HC Deb 14 February 1979 vol 962 cc1173-203
Mr. Emery

I beg to move amendment No. 1, in page 1, line 17, at end insert: 'or (c) Notwithstanding Schedule 1 of the Bill, the business is the National Giro.'.

Mr. Deputy Speaker

With this we may take amendment No. 28, in schedule 1, page 54, leave out line 7.

Mr. Emery

Basically, the Opposition believe that where similar organisations are operating in both the public and the private sectors and where a nationalised industry or other public sector body is in competition with a company in the private sector, the rules and the supervision of both organisations ought to be not only similar but the same.

I believe that that is a fair statement of principle affecting all nationalised industries. In this Bill, it affects especially the banks and a body which is now in competition with the banks—the National Giro.

The Opposition consider that the National Giro should not be excluded by the Government from the provisions of this new Banking Bill. This is especially important because, for the first time in any major sense, regulations are being produced by the Government for the organisation, structuring, control and policing of banks in general.

It is always a matter of concern to the Opposition when the general principle which I have expounded of the same control and the same structure for both public and private sector companies is deviated from by the Government, and we wish to look at the special position created by it. No one can argue that by excluding the National Giro from the Bill a special position is not being created.

When we consider banking, I am sure that the Minister will understand if there is considerable suspicion in the minds of the Opposition. We recall the 1976 Labour Party conference when, by a two to one majority and nearly 5 million votes recorded, a proposal was carried to nationalise the major banks. If this amendment is not accepted, the National Giro will be excluded and will continue in a special position in the banking and financial world.

I am in no way attacking the National Giro. As my speech progresses, I hope that hon. Members will appreciate that I wish to ensure, as I have always done, that when this House decides an industry shall be nationalised, it becomes a major asset of the nation and that it is the duty of the Government and of this House to ensure that it operates as efficiently, profitably and reasonably as humanly possible. At the same time, however, we have to ensure that all nationalised industries—and in this instance the National Giro—operate in such a way that competition with private sector companies is equal and fair.

When we consider the history of the National Giro, it may be understood why initially it might be considered that it should be excluded from the Bill. When it was established in 1968, the purpose was to provide a rapid and convenient money transfer system through the Post Office. However, the National Giro now offers an expanding range of banking services to private users, to public bodies and to commerce. In 1975, the then Secretary of State for Industry announced that the Goverment had decided upon a number of measures to set the National Giro on what he described as "a surer foundation", and this was all explained in the White Paper entitled "The Development of the National Giro"— Command 6344.

The wider banking services are very considerable. Under legislation then existing, the Government authorised the expansion of National Giro banking facilities to include facilities for personal loans and personal overdrafts, and overdrafts for local authorities, nationalised industries and business customers on terms which were quite competitive with those of other lenders in the financial world. It was also accepted that the National Giro should be authorised to provide other banking services, such as credit cards, cheque guarantee cards, bridging loans and so on. However, in order to do all this the changes in the capital structure required involved legislation, and in 1976 the Post Office (Banking Services) Act was passed.

There are some problems in that the National Giro accounts are part of the Post Office accounts. However, it is interesting to note that in a report setting out the views of the Post Office on the White Paper, it was pointed out that the growth of the National Giro had been set stretching profit targets by the Government and that the competitiveness of its charges to business was demonstrated by the continuing rapid growth with deposits into accounts of businesses reaching £10,000 million per annum. That strikes me as an immense figure, and I believe that an additional nought has crept into it.

The report went on to say that the National Giro was handling more than 250 million transactions per annum and that in its tenth year of operation it was moving from the strong and flexible base which had been established.

The accounts are very simple. Indeed, under the Companies Act they would not be acceptable for a bank; they would have to contain much more information. However, from them we are able to see the income of the National Giro in the year 1976–77—the Library does not yet have the 1977–78 accounts—set against an expenditure of £61 million. It is interesting to note that the retained profit for the year, after interest had been paid, is shown as a deficit of £0.9 million. I hasten to add that that is mainly because the postal order service is included in the accounts, the deficit being taken up mainly with the postal order service which is considered to be a social service of the Post Office and which is fairly expensive.

5.30 p.m.

I do not find these accounts for a banking organisation as satisfactory as I should like. I would be much happier if control of the National Giro, as envisaged for other banking institutions in the Bill, came from the Bank of England. I understand that legislation places prime responsibility on the Treasury in coordination with the Department of Industry, which is responsible for the Post Office, but that the Bank of England is also involved in decisions of control. Those who have worked in Whitehall know that it is never satisfactory for two or three organisations to be concerned with overall control of something as important as a major banking institution.

As the Bank of England is already partially involved, why should we not include the Giro as a financial institution covered by the Bill? It is fair to say that public sector organisations need just as much overall supervision as those in the private sector.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Much more.

Mr. Emery

My hon. Friend says "Much more". I cannot avoid drawing attention to the Crown Agents and the large loss by that public sector organisation. I am not making a major point, but it illustrates how public sector control was inadequate. We now have legislation to alter the whole structure of the Crown Agents.

Mr. Ian Wrigglesworth (Thornaby)

The hon. Gentleman would presumably not want to forget private sector organisations like London and County Securities, United Dominions Trust, Mercantile Credit or many of the other bodies which, like the Crown Agents, got into financial difficulties.

Mr. Emery

I am not saying that private organisations have not got into trouble. The point I was making was that there is as much need for supervision in the public sector as in the private sector.

I would like to discuss the position which the Government have previously taken over the National Giro in relation to this Bill. They say that it should be exempted because it is the responsibility of Ministers and already subject to the supervision of the three bodies to which I have drawn attention. I gather that there are regular meetings with the Bank at a high level, chaired by the Treasury.

It is also claimed that aspects of the legislation are perhaps more stringent than those which would be required by the Bank of England. This has only been suggested. I hope the Minister will tell the House in which areas they are more stringent. I do not believe that the competition about which I have talked should be one-sided. When we say there should be fair and even competition, this does not mean fair competition only in the private sector. It should also be fair and even for the public sector.

If the House was persuaded to accept this amendment, aspects of legislation already on the statute book would have to be altered in such a way that ministerial control was no greater than for other nationalised industries. The special limitations, hinted at by the Treasury Minister, would have to be abolished so that limits on operations were equal. I believe that this would be accepted by those running the National Giro. They would wish that to happen.

I hope the Minister will not argue that the National Giro is not in competition with the rest of the banking sector. I have a number of most attractively produced publicity leaflets, one concerned with weekly payments and another with monthly payments relating to loan possibilities by the Giro. They are equally as well, if not better, produced as those of many financial institutions, perhaps because the Giro is not so staid and has paid more attention to public presenta- tion than is usually the case among many of the more stuffy financial bodies in the City of London. If the Giro is to be a competitive body, it should compete equally and should be controlled by the Bank.

Mr. Roger Moate (Faversham)

I should be grateful for the advice of my hon. Friend. If the Giro is advertising in a more adventurous spirit than other financial institutions, does not this emphasise the importance of its being brought within the control of the advertising deposit regulations to which all other banking institutions are subject? Why should the Giro be in a privileged position?

Mr. Emery

I would not suggest that any of this advertising goes outside the advertising control provisions which we envisage would be set up by the regulations in the Bill. If our amendment were carried, it would ensure that the Giro had to comply with all aspects of the Bill and not simply in the matter of its supervision.

I want to make some remarks about the deposit protection fund. Much play was made on Second Reading about the need for the National Giro to contribute to the fund which would be set up. The Government have made clear that they would regard as uncompetitive any contribution that was made. The Minister has announced that the contribution will be made to the Treasury, not to the fund. I do not want to argue about whether or not there should be a fund. If there is to be a fund, the Giro should contribute just as much as any of the joint stock banks.

I base that argument to some extent on a question which I put to the Minister of State on Second Reading to which I never received a reply. I said: I immediately have to ask whether the Government expect that the joint stock banks or the clearing banks will ever have to draw on the fund. I did not receive an answer and, therefore, I answered the question myself. I said: Of course they do not." [Official Report. 23 November 1978; Vol. 958, c. 1541.] It is argued that the Giro need not contribute to the fund because it has a Government guarantee and would never have to draw on it. But that argument applies equally to the joint stock banks, which will not have to draw on the fund.

I reject absolutely the argument that the Giro's creation puts it in a specialist position. It should not be in that position. Everyone in the financial world would welcome its being brought under the Bill as a normal financial institution. If the Giro is to be encouraged to expand its banking services, increase its deposits and attract more new commercial business, it should be under the same controls and supervision as a joint stock bank.

I hope that the Minister will not suggest that the amendment is incomplete because the proper title should be National Giro-bank. We could put that right later. The intention is to bring the Giro under the Bill. I hope that the amendment will be supported by my hon. Friends. It should be supported by the Government and those who know the Giro because it would assist the Giro and be fair to both nationalised and private industry.

Mr. Wrigglesworth

The hon. Member for Honiton (Mr. Emery) has made slightly heavy weather of the argument on behalf of the clearing banks, which want this exclusion removed. He and they should study the National Giro's position more closely. There is no party political difference here. This is a simple practical point about the Giro's position as part of the Post Office and the relationship between such a public body and its sponsoring Government Department. There would have been an anomaly if the Giro had not contributed to the deposit protection fund, but that problem has been overcome by its making an equivalent contribution to the Treasury.

As was said in Committee, the National Giro is not a separate bank, like those constituted in the City, with its own board of directors and corporate entity. It is a division of the Post Office. That is why its accounts appear as they do, and they give just as much information. The hon. Member should discuss this matter with the accountants of the Giro and study its more recent accounts.

It is difficult to see how the Giro could at this stage operate otherwise than as part of the Post Office, because it relies so much on Post Office services and counters. It is impossible for it to have the same relationship with the Bank of England for supervision purposes as other banking institutions. As part of the Post Office, it must be responsible to the Department of Industry and the Treasury as well as to the Bank of England.

5.45 p.m.

As I said in Committee, and as the hon. Gentleman himself has said, in an ideal world the National Giro would prefer things to be otherwise and to be responsible to one body rather than three. But it is part of the Post Office, which, as a State enterprise, has a relationship with a sponsoring Department. The exclusion therefore follows.

I was impressed by the willingness of the hon. Member to give freedom to the Giro. His view was not mirrored by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who said that he wanted much stricter control of the public sector than of the private. That is the philosophy that the Conservative Party has practised in power—no more so than in relation to the Giro. The former Member for Chichester, Mr. Christopher Chataway, pawed all over the Giro and considerably restricted its growth when he was Minister of Posts and Telecommunications during the last Conservative Government. He restricted its activities and set un a joint working party and an investigation of its future which lasted well over a year. He was never off the Giro's back.

I welcome the approach of the hon. Member for Honiton to the relationship between Government and a public enterprise. Should the Opposition ever become the Government—I do not think they will—I hope that his advice will be followed not only about the Giro but about other State enterprises.

There is a distinction here. The trustee savings banks come into the same category as others covered by the Bill. They are separate entities dealing entirely with banking operations, not a part of a postal service or of an organisation running the country's telecommunications, with massive investment in such things as submarine cables and satellites. They can therefore have a relationship with the Bank of England.

I hope that the amendment will not be pressed. On practical grounds, if the Opposition were the Government they would realise that it could not operate and that the Government must maintain their relationship with the Post Office as it is today and as it was under previous Conservative Administrations.

Mr. John Moore (Croydon, Central)

I congratulate my hon. Friend the Member for Honiton (Mr. Emery) on the excellent way in which he moved the amendment. I suggest to the hon. Member for Thornaby (Mr. Wrigglesworth) that there is a degree of confusion between the two sides of the House which is unnecessary. Our objectives are basically similar.

There are two basic objectives to take into account when we are discussing the National Giro. We all want to see adequate supervision of Giro. Our difficulty involves the different kinds of supervision rather than whether we should have supervision. We all want Giro to compete fairly in the public market place. My hon. Friend the Member for Honiton mentioned this, but it is not well enough seized by the Government.

It is important to glance briefly at the character of some of the problems associated with a national institution such as the National Giro as opposed to a commercial institution which is owned by investors and private individuals. There are a series of different types of problems which create the need for different types of supervision.

The fact that an institution is national can and does create in the minds of the public and in the minds of depositors a spurious sense of respectability. I do not suggest that that is not merited by Giro. But a semi-Government institution creates an illusion which makes us consider the necessity of providing additional protections rather than less secure protections for depositors who might be attracted by such an institution because of its national character.

Such a national institution uses public money, and therefore different kinds of responsibility and supervision are required. I emphasise the words "different kinds" as opposed to the essential thrust of the legislation which is to provide protection specifically for depositors.

A national institution legitimately can have different objectives from those of similar, competing commercial institutions. Let us imagine, for example, that the National Giro seeks to provide a cheaper form of deposit system. That might be a legitimate aim and it might not be more risky. But there could, in the eyes of those seeking to defend depositors, be that correlation. I do not put it any higher than that.

The next point was touched upon by my hon. Friend the Member for Honiton. It concerns the difficulties that arise in remunerating or rewarding those who serve in responsible positions in national institutions that are not equity-run and where there is no opportunity to reward people beyond their remuneration. That could create a situation similar to that about which we are hearing in the Crown Agents tribunal. It is difficult to create a sense of equity remuneration as opposed to monetary remuneration for a national organisation. Those are some of the features of the problems that are associated with a national organisation which may not be experienced by a commercial, equity-based organisation.

We must also consider the non-contribution of an organisation such as Giro to the fund and the impact of that on commercial competitors. The hon. Member for Thornaby said in Committee that Giro must be happier in the commercial market place. But he must recognise that commercial institutions cannot feel on all fours with the National Giro when they believe that that organisation is not contributing equally to the fund and that it is not experiencing the same disciplines and controls.

Another small but related matter is that if the National Giro does not contribute to the initial fund, that will create disadvantages for other commercial organisations when there is a call on the fund.

We are making heavy weather of the issues. The solution is clear. We need two kinds of supervision. First, we need supervision for the protection of depositors. In other words, we want to bring the Giro within the scope of the Bill and under the control of the Bank of England which is charged with protecting depositors. We must also ensure that Giro contributes proportionally to the fund.

Secondly, we need a different type of supervision. I accept the Minister of State's comments in Committee. We must have the supervision of the Treasury and the Department of Industry in the light of the use by the National Giro of public moneys. I am talking of a different type of supervision. Such a dual responsibility is not confusing. It is necessary in the light of the differing supervisory needs.

I commend the amendment to the House. It represents an important opportunity to help the National Giro and, at the same time, to help the commercial institutions with which it rightly seeks to compete on all fours.

Mr. Ridley

I declare an interest as a director of a bank. I do not think that that interest conflicts with anything in the amendment or anything that I wish to say.

This is my first contribution to the Bill. My experience as director of a bank has led me to be humble about the difficulties of supervision and control of banking institutions and to have less faith than the Government and some hon. Members seem to have that merely passing a Bill to control banking will result in profitable and successful banking ventures in the public and private sectors.

My heart is not with my hon. Friends when they call for fair competition between private banks and the National Giro. I do not believe that that concept can be sustained. There was fair competition between National Giro and the rest of the banking system from the beginning of Giro. What happened? The National Giro lost about £7 million a year in the early 1970s. Finally it accumulated a deficit of £33.4 million, which was written off with State funds. It proceeded to have appallingly bad results. It managed to scratch up a profit of £400,000, which, after it had paid its dividend, became a £900,000 loss. No private sector bank could get away with that performance.

I admire my hon. Friend the Member for Honiton (Mr. Emery) and agree with his general view. But I do not agree with him about this. If Giro had been a private bank, it would have gone out of business long ago.

Mr. Emery

My hon. Friend is reinforcing my argument. The postal service represents a major part of the loss which he quoted. That does not alter the main force behind the argument that Bank of England supervision would ensure that no private body could continue to operate with such losses. The Giro would never have been allowed to build up a £34 million loss if it had been supervised by the Bank of England. That is why I say that supervision should be removed from the Government and given to the Bank. Government supervision in the past has been inadequate.

6.0 p.m.

Mr. Ridley

I shall come to my hon. Friend's main point, but let me deal first with the subsidiary point concerning postal services. I understand that there is a close connection between the Giro and the Post Office. I do not understand why the Giro cannot pay the Post Office for the Post Office services that it uses, or why the Post Office should not pay the Giro for the services it receives. The transaction could be carried out at arm's length. Any bank in the country probably spends hundreds of thousands of pounds on postal services, but there is no difficulty about any such bank paying the charges imposed by the Post Office. There is no reason why the Giro should be anything to do with the Post Office. The sooner it is not, the better.

Mr. Wrigglesworth

The Giro may go down that line, but the hon. Gentleman should read the accounts more carefully. If he were to do so he would find that Giro pays for all the postal services, counter services and all the other aspects of postal business that it uses. He would find, in addition, that the Giro has made a profit in each of the last three years.

Mr. Ridley

I would hate to read the accounts more carefully. I dread to think what horrible creatures would emerge from a close study of those accounts. It is time that the Comptroller and Auditor General went into those accounts with a fine tooth comb. At least the Government have grudgingly given us the point that the Comptroller is able to look into them.

The time is long since past when we should have had a standard of public audit from nationalised industries such as this, with a code of practice. The cheating, fiddling and fooling that are permitted in the public sector because the public sector is so dominant over its auditors frighten me very much.

That brings me to the main point raised by my hon. Friend the Member for Honiton. It was that Bank of England supervision would avoid all this trouble. But what about the Crown Agents?

Mr. E. Fernyhough (Jarrow)

What about the secondary banks? They were bailed out by the Bank of England.

Mr. Ridley

The right hon. Gentleman cannot have been listening to my speech. I said that the secondary banks went bust. If only the Giro had gone bust we would not have been having this silly debate this afternoon. The answer is that the Giro should have gone bust, just like London and County and all the other fringe banks that went bust. There is no way of securing full and fair competition if Giro cannot go bust when it deserves to.

I come back to the question of Treasury and Bank of England supervision. It was under that supervision, as well as the supervision of the Ministry of Overseas Development, that the Crown Agents were able to lose about £220 million in secondary banking and property ventures. There was a certain degree of supervision after a few years. The various authorities that supervised the Crown Agents were unhappy that the Crown Agents had made all those investments but said that because they were such good investments there was no real need to worry about them.

Leaving out of account the constitutional question of whether the Crown Agents were entitled to make those investments, those who supervised the Crown Agents were on the whole not worried about their investments because they were in marvellous concerns such as that of Mr. William Stern and many other characters who have since departed from the financial scene. So I have no great faith in Bank of England supervision, and I say that out of personal knowledge.

When one tries to supervise investments and loans made by a bank, the picture at the time the investments and loans are made is different from the picture when the concern crashes. It takes a man of great skill, not to say genius, to know that a concern which appears to be healthy when a loan is made to it will turn out to be a complete dud. That supervision is one for the directors to exercise. The responsibility should be placed upon their heads, and if they fail it is they who should pay the penalty. That is what happens in the private sector.

The worst casualties of the secondary banking crash were the directors of the secondary banks. But with Giro and the Crown Agents only the taxpayer loses any money. No individual whose responsibility for supervision had been found wanting personally lost a penny.

I have difficulty about the whole subject of whether Giro should be included in the Bill. I think that it is a bad Bill, and I think that we should not have a Giro. Therefore, I find it difficult to give a view on whether something that I do not believe should exist should be subject to a supervision and control which I do not think we should have. That difficult question may take me some time to resolve this afternoon.

The only way to supervise and control the activities of banks is to have in charge of them people who are so committed, either in terms of their own money or that of their shareholders, and that they take the necessary great care and skill to control loans. I am humble about how difficult that is. I do not believe that by examining quarterly returns or by asking a few questions at the year end one succeeds by one iota in helping those who are in charge of banks. I do not believe that supervision of the Giro will stop it from losing another £33 million of public money in due course. With inflation, the figure will probably be higher next time.

I am, therefore, not happy for the Giro to continue as it is. There are two alternatives. One is to close it down. The other is to denationalise it. Both seem excellent ways of supervising it. I would like to see the Giro either closed down or passed into the private sector by a gradual transfer of its shares or by outright sale. If either of those alternatives were adopted, at least Giro would be suitable for supervision under the mechanisms in the Bill. It would be right to add it to the contributors to the fund because it would be liable to accept contributions from the fund should it get into trouble and its depositors face loss.

There is, therefore, an argument in favour of the amendment. If and when somethting is done about Giro, as it certainly will have to be, at least by putting Giro into the Bill it could be supervised along with the other banks. We are burying our heads in the sand if we believe that Giro will go on and not lose another packet pretty quickly. There is therefore a case for including Giro in the Bill.

I often wonder why Labour Members are so keen about Giro and why the hon. Member for Thornaby (Mr. Wriggles-worth) rose to make a minor defence of it. He even interrupted me to say that it had made a profit in the last three years. With the £20 million investment income on the Government stocks that it has been given, I am not surprised that it made a tiny profit. The profit is totally and utterly inadequate to build up reserves against a had period in future. Labour Members do not examine what is the nature of banking. They do not understand its function in the industrial process. They do not begin to consider whether this is the right way to provide banking services. It is simply that the private sector has banks which are grand, important, powerful things—rich things.

The public sector did not have a bank. Like little boys at school, it asked "Why can't we have a public bank, just like the private sector has its banks?" Out of that desire there was set up this monster. However, no one is responsible for the conduct of this monster. When it next puts its hands into the taxpayers' pockets, which it undoubtedly will do at some stage or other, the public sector will merely say that the loss was due to the oil crisis or the failure of the anchovy crop off the coast of Patagonia, in which the Giro had invested heavily, or that it was blown off course, or something of that sort. But it will not go bust. It will not mean that some man loses his reputation and his fortune in the process. There is no one there who feels that he is remotely at risk.

The whole point of banking is that a person should be at risk so as to concentrate his mind upon the importance of making the right decisions. We have this problem with the Giro. On balance, my hon. Friends are right to seek to put this provision into the Bill. I hone that at least the Minister will agree that the regulations about advertisements and about the general way in which banks behave in our society should apply equally to the Giro as they will apply to the other banks. There is something extremely obnoxious about saying that, because it is a public sector institution, it will never cross the mind of the Giro to do anything which is unethical in terms of its accounts, its advertisements or the way that it attracts customers and depositors.

This type of approach does the public sector great harm. If it is necessary to control the advertisements of banks, it seems that this control must apply equally to the Giro. That is desirable because ultimately we shall have to do something about the Giro. I know that Labour Members wash their hands of the events that have occurred, whether they concern the Crown Agents or Giro. Such institutions are always bailed out.

We must think not about deposit protection but about taxpayer protection. The need for such protection in relation to the Giro is such that anything that we can do to help will be an improvement. My dilemma in not being able to see how to deal with an organisation which I think should not exist in relation to a Bill which I do not believe should have been given a Second Reading is unresolvable. I therefore propose to vote with my hon. Friends and I hope that the vote will do something to impede the progress of the Giro.

Mr. Moate

Unlike my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), I cannot declare an interest. I only wish that I were a director of a bank, or even a shareholder. I do not even aspire to having an account with the National Giro. I agree with a great deal of what my hon. Friend said, but I have to disagree with some of his more fundamental points. I was happy that he came to the conclusion which I have reached, namely, that this is an amendment which ought, in present circumstances, to be supported.

Where I disagreed with my hon. Friend was in his general strictures concerning the very existence of the Giro. In the early days of the Giro, the losses which it incurred were certainly alarming and rightly gave cause for a fundamental examination of its right to exist. When discussion took place about the proposition that it should be abolished, it seemed that that was the wrong proposition. It was providing a valuable service. A large number of people for whom the joint stock banks—the clearing banks—were not providing a service were being helped by the Giro. I was particularly involved in one scheme involving the payment of a large number of small amounts of money. It seemed to be essential in such circumstances that individuals should be able to cash their cheques at post offices. It was the only way that working people could cash cheques on, say, a Saturday afternoon.

6.15 p.m.

This led me to the view that the Giro was fulfilling a valuable service. Nevertheless, it must pay its way. I felt that it had to be placed on a proper basis, under proper economic and financial disciplines. Inevitably the situation in the past led to the result my hon. Friend has described, when millions of pounds were lost per year, with an eventual write-off of £34 million. I share my hon. Friend's fear that this will happen again. I would have limited the activities of the Giro to what I would describe as post office services. It has gone much further. It has set itself up as a competitor of the banks. It offers personal loans and provides overdrafts. It can provide loans to local authorities and nationalised industries. It can issue credit cards, supply bridging loans, and the like. It is fundamental that, if the Giro wishes to present itself to the people as a banking institution, it ought not to resist the proposition that it should subscribe to the same rules and be subject to the same regulations as the other major banks.

I would have thought that the Giro would welcome the idea that it should be given the same status as the clearing banks in the eyes of the law. It surprises me that the Government seem to be making heavy weather of this proposition. I thought that the hon. Member for Thornaby (Mr. Wrigglesworth) was about to put forward a powerful defence of the Government's resistance of this amendment. What reason did he give? His reason was basically that there was no objection in principle—it was just that it would be difficult in practice. There was a practical objection. What was that practical objection? It was to do with the close connection of the Giro with the Post Office. I do not see that as a practical objection. While it may be undesir- able to serve more than one master—to be responsible to the Post Office and then to the Department concerned and to the Treasury as well as this other institution which will supervise banks—it is certainly not impractical.

It is only fair that the Giro should be so regulated. It is feasible that the Giro could be so included and could conform with the rules and regulations. I am sure that, given the will, the Minister could quickly find a way of ensuring that the Giro was subject to these rules and came within the ambit of the Bill. There is no fundamental problem about that.

What I suggest is that the closeness of the Giro with the Post Office makes it desirable that we should make further demands of the Giro. It is its close connection with the Post Office which makes it more important, not less, that it should be seen to be competing fairly with the other banking institutions. By resisting its inclusion in the Bill, the Government are blurring further the edges of this nationalised banking body.

I wish further to develop this point about the closeness of the connection between the Giro and the Post Office. My hon. Friend the Member for Cirencester and Tewkesbury rightly said that what we are concerned with here is not the protection of the depositor but the protection of the taxpayer.

Obviously, there has been some confusion already about the nature of the profits or losses which the National Giro is making. How extraordinary it is that the accounts of a banking institution of this kind should not be absolutely clear. How can that be so? The answer lies in the closeness of connection with the Post Office, with all the possibilities of cross-subsidy between one Department and another.

How do we know whether Giro is making a profit or a loss? How do the employees and the senior executives of the National Giro know whether they are operating under proper financial disciplines, whether they are taking too great a risk or too little a risk in a particular loan, and so on? They are not subject to the same risks themselves—certainly not the same risks in their employment as would be faced by an employee in the private sector. Their jobs are not at stake. The shareholders' money is not at stake. What is at stake, perhaps, is Post Office money, and there is a possibility of Post Office funds being used in some way, perhaps through the reduction of hidden overheads, which would amount to a form of subsidy to Giro.

We do not know, and we shall not know, unless we have a far better view of the National Giro accounts and much clearer accounting than we have now. We cannot know whether the National Giro is truly competing with the banks, bearing all the overheads which it should bear and making the sort of profit or return which it should on the taxpayers' capital.

Even if the Government do not concede the amendment, or it is not carried by the House, the least we are entitled to is much clearer accounting and a clear separation of the accounts of the National Giro so that, if it has banking pretensions, one can see whether it conforms to our banking standards and requirements.

I go further and say that the National Giro ought to welcome the case which we are making from the Opposition Benches. If the National Giro seeks to perform the wide-ranging activity which it is empowered to engage in, and if it aspires to that sort of status, it should be kept more apart from the Post Office. It should show separate accounts. It should be separately capitalised, and it should be separately accountable to the House. It should be separately examined by the Comptroller and Auditor General. By that I am not suggesting denationalisation. I am saying merely that it should stand on its own and be separately accountable.

If, however, the National Giro were separately accountable and if it were successful and profitable, there might be a case for allowing it to have a part-equity taken up by the private sector. Perhaps that would be right, and one might have, so to speak, a BP-type solution, with part-public and part-private equity. At the initial stage, however, it should be kept separate and be separately accountable.

As I say, I should have expected the National Giro to welcome that proposition. I should expect the Government to welcome it, too. If they were to accept the inclusion of the National Giro in the Bill, the Government would be giving the National Girobank that extra status in meeting all our banking requirements. Presumably, that would be a commercial attraction to Giro. It could then say to potential depositors and its customers "We have full bank status, and we conform to all the banking standards laid down in the Government's new Bill." Surely, that could be only to its advantage, and I fail to understand why the Government resist it.

I come now to the question of fairness in competition. I am coming to the Bill afresh, as it were. I was not privileged to be on the Standing Committee, if "privileged" be the right word. As I look at part III, I cannot understand why all other banks should be subject to fairly stringent, or potentially stringent, control over advertisements whereas the National Giro should not be so regulated and controlled.

My hon. Friend the Member for Honiton (Mr. Emery) produced a pamphlet and said—I am recalling his words—that it was a very good pamphlet and rather more adventurous and inviting than, perhaps, some of the advertisements used by the rather more staid banking organisations. He was not criticising it on those grounds. I took him to be commending it, and so would I.

I do not suggest that banking advertisements should not be adventurous and inviting to the depositor, but, if the banks are to be controlled in their advertisements, why should not the National Giro be similarly controlled? It seems to me that the point is so self-evident that even hon. Members on the Government Benches should agree. The National Giro should be on the same basis as all the other banks, and in regard to advertisements in particular it should follow exactly the same lines—and be seen to follow exactly the same lines—being subject to the same rules and regulations. I regard that as fundamental.

Finally, I come to the question of the compensation fund. I understand that the Government have, in effect, conceded the principle and accepted that it would be unfair if the National Giro were not to make a payment equal to the contribution which it would have to pay to the deposit protection fund if it were included in the Bill. It seems strange to concede the principle in that way and then to say that the Treasury will receive a payment from the Giro equal to the amount which would otherwise have been paid into the fund, since, as I understand it, that will be of no benefit to the fund. It might be of benefit to the taxpayer, but it will be of no benefit to the other banks which will have to contribute to the fund in the event of a call upon it.

That arrangement reminds me of the procedure for contracting out of the political levy in the trade union movement. Where there is any question of a closed shop, in certain circumstances it is conceded that a worker need not join the union but must make a payment to charity equal to the amount of trade union dues. In this case, the National Giro is to be allowed to contract out and make its equal contribution to the Treasury, corresponding, presumably, to the contribution to charity in the trade union analogy which I have drawn.

That is an illogical proposition because the National Giro, which is being heavily supported, or has been heavily supported, by the taxpayer is now to make a small contribution, probably a pitiful contribution, back to the Exchequer—to the Exchequer of all people—when that contribution should be paid to the fund, just for the sake of some spurious equity which the Government are trying to introduce into the system. In my view, it should be part of the fund or not be part of the fund—one way or the other. It would be part of the fund through the inclusion of the National Giro in the Bill.

I congratulate my hon. Friend the Member for Honiton on his introduction of the amendment. I hope that the Minister has been persuaded by our arguments and will accept the logic of the case. I ask the House to decide that the National Giro should be subject to the same rules and regulations as those governing other banking institutions and should be covered by the Bill.

The Minister of State, Treasury (Mr. Denzil Davies)

The debate has, in effect, been about whether the National Giro, as the hon. Member for Faversham (Mr. Moate) has just put it, should be subject to the same rules and regulations as those governing all other financial institutions. As I said in Committee, the answer is that it is now subject to all the same rules and regulations as those governing other financial institutions. It is supervised certainly as stringently as, and perhaps even more stringently than, private commercial banks are at the moment. It is supervised by the Treasury and the Bank of England. Ultimate responsibility to the House lies with the Department of Industry, but the regulation and supervision is carried out by the Treasury and the Bank of England, although, as I say, the constitutional position is that the Department of Industry has ultimate responsibility for the Post Office.

The hon. Member for Honiton (Mr. Emery) said that, where a public body is competing, the rules ought to be the same. I accept that entirely. I accepted it in Committee, and I accept it now. The rules are the same. In fact, the restrictions on Giro are greater. I am not talking necessarily about supervision here, but on what it can do and how it can go out and compete for deposits the restrictions are greater than those upon a normal private sector commercial bank.

At that point in the speech of the hon. Member for Honiton the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), speaking from a sedentary position, said "Much more". Indeed, although I do not accept what the hon. Gentleman says about the public sector or about Giro, if one argues from his premise, yes, indeed, there is much more supervision and regulation. The National Giro is subject to more stringent rules than is the private sector.

Mr. Ridley

What happens if Giro loses £34 million? Who suffers? Who pays up? Who loses his job?

Mr. Davies

That is a separate point, and I shall come to it in a moment. Behind some of his cynicism, if I may say so, with respect, the hon. Gentleman made a good speech. The hon. Gentleman's conclusion did not follow his argument. However, the vote was nearing and he had to square his argument with party loyalty. He did not do himself justice by drawing such a conclusion. To some extent I agree with his analysis.

6.30 p.m.

The hon. Member for Honiton introduced the amendment reasonably and in a reasoned manner. He went so far as to say that Giro should be allowed to compete on all fours with the private sector and that the restrictions should be lifted. I shall bear that in mind. From time to time we consider the deposit-taking restrictions placed upon Giro. I understand that if a person does not have a current account he or she cannot have a deposit account. We shall consider the restrictions and consider whether we should put Giro on all fours with the private commercial banks.

I accept the hon. Gentleman's remarks about the difficulty of supervising banks. It is a difficult operation. There is no perfection. Other countries have realised that. However, we must try to make the effort. That is what the Bank of England will do when the Bill is enacted.

Giro competes with the private sector, but it is not necessarily on all fours with it. That is because the restrictions on Giro are greater than those on other banks. There is no advantage to Giro from being outside the deposit protection supervisory provisions. The hon. Member for Faversham thinks that Giro would wish to be included. It probably would. It probably would not object to the effect of the amendment. I do not think that it would object to being included in private sector supervision. Indeed, inclusion might enhance its reputation. In resisting the amendment, there is no question that we are conforming to the wishes of Giro. It is possible that we are doing the very opposite.

The hon. Member for Cirencester and Tewkesbury said that we should liquidate Giro or sell it off to the private sector. There lies a dilemma. We are not liquidating it and we are not selling it off to the private sector. We are talking about a public sector bank. The hon. Gentleman asked who will bear the risk if the money is lost. He said that the risk will not be borne by the directors or those who work for Giro. At the end of the day the risk, if that is the right word, lies with Ministers. The risk lies with Ministers, who are responsible to the House, when public money and a public body are involved. That may be an imperfect responsibility. It may be that we need better rules. The system is imperfect and we recognise the limitations, but ultimately responsibility for a public sec- tor body and public sector money should lie with Ministers. That is the present position with Giro.

If we accepted the amendment, Giro would come into private sector supervision. It would become responsible to the Bank of England. Under the Bill the Bank of England is responsible in a different way. It is responsible for the whole operation of its supervision, not necessarily the way in which it supervises each institution. That is why I cannot accept the amendment.

It may be rather old-fashioned to say that ultimately responsibility for public money should lie at the Dispatch Box. That is the only real reason why the Government resist the amendment. I do not say that there are great practical difficulties. The difficulties could be resolved. It may be a small constitutional argument, but by putting Giro into the supervisory system that we have designed for private commercial institutions we are removing it from public sector accountability to a great extent. I believe that responsibility should lie with Ministers through Government Departments.

Mr. Moate

Surely, if Giro is included and made accountable to the Bank of England, that does not reduce the accountability of Ministers for the profits, losses or operations of Giro.

Mr. Davies

The hon. Gentleman is saying that total supervision of Giro should lie with the Bank of England and that Treasury Ministers, who have no say in that supervision, should still be responsible to the House. That is crazy. I happen to believe that nationalised industries are not sufficiently accountable to the House. The way in which they were set up did not permit that responsibility. I should have preferred a closer responsibility.

Opposition Members are saying that public money is involved and that they are afraid of losses. Over the past few years the figures have been good, but they are saying that they are afraid of losses and that Giro, despite the fact that public money is involved, should be pushed further into the private sector and its responsibility to the House diminished. That is why I said that the conclusion of the hon. Member for Cirencester and Tewkesbury did not follow the analysis that he drew. In view of his remarks, it seems that he will not be able to support the amendment.

I advanced the same argument in Committee. It is the real reason for resisting the amendment. I do not believe that some other reasons that have been mentioned are conclusive. Surely it is only right at the end of the day that a public sector body and a public sector bank should be supervised and examined through a Government Department and through Ministers and made accountable to the House. That is why I advise the House to reject the amendment.

Mr. Ian Stewart

Before I turn to the subject matter of this interesting debate about the status of Giro, I wish to make a declaration and a reference outside the debate.

First, I declare an interest. I remind the House, as I said on Second Reading and in Committee, that I am a director of Brown Shipley and Co. Ltd., a merchant bank and a member of the Accepting Houses Committee.

Secondly—my reference may strictly be out of order, but I hope that I shall be allowed to make it—as we are dealing with Treasury business it is right to think for a moment of the memory of a former Chancellor of the Exchequer. I refer to the sad death of Mr. Reginald Maudling. I did not come to know him well until the last year or two when my wife went to work with Mrs. Maudling on the Westminster Hospital Research Trust. During that time I came to know him and his wife well. He must have been one of the nicest and most able Members that the House has had for a long time. Many of us feel deeply for Mrs. Maudling at this sad time.

We have had an interesting debate about the status of Giro. We had similar debates on Second Reading and in Committee. The debate hinges on the measure of importance of the difference in emphasis of the two sides of the House. My hon. Friend the Member for Honiton (Mr. Emery) moved the amendment with his usual eloquence. My hon. Friend put the case satisfactorily. We are concerned with how to define the boundary between the public and private sectors of the economy.

In a mixed economy such as ours there is bound to be a substantial public sector element. Some of my hon. Friends— my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) expressed his own feelings—think that it would be better if there were not a public sector and if a body such as Giro did not exist. However, dealing with matters as they are, there are a number of public bodies in industry and in the financial sector that are competing with their counterparts in the private sector. The burden of our argument is that, when that is the position, the public sector companies and the private sector companies should, as far as is possible, be placed on all fours. We say that that should apply, not only in formal legislation but in administrative procedures and commercial practice. We say that when there is direct competition there should be a fair balance.

I have no hostility to Giro. If it were to receive exactly the same treatment and not the compromise that the Government wish, that might be to its advantage. I was not surprised when the Minister said that Giro might welcome being brought on all fours with its private sector counterparts. That point was also made by my hon. Friend the Member for Faversham (Mr. Moate).

There are two main elements in parity between Giro and the private sector banks. The first is the deposit protection fund. The Government have fairly recognised that it would be wrong for Giro not to bear a cost equivalent to that borne by private sector banks that under the new arrangements in the Bill will make contributions to the deposit protection fund. For that purpose they have arranged that the Giro shall pay a sum equivalent to what its contribution would have been had it been a member of the fund, but that it shall be paid to the Treasury instead. This is not to put the Giro on exactly the same footing. The size of the fund is affected. If the Giro had been making contributions to the fund, then, relatively speaking, although it may be by a small amount, the other participants in the fund would not have had to contribute so much.

My hon. Friend the Member for Honition put again the question that he asked on Second Reading—that is, whether the Government seriously thought that the deposits of the clearing banks were likely to be at risk. The clearing banks have to put up two-thirds of the total amount of money in the protection fund. While the clearing banks and other recognised banks and other licensed deposit-taking institutions will be making contributions to the fund—and will thus in a sense be subsidising the activity of the riskier institutions at the cost of the saver—the Giro will not be part of those arrangements. If there are defaults, and payments are made out of the fund, it will in the first instance be for the banks in the private sector to meet that deficiency.

The other area of difficulty that we have had all through our discussions concerns supervision. It is true, as the Minister has said this afternoon—and as he explained at greater length in Committee—that there are arrangements between the Post Office and the Treasury to determine the various ratios which apply in the conduct of the Giro banking business. There are also agreements about the classes of business which it can undertake. There is, therefore, a sort of tripartite responsibility for the Giro on the part of the Bank of England, the Treasury and the Department of Industry. That is right, because the Giro depends on the Treasury for its capital. It is right that the Giro should be accountable, in that sense, through Ministers to the House of Commons. But all this seems to me to turn on the interpretation of the word "supervision". After all, when the Bank of England supervises banks in the private sector, it does not control their policy, it does not organise the business which they can do. and it does not exert a proprietary control over the business of those banks.

I am a director of a bank which is a subsidiary of a holding company, which has a separate board of directors and which is responsible to the shareholders. That bank is run as a result of decisions taken in the broadest terms by shareholders, through the articles of association of the company, through the holding company's board, and through the management of the bank itself. That is not supervision. That is management, control and operation. The bank, like many others, goes to the Bank of England for supervision of the nature of its balance sheet, its assets, its liabilities and so on.

What we are proposing in the amendment is that the supervisory function in relation to the Giro should be carried out by the Bank of England in exactly the same way as it is carried out now for literally hundreds of banks in the private sector. It is not quite right, therefore, for the Minister to say that the same rules apply. They are in some ways equivalent rules, but they are not the same rules. It is on a small but important point that there is an issue of principle between us. There seems to be a mental block in the bureaucracy when these matters are looked at. Civil servants say, in effect, "We shall try to get everything in practice as nearly the same as possible, but we shall stop short of putting matters on all fours as between the public and the private sector."

6.45 p.m.

Mr. Emery

My hon. Friend was talking of the supervision of the management. The Minister suggested earlier that the supervision was as great as anything that could be expected in the private sector. I draw his attention to the report of Touche Ross and Company, the auditors of the Post Office accounts for 1976–77. The accounts are noted specifically in regard to the Giro, and note XIII states that an acceptable level of control over Giro processing could not be maintained at all periods during the year". The auditors go on to say that Any errors arising are, in our opinion, unlikely materially to have affected the total of the Giro customer balances … at £188 million". The auditors point out in note XIII that in one of the five main areas of transaction processing the control during parts of the year is "unacceptable".

If any bank had to note its accounts in that manner, it would be out of business. I suggest, therefore, that the stringency of the private sector is what the amendment requires of the Giro. Indeed, it strengthens the point—made so adequately by my hon. Friend—that I tried to make in my speech.

Mr. Stewart

My hon. Friend has made an interesting and important intervention. I am sure, however, that he would not expect me now to follow through the implications of his remarks. I have no doubt that his words will not be lost on the Minister when he considers them.

It is a pity that the Government, having come so far in their proposals for the National Giro, have stopped short of bringing its supervision and its contribution to the funds exactly into line with

Division No.80] AYES [6.47 p.m.
Arnold, Tom Hicks, Robert Prior, Rt Hon James
Atkins, Rt Hon H. (Spelthorne) Hodgson, Robin Pym, Rt Hon Francis
Atkinson, David (B'mouth, East) Holland, Philip Rathbone, Tim
Baker, Kenneth Hooson, Emlyn Rees, Peter (Dover & Deal)
Benyon, W. Howell, David (Guildford) Rees-Davies, W. R.
Berry, Hon Anthony Hunt, David (Wirral) Renton, Rt Hon Sir D. (Hunts)
Biffen, John Hunt, John (Ravensbourne) Rhodes James, R.
Biggs-Davison, John Hurd, Douglas Ridley, Hon Nicholas
Boscawen, Hon Robert James, David Ridsdale, Julian
Braine, Sir Bernard Jessel, Toby Rifkind, Malcolm
Brooke, Hon Peter Johnston, Russell (Inverness) Roberts, (Michael (Cardiff NW)
Brotherton, Michael King, Evelyn (South Dorset) Ross, Stephen (Isle of Wight)
Buck, Antony Kitson, Sir Timothy Rossi, Hugh (Hornsey)
Budgen, Nick Knight, Mrs Jill Rost, Peter (SE Derbyshire)
Clark, Alan (Plymouth, Sutton) Knox, David Sainsbury, Tim
Clark, William (Croydon S) Le Merchant, Spencer Shaw, Giles (Pudsey)
Clegg, Walter Lester, Jim (Beeston) Shelton, William (Streatham)
Cockcroft, John Luce, Richard Sims, Roger
Cope, John McCrindle, Robert Speed, Keith
Costain, A. P. Macfarlane, Neil Stainton, Keith
Crowder, F. P. MacKay, Andrew (Stechford) Stanbrook, Ivor
Douglas-Hamilton, Lord James McNair-Wilson, M. (Newbury) Stanley, John
Dunlop, John Mather, Carol Steel, Rt Hon David
Dykes, Hugh Mawby, Ray Steen, Anthony (Wavertree)
Eden, Rt Hon Sir John Maxwell-Hyslop, Robin Stewart, Ian (Hitchin)
Emery, Peter Miller, Hal (Bromsgrove) Stradling Thomas, J.
Eyre, Reginald Mills, Peter Taylor, Teddy (Cathcart)
Fairgrieve, Russell Moate, Roger Tebbit, Norman
Fisher, Sir Nigel Monro, Hector Temple-Morris, Peter
Fletcher, Alex (Edinburgh N) Moore, John (Croydon C) Townsend, Cyril D.
Fletcher, Ted (Darlington) More, Jasper (Ludlow) Viggers, Peter
Fowler, Norman (Sutton C'f'd) Morgan, Geraint Walker, Rt Hon P. (Worcester)
Freud, Clement Morris, Michael (Northampton S) Wall, Patrick
Fry, Peter Nelson, Anthony Weatherill, Bernard
Gardner, Edward (S Fylde) Page, Rt Hon R. Graham (Crosby) Whitney, Raymond
Gilmour, Rt Hon Sir Ian (Chesham) Page, Richard (Workington) Wiggin, Jerry
Glyn, Dr Alan Paisley, Rev Ian Winterton, Nicholas
Gow, Ian (Eastbourne) Pardoe, John Young, Sir G. (Ealing, Acton)
Gower, Sir Raymond (Barry) Pattie, Geoffrey Younger, Hon George
Grist, Ian Penhaligon, David
Hall-Davis, A. G. F. Percival, Ian TELLERS FOR THE AYES:
Harvie Anderson, Rt Hon Miss Prentice, Rt Hon Reg Mr. John MacGregor and
Hawkins, Paul Price, David (Eastleigh) Mr. Peter Morrison.
Hayhoe, Barney
NOES
Allaun, Frank Carmichael, Nell Dormand, J. D.
Areher, Rt Hon Peter Cartwright, John Douglas-Mann, Bruce
Armstrong, Ernest Clemitson, Ivor Edge, Geoff
Ashley, Jack Cocks, Rt Hon Michael (Bristol S) Evans, John (Newton)
Ashton, Joe Corbett, Robin Fernyhough, Rt Hon E.
Atkins, Ronald (Preston N) Cowans, Harry Fletcher, Ted (Darlington)
Bagier, Gordon A. T. Cox, Thomas (Tooting) Foot, Rt Hon Michael
Bain, Mrs Margaret Cralgen, Jim(Maryhill) Ford, Ben
Bates, Alf Crawford, Douglas Freeson, Rt Hon Reginald
Bean, R. E. Crawshaw, Richard Gould, Bryan
Bishop, Rt Hon Edward Crowther, Stan (Rotherham) Grant, George (Morpeth)
Blenkinsop, Arthur Cryer, Bob Grant, John (Islington C)
Boardman, H. Cunningham, Dr J. (Whlteh) Grocott, Bruce
Boothroyd, Miss Betty Davidson, Arthur Hamilton, W. W (Central Fife)
Bray, Dr Jeremy Davies, Bryan (Enfield N) Harrison, Rt Hon Walter
Buchan, Norman Davies, Rt Hon Denzil Hayman, Mrs Helene
Buchanan, Richard Davies, Ifor (Gower) Heffer, Eric S.
Callaghan, Jim (Middleton & P) Deakins, Eric Home Robertson, John
Campbell, Ian Dempsey, James Horam, John
Cant, R. B. Doig, Peter Hoyle, Doug (Nelson)

what they would be if it were part of the private sector, with which it will be competing. It is on the basis of that difference that I advise my right hon. and hon. Friends to support the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 126, Noes 140.

Division No.80] AYES [6.47 p.m.
Arnold, Tom Hicks, Robert Prior, Rt Hon James
Atkins, Rt Hon H. (Spelthorne) Hodgson, Robin Pym, Rt Hon Francis
Atkinson, David (B'mouth, East) Holland, Philip Rathbone, Tim
Baker, Kenneth Hooson, Emlyn Rees, Peter (Dover & Deal)
Benyon, W. Howell, David (Guildford) Rees-Davies, W. R.
Berry, Hon Anthony Hunt, David (Wirral) Renton, Rt Hon Sir D. (Hunts)
Biffen, John Hunt, John (Ravensbourne) Rhodes James, R.
Biggs-Davison, John Hurd, Douglas Ridley, Hon Nicholas
Boscawen, Hon Robert James, David Ridsdale, Julian
Braine, Sir Bernard Jessel, Toby Rifkind, Malcolm
Brooke, Hon Peter Johnston, Russell (Inverness) Roberts, (Michael (Cardiff NW)
Brotherton, Michael King, Evelyn (South Dorset) Ross, Stephen (Isle of Wight)
Buck, Antony Kitson, Sir Timothy Rossi, Hugh (Hornsey)
Budgen, Nick Knight, Mrs Jill Rost, Peter (SE Derbyshire)
Clark, Alan (Plymouth, Sutton) Knox, David Sainsbury, Tim
Clark, William (Croydon S) Le Merchant, Spencer Shaw, Giles (Pudsey)
Clegg, Walter Lester, Jim (Beeston) Shelton, William (Streatham)
Cockcroft, John Luce, Richard Sims, Roger
Cope, John McCrindle, Robert Speed, Keith
Costain, A. P. Macfarlane, Neil Stainton, Keith
Crowder, F. P. MacKay, Andrew (Stechford) Stanbrook, Ivor
Douglas-Hamilton, Lord James McNair-Wilson, M. (Newbury) Stanley, John
Dunlop, John Mather, Carol Steel, Rt Hon David
Dykes, Hugh Mawby, Ray Steen, Anthony (Wavertree)
Eden, Rt Hon Sir John Maxwell-Hyslop, Robin Stewart, Ian (Hitchin)
Emery, Peter Miller, Hal (Bromsgrove) Stradling Thomas, J.
Eyre, Reginald Mills, Peter Taylor, Teddy (Cathcart)
Fairgrieve, Russell Moate, Roger Tebbit, Norman
Fisher, Sir Nigel Monro, Hector Temple-Morris, Peter
Fletcher, Alex (Edinburgh N) Moore, John (Croydon C) Townsend, Cyril D.
Fletcher, Ted (Darlington) More, Jasper (Ludlow) Viggers, Peter
Fowler, Norman (Sutton C'f'd) Morgan, Geraint Walker, Rt Hon P. (Worcester)
Freud, Clement Morris, Michael (Northampton S) Wall, Patrick
Fry, Peter Nelson, Anthony Weatherill, Bernard
Gardner, Edward (S Fylde) Page, Rt Hon R. Graham (Crosby) Whitney, Raymond
Gilmour, Rt Hon Sir Ian (Chesham) Page, Richard (Workington) Wiggin, Jerry
Glyn, Dr Alan Paisley, Rev Ian Winterton, Nicholas
Gow, Ian (Eastbourne) Pardoe, John Young, Sir G. (Ealing, Acton)
Gower, Sir Raymond (Barry) Pattie, Geoffrey Younger, Hon George
Grist, Ian Penhaligon, David
Hall-Davis, A. G. F. Percival, Ian TELLERS FOR THE AYES:
Harvie Anderson, Rt Hon Miss Prentice, Rt Hon Reg Mr. John MacGregor and
Hawkins, Paul Price, David (Eastleigh) Mr. Peter Morrison.
Hayhoe, Barney
NOES
Allaun, Frank Carmichael, Nell Dormand, J. D.
Areher, Rt Hon Peter Cartwright, John Douglas-Mann, Bruce
Armstrong, Ernest Clemitson, Ivor Edge, Geoff
Ashley, Jack Cocks, Rt Hon Michael (Bristol S) Evans, John (Newton)
Ashton, Joe Corbett, Robin Fernyhough, Rt Hon E.
Atkins, Ronald (Preston N) Cowans, Harry Fletcher, Ted (Darlington)
Bagier, Gordon A. T. Cox, Thomas (Tooting) Foot, Rt Hon Michael
Bain, Mrs Margaret Cralgen, Jim(Maryhill) Ford, Ben
Bates, Alf Crawford, Douglas Freeson, Rt Hon Reginald
Bean, R. E. Crawshaw, Richard Gould, Bryan
Bishop, Rt Hon Edward Crowther, Stan (Rotherham) Grant, George (Morpeth)
Blenkinsop, Arthur Cryer, Bob Grant, John (Islington C)
Boardman, H. Cunningham, Dr J. (Whlteh) Grocott, Bruce
Boothroyd, Miss Betty Davidson, Arthur Hamilton, W. W (Central Fife)
Bray, Dr Jeremy Davies, Bryan (Enfield N) Harrison, Rt Hon Walter
Buchan, Norman Davies, Rt Hon Denzil Hayman, Mrs Helene
Buchanan, Richard Davies, Ifor (Gower) Heffer, Eric S.
Callaghan, Jim (Middleton & P) Deakins, Eric Home Robertson, John
Campbell, Ian Dempsey, James Horam, John
Cant, R. B. Doig, Peter Hoyle, Doug (Nelson)
Hunter, Adam Mellish, Rt Hon Robert Stewart, Rt Hon M. (Fulham)
Irving, Rt Hon S. (Dartford) Mikardo, Ian Stoddart, David
Jay, Rt Hon Douglas Milian, Rt Hon Bruce Stott, Roger
Johnson, James (Hull West) Molloy, William Strang, Gavin
Jones, Dan (Burnley) Morris, Rt Hon Charles R. Summerskill, Hon Dr Shirley
Kerr, Russell Morton, George Taylor, Mrs Ann (Bolton W)
Lambie, David Murray, Rt Hon Ronald King Thomas, Jeffrey (Abertillery)
Lamborn, Harry Newens, Stanley Thomas, Ron (Bristol NW)
Lamond, James Noble, Mike Tierney, Sydney
Latham, Arthur (Paddington) Orme, Rt Hon Stanley Tinn, James
Leadbitter, Ted Palmer, Arthur Urwin, T. W.
Lewis, Ron (Carlisle) Park, George Wainwright, Edwin (Dearne V)
Litterick, Tom Parker, John Walker, Terry (Kingswood)
Lofthouse, Geoffrey Radice, Giles Watkins, David
Loyden, Eddie Richardson, Miss Jo Watkinson, John
Lyon, Alexander (York) Roderick, Caerwyn White, Frank R. (Bury)
McCartney, Hugh Rodgers, George (Chorley) White, James (Pollok)
McDonald, Dr Oonagh Rodgers, Rt Hon William (Stockton) Whitlock, William
McElhone, Frank Rooker, J. W. Wilson, Gordon (Dundee E)
Macfarquhar, Roderick Ross, Rt Hon W. (Kilmarnock) Wilson, William (Coventry SE)
McGuire, Michael (Ince) Rowlands, Ted Wise, Mrs Audrey
McKay, Allen (Penistone) Shaw, Arnold (Ilford South) Woof Robert
Maclennan, Robert Silkin, Rt Hon John (Deptford) Wrigglesworth, Ian
McMillan, Tom (Glasgow C) Silverman, Julius Young, David (Bolton E)
Madden. Max Skinner, Dennis
Marks, Kenneth Snape, Peter TELLERS FOR THE NOES:
Marshall, Dr Edmund (Goole) Spriggs, Leslie Mr. James Hamilton and
Marshall, Jim (Leicester S) Stewart, Pt Hon Donald Mr.Ted Graham.

Question accordingly negatived.

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