt that I read early-day motion No. 164 in the names of several Tory Members. It was interesting that that motion on nurses' pay carefully did not ask specifically for more money for nurses. Why? Because the signatories were clearly embarrassed by the Conservatives' official commitment to slash public expenditure. In logic, they should not—though they do—argue for increased pay for nurses, firemen, the police and the Armed Forces and pretend that they can do all those things and, at the same time, cut public expenditure.
I want to spell out the Tory record on nurses' pay. It is a story of Scrooge writ large. I have been reading some debates of 1962—when we had no crisis of the proportion that we have now, either consequential on increased oil prices or because of a world crisis.
Mr Kenneth Robinson, who was Labour's official spokesman on health matters, said in 1962:
"A qualified staff nurse, after three years' training and aged at least 21, starts at about £l0 a week."
That was after 11 Tory years. A qualified staff nurse after three years' training earned £10 a week. The present right hon. Member for Down, South (Mr. Powell), who was Minister of Health while the incomes policy of the time was operating, said:
"The incomes policy … is a policy for the nation as a whole."
He presumably meant that the nurses could not be excluded from that policy.
The hon. Member for Orpington, the then Eric Lubbock, who is now Lord Avebury, said in his maiden speech that a ward orderly at that time was receiving £10 Os. 8d. for a basic 42-hour week and he went on to outline the overtime
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rates. The hon. Member for Maidstone (Mr. Wells) said:
"I have no objection to ward orderlies earning high money."—[Official Report, 27 March 1962; Vol. 656, cc. 1088–1109.]
High money! The hon. Member was referring to £10 a week, with overtime paid for more than 42 hours' work in a week. That was the attitude of the Conservative Government.
In a debate in that same year, during the second phase of the Tory Government's pay policy when the nurses and others were to get 21½per cent., the Minister of Health said:
"a rise in incomes which outstrips production has consequences from which all are bound to suffer, not least professions like that of the nurses themselves, which will always be at the tail of the rat race".—[Official Report, 14 May 1962; Vol. 659, c. 945.]
At the end of that debate there was a vote in which the right hon. Lady the present Leader of the Opposition, the then Prime Minister and most of the present members of the Tory Front Bench voted in favour of the 21½per cent. infliction on the nurses.
I put those facts on the record in order to try to convince nurses that, whatever their problem today, it will be solved only by a Labour Government.
Let us look at the position of the Conservative Party today. Its official policy document "The Right Approach" says of the NHS:
"When the service is short of funds … there is no case for holding down prescription and other charges."
The Conservatives believe that there is no case for holding down any of the existing charges in the NHS. On 29 October 1977, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), who is the Opposition's spokesman on health and social security, said:
"If… we are able substantially to reduce the burden of direct personal taxation, is it not reasonable to ask people to pay something towards their health costs?"
There it is in black and white. Direct tax reductions, mainly for the benefit of wealthy people, are to be recouped by increased health charges, mainly on the poorer sections of the community.
"The Right Approach" went on to say:
"We should encourage … private provision "—

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that is, the provision of health services via private medical insurance. It added:
"We see no reason for quantitative controls over the development of the private sector outside the NHS."
That is the background to the present claim and complaints of the nurses.
Everyone, including the Government, accepts that nurses' pay has fallen behind in the past few years. I passionately believe that they are a uniquely special case and I shall explain why. They are unique because support for their claim, above that for any claim made by any other section of the community, would meet with unanimous public approval—more so than in the case of the police, the firemen and the Armed Forces, who have all had exceptional treatment from the Government.
The nursing profession is also unique because use of the strike weapon, I like to believe, is unthinkable. It is unique, too, because these people are serving in a universally popular and vital national service.
I should remind the House and the public of what Labour Governments in the past decade have done, and what I hope they will do in the immediate future. In 1970 there was a great advance in nurses' pay. My right hon. Friend, the Secretary of State, said of the Labour Government of that time:
"They picked them up virtually off the floor."—[Official Report, 30 January 1979; Vol. 961, c. 1220.]
I do not think that that is an exaggeration. The Halsbury award in 1974 was very substantial. Despite those achievements, the right hon. Member for Wan-stead and Woodford was belly-aching about Government delay in settling the nurses' pay claim. He demanded an answer from the Secretary of State, who explained that the Government were considering the claim which was, in any event, not to be implemented before 1 April.
On 6 February, in answer to my question, the Secretary of State for Scotland indicated that nurses had certain claims outstanding from the previous round of negotiations. The Secretary of State also said, which I found disturbing:
"but these are not under active discussion at the moment."—[Official Report, 6 February 1979; Vol. 962, c. 212.]
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Why not?
Secondly, the Secretary of State indicated that the nurses would be considered in some future comparability study, subject to agreement with trade unions and employers. I do not know what commitments, if any, the Prime Minister gave when he met the nurses a week or two ago, but it is almost without dispute that every Member of this House and almost every member of the public would be unanimous in supporting the acceptance by the Government of the nurses' claims. That, in my view, is not enough. Although the Labour Government's record in this matter needs no great defence from me, I think that the Minister would agree that any advances made are bound to be eroded in direct proportion to our inability to control inflation.
I notice that some of my hon. Friends on the Left of my party are listening to the debate. I would tell them that the policies of free collective bargaining urged equally forcefully by the extreme Right and the extreme Left—by the 1922 Committee of the Tory Party and by the Tribunte group of the Labour Party—leave in the lurch the very people I am talking about. They are the nurses and others whose bargaining power, for one reason or another, is incomparably weaker than that of other sections of society. Even supposing that the Government accept the claims of the nurses, which I hope very much they will, there must be machinery devised for dealing with such deserving cases. That must happen very soon.
Mr. Dennis Skinner: I would not want my hon. Friend, who is making out a good case for the nurses, to mislead the House by coupling the Tribune group with the 1922 Committee of the Tory Party. I believe he will agree that, although most sections of the Tory Party posture about free collective bargaining, when it comes to the practical details—for instance, over cuts in public expenditure—they tend to become confused. If they really believed in free collective bargaining, they would have supported the lorry drivers when they demanded an increase and the public sector workers who are currently in dispute. They say that they believe in free collective bargaining. but they do not want to practise it, whereas some of us on these Benches—I agree,

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a minority—believe in collective bargaining, because nothing is free when negotiating for wages. We are prepared to see that carried through. I think my hon. Friend would agree that there is a considerable difference in our views.
Mr. Hamilton: My hon. Friend has made the most gentle interruption that I have heard him make since he became a Member of this House. I am gratified because I sense he is on the retreat. He does not like much to be associated with members of the Conservative Party in believing that the law of the jungle will get us out of the problems we face. It will not. He and his colleagues on the old-fashioned Left of our party believe it will. But it cannot be done. One has to intervene. The Left in our party many years ago accepted that if one wants a Socialist society one has to intervene and control in some degree wages, which are, in effect, the price of labour. If one is not prepared to accept that form of intervention, one cannot build the kind of society we want.
I should like the Minister to take this matter back to the Cabinet. Nothing will serve our purpose better, than to go to the country saying that we believe in social justice and in giving to the people who do the most important jobs the best rewards and that this will be achieved by deliberate Government intervention. Nothing will serve that purpose better than if the Minister tonight says "We will put this case to the Cabinet with the support of the whole of the Parliamentary Labour Party. There is not one hon. Member on the Opposition Benches. I hope that the Minister's resolve will be strengthened by this worthy case.
8.8 p.m.
Mr. William Molloy: Like my hon. Friend the Member for Fife, Central (Mr. Hamilton), I have a tremendous interest in the National Health Service. Both our families, our wives and daughters have been involved in the practical side of the National Health Service as nurses and State certified midwives. My hon. Friend, like myself, has probably been at the receiving end of some sharp and severe criticisms over the way in which this House has behaved in trying to make the National Health Service an even better service.
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The truth about the NHS was outlined and adumbrated by Aneurin Bevan. Everyone of any note in the medical profession, the economists in the City, the bankers and regrettably some members of the Labour Party in prominent positions remarked that it was a wild ideal. It could not be done, they said: it would take 10 or 15 years to achieve a full NHS covering everyone from the cradle to the grave. Thank goodness the Minister took little notice of well-educated people in Cambridge and Oxford.
That service was introduced within a couple of years of the most horrendous war in history. Today's problems are tiny compared with those faced by that Labour Government in introducing a great principle. Many men and women who had fought in the war were still overseas. There were massive housing problems. Europe was devastated and poverty-stricken. In passing, I would say that some members of the EEC should reflect that this country's generosity was enormous. Yet at that time we laid the foundations of the National Health Service. It is saddening that its progress in the subsequent 30 years has been so abysmal.
Central to this problem has been the treatment of the nurses. How can we tell young women "Don't be a mug. Don't become a nurse in the NHS. Take your clothes off instead and be pictured in some glossy magazine. You will earn more in a week than a nurse earns in five years."?
Perhaps the Archbishop of Canterbury would apply his mind to this problem now and again. What does he think of young women stripping off to be photographed in newspapers, exhibiting their breasts in fancy glossy magazines? Does his Lordship agree—if not, how strongly does he disagree—that a young woman engaged in that activity should receive a thousand times as much pay as a young girl working at night, emptying bed pans, dealing with someone in pain or in a geriatric ward, or, unpaid, comforting families who are visiting the sick? That is the sort of problem that Governments and clergymen should consider.
There is a lopsided situation in the NHS. One sees a disgraceful situation when one compares the fees of part-time

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consultants, important though they are, with the pay of nurses.
Mental nurses—in perhaps the most poignant profession, dealing with someone's loved one who has not a proper mind and might be dangerous—are not only ill paid but sometimes run legal risks which this House permits and of which we should be ashamed.
The Minister has received representations on behalf of all nurses, including mental nurses, from the Confederation of Health Service Employees, with which I am connected, as is my hon. Friend the Member for Fife, Central. If Ministers want to make this wonderful ideal a reality, they can do no better than act on the weekly advice that they get from that body.
I have raised many times in this House another matter that irritates and annoys our nurses. It has been a waste of time mentioning it to the Front Bench and certainly to the Opposition parties. With our Socialist ideals we do not believe that the only way that people receive medical treatment is if they have sufficient money to pay. This principle applies also to high-class schooling. It is never asked how this money to pay for privileges is obtained. It could be from running a brothel.
One assumes that private patients pay for their beds, but they do not. They cheat. There is a good hospital with a fancy name within a few miles of this House. It has a large number of pay beds where nurses, consultants and other doctors have to work outside the National Health Service. There are other hospitals like this. At the monthly meeting of the board of governors one of the main problems is who has done a bunk. Patients have had a month's treatment and vanished without paying the bill or cheques have bounced.
I had a devastating reply to a question that I asked in the House. It was said that the cheating was known and that the high-flown people who receive the treatment, preference and privilege vanish and do not pay. But little could be done. In the first place, the Government could move over and let my hon. Friend the Member for Fife, Central and myself take over for six months to set a level. I do not accept that in Great Britain private patients can keep another patient
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who cannot pay out of a hospital bed, that they can jump the queue with a promise to pay and then double-cross the system and not pay a halfpenny. It has been said that there is no way of checking. But a short circular could be sent to governing boards asking how many thieves have stolen national resources by promising to pay for a bed in a National Health Service hospital.
It is argued that the National Health Service and the nursing profession could not exist without people who jump the queue and pay large sums to get into hospital. That is disgraceful and phoney. It has had a deleterious effect on the National Health Service, and especially on the nurses. The senior nurses and experienced staff in the Confederation of Health Service Employees particularly have seen over the past 30 years an insufficient contribution to maintain the National Health Service to the spirit and ideal orginally conceived. During the years when "we never had it so good" the National Health Service was quietly allowed to run down and nurses' pay to slip behind.
As my hon. Friend the Member for Fife, Central has so often said, during those years not only was the Health Service quietly allowed to run down but the nurses actually had a pay cut. There was no great outcry because Governments took cruel advantage of the idealism of both mental health and ordinary nurses. All that has happened in this long period is that the very essence of the National Health Service has been sucked away by disguised vampire Governments who are not interested in the principle of the creation of an even better Health Service.
My hon. Friend the Member for Fife, Central mentioned the Halsbury report. I agree that it was a good report, but the brutal truth is that nurses have still missed out. They did not get anything like the police or the Armed Forces. What a contrast. Are not nurses just as important as Service men? Is it not vital that the British nation should be adequately defended against disease as much as against anything else? Yet we have failed to do that.
I sincerely believe that any form of preventable pain is a blot on any society. There are smudges still left on the

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National Health Service, and these smudges did not exist when it was created. We have allowed this tiny little cancer in the Service to grow—surreptitiously, but nevertheless to grow.
I wonder whether the Minister really understands the strain on nurses or the feeling of great achievement of young trainees. Does he understand the devotion and the agony of waiting for examination results? I have been through all that. I remember the day when I received a message on the House of Commons notice board from my daughter. I felt quite choked. It simply said "Dad, I have passed State." There was more pride in that than if she had said "Dad, I have landed a Hollywood contract." Somebody has to do this work, so why should we penalise men and women in the nursing profession when they have such pride and fine idealism in their work?
I hope that the Minister will look at some of the petty restrictions with which our nurses have to contend in some of our hospitals. I readily admit that nowadays there are very many enlightened matrons who are a great credit to the NHS. But here and there are the remains of old Victorian attitudes which do not match the requirements of professional nursing in a modern society. Along with that aspect is the aspect of frustration felt by many of our mental and psychiatric nurses. Unless something is done about these irritating features, and unless these nurses are properly remunerated for their important job, our Health Service will suffer even more.
The creation of the NHS was a great endeavour, and those of us who sit on the Labour Benches are proud to be connected with the party which created it. But we shall no longer be proud if the Labour Government try to cash in on the job satisfaction of the nurses and deliberately exploit their idealism. That would be a heinous crime, and I hope that we are not even approaching the possibility of committing such a crime.
We must match the pride of the nurses' contribution to society, reflecting the nation's appreciation by ensuring a proper remuneration for all our nurses. I am sure that the people of our country would endorse it. We very rarely arrive
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at the frontiers of understanding of the problems of the National Health Service until our own souls are smitten with grief. Then we realise what a great service it is, and right at the heart of that service is the nursing profession.
Let us have much closer liaison with the great trade unions within the National Health Service, particularly with the Confederation of Health Service Employees. Its devoted officers understand these problems and they want to improve the National Health Service. I have been present at meetings of COHSE at which we have talked for hours not about increases in pay and scales of remuneration but about the problems in our hospitals which have to be resolved. The officers of COHSE feel that their members can make a contribution here. But while they take a great deal of interest in the NHS outside their normal scope of their duty, it must be acknowledged that they are not given the sort of treatment to which they are entitled. If their members are treated shabbily, and if the nurses are treated shabbily, we shall have a shabby National Health Service.
I hope that the Government will not allow frustration and desperation within the nursing profession to continue to the point at which nurses might even contemplate all-out industrial action. The continuance of this frustration and desperation can be prevented only by action on the part of the Government. I do not mean simply action taken to avert a strike. I mean the sort of action that will increase the morale of the trade unions and their members, and of the nursing profession as a whole, so that the nurses will once more be proud to be members of a great profession. They will benefit from such action, and, more important still, the British people will benefit from it immensely.
8.28 p.m.
The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): I am well aware that the subject of pay of nurses is one on which there is widespread and genuine interest among my hon. Friends, as is evidenced by their attendance here tonight.
My hon. Friend the Member for Fife, Central (Mr. Hamilton) and my hon. Friend the Member for Ealing, North

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(Mr. Molloy) have made their case very strongly. I welcome this opportunity to tell the House something about the background and to explain the present position. But before doing so I should like to respond to the last point made by my hon. Friend the Member for Ealing, North concerning the relationships with the Health Service trade unions. I can assure him and my other hon. Friends that our relationships with the National Health Service trade unions are extremely good. We meet them regularly in a series of meetings at which each side can put on the agenda whatever items it chooses. Indeed, in recent weeks we have been meeting extremely regularly. The weekend before last I spent 24 out of 48 hours with one of the Health Service unions over a hospital dispute. I can assure my hon. Friends that we take very seriously the task of maintaining good relationships with the unions which represent a great proportion of the workers in the Health Service.
I echo my hon. Friends' tributes to the nurses and express my own appreciation, and that of my right hon. and hon. Friends, of the valuable and dedicated work which they do in all parts of the National Health Service. Wherever there are sick or injured or seriously ill people, whether in hospitals of various kinds or in their own homes, skilled nursing care is a key element in their treatment.
The nurses and midwives who work in our mental and acute hospitals and in the community have established standards and traditions which are not bettered anywhere. I therefore gladly join my hon. Friends in paying tribute to the devotion and hard work of all our nurses. I wish to make clear at the outset that any disagreements or difficulties about the size of the increases in their pay which we can contemplate do not detract in any way from our appreciation of the valuable contribution which nurses make to the National Health Service.
I hope that my hon. Friends will forgive me if I do not follow them in their comments on comparisons of the pay of nurses with that of other perhaps less honourable but more glamorous professions. Many years ago I wrote that nurses were an invaluable part of our society, and while one can imagine a society without quite a number of the
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professions one could not possibly conceive of a society without nurses.
At the beginning of the present decade, in 1970, there was widespread concern about the level of nurses' pay, and the Secretary of State at the time—who was Richard Crossman—instituted an internal review which led ultimately to substantial increases of some 20 per cent. in nurses' pay levels. By 1974, there was again concern on this subject, and my right hon. Friend the Member for Blackburn (Mrs. Castle) appointed a committee of inquiry under the chairmanship of Lord Halsbury to look into this question. The Halsbury committee produced its report in September 1974 and it was accepted by the Government. The committee said it had been concerned not merely to update the pay levels established in 1970 but to provide the right sort of pay levels for nurses, taking account of increased responsibilities which they were undertaking and of the need to continue to recruit good quality entrants to the profession, which is a matter which must concern us all. The Halsbury award was a substantial one by any standards. Nurses received increases of 30 per cent. in their pay with effect from May 1974 in addition to the increases of some 7 per cent.—with associated improvements in conditions of service—which had been paid from April of the same year.
During 1974–75, nurses—like other groups of workers—received threshold increases, and their next main settlement was in April 1975, when they received increases of some 11 per cent., which resulted in pay levels of nearly 17 per cent. above the May 1974 position. Since then—in April 1976, 1977 and 1978—nurses and midwives received the amounts authorised under incomes policy. When they tabled their pay claim in March 1978, the staff side of the Nurses and Midwives Whitley Council claimed that nurses should be entitled to more than the 10 per cent. allowed under incomes policy because, they claimed, their pay had fallen behind since the Halsbury award of 1974 and they felt at a disadvantage in that they were not able to take advantage of self-financing productivity deals which were available to other groups of workers. They therefore argued that they

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should receive some form of "compensatory" payment in addition to the 10 per cent. pay increases.
In discussions with the staff side, my right hon. Friend the Secretary of State made it clear that there was no scope under the Government's incomes policy for a compensatory claim of the kind suggested. He told the staff side members that, if they felt they had a claim on more general grounds to be treated more favourably than was allowed for under incomes policy, it was for them to develop their case, which the Government would examine carefully. Such examination would be undertaken, however, in the light of all the relevant circumstances at the time.
My right hon. Friend wrote on 9 May 1978 to the chairmen of both sides of the Whitley Council to put on record the position which he took on this question. That letter was of some significance for a reason which I should explain. Pay agreements by the Whitley Council require the formal endorsement of my right hon. Friend—under the terms of the NHS Remuneration and Conditions of Service Regulations—before health authorities may introduce the higher levels of pay. The purpose of the letter of 9 May 1978 was to make quite clear what position the Secretary of State took on the claim for additional payments when he authorised the 10 per cent. settlement which had been negotiated within the current incomes policy.
After a number of exchanges on the Whitley Council during the summer last year, a detailed case, prepared by the staff side and arguing for specially favourable treatment for nurses, was submitted to my right hon. Friend on 6 October 1978. The case submitted by the staff side was supported in principle by the management side of the Whitley Council, but the management side was not committed to any precise quantification claimed by the staff side and it accepted that no additional money could be paid during the then current pay round. In short, the position of the management side was that it hoped that an advance commitment might be given to favourable treatment for nurses, but it accepted that no additional money could be available earlier than the 1979–80 pay round. The staff side, on the other hand, was press-
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ing for additional payments beyond the phase 3 10 per cent. during 1978.
On 16 October last, my right hon. Friend received a deputation from the Whitley Council when the two sides developed their arguments in support of their claim for specially favourable treatment for nurses. The staff side emphasised strongly its contention that nurses' pay had been eroded seriously since the Halsbury award. It maintained that an increase of some 18½ per cent. would be needed at April 1978 to restore nurses to the position established by Halsbury. My right hon. Friend reminded the deputation of his letter on 9 May, and in particular of the statement in that letter that any general case which might be presented would be considered in the light of all the relevant circumstances at the time.
The most relevant current circumstance was that the Government had issued their new White Paper "Winning the Battle Against Inflation", which set out the approach the Government were adopting to incomes policy. My right hon. Friend emphasised that the overriding concern must be to contain inflation, which was a major threat to the well-being of nurses as to the rest of the community. The White Paper had made clear that any claims to special treatment would have to be examined very critically as it would be self-defeating if more than a very few groups were accorded special treatment. The Government would consider the case which the nurses has developed—and I note my hon. Friends' contention that the nurses are a unique case—but my right hon. Friend told the deputation frankly that he could see no prospect of any additional payments for nurses in the current pay round.
It is important to emphasise at this point, because there has been a certain amount of misunderstanding, that the nurses received a pay settlement in April 1978 and their next settlement is due in April 1979. The arguments that have been taking place in recent months therefore have been not about a particular pay claim but about a case, submitted between annual settlements, which argues that nurses should be entitled to some additional awards over and above their annual settlements. In considering representations of this kind, the Government cannot take a simple isolated view relating to one particular group and ignore

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the wider implications of settlements for individual groups.
My hon. Friends will not need to be reminded that towards the end of 1978 there were several groups in the public service who were pressing their claims. All of them believed that theirs was a particularly good case. No doubt from their own standpoint they all are good cases, but the Government have made quite clear their determination to fight inflation—a fight in which they have met with much success in the last two to three years. That success has been hard earned, and we must not lightly surrender the successes we have achieved in the battle against inflation.
When hon. Members press the claims for high pay increases for any particular groups of public service employees, they must consider the implications of what they are proposing. Excessive pay settlements in the public services could mean ultimately that poorer services are provided. There is no bottomless purse available for funding excessive settlements. Recently the Government have announced their public expenditure plans for the next few years. These include a significant increase in resources available for the development of the National Health Service. But, as my right hon. Friend the Secretary of State has already warned the House, excessive demands will put the Government's plans for expanding the resources available to the NHS seriously at risk. We cannot ignore these issues when debating pay questions.
When the House debated the industrial situation on 16 January, my right hon. Friend the Prime Minister announced improvements in the underpinning arrangements in incomes policy for the
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low paid. He also indicated that the Government were willing to accept a greater role for comparability in determining pay for particular groups employed in non-trading parts of the public sector. He said that discussions were taking place on the scope for comparability investigations for local government manual workers, National Health Service ancillary employees and some others. The Prime Minister also said that the Government would be prepared to give sympathetic consideration to an approach for the comparability principle to be applied to nurses. He reminded the staff side of this when he received a deputation from it on 24 January.
My right hon. Friend the Secretary of State has urged the two sides of the Whitley Council to accept that the offer of a comparability study provides a constructive and positive way forward on nurses' pay. He has indicated that he is willing to enter into discussions at an early date about the way this could be done for nurses and midwives. The Whitley Council will be meeting again tomorrow, when I hope very much that it will consider seriously my right hon. Friend's proposals.
Discussion on the question of nurses' pay is now clearly at a very delicate stage. The negotiators have an important and responsible task. I am not in a position to make any dramatic announcement this evening on the eve of further negotiations, and I would not pretend to do so. However, I can assure my hon. Friends that in regard to nurses' pay the present is a time for constructive discussion, and I know that my hon. Friends and the profession outside will appreciate that fact.

LUCAS AEROSPACE
8.40 p.m.
Mr. Bob Cryer: I am grateful for the opportunity to raise what is one of the most important moral crusades that this country has seen in the twentieth century. I refer to the Lucas Aerospace combine shop stewards' committee, its corporate plan and the work it has done over the past three years. The shop stewards' imaginative method of tackling the question of providing jobs for peace and not for destruction is an important moral crusade of which the House and the nation must take note. I say that against the background of the Iranian contract for the production of means of extermination, a contract worth about £2 billion, which is grinding to a halt.
Time after time some of us on the Back Benches have raised these points. Indeed, only a short time ago I discovered from the Ministry of Defence that among the thousands of people that it employs there is not one person who devotes his or her time and energy to the possibility of substituting production for extermination with production for peace.
One of the difficulties faced by the Lucas Aerospace shop stewards is that, by and large, people do not wish this sort of question to be raised. They prefer to go for soft, easy contracts to sell 500 tanks to a reactionary regime in some distant land—the further away the better.
The Lucas Aerospace shop stewards have said that when they raised the question of the morality of the work being done by Lucas Aerospace, allied to their concern for jobs, they were told by the executive elite that runs Lucas Aerospace—as it runs all our big corporations—that the work carried out by Lucas was quite adequate for jobs.
In a recent press release the confederation trade union committee said:
"The 'Corporate Plan' initiative, launched in January 1976 was rejected by the management, who maintained that the Company's present product policy was the best guarantee of employment; the shop stewards point out that almost exactly two years later the Company announced the closure of its Liverpool, Bradford and Coventry sites."
So who was right? Was it the highly paid corporate executive elite or the lads on the shop floor, albeit rather sharp
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lads with penetrating minds? As a matter of fact, their minds seem sharper than those of the corporate elite when it comes to the actual experience people have had.
This is an important debate. I am pleased that my hon. Friend the Minister is here after our pressure on Thursday for a debate. Unfortunately, he was not able to meet our request then, but I am pleased that the debate is now taking place.
It is worth pointing out also, against the background of the Lucas Aerospace shop stewards' views and their corporate plan, that one of our greatest commercial rivals is Japan. We know that, because we see Japanese products such as motor cycles, televisions, sound centres, and motor cars everywhere. Indeed, people become very concerned about the level of importation of Japanese cars, and Members for areas where there is a motor industry are concerned about the number of commercial vehicles imported from Japan.
What is the position with regard to Japanese defence expenditure? In July 1976 in the Financial Times, the Far East editor, Charles Smith, talked about "A dilatory phoenix". He said:
"The first is that Japan's defence spending is never going to get very big (it is currently 0·87 per cent. of the GNP), and may indeed grow more slowly in the next few years than in the recent past because of the expected slow down of the growth of the Japanese economy."
The Japanese have been very sensible. They have taken a moral view very similar to that of the Lucas Aerospace shop stewards. Because of their experience as the only nation in the world to face the horror of a nuclear holocaust, they have kept their defence expenditure down.
We spend about 5 per cent. of our GNP on defence. The Japanese are putting their expertise and development into products that people actually want. That is why we see their products on the streets of this country and virtually every other developed nation as well as underdeveloped nations.
Therefore, the attitude of the Lucas Aerospace shop stewards is a vital matter that we must take notice of. It is a pity that because of the structure of our Government the nation sometimes seems able to accept such ideas only in a crisis. If the Iranian arms contract is not to be

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renewed or extended, as seems likely, there will be a crisis for many employees in the armaments industry.
It is true that over the past three years the shop stewards' committee has discovered a number of difficulties. Institutions, whether of Government or of the trade union movement, have not responded as rapidly as the shop stewards thought desirable and as the nature of their views demanded. We should change our institutions if they are incapable of meeting the sort of attitude expressed by the shop stewards' committee. We are talking about men and women who have got together in their spare time and thought up plans for alternative production.
When the idea was introduced, the committee circularised a number of academics to see what sort of response they would receive, and they got about half a dozen ideas. They circularised the shop stewards in the various factories throughout the Lucas group and received over 150 practical ideas on what production and resources could be put to. That is the basic, practical, down-to-earth background of the corporate plan, which the shop stewards titled
"A contingency strategy as a positive alternative to recession and redundancies."
It took the shop stewards three years to meet the management to discuss the corporate plan, because they were challenging the hierarchical nature of our society, which is that the bosses shall make the decisions and the workers shall accept them, and woe betide workers who question those decisions and perhaps even produce better ones. That sort of attitude challenges the whole nature and structure of our society. That is why they took three years to meet the management, and then it was only in a television studio because the plan had received such widespread publicity and sympathy.
The moral strength of the plan is clear and basic. People ask "Why on earth cannot the common sense of this plan be discussed?" It was not until that publicity and the pressure from outside organisations was realised that the Lucas management was driven into a television studio, after three years of pressure, to discuss the corporate plan. That is a serious indictment of the management, and to some degree of the Government
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for not putting more pressure on the management to get to grips with the matter and enter into discussions with the shop stewards.
What did the plan contain? I cannot go into it, because although we have, happily, a fair amount of time, it would take too long. It is a comprehensive, detailed and practical plan. The shop stewards were probably the first to coin the word "microprocessors". Now it is part of our language and people are talking about the microprocessor revolution. The Lucas shop stewards were discussing that very subject almost four years ago.
Perhaps I may give just one illustration of the sort of thing the shop stewards were advocating. They said on page 21:
"The increased speed of both road and rail vehicles and the larger payloads which they will carry, both of passengers and goods, will give rise to stringent braking regulations during the coming years. This tendency will be further increased by Britain's membership of the EEC. The EEC is now introducing a range of new braking regulations. These specify not only stopping distances, but calls for minimum standards of braking endurance over a continuous period. In addition, the regulations lay down conditions for 'braking balance' between axles in order to prevent a dangerous sequence of wheel locking."
They go on to say:
"In Britain public attention has been dramatically focused on the weaknesses of existing braking systems by the Yorkshire coach disaster which claimed 32 lives in May of this year. The Sunday Times of June 1st stated 'Last week's crash might have been avoided if the coach had been equipped with an extra braking device, such as an electromagnetic retarder which is being fitted to an increasing number of coaches in this country '."
That is the retarder which is advocated in the corporate plan.
They also say:
"This problem"—
that is, the loss of braking operation because of heat—
"can be greatly reduced, if not totally overcome, by using a retarder. A retarder is basically an electro magnetic dynanometer which is fitted usually to the prop shaft between the engine and the back axle."
They add:
"In fact it would appear that only 10 per cent. of Britain's 75,000 buses and coaches actually have retarders fitted to them."
If we examine the history of coaches between 1976 and today, we find that there have been a number, albeit a small

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number, of spectacular crashes, almost in every case due to braking failure. There was the crash of a police coach at Wakefield, with the loss of several lives, as a result of inadequate maintenance. Because of inadequate maintenance, there was no braking, and no reserve braking by means of the retarder advocated by the Lucas Aerospace shop stewards' committee in its corporate plan.
That is the kind of imaginative development that was put forward. As the days go by, we see examples where the application of their ideas would save lives and be a useful addition to our safety standards. That is the attitude which they had and which they put forward.
What does it mean in terms of jobs? The Lucas Aerospace shop stewards' committee set up a special working group, which reported. It has been reported on in The Guardian today. It means, for example, the proposed closure of the factory at Bradford. My hon. Friends will discuss the other proposed closures. The Bradford factory closure has been modified by the provision of a new factory to replace the old one. However, the report which has just been produced, and which I know the Department of Industry will discuss shortly with the group, says that the closure of the Bradford factory has a number of disadvantages.
It is said that the engineers are not willing to move to Hemel Hempstead. That was the proposal put forward. Insufficient engineers may move to Hemel Hempstead to ensure the continuity of the generating systems business. The engineers concerned at Bradford do not accept the necessity for the integration of design and production. They operated separate design facilities successfully for years on constant speed drives produced at Netherton. The company's intention on the engineers required at Hemel Hempstead is to deploy some of them in production engineering and quality control areas.
The Bradford labour force is prepared to accept a new actuator factory, but insists on the retention of all surplus labour in Bradford in the new site, the existing site or new rented premises.
Mr. James Blyth told Members of Parliament on 6 April 1978:
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"It could well be that in Bradford we shall absorb the entire work force, or what is left of it, with an amount of natural wastage, if we manage to get more business—for example, if the McDonnell Douglas work comes along."
The McDonnell Douglas work did come along, and so the report comments that presumably the company could retain the entire labour force.
The report picks out a number of points. A further one is that the relocation offers, especially house price differential repayments, will cause industrial relations problems at Hemel Hempstead. Bradford is designated as a grey area with few opportunities for those who lose jobs. That is very important. Bradford is an intermediate area. Over the past few months the trend of unemployment in Bradford has, against the national trend, been increasing. One of the reasons is that Thorne, another large profitable multinational, closed down a television factory last year, with the loss of 2,300 jobs. That is the sort of decision, made in the executive suite, which ordinary working people cannot possibly shape.
The emphasis of the report is that all the jobs at Lucas Aerospace in Bradford should be retained. The reasons why are set out very cogently. That is the sort of basis that is being argued: that jobs should be retained to ensure that there are opportunities for learning skills in the future, that an area is not depopulated and does not drift along an avenue in which the skills are taken away and only semi-skilled and unskilled job opportunities are available.
I want to mention the Government's position in this context. The view of the combine shop stewards' committee is that the Department of Industry has been too close to the management and not close enough to the shop stewards. The committee points out, for example, that, as in Bradford, a new factory is proposed, but it will lead to a net loss of jobs in current circumstances. The committee points out that the Victor works at Lucas is on a broken back of concrete and that the works requires extensive renovation and extensive expenditure, yet a new factory is to be provided by the Department of Industry.
The committee is very concerned—so am I—that a former permanent secretary at the Department of Industry, Sir Antony

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Part, instead of retiring to his garden in Sussex, or wherever, should go on to the board of Lucas Aerospace. There have been a number of moves by a permanent secretary, Sir Anthony Part, and deputy secretaries neatly out of the Department of Industry and into some rather cosy well-paid jobs on private enterprise boards.
The committee makes the claim, which I think can be substantiated, that this demonstrates a closeness between senior civil servants in the Department of Industry and the management of a company. The shop stewards point out, for instance, that discussions are going on between the Department of Industry and Lucas on planning agreements, but the unions have not been consulted. The basic purpose of planning agreements is to get an arrangement between the Government and the major important company with the trade unions being involved as well.
There is far too much of a tendency for the senior civil servants at the Department of Industry always to approach the management rather than to approach both sides of the shop floor in industry, the management and the trade unions. The shop stewards argue that in their case it is absolutely essential that they should be approached and should have discussions on every occasion. It is not good enough simply for senior civil servants to have an understanding and a continuous relationship with the management, because the management has been shown to he at least less than competent over the past two or three years and is now actively trying to reduce the number of the work force at Lucas.
I know that representatives of the Department of Industry will very shortly be meeting representatives of the combine shop stewards' committee. I very much hone that it will not be simply the Department of Industry that is represented at this meeting but that it is wider, because it involves very important considerations. One of them is employment. Energy is another Department which should be involved, because many aspects of the corporate plan are concerned with the better use of energy and energy saving. Therefore, it is important that such a Department should be involved.
It is important that the Department of Employment should also be involved.
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One of the arguments that is always put forward about expenditure by the Department of Industry is "There has to be a curtailment. There must be a minimum. Public expenditure is limited, and, therefore, expenditure should be cut." But in fact, if the Department of Industry does not spend money on saving jobs, for example, what happens is that people are put on the dole, they are then paid money by the Department of Employment, they get supplementary benefit from the Department of Health and Social Security, the local authority loses rate revenue and the Inland Revenue loses tax revenue, and instead of it simply being a saving on one Vote, it is a transfer from the Vote of the Department of Industry to the Vote of the Department of Employment. In those circumstances, it seems to me that the Department of Industry could usefully determine to be prepared to spend money in order to preserve jobs and to encourage the Lucas Aerospace shop stewards to move along their various ventures.
I recognise that this will not be very easy. The Lucas company is a very large corporation, and it is seeking to operate that corporation in the traditional way by a small group of directors making decisions which have to be accepted by the work force. It will be very difficult for the Department of Industry to break away from its traditional links with the management. I make no criticism or individuals in the Department. I am saying that it is traditional for the Department of Industry to see itself as an ally of management. Many senior civil servants would not easily conceive of being allies of the rank and file on the shop floor. There is not much machinery whereby the rank and file can see senior civil servants in the same way as management can call on their knowledge and expertise and even buy it permanently when they get hold of someone such as Antony Part.
There is not much opportunity for trade unionists to meet civil servants in the ordinary course of events. That is one of the differences between the Lucas combine shop stewards' committee and most ordinary trade unionists. Many trade unionists would not dream of asking a Labour Minister to attend their trades council or meet them as the combine shop stewards' committee. They would

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argue that Labour Ministers are very busy and that they are very important people carrying out important work on their behalf in Whitehall. They would not dream of intruding on them. Managements see it as a matter of right that Ministers should go to their functions and that they should have a constant consultative capacity with senior civil servants. That is the difference.
The Lucas combine shop stewards have taken this notion of their position in society and torn it apart. They have said that they have as much right as anyone to be consulted, that they have as much right as the management to enter into discussions about decisions which will affect their future, and that they will not simply accept a notice in their pay packets at the end of the week to the effect that that is the end of the day for them and that they are out on the streets looking for jobs. They are saying very clearly that they have to be consulted, that they have to be involved in decision making and that if that means going to the Department of Industry and becoming involved in consultations to the same degree as the Lucas management, that is what must happen.
I say that that is what must happen, because Labour Governments are not elected to uphold the traditions. A Labour Government may not be articulated by many millions of people. But we get a Labour Government against the trends because many working men and women see a Labour Government as being on their side. When we get into office, we have to recognise that, whatever the difficulties, these traditional patterns of negotiation have to be pushed to one side and that political initiatives must be taken sometimes. That may cause a little difficulty with the CSEU, although recently the CSEU has shown commendable initiative. But working men and women—organised trade unionists—have as much right as managements to that close consultation.
I hope that the meeting which is to take place very shortly between the combine committee and the Department of Industry—and, I hope, the Departments of Energy and Employment—will represent a new initiative. It will be difficult because of the traditional patterns, and
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I am sure that Ministers at the Department of Industry will be having a lot of advice fed to them that they must not make any promises or say anything which will give an indication of help to the combine shop stewards, that it is the management which is taking the initiative and that it is management decision making.
The combine shop stewards are turning that argument on its head. They say that that is not the case at Lucas. They say that decision making should be taken at least jointly. Of course, that will be resisted. Everyone says that it is a wonderful idea. People pour out sympathy and say that it is a splendid idea with great moral virtue—but nothing seems to get done.
The reason is that if the Lucas combine shop stewards' committee should open the door of the elite of the Civil Service talking to the elite of management and making decisions in concert, many more trade unionists will also want a say in decision making. They would be right. If the Lucas Aerospace plan is adopted, it will mean an alteration in our society, and the Iranian contract may cause that degree of crisis that produces a change in our society. It is reckoned that it takes about 10 years for an idea to be taken hold of and put into practice. It may be that the general economic difficulties and the crisis in the arms industry will produce a rather shorter period in this case.
I understand the difficulties of my hon. Friend the Under-Secretary in replying to a debate at relatively short notice, but we represent a movement which is headed towards change. It may not take place next week or the week after, but it is irresistible. Change will take place. That is the message which goes out from this House.
We have talked to the shop stewards involved. They have met setback after setback. They do not look on us as noble saviours from Parliament. They look on us with a certain amount of suspicion because we are in Parliament and we represent the sort of establishment that they have been fighting for the past three years. They are still dedicated because they have the right ideas, and people with the right ideas will win in the end, no matter how many times they are put off. That is the message that we put out. The

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shop stewards will win, and they will have us behind them all the way.
I hope that in the next few weeks we shall be able to stand proudly—as we have not always been able to do in the past—and say that the Departments of Industry, Energy and Employment are behind those shop stewards. Perhaps it may even be possible, though it seems unlikely, that the whole Government will give their backing to these sorts of ideas.
9.8 p.m.
Mr. Sydney Tierney: I join my hon. Friend the Member for Keighley (Mr. Cryer) in thanking my hon. Friend the Under-Secretary for giving us the opportunity of having this debate.
I have been involved with the Lucas corporate plan for about three and a half years. Like a number of other hon. Members, I have a Lucas Aerospace factory in my constituency. It is agreed on the Labour Benches that the Lucas Aerospace corporate plan is fully in line with Labour ideas about industrial strategy.
I wish to put on record what the corporate plan is all about. Essentially, it is a set of detailed proposals for the manufacture of 150 products covering six major areas of technological activity, including oceanics, transport systems, braking systems, alternative energy sources and medical equipment. The products include wind generators, gaseous hydrogen fuel cells, solar collecting equipment, all-purpose, multi-fuel power tanks, kidney machines, hobcarts for spina bifida patients, portable life support systems, robotic devices for mining, underwater work and so on, and road and rail vehicles. There were two objectives to the plan—to protect jobs and to ensure that the alternative work would be socially useful. That is a tribute to those who compiled it.
There is a long history of redundancies in Lucas Aerospace. I first came in contact with the problem when the workers drew up a diversification plan three and a half years ago with the object of saving jobs. But then this plan was devised which has been widely praised as a considerable theoretical achievement. I led a deputation to Ministers three and a half years ago and they, too, hailed it as such. Books and articles have been writ-
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ten about it, but there has been no practical Government involvement yet. I hope that this debate will encourage such involvement.
A first step, which we suggested three and a half years ago, might be a feasibility study of the products proposed. The workers understand about marketing and demand and that the products will have to be sold at a profit. They say that one or two of the 150 products could be commercially successful. The electronic chips with which they were dealing at that time were four inches long. They showed the Minister examples and talked to him about some of the products which might result.
In spite of the difficulties, we have tried to involve the management, the unions and the Government. This is a classic case for a compulsory planning agreement to get such an admirable venture off the ground.
The Government recently said that they met the company to discuss a planning agreement and that another was planned. Has a further meeting been put in motion? The Government will probably say that over four and a half years they have taken a great interest in redundancies and have given considerable help to Lucas Aerospace. But most of that time has been spent on procedural arguments with the unions about whether the shop stewards making the plans were the true union representatives. There have been serious problems with the Confederation of Shipbuilding and Engineering Unions. The Government have spent more time on procedure than on anything tangible.
I began by saying that the plan was a twofold issue—redundancies and new technology, new products, new exports and new jobs. I know that the Government will say that they have given considerable support to Lucas Aerospace to save jobs. Recently a grant of £8 million has been offered to build a new factory and to save jobs on Merseyside. This is important. What happens in a combine like Lucas Aerospace obviously affects the situation in other places. We take an interest in what is happening within the combine because it affects each unit in various parts of the country. Concern was expressed that work had not started on a new factory site at Huyton. I wonder

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whether the Minister could give more up-to-date information on that.
My hon. Friend the Member for Keighley mentioned that working parties have been established with the unions to discuss redundancy questions. There have been various complaints about procedure. Would the Minister make clear that the working parties have been dealing with other matters apart from redundancies? If they have been dealing explicitly with redundancies on the basis of what is happening in Huyton and other places where factories were to be built and where there were worries that factories would not be built, may we know whether the established working parties have got down to any details of the plan concerning new technology, new products and new jobs?
I should also like the Minister to bring us up to date on other questions. It has been established that the Government were prepared to hold a tripartite meeting once the working parties had reported. It was stated that this would possibly take place some time in February 1979. The working parties have been meeting and they have been discussing redundancy problems. Have the working parties been discussing ways and means of establishing some kind of feasibility study between the Government, the unions and the company to make practical arrangements for marketing some of the products I have mentioned in the long list?
If the working parties have not been discussing matters other than redundancies and have not been discussing in detail the practicable introduction of any of these products on a marketing basis, even in terms of a feasibility study, will the Minister promise that the Government will take the initiative in the tripartite meeting and introduce the subject of a feasibility study to see whether they, the company and the trade unions between them can tackle this problem in a more realistic way and implement in some form the Lucas corporate plan? There has been no argument on this side of the House about this being the right way to approach the question of industrial strategy.
9.20 p.m.
Mrs. Audrey Wise: People are quick to criticise
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workers when things go wrong in industry. Even when it needs the exercise of imagination, people seek to blame the industrial relations record of an industry for the decline, and there is a chorus of accusation in the press. In industries with a record of quiet industrial relations. where this accusation cannot be made, those who are so quick to criticise workers do not look to management to see where it has gone wrong but treat the decline as inevitable.
When a work force such as that at Lucas Aerospace constructively plans for expansion, one would think that management would welcome it. But that is not so. Management has been conspicuous in its lack of enthusiasm for the Lucas workers' initiative and their corporate plan. I greatly regret that but do not find it surprising. However, I would expect a Labour Government not just verbally to approve such an effort but to give all possible help to the work force to achieve their plan. There is at last to be a tripartite meeting on Wednesday to discuss the situation and the forthcoming closures and job losses. I hope that this portends a change of attitude and more practical support.
An additional interim report has carried the original corporate plan a stage further. It has considered the situation in the light of the redundancy and closures proposals currently put forward by management. The title of the report "Turning Industrial Decline into Expansion—a Trade Union Initiative" epitomises the attitude of the Lucas workers. They want to turn decline into expansion, and not just any old expansion but useful expansion—as is often said, expanding in the life industry instead of the death industry. I hope that the meeting on Wednesday will be the first of a series to ensure that this work is carried forward.
It is a pity that the working committee has had difficulties in producing the fresh report dealing with the current crisis. I regret that in the report the working committee had to complain that at some sites a direct instruction had been issued by the Management that all information should be withheld. That is extraordinary. It suggests a fear on the part of the management that information is a tool which can be dangerous in the hands

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of workers. I suggest that information in the hands of workers rather than in the hands of management is more likely to result in constructive proposals. I do not say that from a vague feeling of suspicion of management but because it is shown by the report that the Lucas management has decided to source more production abroad to the detriment of plants in this country.
The people who have a real interest in ensuring that plants in this country are able to do a good job and to expand are the workers in those plants. On the other hand, the management interest can be forwarded by production abroad. Management is interested in the maximisation of profit, which is not necessarily in the interests of the British people.
The working party makes direct statements about secret decisions by the company to source more production overseas in subsidiary and associated companies. The report notes that the hydro-mechanical fuel systems business is thriving, but, unfortunately, it is thriving in one of Lucas's associated companies in Germany. This is very important because this equipment is a product of the Victor works in Liverpool which is to be axed.
It has been put to us by management that the coming of electronics has made hydro-mechanical equipment less able to provide jobs. The workers' rejoinder to this is that, despite the electronic element in this equipment, the hydro-mechanical element remains the most important, and that since the market is expanding the work on this equipment must expand also. It is no use to the workers in Liverpool if this expansion is in Germany. As Lucas is a British-based multinational, it is scandalous that it should divert its production overseas in this way. It is the Government's job to ensure that something is done to prevent this.
The workers have put forward not only the list of product suggestions already outlined in this debate but eight specific product suggestions for the sites that are at present under threat of closure. The report proposes a Government-aided job maintenance programme. We hear a lot about the provision of jobs, and a lot of effort is put in by the Government on job creation schemes of various kinds. Here is a golden opportunity for a real job maintenance programme which will help
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to maintain an important sector of production. It will in no sense be pretend work or work created for its own sake. It will be very important production.
The working party challenges the company on its facts. It challenges the figure of £500,000 which the company claims is necessary for the Coventry foundry to be modernised. The working party claims that the cost of new equipment to modernise that foundry is £200,000, not £500,000. As a Coventry Member, I am obviously interested in this, even though the Coventry foundry is a small plant, because Coventry needs all the jobs it can get. I am therefore very pleased indeed that the working party's report recommends that, far from being closed, the Lucas Coventry foundry should be modernised and expanded to meet the requirements for non-ferrous castings which exist throughout the whole of Lucas Aerospace.
In seeking information for its report, the working party came across an extraordinary position. It found that most of the technical staff and others associated with the design of castings and the organisation of their production in Lucas Aerospace were not aware of the facilities available at Coventry. That is a fine way to run a company—to have a facility of which one's own design staff are not aware.
The working party points out that there is a general requirement throughout Lucas Aerospace for more non-ferrous castings facilities rather than less, and that the companies at present supplying nonferrous castings to Lucas show a marked reluctance to supply the short runs usually associated with the aerospace industry. Lucas Aerospace's own foundry would be completely geared to whatever kinds of runs were needed in the aerospace industry, whether long or short. Outside foundries cannot be expected to have the same determination to make aerospace needs a priority.
The working party also accuses the management of adopting an unrealistic accounting procedure in working out the hourly rates charged for the Coventry foundry, and, of course, accounting procedures can be extremely important.
There is a fascinating passage in the report which will, I hope, be probed deeply at the tripartite meeting on Wednesday. It is the passage in which the

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working party challenges the claim by the company about the figures which result from maximum utilisation of existing facilities. The company's figures show the extraordinary position that maximum utilisation apparently increases the overhead cost for each unit of output. The whole basis of telling workers that they can have wage increases if they increase productivity is the notion that overhead costs per unit of output go down if there is maximum utilisation of capacity and increased productivity.
Although I am very often suspicious of productivity agreements, there is a certain logic in that general statement. One would expect maximum utilisation of capacity to reduce the overhead costs per unit of output. There must be something very peculiar indeed about the organisation of Lucas Aerospace if it actually increases its overhead costs per unit of output when it has maximum utilisation. If that is so, there must be something very seriously wrong in the company, and it must be reflected in all sorts of ways.
There are other cricitcisms of the conduct of the company in Birmingham. It might be claimed that management has the right to manage, that Lucas Aerospace belongs to Lucas Aerospace, and who are we to poke our noses into the way that it is run. I start from the proposition that Lucas Aerospace does not simply belong to Lucas Aerospace. The build-up of wealth in the company, as in others, comes from the labour of the workers in it. If their labour is wantonly wasted by bad management practices, they have every right and duty to complain and to be heard. As an hon. Member who tries to represent the workers, I think that I have the right and duty to give voice to their criticisms.
There are serious faults in Birmingham. My hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) may seek to discuss specifically the situation in Birmingham, and therefore I shall not pursue it unduly. However, it is most serious that young graduates have been allowed to leave Lucas Aerospace in Birmingham with the result that there are now insufficient designers to handle even the existing work load. That is bound to result in customer dissatisfaction, which will lead to a fall in orders and production. I leave my hon. Friend
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the Member for Selly Oak to pursue the matter in more detail.
There is often a lot of pious talk about industrial strategy, about the need to maintain production and to re-equip industry, and about the need for workers to co-operate in that process. Here we are discussing proposals which are enormous in their scope. They have been described tonight as a moral crusade. They express the desire of workers that their labour should be used constructively for the benefit of the workers in the company and of people generally.
So in one dimension the Lucas Aerospace corporate plan and the new interim report are enormous general structures. But they are also specific plans, and the point which concerns us here tonight, and which will arise for Ministers from the Department of Industry on Wednesday, is that this is not only about grand plans but also the need to maintain the jobs of specific workers in specific places.
I share the hope expressed by my hon. Friend the Member for Keighley (Mr. Cryer) that there will be the maximum ministerial involvement in the meeting on Wednesday. I was present at a meeting at which the Secretary of State for Employment met the Lucas combine committee. It was a good meeting, and it was appreciated by the shop stewards concerned. As employment is directly concerned in this matter, as the Department of Employment is expert at creating jobs and knows how to spend money on that to get a reasonable return, and bearing in mind that the Department is familiar with the general points of the Lucas workers' plan, it would be both courteous and efficient if the Department of Industry invited the Department of Employment to the meeting.
As my hon. Friend the Member for Keighley said, a similar consideration applies in relation to the Department of Energy, given the importance of energy conservation. I understand that at that Department one Minister is given the job of handling the subject of proper energy utilisation and conservation. The Department would surely be charmed to receive an invitation to Wednesday's meeting, and I am sure that it would be happy to co-operate. The shop stewards, who have undertaken their work in a most constructive way, feel that a fruitful meeting on Wednesday will show that

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the Government are at last taking their proposals seriously.
I am very much afraid that, if the meeting appears to be cursory and formal and does not go into matters in depth, there will be enormous disappointment on the part of the workers, which will have serious repercussions on morale in the factories. People can go on for so long making constructive suggestions, but they feel most frustrated if their suggestions meet with no response. Speaking as somebody who is very anxious to see the maintenance of the Coventry foundry, as is recommended in the interim report, and since I wish to see Lucas Aerospace expanded, I very much hope that Wednesday's meeting will be the first of many meetings to ensure that the job is properly carried out.
Close relationships exist between the company and the Department of Industry and the Treasury. Looking at Lucas Industries as a whole, I am fascinated to note that the amount of tax paid by Lucas Industries appears to be balanced almost exactly by the amount of money which that organisation has received in grant. If there is that kind of neat and tidy financial relationship between Lucas Industries and the Treasury to the good fortune of the company, it is particularly important that in relation to Lucas Aerospace workers and the Government there should be an equally close relationship which will be fruitful not only for the company but for the nation as a whole.
9.43 p.m.
Mr. Tom Litterick: We are speaking in this debate about the shop stewards' combine committee. Before I talk specifically about the Lucas Aerospace committee, I believe that it is worth while spending a few moments on the subject of shop stewards' combine committees. This is an institution which has developed in the last 30 years and has set an example to trade unionists in other countries—as indeed in earlier days we set an example to the working classes in other countries.
An interesting characteristic of the shop stewards' combine committee is that it is the response of the working man or woman to the real and hard problems that arise when a person works for a large organisation containing a large number of plants. Just as management dis-
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covered its need to co-ordinate the activities of different but simultaneously operating units, so, too, did the workers discover that if they did not co-operate their activities in the various plants in a multi-plant firm they could be picked off, one group at a time, by management. In other words, they discovered that by applying to a multi-plant firm the ancient and well-proven Labour movement principle that unity is strength they could confront the management with a different degree of strength, co-ordination and unity.
That attitude caused a number of problems in British industry, and not least in the British trade union movement. The trade union movement was not structured to encapsulate within it this new strange infant, the shop stewards' combine. For many years, official trade union organisations, with the collaboration of the employers, fought like tigers to suppress these committees.
Some of us remember the number of times that the Ford shop stewards' committee ceased to exist—crushed by a combination of management and official trade union force. But, being essentially a healthy infant, being an essential and logical outcome of the kind of industrial growth that we have had, having been created by British working men, it persisted, in spite of the trade union bureaucrats and in spite of the multinational managerial bureaucrats, and it thrives today. It is still looked upon with a great deal of scepticism in official trade union circles and with outright hostility by managers, because the one thing that managers hate and detest is that their workers might have cohesion and unity throughout what they regard as their organisation.
Mr. Cryer: Does my hon. Friend also accept that one of the interesting things about the combine shop stewards' committees is that, unlike what happened in previous days, the management cannot separate the work force and so bring about disunity between clerical workers, craft workers and unskilled workers? One of the real strengths of the combine shop stewards' committees is that they combine the blue collar and the white collar workers for a common purpose.
Mr. Litterick: I entirely agree, but my hon. Friend should remember that the

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first stage of that development was the formation of joint shop stewards' committees within one multi-union plant, and then they extended. They discovered, as their ancestors in trade union life had discovered, a new source of strength. It was a logical response to the situation in which they found themselves, which was that their employer had many tentacles, many factories, and if he wished he could play one group of workers off against another.
That was the employers' answer. Hence their violent, total hostility, which is as strong today as it was 20 years ago, to the idea of bargaining with their workers as workers in an entire multi-plant group. The employers do not mind bargaining with trade union officials, strangely enough. The game they play is to bargain with full-time officials of the trade unions, to play them off against the trade union members. Some manage to play that game quite skilfully.
This brings me to Lucas. What the Lucas Aerospace combine committee did was not only to carry out the now well-recognised function of co-ordinating the bargaining activities of workers over wages, conditions of work, and so on where there are a number of plants, but made a great leap forward into unknown territory by, in effect, claiming of management the right to discuss with it the products that they produced. That was a claim on what management regards as its prerogative, and that is what makes the Lucas Aerospace combine committee so interesting and encouraging.
We hear on all sides—I must say "on all sides", given the events of the past three or four weeks—not to mention pulpits, that shop stewards are the enemy of civilised life as we know it, that the fabric of Christian civilisation is about to crumble, because ordinary working men have discovered means of asserting power on their own behalf. You have heard, Mr. Speaker, some people on both sides of the House who should be ashamed of themselves deploring this fact.
What these men have done is to tell their historic, traditional lords and masters "We do not think that you are very good at the job of managing. We think that we should participate in that
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job of managing the work that we do". That is the question which the Lucas Aerospace combine committee posed to British management and the British State. In the context of this sad story, which has been dragging on for four years, the Labour Government have not played a creditable role. They have sided with conventional wisdom.
It is asked "Who are these people who claim the right to have a say in whatever their employers produce?" I know that my hon. Friends who are here tonight have had the experience of being involved with the consultations and attempts at bringing people together. They have seen the negative attitude of the State, to put it at its most charitable, to this positive and creative initiative by working men and women. The State does not know how to handle it. It is nonplussed because this challenges a traditional historic bastion of social, economic and political power. Its social democratic ideology furnishes it with nothing that enables it to make a positive response to these creative initiatives by working men and women.
This is a large company with a sophisticated technology which commands a high level of skills in our people. It has progressively run down its labour force from 18,000 to about 11,000. It denies that. It did so at great human cost, in the pursuit of maximised profit. That is all. That has nothing to do with the interests of our country. It has nothing to do with the interests of humanity. That firm is big in the armaments business. It is in the business of accumulating capital and maximising profit. It has done well out of it.
In the seven years up to 1977 it accumulated about £250 million of profit, but paid no tax. That is the meaning of what was said by my hon. Friend the Member for Coventry, South-West (Mrs. Wise). It paid no tax. It received as much in grants out of my constituents' money as it paid in tax. The rest has been—as the Chancellor has it—deferred taxation. That is a complicated euphemism for letting the corporate entities of capitalism off without paying their fair whack to the community. Meanwhile, this firm goes on exporting productive capacity abroad. It denies opportunities to my constituents and to those of my hon. Friends. It continues decimating the economies of

921
Liverpool, Bradford and Coventry at will. It does so because nobody within the State has the will to stop it. All that the State has managed so far is a pathetic effort to bribe it with my constituents' money not to do so.
Whatever else the Lucas Aerospace case study might be, it is a classic case study in how not to go about bribing capitalism to do something that is socially beneficial. Those people are apparently unbribable, no matter how much money we give them. All we succeed in doing is making life easier for them, so that they may do what is to their greatest advantage. It is to Lucas's greatest advantage to downgrade the Lucas organisation in Britain, to reduce its productive potental and to create or set up new productive potential elsewhere, at the expense of our people and our economy. It takes the money. But the bribes do not work. Nor indeed do the bribes work elsewhere.
However, the hostility towards the shop stewards continues unabated. I referred to the troubles over the past three weeks. All the latent hatreds erupted to the surface on both sides of the House. We heard what Members of Parliament think of the organised workers of Britain. You, Mr. Speaker, have heard it. You have read our newspapers, with their mendacity, malignancy and bigotry. They hate these people with a bitterness that is almost unbelievable.
What are these people doing? They are saying "All right. The traditional way of doing work is not something we can continue any longer. Our existing line of products will not serve us much longer. Therefore, we should work differently and have new products." They have said "Perhaps we should not make instruments of war." But they have also said "Perhaps there is an alternative to unemployment by making new things."
These are constructive suggestions. What is the response? Mendacity and hatred—echoed faithfully and resounded in our press, whose philistinism is equalled only by its bigotry when it comes to dealing with working people.
This has been the experience of these men and women. They have played the constructive role and the creative role. They have said "Here we have thought out creative, constructive proposals for
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the organisation with which we are intimately familiar and about which we know more than anyone else. But what happens? They will not even talk to us. The State will not co-operate with us. All sorts of difficulties are placed in our path." For four years they have trudged along that path to attempt to get someone with power and influence to listen to them. Only now does it seem that it is beginning to happen.
I do not say for a moment that Wednesday will be the beginning of anything. But it might be. However, until now virtually nothing has happened. The directors who have run Lucas have flatly refused to engage in any constructive conversations with these people. Indeed, they have gone out of their way to subvert these men and women. They have actually done that. But who are these people who defy their own workmates? Although managers do not think of workers as their workmates, they are so. They are fellow workers. Who are these people? They are people who will, for example, build a factory in France to make car components, rather than build a factory in Britain or use an existing factory here. They justify this by saying that that is the deal that the French company with which they are dealing has insisted upon. Never does one hear of the reverse taking place. Strangely, it is always that they have to make a deal which involves either creating new productive capacity abroad or closing down capacity in Britain, reducing employment, to the advantage of some other organisation abroad. They run down the strength of our economy.
In effect, the directors of Lucas have for more than a decade been steadily sabotaging the British economy and sabotaging the work prospects and career prospects of almost every conceivable grade of worker in the British economy. whether he is an unskilled labourer or a highly skilled scientist. The men who are directors of Lucas have undermined their lives and they say "That is business." But we say "That is capitalism." That is how capitalism works.
They ignore the other consequences of their behaviour. They always whine about the tax burden. They pay expensive public relations experts to whine in public for them, hoping that no one will notice

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that they pay no taxes and that they are subverting the economy. When their bluff is called, when their own fellow workers say to them "All right. We have here a set of proposals", their only response is to run away and to deny their right to implement them.
I hope that my hon. Friend the Under-Secretary will take sides with us and with the workers of Lucas Aerospace and give us some reason to hope that the meeting on Wednesday will be not only the beginning of the road for the Lucas Aerospace combine but the beginning of an example which will set a new pattern not only for the British economy but throughout Europe.
9.59 p.m
The Under-Secretary of State for Industry (Mr. Les Huckfield): I must confess that when I came into the House this morning I did not expect that I should be replying to this debate. In view of the small amount of time that I have had to prepare for it, I hope that my hon. Friends will accept that if I try to reply to the matters which they have raised in as much detail as possible, they must not expect too much and that as regards other details on which they have sought information I shall let them have that later if I cannot furnish it tonight.
I want first to pay tribute to the work which has been done over the past four years by the Lucas shop stewards. There is no doubt that a tremendous amount of energy, effort and endeavour have been put into the preparation of the corporate plan.
It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr.Tinn]
Mr. Huckfield: I was paying tribute to the tremendous effort and endeavour which the shop stewards had made on behalf of their fellow workers, as I do to my hon. Friends for the way in which they have pleaded their cause assiduously and for the way in which they have put their case on behalf of their constituents and on behalf of all the workers in Lucas
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Aerospace in various parts of the country.
It was my hon. Friend the Member for Birmingham, Yardley (Mr. Tierney) who first brought a deputation of Lucas combine shop stewards to see the then Under-Secretary, my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), as long ago as December 1975, and I know that my hon. Friend the Member for Yardley and my other hon. Friends have been associated with a large number of meetings with Ministers in the Department of Industry and other Departments and involved in trade union meetings up and down the country, all concerned with and all designed to advance the aspirations and hopes stressed in the corporate plan.
I welcome the spirit in which my hon. Friends have put their points of view tonight because they, too, spoke well within the spirit, the hopes and the aspirations of the corporate plan.
It is worth putting on record that, though we are all looking forward to the tripartite meeting which is to take place in my Department on Wednesday, that offer, option or possibility of such a tripartite meeting has been in existence for nearly two years. It was in March 1977 that the possibility of such a tripartite meeting, if it was desired by the union side and the management side, with the Department was first mooted. I recall meeting the combine shop stewards myself, along with my right hon. Friend the Secretary of State for Employment, in April 1978 when the possibility of a tripartite meeting was mentioned.
My hon. Friend the Member for Keighley (Mr. Cryer) spoke about the Department of Industry being the traditional ally of management. I hope that that was no criticism of Ministers. I am sure that he will recognise that, although some of us are Ministers, we are nevertheless still members of our trade union branches and attend their meetings whenever we can. I hope he will also recognise that by having offered that tripartite meeting, and that since that meeting has been on offer for some considerable time, that in itself shows the desire and willingness on the part of my Department to meet the workers, their representatives and the unions involved and that there is a willingness to listen not simply to management but to the union side as well.

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If my hon. Friends look at the catalogue of meetings surrounding the corporate plan which have taken place since 1974, they will see that just as many meetings with union representatives in various layers of the trade union movement have taken place as have meetings with representatives of management.
Mrs. Wise: I should be grateful if my hon. Friend would follow up that statement with a written account of the meetings to which he refers. I believe that he will find that the only meeting at which the combine shop stewards' committee has been able to meet Ministers is the meeting arranged by my hon. Friend the Member for Sowerby (Mr. Madden), who is chairman of the employment group of the PLP, with the Secretary of State for Employment. That is the one and only meeting facilitated by the Government.
Mr. Huckfield: I shall furnish my hon. Friend with a list of the meetings which have taken place. I think that she will see from it that rather more meetings with union representatives have taken place than she supposes. The latest was a meeting between the Lucas management and the unions only last Friday to take further certain discussions surrounding the report to which reference has been made There have been a large number of meetings, not just about the subjects raised in the corporate plan but in connection with the working parties and some of the proposals that my hon. Friends have put forward.
I hope that my hon. Friend the Member for Keighley will recognise that the combine structure which exists in, for example, Ford, Chrysler, Massey Ferguson, Vickers, British Leyland and British Aerospace is not a unique feature. Combines are now much more prepared to put forward the sort of alternatives that we have been discussing, but the existence of combines has been observed in the trade union movement for some time. Many of us recognise the contribution that they have to make, the hard work that they have done and the validity of many of the initiatives that they have taken.
I have been asked about planning agreements. My right hon. Friend wrote to the company management about a planning agreement in July. A preliminary meeting with the top management has taken place and there have been fur-
926
ther meetings planned at working level. The latest position is that there was to have been a discussion with officials last week but it had to be postponed because of one or two industrial disputes and the imminence of the tripartite meeting on Wednesday.
Mrs. Wise: A lockout.
Mr. Huckfield: Discussions about a possible planning agreement have been taking place but have not been concluded. I do not conceal from my hon. Friends, and we have never tried to conceal from the House, that we would like to conclude a planning agreement with Lucas.
The working party to which my hon Friend the Member for Yardley referred has been concerned with the reorganisation options and alternative proposals that might be possible on the sites under discussion—primarily Liverpool and Bradford, but including others as well. I do not think that I should go into more detail on the report which is to be discussed on Wednesday. My hon. Friend the Member for Coventry, South-West (Mrs. Wise) made clear that it goes into a great amount of detail on alternative proposals for some of the sites, and I believe that those details ought more properly to be the subject of Wednesday's discussions.
There is no question of our having been secretive about the financial assistance made available to Lucas Aerospace I gave a full reply to a question from my hon. Friend the Member for Coventry, South-West on 19 June when I said
"The projects announced by Lucas Aerospace on 12th June will create at least 500 jobs in Liverpool and at least 400 jobs in Bradford. The financial assistance for the Liverpool project is:

(a) selective financial assistance in the form of an interest relief grant of £2·2 million; and

(b) regional development grants estimated at £890,000.

In addition my Department is to build a factory at Huyton at a cost of up to £3 million. This factory will be leased to Lucas Aerospace on a full repairing and insuring lease. Lucas will be given a rent free period of five years and will then pay the full market value rental as assessed by the district valuer. For the Bradford project my Department has agreed in principle to build a factory at a cost of up to £2 million. The initial rent free period will be two years, but otherwise the conditions will be similar to the Huyton factory."— [Official Report, 19 June 1978; Vol. 952, c. 94.]

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The cost per job—this applies only to the selective financial assistance to which I have referred—will amount to £2·2 million for at least 500 jobs, giving a cost per job in grant value of up to £4,400.
Mrs. Wise: Would my hon. Friend confirm that there will nevertheless be a net loss in jobs, despite the expenditure of this £8 million?
Mr. Huckfield: That has never been concealed from the House. It has been made unfortunately plain in the figures which I have given. I do not intend to conceal the fact that job losses are involved in these proposals.
Mr. Cryer: Will my hon. Friend confirm that these arrangements were made without any reference to the combine shop stewards' committee? Will he confirm that the arrangements in Bradford and elsewhere to which he has referred, which will produce a net loss of jobs, were carried out in consultation with the management and that no consultations were undertaken with the combine shop stewards' committee?
Mr. Huckfield: My hon. Friend will know from his experience that all these discussions are normally conducted on a confidential basis. If a particular company was willing to release the application to its employees, my Department would raise no objection.
Reference was made to the question of conversion work and the possibility that might exist within the Ministry of Defence. I hope it will be recognised that many jobs depend on defence-oriented business but that the United Kingdom is nevertheless participating in a United Nations study of the economic problems of disarmament in a proposal called the Nordic initiative. The Foreign and Commonwealth Office, under my right hon. Friend the Foreign and Commonwealth Secretary, is taking the lead. At present, my Department feels that the Industry Acts and the science and technology legislation give it all the powers it needs to assist in the conversion process.
I take note of what my hon. Friend the Member for Keighley said about the need to examine this matter further. The Government have taken certain steps, fal-
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tering though they may be in his eyes, in the direction he has been advocating.
Reference was made about the role that could have been played in these discussions by Sir Antony Part, former permanent secretary in the Department of Industry. The section of the working party report entitled, I believe, "Close relations" comments adversely on the close relations between the Department of Industry and the management of Lucas which, the report claims, make a mockery of supposed Government impartiality between both sides of industry.
I cannot comment on the claim in relation to Sir Antony Part. My Department has received a copy of the working party's report. We are studying it before the tripartite meeting on Wednesday 14 February. I have seen Sir Antony's statement in The Observer. I have no doubt that my hon. Friends have also seen it. Sir Antony says that, in accordance with public procedure, he consulted the Prime Minister's advisory committee under the chairmanship of Lord Diamond, who approved both his appointment and its timing in relation to the date of his retirement from the Civil Service.
I know that there is a great deal of concern about this matter among my hon. Friends. It is not the first occasion on which it has been noted. I know that Sir Antony is able to speak for himself, as he has done in the quotation attributed to him in The Observer.
My hon. Friends have referred to the breakdown of work between civil and military projects within Lucas. The 1976 sales figures reveal that only about 50 per cent. of the work was military in some way. The other 50 per cent. was civil. The main customer was Rolls-Royce, which took about 45 per cent. of production. The share of the Ministry of Defence was about half that. If one examines the work in which Lucas has been involved, one finds that it is certainly not all military. My hon. Friends have not given that impression, but it is worth putting on record that a great deal of work in which Lucas has been involved is civilian work. With your permission, Mr. Speaker, I will refer to civilian projects a little later.
I pay tribute again to those who must have spent many an hour preparing the

929
corporate plan. It reads like a tour d'horizon through much of modern technology and research. It refers to such products as solar heating, windmills, braking systems, electric vehicles, heat pumps, oceanics, applications of microprocessors—perhaps a little before its time—kidney machines, aids for the blind and for spina bifida patients and powered undercarriages for aircraft.
As I have told my hon. Friends before, a great deal of work is already taking place either in my Department or in other Departments into many of these facets of new technology. I will not say that all this is a direct result of the corporate plan, but work is already proceeding in many of these areas. However, I recognise the plan's validity and the challenge and the social usefulness of many of its concepts.
My hon. Friends said that union difficulties had been encountered by the combine. It is only fair to say that the combine's activities have aroused comment at executive and general secretary level. Some of its activities led to a circular being sent out last year to divisional offices by the general secretary of TASS, which says:
"Contrary to statements widely circulated, the 'Corporate Plan' is not the official policy of TASS. It was submitted to the National Conference of the AUEW where it failed to receive support. Nevertheless, the TASS EC took the initiative to put the issue to the Confed. EC and it was raised with the Government as a result."
I have no wish to engage in a long debate about union structures. My hon. Friends are very involved in their union. My hon. Friend the Member for Keighley has strong union connections. They understand as well as I that there are levels of negotiation, participation and bargaining. I hope that they will recognise, however, that my Department is not in an enviable position when one level of a union tells us that an initiative is worth pursuing and another level, often domocratically elected and constituted, says that it would not be wise to proceed so deliberately with those proposals. The Department has received pressures from one level urging us in one direction and from a second level urging us in another. That is a difficult position for us, because we must try to retain, as I hope we do, good relationships with all levels of the trade union movement.
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But I do not want to digress into a long discussion tonight. I only hope that my hon. Friends will recognise that some democratically elected executives and general secretaries have made this reference to us and that they will agree that my Department should pay attention to their proposals.
I should like to make it clear to my hon. Friends that for a long time I have paid tribute to the work done by the Lucas combine shop stewards. I was a member of the national executive committee that signed the motion put down by my hon. Friend the Member for Sowerby (Mr. Madden) that they should be proposed for the Nobel peace prize. That was a testimony of my support for their initiative. I produced a paper for the Labour Party entitled "The Industrial and Employment Implications of Changing from Defence to Civil Production". I submitted that as an addendum to that study which was produced by the national executive committee study group on defence expenditure.
I said on the diversification issue and with specific reference to the Lucas combine:
"In general, compensating employment has to be looked for by diversification into other industry. The diversification plans produced by the work force of Lucas Aerospace recognise this by seeking to utilise relevant skills in new ways."
I went on to say:
"This is a constructive approach and with a positive attitude from the workers, industrial restructuring on a large scale becomes a possibility …"
I made that submission with the full knowledge of my Department, and I went on to say:
"In conclusion, the Lucas Combine Corporate Plan is a worthy initiative, into which much constructive thought has been concentrated."
That has been my position for a long time. Similiarly, my right hon. Friends in the Department of Industry have paid tribute to the large amount of detailed work done by the combine shop stewards.
Mr. Tierney: I wonder whether my hon. Friend could give us a glimmer of hope that at Wednesday's meeting the Government might take some initiative to get the company involved in a feasibility study.
Mr. Huckfield: I seriously take on board what my hon. Friend has said. By the circumstances in which it was constituted, the working party has concentrated primarily on alternative restructuring options and proposals. It has been felt that it should also be seriously examining some of the proposals in the corporate plan. I shall certainly put this before my right hon. Friend. I shall be taking part in the discussions on Wednesday, and I shall endeavour to convey the feeling expressed by my hon. Friend.
As my hon. Friend the Member for Coventry, South-West said, the working party has completed its detailed examination of alternative restructuring proposals and has produced a comprehensive report. She quoted from it, exemplifying the large amount of detail. I do not want to comment further without having the opportunity to examine it in more detail. It was discussed on a preliminary basis between Lucas management and the unions last Friday, and there will be a further meeting on Wednesday.
Mrs. Wise: I am a little concerned at my hon. Friend saying that the committee has completed its work. I thought that it was an interim report and not final.
Mr. Huckfield: I said that the working party had completed its examination. I cannot tell at present to what extent it intends to go further. The further development of proposals in the report will be studied at the meeting on Wednesday. It would be premature for me to comment further until we have received a report from the management and unions on the progress that they made last Friday and in other discussions that they may have had.
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I emphasise to my hon. Friends that I do not want to prejudice anything that they may want to say. I and my right hon. Friends want only to facilitate constructive discussions between the management and the unions on the future of the company.
There is no doubt that the new civil aircraft programmes that have been launched over the past six months—for example, the Boeing 757 and 767, the British Aerospace 146 and the Airbus 310, as well as the launch of the Rolls-Royce RB211–535—have significantly changed the immediate prospects for the equipment industry. When these prospects must be seized rapidly, companies like Lucas must be involved. If they do not secure business on some of the new programmes that I have mentioned, the longterm outlook for them must be bleak. The workers know this. It is a question of grasping as firmly as possible the opportunities in the aerospace and aero engine industries.
I thank my hon. Friends for raising this subject tonight. Because of the short notice, I have not been able to give my reply the kind of thought that my hon. Friends deserve. However, I have tried to answer all their points.
The tripartite meeting on Wednesday will discuss the comprehensive report. I look forward to that meeting, and I shall bear in mind the need for other Departments to be involved. Now that the meeting has been arranged, let us look forward to it, let us look forward to progress being made from it, and let us try to take forward the spirit of the initiative of the shop stewards' plan.
Question put and agreed to.
Adjourned accordingly at twenty-six minutes past Ten o'clock