Commons Sitting of 24 March 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  INDUSTRY

    South-West Durham
    Mr. Fosterasked the Secretary of State for Industry what is the Government's policy for attracting industry to South-West Durham.
    The Under-Secretary of State for Industry (Mr. David Mitchell): The Darlington and South-West Durham travel-to-work area is to remain an assisted area.
    Mr. Foster: Is the Minister aware that there are parts of my constituency in South-West Durham where the unemployment rate is now 12 per cent? Does he realise that, now that the area has been downgraded, not only incentives but a large part of the advance factory programme will be lost? Will he now, in partnership with the local authorities, invest in an advanced and nursery unit programme and also in the refurbishment of small units for small businesses?
    Mr. Mitchell: The hon. Gentleman has raised two matters. The first concerns the level of unemployment in his constituency which is made up partly of the Barnard Castle travel-to-work area, where 319 people are unemployed, and partly of a section of the South-West Durham travel-to-work area, where unemployment in 1979 was 6·8 per cent. which compares with the national average of 5·6 per cent. Therefore, the hon. Gentleman was referring to a small pocket, in relation to the very high figures which he just quoted. As regards nursery units, my Department has just received a report from Coopers & Lybrand Associates Limited relating to small firm premises
    916
    and we shall be publishing that next month.
    Mr. Armstrong: Does the Minister realise the seriousness of the situation in West Durham? Statistics and averages are no answer to the men and women who now feel that their only alternative, if they are to secure work and provide for their families, is to move to the South. Is he aware that this is not acceptable? Does he appreciate that unless more regional aid is made available, the cynicism, bitterness and, indeed, anger now growing because of the savage cuts in regional aid will lead to serious repercussions?
    Mr. Mitchell: We are concentrating regional aid on the areas of greatest need. That means that they will stand out much more than they have done in the past. We really care about the problems of very high unemployment in areas such as Newcastle and other special development areas.

    British Steel Corporation
    Mr. Michael Brownasked the Secretary of State for Industry when next he intends to meet the chairman of the British Steel Corporation.
    The Secretary of State for Industry (Sir Keith Joseph): I do not have a meeting arranged with Sir Charles Villiers at the moment, but we meet from time to time.
    Mr. Brown: When my right hon. Friend meets the chairman of BSC will he draw to his attention the fact that there are many steel workers who now wish to settle along the lines of the offer made by the corporation? Can my right hon. Friend give us some assessment of the damage to job prospects and job security caused by this strike?
    Sir K. Joseph: I fear that the strike will have jeopardised the size of the industry but I hope very much that when it gets back to work—we all hope that that will happen as soon as possible—it will quickly manage to recover its market share.
    Mr. Roy Hughes: Does not the Secretary of State agree that British steel workers have put up a remarkable display of solidarity in supporting what they believe to be their just wage claim? What is more, does he not agree that they are not likely to forget in a hurry those

    917
    people, including their elected representatives, who have done everything possible to undermine them in the dispute?
    Sir K. Joseph: I have a high respect for the steel workers. I hope they will recognise that the sooner they get back to work, the better it will be for the future of their own jobs.
    Sir Anthony Meyer: Although it is clear that the strike has not gained an additional penny for the steel workers but has lost them vast sums, will my right hon. Friend make it plain that once the strike is over he will be prepared to listen very carefully to anything that the corporation may say about the possibility of a more intelligently phased operation of slimming down the size of the industry?
    Sir K. Joseph: I shall listen to anything that the corporation may say, but the limitation upon the money available to it from the taxpayer must remain firm.
    Mr. John Silkin: May I remind the Secretary of State that the gap between BSC's offer and the union's claim is less than £50 million? Using the Minister's figures of some weeks ago, the loss of revenue to BSC at £10 million a week or so now totals £120 million. If we add to that the loss of revenue to British Rail and the National Coal Board, we are discussing a figure four times the amount of that gap. Therefore, was not it extremely stupid of the Prime Minister to say on Saturday that the Government could have avoided the steel strike but did not do so for the sake of the taxpayer?
    Sir K. Joseph: No. The gap to which the right hon. Gentleman referred is far more about where the money to meet the earnings shall come from than about the size of the earnings. The issue is whether the taxpayer should be asked to meet some of the increase in earnings which, in the view of many people, myself included, should come from the productivity of the steel workers and not from the taxpayer.
    Mr. Silkin: But the £200 million of which I have spoken, and which the Secretary of State cannot possibly deny, will have to be found by the long-suffering taxpayer anyway.
    Sir K. Joseph: The right hon. Gentleman did not ask me a question, but per-
    918
    haps I may treat his remarks as if they were a question.
    It does not follow that the loss imposed upon the Steel Corporation by the strike has to be met by the taxpayer. The Steel Corporation is required, as any private business would be, to take every step that it can, including cutting its overheads—
    Mr. Russell Kerr: Prices.
    Sir K. Joseph: Alas, if the hon. Member for Feltham and Heston (Mr. Kerr) knew more about the steel industry—I withdraw that, because the hon. Gentleman was Chairman of the Select Committee. He should know, even when he comments from a sedentary position, that steel is a buyer's and not a seller's market. But I was saying that the Steel Corporation will be required, as any private business would be required, to break even by every legitimate means in its power—that is, including cutting overheads, buying better, reducing stock, disposing of non-essential assets and, if necessary, increased redundancies.

    Manufacturing Industry
    Mr. Knoxasked the Secretary of State for Industry what is his estimate of the effect of the present exchange rate on production in manufacturing industry.
    Sir Keith Joseph: The present exchange rate must affect our manufacturing competitiveness. But a strong exchange rate should help to contain inflation, and success on that front is important for future manufacturing production.
    Mr. Knox: Does not my right hon. Friend agree that this is having a very severe effect on the profitability of our manufacturing industry? Has he drawn the attention of the Chancellor of the Exchequer to this matter? If not, will he do so?
    Sir. K. Joseph: The Chancellor of the Exchequer is certainly extremely well aware of the effect of the exchange rate upon manufacturing industry. But I repeat that to alter by Government action the level of the exchange rate, even if it were practicable, would endanger the priority objective of reducing inflation, which is equally if not more important for manufacturing industry.
    Mr. Robert Sheldon: Is the Secretary of State not aware that in one month last

    919
    year imports of finished manufactures actually exceeded exports of finished manufactures, and that this situation is likely to deteriorate further this year? Will he bear in mind that his monetary policy—to which he adheres and which is responsible for the failure to instruct the Bank of England to intervene in the exchange rate—is a very heavy price to pay for the certainty of the damage that it is doing to our competitiveness and to the export possibilities for British industry?
    Sir K. Joseph: There is a lag in all these things. I do not want to put too much weight upon the performance of British manufacturing industry at present, but the fact that British manufacturing industry is maintaining and even increasing the volume of its exports, while the volume of imports did not increase so much last month, is encouraging. I repeat that to let inflation rise further, which is what would be involved by seeking to lower the exchange rate, would be more damaging still to British manufacturing industry.
    Mr. Viggers: Does the Secretary of State agree that Germany and other countries have shown that it is possible to prosper with a strong exchange rate, and that this can enable the benefit of our prosperity to be spread by enabling higher wages to be paid to our labour, whereas the low exchange rate is needed only if one is concentrating on cheap labour?
    Sir K. Joseph: I agree with the gist of what my hon. Friend has said. It is true that good manufacturing companies are finding the high exchange rate an intense stimulus to their efficiency.
    Dr. John Cunningham: Is there not a widespread and strongly held view throughout British industry that sterling is overvalued? Has not the Secretary of State been told this by a large number of industrial organisations, including the footwear industry, the textile industry and, most recently, the chemical industry? For the first time for many years, record import levels of chemicals are coming into the British economy, which is surely a disgrace. The Minister's answer would be acceptable if inflation were falling and output were increasing, but is not the reverse the truth in both cases?
    Sir K. Joseph: As I have said before, there is a lag in these matters, and
    920
    inflation is still reflecting the loss of control of the money supply by the Labour Government in their last year. I repeat that manufacturing industry recognises that the defeat of inflation, to which the exchange rate contributes, is in its own highest interest.

    National Enterprise Board
    Mr. John Evansasked the Secretary of State for Industry when next he expects to meet the chairman of the National Enterprise Board.
    Sir Keith Joseph: I see the chairman frequently.
    Mr. Evans: When the Secretary of State next meets the chairman of the NEB will he be informing him that it is the intention to go ahead with the Inmos microchip production unit and that the Government will finance it? Will he also further indicate to the chairman that the Government's decision is that the production unit must be placed in an assisted area?
    Sir K. Joseph: This is a very complex question. I shall make a statement as soon as a decision is reached.
    Mr. Butcher: Does my right hon. Friend agree that pressure for direct investment from the NEB in the information technology industry should be resisted, and that, alternatively, there is a role for the Department of Industry in the co-ordination of Government buying schemes and the placing of large contracts with successful British companies in this field?
    Sir K. Joseph: I agree with the latter part of my hon. Friend's question. As to the former part, the NEB has been given a remit by the Government.
    Mr. McNally: When the Secretary of State meets the chairman of the NEB will he make clear that it is his firm belief that, where the NEB is being forced to dispose of assets, such as in Fairey Engineering, the workers in those industries should be fully consulted about would-be purchasers?
    Sir K. Joseph: The NEB is required to take into account the interests of the company as well as the national interest in its disposal policy, and it is for the NEB to decide how to carry out that instruction.
    Mr. Woolmer: As the Government can expect oil and gas revenues of between £15 billion and £20 billion a year within the next three or four years, will the Minister have discussions with the NEB on how best it can make sure that those revenues are channelled into industry and manufacturing and are not squandered simply on higher imports within the next few years?
    Sir K. Joseph: We must not spend money before we have it. It is the Government's view that such money as is available is better spent by the consumer than by Ministers and officials.

    Trades Union Congress
    Mr. Barry Jonesasked the Secretary of State for Industry when next he proposes to meet leaders of the Trades Union Congress.
    Sir Keith Joseph: At the National Economic Development Council on 2 April.
    Mr. Jones: Does the right hon. Gentleman accept that, if he meets the TUC leaders, some of them certainly would say to him that his industrial policies are needlessly turning some of our workplaces into centres for trials of strength between management and the shop floor? Does he agree that his inflexible monetarist policies are posing a danger to the social fabric of our country as well as bringing about the likelihood of an unemployment figure well beyond 2 million?
    Sir K. Joseph: I did not notice that the previous Government's industrial policy brought about a situation of unrelieved sweetness and light in every workplace.
    Mr. Peter Bottomley: When my right hon. Friend meets the TUC will he discuss the apparent difference between the industrial rate of exchange and the financial rate of exchange? Will he make the TUC understand that a neutral monetary policy—monetary control—leaves it to employers and trade unions to negotiate pay increases that are greater than the increase in the money supply? Does he not agree that those increases will lead to reduced industrial competitiveness, and higher unemployment?
    Sir K. Joseph: I agree that excessive unit labour costs, which result from wage
    922
    claims that are not accompanied by higher productivity, will destroy jobs.
    Mr. Heffer: When the right hon. Gentleman meets the TUC—apart from his philosophical discussions about monetarism—will he hold concrete discussions on selective import controls? Does he not agree that such import controls will save some of our industries from the pressures that they now suffer?
    Sir K. Joseph: At present, we have some selective import controls. To go further would risk encouraging inefficiency and price rises as well as retaliation.
    Mr. Henderson: When my right hon. Friend next meets the leaders of the TUC will he stress the important role that they could play in the application of microprocessor technology to industry? Does he not agree that that technology can substantially improve our industrial efficiency and assist in raising the standard of living of TUC members?
    Sir K. Joseph: TUC leaders do not need much persuasion. A TUC booklet called "Employment and Technology" was recently published. As I have mentioned in public before, it contained a most encouraging welcome for micro-processing as a new technology. However, I think that some of the conditions attached to the application of those new techniques are misguided.
    Mr. Winnick: Is the right hon. Gentleman aware of the sense of dismay that is felt by leaders of the TUC and by the country about the Government's monetarist policies? Does he not recognise that such policies can lead only to a return to massive unemployment? Does he not accept that we shall have disaster areas instead of industrial areas?
    Sir K. Joseph: The hon. Gentleman has got it entirely wrong. It is long-established common sense that a monetary policy involves moving towards a balance between the growth of demand and the growth of supply. The hon. Gentleman has forgotten that the last leader but one of the Labour Party, the right hon. Member for Huyton (Sir H. Wilson) got it exactly right. He said that inflation, which monetary policy seeks to abate, is the father and mother of unemployment.
    Mr. Emery: When my right hon. Friend speaks to the TUC will he emphasise the need for increased productivity in most of our industries? Does he not agree that if we are to compete and to attain the level of production and employment that all hon. Members desire, there must be a heightening in the level of productivity and a lowering in unit costs? Will he stress that point, above all else, in his discussions with trade union leaders?
    Sir K. Joseph: To be fair, those trade union leaders attending the NEDC do not need any persuasion. They understand that perfectly well. However, at shop steward level, one finds resistance, because there is fear about the loss of jobs. At that level there is no understanding that higher productivity is a source of greatly increased employment.
    Mr. John Silkin: When the Secretary of State meets TUC leaders and gives them his ideas on the necessity to curb inflation, will he explain why his Government doubled VAT in the last Budget, thereby increasing inflation to double the figure that existed when they took over?
    Sir K. Joseph: The right hon. Gentleman must remember that the previous Labour Government complained throughout their lives that the inflation that occurred during their first two years of office resulted from an inherited lag from the previous Conservative Government. We can, therefore, make the same claim now. We inherited rising public expenditure and a rising monetary supply. At present, the country is suffering from the consequential inflation.

    Finniston Report
    Mr. Douglasasked the Secretary of State for Industry if he will list the organisations that have submitted their views to him on the Finniston report.
    Mr. Kenneth Carlisleasked the Secretary of State for Industry what actions he is taking both to assess the Finniston report on engineering and also to implement its findings.
    The Under-Secretary of State for Industry (Mr. Michael Marshall): The Department is currently seeking views on the key recommendations of the report from over 350 organisations and in-
    924
    dividuals. Over half of these have replied to date and I expect most of the remainder by the end of the month. Other Departments are carrying out their own consultations. In addition, many unsolicited views are being received.
    I do not think it would be appropriate to list the individuals and companies who have submitted their views, whether solicited or not, but I shall place in the Library a list of those representative organisations from which the Department sought comments.
    The consultation exercise is being co-ordinated by officials, who are also advising my colleagues and myself on various aspects of the report. As I told the House on 29 January, we intend to reach decisions on the key recommendations quickly and to announce them in the summer.
    Mr. Douglas: Will the right hon. Gentleman consider eschewing a noninterventionist view of the report? Does he not recognise that Government intervention is needed if the major recommendations of the Finniston report are to be accepted and carried into practice? Will he further note that there is a shortage of science and mathematics teachers? If we are to have engineers, those teachers are required now.
    Mr. Marshall: I note the hon. Gentleman's remarks, particularly those referring to the work of educationists. No doubt my colleague in the Department of Education and Science will consider those remarks. I appeciate the hon. Gentleman's broader point about intervention. I hope that he will use his influence to encourage industry to put its money where its mouth is to ensure development along those lines.
    Mr. Carlisle: Further to that reply, does my hon. Friend agree that this is a most important report about the future of British engineering and the economy? Will he ensure that the Government implement the report's major conclusions as soon as possible?
    Mr. Marshall: I am glad that the right hon. Member for Deptford (Mr. Silkin) has already welcomed the report. I think that the House will recognise the significance of the analysis. There was a great deal of agreement about it. The

    925
    decisions that flow from it must be carefully analysed.
    Mr. John Silkin: Does not the Minister agree that there is a great shortage of skilled workers on the shop floor? Does not that shortage flow to a great extent from the trouble that arose in 1973–74 when apprenticeships in many parts of British industry came to an end? Does not the Government's policy of massive deflation encourage the loss of skilled workers, although they will be needed, in the future?
    Mr. Marshall: The right hon. Gentleman seeks to widen the debate. The question of technicians is not covered by the Finniston reports, although some people would have liked it to have been. The right hon. Gentleman's arguments are therefore somewhat specious.
    Mr. John MacKay: Does my hon. Friend realise that some of us feel that it is high time that the House had a debate on this important document? Will he give us a guarantee that a debate will be held before the Government reach a conclusion?
    Mr. Marshall: I note my hon. Friend's remarks. However, he will appreciate that the issue has been debated in another place. We shall want to consider that point when we are nearer to reaching our own conclusions.
    Mr. Budgen: Does my hon. Friend not agree that the shortage of skilled labour—complained of throughout British industry—is an inevitable consequence of freezing differentials as a result of successive wage controls?
    Mr. Marshall: There is great force in what my hon. Friend says.

    Investment in Industry
    Mr. Hooleyasked the Secretary of State for Industry what estimate his Department has made of intended Government investment in industry in 1980–81.
    The Minister of State, Department of Industry (Mr. Adam Butler): Details of Government assistance to industry in 1980–81 will be given in the White Paper on public expenditure and the Supply Estimates, both of which will be presented to the House on 26 March. It would not be appropriate for me to anticipate the publication of these documents.
    Mr. Hooley: Is the Minister aware that the gap between industrial investment in Britain and that in Germany, France, Japan and other major manufacturing countries is terrifying? Does he not realise that Government policies will do nothing to encourage private investment in Britain? Does he not accept that substantial public investment is essential if we are to survive as an industrial nation?
    Mr. Butler: The hon. Gentleman is aware that massive industrial investment has been made in the public sector. He knows that losses are now being made in that sector. The best investment will come from the private sector putting money into projects from which it knows that a profit can be made.
    Mr. Adley: Is not the Treasury right to wish to encourage the State's accretion of funds through the sale of State assets so as to reduce the level of direct Government holdings in industry? What action is my hon. Friend taking to bring that about in the case of British Leyland?
    Mr. Butler: I know my hon. Friend's concern about British Leyland. He knows the Government's position, which is that we should not stand in the way if it were the commercial decision of British Leyland to sell. On my hon. Friend's first and more major point, it will be significantly to the benefit of British industry for certain assets held by the State to be returned to the private sector.
    Mr. Les Huckfield: Is not the Minister aware that the biggest fear on the shop floor, not only in British Leyland but in successful manufacturing nationalised industries, such as British Aeropace, is that Government investment in those industries is about to disappear?
    Is the hon. Gentleman aware that half of the British Aerospace workers have stopped work today, and that 5,000 have marched on the House this afternoon because they fear that British Aerospace will be sold off to foreigners, or to those who pay most to Tory Party election funds?
    Mr. Butler: The hon. Gentleman would do a great service to British Aerospace and its employees if he did not—as he has done yet again today—perpetuate untruths about the industry's future. He is thoroughly to blame for the anxieties which exist in British Aerospace. The hon. Gentleman is perfectly well aware

    927
    that in the articles of association there will be a maximum limit of 15 per cent. foreign ownership. That will be safeguarded by the Government retaining 25 per cent. of the shares and their preparedness to vote their shareholding to defend the articles.
    Mr. Grylls: As my hon. Friend's answer indicates that a large sum of money is likely to be involved, is there not enormous scope for reducing the amount of money invested by the Department of Industry? Does he agree that the right level of investment by the private sector will never be achieved if the Government continue to pre-empt so much of its money? That is a lesson that the House should learn.
    Mr. Butler: My hon. Friend, as always speaks a great deal of wisdom on the subject.
    Mr. Huckfield rose—
    Mr. Speaker: Order. I shall call the hon. Member for Nuneaton (Mr. Huckfield). However, as the House knows, I do not usually call even Front Bench spokesmen twice on one question, especially when many other hon. Members are seeking to catch my eye.
    Mr. Huckfield: If there were not 5,000 workers from British Aerospace outside the House I should not press my case Mr. Speaker. Will the Minister confirm or deny that there is nothing in the Bill that will prevent the breaking up of British Aerospace, and that there is no provision, if the Bill reaches the statute book, that will prevent British Aerospace being taken over lock, stock and barrel by foreign interests?
    Mr. Butler: I have stated very clearly the safeguards against British Aerospace being taken over by foreign interests. I should like to think that a statement to this effect from the Dispatch Box—which has been made on previous occasions—would be accepted by the House.
    The Government have made it clear that it is not their intention to split up British Aerospace. There is allowance for only one successor company to the corporation, and that, in itself, is a safeguard and an assurance that British Aerospace will remain in its present form.

    Concorde
    Mr. Michael McNair-Wilsonasked the Secretary of State for Industry what work on the Concorde project is currently being funded by his Department.
    Mr. Michael Marshall: Work on the Concorde project currently being funded by the Department is mainly for the support of the aircraft and engines in service with British Airways and Air France, including, in particular, in-service development, continued fatigue specimen testing, the meeting of warranty claims, and the manufacture of spares.
    Mr. McNair-Wilson: Because £800 million of taxpayers' money is being spent on the project, will my hon. Friend tell the House whether the Government are seeking to persuade American manufacturers to become interested in the advanced technology developed by ourselves and the French, so that this vast sum will not cease to exist in practical terms when the aircraft ceases to fly? Will he do that to ensure that we shall have a stake in the second generation of supersonic aircraft that will fly within the next decade or two?
    Mr Marshall: Discussions on the matter are continuing between British Aerospace and American manufacturers. There is nothing more that I can add this afternoon.
    Mr. Dalyell: Is the Minister aware that about 20,000 people turned out yesterday to see Concorde on its first appearance at Edinburgh airport? What is the extent of the warranty claims? Has the Minister figures in his brief?
    Mr. Marshall: I cannot answer that question without prior notice. I shall write to the hon. Gentleman.
    Mr. Bruce-Gardyne: As this is the supreme example of State entrepreneurship to date, will my hon. Friend contemplate establishing a Select Committee to examine the whole ludicrous story, together with the enormous sum of public expenditure that has been wasted for no purpose whatever?
    Mr. Marshall: My hon. Friend is aware that the question of Select Committees is one for the House itself. If he wants a more detailed exposition on the matter, I

    929
    suggest that he consults his own splendid book.

    North-East Lancashire Development Association
    Mr. Strawasked the Secretary of State for Industry whether he will now meet representatives of the North-East Lancashire Development Association.
    Mr. David Mitchell: My noble Friend will be meeting the North-East Lancashire Development Association on 22 April. My noble Friend the Under-Secretary of State for the Environment and my hon. Friend the Parliamentary Secretary to the Ministry of Transport will also be present.
    Mr. Straw: Is not the Minister aware that there is deep concern across the whole political spectrum in North-East Lancashire that the Secretary of State views the region's problems with such complacency that the association is to be fobbed off with a meeting with Ministers who are not hon. Members of this House? Is he aware that there is even greater concern that one of those Ministers is Lord Bellwin, whose only contribution to North-East Lancashire was increasing unemployment by some hundreds through the closure of firms of which he was chairman?
    If the Secretary of State is not willing to meet the representatives, is he willing, at some stage during the next six months, to visit North-East Lancashire so that he can appreciate what damage or success his policies are causing?
    Mr. Mitchell: The hon. Gentleman refers to complacency. The fact that three Ministers will meet the deputation is a sign that there is no complacency. The Government intend to examine carefully what is said by the deputation.
    The hon. Gentleman referred to unemployment in the area. The level of employment will be determined by employers and workers in the way in which they proceed. I am bound to say that there is substantial concern that wage increases not covered by improved productivity are being demanded and granted, and that these will lead to job losses.
    Mr. Trippier: Is my hon. Friend aware that I and my constituents are grateful for his visit to Rossendale last year when he made himself aware of the problems there? When considering the representa-
    930
    tions of the North-East Lancashire Development Association will he remember that the two most important grants that we are anxious should be continued after 1 August 1982 are the industrial grants from the EEC and the derelict sites grant, which is of great value to certain parts of East Lancashire? I understand that no decision on these matters has yet been reached.
    Mr. Mitchell: I am grateful to my hon. Friend for drawing attention to these matters. He took me to see some of the areas concerned, and I held subsequent discussions with Ministers in the Department of the Environment.

    Post Office Corporation
    Mr. John Townendasked the Secretary of State for Industry when next he intends to meet the chairman of the Post Office Corporation.
    Mr. Pollockasked the Secretary of State for Industry when next he expects to meet the chairman of the Post Office.
    Mr. Adam Butler: My right hon. Friend meets Sir William Barlow as the need arises. I myself met Sir William on 20 March and expect to do so again later this week.
    Mr. Townend: When my hon. Friend next meets the chairman of the Post Office, will he seek to persuade him to reconsider the refusal of the Post Office to issue a special stamp to commemorate the opening of the Humber bridge? [Laughter.] Is he aware that despite the recent unfortunate problem, the bridge will be the longest single-span suspension bridge in the world? Opposition Members may laugh, but it will be a great engineering achievement, by British firms.
    Mr. Butler: Perhaps I could use this occasion to express considerable regret about the accident which occurred in the building of the bridge, and about the delay in its completion.
    Both the Post Office and my Department receive a large number of requests for commemorative stamps. I am sure that my hon. Friend's remarks will be read by Sir William, but I cannot give him much encouragement.
    Mr. Pollock: When my hon. Friend next meets the chairman will he raise

    931
    with him the increasing absurdity of the Buzby advertising campaign? Is he aware that we now have a Buzby balloon, and that when such a balloon is deflated it produces a sound which approximates very closely to the feelings of many of my constituents about the declining quality of our postal services?
    Mr. Butler: I must congratulate my hon. Friend in giving an indirect raspberry to the public relations section of the Post Office. However, it is entitled to use whatever advertising it wishes, and the Post Office's view is that the Buzby advertisements are increasing traffic and are proving profitable.
    Mr. Golding: Will the Minister discuss with Sir William Barlow the damage being done by the irrelevant application of cash limits to the Post Office telecommunications business? In addition, will he agree that the increase in the calling rate which has been achieved by the Buzby campaign, has been important in increasing profitability in this public service?
    Mr. Butler: In the second part of his question the hon. Member agreed with what I said a few minutes ago. On the question of cash limits, I would like to think that the whole House would support the Government in their determination to observe cash limits as one way of helping to overcome inflation. In the current year the Post Office's cash limits have been put very seriously at risk by the damaging strike last summer, which greatly affected cash flow. I hope that in his position of influence, the hon. Member will try to ensure that such disputes are minimised in future.
    Mr. Hill: When my hon. Friend meets the chairman of the Post Office will he convey to him the views that I have conveyed to my hon. Friend from the Post Office Engineering Union? That union is looking forward to the division of the Post Office, and would like to think that this will occur in the immediate future. Is he aware that its members would like to think that their jobs will be protected by this extra commercial incentive, but they want an assurance that the telecommunications department will not be split further than the one initial split in the Post Office itself?
    Mr. Butler: My hon. Friend is quite right in drawing attention to the Government's policy, namely, that there shall he a split of the telecommunications side from the postal side and Giro. These are very disparate activities, and we are certain that both will benefit from the split. I note what my hon. Friend says about not splitting the telecommunications side any further.
    Mr. Armstrong: Will the Minister tell the chairman that the Government will not countenance any change in the way that social security benefits are being paid at present? Is he aware that the inept handling of this matter by the Government has brought genuine anxiety to the most vulnerable sections of the community? Will he give an assurance that this nonsense will be dropped?
    Mr. Butler: The alarm was caused by rumours that were spread and intensified some weeks ago. It led to a debate in the House, during which my right hon. Friend and I were ready to give an assurance about the future of the network. More recently it was made abundantly clear that there would be no question of forcing pensions to be paid through a bank—but we hope that that will be an option open to people—and that secondly, the retention of weekly payments will be maintained for those who want it.

    Manufacturing Industry
    Mr. Dorrellasked the Secretary of State for Industry whether he is satisfied with the level of profitability in manufacturing industry.
    Mr. Michael Marshall: No, Sir.
    Mr. Dorrell: Will my hon. Friend agree that one of the features that has distinguished British industry from its competitors in recent years is the low and falling rate of profitability? Will he accept that one of the prices that must be paid for a high exchange rate is further compression of that profitability? Accepting the argument that there will be a lag before Government policies are successful, may I urge my lion. Friend to give the House some idea of when productivity in British industry will improve, in order to restore the competitive balance?
    Mr. Marshall: My hon. Friend rightly points out that the profitability of manufacturing industry has been falling over a number of years and has become a long-term problem which reached its crescendo in the last four years of the previous Government.
    Dr. Summerskill: Will the Minister bear in mind that the manufacturing industries, especially carpets, textiles and machine tools, which have formed the backbone of the industries of Halifax and West Yorkshire for many years, are now in serious difficulty? What specific proposals have the Government to help those industries, particularly in view of the great contribution that they made in the past towards industrial development?
    Mr. Marshall: The House is unlikely to forget the contributions made by these industries as long as the hon. Lady is a Member. The question that she raises comes back to the broad ways in which the economy must be stimulated in order to produce the growth that we all seek.
    Mr. Kenneth Baker: In the representations that my hon. Friend or his ministerial colleagues have made to the Treasury in the last few weeks, have they drawn attention to the fact that one of the major factors intensifying the liquidity squeeze on British companies is the high level of the national insurance employer's surcharge, which was increased so savagely by the former Chancellor of the Exchequer?
    Mr. Marshall: As ever, my hon. Friend has put in a timely word to remind my right hon. and learned Friend, the Chancellor of the Exchequer, but I am sure that he is aware of these matters. I did not fully answer my hon. Friend the Member for Loughborough (Mr. Dorrell) on the previous question. It is impossible to say what the time lag will be, particularly given the nature of the long term problem that we face.
    Mr. Jay: Does the Minister realise that the present Government's policies are making private manufacturing industry and investment less profitable than for many years past?
    Mr. Marshall: The right hon. Gentleman should bear in mind that the profitability of British industry fell to an all-time low of 2 per cent. during the life of
    934
    the previous Government. We seek to reverse that trend as a matter of policy.
    Mr. Kenneth Lewis: Is my hon. Friend aware that there are many businesses and industries, especially small businesses, which are in great difficulties at present? They are profitable, but they are threatened with liquidation because they have cash flow problems. Will he ask the Chancellor to have a word with the banks to ensure that they lend money to industry, rather than give personal loans? This is not being done sufficiently at present.
    Mr. Marshall: I am sure that the Chancellor will note my hon. Friend's suggestion. There is a good deal of evidence that the banks are being particularly helpful at present, bearing in mind the existing difficulties.
    Mr. John Silkin: Will the Minister explain how he proposes to increase profitability in the manufacturing industry when his Government are, by savage deflation, destroying demand; by high exchange rates, preventing our exports from being competitive abroad; and by ludicrously high interest rates, driving many companies into liquidation?
    Mr. Marshall: As usual, the right hon. Gentleman presents only one side of the picture, and he does so with his usual vigour. He has overlooked the fact that in the battle against inflation it is vital to strike a reasonable balance on wage agreements. I hope that he will lend his weight to that side of the argument as well.

    Nationalisation (Compensation)
    Mr. Nicholas Bakerasked the Secretary of State for Industry what steps he is taking to compensate the companies owning assets nationalised under the Aircraft and Shipbuilding Act 1977; and if he will make a statement.
    Mr. Adam Butler: Compensation is not yet determined for 12 out of the 25 companies. Payments on account totalling £60 million have been made in respect of the 12 companies. Arbitration is in progress concerning three of the companies. The position remains open in respect of the remaining nine companies, effectively involving seven negotiations. These inevitably raise some particularly intractable issues. It would not be appropriate for

    935
    me to comment further on individual cases.
    Mr. Baker: Will the Minister give an assurance that the Government have not been dragging their feet in this matter? It appears that these negotiations have taken an unconscionable amount of time. Can he say whether the possibility of denationalisation has entered these negotiations?
    Mr. Butler: I assure my hon. Friend that Ministers have not been dragging their feet. It is a highly complicated matter and in some cases there is a difference between what is asked by the previous owners and what the Act appears to allow. This dictates a longer period of negotiation. Compensation payments and denationalisation are separate matters, but it remains the firm policy of the Government to introduce private sector capital into British Shipbuilders at an appropriate time.
    Mr. Les Huckfield: Does not the hon. Gentleman understand that, despite what he says, he is trying to denationalise an industry which has not yet been properly nationalised? Does he accept that, on the basis of the replies that he has given today, there is nothing in his Bill, and there will be nothing on the statute book if the aerospace denationalisation Bill gets through, to prevent British Aerospace from being either broken up or taken over, lock, stock and barrel, by foreigners?
    Mr. Butler: I am interested in what the hon. Gentleman says about the companies not being properly nationalised, but I understand that, in law, ownership was transferred on vesting day. In regard to the hon. Gentleman's repeated remarks about the aerospace industry, I can say only that there are none so deaf as those who will not hear.

    SHOPLIFTING
    Mr. Archerasked the Attorney-General in how many prosecutions for shoplifting offences during the latest period of 12 months for which figures are available the Director of Public Prosecution has either undertaken the prosecution or been consulted.
    The Attorney-General (Sir Michael Havers): Of prosecutions undertaken by the Director in 1979, eight have to date been concluded where an offence of theft of the shoplifting variety was charged.
    It is not possible to give details of cases of shoplifting theft on which the Director was consulted in 1979: this sort of offence is not normally reported to the Director and is, therefore, not a type of theft for which detailed indices are kept in the registry. Those cases which are reported normally involve one or more of the following factors:
    the alleged offence was committed by a police officer or a police officer's spouse;
    the alleged offence was committed by a public figure;
    the alleged offence was committed in addition to other offences which are reportable, for example murder or corruption;
    the alleged offence involves an issue of identification;
    a private prosecutor wishes to withdraw the summons.
    Mr. Archer: I am grateful for that careful reply. Does the right hon. and learned Gentleman agree that, while the right to bring a private prosecution is an important constitutional safeguard, it can operate harshly against individuals who ought not to be subject to criminal proceedings? Will he further agree that shoplifting is an example of an offence in which the motives and circumstances can vary, from the persistent professional offender to the merely absent-minded? Bearing in mind the recent example of an 83-year-old man who was driven to suicide, will the right hon. and learned Gentleman discuss with the DPP whether those who bring private prosecutions for shoplifting might be asked to consult the Director beforehand?
    The Attorney-General: I agree with the right hon. and learned Gentleman. Wherever there is a public interest aspect, for example the advanced age of the proposed defendant, that is a matter which

    937
    the Director, when deciding whether to prosecute, would bear in mind. I would welcome that going out to private prosecutors so that, where they felt that there was a public interest aspect, they could consult the Director for his advice.
    Mr. Neubert: Although the matter is not my right hon. and learned Friend's direct responsibility, does he agree that there is an obligation on shops and stores to limit the opportunities for shoplifting and that the provision of bag parks is a commendable and constructive action to that end?
    The Attorney-General: Any shop operation that affords an amount of temptation will lead to prosecutions, and sometimes to ill-considered prosecutions when an offence is not intended. It is just as serious for my hon. Friend to leave his wallet in his room when he goes to wash his hands. That is offering temptation to the cleaner who comes to clean his office. The circumstances must be decided on each case.
    Mr. Lawrence: I hope that my right hon. and learned Friend will follow through the sort of exception outlined by the right hon. and learned Member for Warley, West (Mr. Archer) by circulating private prosecutors so that that matter can be brought before them. Is my right hon. and learned Friend satisfied that the general principle of stores prosecuting offenders is working in the public interest and can he tell us what saving results to the public purse by continuing the present system?
    The Attorney-General: Bearing in mind the shoplifting figures, I believe that it would place an impossible burden on police forces if they had to prosecute such offences in addition to all their other duties. The right of private prosecution has been jealously guarded over the centuries and I should not like to alter it.

    PICKETING
    Mr. Adleyasked the Attorney-General what representations he has received following his recent statement on the law relating to picketing.
    The Attorney-General: None, Sir.
    Mr. Adley: Does not my right hon. and learned Friend feel that some of the more aggressive noises from the TUC and particularly, I understand, from the GMWU over the weekend are not representative of the views of the majority of trade unionists? Will he therefore do all that he can to ensure that the sensible proposals going through the House are pursued in such a way as to retain the support for them of the majority of working people?
    The Attorney-General: The enforcement of picketing laws, whether as they exist or as they will be if clause 14 of the Employment Bill becomes law, is entirely a matter for the chief constables and particularly the police officers at the site. The statement that I made on 19 February was circulated to chief officers of police and no doubt they will bear it in mind when they advise their officers what to do about picketing.
    Mr. John Evans: In view of the Attorney-General's repeated statements that primary pickets will retain the right to peaceful persuasion after the passing of the Employment Bill, will he inform the House whether the Government intend to introduce a new clause to the Bill to allow primary pickets the right to stop lorry drivers to persuade them peacefully of the justice of the dispute?
    The Attorney-General: There has been a great deal of discussion about that matter and it has been decided that there should be no right to stop lorry drivers. One of the questions that always occurs to me is what would happen if a lorry driver did not want to stop. Would he be committing a criminal offence? That is the sort of problem that one would face if one went down the road suggested by the hon. Gentleman.
    Mr. David Price: Does my right hon. and learned Friend agree that, even under the existing law, so ably defined by him recently, there are still difficult situations for the police and those who are trying

    939
    to picket peacefully? Does he agree that it would be a great help if the TUC would go further with the law enforcers in agreeing basic guidelines that could be enforced by both police officers and those operating picket lines?
    The Attorney-General: I said on 19 February that I thought that the guidelines issued by the TUC were sensible. I was sorry to see some comment the other day that tended to suggest that the TUC was withdrawing those guidelines.
    Mr. John Morris: Is the Attorney-General aware that in some areas there is automatic fingerprinting of pickets charged with obstruction? Does not that increase tension? Would it not be better to limit fingerprinting to cases where serious charges are involved and not make it automatic, as is the case in many areas? Does he not agree that automatic fingerprinting causes increased tension in those areas?
    The Attorney-General: That is a question which would be better put to my right hon. Friend the Home Secretary.

    POLICE CONDUCT (COMPLAINTS)
    Mr. Meacherasked the Attorney-General if, in the light of the recent Lannon case, he will now make available to interested parties the reports submitted to the Director of Public Prosecutions by the police following complaints about police conduct.
    The Attorney-General: No, Sir.
    Mr. Meacher: Since the judge in the Lannon case ruled that the family had a right to see the police investigating officer's report in order to pursue a civil action, on what grounds, in equity, can the Attorney-General deny sight of such reports to other families, whether or not they decide to go for the elaborate and expensive procedure of instituting a civil action?
    The Attorney-General: In the case to which the hon. Gentleman referred, the only claim for privilege was for profess-
    940
    sional legal privilege. In other cases it may be necessary for the Director to consider whether he is to make a claim for privilege upon the class or contents grounds. The reasons for that were given in detail by the Director when he gave evidence before the Select Committee on Home Affairs on 14 February. I refer the hon. Gentleman to the full account. In summary—the reports are confidential—they contain views and opinions of the police officer making the report; the credibility of the witnesses is discussed together with, in some cases, their previous convictions. Details are also given about the suspected police officer which, if the Director decided not to proceed, could lead to a form of public trial without the safeguards of a trial in court. Those are strong public aspect reasons why it should not be a matter of course that section 49 reports should be published.
    Mr. Jeffrey Thomas: Is the Attorney-General aware of reports that the team under Commander Cass, which investigated the circumstances of the death of Blair Peach, was anxious—
    Mr. Speaker: Order. I wish to help the hon. and learned Gentleman and the House. Hon. Members will be aware that both the Blair Peach and the Kelly case are sub judice at the moment. No one in the House would want to seek to influence in any way the decisions of the coroner's court. It could have a serious effect on people later.
    Mr. Thomas: In those circumstances, Mr. Speaker, I do not pursue the matter.
    Mr. Michael McNair-Wilson: Has my right hon. and learned Friend had a chance to see a replay of the BBC television plays called "Law and Order"? If he has, can he think of any drama series that is more likely to undermine confidence in the police?
    The Attorney-General: I have seen part of the series. I agree with my hon. Friend that it shows not only the police but lawyers and others concerned in the administration of justice in a very unfavourable light when that light is the exception to the rule rather than common form.

    QUESTIONS TO MINISTERS
    Mr. John Morris: On a point of order, Mr. Speaker. Has the learned Attorney-General made any request to answer question No. 47 or to make a statement regarding jury vetting?
    Mr. Speaker: Not to me.

QUESTIONS TO MINISTERS
Mr. John Morris: On a point of order, Mr. Speaker. Has the learned Attorney-General made any request to answer question No. 47 or to make a statement regarding jury vetting?
Mr. Speaker: Not to me.

QUESTIONS TO MINISTERS

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's Sitting, Standing Order No. 3 (Exempted business) shall apply to the Motion relating to European Economic Community Convergence and Budgetary Questions with the substitution of half-past Eleven o'clock or three hours after it has been entered upon, whichever is the later, for the provisions in paragraph 1(b) of the Standing Order.—[Mr. MacGregor.]

ORDERS OF THE DAY
  TRANSPORT BILL
  As amended (in the Standing Committee), considered.
  TRANSPORT BILL
    New Clause 1

      OBLIGATORY TEST CERTIFICATES FOR PASSENGER-CARRYING VEHICLES
      'In section 44 of the Road Traffic Act 1972 (obligatory test certificates) in subsection (4) (excluded classes of vehicles) the following words (which relate to the exclusion of large public service vehicles) shall be omitted—

      (a) the words from "to public service vehicles" to "passengers or"; and

      (b) the words from "but shall apply" onwards.'.—[Mr. Fowler.]

      Brought up, and read the First time.
      3.32 pm
      The Minister of Transport (Mr. Norman Fowler): I beg to move, That the clause be read a Second time.
      Mr. Speaker: With this we are taking new clause 8—Annual inspection of public service vehicles:
      'The Minister shall prescribe in regulations arrangements for the annual inspection of public service vehicles at either official public service vehicle testing stations or, if the equipment provided is adequate, the operator's premises, but no such regulations shall be made until a draft thereof has been laid before, and approved by a resolution of, each House of Parliament.'.
      and Government amendments Nos. 75, 76, 91 and 92.
      Mr. Fowler: I am delighted to open the debate by proposing a new clause that I am sure hon. Members on both sides of the House will welcome. The clause concerns, basically, the safety of vehicles. It paves the way for a new annual test of all large passenger-carrying vehicles. It is a commitment to higher standards.
      On the day after a coach accident in France in which 16 young people lost their lives, we must all be aware of the need to tighten standards. I emphasise again, as I did in Committee, that although this Bill reduces restrictions on the number of services that can be provided in this country—we look forward to an increase in services—it does not reduce safety standards. Our aim has been to

      943
      produce a system that does not mistake paperwork for effective safety controls.
      The Bill generally attacks the problem in three ways. It deals first with the fitness of the operator—what I might call the first level of prevention. The Bill requires an operator to demonstrate both his competence to run buses and that he has adequate maintenance facilities or arrangements. If an operator cannot meet the standards, he cannot operate.
      Secondly, the clauses on vehicle fitness ensure that the Ministry of Transport's examiners have powers to inspect public service vehicles at any time and to prohibit their use straight away if they are defective. With this clause we are looking ahead to the more formal requirement of the annual test, as my hon. Friend the Parliamentary Secretary undertook to do in Committee. I should like to thank the hon. Members for Holborn and St. Pancras, South (Mr. Dobson) and for Newcastle upon Tyne, Central (Mr. Cowans), who raised the matter in Committee.
      What will the annual test achieve? I believe that it will be a tighter, more foolproof means of ensuring that all buses undergo a thorough examination. The rather informal process of inspection now carried on runs the risk that some vehicles may not be examined as regularly as they should be. Secondly, and just as important, the new test will apply to all passenger vehicles with more than eight passenger seats, regardless of whether they are used for hire and reward. As we discussed in Committee, there has been, since 1930, a rather uneasy distinction between the safety standards required of public service vehicles and the lack of controls over privately run buses. The new annual test takes a major step towards bringing all buses into line. I believe that this will help to give the public the confidence that they deserve to have, whatever kind of bus they are travelling on.
      When will the new test be brought in? Inevitably, there must be time to make all the necessary practical arrangements. We are required by the EEC—this is one EEC requirement, whatever hon. Members' views, that can be welcomed—to have a testing system fully in operation by January 1983. This means carrying out the first tests in January 1982 at the latest.
      944
      We shall shortly be circulating the necessary regulations in draft for consideration by all interested parties. We shall also be discussing with operators the best arrangements for testing. We have already said that we accept the case for using operators' premises to the fullest extent possible consistent with the maintenance of safety standards and a reasonably economic deployment of resources, both public and private.
      I commend the new clause to the House.
      Mr. Speaker: Before I call the right hon. Member for Barrow-in-Furness (Mr. Booth), I draw the attention of the House to the fact that the Government did not move the motion on the order of business, outlined on the Notice Paper. In order that there should be no misunderstanding later, I should like to put on record that the result is that instead of proceeding to Government amendment No. 1 after new clause 9 is disposed of the House will go straight on to discuss the remainder of the new clauses, beginning with new clause 5.
      Mr. Fowler: On a point of order, Mr. Speaker. That is correct. The Government did that with the agreement of, and at the request of, the Opposition.
      Mr. Speaker: I understood that. In case the matter is raised by hon. Members who are not now in the Chamber, the occupant of the Chair will be in a position to say that the matter was explained succinctly.
      Mr. Albert Booth: Thank you, Mr. Speaker. We always welcome your guidance. It is helpful for the House to be absolutely clear about the order in which it is to proceed with the Bill.
      The Minister's statement on new clause 1 is surprising. In a Committee stage that was pretty barren of joy for Opposition Members, the willingness of the Minister, on the raising of this issue, to agree that there should be some provision within the Bill for annual testing of public service vehicles shines like a beacon. It should have been in the Bill from the outset. There should have been a Government proposition in the Bill for annual testing of public service vehicles.

      945
      When the issue was raised in Committee, the Minister undertook to consider it and to bring forward his own proposition for inclusion at this stage. But his proposition in new clause 1 does not create a statutory obligation for annual testing of public service vehicles. The new clause removes from the Road Traffic Act 1972 the specific exclusion of public service vehicles from the range of classes of vehicle for which test certificate provisions can be made. Those test certificate provisions in the 1972 Act can be for 10-year tests or tests of other periods.
      We want spelt out clearly in the Bill that public service vehicles shall be annually tested. That is a basic safety requirement that we want to see written into the law.
      The Minister touched upon the use of operators' premises. There is nothing in his new clause that touches on operators' premises. I believe that new clause 8 is much better for this purpose.
      I wish to deal first with the question of a statutory requirement for annual inspection. If one was to use the procedure used under the 1972 Act for other vehicles, one would not bring about a satisfactory position on the annual testing of public service vehicles. Public service vehicles are in a special position and their testing is not the same as the testing of other vehicles.
      In Committee the Minister withdrew the requirement for an operator's disc to be displayed on the vehicle, so we have to be assured that this testing requirement can be enforced in its own right. We cannot rely on the operator licence requirement. It is virtually unenforceable, since the requirement to display the discs has been removed from the Bill that we considered on Second Reading, so the link has been removed between the operator and the number of licensed vehicles that he runs. Therefore, in some ways, the annual safety check becomes more important. It means that any safety inspector or policemen can ensure that the fitness to carry passengers of any vehicle on the road has been tested in the previous 12 months. It would be impossible to know from an examination of the vehicle whether it was covered by an operator's licence.
      But a specific requirement for annual safety tests is important because of the
      946
      nature of the operation. We should all be alarmed that any large vehicles should be able to travel on our roads without safe brakes and steering, for example. A major public service vehicle can affect the safety not only of other road users but of those who travel as passengers on it. The vehicle is in constant use and stops and starts frequently. Safety control is crucial.
      The other question raised by new clause 8 is whether the operator's premises should be available for inspection. The control of PSV safety has, if anything, a longer history than safety control of other vehicles, so it is surprising that annual testing has not been insisted upon before. There is testing provision, however. Good operators often have good testing facilities on their premises. This testing has developed in a way very suited to the needs of the PSV. Major fleet operators have their own engineering facilities which they can use in the interests of greater efficiency. That should be recognised in legislation of this sort.
      However, we know that we are dealing with Ministers who are on record as wanting to put testing facilities in the hands of private operators rather than those of Government inspectors. We put down a marker about the need for independent monitoring by the Department's own engineers. There may be a difference between the two parties as to how safety testing is best achieved and how specific the legislative commitment to annual testing should be, but I hope that there is no difference between us that stringent and impartial requirements should be imposed for annual testing so that it is done to a uniform and high standard.
      3.45 pm
      At some time in the near future we need some assurance that, however the tests are done—in what are now Government stations and handed over to private control, a move that we would oppose; on the operator's own premises; or in Government test stations run by the, Minister's own staff—they will all be subject to independent monitoring by the Department's engineers, in whom we have great confidence.
      In all these circumstances, the annual inspection of PSVs should not be dealt with in general test regulations by removing the ban in the 1972 Act to imposing a test requirement on public service

      947
      vehicles but should be specifically related to the needs of the special case of the PSV.
      That is why new clause 1 is inadequate. It does not achieve the purpose or the specified period of testing. New clause 8 is vastly superior. It achieves our intention and that which I think the Minister spelt out.
      Mr. Frank Dobson: I am grateful to the Minister for thanking my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans) and myself for pointing out that the Bill contained no provision for annual testing of public service vehicles. If the Minister's intention is met by the new clause, we welcome it, because people who travel in PSVs are entitled to high standards of safety.
      However, I must add that it was pointed out on Second Reading that some provisions of the Bill would adversely affect safety. Right at the end of his reply to the Second Reading debate, the Parliamentary Secretary said:
      "I reject completely suggestions that safety is threatened. That is absolute nonsense. If anything, the Bill will improve the safety arrangements."—[Official Report, 27 November 1979; Vol. 974, c. 1246.]
      As originally drafted, the Bill clearly would not have improved safety because it would have got rid of the annual testing of vehicles. I am afraid that the Parliamentary's Secretary's brief was somewhat amiss.
      The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): There is no system of annual inspection of vehicles at the moment, so there could have been no question of the Bill getting rid of it. All that we are introducing in the new clause is the ability to bring in the annual inspection of vehicles as a new concept in this country. We always intended to bring it in anyway, but we had not intended to use this Bill to do so.
      Mr. Dobson: I accept that, but we are getting something worth while from the suggestion of my hon. Friend and myself. We look forward to the introduction of annual testing, which will make things safer both for PSV passengers and for other road users.
      In the spirit in which he moved new clause 1, however inadequate it may be,
      948
      I hope that the Minister will recommend the House to accept our amendment No. 25. That would extend the provision for the safety testing of vehicles to include vehicles owned by education authorities and used as school buses. There is no requirement at present to test them as there is with public service vehicles.
      Mr. Clarke: I was delighted to hear from the right hon. Member for Barrow-in-Furness (Mr. Booth) that there were some aspects of the Bill about which we agreed. We have agreed throughout on the principle that the safety of passengers should be paramount in the passenger transport industry.
      I repeat without hesitation what I said on Second Reading, that there is no provision in the Bill which threatens or reduces the present protection given to passengers in trying to maintain the proper level of safety on public transport vehicles. There are aspects of the Bill that will strengthen the protection for passengers and make the system more adequate and enforceable.
      The new clause introduces a new system of annual inspection of all public service vehicles. The Government have always contemplated that, and it is an innovation to which we are bound by an EEC directive—the so-called roadworthiness directive. This has not occurred to the Government during the passage of the Bill. We always intended to comply with our legal obligations under that directive and to bring in a new system of annual testing by 1 January 1983. That means that we must get the first tests going by January 1982.
      The only change of policy indicated by the clause is that, following representations made by the hon. Members for Holborn and St. Pancras, South (Mr. Dobson) and for Newcastle upon Tyne, Central (Mr. Cowans) in Committee, we looked at the possibility of using the Bill, while there is parliamentary time, as the appropriate vehicle for bringing in a system for the annual testing of vehicles.
      Given that we are all agreed that this is a desirable innovation, I think it is a pity that the right hon. Gentleman—though I understand that he will advise his hon. Friends to support the idea—feels it necessary to hedge that agreement about with qualifications concerning the chosen method, the precise way it will be

      949
      introduced and its enforceability thereafter.
      Let me explain why, on the face of it, new clause 1 is expressed in rather obscure language and does not provide in terms that the annual inspection of public service vehicles will begin in January 1982. The wish was expressed repeatedly in Committee that the legislation could be framed in language of that kind. However, upon examination it will be found that the, clause is adequate to pave the way for the regulations. That will be the most appropriate means of fulfilling the terms of the EEC directive. The new clause and the consequential Government amendments bring public service vehicles within the ambit of sections 43 and 44 of the Road Traffic Act 1972 from which they are presently excluded.
      That Act ensures the annual testing of heavy goods vehicles. At the moment public passenger vehicles are excluded from those testing arrangements. The amendments bring passenger vehicles within the terms of that Act, and pave the way for the necessary regulations spelling out the details of the arrangements.
      The alternative way of proceeding as a matter of law would have been to draw up regulations under the European Communities Act 1972 implementing the United Kingdom's Community obligations in respect of public service vehicles. That would have given rise to considerable drafting and other difficulties and probably, for a variety of reasons, would have been a less attractive course, given the present mood of the House, to adopt. We welcome the opportunity, therefore, of paving the way through this Bill to bringing passenger vehicles within the terms of the 1972 Act and then making the necessary regulations.
      There is no policy difference between us and, though the statute will not contain details of the annual inspection, it will pave the way for the regulations. I give the clearest possible undertaking on behalf of the Government that we shall produce the necessary regulations to bring the new system into effect at the required time.
      There is the problem of the enforceability of the new system of annual inspection once it has been put into effect. As
      950
      with the other safety requirements of the Bill, our view is that they are perfectly straightforward to enforce and that they can be enforced properly. It is obviously in the public interest that public safety regulations should be enforced as strictly as possible.
      Every operator will be required by regulations under this Bill to notify the traffic commissioners of the vehicles he owns and operates. Every vehicle which he possesses will be subject to inspection by the Department's vehicle inspectors. Inspection can take place in a wide range of circumstances and more or less at any place and any time to ensure that a vehicle is fit to be on the road.
      The means by which we shall make sure that an operator submits his vehicles for annual test are that, by bringing passenger vehicles within sections 33 and 34 of the 1972 Act, the test certificates to be issued under this procedure will be linked with vehicle excise duty. That means that the certificate will be producable at the time of paying the vehicle excise duty. There will thus be a ready means of ensuring that a vehicle has gone through the annual test to which it is liable.
      The other point of detail raised in debate was whether it would be possible to carry out these annual inspections on the premises of operators who had the right facilities or whether all buses would be required to go to an approved vehicle testing station elsewhere. I am happy to repeat the substance of what I said in Committee. The Government are quite happy to consider the possibility of operators' premises being designated as approved places for the test. The regulations will pave the way for that possibility. We anticipate that a number of testing centres will be the premises of some of the major operators.
      First, we shall need to consider—and the right hon. Gentleman anticipated this—whether the facilities at particular premises are adequate for the rigorous tests required. I believe that only the major operators will have the kind of depot, garage and maintenance facilities appropriate for the tests. My only caveat is that the adequacy of the facilities will not in itself be the only decisive factor. We must look at various other matters, including the cost of sending our examiners to obscure parts of the country or

      951
      endless testing centres to chase up specific vehicles. We must have some economy of organisation.
      There must be a proper geographical spread of testing centres to ensure that the bus industry as a whole is properly served and is not inconvenienced. There must be a testing station within easy range of an individual operator. Although we have not proposed these particulars in our discussions, it is possible that, if an operator wants his own premises to be used as a testing station, approval may depend upon the facilities being available to other operators so that their vehicles may be tested at that same station. A station will thus serve a fairly wide geographical area and be of advantage to the bus industry as a whole.
      We are prepared to discuss all these matters. We do not anticipate any difficulties in practice and we envisage that when the system is set up some of the approved centres will be operators' own premises.
      I was asked about the standards of the tests, and how they would be achieved. The standards will be the equivalent of the present rigorous ones that we attempt to apply to heavy goods vehicles and to passenger vehicles as well. We have indicated a policy intention to return the testing of heavy goods vehicles to the private sector. We are still considering the position with respect to passenger vehicles. However, whoever carries out the testing, it is the Minister who bears the responsibility for ensuring that it is of the right standard and adheres to the policy of the Bill. That policy is to ensure that the best possible protection is afforded to the travelling public by way of a regular enforceable system of testing and inspection. We can thus ensure that, once tested and inspected, the bus fleet will be as safe as reasonable regulations can secure.
      4 pm
      Mr. Booth: With the leave of the House, may I say that I cannot understand why the Parliamentary Secretary insists that this matter must be left with the Minister. I understand that he has agreed that there should be an annual inspection of public service vehicles and that that should be prescribed in regulations. Why, then, will he not support me in recommending new clause 8, which seeks to provide precisely that?
      952
      New clause 1 removes an impediment in the 1972 legislation. That impediment is the specific exclusion of public service vehicles from test certificate requirements. However, that is not good enough. I have no objection to removing that part of the 1972 Act so as to leave the regulation-making powers in the Bill as they stand. That may serve some useful purpose, but it does not impose a specific requirement under the Bill, as we seek, to ensure that the Minister provides for full annual inspection of public service vehicles. The requirement was not in the 1972 Act, but we should take the chance to put it in the Bill. There is nothing in new clause 8 to prevent the Minister from taking the time that he needs to prepare the regulations properly; nothing to prevent him from taking account of all the considerations which the Parliamentary Secretary has very fairly laid before us.
      Mr. Kenneth Clarke: New clause 8 is confined to public service vehicles. In our proposals we are taking wider powers than that, and our regulations will apply to all large passenger vehicles. The powers that the right hon. Gentleman is offering us in new clause 8 are narrower than those that we propose to take in the regulations.
      Mr. Booth: I do not accept that. I do not see one new clause as an alternative to the other. If the Parliamentary Secretary will support our new clause we shall happily join him in recommending both new clauses, but the House has an absolute right to demand regulations requiring an annual inspection.
      The Parliamentary Secretary does not need to tell me, given all our debates in Committee, when we pressed upon the Government the need for a wider definition of public service vehicle, that there are vehicles outside that definition which should be covered by it. As my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) pointed out, there are buses conveying children to school which could be outwith the definition. However, conscious though we are of the public service vehicle definition in the Bill, that is not the point at issue.
      If my hon. Friends want the House to recommend an annual inspection by regulation rather than leaving the matter to the Minister, they must vote for our new clause. I ask them to support new clause 1 and new clause 8, and that is a perfectly

      953
      proper approach because none of us would want to stand in the way of the Minister making wider regulations than those we propose. If, in his wisdom, the Minister decides that other larger passenger vehicles not within the public service vehicle definition should also be subjected to annual fitness tests, we would not wish to be seen, by anything that we said or did, to be opposed to that. We are not. However, we insist that the House should decide whether there should be such annual inspections and whether they should be written into the Bill at this stage.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.
      Mr. Speaker: We shall have a Division on new clause 8 when we come to it.

    New Clause 6

      CARRIAGE SERVICES COMPETING WITH OPERATORS HOLDING ROAD SERVICE LICENCES
      "No express service or contract carriage service shall operate on a route which is served by public service vehicles operating under a Road Service Licence and supported by a transport supplementary grant and/or cross-subsidised under a passenger transport policy network agreement unless in the cases where cross-subsidy applies the agreement of the Traffic Commissioner is obtained and in the cases where transport supplementary grant applies the agreement of the local authority is obtained.".—[Mr. Booth.]
      Brought up, and read the First time.
      Mr. Booth: I beg to move, that the clause be read a Second time.
      The clause deals with a matter which is at once complex and far-reaching and relates to one fundamental issue. That issue is whether it is possible, within the combined effects of the Bill in terms of its delicensing, its definition of express service, its opening up of contract carriage, for local authorities to carry out their statutory duty to promote and coordinate efficient public transport systems within their areas.
      We hold that these combined effects will prevent local authorities from doing that. We also believe that, in order to rescue something from the devastating effects of the Bill, our new clause is necessary to inject into the much wider system of free enterprise operation a method of
      954
      check and agreement as between local authorities and operators, and as between traffic commissioners and operators about what is necessary to maintain network and individual services where they are being supported by transport supplementary grant.
      As the Bill is now drafted, it would be possible for someone to set up a contract carriage operation within an area covered by a networking agreement. Even though the public are making their contribution to that agreement through the transport supplementary grant, and even though major operators in the area are making their contribution by cross-subsidisation as between their profitable and unprofitable routes, along could come another operator who could cream off certain of the profitable routes without regard for the effect that that would have on the public transport service, which is a statutory concern of the local authority, or for the public interest which is at the root of the statutory duty imposed on traffic commissioners.
      A great many services in local authority areas are making a valuable contribution to maintaining other services within those areas. Urban services are making a contribution towards rural services. Monday to Friday services are making a contribution towards Sunday services. Peak hour services are making a contribution towards slack hour services.
      The whole of our public transport network is based upon a complex balancing of financial factors that allow services to run on the basis of a mixture of considerations. There is the consideration of how much should be properly taken from one route to support another. There is the complicated consideration of how much taxpayers' and ratepayers' money should be provided to operators through supplementary grants for them to operate services that the local authorities consider necessary if they are to carry out duties laid upon them by Parliament to promote and co-ordinate efficient public transport systems.
      Many hon. Members are aware that the emphasis on the promotion of services needs to be highlighted. There are still too many areas which, several years after the introduction of transport supplementary grants, have not succeeded in promoting services on a considerable number of routes. There are still many people

      955
      who complain bitterly about their difficulties in getting to work or attending social functions because of the absence of public transport in their areas.
      It is our experience that even after a few years of those statutory duties and of local authorities receiving transport supplementary grants, far from having an over-provision of public transport services, we are still suffering an under-provision. Those local authorities, shire county authorities and metro-county authorities that have been successful in bringing about an expansion of public services by promoting and co-ordinating the various transport operations are in a minority. Many have been struggling to hold together an existing system.
      Under the provisions of the Bill, a contract carriage operator will be able to take advantage of a lucrative end-to-end route that is being served by a stage carriage service for which a road licence has been obtained, and will be able to operate only at peak hours, and on Mondays to Fridays, or possibly Saturday mornings. He will be able to do so only on those identifiable occasions when it is profitable, and he will be able to cream off money from the route and leave the existing operator to carry out that part of the networking operation that is essential if it is to stand as an operation that can be fairly described as a co-ordinated, efficient public transport system.
      If that happens, we predict that we shall be presented with a number of unpleasant options. Local authorities may tell the Government that they can sustain the operation of bus services—in some cases train services that are supported under the transport supplementary grant system—only if considerably greater contribution can be made. They may tell the Government that they cannot continue sustaining services at the required rate.
      4.15 pm
      Another possibility is that the network operators will tell local authorities that they can no longer make the network agreement or the contribution from cross subsidy required to sustain the network. They will say that they are not prepared to work on that basis. Some local authorities are prepared to play the game by either set of rules. However, at present, operators cannot use one service to cross-
      956
      subsidise another and simultaneously compete with that service. They can do one or the other.
      Having talked to a number of operators, I suspect that in those circumstances they will pull out of the non-profitable routes. They will say that the TSG support is about one-third of the subsidy that is required, and that they are having to find two-thirds or more by cross subsidy. They will not be prepared to give up the routes where they are now making a profit, even though they are using the profit largely for cross-subsidy purposes. They will pull out. They will cut fares on the few routes that are profitable—10 per cent. of the routes at most—and the overwhelming majority of services will close down. That type of contract carriage operation has not been envisaged previously. Up to now all contract carriage law has covered specific types of operation.
      Another threat that looms large is that of the new definition of the express services. Any operator who is prepared to run a 30 mph or faster service can do so without road service licensing approval. There is much argument about the length of express operation—25 miles, 30 miles, 35 miles or 40 miles—that will affect the ability of the major operators to make a contribution from their carriage operations to other services. The National Bus Company estimated that a difference of five miles would affect its income by about £5 million.
      Under new clause 6 we are pressing for a minimum that is required to bring about reasonable protection of the operations. We are not saying that a new operator should not be able to operate on a cross-subsidised route. There may be cases—this will appeal particularly to the Minister—where local authorities will welcome a new operator on a cross-subsidised route. They may find that a new operator is prepared to operate a substantial part of the service with a lower degree of subsidy. That will be welcomed with open arms. However, where the route is at present subsidised under the TSG arrangements, the local authority concerned must be consulted. Public money is being used to provide a service, and if a new operation can lead to the use of that public money in such a way as to provide as good or better services, with no more, or possibly, less

      957
      subsidy, it is to be welcomed. However, it is feared that in many cases a new operator will not want to discuss that with the existing company, the traffic commissioners or the local authority, because he will want to operate in a way that does not take into consideration this major factor, which the House has decided must be a responsibility for local authorities.
      I cannot believe that Members of Parliament would seriously wish to pass legislation which would require the majority of operators on stage carriage routes within their constituencies to go through a road service licensing procedure which took account of the public interest through reference to the traffic commissioner and the considerations which he would apply to road service licences, as well as the local authority's careful regard to the provision of taxpayers' and ratepayers' money to operators in order to maintain a network, and at the same time wish to make it possible for a number of others to operate with total disregard for those major factors. To do that would be to make nonsense of the whole business which we are about.
      The Bill is an unhappy mess in this respect. It aims at two completely different objectives, and one so badly conflicts with the other as, in my view, to threaten the destruction of a good passenger transport system in a large number of areas.
      I believe that this new clause provides a mechanism which allows a fair balance of the considerations involved, allowing an operator who is carrying out a desirable cross subsidisation—which was desirable in the view of the traffic commissioner and was taken into account in the determination of his road service licence—to say to the traffic commissioner that he believes that the effect of having contract carriage operation over certain parts of his routes at certain times, would not only be detrimental to his maintaining those routes but would in fact require him to withdraw.
      A traffic commissioner who has granted a road service licence, having looked carefully and in detail at how far that licence and its form and conditions met the public interest, is, I believe, in a better position than are others to judge the effect of
      958
      having contract carriage operation on such a route.
      It could be held that the operator is biased about it. It could even be held in certain circumstances, though I would not so contend, that local authorities may be somewhat partial in their attitude towards certain routes, having run their own services or having made arrangements with particular operators. But that cannot be said of the traffic commissioner.
      I believe, therefore, that the new clause is of great importance. It offers, as it were, a last chance for us to try to inject some logic, common sense and balance as between the express or contract carriage operations which at present are totally outwith road service licensing and the role of the traffic commissioner. It gives an opportunity to local authorities which have the statutory duty to try to promote good public services and which are spending public money for that purpose to be involved in agreements with those who will operate on routes which, under the proposals in the Bill, can be operated without any regard to these major considerations of the public interest.
      Mr. Iain Mills: During the 110 hours of our work in Committee, when the right hon. Member for Barrow-in-Furness (Mr. Booth) and his hon. Friends spoke in those grindingly long debates, this question emerged, to a large extent, as the greatest divide between us.
      As I understand it, the right hon. Gentleman's argument is summed up in the belief that cross subsidisation is somehow a beneficial system which will result in the provision of services which otherwise would not be provided. In examining that argument, one has to look at the reality of services in Britain today. I find it strange that the right hon. Gentleman did not remind the House that in every county, every district and every area public bus services are declining.
      Mr. John Prescott: This is the second time that the hon. Gentleman has made that assertion, and it is not true. Let him make the comparisons and look at the facts, especially in the metropolitan bus authorities compared with the counties or, indeed, look at the facts even in Tory metropolitan areas. He will see that both the South

      959
      Yorkshire and Newcastle areas, for example, have been increasing the number of people travelling on their buses.
      Mr. Mills: I hope that the hon. Gentleman will recognise that I did not speak of the number of people travelling on buses. I referred to the services offered, and this is an important distinction. It is vital to have services offered which are relevant to people's needs. I can only tell the hon. Gentleman that, right in the middle of our lengthy Committee stage, Midland Red, in my constituency, cut services. I hope that the hon. Gentleman will forgive me, therefore, if I find his remarks strange when my constituents tell me that right in the midst of this argument, in which he and his right hon. Friend have argued that cross subsidisation will somehow continue the magic of public bus services, in my constituency those very services were declining.
      Mr. Prescott: Take an example from a Labour area.
      Mr. Mills: My constituency is not the only one where that has happened. This brings me back to the real divide between us. Cross subsidisation and directed traffic under the present system just does not work. I re-emphasise that in North Warwickshire, Solihull and the rest of my area in the Midlands this need has now become a prime priority. There are old-age pensioners, disabled people and families who are abandoned and marooned by the lack of bus services. So we are not starting from the basis of an ideal situation which is beneficial to all.
      Secondly, is it right to define cross subsidisation as a necessity for the provision of bus services? What is cross subsidisation? It is the use of finances generated from one set of services to support another set of services. Is this genuinely sacrosanct? Is it not part of the duty of an elected authority, or of a non-elected authority—even a non-elected authority such as the traffic commissioners —to recognise that if socially needed services should be provided they should in fact be provided? Is it not a better financial discipline to recognise that by defining, without cross subsidisation, what each service provides in terms of its benefits to the customer?
      We are not talking about politics here. We are talking about people who want
      960
      transport services to take them from one point to another. Could people not have a better service if we allowed ourselves to make judgments? I am sure that many passenger transport executives and bus companies would accept the argument that if they are there to provide services it is up to the elected authorities, whether Members of Parliament, county councillors or district councillors, to decide where and how the public money should be spent. I find it difficult, therefore, to understand why cross subsidisation should be regarded as sacrosanct.
      The right hon. Gentleman said that we should have to face some unpleasant options. Why should they be unpleasant? Under the Bill we are for the first time embodying in law opportunities which in many of our constituencies have already been shown to be genuine opportunities. Private enterprise can often provide at lower cost better services than those provided by public enterprise. This also is part of the great divide which took us over, as I recall it, 130 Divisions in the Standing Committee. By energising the forces of private enterprise we shall get people working at a cost lower than that shown by the passenger transport executives or the nationalised bus companies in the provision of services at times when people want them and in vehicles as they want them.
      We must all be familiar with the sight of huge buses with three people sitting in them. I am not so unsophisticated as to make that point without recognising that at peak times those very buses may well be full. But I put it to the Opposition that there could well be a place for buses run by private enterprise at certain times of the day to provide services which will make a profit for an entrepreneur, providing services for local residents, while at other times of the day on the same routes we could still achieve services in different buses for those of the population who require them. I believe that a complex mixed economy of transport provision, both private buses and public buses, is the only answer.
      Under the Bill, without new clause 6, which I sincerely hope we shall not pass, we have for the first time innovatory legislation which allows entrepreneurs to do just that. Many of us have in our constituencies entrepreneurs who have

      961
      already battled through the lengthy process of arguing with the established bureaucracies of the National Bus Company, the passenger transport executives and the local authorities in order to get their services going. They are already providing services. In Committee I gave three examples from my own constituency where they are providing excellent services where the institutionalised public provision would just not succeed. I therefore urge the House to reject the new clause.
      4.30 pm
      Mr. Sydney Bidwell: I did not sit through the long, weary and tortuous hours in Committee, but I took part in the Second Reading debate. In looking at the new clause, I can imagine that it somewhat counters the substance of the Bill itself. However, it does not entirely throw out of the window the main purpose of the Bill.
      In endorsing the argument of my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), it seems to me that the wording of the new clause—which I imagine has been drawn up very carefully indeed, and at first sight appears to be somewhat complex—can be the means of ushering in an element of planning in order partially to accept the fact that the Bill is now going through Parliament because of the inbuilt Conservative majority.
      The Government have applied their mind to transport according to their own light, and they genuinely believe that out of their proposals will emerge a much better service for the people and a much more efficient one than we have had hitherto. I do not think that that is the case at all. Without new clause 6, I believe that the Bill could rapidly lead to a state of anarchy on our roads.
      Like many other hon. Members on both sides of the House, I foresee the time rapidly approaching when more and more car owners will have to look to the passenger services of various kinds in order to get to work. If that is the case, it means that more workers will be involved in those services. There is real fear, particularly on the part of members of the Transport and General Workers Union, that an anarchistic situation will arise from the Bill's central provisions.
      962
      It is up to the Minister to allay those fears, because it is upon the good will of transport workers and the way in which they go about their daily lives that at the end of his period the right hon. Gentleman will be judged to have been successful or to have failed.
      In addition, there is the question of road slaughter. If efficient public services are used by more people than use our existing services, obviously the question of slaughter on the roads diminishes a great deal, because it arises precisely from the various kinds of transport which at present use our roads.
      These questions are interlocked. I believe that as a result of the requirement in the new clause, whereby local authorities will be under the discipline of a cross-subsidisation system, local authorities will be able to play a greater role in the localities, and throughout the county complex, to ensure that the changes envisaged by the Government and the Minister are successful. I respect the Minister's views, but only the test of time will tell whether the basic Socialist philosophy as applied to public transport is better than his. The proof of the pudding will be in the eating. I believe that at the Tory Party conference the Minister described his proposals as somewhat revolutionary. In so far as his proposals spell out considerable changes, I suppose that they could fall into that category, although we are not accustomed to Tories talking about revolution.
      Nevertheless, the proposals spell out considerable changes that must be ushered in with a good deal of caution. I am open-minded about certain aspects of the proposals, because, as I said, the proof of the pudding will be in the eating. However, as my right hon. Friend said, there is a fear that there will be a wholesale creaming off.
      The trade unions which represent road passenger service workers in the public sector are well organised, but there is a fear that the wages and conditions of those workers will be put in jeopardy as a result of their being left with the Cinderella services. There is a fear that they will be left with the empty vehicles while the fly-by-night operation, which will pass under the sunny title of "private enterprise", will cater only for rush-hour periods or times when the vehicles are

      963
      likely to be fully used. The danger is that if such an operator gets fed up, if someone goes sick or if a man's son does not wish to carry on with the service, many people will be bereft of any service whatever. That is a real fear.
      There is a need for a balance, and I believe that the terms in which new clause 6 is drawn will ensure that that balance is steadily applied and arrived at.
      Mr. Peter Fry: I begin by declaring an interest in this matter. Having heard about the length of the Committee proceedings, I am not sorry that I missed them. However, there is one relevant question that should be asked, not only in regard to this part of the Bill but in relation to the new clause. Will what is proposed either halt the decline in services in some parts of the country or improve them? Surely, that is the only relevant question that we should ask this afternoon.
      My right hon. Friend the Minister has put forward what have been claimed to be far-reaching proposals, and the right hon. Member for Barrow-in-Furness (Mr. Booth) has rightly expressed certain fears about what could happen. I am sure that all of us would accept that the present situation is unsatisfactory. Indeed, I remind the right hon. Member for Barrow-in-Furness that over the years the Labour Government introduced new legislation because they realised that what was happening was totally unsatisfactory. For example, bus services were declining and more and more people in various parts of the country, particularly in the rural areas, were finding themselves without public transport.
      I do not entirely agree with what my hon. Friend the Member for Meriden (Mr. Mills) said about cross-subsidisation, because bus service operations are somewhat more complex than many people appreciate. It is not just a question of a driver starting off at point A, driving to point B and back to point A, and doing that throughout the day. Because of the complication of drivers' hours and other legislation which applies, it is often necessary for that driver to make two or three journeys from B to C, or even from C to D, before he reverts to B to A. That may confuse the House. I confess that I have
      964
      always found the matter confusing. However, it means that in employing that bus and driver we are not dealing with just one service. If anything happens which undermines or removes the need for the service while the driver is operating, the coherence of the whole of the service is undermined. As I understand it, that is the main point that the right hon. Member for Barrow-in-Furness put forward.
      How does my right hon. Friend see the role of the local authorities and the county councils which have the responsibility for the co-ordination of public transport and, indeed, the job of subsidising public transport in the event of that type of situation arising? What will happen if, because of the creation of new contract carriage services, services that are subsidised are undermined? For example, what will happen if the local operator who is perhaps part of the National Bus Company says "It is not just a question of my doing away with the route from B to C. I must do away with the routes from C to D, D to E and E to F because they will no longer pay. On the other hand, in order to maintain those services I require a considerable amount of money from the ratepayer and the taxpayer"?
      Therefore, we must carefully examine the role that the county councils are expected to play. They have been anxious to take on the responsibility in the past. I remember my right hon. Friend and myself arguing vociferously that they should be given the right to control public transport, particularly in rural areas. If they have this responsibility, they should be consulted and have a strong say before we introduce a whole series of new services which could damage what already exists.
      There is one fear that niggles me about this part of the Bill. I do not doubt my right hon. Friend's intention to try to bring new services and life into public transport. For that he deserves every commendation. My fear is that the freedom to be given is likely to bring into public transport not just the fly-by-night operators—I do not go all the way with the hon. Member for Ealing, Southall (Mr. Bidwell)—but those who have not done their sums too carefully, who may think that they can operate an express service and then find that the economics are not going too well.

      965
      The temptation to break the law—the temptation to try to get extra revenue—which existed before there was legislation on bus services could happen again. Because of that, there is a danger that these new services may siphon off passengers from existing services rather than create more passengers and services. If that happens, it will undermine the real purpose of the Bill—the creation of new services and help for people who are without public transport at the moment.
      I hope that, in reply to this short debate, my right hon. Friend will try to spell out for me and satisfy me that the Government are aware of this danger and that they have consulted the Association of County Councils on how they are to meet this need. The danger may not be immediate. It may not be next year or the year after. The real danger is that many of the new services may come in and prove unprofitable and that, in about 1983 or 1984, we shall find ourselves with less public transport than we have today.
      Mr. Harry Cowans: I listened as carefully today to the hon. Member for Welling-borough (Mr. Fry) as I did during the transport debates in 1978. I do not agree with everything that he said, but he introduced a note of realism into the debate today. Without doubt, the new clause tries to put a note of realism into the Bill. One could argue that it is a conservative clause, because it introduces a note of caution.
      Having heard the hon. Member for Meriden (Mr. Mills), one would have thought that entrepreneurs were queueing up to take over these services. The clause makes it abundantly clear that we are talking about rural services—the unprofitable parts of the transport empire. That is the fundamental difference between us.
      I turn to the cross-subsidisation argument. Whether we like it or not, people outside sometimes make the accusation that in this place A votes "Aye" and B votes "Nay" and never the twain shall meet. Put another way, Conservative Members vote "Aye" and Labour Members vote "No" and realism goes out of the window. I hope that that will not transpire in this debate, because there is real worry about this matter.
      966
      As the hon. Member for Welling-borough said, the worry is not immediate. It will not happen the day after the appointed day. The worry goes beyond that point. It would appear that many people hidden away in many constituencies have suddenly discovered that they can run the transport system. One could argue that the opportunity is available to them now. Conversely, it can be argued, as no doubt Conservative Members will argue, that the transport commissioners grind exceedingly slow. But in the pursuit of profit, even when the rules of the game grind exceedingly slow, has anyone who can make that profit been put off before? The answer must surely be "No".
      4.45 pm
      There has been no queue of people to operate these rural services. This matter goes beyond party politics. We are talking about people in rural areas who rely on transport. There has been no queue of people to provide these services.
      The clause is carefully worded. It is cautionary. It urges us to look at the systems which have previously been subsidised before we introduce another system which may not exist for a very long time. One would think that a local authority would look into rural transport before pouring good money into it. Successive Governments have supported the view that rural transport should be subsidised.
      The fundamental issue between us is cross-subsidisation. I appreciate that to Conservative Members the National Bus Company is poison. However, it exists. There is also another clause on this matter, which, for fear of incurring your wrath, Mr. Deputy Speaker, I shall not mention. However, there is the prospect of £5½ million being lost, a percentage of which could be used in cross-subsidisation. If that percentage is taken away, that cross-subsidisation will not exist. It can be likened to a tree. The National Bus Company does not cross-subsidise out of the goodness of its heart. It cross-subsidises in the form of a tree. If the branches feeding into the trunk make the trunk profitable, it makes sense to support the branches.
      Our worry is that, not in the first instance but over a period of time, rural transport will be non-existent because people who have not done their homework will move in. Everything in the

      967
      garden will look rosy for a short time, but they will kill off existing services, because of the cross-subsidisation agrument, and then move out. What will fill the gap? Perhaps the Minister, in replying to the debate, will take us beyond the appointed day, when this free-for-all is to transpire. If it does not work, will he tell us what he proposes to put in its place by way of rural transport? That is always assuming that the Minister and his hon. Friend are still in the positions that they now occupy.
      Mr. Fowler: The essential point about the debate was put forward by my hon. Friend the Member for Wellingborough (Mr. Fry). He asked whether the new provisions would benefit the travelling public. I agree that, above all, that is the litmus test. It is about not what the lobbies, the operators or the unions want —all these bodies have a right to put their arguments—but what is in the best interests of the travelling public. Therefore, I should paint in the background to what we are doing.
      The aim and purpose of the Bill is to remove unnecessary restrictions on the bus industry and, at the same time, provide the opportunity for new services to develop. As my hon. Friend the Member for Meriden (Mr. Mills) rightly pointed out, some of the new services will undoubtedly be provided by private operators. The obstacles now put in the path of operators wishing to run long-distance coach services do not serve any worthwhile purpose. It is right to remind the House that essentially we are talking about express services which, by definition, are services covering more than 30 miles.. Such obstacles in the long-distance area restrict the choice of the public.
      There are those who want to travel by express bus and who prefer that option either to driving or to catching a train. If a man travels from Bristol to Birmingham he may want to travel by air, rail, car or coach, and the Government see no justification for seeking to restrict this choice of method of travel. That sums up my philosophy, but, what is even more significant, it sums up the philosophy of the Labour Government. In their White Paper on transport policy they said:
      "Provided the terms of competition are fair, if people choose to travel by coach rather than rail or air because lower fares are more im-
      968
      portant to them than speed, they should not be prevented from doing so."
      That is a sentiment that I support entirely.
      Mr. Stanley Cohen: The problem is whether those people will have the right of choice. I remind the Minister that there was an occasion during the Beeching era when the rail service between Scarborough and Whitby in Yorkshire was terminated as the result of an investigation by the traffic commissioner, who was assured that private bus operators would provide an alternative service. But within 12 months that alternative service no longer existed because it was totally unprofitable, and the people who lived in those rural areas were isolated from public transport as a consequence.
      Mr. Fowler: I shall come to those points. We are dealing with contract carriage, but essentially we are talking about express services. In other words, we are dealing with services that are more than 30 miles in distance. That is the aim and purpose of what I am about to say.
      In the area of express services, it is fair to remove the present licensing restrictions that prevent bus operators from competing on equal terms. In other words, contrary to what has been said, there is a demand for travel which at the moment is not being met. I believe, further, that that new demand, and the fact that resctrictions can and will be removed, will lead to new operators coming forward in this area.
      I was attacked on the ground that new operators would not come forward and that there was no great demand for intercity coach services of for new coach services at all. But there are signs at present that exactly what I am predicting is taking place. An article in The Daily Telegraph on 21 January said:
      "New private enterprise companies are planning to challenge the National Bus Company on key express coach routes when unrestricted competition returns to the business later this year for the first time in half-a-century".
      Surely, that is in the interests of the public.
      Mr. Cowans rose—
      Mr. Fowler: What was the response of the National Bus Company? To do it justice, its express division controller

      969
      was quoted in the same report as having said:
      "Competition is a spur; it is not a threat."
      That is surely exactly the approach and feeling that there should be in the bus industry.
      The first point that I make in refuting much of what has been said today, which I believe is not only alarmist but totally wrong, is that in this important area—this point was conceded by the right hon. Member for Barrow-in-Furness (Mr. Booth) in Committee—of inter-city travel there will be more opportunity and more providers. That will be in the interests of the public. Not one word that I have heard this afternoon challenges that.
      Mr. Cowans: If the Minister reads new new clause 6 carefully, which I assume he has done, he will see that the key words are
      "under a passenger transport policy network."
      The fear is that, as with a jigsaw puzzle, many local authorities and the NBC have subsidised a number of branches of the tree in the overall network. If we take out one or two of those branches the network will collapse. That is the main point of new clause 6.
      Mr. Fowler: I shall come to the points made by the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans).
      Basically, the Opposition are still concerned about the freedom that will be provided here. They wish to reimpose restrictions on these services. Indeed, they now wish to go further and extend those controls to services that are not even licensed at present. If the hon. Member for Newcastle upon Tyne, Central refers to the clause, he will see that those services are the private coach parties or contract carriers.
      The Bill does not change greatly the position of those services except in one small but important way. The Bill will make it easier for people to club together to solve their own transport problems. I am thinking especially of commuter clubs which are currently prevented from hiring coaches for journeys to work by the restrictions on the making of regular journeys. This restriction will go, but those which protect the ordinary local bus service will remain.
      970
      Concern for the local bus network—I fully appreciate what the hon. Member for Newcastle upon Tyne, Central is saying—is at the heart of the clause. I have sought to make clear all along that it is no part of our desire to destroy that network. That is why I have retained licensing for all services which are part of the local network. The distinction that I have drawn in the Bill between express on one side and stage carriage services on the other does that. In other words, it preserves the distinction between the express services that are outside the licensing restrictions and the local services where I believe there is a need for control. Although we have changed the presumption of proof, we have accepted that.
      What I do not see is why a non-stop express bus from, say, London to Manchester should damage the local bus network. Contract carriages also serve quite a different market. They are privately run and are organised voluntarily. That is not unfair commercial competition. That kind of commuter coach service will supplement regular services at peak periods and will not damage the network.
      I believe that the Bill makes a proper distinction of the local network. My purpose is not simply to maintain and protect that network in its present form. The public would not be satisfied with that, just as they are not satisfied—as my hon. Friend the Member for Meriden rightly pointed out—with the present level or standard of local bus services. The Bill will change the balance of licensing in favour of the operator wishing to run new or better services. It will be for the established operator to prove that the competition will be detrimental to the public interest.
      Cross-subsidisation may be an important issue here. But the operator will be required to satisfy the traffic commissioners that it is of overriding importance. I understand, obviously, the arguments about cross-subsidisation, but I believe that it is necessary for those who claim that cross-subsidisation is taking place to justify the patterns of that subsidy. That is a healthy discipline for the operators themselves. When it comes to the local services—the services within the 30-mile threshold—as I have said, there is no question but that they will have to go to

      971
      the traffic commissioners. The commissioners will have to judge whether that is an overwhelming argument.
      5 pm
      It seems to me, therefore, that the thrust of the Opposition's new clause is to protect the present pattern of cross-subsidisation and local authority support. The thrust of the Bill is to encourage a new look at those patterns to allow competition to be a spur to improving services and efficiency instead of placing an automatic and ever-increasing reliance on subsidy paid for by the ratepayer and the taxpayer.
      When the hon. Member for Kingston upon Hull, East (Mr. Prescott) intervenes and tells me that South York shire is now the model upon which the Opposition's policy is based, I am bound to tell him that for three years I sat on the Opposition Front Bench and heard from the then Secretary of State for Transport in the Labour Government how iniquitous the policy of South Yorkshire was at the time and how it was that the right hon. Member for Stockton (Mr. Rodgers) wanted nothing else but to change that policy. Now we understand, with the change of management on the Benches opposite, that South Yorkshire, rather than being the villain of the piece, has become the hero of the piece.
      We learnt many things during the Committee stage. The great differences in policy that have emerged between the Labour Party in Government and the Labour Party in Opposition have been some of the most dramatic.
      Mr. Prescott: The right hon. Gentleman is being less than fair to my right hon. Friend the Member for Stockton (Mr. Rodgers). Whatever the differences of attitude about bus policies, certainly when my right hon. Friend was Minister he was concerned about the proportion of rates that South Yorkshire might be getting, but he was also concerned about the same argument for Oxford. At that time it was a very difficult argument. Nevertheless, he reached agreement the following year with South Yorkshire, which maintained the very principle that it has today, which has gone from strength to strength in passengers and in the provision of services in that area, to a far greater extent than any other metropolitan authority.
      Mr. Fowler: That strains the matter a bit. I think that anyone with any
      972
      objectivity who had listened to what the former. Secretary of State said over the previous two or three years about the policies of South Yorkshire could not conceivably come to the conclusion that those were policies that he supported.
      Basically, however, I cannot accept the new clause to reintroduce controls in the way that it sets out. It would introduce new restrictions on contract carriage services, which under the present system are not licensed. The Opposition want to protect the local network. I understand that. I have made it clear—and I say this again to my hon. Friend the Member for Wellingborough, who made a thoughtful and critical speech—that I am in no way out to destroy that network. That is why I have retained licensing for all the services which are part of that network. But I am confident that the distinction that I have drawn between the express and the stage carriage services does just that. I see no reason why the express services should be a challenge to that, nor do I believe that contract carriages, which are serving a different market, should be a challenge to that. In other words, I believe that services such as commuter coach services will supplement regular services at peak periods and not damage that network.
      Mr. David Penhaligon (Truro): On a point of information, will the Minister let me know whether the sort of holiday excursions organised in parts of the country such as mine, where people offer services in a number of picturesque areas —say 10, 15, 20 or 40 miles away from the passengers' main residence during a holiday—are derestricted under the express licence regulations? Clearly, it could not be described as "express", but certainly the passengers, at one time on the trip, may be more than 30 miles away wrom where they started. Will that sort of service be derestricted under the Bill?
      Mr. Fowler: The short answer is that if the journey itself is over 30 miles, an express service, it would be outside the restrictions, but there are different derestrictions in the case of excursions and tours. I should need to look at the question in detail if the hon. Gentleman has a particular point, but my straight answer is that I believe that what he is saying would be outside the powers of the traffic commissioners.

      973
      Therefore, it is for operators and county councils to take an objective look at the patterns of cross-subsidisation that occur. I think, however, that it is not right to become obsessed with the subject of cross-subsidisation.
      Mr. Penhaligon: I am sorry to persist, but it is clearly stated in the regulations outlining the provisions that a person must be set down 30 miles from where he started. The irony of these particular trips is that the passenger is set down precisely where he started from, in exactly the same spot. I am wondering, therefore, whether that is covered by the express service definition.
      Mr. Fowler: As long as any point from which the passenger is taken is 30 miles away, that would take him ouside the ambit of the commissioners.
      Mr. Penhaligon: It does not say that.
      Mr. Fowler: With respect, it does say that. Also, with respect, the hon. Gentleman served on the Committee on the Bill and we have been debating it for about 110 hours. I shall not embarrass the hon. Gentleman by pointing out the time he spent on it during the Committee stage.
      Therefore, the greater competition that I hope to see within local services will be a better spur to improving the services and efficiency than automatic and ever-increasing reliance on subsidy. But I beg the House to understand that, when it comes to the question of express services, I hope that there is now, as I believe there was, the start of an agreement, when we were talking in Committee, and that the fact that we are derestricting these important inter-city services—the services between London and Birmingham, and between London and Manchester, intercity services of that kind—is something that is totally in the interests of the public. We look forward to new operators coming forward on these routes and providing low-cost transportation for the public.
      That, I believe, is in the interests of the travelling public. That is what we judge the criteria of the Bill to be.
      Mr. Dobson: As a new Member, it strikes me that the response of Oppositions faced with Government measures falls into two categories. They either
      974
      denounce them as being likely to have the most far-reaching and disastrous effects or, alternatively, they say that the Minister concerned is leading people on into believing that what he is introducing will have a dramatic effect, when it will have practically no effect at all.
      In an effort to resolve that problem for myself today, I think I can say that the delicensing provisions of the Bill will probably achieve both of those things, because it seems fairly likely that there will be parts of the country which will be very adversely affected by the delicensing measures and parts where there are scarcely any effects at all. I am prepared to concede that on a certain number of what may be described as privileged routes there will be services that will be improved as a result in an increase in the number of operators and, consequently, an increase in the number of services.
      I had not intended to speak until I heard the Minister refer to the boss of the express division of the National Bus Company saying that such competition was a spur, not a threat. Prior to that, I heard the Minister say that we should consider not the interests of various pressure groups, such as the management, unions and so on, but those of the travelling public. I can understand why the man from the express division does not regard the delicensing of the express services as a threat to that part of the company for which he is responsible. It is likely that the National Bus Company will respond to the new situation by concentrating a great deal of effort on the profitable express services.
      I do not know what the NBC will do with the services that are not on express routes and are no longer profitable and no longer capable of being subsidised from the profits of the express services. The manager of the express division may loom larger in the hierarchy of the National Bus Company as a result of the proposals.
      Mr. Fry: Is not the hon. Gentleman aware that the National Bus Company operates under various headings? It is hardly likely that express services will subsidise the operations of one of the company's sub-divisions. Although we can talk about the overall profitability of that company, the hon. Gentleman's recent remarks tend to mislead the House.
      Mr. Dobson: I had not intended to mislead the House. I rely on the clause put forward by my right hon. and hon. Friends. It refers to the element of cross-subsidisation with transport supplementary grant or to a route upon which there is a cross-subsidy under a passenger transport policy network agreement. Perhaps I did not make clear that some areas may benefit from the Government's proposals. However, others will not. I tried to make a distinction. The clause seeks to protect those which are affected by the transport supplementary grant and by cross-subsidies under the passenger transport policy network agreements. I therefore do not accept the hon. Gentleman's point.
      Mr. Fry: If the hon. Gentleman refers to Hansard, he will discover that he said that it was the express services of the National Bus Company that would subsidise other bus services. As I said in my speech, it is possible that some express services may affect more services, but the National Bus Company operates through separate companies and those companies are accounted as such. As a result, the hon. Gentleman's forecast will prove incorrect.
      Mr. Dobson: I accept that technical point. Nevertheless, the express services of the constituent parts of the National Bus Company will probably loom larger in the activities of the National Bus Company. The provision of rural services by that company will probably loom much smaller. Those waiting in country lanes for a bus to appear in the distance will probably have to wait much longer as a result of the proposal. Services will become less frequent.
      The same applies to the new contract carriage services. The Minister upbraided my right hon. Friend for wishing to extend coverage to contract carriage services. He would be right to upbraid us if we had wished to extend the limitation to contract services of the type already discussed. However, if one considers the contract carriage services that are to be provided by clubs or by those who club together allegedly to look after themselves, we can see that they will have an impact on those services. It is a matter of dispute whether that impact will be favourable or adverse.
      976
      On Second Reading and in Committee we were concerned about protecting the bus network, particularly in rural areas. The Minister said that he would retain licensing in rural areas as that would help to preserve the network. If that is what he means, logic requires him to maintain a licensing system, or consultation with traffic commissioners, on those parts of the express system that are covered by TSG or provide an element of cross-subsidy for the rural network. The Minister conceded that that network needed protection in the form of licensing. However, he will chuck away part of that licensing. As a result, part of the provision of cross-subsidy from the express services into the rural services will be taken away. That is plain daft. It does not follow the logic of maintaining licensing for rural services.
      5.15 pm
      We therefore return to the fundamental question of whether a free-for-all in certain parts of the country will benefit the bulk of customers. We do not believe that it will. The Minister and his colleagues apparently hold a different view. However, there is little evidence that this burst of free enterprise on profitable routes will favourably affect the provision of services in rural areas. Those networks are already thin on the ground. We repeated one point ad nauseam in Committee. I hope that I shall not nauseate too many hon. Members if I repeat it this evening. The existing network of rural services is, on the whole, maintained by one form of subsidy or another. Such subsidies come from the taxpayer, the ratepayer or other users of the bus routes that pay. Rural networks cannot pay. Anything that lessens these subsidies to rural networks will damage them.
      The categories of express service and contract service that are mentioned in new clause 6 are involved in the cross-subsidy system. They should remain there. That provision should continue, to the benefit of the most deprived areas. We all accept that some routes may have four or five express coaches travelling on them each day. As a result of competition or of an additional operator, such routes may be used by five, six or seven coaches a day. Perhaps that would benefit those travelling on such routes. Such an occurrence may not prevail for long. However, it may pay and benefit the users on that

      977
      limited number of high-paying express routes. If the clause is not accepted, that change—which may be beneficial in the area concerned—will damage rural networks.
      Mr. Cowans rose—
      Mr. Deputy Speaker (Mr. Bernard Weatherill): The hon. Gentleman has already spoken. He cannot speak twice on Report.
      Mr. Booth: I am greatly concerned, because the Minister has totally misunderstood the new clause. He has opposed it on the ground that it will tend to defend and maintain the existing system and he envisages a superior system emerging as a result of the Bill. We can have many arguments about the effects of the new clause, but it cannot be argued that it will maintain the existing system. It will not. If we had wanted to put down a new clause to maintain the existing system, we should have done so. We have not chosen to do that.
      We recognise that the Minister has a majority in the House and that he can therefore introduce a different type of contract carriage operation that will enable operators to run bus services over short distances within urban and rural areas on a regular basis—for example, every Monday to Friday at nine o'clock in the morning and five o'clock at night. That will be possible under the contract carriage provisions in the Bill.
      The new clause does not take that power away. It does not change the definition of "contract carriage". It provides only that a test—not a prohibition—shall be applied where a new type of service is introduced into an area not currently served under networking agreements or TSG support. Where the service is introduced on a route presently served under a road service licence, a test should be applied by the traffic commissioner who previously decided to grant a road service licence. When granting the licence, he believed that it would enable a service to be operated in the public interest. He decided that without any knowledge of any new contract carriage operations being introduced.
      If somebody proposes to introduce a new service, a new decision must be made by the traffic commissioner about
      978
      whether it is in the public interest. That should operate only in cases where the traffic commissioner has to take into account whether that licence affects the degree of cross-subsidy in his area. The Minister cannot deny that the commissioner may have specified special conditions on the licence to maintain a certain level of public service within the area. The licence should be issued subject to those conditions.
      When the new contract carriage service is introduced those conditions may not apply, because there may no longer be any need for a degree of cross-subsidy. That is what the Minister and his colleagues want. Someone may be prepared to operate a contract carriage system that will relieve the need for a cross-subsidy.
      We think that such operators will come forward only on the highly profitable routes to cream off the profits. However, we do not know that that will be the case. We are speculating and making intelligent judgments about a service that has not existed for the past half century.
      We are not trying to change the provisions in the Bill. We are saying that where a contract carriage operator wishes to operate on a route where a road service licence has been issued and a cross-subsidy exists, the commissioner should consider the case. It is a matter of establishing protections for the road service licence holder.
      Mr. Leslie Spriggs: How would my right hon. Friend advise the Secretary of State to divide the services between the new operators, or the express operators, and the present licensed carriers? It is likely that a new operator will pick the most lucrative routes in the network. How can an unfair distribution of routes in the network be avoided?
      Mr. Booth: I shall try to answer those points later. At this stage I shall deal only with the one affected by contract carriage. If I were seeking to advise the Minister, I should tell him that the new system should operate only in those areas where its introduction would not damage the public interest, namely, where people were already operating subject to conditions of road service licence or with the aid of a cross-subsidy or TSG. In those areas the matter should be considered by the responsible authority. In the case of a cross-subsidy, it should be considered

      979
      by the traffic commissioner. In the case of a TSG, it would be a matter for the local authority which made the grant.
      Mr. Fry: I understand the intention behind the new clause. I am not unsympathetic to it. Does the right hon. Gentleman accept that the way in which it is phrased will give rise to an enormous number of applications to the traffic commissioners, because a large number of routes are subsidised? For example, let us consider an express service between London and Manchester. For part of its journey it would run over part of the London Transport ordinary bus system. To refer that application to the traffic commissioner would create an enormous amount of bureaucracy and do nothing to help the freeing of public transport from bureaucratic interference, which many of us feel is necessary.
      Mr. Booth: It will lead to a great deal of additional work for traffic commissioners only if people seek to run contract carriage operations on routes that are presently subject to road service licences, to either cross-subsidy or TSG, or to a combination of both. It is my fear that some new operators will cut across those elements of the road service licence routes that provide substantial cross-subsidies. They may cover parts of routes at times that are profitable, leaving the remainder to be covered by an operator who is complying with a public interest requirement. The House gave the traffic commissioners the job of judging whether issuing a licence subject to certain conditions was in the public interest.
      On the contract carriage aspect of the new clause, the Minister is not entitled to claim that he is defending the existing position. We are attempting to write into the legislation a check on the first phase of a new type of operation but one that does not preclude its introduction.
      5.30 pm
      Mr. Kenneth Clarke: I am not sure what the right hon. Gentleman's policy is. His new clause reads as if it refers to giving protection, against the new contract carriages, either to those services supported by transport supplementary grant or to those which are cross-subsidised. Therefore, on the face of it, I thought that his new clause said that the traffic commissioners should be consulted if a new work service or a school bus under
      980
      contract carriage arrangements competed with a loss-making service which was either receiving revenue support or being cross-subsidised. Now, he seems to be changing his mind and extending the new clause to a great extent. He seems to be claiming that a service should be referred to the traffic commissioners if it is receiving revenue support—that is, if it is loss-making—or if it is profit-making and is cross-subsidising other services. It seems as if the right hon. Gentleman, in his beguiling way, wants to go to the traffic commissioners over every bus service that one can imagine. If that is the case, he is seeking to undermine the whole policy of the Bill.
      Mr. Booth: It could be that certain operators who wanted to operate contract carriage services would have to go to a commissioner or to a local authority if they wanted to operate on a route already covered by either a loss-maker or a profit-maker. That is true. The limitations are such as to safeguard the wider public interest.
      It might well be that a contract carriage operator could persuade a local authority, and the local authority could quite reasonably agree, that he should cover part of an operation. In fact, the operator could persuade the local authority that considerable public good could result from having another operator on the route at a particular time. It would be for the local authority to judge whether the contract carriage operator was undermining an element of its profit, so that it would have to put back a large part of what he was taking out in order to sustain the route.
      I am not evading the issue. Under the terms of the clause it could well be that a certain operator might have to go to a local authority because he was seeking to operate on a profitable route, and in other circumstances an operator might have to go to the authority because he was seeking to operate on an unprofitable route. However, I stress that in those two cases the local authority's response would not necessarily be the same. It might welcome certain arrangements being made in certain circumstances.
      In Committee it was pointed out that one of the complaints that one received from certain authorities about the running of their services was that they had to maintain an unduly large fleet in order

      981
      to cover certain peak hours. There might well be a case in the minds of those authorities for having another operator lifting some of the peak load from their shoulders so that the rest of the service load was capable of being covered by a smaller fleet.
      There are many aspects of this matter that must be considered. These things cannot be determined by the House. They must be determined by local authorities, the operators and, in some cases, the commissioners with their detailed and intimate knowledge of the problems of the area concerned.
      The other issue that is covered by the clause is that of express bus services. Here again, there is room for reappraisal. I agree with the Minister that there are some cases in which people may be better served by two or three operators competing for a bus service running from A to B. However, that would be in circumstances which paid no regard to those living in areas between A and B which were currently being served by a single operator who was prepared to stop at various points between A and B. On a 30-mile journey at present, many operators are prepared to stop 10 or 12 times at places where they can pick up or put down passengers.
      The issue at stake is whether that service could be sustained if, at certain times, another operator ran a service which went straight from A to B without stopping but took part of that route's traffic. In an ideal world where no financial considerations applied and there was as much money to support public transport services as operators could wish for, we would love to have an express operator from A to B alongside another operator stopping a dozen times between A and B. That would mean that both needs would be served. But the reality of the financial position of many operators is such that in certain parts of the country there is a genuine fear that such an ideal might not be possible. If there is competition between A and B, where the express operator is subject to no licensing procedure whatsoever, and at the same time a stopping service operator between A and B is subject to the ruling of the commissioners, who have to decide in terms of public interest, the commissioners' role becomes unrealistic. It
      982
      is unrealistic for a commissioner to judge upon a situation in which there is no possible choice.
      It is possible that someone will come to a commissioner for a variation of the conditions of his road service licence in order to cut down the number of places at which he stops between A and B because he can no longer compete with the express merchant. He may seek a variation of the conditions of his licence so that he has to stop at only two places. That may well be the kind of decision that will come to the traffic commissioner. Under the terms of the Bill, the traffic commissioner cannot have any opportunity of considering the effects on that service and on the public interest. Therefore, it is proper for the new clause to say that where the effect of introducing new express carriage operations is such as to impinge—and only where it is such as to impinge—on network agreements or cross-subsidy arrangements, the commissioner should have a chance to look at the issue again. That is an important proposition.
      I urge one further consideration. We do not have a rigid, inflexible system in this country. Traffic commissioners do not meet week in week out, and month in month out, in order to turn down new applications. All the evidence that I have shows that there is a considerable degree of flexibility in the present situation. Many new road service licences are granted from year to year for all sorts of different services. Also, up and down the country there are a number of county authorities which are only too willing to look at alternative arrangements for passenger transport services in their areas if by any change there is a chance of improving the service or introducing new services. Therefore, the position is not rigid or sterile.
      There is great possibility for improvement or change, given a realistic appraisal of the delicate balance between the amount of public money that is put in and the extent to which those who are operating are prepared to do so in a way that will maximise the service rather than individual profit. It was basically to try to combine those considerations, and bearing in mind the Government's determination to introduce new services, that the clause was tabled.
      Mr. Penhaligon rose—
      Mr. Deputy Speaker: Order. It will be in order for the hon. Member for Truro (Mr. Penhaligon) to make a speech, but, as the Minister has replied to the debate, the hon. Gentleman may get an answer.
      Mr. Penhaligon: That is a disappointment. I thank the right hon. Member for Barrow-in-Furness (Mr. Booth) for this interest in rural areas, but I wish to rebut much of what he said.
      It is not true that rural transport survives on a system of cross-subsidies. Tragically, virtually no bus routes in rural areas make a profit. The question facing the Government, in considering whether there is to be a transport system in those areas over the next five or eight years, is how much money they are prepared to pour in.
      We face a desperately difficult problem on which some difficult decisions will have to be made. I hope that the Government will put in money, otherwise a ludicrous number of people will be more isolated in their home communities than they have been at any time in the past 100 years.
      Mr. Fowler: The hon. Gentleman's opening remarks were correct, and it is right that the House should be reminded of the situation that he outlined, but does he not agree that it is a matter not just of the amount of money but of getting value out of the investment that local authorities make?
      Mr. Penhaligon: I accept that. Value for money is always a major concern, but I warn the Minister that it will cost quite a lot of money, whether he gets value for it or not, to keep going rural bus services in a county such as Cornwall where there are 100 recognised routes of which only two make a profit. Five or six routes break even—and on the slide rule aproach might make a small profit or loss—while many routes lose a lot of money.
      M. Prescott: I took a particular interest in Cornwall during the Committee proceedings. It is clear that only one or two of the NBC routes are profitable and that the non-profitable routes are subsidised from the transport supplementary grant.
      Of course, when the bus company approaches local authorities for assistance
      984
      from the grant, the authorities usually require that money made on the profitable routes should be ploughed back into non-profitable routes before the deficit on operating costs is made up from the grant.
      Mr. Penhaligon: I do not deny that. There is some significance in that point, but it does not carry the weight that the hon. Gentleman and his right hon. Friend the Member for Barrow-in-Furness attached to it.
      There is only one profitable bus route in Cornwall, that between Camborne and Redruth, neither of which is in my constituency. Those towns are about four miles apart and a single bus travelling endlessly from one to the other could be quite a profitable operation. I can think of no other bus route of which that could be said.
      The right hon. Member for Barrow-in-Furness argued that the end-to-end merchants—a good description—on the 30-mile routes would take passengers from the stage carriage routes. I doubt that. The Bill refers to 30 miles in a straight line. No one could claim that the roads in Cornwall are anything approaching a straight line, and a 30-mile distance as the crow flies would involve a stage carriage route of about 35 miles.
      I should be interested to know how many people in Cornwall, Devon or other rural areas use stage carriages for journeys of 30 miles in a straight line. I suggest that it is incredibly few. Anyone contemplating such a journey would need to have an enormous amount of time to spare.
      For example, the journey from Penzance to St. Austell is more than 30 miles as the crow flies and the journey time is about three hours. Fortunately, there is still a train service between those towns and anyone making that trip takes the train.
      The amount of business that will be taken away by the end-to-end merchants will be remarkably small, though I must tell the Minister that the number of people who will operate such 30-mile routes in my area will also be remarkably small. I cannot think of a single such route on which a profit is made.
      I am concerned about one form of cross-subsidy in the South-West which may be ended. Many private operators in

      985
      counties with a large tourist industry survive because of the lucrative trade for 10 or 12 weeks in the middle of the summer when they take thousands of visitors to seaside resorts and places of interest. There is no doubt that, as the Minister said, those who go beyond the 30 miles in a straight line from where they started will operate on an unlicensed basis. A number of operators in Cornwall point out that they survive because of the business of those few weeks, which, by chance, come at the time when there is no school transport business.
      5.45 pm
      For those few weeks they can operate profitably and keep a substantial fleet on the road, and that enables them to keep in business for the rest of the year a fleet of a size that they would not otherwise be able to operate. Under the present licensing system, all the coaches that flood into the South-West bringing tourists from Birmingham, London, Manchester and elsewhere are not allowed to operate journeys over 30 miles in my area unless they have a licence. In effect, the coaches cannot be used during the week and cannot ply for business on a trip from, say, New-quay to Land's End—a trip that tourists always insist on taking, though I cannot understand why.
      The operators in my constituency are worried that they will lose that sort of business to the tourist coaches, because they will ply for hire on the few routes that are more than 30 miles as the crow flies from the starting point.
      Mr. Fry: Surely, coaches from Manchester which deposit people in Cornwall usually take back the holidaymakers whom they left there the week before. Is not the hon. Gentleman exaggerating the risk?
      Mr. Penhaligon: I am not making the point that strongly, but what the hon. Gentleman says is not wholly true. I could take him to car parks in Cornwall in the middle of the week where he could see an apparently endless sea of coaches. I am sometimes amazed at how many coaches there are in this country, judged on the evidence of a few weeks in the summer.
      Newquay is the main tourist resort in Cornwall. The native population is no more than 14,000, but in the middle of
      986
      August there are perhaps 180,000 people in the town. In mid-week periods, there are coaches in Newquay with nothing to do and the local operators, who keep the private end of our transport system in being, are worried that the operators of those coaches will ply for hire in competition with the local operators in trips from Newquay to Land's End. The driver of the tourist coach is paid for the week and the coach has been hired for that time. The marginal operating costs of such a coach would be small and its operator would be able to undercut local services, at least on longer day excursions. I should be disappointed if that happened. The new clause would be a sledgehammer to crack a nut, and I believe that the substitution of 40 miles for the 30 miles in the Bill would remove many of the problems.
      Operators in the South-West have continually put the problem to me. I did not foresee it when the Bill was published. On the whole, the proposals outlined by the Government are reasonable and will do no harm, though only time will tell what good they will do. I mention that isolated example of cross-subsidy in the South-West because it can make a useful contribution to the transport system of the area. I shall not vote for the new clause, because it is too complicated to be true, but I ask the Minister to look at the problem that I have raised and consider whether there is some way of protecting that small industry.
      Mr. D. N. Campbell-Savours: I had hoped to be allowed to serve on the Committee that considered the Transport Bill, but I was put on the Competition Bill Committee and was therefore unable to take part in the Committee's consideration of the Bill before us.
      My right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) adequately argued certain aspects of the matter covered by the new clause and referred in Committee to a problem in his constituency. I wish to draw attention to a problem in my constituency stemming directly from the passage of the Bill through the House. The problem is causing considerable disquiet in West Cumbria among the travelling public, among the trade unions, which recognise the dangers embodied in the Bill, and among the employees of Cumberland

      987
      Motor Services, who are worried about the passage of the Bill. The problem relates to the trial area aspects of the Bill, although this matter is to be dealt with in a further new clause, and the operation of new licences.
      I cannot understand why great armies of lion. Members are not manning the Conservative Benches. Without the new clause that we wish to insert, the Bill will have a major effect on Conservative constituencies that enjoy cross-subsidised rural transport. I am at a loss to understand why only nine or a dozen Conservative Members are present. Following the defeat of a certain clause in the Education (No. 2) Bill in the House of Lords, one wonders whether those same noble Lords who joined together to defend the interests of the constituents of Conservative Members—namely, those in rural areas—will join together to defeat this aspect of this Bill. The same people will be affected by the absence of the new clause if the House fails to carry it.
      In my constituency of Workington, Cumberland Motor Services operates in the area of Allerdale and Copeland. My constituency covers a number of rural communities and small towns. In my conversations with officers of the transport authorities and members of trade unions involved in transport in West Cumbria, I have established that only 50 per cent. of routes in the area are profitable. I wish to draw to the attention of the House those routes that are profitable. I want the Government to inform the county authority what is to happen to the rural routes that do not produce a profit. The authority has a legitimate right to know from where the money is to come to fund those routes. The public also have a right to know what services will be available to ensure their safe passage to major conurbations for shopping.
      The Whitehaven-Workington, Workington-Maryport, Whitehaven-Carlisle and Keswick-Whitehaven routes, which pass through my constituency, are profitable, but all the public transport provision between the villages and small towns of Aspatria, Brigham, Broughton Moor, Ireby, Bothel, Lamplugh, Deanscales and a number of small communities and villages is losing money. We want to know what action the Government will take to ensure that those routes are pre-
      988
      served. We do not believe that it is possible that any enterprising young operator will move in and put some transport—
      Mr. Kenneth Clarke: An Adjournment debate would probably be more suitable for what the hon. Gentleman has in mind. We have had the pleasure of meeting the Cumbria county council. Its nonprofit-making rural routes will be supported, like others, by revenue support and transport supplementary grant. They are not adversely affected by the Bill. The county council, like other shire counties, was reassured by the generous treatment which, even in these difficult times, we were able to give to shire counties in the award of transport supplementary grant for this purpose this year.
      Mr. Campbell-Savours: The hon. Gentleman seeks to reassure me. I am told that for 1981 the transport undertaking in West Cumbria is having to bid £600,000, in conjunction with profits, through cross-subsidisation, to subsidise the routes that are not making a profit. Is the hon. Gentleman suggesting that additional money will be made available through the subsidy system to ensure that those rural routes are preserved? I am asking the hon. Gentleman to tell the House and my constituents that all those rural routes will be 100 per cent. protected under the provisions of the Bill.
      We are basically talking about whether the Government are willing to underwrite any added losses that may stem from the loss of profitable routes by the semi-municipal undertaking. It seems that the county Conservatives are on the horns of a dilemma. They have to decide whether to back their political prejudice and carry the Bill through all its stages, ensuring that the ratepayers, or the taxpayers, are asked to pick up the ticket at the end of the day, or to fight the Bill by impressing on noble Lords the need for their support for amendments to the Bill.
      I must appeal to my constituents from this Chamber. I am informed that the districts of Allerdale and Copeland in West Cumbria are under consideration as trial areas, to which I referred. This may be a matter to be dealt with under the next new clause, but I can adequately refer to it now. It is part of the general argument. I am told that meetings are to be convened in the near future. I say to

      989
      my constituents from the Floor of the House that once again, in the spirit of previous petitioning, they must petition the county authority to ensure that Copeland and Allerdale are not designated as trial areas.
      Mr. Deputy Speaker: Order. The hon. Gentleman is now moving on to the next amendment. He must relate his remarks to new clause 6. This may be an important matter, but the House is debating new clause 6.
      Mr. Campbell-Savours: I shall therefore move on, Mr. Deputy Speaker—
      Mr. Booth: If it is the case that the Cumbria authority, in which both my hon. Friend and I have an interest since it is the area in which our constituencies are situated, was reassured by the allocation of transport grant, has the county informed my hon. Friend—it has not informed me—of the extent to which it is alarmed by the provision in the local Government, Planning and Land (No. 2) Bill that gives the Minister power to withdraw the transport supplementary grant?
      Mr. Kenneth Clarke: Before the hon. Member for Workington (Mr. Campbell-Savours) leaves this matter, may I put a point to him? He is obviously addressing his constituents, and there is a danger that some of his old buck will appear in local newspapers. Will he also inform his constituents that, at the moment, services are supported by revenue support backed by transport supplementary grant? This Government have dealt generously with the shire counties and will, within the limits of financial circumstances, continue to do so. The effect of a trial area will be not to remove that revenue support but to facilitate new operators coming in, if such new operators are available, and to extend the variety of services that might be available in rural and other areas of the county. It is a balanced judgment. I
      do not believe that the hon. Gentleman has gone into the matter sufficiently to make a balanced judgment.
      Mr. Campbell-Savours: Is the hon. Gentleman seeking to reassure my constituents that those rural services will not be affected by the introduction of trial area designation to West Cumbria?
      Mr. Deputy Speaker: Order. Let us stick to new clause 6. It has nothing to do with trial areas.
      Mr. Campbell-Savours: I should like to discover from the Minister what will happen to undertakings in counties such as Cumbria if certain routes are removed from the municipal undertakings and given to private enterprise.
      Mr. Kenneth Clarke: They will not be removed.
      Mr. Campbell-Savours: The Minister says that they will not be removed. Is he suggesting that the advent of new competition on the profitable routes will have no effect on the revenue of Cumberland Motor Services? If so, will he give us this undertaking once again? I am trying to establish the effect of the clause on the transport services in my constituency.
      Is the Minister also aware that many transport undertakings are asking what will happen if these new entrepreneurs find that they cannot effectively manage routes or maintain the services required? Will the municipal undertakings then be required to move in and re-establish their services? Has the Minister thought out the implications for municipal undertakings if that be the case? Will he answer that question in the light of the problems that he knows exist in my constituency?
      Question put, That the clause be read a second time:—
      The Committee divided: Ayes 151, Noes 194.
      Question accordingly negatived.

    New Clause 7

      EXEMPTION FROM DUTY TO CO-OPERATE IN TRIAL AREAS
      '(1) Within a trial area the duty of public passenger transport operators to co-operate with one another and with local authorities and to provide information in respect of their operators shall not apply.
      (2) The duty referred to in subsection (1) is that specified in—

      (a) section 24 of the Transport Act 1968 (in passenger transport areas);

      (b) section 151 of the Local Government (Scotland) Act 1973 (in Scotland otherwise than in a passenger transport area);

      (c) section 1 of the Transport Act 1978 (in non-metropolitan counties in England and Wales).

      (3) Section 3(5) of the Transport Act 1978 shall not have effect within a trial area.'.—[Mr. Prescott.]
      Brought up, and read the First time.
      Mr. Prescott: I beg to move, That the clause be read a Second time.
      We come to the debate on trial areas. The clause is limited to the specific aspect of the duties imposed by other legislation on bus service operators in trial areas. The Transport Act 1968, the Local Government Act 1973 and the Transport Act 1978 impose upon transport operators certain duties which the Opposition believe are in conflict with the concept of the bus services that will be operated in designated trial areas. The purpose of the clause is to consider those duties and suggest to the Government that the acceptance of these duties in a trial
      994
      area will impose considerable difficulties upon the remaining bus service operators in that area. It is a matter of judgment what kind of bus service will remain in trial areas, and there is a distinctive and qualitative difference of opinion between Conservative and Labour Members about the consequential effect on bus services of the designation of trial areas.
      We must wait to see what happens, but our judgment is that the imposition of these duties in trial areas will be detrimental. Bus operators are being asked to compete rather than to co-operate, and we seek reconsideration of the duties to be imposed. Bearing in mind all the obligations in this legislation, which changes fundamentally the nature of obligations and systems in bus service operation, it is our view that the whole of Britain will become a trial area. However, I shall keep primarily to the definition of "designated trial areas" as contained in the Bill, the general conditions that will apply and the conditions of competition that form part of the experiment.
      6.15 pm
      The concept of experiment is at the heart of the trial areas scheme. Almost by definition, a trial area is one in which one seeks to impose different criteria in an attempt to assess the consequences. We should make it clear from the start that the attitude of the Opposition—as of previous Labour Governments —is that we recognise that experiments are necessary in areas where it has been difficult to maintain regular passenger bus services. At the heart of the 1978

      995
      Act lay the case for introducing experiments. In 14 or 16 areas they became known as the Routex experiments. Experiments were tried out that were not allowed under the existing licensing arrangements. Those experiments included the sharing of cars and minibuses, under which there were certain exemptions on driver conditions and bus operation conditions.
      I want to make it clear that we are not against experimenting with new methods. However, the difference in our approach from that of the Government is that we wish to maintain what exists while carrying out experiments. The system that we envisaged under the 1978 legislation—despite its limitations and the criticism that it attracted—provided a public transport network. It provided services in rural areas while allowing experiments to take place. We felt that the safeguard of commissioner licensing, the maintenance of public service licensing, cross-subsidisation, the transport supplementary grant and the development of transport plans—and now the duties related to legislation as outlined in the new clause—all helped to maintain a service on which people could rely. Experiments in those areas were possible at the same time.
      I visited a number of those areas, particularly in North Yorkshire, where experiments were attempted, and it is not clear what conclusions to draw from those experiments. I have seen a report produced by the Transport and Road Research Laboratory. It offers no conclusion. If anything, it says that we had better maintain the public service system because there is insufficient information on which to recommend an extension of experimental systems at present. The Opposition have been in favour of experiments from the outset, but only alongside the provision of a public service as well.
      The definition of a trial area is spelt out in the Bill. Such an area is one where there is no requirement for licensing and where the full force of competition will apply. I presume that it is the kind of free enterprise area that is spoken of in the Government's economic policies. However, the full force of competition will not apply. The competition will be organised because, to an extent, there is a desire to see some elements of coordination. Timetables and a notice
      996
      clause will be provided. That means that one cannot immediately begin or end a service under the terms of the Bill. I assume, however, that if a firm goes bankrupt overnight no one will insist that that firm carries on because it has an obligation.
      I understand the Bill to provide that where a service is to cease it will not be allowed to do so immediately but will have to continue for a specified period. I am not sure how long that period will be. The designation order refers to three weeks, and I believe that the regulation will spell that out in detail. Will the Minister tell us what sort of time span he has in mind in respect, for example, of existing bus services in a designated area? The burden of our approach is that operators will seek to pull out because the services will prove uneconomic, given that they will cease to receive transport supplementary grant and the benefit of cross-subsidisation.
      This is not an academic point. I believe that 80 or 90 per cent. of the rural services operated by the National Bus Company are likely to come into this category. Indeed, the restriction of TSG by the county authority has led in the areas affected to a direct reduction of services. The economic pressures of operating costs may well therefore lead to bus companies taking the inevitable commercial decision that they cannot maintain services with restricted support.
      If the service were to be forced to operate for a month or two after it wished to cease, that would impose a further penalty on the bus company, since it would have to operate for that period without compensation. It is interesting to see how the Bill will apply when a designated area is discontinued. If the Government felt after two years that the system was collapsing and that services were not being maintained, the Minister could state that the designation order would be revoked or altered. If it were revoked, operators who were still maintaining services in the designated area would presumably be compensated by the automatic award of a road service licence on the ground that if they had invested in bus services on the basis of trial area schemes they should not be penalised by being put out of business just because they did not have road service licences before the schemes were

      997
      introduced. The aim should surely be not to disadvantage operators.
      That is not the attitude adopted towards the nationalised sector, which will be required to maintain services in these areas without compensation in that way. But that is probably not the only way in which the Bill treats the private and public sectors differently. The trial areas seem to involve the development of organised competition, with order being introduced by way of timetables and the giving of notice.
      It would be easier for us to address specific arguments on this issue if we knew which areas were likely to apply for trial area status. We have to rely on the general information given by the Minister, who said only that there had been 12 applicants. We do not know whether those applicants are in respect of whole areas or parts of them. We do not know whether Tory councils want to designate Labour districts. All that is possible under the Bill. Our job of assessment would be easier if we knew which type of county authority was applying and the transport demands upon it. The publication the Surveyor looked at the 12 areas likely to apply to become trial areas and found that they were the very authorities that spent less per head of the population on transport than the county authority average. They were the authorities that gave a low priority to a public transport system. That factor causes us concern and alarm.
      In Committee the Minister made it clear that his policy did not necessarily mean that if eight or nine authorities survived the various checks and balances they would all necessarily be granted this new status. His attitude was that he would not grant trial area status just because they wanted it. Instead, only two or three of the applicant areas would succeed. Transport operators and transport planning officers in county authorities have often explained to me that the distinctive factor in transport is that no two areas are alike. Therefore, if trial areas were allowed on a broader basis, the scheme could be more effectively monitored. With more areas, the quality of the data used to make an assessment would be higher. However, I do not press that argument too hard, because if, as I believe, the trial areas scheme is a disaster, it would
      998
      be better if the disaster were restricted to only two or three areas.
      Has the Minister decided whether two or three areas will be designated, and will he name the areas that have applied? It is important for us to know that, so that we may see whether our individual county authorities are among them. I have asked my authority on Humberside whether it has applied, but it has quickly run away from the whole idea. Some authorities were attracted to the scheme because they thought that they would become licensing authorities in the way that the commissioners are. They soon learnt, however, that that was not to be. Their only role was to be in designating part or all of their areas as trial areas—that is, areas in which a road service licence was unnecessary.
      The scheme will inevitably lead to controversy, especially since only the county authority will be eligible to apply. The authority may consult a number of bodies, and is requested to do so. I understand that within three weeks of notice having been given in the press all evidence received is to be attached to the designation order so that the Minister can determine how much opposition there is to the scheme.
      The district authorities are incensed by the whole business. The Minister said in Committee that he would not be put off by the district authorities which have a vested interest and which might not necessarily know what was good for them.
      Mr. Fowler: I did not say that.
      Mr. Prescott: No, the Minister did not say that, but his words were to that effect. He said, however, that the experiment would require a courageous approach and that he would bear that in mind in deciding on the applications. Forty of the 50 or so county authorities are themselves bus undertakings and they have a great deal of expertise in the business. They are well aware of where their own best interests lie. Tory and Labour districts alike agree that they do not want trial area status imposed upon them against their wishes by the county authority, with the Minister's endorsement. To that extent it is a controversial argument.
      It will help the House if the Minister will indicate which county authorities he is likely to designate. Who are the favourite runners? Which counties are

      999
      likely to be chosen to lead the way into this new era of free enterprise? We need that information so that we can make a proper assessment of the problem.
      The Minister is aware that some county authorities have no transport operating abilities. Some Conservative-controlled authorities—for example, in the North—will have responsibility over a number of Labour-controlled district authorities. Their attitudes to subsidies and support are clearly different and will lead to controversy. The local authority in my area is a classic example. The Government gave a TSG to the county authority, but my district authority has not received a penny of it. To be correct, it received £40,000 that was left over out of £1 million. The county authority was embarrassed by that sum and gave it to the corporation's largest district operator. An application was made by the district, but the county authority disagreed with its bus policy and, therefore, did not allow it the TSG. There is a recipe for considerable controversy on strong political lines between county and districts, of whatever political colour, and certainly between districts of different political colours within a county authority.
      6.30 pm
      We fear that that will have a disastrous effect on the trial areas. It is a matter of judgment whether that will happen, but it is common criticism that this attack will affect the cross-subsidisation argument. Cross-subsidisation is an essential feature of the network concept. There was much discussion in Committee and on new clause 6 about the concept of cross-subsidisation. It is an important economic means by which responsibility is matched to the duties imposed on local authorities. New clause 7 refers to legislation that imposes duties on local authorities.
      Cros-subsidisation is a means by which a network system is maintained. It does not necessarily mean that the difference between costs and revenue is met out of the TSG. As a means of maintaining the network system, county authorities ask transport operators to provide a service from A to B, which they know is not remunerative, but they then help them by granting a bus service from C to D. That is a means by which county authorities—Tory or Labour—have attempted to main-
      1000
      tain a network service. Cross-subsidisation must be regarded not only as money from the Government but as money that is derived from profitable routes, with the counties making up the difference by means of the TSG.
      The idea of a network concept and cooperation is essential to this clause. It refers to duties imposed by previous Acts of Parliament. The Transport Act 1968 states that where any area has been designated under section 9(1) of the Act it shall be the duty of the bus companies to cooperate with one another in the reorganisation of bus services within, from and to that area, and for that purpose to enter into agreements as to the services to be provided by the company or group or the subsidiaries in or in connection with that area, and as to the terms on which those services are to be provided. Clearly, certain onerous duties are laid on the National Bus Company.
      The Local Government Act 1972 makes clear that it is the duty of the county council
      "To promote the provision of a co-ordinated and efficient system of public transport to meet the needs of the county and, for that purpose, to take such steps to promote the co-ordination, amalgamation and re-organisation of road passenger traffic transport undertakings in the county as appear to the county council to be desirable."
      Those words about responsibilities, duties and co-ordination are included in all the Acts referred to in the new clause.
      Under the Transport Act 1978 the metropolitan county councils were given further duties:
      "To develop policies that would promote the provision of a co-ordinated and efficient system of public passenger transport to meet the county's needs, and … to take such steps as the council think appropriate for promoting the co-ordination, amalgamation and re-organisation of road passenger transport undertakings."
      It further provided that all public transport service operators in the county and district were required
      "To co-operate with one another in the exercise and performance of their respective functions for the purpose of co-ordinating public passenger transport services."
      Those duties are specific, and it is the basic claim of transport operators that if they are expected to co-operate in the way suggested in the Bill and to provide information in the way requested in the Bill, they will be put at a disadvantage.

      1001
      We feel that the new Clause is realistic and that the duties embodied in previous legislation shoud be removed. Under that legislation, an operator is required to give information to the local authorities which could be used directly or indirectly against and to the detriment of the first operator. Can we really expect competition to be complementary to cooperation? Are they not antitheses of each other? Is competition the requirement to co-operate, or to compete against? I think that it is to compete against. If those factors are complementary to each other, it is because it is in the commercial interests of the operator who makes the decision and not because of any basic principle of cooperation that is imposed as a duty on operators.
      The Government seem to take the view that co-operation is against the public interest and that competition is the means by which the best co-operation is achieved. Therefore, we feel that the legislation referred to in the new clause should be repealed, since considerable difficulties will be imposed on the operators.
      In our view, the trial areas are the antithesis of the present policy, in which co-operation is a requirement and a duty, and the traffic commissioners have considerable powers to ensure that there is co-operation and integration. Competition will very much undermine that.
      We must consider carefully whether the imposition of a trial area will be against the interests of the people involved. One has to bear in mind here the opposition that one hears. Certainly the operators seem to be against it to a man. I recall what the Minister said in Committee:
      "When it comes down to it, the crucial people in the transport debate are not the operators but the travelling public."
      That is a fair point. It is said that the public are the best placed to judge in this case. But they cannot make their judgment until something has happened. The operator, at least, has a good idea of what is likely to happen and what the consequences may be. Perhaps a dispute between the two sides of the House will not be a matter of common knowledge to the public. In the main, the public tend to react when faced with the con-
      1002
      sequences of legislation rather than before.
      In these circumstances, one hopes that the electorate will look for protection to their elected representatives, in which case, presumably, in a district they will look to their district councillors. But, as we know, the views of the district authorities are likely to be overridden. I think that the Minister has now agreed, through certain amendments, that the views of districts may be taken into account in a context rather more important than just consultation. But when the thing has collapsed, when an order is to be revoked or varied, the district council may be dragged in and all it will be able to say will be "We told you what would happen." Perhaps that is some consolation, but it will not amount to much, I believe for the district authorities.
      The 50 municipal authorities to which I have referred are one important source of democratic opinion and, speaking through their association, they are to a man against the designation of trial areas, as I understand it. Perhaps we see here an overriding of the democratic expression of opinion. We have seen much the same in regard to school transport under the Education (No. 2) Bill. I cannot say that I am very happy to see another place determine what the democratic decision of this place should be, but we have to recognise that there was an overriding of the Government by their own supporters on the question of transport provision for education.
      The Government are trying to override the power of local authorities in education, and now we see the same being done in transport. In all these respects Conservative authorities are expressing considerable alarm, and they are at one with their Labour counterparts in the district authorities against the imposition of trial areas.
      There may well be an overriding of people's choice. I am sure that the Minister will say that people in the districts have representatives on the county authorities and we have now said that the authorities, and we have now said that the county authority should have respon-systems. That is a fair argument but for the fact that the counties, especially the shire counties, where the authorities are

      1003
      Tory-controlled, will overwhelmingly outvote any representations from district representatives, so there is no guarantee in that sense that people who have come to expect a level of service in district areas can be certain that that service will continue.
      We have heard Ministers attack the districts on occasion as being inefficient, but they have never specified any authority as being particularly inefficient and over-protected. The Parliamentary Secretary was directly challenged to name one and refused to do so, and one can readily understand the political reasons which move him to keep away from that. But one cannot then say that the district authorities do not provide a good and comprehensive system overrall, as they are required by the legislation to do. That is what they have been asked to do by the House under both Labour and Conservative Governments.
      The question of taking account of whole areas to be designated as trial areas is causing considerable concern, especially in the light of the political bias which is sensed by district areas such as my own. But the feeling is the same in Conservative areas, too.
      The Minister has said that he believes that the power of decision should be as near to the grass roots as possible. We have quoted what he said on the subject of trial areas during debates on previous legislation when he was in Opposition. He made clear his concern that decisions should be taken as near to the grass roots as possible. I remind him of what he said in Committee on this Bill:
      "But what I must emphasise again is that a trial area will not be imposed on the local population."—[Official Report, Standing Committee H, 5 February 1980; c. 966.]
      I presume that by his reference to the local population the Minister meant, for example, that if a county authority designated a district area as a trial area to see what it would be like, the county authority would be imposing that will on the district authority, but all that the Minister could do in such a case would be to say "I do not think that you are near enough to the grass-roots decisions, and I therefore ask you to reconsider it." Or, I suppose, he could refuse to confirm the designation order. But that gives very little protection to the district authorities, so to that extent we are at one with them
      1004
      and have sympathy with much of the argument advanced by the district authorities.
      6.45 pm
      Although I have put the emphasis of my remarks on the district bus transport areas, they are not really the ones likely to feel the most disastrous effects of these experiments. If these experiments are introduced in rural areas, the rural services that are maintained by an element of cross-subsidisation will begin to be reduced even more than they are at present.
      In this connection, I have in mind the studies done by the Transport and Road Research Laboratory. They have made clear that while the majority of people in rural areas have cars—a greater proportion than in the urban areas, to the extent of about 80 per cent. to 65 per cent.—the remainder of the population in the rural areas is heavily dependent on public transport for journeys for medical and hospital purposes and for shopping. That comes very clearly out of the studies which have been done.
      Mr. Dobson: Does my hon. Friend recognise that even the figure that he has given can be misleading, because they refer to car ownership by family? If the breadwinner in a rural area is out with the car, quite frequently neither his children nor his wife will have access to any form of transport at all.
      Mr. Prescott: Yes, I agree. I was taking what I regarded as a more limited approach to the matter, and I accept that one could put the argument much more strongly in that way. Nevertheless, for the minority of low-paid people who cannot afford a car and who are heavily dependent on some form of public transport for education and other services a serious problem will remain.
      The need has now been recognised for school purposes, but the argument is the same for medical and hospital services. By the reorganisation of the Health Service, we have assumed that there will be encouragement of the provision of public transport services so that people may have medical attention. The same applies to schooling, but it is equally important, if not more important, for National Health Service facilities. But under the Government's scheme it will be the rural

      1005
      areas that will have to carry the brunt of the experiments.
      The Minister should be a little more honest with the House tonight. Perhaps I should withdraw the word "honest" and say that he should give the House more information about which authorities he has in mind. Which are the key leading authorities? Let him tell us so that we may make a better assessment of the effect of his legislation.
      Duties are imposed. The advice of the operators is overruled. The elected representatives, certainly at district level, feel that they will be ignored. The logic of the argument for our new clause is that competition and co-operation are not synonymous but are the antithesis of each other. Our new clause recognises that and would provide that existing public transport operators which have duties imposed on them by the House should not be disadvantaged. The trial area policy is in contradiction to the duties imposed on these operators, and we therefore urge that the new clause be adopted.
      Mr. Fowler: Perhaps I may interpose briefly at this stage and allow my hon. Friend the Parliamentary Secretary to reply to the debate in due course. I wish to give some guidance to the House on what we are about in this matter, and perhaps that may be of help and convenience to hon. Members at this stage.
      The hon. Member for Kingston upon Hull, East (Mr. Prescott) is a rather difficult man to reply to, because at one stage he accuses me of being revolutionary in my approach and at the next he accuses me of being far too cautious.
      Clearly, the debate on trial areas, both inside the House and outside, has been a vigorous one, but it has not shed very much light on the present situation. This is not a plot to destroy the National Bus Company. The purpose of the trial areas is quite simple. We believe that the 1930 licensing system is outdated. We have made it clear that generally our preference is for decontrol and freedom. For example, we are convinced that the licensing of leisure services or excursion tours is utterly unnecessary. We also believe that the licensing of long-distance coach services, which we debated on the last series of amendments, is unnecessary. We also take the view that, if a local
      1006
      authority or a county council believed that such a provision would help its area, it would be wise to allow that authority to be designated as a trial area in which no licensing should take place.
      I emphasise what I have emphasised at every stage—that the Government are not forcing a solution upon the county council in question. We are offering a further option in those cases where no licensing applies. If the local authority believes that it is in its interests, it is an option that we are prepared to offer to it.
      Mr. Ted Leadbitter: The right hon. Gentleman is saying something in which he does not really believe. He is saying that if the local authority so desires, it should be given an option. But no option is given to a district council which runs its own public service operations. It will not even be consulted. The practice under local government reorganisation, as a result of the 1972 Act, shows that that is what happens now. If a district authority has invested a large amount of ratepayers' money in its successful bus operations in order to support certain profitable routes to the advantage of the community as a whole, will it ever be given the option to protect its investment?
      Mr. Fowler: I am about to come on to that point. That is exactly why I intervene at this stage. If the hon. Gentleman will forgive me, I shall come on to the position of district councils a little later. Nevertheless, the point that I am making is right, and it is one which I stand by.
      The hon. Gentleman may believe that county councils should not be the transport authority. If that is his belief, it is not a policy that is accepted by the Conservative Government, and it was not accepted when the Labour Party was in Government. All these issues were gone into in some detail, as my hon. Friend the Member for Wellingborough (Mr. Fry) will remember, during our debates on the Transport Act 1978, and there was very little light from the then Government at that stage.
      Obviously, the greatest difficulty about the licensing relates to local services, which we are anxious to encourage and to see flourish. I fully understand the cross-subsidisation and network arguments for protection. Many people

      1007
      genuinely believe that licensing is essential in the public interest, and the Bill accepts that, with some loosening of the burden of proof which, I think, has been generally welcomed. However, I do not believe that we must uncritically acquiesce in something which is a restriction on the undoubted freedom of competition and choice simply because everyone has grown up with it and the industry is used to it.
      That is the purpose of what I said in Committee. Again, I underline it. What we are talking about in regard to transport policy is not something that is necessarily in the interests of a particular lobby. The crucial test, as with the last series of amendments, is what is in the interests of the consumer or traveller.
      I believe that we should take up the challenge. When county councils want it, that being their judgment, and if they see advantages that we also see, they should be allowed to take part in one of the trial areas.
      We are currently in discussion with a number of county councils about the trial areas. As I said in Committee, I would expect there to be probably only two or three trial areas within the country. We are not talking about the whole of Britain becoming a trial area. That is the scale about which I am thinking.
      The initiative must come from the county councils themselves. There will be proper monitoring by the Transport and Road Research Laboratory. The trial areas will have to last long enough to enable the results to be significant. Therefore, we hope that they will consist of substantial areas—not necessarily whole counties, but perhaps towns and even suburban and urban services. Those discussions are continuing at present, and it will be as a result of those discussions that we shall come forward later and make our announcement about what areas have been designated as trial areas. However, while discussions are continuing, I do not think that it is reasonable to talk about those counties that are in discussion with us.
      Mr. Dobson: There are two points that I should like to make. First, is the Minister satisfied that the necessary reporting system will exist in the trial areas for the monitoring to be carried out properly? Secondly, in advance of the introduction of any trial areas, does not
      1008
      he agree that it would be rather unwise to assess the whole of the country on the basis of a few trial areas? In the nature of things, trial areas are likely to be introduced only in parts of the country where they are most likely to succeed. It does not necessarily follow that even if they work in one area they can be more widely applied.
      Mr. Fowler: I do not agree with the hon. Gentleman's second point. I do not think that it is right to talk about these areas as experimental, in the sense in which the hon. Gentleman referred to them. It may well be that in certain areas it will work to the benefit of the public, and it may be that that is an example that other counties will want to follow. That is the way in which I look at it. The information which the TRRL will collect will, I believe, be of use. I foresee no difficulties in the reporting system. I believe that it is a reasonable step forward.
      I agree with the hon. Gentleman that this is a cautious step forward. We are not simply saying that the licensing system should be brought to an end. We are saying that if county councils feel that a no-licensing policy will be of benefit they should be allowed to carry it out. I regard that as a significant step forward in the provision of transport, and I do not go along with the fears that are being expressed.
      I do not believe that the new clause will make any practical difference to the operation of trial areas. I appreciate that there is a difference between the philosophy of the Transport Acts of 1968 and 1978 and the philosophy of the Conservative Party as enshrined in the Bill. However, I believe that the provisions of the new clause are unnecessary. For example, there is no proposal to take away the duty of county councils to coordinate public transport in their areas. They will still be able to exercise that duty through discussion with operators and through their revenue support powers. Therefore, it would be wrong to suggest that operators should not co-operate with local authorities in trial areas.
      7 pm
      At this stage I should like to advise the House on the way in which I propose later to proceed on the issue of revocation of trial areas, on which there was

      1009
      a great deal of debate in Committee. I agree that the original Bill was inflexible and that some county councils might have been discouraged from beginning an experiment by fear of the cost of reinstatement after possibly three years of unsuccessful trials. I also agree, as was urged on me in Committee by my hon. Friend the Member for Meriden (Mr. Mills), that district councils have an interest in trial area experiments and that their role should be recognised. Therefore, at a later stage we propose to move a group of amendments which will give flexibility in the minimum period of a trial area. Instead of being three years for all, it will be whatever period between two and five years is specified in the original designation order. That will be a matter for discussion between the Government and the county council in question.
      The balance may be struck differently in different cases between the need to assure would-be operators that the trial will continue for a reasonable period and the desire of some counties not to be locked into an experiment for too long.
      The later amendments will also involve local authorities more in the revocation procedure than was envisaged in the original Bill. That comes back to the point that was raised in Committee. Revocation, like the original designation, will be left to the initiative of county councils. The county will have to consult the district councils and notify widely before applying to the Minister for revocation. The difference in nature between designation and revocation is such that consultation will not have the same delaying effect as in the case of a designation order. Therefore, if the initiative to start experiments comes from local authorities, so should the initiative to bring them to an end. That is the second change that we shall be making.
      There is one further change, which is designed to encourage new operators to undertake the investment in vehicles which will be necessary for new stage carriage services. New operators might be put off by a fear that there could be revocation before they had recouped their investment and that, after revocation, the licensing procedure would be exploited or used by competitors to deprive them of their routes. Therefore, there will be an auto-
      1010
      matic right to a road service licence for anyone who provided an established service while the area was a trial area. What is meant by "established" may vary according to cases, but a service will have had to be run for at least three months.
      We hope in this way, first, to provide more flexibility by having a period between two and five years; secondly, to involve the local authorities and district councils more than was originally planned; and, thirdly, to give an assurance—this is of the utmost importance—to new operators who want to come in and who clearly want to invest in new buses—and we want them to invest in new buses, because it is in the public interest that they should—that the fact that a trial area is revoked will not leave them in the lurch. They will have an automatic right to road service licences if the situation reverts to road service licensing and traffic commissioner control.
      Mr. Prescott: Will that be a priority right over and above the existing service —for example, if the National Bus Company pulled out because it could not afford to run it?
      Mr. Fowler: The operator would have an automatic right to continue the service that he was operating in the unlikely event of the trial area being revoked. We do not expect this to take place, but we are anxious to give as many assurances as we can in this area. It is important to give assurances not only to district councils but to the new operators whom we hope will come forward. Therefore, what we are doing is right. We are giving an assurance and encouragement to them. I hope that the message that will go out from the House after the Bill becomes law will be that there is an opportunity here for new operators to come forward.
      I thought it right to intervene at this stage to give the House this indication of future policy. My hon. Friend the Parliamentary Secretary will sum up the debate.
      Mr. Leadbitter: I listened with considerable care to what the Minister said, and I have fleetingly cast my eye down the Official Report of the Committee proceedings dealing with trial areas and found that, far from the option principle propounded by the Minister suggesting a process in which consultation could

      1011
      help to put his clause into practical operation, the right hon. Gentleman removed himself from that stance. My right hon. and hon. Friends placed an amendment before the Minister in Committee. That amendment sought to give district councils the right to raise objections. If the Minister has confidence in what he suggested, I cannot understand why he objects to the elected representatives of a district council, whether in a metropolitan or non-metropolitan county, seeking to put forward matters about which they know better than he does.
      It follows that if we are to have competition and co-operation, the principle must be carried forward. Therefore, the Minister should say something far more positive to the House of Commons than he said in Committee.
      The district council in Hartlepool is an outstandingly good transport undertaking, with a policy of renewal of its buses and an investment programme which has served the people well. If, by any chance, the Conservative-controlled Cleveland non-metropolitan county, in formal or informal discussions with the Conservative Minister of Transport, sought a designation order, my district council would have no say in the matter. No county councillor or officer at county level in Cleveland has the knowledge and experience of the transport management committee and councillors of my district council.
      Mr. Cowans: While my lion. Friend is pursuing the argument of the Hartlepool district council, will he cast his mind to a possible situation that could arise? Will he assume the Hartlepool district council not being able to express a view but running a transport undertaking, the Cleveland county council approaching the Minister for a designation order and people presumably waiting in the wings to move in during the trial period? During the trial period, the Hartlepool district council will possibly say "These people are running the transport services, so we shall not run ours". After the trial period, those who had been waiting in the wings may say "It is not economical". Therefore, it could be that, those people having said that it is not economical and the district council having no say and having disbanded its good services, we shall have
      1012
      no services at all. What would the Minister do in such a situation?
      Mr. Leadbitter: Experience shows that that is the consequence. What about circumstances in which someone actually contracts out? Transportation coverage has been based upon a policy of supporting non-profitable routes with revenue from profitable routes. Any new operator, albeit without a licence, unless he is a damned fool, will not take up the unprofitable routes. He will take the profitable routes of the already established operator. But the Minister is not prepared to see sense. Unless he wishes to avoid the charge of a dogmatic determination to set his mind against the experiences of others, he is running in the wrong direction.
      We want to persuade the Minister to try to understand that there will be grave consequences in urban areas. The new clause also asks for protection, through consultation, of boroughs and shires, where, I accept, there is great concern for the rural problem. The Bill will not help. Who will invest as an alternative operator, even without a licence, in the rural areas? It will not happen, so that provision might as well be taken out of the Bill.
      I ask the Minister how many applications he has had for trial areas. He will not answer. I suggest about three. Have any Labour-controlled councils applied? The answer is "No". Possibly, if we examined and scrutinised the three that have applied, we might find a couple of opportunists who would support what is in the Bill. We might discover that they have said "We would like to be a trial area, Minister". But we do not know the reasons.
      Mr. Fowler: Before the hon. Member for Hartlepool (Mr. Leadbitter) gets carried away, I should point out to him that, as I said earlier, about 10 or 12 county councils applied. Perhaps I had better repeat what I have said several times. We expect that there will be about two or three trial areas, but that is not the sum total of those who applied.
      Mr. Leadbitter: There is no need to worry about my being carried away. If anyone has been carried away on this subject it is the Minister. Indeed, he does not have many friends as regards

      1013
      this part of the Bill. If we assume that the principles of the House are based on a democratically supported constitution, I am sure that the Minister will agree that he is in the minority. There is no question of my being carried away. The right hon. Gentleman is on the Government Front Bench and is in a minority. He said that 10 applications had been received of which possibly three would operate. But the question that I was about to ask before the Minister challenged me so exuberantly was how many public service operators there are and how many of them will be affected. What is the extent of the clause?
      Wherever the Minister looks, he will find that nothing to the advantage of the people living in the rural areas will arise from the Bill. On the contrary. There is another answer to the problem, but this cannot be done by this clause. In the urban areas, anyone can see that, should there be operators who are given the opportunity to use buses without a licence, they will not go for the unprofitable routes. Those routes are sustained by a service provided by a public authority already licensed which uses the profitable services to provide overall coverage for the community. The Minister does not see that. But that is what will happen, I am sure that he is forcing this through because it is his own pet hobby-horse.
      7.15 pm
      Perhaps the Minister is lacking in transport experience. I served with a transport undertaking, and I know that the Minister did not. He should have the courage to remove this clause, because it will not work. In two or three years, or under amendments Nos. 14 and 16, which mention a trial Period of between two and five years—and we have not discussed revocation, which is another problem—the Minister will find that his clause has achieved the advantages that he has sought to persuade the House it will bring to communities.
      I hope that the Opposition will support the new clause put forward by my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) and divide the House on it.
      Mr. Fry: As a vice-president of the Association of District Councils, I appre-
      1014
      ciate the new thought that my right hon. Friend brought to this subject when he spoke. I sat here somewhat dumbfounded for about 35 minutes, listening to two or three sentences on the new clause and what appeared to be a long discussion which really belonged to the Committee stage.
      There is one main aspect only that is worth considering: will the new clause make any substantial difference to the idea of trial areas? The point that my right hon. Friend put forward, which I am sure is most significant, was that the powers of co-ordination of county councils still existed. Unlike the hon. Member for Hartlepool (Mr. Leadbitter), I should have thought that the most likely areas to be designated are not those in densely urban areas. Surely this is an attempt to try to tackle those parts of the country where public transport is either non-existent or sparse.
      Mr. Leadbitter: The hon. Member for Wellingborough (Mr. Fry) is trying to make a positive point and is entitled to a response. However, will he take into account that the rural areas with bus services are those that have highly subsidised bus services? How can an entrepreneur who wishes to make a profit on his investment achieve that when the established services have to be subsidised?
      Mr. Fry: I can answer that by saying that in an area of Northamptonshire that is exactly what happened. A service with which the company was not happy was operated by a subsidiary of the NBC. That service was taken over by a private operator. I am in no position to judge whether that service will be running three, four or five years from now, but, through the co-ordination of the county council, a new operator has been brought in and the service is now operating. Therefore, we must give the Minister and the Government the benefit of the doubt and the opportunity to tackle this problem.
      From what my right hon. Friend said, it is clear that he does not expect hundreds of applications from people who wish to run trial services, especially in the urban areas. But surely it is right to try to find ways of providing transport for those who are denied it at present. I am sure that the hon. Member for Hartlepool would be the first to agree

      1015
      with that. However, we can disagree about whether the idea of trial areas will work.
      There is one weakness in this whole approach, and it is not the fault of my right hon. Friend but is due to the peculiarity of the licensing system. Any scheme for dealing with public transport in rural areas which ignores the place of the rural taxi will not deal with the problem. We all know that there are many small villages and hamlets where only a handful of people need to move at any one time. In many of the rural areas, the rural taxi can cope. For some peculiar reason, through the processes of government over the years, taxis come under the Home Office and other public transport comes under the Department of Transport. If we are to move forward in trying to deal with the problem of parts of the country and talk about delicensing, for goodness sake let us look at what transport could be available in those areas. Many of the problems could be solved by a new look at the taxi service in rural Britain. I hope that that point will not be forgotten.
      There is a danger, and, surprisingly enough, it is totally the opposite to the danger that has been advanced from the Opposition Benches. I do not think that it will be the large operators who may well suffer if there is no licensing. The people about whom I shall be worried are the small private operators, because the organisations with large resources will be able to subsidise their operations and run at a loss much longer than the man with one or two coaches or rural buses. He is the person who could be really vulnerable in this situation. Therefore, we must be aware that there is this other side to the picture, as distinct from that put forward by the Opposition.
      I am in favour of experimentation. In his contribution tonight, my right hon. Friend has already answered nearly all my queries. It is the last one that remains. We must be careful that we are not undermining some of the other services that are being provided, particularly by the small operator. In any case, the county council has a serious responsibility and a chance to help here, because it is the county council which co-ordinates not only public transport but the schools service. Therefore, I hope that when they are looking at this matter the county councils will be very sympathetic to those
      1016
      who are trying to supply a bus service and will certainly continue to bear them in mind when they are awarding school transport contracts.
      Mr. Cowans: I always listen to the hon. Member with great interest. However, it seems that the case that he has made is equally true in respect of the National Bus Company. Basically, what he is saying is that small operators could suffer because of operators moving in on the more profitable routes. That seems to be a reasonable case to argue. But is it not also the same case to say that the National Bus Company should withdraw from rural transport and that the subsidy that it was putting into rural transport should be galvanised into its long-route services to make them more competitive? Therefore, rural services, whichever way the hon. Gentleman has the argument, will suffer.
      Mr. Fry: As the hon. Gentleman knows, I feel that that is a possible danger. However, my right hon. Friend is not considering making the whole of rural England the designated area. He is deliberately asking for one or two areas in which experiments can take place. Surely it is right to try to have one or two areas where these experiments can take place. I shall be joining in watching very closely indeed how the experiments are taking place and seeing what dangers may befall them. My right hon. Friend will be looking to one interest and I shall be looking to another. But we have one thing in common: we shall be considering the public interest above all else.
      Mr. David Marshall: I should like the Minister to tell the House how many Scottish local authorities have made application to be designated as trial areas. My own authority, Strathclyde regional council, which covers some 5,000 square miles and encompasses large urban areas as well as very large remote rural areas, might well be thought of as an ideal example of an authority which could be considered fit to be designated as a trial area. Yet, when we examine the figures for subsidies paid to transport operators, we find that in Strathclyde regional council in the 1979–80 financial year the local authority will be paying transport operators a subsidy of £23·9 million, and that at present it subsidises about 25 bus and post bus

      1017
      operators as well as seven ferry service operators.
      As far as I am aware, no rural bus operator in the Strathclyde region operates at a profit, and many of these operators would simply cease to exist without this subsidy from the local authority. There is no rush by entrepreneurs in Strathclyde to set up in business as transport operators, because there is simply no profit in it in the rural areas. If there were, the local authority could well save some of the £24 million that it pays in general subsidies.
      The Scottish Bus Group, which is far and away the largest bus operator in Scotland, made the following comment on trial areas:
      "The idea of trial areas where road service licensing for all bus operators would be temporarily waived, is viewed with some trepidation unless bus operators are well represented in the discussions and organisation of such a scheme. The danger foreseen is that if abstraction results from established services during the trial period and these services are consequently reduced or withdrawn, it is unlikely that on the termination of the experiment passengers will return in sufficient numbers to justify restoration of these facilities. Generally the industry is not against positive experimental schemes but doubt must be cast as to whether operators would be prepared to make the necessary investment in vehicles and plant for a trial period only with no guarantee of continuity. Finally it must be said that transport in any area is a product unique to that area reflecting peculiar local circumstances and the results obtainable from one area do not necessarily become applicable to any other part of the country without modification."
      The present road service licence system ensures that in general only companies with serious intentions to run a viable and efficient service will make application. There is no evidence to support the Government's claim that the system is daunting to new entrants or difficult to understand. Under the present arrangements, very few applications for new licences are ever refused. It is not bus licensing that hampers initiative or restricts competition. It is simply the inability to make a profit.
      I agree with my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) that there is little doubt that in the short term the public interest would be served by having State-sponsored trial areas free of road service licensing, but only if some public money is used to initiate them. We have seen nothing of
      1018
      lasting value under the experimental areas legislation of 1977, and nearly all of these schemes have financial and staffing problems.
      It is in the long term that the real danger of trial areas exists. The damage that could be done to the existing service could never be repaired except possibly at considerable public expense. I should have thought that that was not something for which the present Government would like to be responsible.
      Mr. Kenneth Clarke: The hon. Member for Glasgow, Shettleston (Mr. Marshall) sums up the views of all those with fears by a defence, largely, of the existing licensing system, with a distinct reluctance to contemplate any change and a dismissal of recent experiments which, in his opinion, have not got very far, as such under the 1977 Act. I concede to those who have raised the matter that that is the reaction of quite a lot of people in the passenger transport business, which has become quite accustomed to 50 years of rigid licensing and is somewhat worried to contemplate change of any kind. But we are contemplating change generally and change particularly in the trial areas. It is right that hon. Members should express their further fears about it in this debate.
      First, I think that the comparisons with the 1977 Act and Routex and so on rather put the trial area concept into the wrong context as an experiment, a very limited project. As my right hon. Friend emphasised, our approach to the idea of trial areas is a cautious one. The Bill is riddled with caution so far as the mechanics for consultation and so on are concerned. Nevertheless, we are envisaging something much more significant than the 1977 Act experiments. We are in the hands of the local authorities. Where local authorities agree with us that the time has come for change, we think that very considerable change in passenger transportation could come from these experiments.
      Our approach to trial areas and what led us to look at the possibility of trial areas free of quantity road service licensing altogether was an underlying belief that a great deal of the licensing system in many parts of the country had probably outlived any useful purpose. Perhaps we shall discover—if enough trial areas are designated—that the licensing

      1019
      system exists because it has existed for 50 years but that it serves no worthwhile purpose. Trial areas provide a way of challenging that in an adequate number of diverse circumstances.
      Mr. Dobson rose—
      7.30 pm
      Mr. Clarke: That belief is partly based on a study of present circumstances. People agonise about the delicate network arrangements that now exist, that cross-subsidise and support rural services and help outlying areas of municipalities. It is surprising to hear such arguments. The real background is one of continuous decline in the passenger transport networks of Britain.
      The hon. Member for Truro (Mr. Penhaligon) reminded us of the disasters that had hit parts of Cornwall. My hon. Friend the Member for Meriden (Mr. Mills) pointed out that rural parts of his constituency were losing the services of a National Bus Company subsidiary. It is no good saying that the present system supports a viable network in all rural areas or that it is fulfilling all passenger needs. It is very much in need of change. We shall, therefore, make that change.
      Trial areas must be contrasted with the position that will exist in the country as a whole. We shall change the burden of proof, whether in trial areas or not, in attempts to resist new operators seeking new services. The traffic commissioners will be enjoined to give licences, unless those licences are against the public interest. Express services that travel more than 30 miles without setting down a passenger will be free from licensing throughout the country. The commuter coach will be given priority. Regular contract services serving works and schools will be a reality throughout the country outside road service licensing. Within that context, county councils may ask my right hon. Friend to designate the whole or part of the county as a trial area. Such councils may share our belief that in practice road service licensing serves no purpose.
      About a dozen councils have expressed interest. I am told that two regional councils in Scotland have expressed interest. That information may be of benefit to the hon. Member for Shettleston. However, as yet no one has formally applied. Many councils are consulting. Some have
      1020
      not yet reached the consultation stage. We hope that two or three will put it into practice. We would like variety. However, we are in the hands of local authorities. The question of how many trial areas and how big they are will depend upon local authorities. They are the transport authorities. It would be nice to have a trial area in a large city or town as well as a rural one.
      Mr. Leadbitter: The hon. Gentleman has stressed the word "consultation" and the phrase "in the hands of local authorities". Perhaps he will heed his own remarks. In Committee he said:
      "Such procedures will certainly be demanded by those district councils which are flatly against the whole idea of trial areas in their or any other district. Some of those councils are controlled by people who are as hostile to the whole idea of competition in transport, as well as trial areas, as many members of the Committee are, and who will use the statutory consultation procedures deliberately to delay and obstruct the implementation of the county council's intentions."—[Official Report, Standing Committee H, 5 February 1980; c. 938.]
      In other words, he has said that there will be no consultation. He distrusts district councils. He is saying that they are prejudiced.
      Mr. Clarke: I am glad that the hon. Gentleman reads my speeches. I remember well what I said. If the hon. Gentleman has read the whole of that speech, he will know that earlier in it I answered the questions that he has posed. He asked how local authorities could set up trial areas. He wanted to know the position of district councils. He said that we did not want to know the views of district councils. He queried the position of areas such as Hartlepool. He said that if the county council had considered designating a trial area its representations would not be made known. He knows that I made those remarks about a demand that there should be formal statutory consultation when the Bill is enacted, even if consultation has already been held. I pointed out that it would give an opportunity to those districts that are hostile to the idea as a matter of principle to delay the proposals indefinitely. However they will have information and be able to make representations.
      The hon. Gentleman will also know that I referred to schedule 2. I made clear that when a county council wishes to designate a trial area it must begin

      1021
      by informing many bodies about its intention to apply to my right hon. Friend. It must inform all district councils. The district councils may then make representations to the county council. If the county council still wishes to persevere with the desire to be a trial area, its application to my right hon. Friend must be accompanied by all the representations that have been received.
      Before designating a trial area, the Minister will consider all the representations that a district council may choose to make. The hon. Gentleman is merely prodding at a passage in Committee that he has taken out of context. In that passage I dismissed the idea of going beyond the adequate arrangements that I have already described and of writing statutory consultation into the Bill in addition to all the requirements of information and of representations. He knows that formal statutory consultation will provide opportunities for delay.
      Of course, we appreciate the position of district councils. That position was pressed upon us by Conservative district councils and by my hon. Friends in Committee. Indeed, my hon. Friend the Member for Wellingborough (Mr. Fry) again stressed it tonight. My right hon. Friend has dealt with the changes that we made concerning the revocation of trial areas and a district's desire to be consulted. That will be accommodated in later amendments.
      The apparent desire to write out the duty to co-operate was merely a means of obtaining a debate. The Opposition proposed to wipe out large portions of the 1968 and 1978 Acts, to which they are so wedded. The hon. Member for Workington (Mr. Campbell-Savours) jumped the gun and asked what would happen in these trial areas. He wanted to know how we could be certain that they would not be of great disadvantage to the areas concerned. That is the main point.
      I stress that we are not advocating trial areas because we believe that there will be a collapse of public transport as we know it. By that I mean that which is urged upon us by the most cautious of operators, by all trade unions and by the ideological opponents of the Bill. We do not envisage dramatic overnight changes in trial areas. Those who find
      1022
      themselves within a trial area will wake up the morning after their area has been designated and find that nothing has changed. The same bus service will be operating. However, the climate may change because the traffic commissioners' road service licensing powers will have gone.
      What might happen? The hon. Member for Workington put his case succinctly. He spoke of the rural areas in his constituency and of the profitable urban parts. I shall not go into detail about Cumbria as that is a matter for Cumbria county council and for local operators. Let us take an imaginary county.
      Mr. Cohen: We are concerned not so much about ideological changes but about the effect of those changes upon community life in certain areas.
      Mr. Clarke: I accused my opponents of being interested in ideological changes.
      I wish to return to the practical arguments put forward by the hon. Member for Workington. In an imaginary county, half of the services need to be profitable and half unprofitable. It may be thought that the profitable ones generally subsidise the unprofitable ones and that the county council chips in a bit of revenue to support the network. That is a fairly typical set-up. If the traffic commissioners' arrangements are withdrawn, what will happen? There will be no dramatic change unless the National Bus Company, or one of its subsidiaries, starts behaving in a foolish and precipitate way—as they have said that they might. However, I do not think that the subsidiaries will take such action in practice. The hon. Member for Workington dwelt on the first thing that might happen. People might move in on the profitable services. The first sign of change will be that a proportion of the better services will have more buses and reduced fares. Operators will move into the better routes—
      Mr. Leadbitter rose—
      Mr. Clarke: The hon. Member for Hartlepool (Mr. Leadbitter) flits in and out of the debate like Fairy Blackstick without listening to the parts in between. All his right hon. and hon. Friends have referred to pirates moving in to cream off the profitable routes. A profitable route is vulnerable to competition. Somebody might move in and provide more buses or lower fares, or do other wicked and

      1023
      heinous things to those who live along the route. No one is arguing with that except the hon. Member for Hartlepool. We are told to consider the consequences to the rest of the network. Those who live along the routes will discover that they have been paying high fares and tolerating a poor service to cross-subsidise the network—to use the jargon of the passenger transport industry.
      What happens to the unprofitable services where there is a defined public need for operators? Revenue support is given to subsidise the network as a whole. Very few counties give revenue support to specific services. An operator with a certain piece of territory asks the county for a subsidy and probably receives it. It is possible to move away from that system with the MAP—market analysis project—arrangements, but it is the norm. Counties must realise that trial areas are not a substitute for revenue support. There is nothing wrong with revenue support. However, trial areas will provide counties with an opportunity to use revenue support in an intelligent, creative and better way.
      Trial areas will identify not only the present routes, who operates them, what are their losses and how much finance is required to keep them running—most of the present networks are a combination of history and chance—but which routes the county council, as the transport authority, considers to be fulfilling a public need but which are not being served or which might not be served if there were change to a more commercial regime. The county councils must identify the routes and the public need, and decide how to make intelligent use of their revenue support to provide the necessary services.
      I know of a council that has invited tenders for revenue support for certain routes, to discover who will come forward, what services and vehicles such operators can provide and at what price to meet the county council's desire. That option is open to the National Bus Company because there is no bias in the Bill as between the public sector and the private sector.
      Mr. Cowans: The Minister's remarks read like something from Hans Christian Andersen. There is no need to look into a crystal ball when one can read the book. We heard similar remarks during the Beeching era. We were told that
      1024
      there would be no change and that the only difference was that one would ride on a bus instead of a train. Lo and behold, the fairy descended and the buses started. But the fairy's wand rusted and there were no buses and no trains. What will the Minister do in that context?
      7.45 pm
      Mr. Clarke: The hon. Gentleman has said a lot about fairies, Beeching and trains, but I do not see the analogy with what I have described. The revenue support given by the public service obligation to the railways is not for specific routes. The Beeching operation predated the PSO by some years and was a national attempt to stop the deliberate closure of routes. We are not closing any routes. We are indicating that counties can, if they so wish, take away the restrictions on road service licensing where they can make better use of revenue support. Once the restrictions have been lifted, there will be a wider choice of operators and types of service. It is for the county councils to use the purse strings that are in their possession and their duties as transport co-ordinating authorities to make the best use of the moneys provided.
      Mr. Fry: Does my hon. Friend believe that the same principle should be applied to British Rail? Surely, it is unfair to treat road transport in one way and rail transport in a completely different way.
      7.45 pm
      Mr. Clarke: We are not responsible for the present financial arrangements for British Rail. I am biting off my tongue before launching into the analogy of British Rail. It should be run on the basis of the subsidy being applied to certain services where an accepted public need is defined by the Government. Sir Peter Parker is fond of talking about the contract between British Rail and the Government to provide certain passenger services at a certain price. That is a system that bus companies could arrive at with their county councils. Nothing within a trial area system would prevent them from doing so.
      Mr. Cohen: The Minister has announced certain concessions for private operators. Will there be a degree of compulsion to ensure that they provide the service required by the rural communities and do not opt out if they find that it is not profitable?
      Mr. Clarke: I emphasised that there was no concession to private companies. The public sector and the private companies are left on precisely the same footing. Each sector can take advantage of the Bill in whichever way suits it best. Each can lose out if it is uncompetitive and is forced to give way to more efficient competition.
      My hon. Friend the Member for Wellingborough made it clear that many private companies were cautious about the proposals. Operators must give notice to serve routes, and must give notice if they seek to withdraw from those routes. A bus company cannot be compelled to provide a service that will lose money and for which the county councils will not pay. Under the present licensing system, rural village after rural village is losing its services. We are not doing away with a system that protects the small operator in the rural areas or removing an unqualified success. We are altering the terms under which revenue support and other assistance is given. We hope that counties will use that support more intelligently.
      We accept the importance of rural taxis, mentioned by my hon. Friend the Member for Wellingborough. In many of the smaller communities we must find alternatives to the traditional bus service. Other parts of the Bill deal with shared cars, community bus services, post buses and other experiments that we wish to encourage.
      Taxis are the responsibility of my right hon. Friend the Home Secretary. Nevertheless, parts of the Bill touch on that subject. We have consulted those with taxi interests to ensure that we shall not damage them by our proposals. Other new clauses, tabled in the name of the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans), refer to the provincial taxi service. I believe that the hon. Gentleman discussed his new clause with those concerned. We hope to meet the legitimate fears of taxi owners.
      Other parts of the Bill provide for revenue support for shared car schemes, which is a matter of some doubt in rural areas at present. We have not lost sight of the fact that taxis will have a part to play in rural areas. We must move away from the half-empty large bus rumbling through the leafy lanes. Some claim that it is subsidised by profitable services
      1026
      elsewhere. Others claim that it is supported by the county through the network but argue that it is not supported sufficiently. Nobody really knows the cost of the service or whether it serves the needs of the area. It is provided only because it has always been provided and because the operator has held a licence since goodness known when. Nobody else has been allowed to apply to the commissioners to service the route. We think that that must change considerably. That is the purpose of this part of the Bill, and it certainly would not be helped by the addition of the new clause.
      Mr. Prescott: The Parliamentary Secretary has made a number of interesting statements, some connected with the clause and some not. Certainly we were interested in the reply to the hon. Member for Wellingborough (Mr. Fry)—whether there is any new Government thinking about the financial obligations of British Rail and whether a different principle has been considered since the Minister met the chairman immediately after Question Time last week. The Parliamentary Secretary was clearly pointing out that there is a difference between British Rail as it is at present financed and a future approach to that financing. We await with interest further developments in the Conservative approach to the financing of British Rail.
      The new clause is largely concerned with showing the contradictions in the obligations and duties placed upon the authorities in relation to trial areas. The legislation gives a rather lax interpretation of the word "duty". I always thought that duty had something to do with responsibility. This is not a recommendation; it is a duty clearly imposed by the legislation. I cannot accept that it can be dismissed in such a cavalier manner.
      The trial area argument will be judged by experience. It is a matter of judgment between the two sides of the House. The unfortunate thing is that if we on these Benches are right, it will have been at considerable expense to many people in those areas, and that is our major fear.
      When I accused the Minister of being somewhat timid and cautious, I was referring to the fact that he was not prepared to experiment with the system

      1027
      beyond two or three areas. Undoubtedly, the implementation of the trial area scheme is a considerable and fundamental change in our transport system, and I would be the last to condemn a really challenging fundamental change. In fact, I hope to see a great deal of such change in the future.
      Nevertheless, our concern about the trial areas is based on the judgment of the consequences. I note that a considerable amount of praise has already been given to the existing licensing system. There is a reliance on the licensing system to maintain in other areas outside trial areas, within the 30-mile area, a basically similar transport system to the one we have at present. It might be a good idea to maintain the licensing system with commissioners and so on until we have witnessed the achievements of the experiments in the trial areas. It could be an extension of the previous Government's ideas of having experiments in certain areas but maintaining them against the background of commission control. To a great extent, that is the difference between us in our approach to the experiments. We like to have the safety of the backdrop.
      The services in rural areas are far from satisfactory and tend to reflect the competition aspect that has crept in during the last 20 years under a number of Governments. This has led to an unfortunate reduction in the extent of services. That must be seen against the background of the increase in the number of cars. The problem with the rural areas is that only a few people are dependent on the transport system and, whether these transport services are private or public, there is no way in which they can pay commercially.
      All sorts of minibuses and different kinds of vehicles have been tried, and the reports of the experiments conducted so far have not necessarily shown them to be a considerable financial success. Indeed, a number of them show quite clearly that if these services are breaking even at present, that is happening without the money for investment. The recommendation is that the Government should provide money for investment in vehicles and then have a kind of break-even system on the operation of the vehicles. That is clearly not envisaged in the trial
      1028
      area experiments, and to that extent we feel strengthened in our view.
      We have concentrated a considerable amount of time on the rural areas—and rightly so—but I am still a little confused about the position of rural taxis. I understood that taxis outside London were not controlled by the Home Office. I might be wrong, but I thought that we had a Bill not so long ago which gave control of taxis outside London to local authorities. I thought that the Home Office's jurisdiction applied only to the London area.
      Mr. Kenneth Clarke: In so far as there is a sponsoring Department, the Home Office is the relevant Department, just as the Ministry of Transport is the sponsoring Department for bus services even though it does not run any.
      Mr. Prescott: Then, presumably, any kind of policy for rural taxis would be determined not by the Home Office but by the Ministry of Transport, which has established the experimental areas under the 1978 Act.
      Mr. Cowans: The fact of the matter is that the Home Office is now fully responsible for taxi drivers in the cab service in London, and local authorities are now responsible for taxi drivers in their areas. While it is true that the Home Office is the overall sponsoring body, in effect the Home Office supervises London cabs but it does not supervise provincial cabs.
      Mr. Prescott: Yes, and the Home Office is not very effective at that. The demands for changes in that area have come over a period of time from the taxi drivers themselves.
      Nevertheless, we are convinced about our case in making the judgment by the fact that there is a combined alliance of opposition. All the established operators appear to be against the trial area principle. Also, the districts are very much against the imposition of a trial area.
      We note the point made by the Minister that money will be available for these services and, therefore, there will not be a difference in that sense. The operator may be different. He may no longer be the network public transport operator; he may be "Jones the Bus" or whatever.

      1029
      The Minister may find that he may be able to produce a service more cheaply under the present economics, but that may not necessarily be so when the new National Bus Company and the new operators adjust to the changes which will inevitably mean fewer buses, and these will be concentrated on profitable areas.
      We have made great play of profitable routes, because we do not believe that bus operators will want to look for unprofitable routes. The Minister answered that by saying that money will be provided by subsidies. Therefore, presumably, the competition will now be between companies for the subsidy, and the one that applies for the lowest amount of subsidy will get the bus. That begs the question as to the fare policy in those areas. There is a considerable correlation between fares and the number of journeys that people make by bus.
      The point was made earlier in the debate that if the Hartlepool authority found that cowboy operators were coming in and undermining the present network system of the district authority, this would be extremely disadvantageous. Whether that is right or wrong, it is clear that if the scheme were to collapse the licence presumably would go to the existing operator. Therefore, we are likely to replace the old-established operator, for one reason or another, and to remain with the one-man company or the two- or three-bus companies which come in to take these routes. These are not the people who co-ordinate transport services, nor are they the people who provide network services.
      Mr. Leadbitter: My hon. Friend has mentioned the objections of the district councils, but will he confirm that the Association of District Councils, the official representative of all district councils, has protested and proclaimed its opposition to the proposal and that that formal opinion represents the great body of local authority opinion, as well as public opinion?
      8 pm
      Mr. Prescott: We have constantly made that point to the Minister in representations and debates.
      The Minister mentioned the case of a new operator receiving subsidies but, pre-
      1030
      sumably, offering cheaper fares. He will have to agree that, if companies are prepared to operate services and profit from them, though they may need a subsidy in order to do so, the profits of "Jones the Bus" will presumably not be used to subsidise the overall service.
      The Parliamentary Secretary seemed to indicate that if new operators started up with two or three buses they might be able to offer a network service, and the local authority could say that although it would not subsidise one route it would be prepared to give subsidies on the basis of three or four routes. That is basically the system that we have at present. Is the Minister saying that the profits made on the profitable route will be used, as the NBC uses the gains from its profitable routes, as a contribution towards revenue and as part of the information given to local authorities when the operator applies for a subsidy? If so, that is similar to the existing situation, except that we should be exchanging one operator for another. It is a matter of judgment. We shall have to see what happens. The question before us is whether we should repeal the duties imposed on operators in trial areas.
      The Minister said that the co-ordination role of local authorities would remain the same and, therefore, there was no need to remove that. There are a number of arguments on that matter, particularly if we take into account the definition of integration of public services. We dealt with that in Committee, and the question turns on the interpretation of "network" and "integration".
      A requirement under the Transport Act 1978 makes clear that the NBC and other operators have an obligation to provide such information concerning their services, including the cost of providing them, as may be reasonably required by the local authority. That causes considerable concern to the operators, and we share that concern. The operators feel that they will be severely disadvantaged by that requirement and they ask us to put the issue of those obligations and duties before the House. We intend to do that by voting on the new clause.
      Question put, That the clause be read a Second time: —
      The House divided: Ayes 144, Noes 189.

      Division No. 237]

      AYES

      [6 pm

      Adams, Allen

      Bradley, Tom

      Cook, Robin F.

      Allaun, Frank

      Brown, Hugh D. (Provan)

      Cowans, Harry

      Archer, Rt Hon Peter

      Buchan, Norman

      Cryer, Bob

      Ashton, Joe

      Callaghan, Rt Hon J. (Cardiff SE)

      Cunlitle, Lawrence

      Benn, Rt Hon Anthony Wedgwood

      Callaghan, Jim (Middlelon & P)

      Cunningham, George (Islington S)

      Bennett, Andrew (Stockport N)

      Campbell-Savours, Dale

      Cunningham, Dr John (Whitehaven)

      Bidwell, Sydney

      Carmichael, Neil

      Dalyell, Tam

      Booth, Rt Hon Albert

      Cartwright, John

      Davidson, Arthur

      Boothroyd, Miss Betty

      Cocks, Rt Hon Michael (Bristol S)

      Davies, Ifor (Gower)

      Bottomley, Rt Hon Arthur (M'brough)

      Cohen, Stanley

      Davis, Terry (B'rm'ham, Stechford)

      Dean, Joseph (Leeds West)

      Jones, Barry (East Flint)

      Rees, Rt Hon Merlyn (Leeds South)

      Dempsey, James

      Jones, Dan (Burnley)

      Richardson, Jo

      Dewar, Donald

      Kilroy-Silk, Robert

      Roberts, Ernest (Hackney North)

      Dixon, Donald

      Leadbitter, Ted

      Robertson, George

      Dobson, Frank

      Leighton, Ronald

      Rodgers, Rt Hon William

      Douglas, Dick

      Lewis, Ron (Carlisle)

      Ross, Ernest (Dundee West)

      Dunwoody, Mrs Gwyneth

      Litherland, Robert

      Rowlands, Ted

      Eadie, Alex

      Lofthouse, Geoffrey

      Sandelson, Neville

      Eastham, Ken

      McCartney, Hugh

      Sever, John

      Edwards, Robert (Wolv SE)

      McElhone, Frank

      Shore, Rt Hon Peter (Step and Pop)

      Ellis, Tom (Wrexham)

      McGuire, Michael (Ince)

      Silkin, Rt Hon John (Deptford)

      Evans, Ioan (Aberdare)

      McKay, Allen (Penistone)

      Silkin, Rt Hon S. C. (Dulwich)

      Evans, John (Newton)

      McKelvey, William

      Silverman, Julius

      Ewing, Harry

      MacKenzle, Rt Hon Gregor

      Soley, Clive

      Faulds, Andrew

      Maclennan, Robert

      Spearing, Nigel

      Flannery, Martin

      McMillan, Tom (Glasgow, Central)

      Spriggs, Leslie

      Fletcher, Ted (Darlington)

      McNally, Thomas

      Stewart, Rt Hon Donald (W Isles)

      Foot, Rt Hon Michael

      McWilliam, John

      Stoddart, David

      Foultas, George

      Marshall, David (Gl'sgow, Shettles'n)

      Stott, Roger

      Fraser, John (Lambeth, Norwood)

      Marshall, Dr Edmund (Goole)

      Strang, Gavin

      Garrett, John (Norwich S)

      Marshall, Jim (Leicester South)

      Summerskill, Hon Dr Shirley

      George, Bruce

      Maxton, John

      Taylor, Mrs Ann (Bolton West)

      Golding, John

      Meacher, Michael

      Tinn, James

      Gourlay, Harry

      Mellish, Rt Hon Robert

      Urwin, Rt Hon Tom

      Graham, Ted

      Mitchell, Austin (Grimsby)

      Wellbeloved, James

      Grant, George (Morpeth)

      Mitchell, R. C. (Solon, Itchen)

      Welsh, Michael

      Hamilton, James (Bothwell)

      Morris, Rt Hon Charles (Openshaw)

      White, Frank R. (Bury & Radcliffe)

      Hamilton, W. W. (Central Fife)

      Moyle, Rt Hon Roland

      Whitehead, Phillip

      Hardy, Peter

      Newens, Stanley

      Whitlock, William

      Harrison, Rt Hon Walter

      Oakes, Rt Hon Gordon

      Williams, Rt Hon Alan (Swansea W)

      Haynes, Frank

      Ogden, Eric

      Williams, Sir Thomas (Warrington)

      Heffer, Eric S.

      O'Neill, Martin

      Wilson, Rt Hon Sir Harold (Huyton)

      Holland, Stuart (L'beth, Vauxhall)

      Orme, Rt Hon Stanley

      Wilson, William (Coventry SE)

      Home Robertson, John

      Owen, Rt Hon Dr David

      Winnick, David

      Homewood, William

      Palmer, Arthur

      Woolmer, Kenneth

      Hooley, Frank

      Park, George

      Wrigglesworth, Ian

      Howell, Rt Hon Denis (B'ham, Sm H)

      Parker, John

      Wright, Shella

      Hughes, Robert (Aberdeen North)

      Powell, Rt Hon J. Enoch (S Down)

      Jay, Rt Hon Douglas

      Powell, Raymond (Ogmore)

      TELLERS FOR THE AYES:

      John, Brynmor

      Prescott, John

      Mr, George Morton and

      Johnson, James (Hull West)

      Race, Reg

      Mr. Donald Coleman.

      Johnson, Walter (Derby South)

      Radice, Giles

      NOES

      Adley, Robert

      Costain, A. P.

      Hooson, Tom

      Alexander, Richard

      Dover, Denshore

      Hordern, Peter

      Ancram, Michael

      du Cann, Rt Hon Edward

      Howell, Ralph (North Norfolk)

      Aspinwall, Jack

      Dunn, Robert (Dartford)

      Hunt, John (Ravensbourne)

      Atkins, Robert (Preston North)

      Dykes, Hugh

      Hurd, Hon Douglas

      Atkinson, David (B'mouth, East)

      Eggar, Timothy

      Johnston, Russell (Inverness)

      Beaumont-Dark, Anthony

      Faith, Mrs Sheila

      Jopling, Rt Hon Michael

      Bendall, Vivian

      Faulds, Andrew

      Kershaw, Anthony

      Benyon Thomas (Abingdon)

      Fletcher, Alexander (Edinburgh N)

      King, Rt Hon Tom

      Berry, Hon Anthony

      Fletcher-Cooke, Charles

      Kitson, Sir Timothy

      Best, Keith

      Fookes, Miss Janet

      Knight, Mrs Jill

      Bevan, David Gilroy

      Fowler, Rt Hon Norman

      Knox, David

      Biggs-Davison, John

      Fox, Marcus

      Lang, Ian

      Blackburn, John

      Freud, Clement

      Latham, Michael

      Blaker, Peter

      Fry, Peter

      Lawson, Nigel

      Boscawen, Hon Robert

      Gardiner, George (Reigate)

      Le Marchant, Spencer

      Braine, Sir Bernard

      Garel-Jones, Tristan

      Lennox-Boyd, Hon Mark

      Bright, Graham

      Gorst, John

      Lewis, Kenneth (Rutland)

      Brinton, Tim

      Gow, Ian

      Lloyd, Ian (Havant & Waterloo)

      Brittan, Leon

      Grant, Anthony (Harrow C)

      Lloyd, Peter (Fareham)

      Brocklebank-Fowler, Christopher

      Gray, Hamish

      Loveridge, John

      Brooke, Hon Peter

      Grieve, Percy

      Luce, Richard

      Brown, Michael (Brigg & Sc'thorpe)

      Griffiths, Eldon (Bury St Edmunds)

      Lyell, Nicholas

      Bruce-Gardyne, John

      Griffiths, Peter (Portsmouth N)

      Macfarlane, Neil

      Bryan, Sir Paul

      Grimond, Rt Hon J.

      MacGregor, John

      Buchanan-Smith, Hon Alick

      Grist, Ian

      MacKay, John (Argyll)

      Buck, Antony

      Grylls, Michael

      McNair-Wilson, Michael (Newbury)

      Burden, F. A.

      Hamilton, Hon Archie (Eps'm&Ew'll)

      McQuarrie, Albert

      Butcher, John

      Hannam, John

      Marlow, Tony

      Cadbury, Jocelyn

      Haselhurst, Alan

      Marshall, Michael (Arundel)

      Carlisle, John (Luton West)

      Havers, Rt Hon Sir Michael

      Mather, Carol

      Carlisle, Kenneth (Lincoln)

      Hawkins, Paul

      Maude, Rt Hon Angus

      Chalker, Mrs Lynda

      Hawksley, Warren

      Mawby, Ray

      Chapman, Sydney

      Hayhoe, Barney

      Mawhinney, Dr Brian

      Clark, Hon Alan (Plymouth, Sutton)

      Heddle, John

      Maxwell-Hyslop, Robin

      Clarke, Kenneth (Rushcliffe)

      Henderson, Barry

      Mellor, David

      Clegg, Sir Walter

      Hicks, Robert

      Meyer, Sir Anthony

      Colvin, Michael

      Higgins, Rt Hon Terence L.

      Miller, Hal (Bromsgrove & Redditch)

      Cope, John

      Hill, James

      Mills, Iain (Meriden)

      Corrie, John

      Hogg, Hon Douglas (Grantham)

      Mills, Peter (West Devon)

      992

      993

      Miscampbell, Norman

      Rhodes, James, Robert

      Temple-Morris, Peter

      Moate, Roger

      Rhys Williams, Sir Brandon

      Thomas, Rt Hon Peter (Hendon S)

      Montgomery, Fergus

      Ridsdale, Jullian

      Thompson, Donald

      Morrison, Hon Charles (Devizes)

      Rifkind, Malcolm

      Thorne, Neil (Ilford South)

      Morrison, Hon Peter (City of Chester)

      St. John-Stevas, Rt Hon Norman

      Townend, John (Bridlington)

      Murphy, Christopher

      Scott, Nicholas

      Townsend, Cyril D. (Bexleyheath)

      Myles, David

      Shaw, Michael (Scarborough)

      Trippier, David

      Neale, Gerrard

      Shelton, William (Streatham)

      van Straubenzee, W. R.

      Needham, Richard

      Shepherd, Colin (Hereford)

      Vaughan, Dr Gerard

      Nelson, Anthony

      Shepherd, Richard (Aldridge-Br'hills)

      Viggers, Peter

      Neubert, Michael

      Silvester, Fred

      Waddington, David

      Page, John (Harrow, West)

      Smith, Cyril (Rochdale)

      Wakeham, John

      Page, Rt Hon Sir R. Graham

      Speed, Keith

      Walker-Smith, Rt Hon Sir Derek

      Parris, Matthew

      Speller, Tony

      Waller, Garry

      Patten, John (Oxford)

      Spicer, Michael (S Worcestershire)

      Watson, John

      Penhaligon, David

      Sproat, Iain

      Wells, Bowen (Hert'rd & Stev'nage)

      Percival, Sir Ian

      Squire, Robin

      Wheeler, John

      Peyton, Rt Hon John

      Stainton, Keith

      Wickenden, Keith

      Pollock, Alexander

      Stanbrook, Ivor

      Wilkinson, John

      Porter, George

      Stanley, John

      Williams, Delwyn (Montgomery)

      Prentice, Rt Hon Reg

      Steel, Rt Hon David

      Wolfson, Mark

      Proctor, K. Harvey

      Steen, Anthony

      Raison, Timothy

      Stevens, Martin

      TELLERS FOR THE NOES:

      Rathbone, Tim

      Stradling Thomas, J.

      Lord James Douglas-Hamilton and

      Rees-Davies, W. R.

      Taylor, Teddy (Southend East)

      Mr. Tony Newton.

      Renton, Tim

      Tebbit, Norman

      Division No. 238]

      AYES

      [8.03 pm

      Adams, Allen

      Grant, George (Morpeth)

      Park, George

      Allaun, Frank

      Hamilton, W. W. (Central Fife)

      Parker, John

      Archer, Rt Hon Peter

      Hardy, Peter

      Powell, Rt Hon J. Enoch(S Down)

      Ashton, Joe

      Harrison, Rt Hon Walter

      Powell, Raymond (Ogmore)

      Benn, Rt Hon Anthony Wedgwood

      Haynes, Frank

      Prescott, John

      Bennett, Andrew (Stockport N)

      Heffer, Eric S.

      Race, Reg

      Booth, Rt Hon Albert

      Holland, Stuart (L'beth, Vauxhall)

      Radice, Giles

      Bottomley, Rt Hon Arthur (M'brough)

      Home Robertson, John

      Rees, Rt Hon Merlyn (Leeds South)

      Bradley, Tom

      Homewood, William

      Roberts, Albert (Normanton)

      Bray, Dr Jeremy

      Hooley, Frank

      Roberts, Ernest (Hackney North)

      Brown, Hugh D. (Provan)

      Horam, John

      Robertson, George

      Buchan, Norman

      Howell, Rt Hon Denis (B'ham, Sm H)

      Rodgers, Rt Hon William

      Callaghan, Jim (Middleton & P)

      Janner, Hon Greville

      Ross, Ernest (Dundee West)

      Campbell-Savours, Dale

      Jay, Rt Hon Douglas

      Ross, Wm. (Londonderry)

      Cartwright, John

      John, Brynmor

      Rowlands, Ted

      Clark, Dr David (South Shields)

      Johnson, James (Hull West)

      Sever, John

      Cocks, Rt Hon Michael (Bristol S)

      Johnson, Walter (Derby South)

      Shore, Rt Hon Peter (Step and Pop)

      Cohen, Stanley

      Jones, Barry (East Flint)

      Silkin, Rt Hon John (Deptford)

      Coleman, Donald

      Jones, Dan (Burnley)

      Silverman, Julius

      Cowans, Harry

      Kilroy-Silk, Robert

      Snape, Peter

      Cryer, Bob

      Leadbitter, Ted

      Soley, Clive

      Cunliffe, Lawrence

      Leighton, Ronald

      Spearing, Nigel

      Cunningham, George (Islington S)

      Lestor, Miss Joan (Eton & Slough)

      Spriggs, Leslie

      Cunningham, Dr John (Whitehaven)

      Lewis, Ron (Carlisle)

      Stewart, Rt Hon Donald (W Isles)

      Dalyell, Tam

      Lofthouse, Geoffrey

      Stoddart, David

      Davidson, Arthur

      McElhone, Frank

      Stott, Roger

      Davies, Ifor (Gower)

      McGuire, Michael (Ince)

      Strang, Gavin

      Davis, Terry (B'rm'ham, Stechford)

      McKay, Allen (Penistone)

      Summerskill, Hon Dr Shirley

      Dean, Joseph (Leeds West)

      McKelvey, William

      Taylor, Mrs Ann (Bolton West)

      Dempsey, James

      MacKenzie, Rl Hon Gregor

      Thomas, Dafydd (Merioneth)

      Dixon, Donald

      Maclennan, Robert

      Thomas, Dr Roger (Carmarthen)

      Dobson, Frank

      McMillan, Tom (Glasgow, Central)

      Tinn, James

      Douglas, Dick

      McWilliam, John

      Urwin, Rt Hon Tom

      Dunnett, Jack

      Marshall, David (Gl'sgow,Shettles'n)

      Weetch, Ken

      Dunwoody, Mrs Gwyneth

      Marshall, Dr Edmund (Goole)

      Wellbeloved, James

      Eadie, Alex

      Marshall, Jim (Leicester South)

      Welsh, Michael

      Eastham, Ken

      Maxton, John

      White, Frank R. (Bury & Radcliffe)

      Edwards, Robert (Wolv SE)

      Mellish, Rt Hon Robert

      Whitehead, Phillip

      Ellis, Tom (Wrexham)

      Mitchell, Austin (Grimsby)

      Whitlock, William

      Evans, Ioan (Aberdare)

      Molyneaux, James

      Williams, Rt Hon Alan (Swansea W)

      Ewing, Harry

      Morris, Rt Hon Charles (Openshaw)

      Williams, Sir Thomas (Warrington)

      Faulds, Andrew

      Morton, George

      Wilson, William (Coventry SE)

      Flannery, Martin

      Moyle, Rt Hon Roland

      Winnick, David

      Fletcher, Ted (Darlington)

      Newens, Stanley

      Woolmer, Kenneth

      Foot, Rt Hon Michael

      Oakes, Rt Hon Gordon

      Wrigglesworth, Ian

      Foulkes, George

      Ogden, Eric

      George, Bruce

      O'Neill, Martin

      TELLERS FOR THE AYES:

      Golding, John

      Orme, Rt Hon Stanley

      Mr. James Hamilton and

      Gourlay, Harry

      Palmer, Arthur

      Mr. John Evans.

      Graham, Ted

      NOES

      Adley, Robert

      Chalker, Mrs Lynda

      Griffiths, Eldon (Bury St Edmunds)

      Alexander, Richard

      Chapman, Sydney

      Griffiths, Peter (Portsmouth N)

      Alton, David

      Clarke, Kenneth (Rushcliffe)

      Grimond, Rt Hon J.

      Ancram, Michael

      Clegg, Sir Walter

      Grist, Ian

      Aspinwall, Jack

      Colvin, Michael

      Gummer, John Selwyn

      Atkins, Robert (Preston North)

      Cope, John

      Hamilton, Hon Archie (Eps'm&Ew'll)

      Atkinson, David (B'mouth, East)

      Corrie, John

      Hamilton, Michael (Salisbury)

      Beaumont-Dark, Anthony

      Dover, Denshore

      Hannam, John

      Bendall, Vivian

      du Cann, Rt Hon Edward

      Haselhurst, Alan

      Benyon, Thomas (Abingdon)

      Dunn, Robert (Dartford)

      Havers, Rt Hon Sir Michael

      Berry, Hon Anthony

      Dykes, Hugh

      Hawkins, Paul

      Best, Keith

      Eden, Rt Hon Sir John

      Hawksley, Warren

      Bevan, David Gilroy

      Eggar, Timothy

      Heddle, John

      Blackburn, John

      Faith, Mrs Sheila

      Henderson, Barry

      Blaker, Peter

      Fenner, Mrs Peggy

      Hicks, Robert

      Body, Richard

      Fisher, Sir Nigel

      Higgins, Rt Hon Terence L.

      Boscawen, Hon Robert

      Fletcher, Alexander (Edinburgh N)

      Hill, James

      Braine, Sir Bernard

      Fletcher-Cooke, Charles

      Hogg, Hon Douglas (Grantham)

      Bright, Graham

      Fookes, Miss Janet

      Hooson, Tom

      Brinton, Tim

      Fowler, Rt Hon Norman

      Hordern, Peter

      Brocklebank-Fowler, Christopher

      Fox, Marcus

      Howell, Ralph (North Norfolk)

      Bruce-Gardyne, John

      Freud, Clement

      Hunt, John (Ravensbourne)

      Bryan, Sir Paul

      Fry, Peter

      Hurd, Hon Douglas

      Buchanan-Smith, Hon Alick

      Gardiner, George (Reigate)

      Johnston, Russell (Inverness)

      Buck, Antony

      Garel-Jones, Tristan

      Jopling, Rt Hon Michael

      Butcher, John

      Gorst, John

      Kaberry, Sir Donald

      Cadbury, Jocelyn

      Gow, Ian

      Kershaw, Anthony

      Carlisle, Kenneth (Lincoln)

      Gray, Hamish

      King, Rt Hon Tom

      1032

      1033

      Kitson, Sir Timothy

      Murphy, Christopher

      Spicer, Michael (S Worcestershire)

      Knox, David

      Myles, David

      Sproat, Iain

      Lang, Ian

      Neale, Gerrard

      Squire, Robin

      Latham, Michael

      Needham, Richard

      Stainton, Keith

      Lawson, Nigel

      Nelson, Anthony

      Stanbrook, Ivor

      Le Marchant, Spencer

      Neubert, Michael

      Stanley, John

      Lennox-Boyd, Hon Mark

      Newton, Tony

      Steen, Anthony

      Lester, Jim (Beeston)

      Nott, Rt Hon John

      Stevens, Martin

      Lewis, Kenneth (Rutland)

      Page, John (Harrow, West)

      Tebbit, Norman

      Lloyd, Peter (Fareham)

      Page, Rt Hon Sir R. Graham

      Temple-Morris, Peter

      Loveridge, John

      Page, Richard (SW Hertfordshire)

      Thomas, Rt Hon Peter (Hendon S)

      Luce, Richard

      Parris, Matthew

      Thompson, Donald

      Lyell, Nicholas

      Patten, John (Oxford)

      Thome, Neil (Ilford South)

      Macfarlane, Neil

      Penhaligon, David

      Townend, John (Bridlington)

      MacGregor, John

      Percival, Sir Ian

      Townsend, Cyril D. (Bexleyheath)

      MacKay, John (Argyll)

      Peyton, Rt Hon John

      Trippler, David

      McNair-Wilson, Michael (Newbury)

      Pollock, Alexander

      Taylor, Teddy (Southend East)

      McQuarrie, Albert

      Porter, George

      van Straubenzee, W. R.

      Marshall, Michael (Arundel)

      Prentice, Rt Hon Reg

      Viggers, Peter

      Mather, Carol

      Proctor, K. Harvey

      Waddington, David

      Maude, Rt Hon Angus

      Raison, Timothy

      Wainwright, Richard (Colne Valley)

      Mawby, Ray

      Rathbone, Tim

      Wakeham, John

      Mawhinney, Dr Brian

      Rees-Davies, W. R.

      Walker, Rt Hon Peter (Worcester)

      Maxwell-Hyslop, Robin

      Renlon, Tim

      Walker, Bill (Perth & E Perthshire)

      Mellor, David

      Rhodes James, Robert

      Walker-Smith, Rt Hon Sir Derek

      Meyer, Sir Anthony

      Ridsdale, Julian

      Waller, Garry

      Miller, Hal (Bromsgrove & Redditch)

      Royle, Sir Anthony

      Watson, John

      Mills, Iain (Meriden)

      Scott, Nicholas

      Wells, Bowen (Hert'rd & Stev'nage)

      Mills, Peter (West Devon)

      Shaw, Giles (Pudsey)

      Wheeler, John

      Miscampbell, Norman

      Shaw, Michael (Scarborough)

      Wickenden, Keith

      Moate, Roger

      Shelton, William (Streatham)

      Wilkinson, John

      Montgomery, Fergus

      Shepherd, Colin (Hereford)

      Wolfson, Mark

      Morgan, Geraint

      Shepherd, Richard(Aldridge-Br'hills)

      Morris, Michael (Northampton, Sth)

      Silvester, Fred

      TELLERS FOR THE NOES:

      Morrison, Hon Charles (Devizes)

      Speed, Keith

      Mr. Peter Brooke and

      Morrison, Hon Peter (City of Chester)

      Speller, Tony

      Lord James Douglas-Hamilton.

      Mudd, David

      Question accordingly negatived.

    New Clause 8

      ANNUAL INSPECTION OF PUBLIC SERVICE VEHICLES
      'The Minister shall prescribe in regulations arrangements for the annual inspection of public service vehicles at either official public service vehicle testing stations or, if the equipment provided is adequate, the operator's
      premises, but no such regulations shall be made until a draft thereof has been laid before, and approved by a resolution of, each House of Parliament.'.—[Mr. Booth.]
      Brought up, and read the First time.
      Question proposed, That the clause be read a Second time.—[Mr. Prescott.]
      Question put:—
      The House divided: Ayes 147, Noes 183.

      Division No. 239]

      AYES

      [8.15 pm

      Adams, Allen

      Dixon, Donald

      Haynes, Frank

      Allaun, Frank

      Dobson, Frank

      Heffer, Eric S.

      Alton, David

      Douglas, Dick

      Holland, Stuart (L'beth, Vauxhall)

      Archer, Rt Hon Peter

      Dunnett, Jack

      Home Robertson, John

      Ashton, Joe

      Dunwoody, Mrs Gwyneth

      Homewood, William

      Benn, Rt Hon Anthony Wedgwood

      Eadie, Alex

      Hooley, Frank

      Bennett, Andrew (Stockport N)

      Eastham, Ken

      Horam, John

      Booth, Rt Hon Albert

      Edwards, Robert (Wolv SE)

      Howell, Rt Hon Denis (B'ham, Sm H)

      Bradley, Tom

      Ellis, Tom (Wrexham)

      Janner, Hon Greville

      Brown, Hugh D. (Provan)

      Evans, Ioan (Aberdare)

      Jay, Rt Hon Douglas

      Buchan, Norman

      Evans, John (Newton)

      John, Brynmor

      Callaghan, Jim (Middleton & P)

      Ewing, Harry

      Johnson, James (Hull West)

      Campbell-Savours, Dale

      Faulds, Andrew

      Johnson, Walter (Derby South)

      Cartwright, John

      Flannery, Martin

      Johnston, Russell (Inverness)

      Clark, Dr David (South Shields)

      Fletcher, Ted (Darlington)

      Jones, Barry (East Flint)

      Cocks, Rt Hon Michael (Bristol S)

      Foot, Rt Hon Michael

      Jones, Dan (Burnley)

      Cohen, Stanley

      Foulkes, George

      Kilroy-Silk, Robert

      Coleman, Donald

      Freud, Clement

      Leadbitter, Ted

      Cowans, Harry

      George, Bruce

      Leighton, Ronald

      Cryer, Bob

      Golding, John

      Lestor, Miss Joan (Eton & Slough)

      Cunliffe, Lawrence

      Gourlay, Harry

      Lewis, Ron (Carlisle)

      Cunningham, George (Islington S)

      Graham, Ted

      Lofthouse, Geoffrey

      Cunningham, Dr John (Whitehaven)

      Grant, George (Morpeth)

      McElhone, Frank

      Dalyell, Tarn

      Grimond, Rt Hon J.

      McGuire, Michael (Ince)

      Davidson, Arthur

      Hamilton, James (Bothwell)

      McKay, Allen (Penistone)

      Davies, Ifor (Gower)

      Hamilton, W. W. (Central File)

      McKelvey, William

      Davis, Terry (B'rm'ham, Stechford)

      Hardy, Peter

      MacKenzie, Rt Hon Gregor

      Dempsey, James

      Harrison, Rt Hon Walter

      Maclennan, Robert

      McMillan, Tom (Glasgow, Central)

      Powell, Raymond (Ogmore)

      Strang, Gavin

      McWilliam, John

      Prescott, John

      Summerskill, Hon Dr Shirley

      Marshall, David (Gl'sgow,Shetles'n)

      Race, Reg

      Taylor, Mrs Ann (Bolton West)

      Marshall, Dr Edmund (Goole)

      Rees, Rt Hon Merlyn (Leeds South)

      Thomas, Dafydd (Merioneth)

      Marshall, Jim (Leicester South)

      Roberts, Albert (Normanton)

      Thomas, Dr Roger (Carmarthen)

      Maxton, John

      Roberts, Ernest (Hackney North)

      Urwin, Rt Hon Tom

      Mellish, Rt Hon Robert

      Robertson, George

      Wainwright, Richard (Colne Valley)

      Mitchell, Austin (Grimsby)

      Rodgers, Rt Hon William

      Weetch, Ken

      Molyneaux, James

      Ross, Ernest (Dundee West)

      Wellbeloved, James

      Morris, Rt Hon Charles (Openshaw)

      Ross, Wm. (Londonderry)

      Welsh, Michael

      Morton, George

      Rowlands, Ted

      White, Frank R. (Bury & Radcliffe)

      Moyle, Rt Hon Roland

      Sever, John

      Whitehead, Phillip

      Newens, Stanley

      Shore, Rt Hon Peter (Step and Pop)

      Whitlock, William

      Oakes, Rt Hon Gordon

      Silkin, Rt Hon John (Deptford)

      Williams, Rt Hon Alan (Swansea W)

      Ogden, Eric

      Silverman, Julius

      Wilson, William (Coventry SE)

      O'Neill, Martin

      Snape, Peter

      Winnick, David

      Orme, Rt Hon Stanley

      Soley, Clive

      Woolmer, Kenneth

      Palmer, Arthur

      Spearing, Nigel

      Wrigglesworth, Ian

      Park, George

      Spriggs, Leslie

      Parker, John

      Stewart, Rt Hon Donald (W Isles)

      TELLERS FOR THE AYES:

      Penhaligon, David

      Stoddart, David

      Mr. James Tinn and

      Powell, Rt Hon J. Enoch (S Down)

      Stott, Roger

      Mr. Joseph Dean.

      NOES

      Adley, Robert

      Hamilton, Michael (Salisbury)

      Myles, David

      Alexander, Richard

      Hannam, John

      Neale, Gerrard

      Ancram, Michael

      Haselhurst, Alan

      Needham, Richard

      Aspinwall, Jack

      Hastings, Stephen

      Nelson, Anthony

      Atkins, Robert (Preston North)

      Havers, Rt Hon Sir Michael

      Neubert, Michael

      Atkinson, David (B'mouth, East)

      Hawkins, Paul

      Newton, Tony

      Beaumont-Dark, Anthony

      Hawksley, Warren

      Nott, Rt Hon John

      Bendall, Vivian

      Heddle, John

      Page, John (Harrow, West)

      Benyon, Thomas (Abingdon)

      Henderson, Barry

      Page, Rt Hon Sir R. Graham

      Berry, Hon Anthony

      Hicks, Robert

      Page, Richard (SW Hertfordshire)

      Best, Keith

      Higgins, Rt Hon Terence L.

      Parris, Matthew

      Bevan, David Gilroy

      Hill, James

      Patten, John (Oxford)

      Blackburn, John

      Hogg, Hon Douglas (Grantham)

      Percival, Sir Ian

      Blaker, Peter

      Hooson, Tom

      Peyton, Rt Hon John

      Body, Richard

      Hordern, Peter

      Pollock, Alexander

      Boscawen, Hon Robert

      Howell, Ralph (North Norfolk)

      Porter, George

      Braine, Sir Bernard

      Hunt, John (Ravensbourne)

      Prentice, Rt Hon Reg

      Bright, Graham

      Hurd, Hon Douglas

      Proctor, K. Harvey

      Brinton, Tim

      Jopling, Rt Hon Michael

      Raison, Timothy

      Brocklebank-Fowler, Christopher

      Kaberry, Sir Donald

      Rathbone, Tim

      Bruce-Gardyne, John

      Kershaw, Anthony

      Rees-Davies, W. R.

      Bryan, Sir Paul

      King, Rt Hon Tom

      Renton, Tim

      Buchanan-Smith, Hon Alick

      Kitson, Sir Timothy

      Rhodes, James, Robert

      Buck, Antony

      Knox, David

      Ridsdale, Juliian

      Butcher, John

      Lang, Ian

      Royle, Sir Anthony

      Cadbury, Jocelyn

      Latham, Michael

      Scott, Nicholas

      Carlisle, Kenneth (Lincoln)

      Lawson, Nigel

      Shaw, Giles (Pudsey)

      Chalkor, Mrs Lynda

      Le Marchant, Spencer

      Shaw, Michael (Scarborough)

      Chapman, Sydney

      Lester, Jim (Beeston)

      Shelton, William (Streatham)

      Clarke, Kenneth (Rushcliffe)

      Lewis, Kenneth (Rutland)

      Shepherd, Colin (Hereford)

      Clegg, Sir Waller

      Lloyd, Peter (Fareham)

      Shepherd, Richard (Aldridge-Br'hills)

      Colvin, Michael

      Loveridge, John

      Silvester, Fred

      Cope, John

      Luce, Richard

      Speed, Keith

      Corrie, John

      Lyell, Nicholas

      Speller, Tony

      Dover, Denshore

      Macfarlane, Neil

      Spence, John

      du Cano, Rt Hon Edward

      MacGregor, John

      Spicer, Michael (S Worcestershire)

      Dunn, Robert (Dartford)

      MacKay, John (Argyll)

      Sproat, Iain

      Dykes, Hugh

      McNair-Wilson, Michael (Newbury)

      Squire, Robin

      Eden, Rt Hon Sir John

      McQuarrie, Albert

      Stainton, Keith

      Eggar, Timothy

      Marshall, Michael (Arundel)

      Stanbrook, Ivor

      Faith, Mrs Sheila

      Mather, Carol

      Stanley, John

      Fenner, Mrs Peggy

      Maude, Rt Hon Angus

      Steen, Anthony

      Fisher, Sir Nigel

      Mawby, Ray

      Stevens, Martin

      Fletcher, Alexander (Edinburgh N)

      Mawhinney, Dr Brian

      Taylor, Teddy (Southend East)

      Fletcher-Cooke, Charles

      Maxwell-Hyslop, Robin

      Tebbitt Norman

      Fookes, Miss Janet

      Mellor, David

      Temple-Morris, Peter

      Fowler, Rt Hon Norman

      Meyer, Sir Anthony

      Thompson, Donald

      Fox, Marcus

      Miller, Hal (Bromsgrove & Redditch)

      Thorne, Neil (Ilford South)

      Fry, Peter

      Mills, Iain (Merlden)

      Townend, John (Bridlington)

      Gardiner, George (Relgate)

      Mills, Peter (West Devon)

      Townsend, Cyril D. (Bexleyheath)

      Garel-Jones, Tristan

      Miscampbell, Norman

      Trippier, David

      Gorst, John

      Moate, Roger

      van Straubenzee, W. R.

      Gow, Ian

      Montgomery, Fergus

      Viggers, Peter

      Gray, Hamish

      Morgan, Geraint

      Waddington, David

      Griffiths, Eldon (Bury St Edmunds)

      Morris, Michael (Northampton, Sth)

      Wakeham, John

      Griffiths, Peter (Portsmouth N)

      Morrison, Hon Charles (Devizes)

      Walker, Rt Hon Peter (Worcester)

      Grist, Ian

      Morrison, Hon Peter (City of Chester)

      Walker, Bill (Perth & E Perthshire)

      Gummer, John Selwyn

      Mudd, David

      Walker-Smith, Rt Hon Sir Derek

      Hamilton, Hon Archie (Eps'm&Ew'll)

      Murphy, Christopher

      Waller, Garry

      1036

      1037

      Watson, John

      Wickenden, Keith

      TELLERS FOR THE NOES:

      Wells, Bowen (Hert'rd & Stev'nage)

      Wilkinson, John

      Lord James Douglas-Hamilton and

      Wheeler, John

      Wolfson, Mark

      Mr. Peter Brooke.

      Question accordingly negatived.

    New Clause 9

      DUTY TO EXHIBIT OPERATOR'S DISC
      '(1) A vehicle shall not be used on a road as a stage, express or contract carriage unless there is fixed and exhibited on the vehicle in the prescribed manner an operator's disc.
      (2) In this section "operator's disc" means a disc in the prescribed form issued to the holder of a PSV operator's licence by the traffic commissioners by whom the licence was granted and containing particulars of the licence, which shall include the serial number, the name of the holder and the address of his operating centre.
      (3) Traffic Commissioners on granting a PSV operator's licence shall supply the person to whom the licence is granted with a number of operators' discs equal to the maximum number of vehicles which that person may use under the licence in accordance with the condition or conditions attached to the licence under section 21(1); and if that maximum number is later increased on the variation of one or more of those conditions, the traffic commissioners on making the variation shall supply the holder of the licence with further operators' discs accordingly.
      (4) Regulations may make provision—

      (a) with respect to the custody and production of operators' discs;

      (b) for the issue of new operators' discs in place of those lost, destroyed, or defaced;

      (c) for the return of operators' discs on the revocation or expiration of a PSV operator's licence or in the event of a variation of one or more conditions attached to a licence under section 21(1) having the effect of reducing the maximum number of vehicles which may be used under the licence.

      (5) Subject to subsection (6), if a vehicle is used in contravention of subsection (1), the operator of the vehicle shall be liable on summary conviction to a fine not exceeding £200.
      (6) In any proceedings for an offence under subsection (5) it shall be a defence for the person charged to prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence.'.—[Mr. Prescott.]
      Brought up, and read the First time.
      Mr. Prescott: I beg to move, That the clause be read a Second time.
      Mr. Deputy Speaker: We may discuss at the same time Government amendments Nos. 71 and 72.
      Mr. Prescott: Like the earlier new clauses, this one is designed to provoke a debate on a principle—in this case, the
      1038
      duty to exhibit an operator's disc. The new clause is almost exactly the same as the clause which the Government removed from the Bill. On Second Reading, in Committee and in the consultative document, they were apparently convinced by the argument that, as part of the enforcement of the operating licensing system, a vehicle should exhibit such a disc. We seek to put that requirement back into the Bill.
      There is probably a balance of judgment here, but our view is that without the display of such a disc the licensing system for buses will be less enforceable. That was apparently the Government's view until the Committee stage. Their argument for removing this provision was that the commissioners would have less clerical work and bureaucracy would be reduced.
      This shift to "quality control", from an emphasis on the vehicle itself to an emphasis on the operator's conditions, was clearly recommended in EEC legislation and was already embodied in the 1968 legislation. The report of the Foster committee into road haulage operating licensing was much concerned with certification and display of discs in the operation of this licensing system.
      The lorry licensing system has been a trail blazer for bus licensing. Licensing was first imposed on lorries and buses in the 1930s to ensure safety, fair competition and the provision of services. The first departure from that principle was with denationalisation in 1953, but it was the 1968 Labour legislation which emphasised the safety aspect and the quality of the vehicle, not only by more stringent tests on the vehicles themselves but by improving the quality of the operators. The emphasis was, therefore, placed more firmly on the operator who was considered to be of good repute, was of good financial standing and possessed certain qualifications laid down by legislation covering the road haulage industry.
      8.30 pm
      The disc was retained as evidence of the enforcement system. It is interesting to note that Professor Foster—in view of criticisms—looked at the operation of the system and the avoidance of enforcement

      1039
      techniques by a number of cowboy operators. He made certain recommendations that I believe are relevant to this debate.
      One matter of immediate concern—and perhaps the Minister can reassure us—is this. If we are to retain the disc for heavy goods vehicles as part of our system of ensuring safety, why is it not considered necessary for the passenger transport service? Obviously, the carrying of great numbers of passengers demands greater safety precautions than those needed for heavy goods vehicles. That may be a cynical point to make, because only one or two cowboy lorry drivers are involved, but we should be stricter where greater numbers are involved.
      Concern for safety should be an important part of our deliberations. The disc system is not the most essential part of our safety control mechanisms. Other control features have been developed. Nevertheless, the Foster report considers the disc system to be important in relation to safety and operator licensing. That inquiry was concerned with cowboy operators.
      In Committee we said that we wished to tighten the procedure, and we considered the possibility of the vehicle registration number being included on the disc. We considered restricting the flexibility of use of the disc because of the possibility that an operator might have 15 buses and only 10 licences. That situation might be decided by his operating centre and other factors determined by the commissioner. The industry did not necessarily agree with that point but it concerned me when I considered those operators who had more buses than they had licences. That situation tends to encourage the avoidance of the control intended to be exercised by the disc system.
      After all, the commissioner decides the number of discs issued to a company. If a company is using more vehicles than it is licensed to use, that is an avoidance we seek to prevent. In the face of our desire to tighten up the procedure, the Government removed it completely. That took the Opposition by surprise. A pattern seemed to have developed in Committee. Every time we pointed out a difficulty or expressed a desire to tighten up the procedure in an attempt to follow the logic of a clause, the Government immediately dropped it.
      1040
      I have in mind car sharing and the cost involved. We pointed out the difficulties about car insurance in relation to those who shared a car. The Government's response was to remove the provision on car sharing. We are still not satisfied with that response. Nevertheless, passenger service appears to be following the path established by the road haulage industry in the matter of safety procedures, enforcement procedures and licensing controls.
      It is relevant to bear in mind what Professor Foster had to say in his recent report to the Department about operator licensing in the road haulage industry. In the light of what has happened, it seems that Professor Foster is, on balance, recommending in the 90-odd provisions of his report—not all of which are devoted to discs—that there should be a tightening up of the procedures and not a loosening of them. He points out how some operators can get round the licensing procedures and he indicates to the Government how the system might be tightened up.
      We are concerned—and I trust that the Parliamentary Secretary will address his mind to this—that if the duty to display a disc is not to be imposed upon passenger service operators, that may mean that the Government will also remove that obligation from heavy goods vehicle operators. What are the Government's reasons for not imposing that duty on the passenger service operators? Some reasons have been given in the report, and it is to those reasons that we address our minds. Foster was concerned only with minorities, so that we are concerned here not with mass evasion but with creating a system that can bring to order the minority who wish to break the law or disregard their obligations under operator licensing. Any administrative system involves bureaucratic control, and safety administration requires some form of bureaucracy. Its extent must be a matter for judgment.
      In Committee the Government took the view that the same purpose could be achieved by a different means. Instead of operators having to apply for a licence by filling out a form and getting a disc, they would rely on the name and licence number being painted on the side of the vehicle. That idea is not new. Regulations already use that arrangement. The Public Service Vehicles (Conditions of

      1041
      Fitness, Equipment and Use) Regulations 1972 state in paragraph 40:
      "Every vehicle shall be marked in readily legible characters not less than 1 inch in height and painted in a conspicuous position on the near side of the vehicle in colours which contrast with their background, with the name and address of the authority, company, firm or individual to whom or to whose representative the public service vehicle licence under Part III of the Act was granted in respect of the vehicle".
      The Government said that if all that information were painted on the side of the lorry, that would be sufficient; There was no need for a disc to be displayed.
      Certain problems arise out of the procedure that the Government propose. The obvious difficulty is of getting a sign-writer. Advice to me from the industry states that that is difficult, but that claim is not conclusive. Past practice has tended to throw up problems in that respect. A considerable amount of evidence shows that the writing is not kept up to date. It is not easy to change the painting on the side of a lorry that is in regular use. I am told that a number of lorries are currently in contravention of the regulation. It is much easier to amend the informaon a disc, which would be prominently displayed, than to change a painted sign.
      The other point concerns the number of vehicles that an operator can run. Under the previous proposals, if an operator had 20 vehicles he would have to have 20 discs. But now the possession of 20 discs does not mean that an operator has 20 vehicles. He can own more vehicles than he has discs as long as the number of vehicles actually in operation does not exceed the number he is registered to operate. It is much easier to transfer a disc from one lorry to another than to transfer a door. Those are the sort of practical difficulties which could lead to evasion. It is much easier for an operator to plead difficulties in getting information painted on the door of a lorry than to plead difficulties over a disc which is available for all to see. The problem is how to check that and how to enforce the system. On balance, there is a better argument for using the disc system. I hope that the Minister will say why he feels it is necessary to retain it for lorries but not to exempt buses. The question is whether the disc indicates more clearly that the operator is licensed to carry out his duties.
      1042
      It is interesting to recall the words of Professor Foster. In chapter 8.90 of his report on the enforcement of safety, he says:
      "In our judgment, the first and by far the most important step to check illegal operation is to require all vehicles to carry a visible licence plate in a conspicuous place, and we recommend that this should be done as soon as possible."
      He continues in paragraph 8.95:
      "These changes should make it far easier to detect illegal vehicles. If, as we recommend in Chapter 13, they are backed up by a computer record system immediately accessible to policemen and vehicle and traffic examiners in order to check quickly on a particular vehicle, it would become much harder for individual vehicles or whole fleets to operate illegally through falsification … of plates."
      Police computers are impressive when they are used to check cars. On one occasion I was stopped by the police and asked whether I owned the car that I was driving. It was checked by a police computer in a few seconds. To that extent, Foster recommended an important law enforcement procedure. The Government should give better reasons why they think it is necessary for information to be painted on the sides of vehicles.
      The industry and the operators prefer the disc system. I am also informed that they cannot accept that the chairman of the traffic commissioners would be able to devise an acceptable system of sign-writing.
      In Committee, the Minister said that the burden of evidence was that we should do away with the disc system. I challenged him on that. I said:
      "Apart from the traffic commissioners and the Government, I wonder whether there are other organisations which … are strongly for retaining this disc or symbol—organisations such as the police or other authorities."
      The Minister replied:
      "I take the hon. Gentleman's point. We considered and consulted on the matter. I examined the clause, having seen the system, and asked whether it was necessary. We decided that it is not."—[Official Report, Standing Committee H, 7 February, 1980; c. 1280.]
      Can the Parliamentary Secretary say how that decision was reached? Presumably, when discussions started, the commissioners agreed with it. The Minister must have had consultations with the commissioners and with the operators, who apparently wish to retain the disc system. What was the new insight? Surely it was not bureaucracy. That was clearly

      1043
      known before publication of the Bill. Will the Parliamentary Secretary also confirm that the commissioners are prepared to abandon the disc system for buses but presumably to retain it for lorries?
      I think that the balance of the argument both by Foster and by others concerned is that the disc should be retained to help in enforcement. It would make it more difficult for the minority of cowboy operators to continue their practices. We must make a judgment on the balance between bureaucracy and the enforcement of standards. In our view, it would be better to maintain the disc as a helpful contributory factor, as in the road haulage industry, for the enforcement of both safety and other standards in the industry.
      8.45 pm
      Mr. Kenneth Clarke: There were two occasions in Committee when we shot the Opposition's fox on two rather difficult points. One was the regulation-making power which we were proposing to take to govern the costs of car sharing, and the other was the requirement to display a disc on public service vehicles.
      On both those matters, the Opposition tabled a number of amendments and pointed out the considerable difficulties which might arise in practice from the Government's suggestions as they then stood. We looked at both those points and, after reconsidering them, we decided that in both cases the best answer to the difficulties was not to go ahead with what we were proposing. I shall not deal with the regulation-making power in respect of car sharing costs because we have an amendment about that.
      On the question of discs, we came to the conclusion, after further consideration, that there was no substantial reason for having a disc inside the vehicles at all. The hon. Member for Kingston upon Hull, East (Mr. Prescott) asked how we reached that conclusion. Plainly, we had a change of mind. We told the Committee that we had. Obviously, I cannot give blow-by-blow details of what went on within the Department and the Government—although I was fairly frank with the Committee quite often—but it was more or less as I have put it.
      We had a second look at the matter, prompted by the amendments put down in Committee, and we asked ourselves
      1044
      the fundamental question of why bother with discs at all before we went on to think of assembling arguments to answer amendments about what might or might not have to be on them.
      It seemed to us that there was no sensible answer to that question, and the enforcement problems at which the requirement was aimed were not such as to need the disc, and certainly not such as would justify the immense bureaucracy involved in issuing thousands of them.
      One was led to reflect that probably the reason why we had the clause in the Bill at all was that public service vehicles had always carried discs in the past. Such vehicles have had a PSV licence disc exhibited in the cab for perhaps as long as 50 years, and no one had actually thought of buses going around in modern circumstances without these little pieces of paper or some up-to-date equivalent in the corner of the cab.
      That was really how we arrived at our decision. I do not want to give the impression that we arrived at it lightly. I realise that there is considerable concern in the industry. The Opposition remain concerned about the enforcement problems if there are no discs in vehicles, and I know that the Confederation of Passenger Transport feels strongly on the point. It feels that enforcement of the safety provisions of the Bill will be difficult without discs.
      In fact, the representations which I have received from the Confederation of Passenger Transport are pretty close to the new clause now before us. The Opposition have changed their view compared with their position in Committee, when, as I recall it, their amendment was designed to ensure that there was a disc for every vehicle. What we have now is a proposal which is in agreement with the Confederation of Passenger Transport—
      Mr. Prescott: It could not be the same if we were to have it selected.
      Mr. Clarke: I know that it had to be a different proposal if it was to be selected, but the point of what we now have before us is that each operator will be issued with a given number of discs, and on any given day he will be able to put those on whatever vehicles he wants to use, while making sure that

      1045
      he does not have more out on any day than his operator's licence would allow.
      Having considered this matter seriously, my conclusion is that I still cannot see what the point is that so troubles the Opposition and the CPT. I have looked at the matter carefully and done my best to be sure that I am not missing some obvious safety point. I ask the House to consider the safety provisions and to think of precisely what the discs are supposed to achieve.
      Mr. Campbell-Savours: I had left the Chamber for a minute or two in order to telephone a colleague of mine who is a haulier and has an operator's licence. I was interested in the procedure whereby people applied for MoT certificates in the case of private vehicles and, in the case of commercial vehicles, the certification about which my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) had spoken to me privately. Is it not possible that, in the event of someone removing the disc which is provided by an authority, operators will misuse the system when they apply for licensing, as in the case of MoT certificates? Perhaps the Minister will comment on that, because that was the instant response of my colleague when I telephoned him. He said that the system was open to abuse.
      Mr. Clarke: I am not sure whether the hon. Gentleman's colleague is engaged in road haulage or passenger transport. Perhaps as a relevant aside I can deal with the point raised by the hon. Member for Kingston upon Hull, East with regard to lorries. The Government will produce soon their response to the Foster report, which lays heavy emphasis on plating as an enforcement procedure in heavy goods vehicles. That is slightly different, but it aims at roughly the same point.
      Without anticipating what we shall say about Foster, there are clear reasons for distinguishing between heavy goods vehicles and passenger buses. Indeed, the systems have always been different in the past. Obviously, there are vastly more lorries than there are buses. There as vastly more operators. Lorry operators do not have the same contact with the licensing authority as is envisaged in the case of buses, where in most areas the bus operators will have regular contact with
      1046
      the traffic commissioners to whom they apply for the licences or services and to whom they notify all their stage carrying services. However, such operators also provide a service even if they are no longer involved in road service licensing—for example, if they are involved in excursions or tours. In that case, they advertise the availability of their tours to the general public. Therefore, there are reasons for distinguishing between the two.
      Nevertheless, we must be satisfied about the safety requirements for passenger buses. I agree that they are no less important than lorries. Indeed, it could be argued that they are even more important because of the number of people they carry.
      As I have emphasised, the safety provisions in the Bill depend on three features. First, there is the system of operating the licensing itself, whereby an operator has to be of good repute and sound financial standing and to have someone who is competent to manage the business and so on. In giving an operator a licence, the traffic commissioner has regard to his facilities, experience and competence, and he may attach conditions to the licence which may affect the number of vehicles which a person operates because of the limitation of his premises, his experience and his work force.
      In addition to operator licensing, there is the power of the vehicle inspectors to inspect the vehicle at any stage in a wide range of circumstances, and penalties can be imposed on the operator if the vehicle turns out to have defects. Certainly a prohibition can be put on any vehicle which proves to be defective.
      The third feature relates to the annual inspection of vehicles. For the first time, it will be carried out at a prescribed place by either our own inspectors or people under their supervision, so that annually every passenger vehicle carrying more than eight passengers will have a certificate saying that it has got through its annual inspection. That inspection will be much more rigorous than, for instance, the MoT test as applied to cars, which is a quite different system that is much more akin to HGV testing.
      What is it that a disc on a vehicle, whether it describes the particular vehicle or the operator, is designed to achieve?

      1047
      So far as I can see, there are two main purposes. The first is to ensure that at all times when a vehicle is on the road, someone is saddled with the responsibility for it. Someone, as it were, acts as the operator who carries the can for safety defects and who is liable for the penalties that will arise if he is not operating it safely. I suppose that the only slight footnote is that whoever is the operator on any given day should not be operating more vehicles than he is supposed to do if the main operator has a condition attached which limits him to a given number of vehicles.
      Let us deal with the first rider: that at any given stage somebody should be saddled with the responsibility for having the bus on the road. Perhaps I should say that someone has to be fixed, rather than saddled, with the responsibility for having the bus on the road. It is an obligation that we do not want people to shrug off. I cannot see how it is inadequate to have the name and address and licence number of the operator painted on the side of the bus. I cannot see the additional quality that a disc would have over and above the name and address painted on the side of the bus that would fix the operator with liability.
      If the operator hires out his bus and driver to another tour operator, that will not affect liability. If the operator has hired out his coach or bus with the driver, his employee, it remains the operator's liability. He is responsible for the driver's hours, the condition of the vehicle and so on. His name and address remain on the side of the bus.
      If by any chance the operator hires out his vehicle to another operator—sometimes another operator will use a vehicle, the property of another establishment in the same industry, but using his own drivers and routes—there will be a sign indicating that the vehicle is on hire to that other operator. Therefore, it will still be possible to identify who is fixed with responsibility at any given time if the vehicle is stopped by the police or by a vehicle inspector.
      That leads to the second rider: how does one know that an operator has more vehicles on the road than he is supposed to have if he has that condition imposed upon him?
      We propose by regulations—and the Bill gives the power—to provide that the
      1048
      operator must furnish to the traffic commissioners a list of the vehicles that he proposes to operate. There will be penalties for failure to comply with that regulation. Therefore, the traffic commissioners will have a complete list of the vehicles that an operator proposes to run. If, upon annual inspection of the vehicles, stopping the vehicles or any infringement arising from their use, it appears that an operator is operating a vehicle which is not on the list notified to the traffic commissioners, he will be liable to penalties. He will also incur the wrath of the traffic commissioners, who retain wide powers over the renewal of operators' licences and so on.
      I suppose that it will be possible on any one day, if we do not have the disc system, for someone to try to get away with it. I do not shut my mind to the possibility of the cowboy operator——to use the favourite phrase of the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans), who has disappointed me by not using that phrase today—trying to get away with operating more vehicles than he has licences to operate. It will be difficult to detect.
      Mr. Prescott: That is the whole point.
      Mr. Clarke: The problem will arise only when he is caught operating a vehicle about which he has not notified the traffic commissioners.
      Mr. Prescott: The policeman will only need to look for the disc.
      Mr. Clarke: I am not blinding myself to that possibility. We have to consider the possibility of that occurring in practice. It is not inconceivable that there might be such an operator. Ultimately, he will be detected, and the traffic commissioners will take appropriate action. The Opposition and the CPT suggest that operators should be issued with paper discs to be displayed on all vehicles that they operate every day of the week to guard against that eventuality. The bureaucracy, the time and the cost involved would be out of proportion to the risk involved.
      Mr. Cowans: I shall not disappoint the Parliamentary Secretary, because what we are talking about is the cowboy operator. There are two questions here. First, whose is the responsibility? Is it

      1049
      the responsibility of the policeman stopping the bus, presuming that the operator has his name and address and telephone number on the side? What kind of bureaucracy is that? But there is a more important question. There is a fundamental difference here. Though I am not suggesting for one minute that everyone does it, the man or woman boarding the bus can look at the disc and make sure that it is a licensed bus. Under the Government's system the potential passenger cannot do that.
      9 pm
      Mr. Clarke: The last point put forward by the hon. Member for Newcastle upon Tyne, Central was not his strongest. He is a rare passenger who, before boarding a bus or coach, studies the PSV disc to make sure that he is safe and knows where he is going. If it is envisaged that when such a new system comes into effect a generation of passengers will study the operator's disc before they board the bus, I shall be very surprised. The only people likely to do so are the members of the Standing Committee who have had to listen to the debates about the disc. I do not think that any ordinary members of the public would do so. If the bus crashes, is stopped for speeding or an infringement of driver's hours or is involved in an accident with another vehicle, what is needed is not a disc, a paper or any regulations backing up that paper, or the issuing of thousands of bits of paper all over the place. I suggest that a passenger should be able to look on the side of the vehicle where he will see the name and address and any other features that may be required to discover who is involved in the infringement.
      Mr. Cohen: In this country we run a series of programmes to help people with problems of illiteracy. There are many old people whose eyesight is such that they cannot see. How does the Minister suggest that they cope with what he is proposing?
      Mr. Clarke: First, I insist that all my vehicle examiners are literate. Secondly, I am led to believe that a high proportion of the police are literate. If an illiterate member of the public has difficulty reading the name and address on the side
      1050
      of a bus, I suggest that he may have difficulty reading what is on the disc which the clause suggests should be on the bus.
      Mr. Prescott: The Parliamentary Secretary well knows that we are concerned that it should be recognised in the Bill that a bus company can have more buses than it has discs. Our point is that though the operating centre may have determined that an operator shall operate no more than 10 buses, he may ignore that and begin to operate more vehicles and offend against the conditions laid down in the Bill. The law enforcement agencies will not be able to ascertain that too easily, because the company will have its name and address painted on the side of all its vehicles but will be licensed for only 80 per cent. of those vehicles. With a disc it will be easier to,identify which bus is operating officially on the day. That is the point to which the Parliamentary Secretary should address his remarks.
      Mr. Clarke: I accept that enforcement is the only point about which we are concerned. An operator who has a condition on his licence that he should operate a given number of buses may for some reason buy more buses than he is licensed to operate. An operator has to be a really strange man to put money into buying more buses than he is allowed to operate, though that can happen sometimes. I accept that if that condition is attached to a licence, penalties should accrue if it is broken. Such an allegation will require investigation by the traffic commissioners.
      The traffic commissioners tend to look with more care at the operations of operators whom they suspect to be at the risky end of the business or whose activities do not often come to their attention because those operators do not go in for any business activity that requires road service licensing. But in the end someone will be required to check the vehicle.
      If that person sees a vehicle with a certain registration number or name and address on the side, it will be for him to check that the traffic commissioners have that name on their records. That could be done by the police or by the traffic commissioners.
      At present I am still not persuaded—although I agree that the disc is a more

      1051
      foolproof system—that what we are talking about is such a serious aspect of our safety requirements, such a serious risk, that it justifies this provision being imposed on every single operator licence, for every vehicle that an operator has on the road, every day of the week, to cover it.
      With respect, the Opposition, as their first amendment in Committee showed, are just shying back to the tradition of having discs in buses, which we always had under the PSV system, which is no longer required because of our new arrangements for annual inspections. They are now trying to find new details to put on new discs. I shall continue to consider the matter carefully. There are responsible bodies that are convinced that somehow this is necessary. We have taken many soundings on this matter and we continue to do so. It has not been established to our satisfaction that there is a serious enforcement problem here which justifies this quite out-of-proportion bureaucracy. In a Bill which is designed to get rid of a great deal of the unnecessary bureaucracy and control in an area which has had far too much of it for years and years, it seems that we should concentrate on the essentials. The Bill without the disc achieves the essentials of having safe passenger vehicles on the roads.
      Mr. Booth: The Parliamentary Secretary's analogy between the power to make the car-sharing cost regulations and the disc clause is not one that I can accept. We had amendments down to both of these provisions, but in the case of car-sharing costs from the outset, right from Second Reading, we were showing just how difficult it would be, if not impossible, to make effective regulations in that area. It was a point that was finally somewhat grudgingly conceded by the Minister in Committee and withdrawn. That was the end of that.
      The position is not the same in relation to the initial proposition in the Bill about operators' licence discs, because there it was the view, and still is the view, of the Opposition that if that original clause was at fault it was because it was not sufficiently stringent. There was no question of our ever suggesting that such objections as we had to the clause would be solved in any way by taking the clause away.
      1052
      As my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has pointed out, we are concerned about two aspects of this matter. It is fair to say that we have changed our position from what it was at the Committee stage. I shall explain why—quite apart from needing a different amendment in order to have a discussion on the matter. One reason is that we were convinced after discussions with people about the original clause that the way in which we were proposing to change it—namely, by requiring the disc to be coupled with the registration number—had a considerable drawback, namely, the lack of flexibility. People working in the industry are of the view that the original clause had a considerable advantage over the present law—namely, that by merely limiting the number of discs to the operator there would be the possibility of the operator switching the disc from one vehicle to another, where it was advantageous and sensible to do so. Provided that he switched the disc to another vehicle, which was sound, safe and properly maintained and which had its certificate of fitness, it would be better that he did that than to run a vehicle which was doubtful in any way as to the purpose of its operation.
      What the Minister has done in seeking to meet our objections between the Committee stage and the present time has destroyed that one advantage of the system originally proposed. By relating the number of discs to a list of registration numbers of vehicles, the flexibility has again gone. It has entirely disappeared. The Minister has rejected our proposition in Committee and the one aspect of the original clause that operators had favoured. He is therefore right to say that a policeman or an inspector could check a vehicle. He could then get in touch with the traffic commissioner and ask whether the vehicle was on the list. If it were not on the list, he could go ahead with a prosecution.
      In order to attain that limited degree of enforceability, flexibility will be lost. As there is a limitation on the number of vehicles that can be operated under a particular operator's licence, it will be impossible to enforce the provision by a quick visual roadside examination. That has been pointed out several times. If an operator is licensed to run 20 vehicles, the police must catch him operating not

      1053
      one but 21 vehicles. If he is licensed to operate 25 vehicles, the police must simultaneously catch the operation of 26 vehicles if they are to prosecute.
      We have already mentioned bureaucracy. However, another danger is that enforcement costs may become prohibitive. Which of my hon. Friends has a big enough police force in his constituency, suitably equipped with cars, to chase every vehicle that is simultaneously being run by a public service operator? The police would need to contact each other by telephone in order to count and see whether the operator was in breach of his licensing conditions.
      The condition relating to numbers is important. It involves the question of safety. If a traffic commissioner, in issuing an operator's licence has said that a particular operator should be allowed to operate only 10 vehicles, he has done so for a reason. Perhaps he is not satisfied that he can supervise more than 10. Perhaps he feels that the operator does not
      have a repair and maintenance contract that is suitable for more than 10 vehicles.
      We are therefore discussing something that may have a direct effort on the safe operation of vehicles. Some bureaucracy may be involved in the printing and issuing of discs. However, that is nothing like the problem that will result if we seek to enforce effectively a system without discs. If an operator has 20 discs and puts 21 vehicles on the road, one will be running without a disc. The police would have to catch only that vehicle in order to enforce the law. That is a major reason behind pressing this issue.
      I am sorry that the Minister, in so far as he has sought to meet the enforcement problem, has chosen to set up a list. It will take away from the operator the one advantage that had originally existed, that of flexibility. I therefore urge my hon. Friends to vote in favour of the new clause.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 134, Noes 184.

      Division No. 240]

      AYES

      [9.12 pm

      Adams, Allen

      Foulkes, George

      Mellish, Rt Hon Robert

      Allaun, Frank

      George, Bruce

      Mitchell, Austin (Grimsby)

      Archer, Rt Hon Peter

      Golding, John

      Mitchell, R. C. (Soton, Itchen)

      Ashton, Joe

      Gourlay, Harry

      Morris, Rt Hon Charles (Openshaw)

      Benn, Rt Hon Anthony Wedgwood

      Graham, Ted

      Moyle, Rt Hon Roland

      Bennett, Andrew (Stockport N)

      Grant, George (Morpeth)

      Newens, Stanley

      Booth, Rt Hon Albert

      Hamilton, James (Bothwell)

      Oakes, Rt Hon Gordon

      Brown, Hugh D. (Provan)

      Hamilton, W. W. (Central Fife)

      Ogden, Eric

      Buchan, Norman

      Hardy, Peter

      O'Neill, Martin

      Callaghan, Jim (Mlddleton & P)

      Harrison, Rt Hon Walter

      Orme, Rt Hon Stanley

      Campbell-Savours, Dale

      Haynes, Frank

      Palmer, Arthur

      Cartwright, John

      Heffer, Eric S.

      Park, George

      Clark, Dr David (South Shields)

      Hogg, Norman (E Dunbartonshire)

      Parker, John

      Cocks, Rt Hon Michael (Bristol S)

      Holland, Stuart (L'beth, Vauxhall)

      Powell, Raymond (Ogmore)

      Cohen, Stanley

      Home Robertson, John

      Prescott, John

      Coleman, Donald

      Homewood, William

      Race, Reg

      Cowans, Harry

      Hooley, Frank

      Rees, Rt Hon Merlyn (Leeds South)

      Cryer, Bob

      Horam, John

      Roberts, Albert (Normanton)

      Cunliffe, Lawrence

      Howell, Rt Hon Denis (B'ham, Sm H)

      Roberts, Ernest (Hackney North)

      Cunningham, George (Islington S)

      Hughes, Roy (Newport)

      Robertson, George

      Cunningham, Dr John (Whitehaven)

      Janner, Hon Greville

      Rodgers, Rt Hon William

      Dalyell, Tam

      Jay, Rt Hon Douglas

      Ross, Ernest (Dundee West)

      Davidson, Arthur

      John, Brynmor

      Rowlands, Ted

      Davies, Itor (Gower)

      Sever, John

      Davis, Terry (B'rm'ham, Stechford)

      Johnson, James (Hull West)

      Shore, Rt Hon Peter (Step and Pop)

      Dean, Joseph (Leeds West)

      Johnson, Walter (Derby South)

      Silkin, Rt Hon John (Deptford)

      Dempsey, James

      Jones, Barry (East Flint)

      Silverman, Julius

      Dixon, Donald

      Jones, Dan (Burnley)

      Snape, Peter

      Dobson, Frank

      Leadbitter, Ted

      Soley, Clive

      Douglas, Dick

      Leighton, Ronald

      Spearing, Nigel

      Dunnett, Jack

      Lewis, Ron (Carlisle)

      Spriggs, Leslie

      Dunwoody, Mrs Gwyneth

      Lofthouse, Geoffrey

      Stewart, Rt Hon Donald (W Isles)

      Eadie, Alex

      McElhone, Frank

      Stott, Roger

      Eastham, Ken

      McGuire, Michael (Ince)

      Strang, Gavin

      Edwards, Robert (Wolv SE)

      McKay, Allen (Penistone)

      Taylor, Mrs Ann (Bolton West)

      Ellis, Tom (Wrexham)

      McKelvey, William

      Thomas, Dafydd (Merioneth)

      Evans, Ioan (Aberdare)

      MacKenzie, Rt Hon Gregor

      Thomas, Dr Roger (Carmarthen)

      Evans, John (Newton)

      Maclennan, Robert

      Urwin, Rt Hon Tom

      Ewing, Harry

      McMillan, Tom (Glasgow, Central)

      Weetch, Ken

      Faulds, Andrew

      Marshall, David (Gl'sgow, Shettles'n)

      Wellbeloved, James

      Flannery, Martin

      Marshall, Dr Edmund (Goole)

      Welsh, Michael

      Fletcher, Ted (Darlington)

      Marshall, Jim (Leicester South)

      White, Frank R. (Bury & Radcliffle)

      Foot, Rt Hon Michael

      Maxton, John

      Whitehead, Phillip

      Whitlock, William

      Winnick, David

      TELLERS FOR THE AYES:

      Wigley, Dafydd

      Woolmer, Kenneth

      Mr. George Morton and

      Wilson, William (Coventry SE)

      Wrigglesworth, Ian

      Mr. James Tinn.

      NOES

      Adley, Robert

      Haselhurst, Alan

      Page, Richard (SW Hertfordshire)

      Alexander, Richard

      Hastings, Stephen

      Parris, Matthew

      Ancram, Michael

      Hawkins, Paul

      Patten, John (Oxford)

      Aspinwall, Jack

      Hawksley, Warren

      Pattie, Geoffrey

      Atkins, Robert (Preston North)

      Heddle, John

      Penhaligon, David

      Atkinson, David (B'mouth, East)

      Henderson, Barry

      Percival, Sir Ian

      Beaumont-Dark, Anthony

      Hicks, Robert

      Peyton, Rt Hon John

      Bendall, Vivian

      Hill, James

      Pollock, Alexander

      Benyon, Thomas (Abingdon)

      Hogg, Hon Douglas (Grantham)

      Porter, George

      Berry, Hon Anthony

      Hooson, Tom

      Powell, Rt Hon J. Enoch (S Down)

      Best, Keith

      Hordern, Peter

      Prentice, Rt Hon Reg

      Bevan, David Gilroy

      Howell, Ralph (North Norfolk)

      Proctor, K. Harvey

      Blackburn, John

      Hunt, John (Ravensbourne)

      Raison, Timothy

      Body, Richard

      Hurd, Hon Douglas

      Rathbone, Tim

      Boscawen, Hon Robert

      Johnston, Russell (Inverness)

      Rees-Davies, W. R.

      Braine, Sir Bernard

      Jopling, Rt Hon Michael

      Renton, Tim

      Bright, Graham

      Kaberry, Sir Donald

      Rhodes James, Robert

      Brinton, Tim

      Kershaw, Anthony

      Rhys Williams, Sir Brandon

      Brooke, Hon Peter

      King, Rt Hon Tom

      Royle, Sir Anthony

      Bruce-Gardyne, John

      Kitson, Sir Timothy

      Scott, Nicholas

      Buchanan-Smith, Hon Alick

      Knight, Mrs Jill

      Shaw, Giles (Pudsey)

      Buck, Antony

      Knox, David

      Shaw, Michael (Scarborough)

      Butcher, John

      Lang, Ian

      Shelton, William (Streatham)

      Cadbury, Jocelyn

      Latham, Michael

      Shepherd, Colin (Hereford)

      Carlisle, Kenneth (Lincoln)

      Le Marchant, Spencer

      Shepherd, Richard (Aldridge-Br'hills)

      Chalker, Mrs Lynda

      Lester, Jim (Beeston)

      Skeet, T. H. H.

      Chapman, Sydney

      Lloyd, Peter (Fareham)

      Speed, Keith

      Clark, Hon Alan (Plymouth, Sutton)

      Loveridge, John

      Speller, Tony

      Clarke, Kenneth (Rushcliffe)

      Luce, Richard

      Spence, John

      Clegg, Sir Walter

      Lyell, Nicholas

      Spicer, Michael (S Worcestershire)

      Colvin, Michael

      Macfarlane, Neil

      Sproat, Iain

      Cope, John

      MacKay, John (Argyll)

      Squire, Robin

      Corrie, John

      McNair-Wilson, Michael (Newbury)

      Stainton, Keith

      Dover, Denshore

      McQuarrie, Albert

      Stanbrook, Ivor

      du Cann, Rt Hon Edward

      Marshall, Michael (Arundel)

      Stanley, John

      Dunn, Robert (Dartford)

      Mather, Carol

      Steen, Anthony

      Dykes, Hugh

      Maude, Rt Hon Angus

      Stevens, Martin

      Eden, Rt Hon Sir John

      Mawby, Ray

      Stewart, John (East Renfrewshire)

      Eggar, Timothy

      Mawhinney, Dr Brian

      Taylor Teddy (Southend East)

      Faith, Mrs Sheila

      Maxwell-Hyslop, Robin

      Tebbit, Norman

      Fenner, Mrs Peggy

      Mellor, David

      Thompson, Donald

      Fisher, Sir Nigel

      Meyer, Sir Anthony

      Thorne, Neil (Ilford South)

      Fletcher, Alexander (Edinburgh N)

      Miller, Hal (Bromsgrove & Redditch)

      Townend, John (Bridlington)

      Fletcher-Cooke, Charles

      Mills, Iain (Meriden)

      Townsend, Cyril D. (Bexleyheath)

      Fookes, Miss Janet

      Mills, Peter (West Devon)

      Trippier, David

      Fowler, Rt Hon Norman

      Moate, Roger

      van Straubenzee, W. R.

      Fox, Marcus

      Molyneaux, James

      Waddington, David

      Freud, Clement

      Montgomery, Fergus

      Wainwright, Richard (Colne Valley)

      Fry, Peter

      Morgan, Geraint

      Wakeham, John

      Gardiner, George (Reigate)

      Morris, Michael (Northampton, Sth)

      Walker, Bill (Perth & E Perthshire)

      Garel-Jones, Tristan

      Morrison, Hon Charles (Devizes)

      Walker-Smith, Rt Hon Sir Derek

      Gorst, John

      Morrison, Hon Peter (City of Chester)

      Waller, Garry

      Gow, Ian

      Mudd, David

      Watson, John

      Gray, Hamish

      Murphy, Christopher

      Wells, Bowen (Hert'rd & Stev'nage)

      Greenway, Harry

      Myles, David

      Wheeler, John

      Griffiths, Eldon (Bury St Edmunds)

      Neale, Gerrard

      Wickenden, Keith

      Griffiths, Peter (Portsmouth N)

      Needham, Richard

      Wilkinson, John

      Grist, Ian

      Nelson, Anthony

      Wolfson, Mark

      Grylls, Michael

      Neubert, Michael

      Gummer, John Selwyn

      Newton, Tony

      TELLERS FOR THE NOES:

      Hamilton, Hon Archie (Eps'm&Ew'H)

      Nott, Rt Hon John

      Mr. John MacGregor and

      Hamilton, Michael (Salisbury)

      Page, John (Harrow, West)

      Lord James Douglas-Hamilton.

      Hannam, John

      Page, Rt Hon Sir R. Graham

      Question accordingly negatived.

    New Clause 5

      SIGNS ON PRIVATE HIRE. CARS AND CARS GIVING LIFTS FOR PAYMENT
      '.—(1) Notwithstanding anything in any enactment:

      (a) no passenger vehicle of less than eight seats which carries passengers for hire or reward, or for payment of any kind, other than
      1056
      a hackney carriage licensed to ply for hire under the several enactments in force within the United Kingdom for licensing such hackney carriages, shall have affixed to the roof, thereof, a sign of any kind or description.

      (b) nothing in subsection (a) of this section shall prevent a District Council from requiring, or allowing, an idenification sign, or mark, on a Private Hire Vehicle licensed under Part II of the Local Government (Miscellaneous Provisions) Act 1976, provided always that any such sign, or mark, so required or allowed, shall have no means of illumination and shall be fitted, or affixed,

      1057
      on the side doors, and, or, rear of the vehicle and below the window line of the said vehicle;

      (c) no vehicle being used to give lifts for payment under this Act, or the Transport Act 1978, will carry any sign of any kind or description on any part of the vehicle indicating that the vehicle was being, or is used, to give lifts for payment.

      (2) If any person contravenes the provisions of this section he shall be guilty of an offence and liable to a fine not exceeding two hundred pounds and to a daily fine of twenty pounds.'.—[Mr. Cowans]
      Brought up, and read the First time.
      Mr. Cowans: I beg to move, That the clause be read a Second time.
      When debating a Bill of this nature, it is always wise to look at previous legislation to consider whether we can put right the mistakes of that legislation. I do not wish to lecture the House—I have not been an hon. Member long enough to do that—but sometimes legislation does not achieve the intended objectives.
      The problem dealt with by the new clause is not a new one. A number of attempts have been made to solve it. The effort made in the Local Government (Miscellaneous Provisions) Act 1976 was a dismal failure, partly because it was no deterrent. We seek to differentiate between the hackney carriage licensed to ply for hire and the private hire car. Many hon. Members will have been grateful for the taxi with its light on which they have been able to flag down on their weary way home.
      We have to consider the interests of the public, on which great emphasis has been laid during our debates. Not long ago, a friend of mine dashing from Heathrow airport spied a vehicle with an illuminated sign and jumped into the vehicle. He asked the driver how much he would charge to take him across London and was told that the cost would be £5. Also in the car was another passenger who was being taken to London for £5.
      The driver was not breaking the law, because he was driving a private hire cab. When a passenger takes a private hire cab, he makes a contract with the driver to be conveyed to a destination at an agreed price. The fares of taxis are registered by local authorities in the provinces and by the Home Office in London. On entering a taxi one can ascertain the fare.
      We have to consider what is the neces-
      1058
      sity for an illuminated sign. The answer is self-explanatory in the case of hackney carriages. When its sign is lit, the driver is plying for hire. When the sign is not lit, the driver may be going for his tea or be on his way to pick up a fare.
      When a member of the public sees an illuminated sign, he will, nine times out of 10, associate it with a taxi cab. The new clause attempts to solve the problem by saying that the only vehicle that may show an illuminated sign on the top of the vehicle is a taxi cab plying for hire.
      Some of the signs on private hire cars are like hire-purchase agreements. One sees the sign lit up, but only later does one notice in small print "private hire". A taxi cab plying for hire is obliged to pick up a member of the public, and such vehicles should be clearly identified and should be the only vehicles allowed to show an illuminated sign. The only reason for the illuminated sign on private hire cars is to advertise.
      We are not opposed to advertising. Subsection (1)(b) of the clause would allow a district council to continue to permit an identification sign on a private hire vehicle under the Local Government (Miscellaneous Provisions) Act 1976. A sign could be placed anywhere on the cab door but it could not be illuminated. This would protect the public. It would also protect large private hire firms that wanted only to carry on their business. If, however, a driver is returning from a journey and someone jumps into the vehicle, is it realistic to expect the driver to refuse to accept that passenger? This is why previous attempts have fallen down. There was no deterrent. It is no good the House passing legislation that merely reads nicely. If there is no deterrent, no one will take any notice of it.
      Subsection (2) of the new clause lays down for anyone guilty of an offence a penalty of a fine not exceeding £200 and a daily fine of £20 if he continues to contravene the new clause. That is not unreasonable when one considers the fares that can be obtained illegally when people wish to use cabs.
      9.30 pm
      The hon. Member for Wellingborough (Mr. Fry) mentioned the demise of the taxi trade. The clause is concerned with

      1059
      one of the reasons why the taxi trade is failing. It seems reasonable, in the interests of the public, that someone seeing a vehicle with an illuminated light should know that it is a taxi cab plying for hire and not a private car in which he can be "ripped off" without knowing. The new clause seeks to make clear the difference between cabs plying for hire and private hire cars that can go about their business and advertise but will not be mixed up with cabs.
      Several Hon. Members rose—
      Mr. Jim Marshall: I apologise to my colleagues who have sat through long hours in Committee and today's Report stage.
      I should perhaps declare an interest since the new clause refers to the Local Government (Miscellaneous Provisions) Act 1976. I was the principal author of part II of the Act and was responsible for getting on to the statute hook the present legislation concerning hackney carriages and private hire vehicles. I was able to get part II into the 1976 Act because it was supported in Committee by the members of the then Opposition. I hope that Government members tonight will extend the same hands across the sea to my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans) when it comes to a vote.
      I should like to remind the House of the hornets' nest across which I stumbled, perhaps unwittingly, in 1976. As soon as I put down amendments to the Local Government (Miscellaneous Provisions) Bill, I was inundated with vehemently angry letters from hackney carriage drivers complaining of the activities of private hire operators, private hire owners and private hire drivers. Their first criticism was that the licensing system operated at that time for hackney carriages but did not operate for private hire vehicles. That was overcome in the 1976 Act.
      The second main source of anger was the restriction upon fare rates that hackney carriages could charge and the complete freedom—Conservative Members would call it the entrepreneurial spirit—of private enterprise operating private hire cars. On the one hand, restricted rates were set down by local authorities for hackney carriages and, on the other, there was complete freedom of
      1060
      the market for private hire vehicles. That remains the position.
      The third main source of anger is that the signs used by private hire vehicles are intended to convince the public that they are hackney carriages. Private hire operators have the same rights as anyone to advertise their business, but the purpose of an illuminated sign on the roof of the vehicle is to convince the public that it is a hackney carriage.
      The results are obvious in the correspondence in my local newspaper, in which irate members of the public have complained about private hire vehicles displaying a lighted sign late at night—when perhaps more policemen are around in the centre of Leicester—and driving past those seeking to hire them. The sign is solely intended to deceive the public.
      I wish that we could have done this in 1966, but I have mentioned the concordat which operated in Committee between the then Government and the Opposition. One reason was that the then Opposition were not prepared to support the restrictions that my hon. Friend now seeks to introduce.
      I fully agree with the words in subsection (1)(b) of the clause that private hire vehicles may have signs, although not illuminated,
      "on the side doors, and, or, the rear of the vehicle below the window line of the said vehicle".
      That would enable the operator legitimately to advertise but without misleading the public.
      I congratulate my hon. Friend on the new clause and I hope that Tory Members will support it.
      Mr. Leadbitter: I detect an agreeable disposition in the Government's approach which seems likely to end today's debate in a satisfying way.
      There is a good deal of sense in the clause. We should have regard to the investment of taxi drivers. I can only go by what London taxi drivers tell me, but I think that it costs about £7,000 to finance a new London taxi. We have a responsibility to protect those whom we license to ply for hire and who provide a community service. The habits of licensing authorities differ, but generally taxi drivers in the provinces are obliged to

      1061
      wait on agreed taxi ranks. To that extent, they are not plying for hire in the fullest sense.
      Mr. Jim Marshall: Yes, they are.
      Mr. Leadbitter: I said that this happens in some places. It happens in my constituency.
      Mr. Marshall: "Plying for hire" does not apply simply to vehicles in motion. It also applies to stationary vehicles. When the hackney carriage is on the rank, it is still plying for hire.
      Mr. Leadbitter: That confirms my point—that the efforts of taxi drivers are negatived by private hire cars which drive around town creaming off the trade of the licence holder, whether he is plying from a mobile or a static position. A man who invests to satisfy the licensing conditions of a local authority about the standard and maintenance of his vehicle and about his compliance with passenger safety requirements is at a disadvantage when compared with the private hire operator who uses his private car supplemented by a temporary, illuminated sign showing his telephone number on the top of his car. That sign indicates to the innocent passer-by that he is possibly a taxi driver. The private hire operator has invested much less than the taxi owner.
      I think that my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans) dealt adequately with the provisions of the clause. The clause seeks not to change the law but simply to make it more enforceable and effective. The Opposition do not say that the private hire car is illegal. We are simply saying "Horses for courses". Let us make it abundantly clear that "private hire" means exactly what is suggested by the clause and that the community realises the difference between the private hire operator and the man who has been licensed by a local authority and is plying for hire. That being so, the common sense of the clause should satisfy the purposes and interests of both private hire operators and the owners and drivers of taxis as well as those of the community. I detect a sense of agreement from the Government Benches on this issue. I hope that my sense of the matter is correct.
      Mr. Vivian Bendall: I represent a considerable number of taxi
      1062
      drivers in the London area who are concerned that they should be protected. Taxi drivers who are licensed should be able to continue their work. I am particularly concerned about what will happen with vehicles with a passenger capacity of eight or fewer people which are able to move between London stations such as Victoria and Charing Cross.
      Under the proposed legislation, people can be carried in such vehicles. That gives little chance to the licensed trade to operate in the way that it has done for many years. I make that vital point because we are talking about the livelihood of the licensed operators. They provide an important and specific service as part of London's transport system, and I ask my hon. Friend the Minister to give serious consideration to that point.
      Mr. Bidwell: My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans) is to be congratulated on taking the opportunity to enlist the sympathy of the Government, through the medium of the Bill, to remove an anomaly in the 1976 Act. That is the best way to describe the situation. I do not believe that what has gone on since 1976 in the car hire business was intended.
      In my capacity as a sponsored member of the Transport and General Workers Union, apart from looking after the interests of those in my union who work in the passenger carrying business, I have also been asked to look at the position of taxi drivers who are still members of the Transport and General Workers Union. I believe that in London most of them are now in the owner-drivers' organisation, the Licensed Taxi Drivers Association. I have met members of that association and have conferred with the hon. Member for Ilford, North (Mr. Bendall) on more than one occasion. Recently he and I took part in a London Weekend Television programme which highlighted some of the questionable activities of some of those engaged in the car hire business. This applied particularly to London, with the charging of extortionate fares and so forth.
      9.45 pm
      At one stage the hackney cab drivers did not like the growth of the minicab trade. They have learnt to live with it now and accept the role of the legitimate

      1063
      car hire business. However, hackney cab drivers have to carry overheads and maintain standards under the law in London, supervised by the Home Office. They are not allowed to charge what they like. Their fare increases are negotiated and they have to undertake continual negotiations to obtain recognition of the extent of their overheads in an attempt to secure improvements in their conditions. These requirements do not apply to the car hire business.
      Something has, therefore, gone out of balance. The hackney cab drivers are owed something. They provide great support for the tourist industry. They seek only fair play, and the clause goes some way towards that. If the Minister accepts it, he will be the pin-up boy of the cab trade tonight.
      Mr. Kenneth Clarke: I am grateful to the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans) for initiating this short debate on this important point. It has shown that there is widespread interest in the problems of taxi drivers. My right hon. Friend the Minister and I have not forgotten the interests of the taxi drivers in bringing forward the Bill. We have had regular meetings with various representatives of the taxi trade. They have voiced considerable fears about the implications of the Bill, and we have gone out of our way to try to reassure them that Ministers in the Department and the Government generally do not intend to damage the interests of the taxi trade.
      We all respect the part that the cabs play in the transport system. At any time of day or night a taxi can be hoarded by a passenger, who can have complete confidence that the driver is a respectable and reputable person and that the fare that he will charge will be strictly related to the mileage covered. These drivers operate under rigorous conditions which would put them in some ways at a disadvantage with other sectors of the trade were unfettered competition to be allowed.
      No one disputes the right of the private hire car operator to pursue his business. But the taxi drivers are full of complaints, as the hon. Member for Leicester, South (Mr. Marshall) said and as has been brought to my attention by my hon. Friend the Member for Word, North (Mr. Bendall) on at least one occasion,
      1064
      about the unfair basis upon which they often find themselves competing with hire cars.
      The issues in the new clause cover one of the problems that taxi drivers say that they face repeatedly at the moment. In many cities it is difficult to distinguish between taxis and hire cars because hire car operators have developed the practice of putting illuminated signs on the roofs of their vehicles. That is particularly so in provincial cities where hire cars are not distinctive large black vehicles but are saloon cars of the same kind as those used by hackney carriage operators.
      I shall not allow myself to be drawn into what the hon. Member for Leicester, South said about private car hire operators deliberately intending that their signs should look like those of taxis. However, that is a firmly-held belief among members of the taxi trade. The Act with which the hon. Member was involved allowed local authorities to restrict roof signs. However, it also allowed for an appeal to the magistrates against the decision of the authority. In a number of cases recently private hire car operators have appealed and have been successful in two-thirds of the appeals. The result is that the legislation passed by the previous Parliament does not give the protection to the taxi drivers that they feel they deserve.
      As I said earlier, this is largely a matter for my right hon. Friend the Home Secretary, but we have consulted the Home Office because this new clause has considerable appeal to my Department. We are anxious to try to give some indication to the taxi drivers that our aims are not hostile to them and that we accept their distinctive place in the passenger network. Therefore, it is possible that we may be able to meet the main purposes of the new clause. However, the hon. Member for Newcastle upon Tyne, Central will not be surprised if I say that the drafting of it is defective and needs to be improved.
      Mr. Jim Marshall: Does the Minister recognise that the Bill applies only to areas outside London? Will the clause apply to the metropolis as well as to areas outside London?
      Mr. Clarke: I undertake to consult my right hon. Friend the Home Secretary on

      1065
      that point, and I shall draw his attention to it. It is a point that is strongly felt by my hon. Friend the Member for Ilford, North and the hon. Member for Ealing, Southall (Mr. Bidwell). Subject to those consultations, the Government propose to move amendments in another place that will meet the objects of paragraphs (a) and (c)—to restrict roof signs on vehicles capable of carrying fewer than eight passengers and used to carry passengers for hire or reward, and to make sure that vehicles used for car-sharing exercises do not carry similar offending signs.
      Paragraph (b) is sweeping in its possible application, and at least one hon. Member has said that we are attempting to stamp out signs for private hire cars. Illuminated signs, so long as they are of a kind that would not be confused with a hackney carriage sign, would be perfectly legitimate. I am not anxious to adopt the spirit of paragraph (b), but, subject to further discussions with my right hon. and hon. Friends, and subject to the advice of those involved, the Government hope to meet the substance of the new clause in another place.
      Mr. Cowans: Until now the Minister has ignored subsection (2). It is no good passing legislation unless there is some form of deterrent. If the Minister accepts the spirit of the Bill, does he also accept the spirit of deterrence?
      Mr. Clarke: If we proscribe signs on vehicles, it follows that there must be some sort of penalty when that directive is not obeyed. There have been references to previous declaratory statements in the Transport Act 1968 which proved to be ineffective in practice because they were not enforceable. We seek to avoid that. The final form of the Bill must be the responsibility of the Ministers who are involved. I give an undertaking that the Government will seek to meet the spirit of the new clause in another place. I hope that in the light of that assurance the hon. Member for Newcastle upon Tyne, Central will seek to withdraw his clause.
      Mr. Cowans: In view of the helpful words of the Minister, and on the assurance that wisdom has not fallen upon stony ground, I beg to ask leave to withdraw the motion.
      Motion and clause, by leave, withdrawn.
      Further consideration of the Bill adjourned.—[Mr. Newton.]
      Bill, as amended (in the Standing Committee) to be further considered tomorrow.

COAL INDUSTRY
Motion made, and Question proposed,
That the draft Mineworkers' Pension Scheme (Limit on Contributions) Order 1980, which was laid before this House on 11 March, be approved.—[Mr. John Moore.]
Mr. Deputy Speaker (Mr. Bernard Weatherill): It will be for the convenience of the House to discuss with this the second motion.
9.54 pm
Mr. Alex Eadie: It is not the intention of the Opposition to retard the progress of the two orders. However, a number of my hon. Friends feel that it might have been better if we had discussed the outstanding progress that the mining industry has made. Productivity is increasing and absenteeism has been substantially reduced. Also, the great investment in technology has paid off, in that it has been a good investment for the nation and for the miners.
As I have said, we do not intend to impede the progress of the two orders. However, I should like to ask the Under-Secretary one question. We are cooperating in facilitating the business of the House. That is why we are trying to exercise the utmost expedition. Even though the Minister moved the order formally, I appreciate that it was not because he was reluctant to argue the case.
My question relates to the payment of the increases. Perhaps the hon. Gentleman can write to me on it. I hope that in no way will the increases be related to what we have heard recently about the Government's views on various methods of payment. If the hon. Gentleman has anything to convey about that, perhaps he will write to me.
9.56 pm
The Under-Secretary of State for Energy (Mr. John Moore): I thank the hon. Member for Midlothian (Mr. Eadie) for his comments. I endorse entirely what he said about the splendid progress towards profitability in the coal industry

1067
and the excellent increases in productivity. I shall, of course, write to him on the detailed point that he raised.
I commend the orders to the House.
Question put and agreed to.
Resolved,
That the draft Mineworkers' Pension Scheme
1068
(Limit on Contributions) Order 1980, which was laid before this House on 11 March. he approved.
Resolved,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1980, which was laid before this House on 11 March, be approved.—[Mr. John Moore.]

EUROPEAN COMMUNITY (CONVERGENCE AND BUDGETARY QUESTIONS)
[Relevant Commission document: No. 11028179.]
9.56 pm
The Financial Secretary to the Treasury (Mr. Nigel Lawson): I beg to move,
That this House takes note of Commission document No. 4845/80 on convergence and budgetary questions, and fully supports the Prime Minister in her efforts to secure agreement at the next European Council to action which will bring about a substantial, immediate and lasting reduction in the United Kingdom's net contribution to the Community Budget and furthermore to ensure that there is a commitment by the Council to long-term restructuring of the Budget which would bring about a significant reduction in the proportion of spending on the Common Agricultural Policy, particularly by reducing the production of surpluses, and a more equitable distribution of expenditure over the whole Community.
Mr. Deputy Speaker (Mr. Bernard Weatherill): I should tell the House that Mr. Speaker has selected the amendment standing in the name of the Leader of the Opposition. That amendment will, however, be moved in a slightly amended form. It involves the insertion after the word "surpluses" of the words
"and creating a more equitable distribution of expenditure".
I should also tell the House that Mr. Speaker has selected a manuscript amendment to the amendment of the Leader of the Opposition tabled by the hon. Member for Caithness and Sutherland (Mr. Maclennan). That amendment is to leave out from second 'Community' to the end of the amendment. Copies of the Leader of the Opposition's amendment in its amended form, together with the manuscript amendment of the hon. Member for Caithness and Sutherland, are available in the Vote Office.
At the end of the debate, the motion and the two selected amendments will be put together to the House in the following order—first, the manuscript amendment of the hon. Member for Caithness and Sutherland, secondly, the amendment of the Official Opposition and, thirdly, the Government motion.
Mr. J. Enoch Powell: On a point of order, Mr. Deputy Speaker.
1070
While appreciating and accepting the Chair's absolute discretion on the acceptance of amendments, may I make two representations? The first relates to the extreme difficulty for hon. Members which arises from an amendment being accepted which is not able to be within the knowledge of hon. Members until shortly before the statement which you have made. That makes it very difficult for an orderly debate upon a major topic to take place.
My second point is that, although this matter does not involve the vexed and major question of two amendments to Government motions on matters of policy, nevertheless if the selection of an amendment to an Official Opposition amendment were to become a regular procedure, the position of the Official Opposition in regard to securing debates of their propositions, as opposed to those of the Administration, would be radically altered.
It is difficult to make this submission, especially in the absence of Mr. Speaker. Nevertheless, I submit that the matters which his decision raises are of considerable moment, and no doubt there will be another opportunity for raising them.
Mr. Deputy Speaker: I thank the right hon. Gentleman for putting it in that way. He will understand that I have no authority to comment upon or alter Mr. Speaker's selection of the sub-amendment.
Mr. Lawson: I have considerable sympathy with the point of order raised by the right hon. Member for Down, South (Mr. Powell).
The motion refers to the next European Council meeting which had been planned to open in Brussels a week today. As the House will be aware, the Italian Prime Minister has announced this afternoon that he felt the meeting of the European Council should be postponed because, as a result of the Italian domestic political situation, he has not been able to devote himself to the preparation for the meeting. We entirely understand and sympathetic with Signor Cossiga's difficulties. But the budget problem is a serious and complex one, affecting the future of the Community, which all members have to resolve as soon as possible. We were and remain ready to tackle that matter next week. But, in the new circumstances which have arisen today, we have made

1071
it clear to the Italian Government and to our Community partners that the Council should be convened at the earliest possible date.
The House will not expect me to say more on a matter which is still under discussion between the Governments concerned, except to confirm, as I do, that we remain determined to bring this difficult matter to a satisfactory conclusion as soon as possible so that a substantial reduction in our net contribution takes effect this coming financial year.
Mr. Denzil Davies: What will be our net contribution in the next financial year? I think that it is important that we should know that in view of the amendments.
Mr. Lawson: Our net contribution, unless we can get the redress that we are seeking—which is what I assume the right hon. Gentleman is talking about—will be over £1,000 million. If the right hon. Gentleman will allow me to develop my speech, I shall be dealing with all these matters. He should be a little less impatient. If he is, it will enable me to get through my opening remarks sooner, and that will give more time to right hon. and hon. Members on both sides of the House to make their contributions to what is a short debate on an important subject.
This is the third occasion in the few months since the present Government took office that the House has debated this important matter. By now, the whole House will be well aware of the explosive growth in the United Kingdom's net contribution to the Community budget that has occurred over the past few years.
Mr. Denzil Davies: How much?
Mr. Lawson: The right hon. Gentleman keeps saying "How much?" I am coming to that. From a level of about £150 million in 1976 it had risen to £900 million in 1979. Unless something is done to reverse the trend, the figure this year, as I said, is likely to be well over £1,000 million. It is impossible to give a precise figure, because there are many imponderables. As I told the right hon. Gentleman, who is muttering from a sedentary position, whether it is £1·1 billion, £1·2 billion or £1·5 billion, or whatever, it
1072
makes no difference to the importance of the matter that we are discussing or to the principles which are at stake.
Mr. Nigel Spearing: Does the hon. Gentleman recall that on 25 February, in col. 442 of the Official Report, he gave a written answer to his hon. Friend the Member for Northampton, North (Mr. Marlow) in which he estimated the figure of the net budget transfer in 1980 to be £1,310 million? Does he not now stand by the figure that he gave on 25 February?
Mr. Lawson: The hon. Member for Newham, South (Mr. Spearing), who is expert in the affairs of the Community, knows that we have to rely to a considerable extent on the estimates made by the Commission. The Commission is in the habit of revising those estimates from time to time. The figure that I gave at that time was based on the latest estimates by the Commission. It now looks as though the figure may be a shade less than that, but it will be between £1 billion and £1·3 billion.
Mr. Russell Johnston rose——
Mr. Lawson: I will gladly give way, but I do not think that this is assisting the progress of the debate.
Mr. Johnston: According to the Commission paper produced today, the figure is 1,683 million units of account.
Mr. Lawson: That is correct, and that is precisely the range that I was indicating in pounds. I assumed that hon. Members would prefer pounds sterling, but I can talk in units of account if that is the desire.
Wherever the figure is within this range, the point is that it would make the United Kingdom far and away the largest net contributor to the budget, with a net contribution almost double that of West Germany, which is the only other significant net contributor. It is the contention of the Government, for which we have already received the full backing of the House on each of the two previous occasions to which I have alluded, that this state of affairs is neither equitable nor sustainable.
If the European Community is to thrive, and we believe it to be in the interests of the West as a whole that it

1073
should, it simply cannot impose this manifestly unacceptable burden on this country. Like any other organisation, the Community must show itself to be alive to the interests and needs of its members, and that means all its members. Like any other organism, it must adapt if it is to survive.
Indeed, that was clearly acknowledged by the six original members of the Community during the accession negotiations in 1970. Even at that time the United Kingdom had been expressing concern that the incidence of Community revenues, together with the predominance of agriculture in Community spending, might well result in this country being called upon to make very large net contributions to the Community budget once the transitional arrangements ended in the late 1970s. At that time the Community contested this and argued that changes in the pattern of Community spending would ensure that the problem never arose in that form. But it did explicitly agree—and I quote as I have before the ipsissima verba—that
"should unacceptable situations arise within the present Community or an enlarged Community, the very survival of the Community would demand that the institutions Lind equitable solutions."
When the present Government took office we made two things absolutely plain to our Community partners. First, we made plain our total commitment to United Kingdom membership of the Community and our determination to make the Community work. Secondly, we made plain our resolve to achieve that equity in the Community's finances which the Community itself, in the quotation that I have just read to the House, had acknowledged to be essential.
Inevitably this has not been easy. The very idea of examining the distributive effects of the Community budget was a novel one for a Community which is reluctant to encourage member States to expect to get out of the budget exactly what they put in, and which never before has been confronted with such a totally inequitable outcome from the implementation of its policies: and of course if Britain pays less inevitably others will have to pay more. No Government welcome that prospect, however compelling the arguments in logic and equity for their doing so.
1074
So it has been hard going. But we have made considerable progress.
Mr. Denzil Davies: Come on.
Mr. Lawson: Yes, we have, and the document that we are discussing is evidence of that progress. It may be helpful for the benefit of the few hon. Members present who may not have read the document in its entirety if I briefly summarise its contents.
The Commission begins by emphasising once again the need for changes in the balance of Community expenditure. It then goes on to propose that an adapted financial mechanism
"should be part of the solution to the probe lems of the United Kingdom over the Community Budget."
Lastly, the Commission suggests that the Community should establish a special fund under a regulation based on article 235 of the Treaty. Money thus made available would be used to help to finance public expenditure programmes designed to improve this country's economic and social infrastructure, and thereby to promote what is described as a convergence of economic performance within the Community.
Mr. Alan Clark: Do not these sums, in many cases, have to be matched by equivalent sums from our side?
Mr. Lawson: No, that is not so.
The document before us is a direct result of the European Council held at Dublin last November. That Council was very far from being the fiasco that it is sometimes presented as by the press and, indeed, by some of the less perceptive Opposition Members. In Dublin the Community Heads of Government established the framework for a solution to this country's problem which the Commission has elaborated in the document before us.
The House may find it easier to understand why it was so useful to establish this framework if I quickly recall the causes of the United Kingdom's budget problem. Only about one-third of our net contribution arises from our high level of payments to the Community. Two-thirds result from the low level of Community spending in this country. In 1980 the Community will, on present policies, spend less than half as much per head of the population in the United Kingdom

1075
as it does in the Community as a whole. Our meagre share of Community expenditure, less than 10 per cent. of the total, reflects the continued domination of the Community budget by expenditure on agricultural support.
The common agricultural policy still absorbs over 70 per cent. of the budget, the bulk of which, as the House knows, is attributable to the cost of storage and disposal of surplus production. This country, with its small farming sector, can never benefit to any great extent from such expenditure, as indeed the Community itself appreciated as far back as 1970.
The Dublin Council recognised the need for action on all these fronts if this country's problem was to be satisfactorily resolved.
As regards our excessive gross contribution—that is, the money that we pay in—the Council agreed that the Commission's proposals for adapting the existing financial mechanism—the much-vaunted but pathetically ineffectual outcome of the previous Government's so-called renegotiation"—could form the basis of a solution. Removal of all the restrictions and limitations which at present castrate the financial mechanism, so as to transform it into an effective instrument for redressing this country's excessive gross contribution, would yield us a refund of about £350 million in 1980, or roughly one-third of our likely net contribution [Interruption.] Opposition Members who are muttering from sedentary positions would surely have settled for that themselves, representing, as it does, a vast improvement on what they were in practice prepared to settle for in 1975.
As my right hon. Friend the Prime Minister told the House on 3 December, after Dublin, she was not prepared to accept an offer that was so patently inadequate to meet this country's needs. She insisted that any solution should take account of the other larger part of the problem, which stemmed from the low level of Community spending in this country.
Under pressure from my right hon. Friend, the European Council at Dublin agreed to see what could be done on this front as well. To deal with the immediate problem, it asked the European Commis-
1076
sion to find ways of increasing Community spending in this country which would contribute to the Community's declared objective of promoting economic convergence. The result is the document that we are debating this evening. For the longer term, too, it expressed its determination to
"reinforce those policies most likely to favour the harmonious growth of the economies of the member States and to reduce the disparities between these economies."
In other words, it endorsed the Commission's suggestion that the Community should spend less on blanket agricultural support and more on its structural policies.
The Commission's document identifies a series of means by which the Community can help to improve Britain's social and economic infrastructure. Since the document was presented to the Council, the Commission has discussed the various possibilities with us. In a new document that we have just received and which will be laid before the House shortly in the usual way, the Commission says that it is already evident—
Mr. Peter Hardy: The hon. Gentleman mentioned the new document and the views of the Community. Will he tell us whether people in the Community are happy that this Government seek to obtain larger funds from the European Community, although we are already being criticised for failing to take advantage of substantial opportunities to obtain Community funds for a variety of purposes?
Mr. Lawson: There are no opportunities that we have failed to take advantage of. I think that the hon. Gentleman is mistaken.
The Commission's new statement is an important step forward towards the solution of our problem. It will also help the Government to achieve the reductions in public expenditure and public borrowing that are central to our economic strategy. It is, of course, at present too early to say what programmes and projects the Community may help to finance. The Commission has put forward some ideas which we shall pursue with it.
The key questions concern the amount and duration of the assistance that is to be provided. On those points our position

1077
is absolutely clear. We seek a solution that will, in the words of the motion,
"bring about a substantial, immediate and lasting reduction in the United Kingdom's net contribution."
By "immediate" we mean one that will be fully operational as from the financial year 1980–81, now only a fortnight away. By "lasting" we mean a solution that will ensure that the problem does not recur. Neither we nor the Community can afford to have to return to this problem year after year.
As for the scale of the substantial reduction that we seek, and about which the right hon. Member for Stepney and Poplar (Mr. Shore) has shown so much concern, we have indicated that we are prepared to join the search for a genuine compromise. However, it must take full account of the seriousness of this country's problem. As my right hon. Friend the Prime Minister reminded us only last Thursday, we have little room for manoeuvre.
Mr. Eric Deakins: Will the hon. Gentleman confirm that the lasting solution that the Government seek is one that will take account of the vastly increased costs of the CAP, and hence of our budget contribution, when the three new members are admitted in the next few years?
Mr. Lawson: A lasting solution clearly means one that lasts as long as the problem lasts. If the result of enlargement is as the hon. Gentleman suggests—and this is a speculative issue depending on agreements not yet reached—that will be one element in deciding the scale and duration of the solution. In the longer term, of course, there can be no doubt that the Community needs to achieve a better balance of expenditure within its budget, and not just for the sake of resolving this country's problem. It is vital that the Community budget should be subject to the same discipline as all member States apply to their domestic budgets. Expenditure must be constrained by the money available. The open-ended character of the CAP, as it now operates, must be modified and new priorities established.
Let there be no illusion that these long-term reforms can be in any way a substitute for the measures expressly designed to correct the United Kingdom's
1078
budget problem that are needed here and now.
Mr. Eldon Griffiths: My hon. Friend earlier spoke of a new document from the Commission. I think that he said that it could represent an important step in solving our problems. I appreciate my hon. Friend's problem. However, how long will it be before the House sees that document and can make its own judgment?
Mr. Lawson: We shall lay that document before the House as soon as possible. I thought that it would be for the convenience of the House if I alluded to it now. Because of the postponement of the European Council, it will be laid before the House before that meeting takes place.
Mr. J. Enoch Powell: On a point of order, Mr. Deputy Speaker. The Minister has quoted, and intends to continue to quote, extracts from a State paper which is in the Government's possession. Is it not a requirement of the House that that paper should be laid if it is to be quoted during the course of a debate?
Mr. Lawson: The right hon. Gentleman, for once, has nodded. At no time did I quote from the document. I merely referred to its existence and to the subject matter.
Mr. Bob Cryer: Further to that point or order, Mr. Deputy Speaker. The Minister specifically alluded to the document. It is a convention of the House that if a document is alluded to by a Minister it is laid on the Table for hon. Members to receive. Similar points have been raised on many occasions, and the documents have been laid on the Table following requests from Back Benchers. Surely that precedent should be followed.
Mr. Robin Maxwell-Hyslop: Further to that point of order, Mr. Deputy Speaker. The rulings from the Chair on the matter invariably have been the same, namely, that it is only if the document is quoted that it must be laid upon the Table.
Sir Derek Walker-Smith: Further to that point of order, Mr. Deputy Speaker. I rise merely to assist you. The custom of the House derives from a legal principle in the courts that a person cannot give oral evidence from a written document. If my hon. Friend the

1079
Minister does not give oral evidence of what is contained in the document, he is within the rules.
Mr. Hardy: Further to that point of order, Mr. Deputy Speaker. Did not the Minister go further than alluding to the document? Did he not refer to the contents of the document and, therefore, should not that document be laid?
Mr. Deputy Speaker: I am grateful to the House for so much assistance. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) anticipated my ruling. It would be necessary for the Minister to lay the document on the Table if he intended to quote directly from it. If he merely alluded to it—as I understand he did—it was not necessary for the document to be laid.
Mr. Lawson: Thank you for that ruling, Mr. Deputy Speaker. I assure the House that the document will be laid at the earliest possible moment. I thought that it would be of assistance to the House to allude to it in the debate.
The Government have no doubt that the Commission's proposals could, given the political will among the member States, form the basis of an adequate and acceptable solution.
I turn to the amendment in the name of the Leader of the Opposition, and to the amendment to the amendment which Mr. Speaker has selected. One is to correct a drafting error in the Opposition's amendment. That sort of bumbling approach is characteristic of all their actions in this area. We are prepared to accept, without demur, that their drafting error should be corrected.
The other amendent is that in the name of the hon. Member for Caithness and Sutherland (Mr. Maclennan), which concerns matters that are dealt with in the Opposition amendment. The internal quarrels within the Opposition should be left to fester unaided by right hon. and hon. Members on either side of the House.
The Opposition amendment is in two parts. The first part seeks to reaffirm the position taken by the House on the two previous occasions on which we debated the matter, namely, that the United Kingdom net contribution to the Community budget should be zero. The
1080
two previous debates took place before the European Council met at Dublin. As I have already made clear, very important positive progress was made at that Council for which the document—[Interruption.] Opposition Members do not like to see the Government finding a solution to the problem. They know that no progress whatever was made when they were in office.
The document that we are debating today bears clear witness to the progress that has been made. At the time we moved from a position of seeking the total elimination of our net contribution to the acceptance, in a spirit of genuine compromise, of a modest United Kingdom net contribution. There is no secret about this. The Prime Minister has made the position quite clear to the House and to our European partners ever since the Dublin summit.
That means equally clearly that I must advise the House to reject the Opposition amendment. Indeed, I hope that the Shadow Foreign Secretary will not seek to press his amendment. The Leader of the Opposition himself told the House on 11 March—and I quote his precise words:
"I hope that the right hon. Lady will go to Brussels knowing that she has the full support of everyone in the House for a substantial reduction in the amount of the payment."—[Official Report, 11 March 1980, Vol. 980, c. 1150.]
The difference between a substantial reduction in this country's net contribution and its total elimination is logically quite distinct. The Leader of the Opposition, on 11 March, quite clearly—and sensibly—gave his support to the very words embodied in the motion before the House.
It is therefore my profound hope that at a time when the Prime Minister will, before long, embark on an international negotiation which is as difficult as it is vital to our country's interests, the Opposition will not press their opportunist amendment but instead will remain true to the position expressed by the Leader of the Opposition as recently as 11 March, and allow the Prime Minister to go to Brussels with the backing of a unanimous House of Commons.
Mr. Roger Moate: In recommending that the Opposition amendment be rejected, or not even

1081
moved, can my hon. Friend tell us that the Government will not oppose the last part of that amendment—the part that is dealt with by the amendment of the hon. Member for Caithness and Sutherland (Mr. Maclennan)? Can my hon. Friend be explicit about this, because it is an important point?
Mr. Lawson: It is important. As my hon. Friend has pointed out, the second part of the amendment deals with the possibility that in the last resort we might withhold part of our net contribution to the Community budget. This aspect, too, was mentioned by the Leader of the Opposition in the important utterance that he made on 11 March, although it is true that the precise words of the amendment echoed the early-day motion tabled by my hon. Friend the Member for Bury St Edmunds (Mr. Griffiths) on 18 March and now supported by 136 of my right hon. and hon. Friends.
Of course, the Prime Minister is aware of the strength of feeling on this matter on both sides of the House, and I am sure that she will convey it to her fellow Heads of Government in her own inimitable manner. Needless to say, the Government have no wish to follow this course and we hope that it will not come to that. We are negotiating for an equitable outcome and will consider this possibility only in the last resort.
Mr. Dick Douglas rose—
Mr. Lawson: No, I will not give way.
Mr. Douglas rose—
Mr. Lawson: No, I will not give way, so there is no point in the hon. Member jumping up and down like a jack in the box.
Mr. Douglas rose—
Mr. Deputy Speaker: Order. The Minister is not giving way.
Mr. Lawson: We have said that we will consider the possibility of withholding part of our contribution only as a last resort. The Prime Minister made this clear as recently as last Thursday. In the light of that, I see no difficulty in the second part of the Opposition's amendment concerning withholding. However, for the reason that I have already given
1082
concerning the first part of the amendment—a reason which was implicitly accepted by the Leader of the Opposition on 11 March—I hope that the Opposition will not press their amendment. If they do, I repeat that I shall have to advise my right hon. and hon. Friends to reject it. How much better it would be for the House to give its unanimous support to the motion; and, as my right hon. Friend the Prime Minister prepares to go to Brussels, before long, to fight for our country's interests, I believe that she has a right to expect no less.
10.30 pm
Mr. Peter Shore: I beg to move, to leave out from first "Council" to the end of the Question and to add instead thereof:
'so that, as the House unanimously resolved on 16th July and 22nd November 1979 Great Britain's contribution to the Budget is at least not greater than the receipts, and furthermore to ensure that there is a commitment by the Council to long-term restructuring of the Budget which would bring about a significant reduction in the proportion of spending on the Community Agricultural Policy, particularly by reducing the production of surpluses and creating a more equitable distribution of expenditure over the whole Community; and will support the Government should it as a last resort find it necessary to withhold part of the United Kingdom contribution in order to achieve a satisfactory settlement.'
We shall sustain our amendment in the Lobbies if the Government, for the weak reasons advanced by the Financial Secretary, find it necessary to oppose us.
The amendment seeks to make two additions to the motion. The first is to reintroduce the resolutions passed unanimously by the House on 16th July and 22nd November in which the House stated its view that the British contribution should not exceed the receipts that we obtain. The second part of the amendment adds:
"and will support the Government should it as a last resort find it necessary to withhold part of the United Kingdom contribution in order to achieve a satisfactory settlement."
With characteristic effrontery, the Financial Secretary attempted to attribute to my right hon. Friend the Leader of the Opposition an interpretation that his words do not sustain. When our support was keenly asked for by the Government in the debate on 22 November, I said:
"The Chancellor has asked for the support of the House as a prelude to the opening of the Dublin summit. He has that support in

1083 s
full measure. He will lose that support only if he or the Prime Minister were to retreat from the meaning and value of their own words."—[Official Report, 22 November 1979; Vol. 974, c. 607.]
Mr. Lawson: The right hon. Gentleman has accused me of misrepresentation. That is a serious charge. If he will look at Hansard for 11 March, he will see that the Leader of the Opposition said:
"I hope that the right hon. Lady will go to Brussels knowing that she has the full support of everyone in the House for a substantial reduction in the amount of the payment."—[Official Report, 11 March 1980; Vol. 980, c. 1150.]
That view is embodied in the motion. I hope that the right hon. Gentleman will not charge me with any misrepresentation.
Mr. Shore: The Financial Secretary cannot get away with attempting to state the considered position of my right hon. Friend, which is embodied in our amendment, on the basis of an abbreviated version of an exchange in Question Time in the House. It does the hon. Gentleman no good to try to wriggle out of it in that way.
Before commenting on and commending the amendment, I should like to refer to the debate itself. We heard this afternoon that the meeting of the European Council had been postponed and that no new date had been set. I heard the news with surprise and regret—surprise because, although we are aware of the difficulties of the Italian Government, I understood that an interim Administration was to be formed by Signor Cossiga, and regret because it means that the matters that were supposed to be settled at Dublin—no later—are to be delayed for months longer.
We do not know when the next summit is to be held.
Mrs. Peggy Fenner: How then can the right hon. Gentleman say that matters will be delayed for months?
Mr. Shore: I shall be pleased to hear that the summit is coming forward in the next few weeks. Nevertheless, it has again been delayed. This must be a matter of regret, because there is no status quo in the situation. Money is pouring out of
1084
this country into Europe. We need immediate action to arrest the outflow.
This debate contrasts strangely with the debate on 22 November. It has only been possible to open the debate, even at this hour, thanks to our colleagues on the Transport Bill, and it will last, I suppose, for no more than three hours at a time when little public attention can be focused upon it. Previously we had a full day and the debate was opened, far more appropriately, by the Chancellor of the Exchequer. We regret the absence of the Chancellor. His absence is particularly unwelcome precisely because he will be presenting his Budget on Wednesday.
As the Financial Secretary knows, there is a crucial link between Britain's contribution to the EEC budget and the United Kingdom Budget to be presented on Wednesday. That link—or should I say "heavy golden chain"?—represents an amount of the order of £1,000 million.
The Chancellor spelt out the connection on 22 November when he said:
"Our forecast net contribution in 1980 is equal to the entire planned expenditure on national roads, all educational buildings, and all hospitals and other health buildings, put together. It significantly exceeds our programme of overseas aid, and already in 1979 it has been a major factor in eliminating the invisible surplus".
The right hon. and learned Gentleman also said:
"Our 1979–80 contribution is already equivalent to 11 per cent. of the United Kingdom PSBR".—[Official Report, 22 November 1979; Vol. 974, c. 592–3.]
There is not much doubt about the connection and relevance in the mind of the Chancellor as recently as 22 November. I can well understand why he insisted that new arrangements must operate in respect of 1980 as well as in subsequent years.
This brings me to a major question. What has been the basis of the Government's calculation of our EEC contribution in this year's United Kingdom Budget?
What figure for our net contribution to the EEC has been entered in the national accounts? Are the Government working on the assumption of success and that the £1,000 million will be retained by the United Kingdom? Or are they working on the assumption of failure and for a

1085
further £1,000 million cut in United Kingdom public expenditure or a further £1,000 million increase in taxation?
This issue cannot be evaded. I hoped that the Financial Secretary would give us a straight answer. If he speaks, with your permission, Mr. Deputy Speaker, at the end of the debate, he will perhaps address himself to it. We shall, I suppose, know, in any event, in two or three days' time; it will have to come out. It is crucial to the whole plan of the Budget for this year.
I turn now to the major anxieties expressed in the first part of the Opposition's amendment—the anxieties that the Government are retreating from the position they accepted with the full support of the House, first on 16 July and again on 22 November. The motion that the House passed called for two things: first, for a fundamental reform of the budget arrangements, and, secondly, an outcome in which the words are familiar—Britain's contribution to the budget
"is at least not greater than the receipts."
On both these main fronts, there is, unhappily, evidence of a serious retreat. I turn first to the question of fundamental reform.
Mr. Tony Marlow: The right hon. Gentleman says in his amendment that the contribution to the budget
"is at least not greater than the receipts."
Would he accept that in any organisation such as the Common Market there is a headquarters overhead cost towards which everyone has to contribute? In that case, we are bound to make a slightly greater contribution than we receive.
Mr. Shore: I understand that, and I shall come to that point in a moment, because we must see that against the actual contributions that other countries are paying. It is not apparent to me that they are bearing any part of the overheads at all.
I see evidence of a retreat. The case for fundamental reform is unanswerable. The latest estimate of losers and winners—and I turn directly to the hon. Gentleman's point—was published by the Commission last Friday. I do not know why the Financial Secretary was so coy about
1086
this. This reinforced what was already an overwhelming British case.
The figure of £1,000 million of last November—the net figure of our contribution—has now become £1,125 million. That is almost twice as large as the West German contribution of £665 million. West Germany has, as we know, a national income which is roughly twice our own. All the rest are gainers. France gains £62 million, Luxembourg gains £178 million, Holland gains £244 million, Denmark gains £265 million, Belgium gains £297 million, Ireland gains £335 million and Italy gains £410 million. What indeed would they do without us?
It is indeed an amazing situation that reflects equally the bizarre cluster of taxes that make up the so-called "own resources" of the Community and the great imbalance of Community expenditure in sustaining what must be the most protected and costly agricultural system in the world.
It was my hope that, armed with the resolution of the House, the Government would open up the whole question of the structure and composition of the EEC tax system, and that it would insist that "own resources" should give way to a progressive and redistributive tax system and that since a major CAP reform cannot realistically be met—if at all—except over a period of years the simple and immediate solution would be found in a straight refund of excess British contributions.
That has not happened, and as far as I can see the "own resources" system has not even been challenged during all these weeks. Indeed, in her post-Dublin statement on 3 December the Prime Minister had only this to say:
"Fundamental reform may be desirable—I happen to think that it would be—but fundamental reform would change all the existing mechanisms, all the existing basis, of the budget".
Yes indeed; that is the point. The right hon. Lady went on to say:
Therefore, one goes not to fundamental reform but to what we did—to using the existing Community mechanisms. Those were two: to diminish the contributions and to increase the receipts".—[Official Report, 3 December 1979; Vol. 975, c. 33–34.]
I regret this very much for two solid reasons that I now put to the House. First, the present tax system is not only absurd in its incidence and composition

1087
but it has the effect of putting the United Kingdom permanently in the position of seeking to claw back what has already been conceded. We are, therefore, always in the position of a demander with a status quo operating powerfully against our interests. That was the situation when the previous Labour Government argued for the first corrective mechanism. It is the same with the revised version of the corrective mechanism that the Government are seeking today.
The second objection is no less powerful. By seeking to secure increased Community expenditure in Britain we are allowing the EEC increasingly to determine our own public expenditure priorities and to increase its influence and competence over Government decisions in Britain.
The other area of retreat with which we are concerned is the aim and the target of the whole negotiations. We armed the Government with the words
"Britain's contribution to the budget should be at least not greater than the receipts".
We needed to make it abundantly plain that in any modern and acceptable tax regime some regard must be paid to taxable capacity and that since we stand in seventh place in the national income league of the Nine the question of Britain contributing to others should not arise at all. That was why those words were chosen. I thought that we were at one on this.
I believed that we were on 22 November when the Chancellor of the Exchequer, commenting on comparative GNPs and calling for a broad balance that we were prepared to accept as being very near our aim, said that he was amazed at his own moderation. So broad balance it was until Dublin.
Dublin was a clear failure and the Prime Minister came back with a new formula. She was ready, or so the House was told on 3 December, to search for a genuine compromise, although her room for manoeuvre—the Financial Secretary has recalled the words—was limited. So in spite of the Prime Minister's assertion last Thursday that we had very little room for manoeuvre, there has been movement—and in the wrong direction.
Meanwhile, the scale of Britain's contribution has risen, according to the latest
1088
estimates, by no less than £124 million. The Government's motion now refers not to broad balance but only to a "substantial" reduction. I think that the House has every reason to think carefully and sceptically about what that word means.
I warned the right hon. Lady before Dublin, and after that not only was her own credibility at stake but, more important, that of this country. If, in the event, we are out-bluffed, out-manoeuvred and out-faced on this issue deliberately and carefully chosen as the main battlefield for redress—and there are many other issues on which we shall need redress—we shall lose all credibility in our future dealings with the EEC.
That brings me to the last part of our amendment, that the House will support the Government should they
"as a last resort find it necessary to withhold part of the United Kingdom contribution in order to achieve a satisfactory settlement."
Mr. Hugh Dykes rose—
Mr. Shore: All right. I have often given way to the hon. Member, but he generally makes his normal speech during his intervention.
Mr. Dykes: There is no need for the right hon. Gentleman to get panicky about that tonight. Will he say what are the other issues on which the Opposition want redress?
Mr. Shore: There are very many matters. There are matters concerning State aid, the general course of economic policy and the loss of rights by this House to the EEC. There should be no doubt that there are many matters that will need to be put right.
I said that the House will support the Government should they
"find it necessary to withhold part of the United Kingdom contribution in order to achieve a satisfactory settlement."
The House will recognise the words. They are taken from the closing lines of the motion in the name of the hon. Member for Bury St. Edmunds (Mr. Griffiths) and a number of his hon. Friends. It is supported by 136 Conservative Members of Parliament. They will be pleased to hear that the Financial Secretary, speaking on behalf of the Government, has no objection to their words. Indeed, as I understand it, that is not the reason

1089
that he is seeking to invite the House to oppose our amendment. Nevertheless, it is an amendment of the utmost importance. It rightly refers to a remedy of "last resort", and it is a last resort that I believe we are rapidly approaching.
The words contained in paragraph 96 of the famous 1971 White Paper—if I may re-quote what the Financial Secretary said—stated:
"Should an unacceptable situation arise, the very survival of the Community would demand that the institutions find equitable solutions."
Those words were also quoted by the Chancellor of the Exchequer on 22 November. I assume that those words carried no weight at the Dublin summit, or in any subsequent discussions. Those words were the so-called safeguards which the House was offered six years ago to ease the anxieties which were then so strongly expressed by many right hon. and hon. Members on both sides of the House.
I said at the time that I did not believe that they had any binding force, and that if they had been binding they would have appeared, if not in the Treaty of Accession itself, then in one of the large numbers of protocols, joint declarations and declarations that were attached to it. But they did not appear there.
I gather that the Government now share that view. I assume that they have had advice from the Law Officers, otherwise I assume that they would take the matter to the European Court, along with the other alleged breach of agreement relating to promises that agricultural support expenditure would fall steeply in the total of Community expenditure.
I assume also that the Government have considered the wider question whether in the operation and the effect of the "own resources" system the Council and the Commission are in breach of the Treaty of Rome, and, in particular, of article 6 (2), which states:
"The institutions of all the Community shall take care not to prejudice the internal and external financial stability of the member States."
I take it that those remedies are closed. If that is so, we are faced with an obstinate refusal to right a manifest wrong. Against the incomprehension of the Seven and the wilful and arrogant opposition of France, the options before us are either meekly to surrnder our claim, or to take
1090
direct British action to sustain it. The Government have no reason to cavil at our resolution on this account.
Last Thursday the Prime Minister told us:
"in the last resort we shall have to consider withholding our value added tax contribution. Let there be no doubt about that."—[Official Report, 20 March 1930; Vol. 981, c. 636.]
The Government and their advisers must by now have decided what needs to be done. The House would welcome a statement, both on the present law in relation to the withholding of Britain's budget contributions, and on the amending legislation which in my view will be necessary if we are to exclude the payment to Brussels either of VAT or the agricultural levies and customs duties.
I am surprised at the attention and focus that have been placed upon VAT rather than upon the other two components of "own resources". Because of the pattern of Britain's expenditure, VAT, while it still operates adversely, at least has some basis, reason and common sense. It relates to the actual expenditure on goods and services in the different countries. It can therefore be taken to be some surrogate of ability to pay. But the other two components in "own resources" are entirely uncertain and arbitrary in their effect. We know, and the Commission knew when it decided to cement this system upon the Community as a condition of opening negotiations with Britain in 1970, that in putting a tax on trade with countries outside Europe, and in putting a tax on imports of food with countries outside Europe, they were taxing the whole history of Britain's trade, particularly its food trade.
Sir Ronald Bell: The right hon. Gentleman knows that I regard this discussion as a ritual dance, masking the inevitable. Is not the difference between VAT and the other components that the other components are appropriated specifically, whereas VAT is simply an amount of money equal to the yield of a 1 per cent. value added tax?
Mr. Shore: I note what the hon. and learned Gentleman has said, but I am not sure that that constitutes a major difference in terms of Community law or in terms of the Treaty, or that it should govern our approach to the three taxes

1091
which we are discussing. Under the European Communities Act 1972 those three taxes are the legal property of the Community. I quote again from a speech by the Chancellor of the Exchequer on 22 November. He said:
"Nobody in his right mind would contend that the legal tail should be allowed to wag the economic and political dog,"—
whatever that may mean. However, it sounds encouraging to me, and therefore I put it to the House to encourage all hon. Members.
Tonight, on behalf of Her Majesty's Opposition, I place on record our support for direct action to obtain relief from the Community budget. We agree with the Prime Minister that we are in fact talking about "our own money." While Britain has never been slow to contribute to others if the need is established, we cannot and will not tolerate arrangements which, due to the weakness, folly and obsession of the right hon. Member for Sidcup (Mr. Heath), backed by a complaisant Conservative majority, allow the British people to be exploited by countries more prosperous than we ourselves.
In conclusion, I repeat the pledge that we gave on 22 November: that the Opposition will give every facility to amending legislation that the Government may need to bring forward to the House to secure the objectives that we all seek.
Several hon. Members rose—
Mr. Deputy Speaker (Mr. Bryant God-man Irvine): We now have just over two hours left for the debate. I am already aware of 12 right hon. and hon. Members who wish to catch my eye, plus the wind-up speeches. I can leave the arithmetic to the House.
10.56 pm.
Sir Derek Walker-Smith (Hertfordshire, East): As you have just said, Mr. Deputy Speaker, this is a short debate, the length of which is in inverse ratio to its importance. Therefore, I shall seek to be as brief as possible.
I am wholly in favour of the Government's motion in the terms in which it is tabled. I have to depart from the Opposition's amendment, though for reasons rather different from those put forward by my hon. Friend the Financial
1092
Secretary to the Treasury, as I shall make clear later.
The Government's motion comprises two facets: first, support for the reduction of Britain's net contribution, and, secondly, support for a policy of restructuring the Community budget so as to reduce spending on the common agricultural policy. These two objectives are, of course, linked. While the first may seem the more urgent, the second is certainly the more important.
A rationalisation of the CAP will automatically benefit Britain and reduce our net contribution. Complementarily, whatever temporary amelioration or arrangement can be achieved for Britain in the short term, in the long term only rationalisation of the CAP can secure an improvement in our position.
It follows that the short-term objective must be presented and pursued in the context of the longer-term objective. The improvement of Britain's position must be seen as a consequence of the restructuring of the budget and the CAP, which is itself a logical and necessary exercise for the improved working of the Common Market in the interests of the Community as a whole. On no other basis is Britain likely to secure a lasting improvement in her position.
The short term plea of poverty can never be completely convincing, any more than it can ever be a dignified posture for a great nation. It is bound to stick in the gullets of a proud people and is not one that we should wish to make. Nor can it carry much conviction indeed, coming from the uncovenanted beneficiaries of North Sea oil. It is bound to evoke the response that, if we have to rely on a plea of poverty, it is our own fault, as indeed, to a large degree it is.
No more convincing is reliance on the so-called principle of a juste retour. Nowhere in the Treaty is such a principle enshrined. Indeed, it would be odd if it were so in an economic community whose basic concept is the efficacy and desirability of free and unfettered competition.
Mr. Tom Ellis: Will the right hon. and learned Gentleman give way?
Sir D. Walker-Smith: There is no one in the House to whom I would rather give way than the hon. Member, but I think

1093
that I would be better advised to resist the temptation. We will talk about it later.
It follows, therefore, that the emphasis must be on the long-term objective, with any immediate ad hoc amelioration of Britain's position ranking only as something on account in the necessary interval before the long-term improvement can be made.
As to the present workings of the CAP—I say "present workings" because the workings are not enshrined in the Treaty—I spoke on this in more detail in November last and I respectfully remind the House of my conclusion on this point. I said:
"It is not, therefore, a matter of having to amend the Treaty, with its practical and constitutional difficulties. It is a matter of presenting and winning an outstandingly clear case in the Council of Ministers by persuasion and advocacy."
I said then:
"I do not say that it will be easy, but reform is necessary and will in the long run benefit not only Britain…but also those who may be minded to oppose it now."—[Official Report, 22 November 1979; Vol. 974, c. 612–13.]
My second point concerns the relationship between contribution and expenditure. I do not believe, as some may be tempted to do, that Community spending in the United Kingdom can, of its nature, ever be a satisfactory alternative to a restructuring of the CAP. [Hon. Members: "Hear, hear."] There are two main reasons for this. First, it is at best a palliative. That is admitted in paragraph 9 of the Commission document, which says:
"In its proposals…the Commission also stated any measures on the expenditure side of the budget relating to United Kingdom should be special, temporary and ad hoc. The Commission reaffirms the views."
The second reason is that the proposed procedure by way of a Council regulation under article 235, with the procedures and controls summarised in paragraph 20 of the Commision document, would inevitably entail a step in the direction of detailed centralised Community control—a step towards what is usually, though loosely, termed in the House a Federal Europe.
For both these reasons, therefore, I conclude that compensation by way of increased expenditure in the United Kingdom is not a satisfactory substitute for the basic restructuring of the CAP.
1094
My third point relates to method. The motion seeks support—and properly—for my right hon. Friend the Prime Minister's efforts at the Council. It does not specify methods. But not so long ago at Question Time the Prime Minister proclaimed—again properly, in my view—her determination to act in accordance with the rule of law. There are now suggestions in the Opposition proposal and in early-day motion 513, that the United Kingdom should unilaterally withhold some of its contribution to the Community own resources.
Mr. Stanley Orme: Tell us what the Prime Minister said.
Sir D. Walker-Smith: I am telling the House what I say.
Mr. Cryer: We are not criticising the hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), but he should tell us what the Prime Minister said.
Sir D. Walker-Smith: I was sent here by my constituents to express my views. I was doing so when some of the Opposition Members who are now making sedentary remarks were still in their political nappies. Maybe some of them still have not grown out of them. This is a serious debate and we want to make our serious points shortly.
We have to ask ourselves: would such action be within the law? Time forbids tonight a detailed analysis of the legal position. Basically, however, article 201 of the Treaty envisaged the replacement, following a unanimous decision of the Council, of the original method of financing the Community under article 200—that is to say, by way of prescribed percentages from the member States, by a system of Community "own resources".
This system was duly specified in the Council decision of 21 April 1970. Articles 2 and 3 of the decision specified respectively customs duties from non-member countries and agricultural levies as part of the "own resources" for the Community, and article 4 specified a third element as a yield from VAT not exceeding 1 per cent. Therefore, prima facie at any rate, payment of the prescribed VAT contribution is a Treaty obligation imposed in 1970, accepted by Britain in its Act of Accession and not sought to be altered in the so-called renegotiation of 1975.

1095
If and in so far as it is a treaty obligation, it would be a violation of international law to breach it. I am bound respectfully to caution my right hon. Friends in regard to such a course. Bad behaviour by another member State in flouting the rule of law would be a bad precedent for Britain to break the law. Law and the treaties are the cement of the Community's constitution. If that cracks, the edifice must crumble and collapse.
But it would not be only the Community that would be damaged. The high standing of Britain in the world rests in no small measure on the belief that we honour our bond and abide by the law. Lose that, and we lose much—perhaps all. [Interruption.] Those who do not mind whether the Community collapses—which is one thing—must nevertheless still have regard for Britain's standing and her reputation. In Shakespeare's words,
"Who steals my purse steals trash… But he that filches from me my good name Robs me of that which not enriches him, And makes me poor indeed."
Therefore, I ask this question: if our partners in the Community will not see reason, is there no alternative other than to break the law?
Mr. Eric S. Heller rose—
Sir D. Walker-Smith: There is an alternative, and I shall spell it out. It would be better—far better than to seek to continue nominal membership of a crumbling Community in an atmosphere of competitive and cumulative law-breaking and evasion—to seek an honourable way out, an honourable exit from a Community in which, in its unreformed state, we could not usefully play a part.
There is such a way. It is, of course, true, as I indicated to the House in the previous Parliament, that unilateral repudiation of a treaty and its obligations is a breach of international law, and that is not what I would advocate. But there is another way. Under article 54 of the Vienna Convention on the Law of Treaties, ratified by the United Kingdom only 10 years ago,
"the termination of a treaty or the withdrawal of a party may take place…at any time by consent of all the parties after consultation with other contracting States."
1096
That is the course that we would have to pursue—to sit round the table with our partners, not in a spirit of recrimination or hostility but in amity and understanding, to seek that honourable solution, and to say then—
Mr. Anthony Beaumont-Dark rose—
Hon. Members: Give way.
Sir D. Walker-Smith:—that if they unwisely insist on a continuance of the common agricultural policy in its present form, in the words of Sir Winston in another context, we can have no part or lot in the thing they seek to do. It would be a sad thing, after 10 years of conscientious endeavour to assist the working of the Community—but not so sad as to seek to continue on a basis of sham or evasion of the law.
There would remain those various possible forms of friendly and meaningful association with our European friends that some of us put forward 10 years ago and, indeed, 20 years ago, as an alternative to membership of the European Economic Comunity.
But we are not yet faced with that position. Our hope must be that the Community will listen to the voice of reason and see that in the long run and, indeed, as a matter of urgency, the rationalisation of the CAP and the budget is vital not only in Britain's interests but in the real interests of the Community as a whole. My right hon. Friend the Prime Minister will go to the Council with the voice of reason and with our hopes that it will prevail.
11.9 pm
Mr. Robert Maclennan: The House meets tonight against a background of crisis in the European Community and in the economy of the United Kingdom. The two issues are not unrelated. It is right that even in so short a debate we should reaffirm the country's deep concern that the budgetary arrangements of the European Community constitute an unacceptable burden on the British people.
It is right that the Opposition should have the opportunity of reaffirming their support of the Government in their attempts to rectify a wholly inequitable and unjust burden at the forthcoming summit. The House has done this before.

1097
It did so with a unanimity that no doubt supported the Prime Minister in her efforts. I deeply regret that it is not possible to voice that same unalloyed unity tonight. I regret that that is due in no small measure to the part played by the Prime Minister and to the way that she has conducted these negotiations.
The motion commended by the Financial Secretary to the Treasury spoke only in terms of the Government's objectives. Had that been the only issue before the House, we might have supported the Government without cavil. Regrettably that is not the only issue before us. The Prime Minister, in the course of two interventions last week, took us beyond the Government's objectives to consideration not only of how the Government would seek to fulfil their objectives but of their response if our fellow members of the Community should fail to accept our proposal.
In an earlier debate on the Government's conduct in their negotiations about Rhodesia, I voiced some doubt to the Lord Privy Seal about whether it was appropriate for the House not merely to give its assent to objectives of diplomacy but to be asked to approve the methods and techniques. I voice that doubt again tonight. It cannot help the Government, either in their diplomatic negotiations with the Community or in their understanding of such issues, to seek to obtain our support for the proposition that Her Majesty's Government should illegally withhold the Community's own resources should those negotiations fail.
It may be argued that the Government have not put that proposition to the House. I accept that that is so. However, the triviality of the Financial Secretary's speech might have been lessened if he had addressed himself to the issue. That issue was put before the House by the hon. Member for Bury St. Edmunds (Mr. Griffiths) and 135 of his colleagues. It bore all the marks of being an inspired motion. The name at the top of the motion led some of us to believe that that was so. Whether that is the case or not, it has not been repudiated by the Government. In so far as there has been any comment on it, it must be taken that the Government are not displeased by that expression of view. The Financial Secretary spoke of the proposal that stands in the names of my right hon.
1098
Friends. He said that he had no objection to the part of it that had been drawn from the terms of the early-day motion in the name of the hon. Member for Bury St. Edmunds. We can therefore take it that the Government accept, in broad terms, its sentiments.
Mr. Eldon Griffiths: I did not engineer the early-day motion. It was the product of a uniting among those on this side of the House who had different views on the matter. I, like the hon. Gentleman, have been an ardent supporter of the European Community, and I shall continue to be so. I ask him to accept that the early-day motion was an expression from the many voices of opinion on this side of the House.
Mr. Maclennan: I may be naive, but I am not as naive as the hon. Gentleman wants the House to believe. I did not suggest that he had inspired the motion. I suggested that it was inspired by the Government. It received from the Financial Secretary the imprimatur of official approval. If we were able to focus exclusively on the inequity of the budgetary arrangements, those like myself who fought long and hard for entry to the European Community—and to ensure that we played a constructive role in it which would bring about a more equitable distribution of the Community resources—would have given our unalloyed support to the Government. That, alas, we cannot do. The Prime Minister made it plain that she intends, as a last resort, to act illegally.
Mr. Heffer: Does not my hon. Friend agree that my right hon. Friend the Leader of the Opposition made it clear a week ago that the Government should refuse to pay VAT contributions because it was necessary to reach a settlement with the EEC? Is not my hon. Friend arguing the case that he argued when he broke the ranks of the Labour Party—[Interruption.] I am sorry if hon. Members do not like my remarks, but he broke the ranks of the Labour Party—[HON. MEMBERS: "What about devolution?"] My hon. Friend broke the ranks—
Mr. Deputy Speaker: Order. The hon. Member knows that interventions should be brief.
Mr. Heffer: My hon. Friend broke the ranks of the Labour Party when it was totally opposed to entry to the EEC, and many of my right hon. and hon. Friends voted with the Conservative Party. Is not my hon. Friend continuing that argument, although we have made it clear that we shall support the Government if they make a real attempt to protect our interests?
Mr. Maclennan: My argument is not with my hon. Friend whose long-term opposition to the EEC is well known. If my lion. Friend is as willing to extend the hand of comradeship to me as I am to him—
Mr. Heffer: I have no intention of doing that.
Mr. Maclennan: If my hon. Friend were to do so, we would find ourselves in an harmonious party.
Mr. Heffer: I shall not do so. It is a disgraceful matter.
Mr. Maclennan: The Prime Minister raised the issue in its sharpest form. The suggestion comes from a Government who made one of their principal planks at the general election the importance of sustaining law and order.
There can be no worse posture for a Government to take in that battle—and it is a battle in this modern world to sustain law and order—than deliberately to announce the intention to depart from law and order if certain political objectives are not achieved.
I am moved to comment on this matter tonight because this is not the first time that the present Government have, in pursuit of political objectives, shown somewhat scant regard for the law. In fact, Ministers have, on more than one occasion of late, come before this House to announce policy decisions for which it appears they can make a colourably strong legal case, but which, if pressed, they would find hard to justify as the appropriate legal action.
I refer to the case of the revision of the immigration rules. The Home Secretary, in announcing them, said that they were probably defensible, but he refused to invite the Attorney-General to give us his authoritative view that they were not
1100
in breach of the European Convention on Human Rights.
The second example is the case of the Secretary of State for Social Services, who—
Mr. Michael McNair-Wilson: On a point of order, Mr. Deputy Speaker. Can the argument about immigration have anything to do with the EEC budget?
Mr. Deputy Speaker: I think that the hon. Member must have not heard the last few words of the hon. Member's previous sentence.
Mr. Maclennan: As I was saying, the second example is the case of the Secretary of State for Social Services, who showed scant regard for the law in his instructions to an area health authority, and once again the Government appeared to find a political objective more important than the upholding of the rule of law.
But undoubtedly the issue which faces us tonight is by far the most serious indication of the Government's willingness to depart from the rule of law, because on this occasion there is no pretension that the Government would not be acting illegally if they withheld from the Community their own resources. Under the Council's decision of 21 April 1970, which was quoted by the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), the provisions were laid down for the establishment of the payments to the Community by the "own resources" method. His speech has saved me from going over the legal arcana in support of the view which has not been challenged, that to withhold own resources, to withhold VAT levies or customs, would be an infringement of the law.
Indeed, the Prime Minister herself has not sought to deny that it would be an infringement of the law. She was interviewed on the "Panorama" television programme by Mr. Robin Day, who asked her whether she was prepared to withold some of our contributions, such as the VAT-related elements, if this country did not get more than half a loaf. The Prime Minister answered:
"There are two things that you could do, one of which would be to consider withholding, which I would be very loth to do because it means going against the Community law".

1101
In an earlier incarnation the Prime Minister was a barrister, and therefore she understands the meaning of the law. She knows perfectly well that what she is doing is a political choice to defy the law of the Community. That is to invite contempt not only for the Community, but for the very institution of the law of which this House is the prime safeguard. I hear my right hon. Friend the Member for Battersea, North (Mr. Jay) suggest under his breath that the law of the Community is not real law. That argument is not one that the Prime Minister would seek to sustain and it is not one that is sustainable by the House of Commons, which passed the Act that makes this Community law the law of our land. It also incorporated into our domestic law the provisions that my right hon. Friend so much dislikes, and that the House accepted when, following further consideration of these matters, the renegotiation of the very financial mechanisms that are at issue tonight, and the referendum of the people of this country, we determined by a clear majority to maintain our membership of the European Community.
He who attacks the law by which this country lives goes much further than damaging our membership of the European Community. He undermines our respect for what holds society together. The Government's failure to recognise that, and their propagation of the notion that because the political objective is reasonable that entitles us to disregard our freely entered into international legal commitments and the law of the land, put at risk much that this House has fought for since it was first elected as a representative and guardian of the free people of this country.
Mr. Deputy Speaker: Do I take it that the hon. Gentleman is not moving his amendment?
Mr. Maclennan: I beg to move, as a manuscript amendment to the proposed amendment, to leave out from second "Community" to the end of the admendment.
Mr. Heffer: On a point of order, Mr. Deputy Speaker. On another occasion 46 Members supported an amendment of mine on the Olympic Games. It was not accepted by the Chair. How is it that a manuscript amendment can be accept-
1102
ed at this stage, when I was told quite clearly by the Chair that only one amendment could be accepted? I should like to know exactly what is the position.
Mr. Deputy Speaker: The matter was determined before I came into the Chair. I am only carrying out the instructions that I gather have already been announced to the House.
Mr. Heffer: Further to that point of order, Mr. Deputy Speaker. [HON. MEMBERS: "Wasting time."] I may be wasting time, but this is a matter of importance. I trust that when on future occasions other Members try to move further amendments on issues of the type that I tried to raise on the Olympic Games they will not be ruled out of order on the basis of your decision tonight, Mr. Deputy Speaker.
Mr. Deputy Speaker: Decisions of Mr. Speaker are not matters for the hon. Gentleman, or for me, to question.
11.28 pm
Sir Brandon Rhys Williams: The House is approaching the subject of our relationship with the European Community rather as if my right hon. Friend the Prime Minister had today returned from the summit completely empty-handed. I think that we are being a little too pessimistic if we assume that the forthcoming summit, whenever it is held, will result in a total defeat for my right hon. Friend's campaign.
I was rather pleased when we heard today that the summit meeting had been postponed, because that gives us a little longer to make known how very strong public opinion in this country is and to study the positions that are being taken up by the other member States. They are by no means all as hostile to this country's interests as certain hon. Members' speeches might have us believe.
My right hon. Friend goes into the negotiation, I believe, with the good will of the whole House. We are not helping her tonight by taking the fractious tone that we are taking and appearing to be disunited, when a
"lasting reduction in the United Kingdom's net contribution to the Community Budget"
and
"a commitment by the Council to long-term restructuring of the budget"

1103
must be objectives shared equally strongly on both sides of the House.
My right hon. Friend has considerable strengths in the negotiations. I do not want to make too strong a party point, but the Treaty of Rome is really the free enterprise manifesto. On the Tory side of the House our deep-seated convictions go along with the essence embodied in the Rome Treaty. On the Opposition side of the House, from the very start, there have been right hon. and hon. Members who were opposed to our adherence to the treaty because its entire philosophy was hostile to the brand of socialism which they preached.
My right hon. Friend is not opposed to the essence of the Rome Treaty and that is recognised on the Continent and it is much in her favour. North Sea oil, which appears to be a millstone or embarrassment, is undoubtedly an enormous source of strength to this country in our dealings with the other member States. It is only fair to pay a certain tribute to the right hon. Member for Deptford (Mr. Silkin), a former Minister of Agriculture, Fisheries and Food, because he succeeded in awakening the interests of consumers, not only in this country but throughout the Community, in the future course of food prices. There are, no doubt, many people on the Continent who are afraid of inflation, just as we are, and who do not welcome the way the common agricultural policy seems all the time to be pressing food prices up without bringing about the basic restructuring of Continental agriculture which is needed if ultimately Continental agriculture is to solve its problems.
We also have the strength that Great Britain is a very important market for the other member Stales. Indeed, it is too important, and I shall come to that in a moment.
Certainly, we have also to admit that my right hon. Friend enters the negotiations with two major disadvantages. One of them is that the renegotiation of the Treaty, carried out by the former Labour Government, was totally bungled. It was recognised that problems just such as we have encountered this year would arise. But the way in which the renegotiation was handled was bungled and the mechanism incorporated in the agreement has not
1104
operated as it ought to have done this year.
Mr. Cryer: The hon. Member is not alone, on the Conservative Benches, in talking about bungling the renegotiations. Could he explain what view he took in the referendum, following renegotiations, and say whether he advocated that people should vote "No" or "Yes"?
Sir B. Rhys Williams: It was recommended to the House, after weeks of negotiations, that the problems had been solved. I think that hon. Members on both sides of the House wanted to believe, and did believe, that the advice the House received was right. I should have liked to have the wisdom and insight of the hon. Gentleman. Acceptance was strongly commended to us by his right hon. Friend. As things turned out, his right hon. Friend was wrong and he was right. No doubt that will help his advancement in his party in due course.
I do not expect that my right hon. Friend will be able to come back having achieved in the current year a complete readjustment of the imbalance between Britain's contribution and what we receive. I do not consider that it is possible, in the context of the annual budget, especially as time goes by, to snatch all the bones out of the dog's mouth and achieve a fairer redistribution in the current year. That does not mean that my right hon. Friend's mission will have failed. It does not mean that she must attack on particular lines which will ultimately lead to success and to the
"long-term restructuring of the Budget".
It is helpful to try to increase our comprehension of the bargaining positions of the other member States and not merely build up an attitude of confrontation. We have problems with redundancies and overmanning in the steel, textile and other industries that are in difficulty or decline. On the Continent, they have problems with their agriculture. We should sympathise with their problems, just as much as we ask them for their sympathy for ours.
It is necessary to aim at the restructuring of the CAP, and not just at its destruction or the abandonment of its principles. We should recognise that it has social purposes and we should insist that those purposes are not achieved simply

1105
by setting agricultural prices inordinately high.
There are ways of achieving the social purposes, and farm workers on the Continent deserve our sympathy just as much as do redundant textile or steel industry workers in this country. We should work with the other member States to solve the problems in a realistic and human spirit. It is not impossible to obtain support for the reform of the CAP that would take the social element out of the series of arrangements that have grown up over the years and place far more emphasis on the responsibility of national Governments to deal with the social problems of their own agriculture industries.
We need to shift the balance in our thinking about agriculture from short-term to long-term policy making. One of the basic problems of Continental agriculture is still a shortage of capital. Producers on low incomes go out for the milk and dairy sector, where they can get two crops in a single day, and do not put enough effort into, for example, long-term crops such as timber, where they get only a single crop in a lifetime. The fundamental problem is shortage of capital—which brings me to an important point.
The Community will not be able to solve its problems within the context of an annual budget. We are still living in the Stone Age in relation to the Community budget. We can look ahead only from one year to the next. Until we know what the next crop is to yield, we cannot look further than one year into the future.
While we are working from hand to mouth in that primitive way, the problems of Western Europe will not solve themselves. We need to introduce a system of budgeting that runs over several years at a time and even takes in long-term investment as part of the deliberate projects of the Community. That is a matter which my right hon. Friend should stress, because this country has so much need for major capital investment in order to restructure our industries and to improve our electricity supply, our transport systems and many other aspects of our industrial base.
We also need to take a long look at the significance of the 1 per cent. contribution which next year will prove inadequate to finance even the CAP, let
1106
alone any other aspects of the Community budget, such as social policy and the rest.
The problem facing us will have to be solved next year, and as members of the Community we should be bending our minds to the right way to find a solution to it, just as the other member States are seriously considering the same problem. We should work with them and see that the solution that we find together brings about the restructuring of the budget in this country's interests. I should like to see far more emphasis on capital expenditure and less on redistribution of income within the context of the Stone Age, one-year-at-a-time budget.
I promised that I would come back to the rate of exchange and the balance of imports and exports between this country and the other member States. I am not one of those who think that the Bank of England has handled our affairs well since the war, or indeed during the whole of my lifetime. It has been obsessed with the prestige of the pound and has not given enough attention to the interests of manufacturing industry.
It would have been better if Hugh Dalton, instead of nationalising the Bank of England, had relocated it in Birmingham. We might then have had the character in our central bank that the Germans have in theirs, a major preoccupation of which is the profitability of German exports. It does not seek to turn Frankfurt into an international finance centre. The Bank of England, in contrast, has not been concerned to promote the profitability of British exports. Its obsession has been to make London into a profit centre for international finance, regardless of the long-term effect on the British economy. Today, we are seeing this policy in the extraordinarily high rate of exchange for sterling, which has resulted in floods of manufactures from the Common Market and the rest of the world coming into the British home market and the difficulties of our exporters sending goods abroad in exchange.
If it was not for the fluke of North Sea oil, our balance of payments would be exceedingly sick. It is possible to blame the richness of North Sea oil for the exchange rate situation. I recommend that my right hon. Friend should send a message to the governor of the Bank of England instructing him to arrange his affairs in such a way that there is a

1107
reduction in the sterling rate of exchange at the rate of 1 per cent. a week against the Smithsonian average until the autumn when the matter could be looked at again. If we could achieve a better balance on our trade with members of the Common Market, we should be able to restore the broad balance for which we are looking through the activities of the private sector.
Although I do not believe that we shall be able to achieve a readjustment of the public sector element in the budget overnight, or even within the next 12 months, we do not have to suffer, as we are now doing, from floods of imports from the Common Market into this country and the weak performance of our exporters in sending our goods into the Common Market to achieve a balance.
We can achieve through export profits a return to this country far greater than the amount we are spending in our official transactions with the Community through the present operation of the budget—but only if the rate of exchange can be adjusted to make that possible. This is why I believe it lies within our own hands to a great extent to restore our balance of advantage with the Common Market.
I would deeply regret a situation in which we found ourselves put to the point where we had to breach the Treaty or to repudiate our debts. I do not believe that we should make the possibility of that a part of our negotiating posture. Our object should be to achieve a better understanding of the attitudes of the other member States and to put our own affairs in order.
11.42 p.m.
Mr. J. Enoch Powell: Anyone who studies the document before the House and referred to in the Government motion, as well as the preceding document relating to the Dublin summit, must be struck by the references to "convergence". Indeed the emphasis on that concept finds a place in the title of this document. Further study will show that the idea of "convergence" is meant differently, indeed, in an opposite sense, by this country and by the rest of our partners in the Community.
For Britain, "convergence" means, and always has meant, the attainment of a roughly equal standard of economic performance between the member States
1108
of the Community. Indeed, that prospect was held out to this country as one of the inducements to agree to our membership eight years ago. But that is not the meaning of "convergence" as that term is understood by the Commission or by the Continental members of the Common Market. They mean by it the increasing amalgamation of the economies of the different States until the Common Market, in effect, functions as a single economy.
The contrast is brought out strikingly and, indeed, is proved by the different methods by which Britain and the Community wish to solve what is called Britain's problem. We call for a radical alteration of the Common Market that is bound permanently, by its nature, to involve the large deficit—the large net payment—that this country has to make to the rest of the Community. We call for the removal of that part of the institution that was essential to the member States of the Six before we joined. What is more we clearly have in our minds—and this is present in the terminology used in both the Government's motion and the amendment of the Opposition—the notion of a quid pro quo. One pays in and one roughly gets out what one has paid in. That is appropriate to the retention of our individual national sovereignties and of our individual national economic entities, but it is repudiated in express terms by the EEC, which instead proposes a series of measures which are temporary.
The most striking clash between the objectives of the Government and the proposals put forward by the Community is that the Government insist that the solution must be lasting—the Government insist that whatever rearrangement there is must be lasting in its effects—whereas the Community insists that these are to be temporary measures. They are envisaged by the Community as essentially regional policies which will be applied for a time until gradually we learn to see ourselves, and learn to fit into the economy of the Community as a whole, as a province within a larger State.
Our Community partners might well adapt the celebrated American claim that we have "lost an empire and not found a role" and accuse the British of having ceased to be a nation and of not being

1109
prepared to admit that they were a province. It is a fundamental divergence, not a convergence, that has now emerged, and it is only right that we should recognise its fundamental nature and that we should insist on that fundamental nature being recognised by the rest of the Community.
The Government are, of course, right in saying that our problem, as we see it as a national economy, is one which calls for a permanent remedy. But then they are looking in the opposite direction to that in which—
Mr. Tom Ellis: Will the right hon. Gentleman give way?
Mr. Powell: I am sorry, but we must all try to be brief and I hope that the hon. Member will forgive me if I develop my arguments as briefly as I can.
The Community is looking in the direction of increasing economic unification. I think that whatever the state of opinion was eight years ago the experience of the last eight years has proved that the constitutional and economic divergence and incompatibility of the United Kingdom with the rest of the Community has not diminished. It has become more conscious and, as experience has evolved, more and more of the people of this country have understood and grasped it.
What we must do, therefore, is to seek not a patching-up and glossing-over of what is a radical divergence but a fundamental alteration of our relationship with the rest of the Community. There is no question of going back upon 10 years of our history. There is no question of the United Kingdom turning its back on the Continent, economically or politically. But unless we are to be in a jangling, warring and incompatible stance, one towards another, we must find a means whereby our constitutional and economical incompatibilities with the present system are recognised and met.
That raises the question of how we are to approach the matter. I do not believe that we should approach it by what I call "the French method". It is easy in our frustration to say that we have seen how successful the French were in imposing their will upon the Community by staying away, by not playing the game, and by breaking the law and inviting the Community to see what it
1110
would then do. I do not believe that those are measures for Britain. Apart from other considerations, they are measures which imply the integration of the Community, and which play upon the integration of the Community. They lie within the ambit and concept of French stataecraft. They are not measures that meets our requirements and the reality of our economy and constitution.
I intend to support the amendment of the hon. Member for Caithness and Sutherland (Mr. Maclennan) because I do not believe that we can adequately measure the gravity and the fundamental nature of the conflict in which we now find ourselves simply by saying that we shall stop paying.
I am in accord, to my pleasure and not to my surprise, with the speech of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith). It is not to my surprise, because eight years ago, without any deviation from principle, he led the opposition to Britain's entry into the EEC. There is one correct and honourable way whereby we can secure the fundamental change and reorganisation of our relationship with the rest of the Community.
When we were considering joining the EEC we first had to make a declaration of intent that it was our intention, given a successful negotiation, to join. Until that declaration was made no negotiation could take place. We must learn a lesson from what happened then. The course we must take is to state our intention, if the Community remains in its present form and structure—incompatible with our economy and constitution—to withdraw from it in due form and at due time. That statement would not be the beginning of a quarrel. It is not intended as a breach. It is intended as the necessary base and beginning of a genuine negotiation whereby our relationship with the rest of the Community would be transformed to mutual benefit.
Mr. Heffer: The right hon. Gentleman argues that he will support the amendment tabled by my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan). His logic is that at no time should any country refuse to pay taxes of any kind that are an imposition on that country. But would he agree that the Americans were wrong in their action regarding the tea tax at Boston? Were

1111
the Americans right or wrong to take that stand in the interest of the American people, and is it not right that we should take the stand that we are now taking in relation to VAT?
Mr. Powell: If I thought that there was no other way available in which to regain our national independence and the sovereign legislative power of the House, I would take any step. But I do not believe that we are thus destitute of means, and I do not believe that the adoption of those methods at this stage would result in the kind of relationship that should exist between Britain and Europe in the future.
We have a method in our hands. We have the right, in proper and due form, if we think fit, to withdraw from the Community. But we must do so in proper and due form. By making the announcement of that will the basis of a genuine negotiation, it will prove whether the European Economic Community as it is now—of which the parameters are incompatible with the economy as well as with the constitution of this country—can be transformed into the link and co-operation which should exist between the United Kingdom and Western Europe.
11.55 pm
Mr. Selwyn Gummer: We are this evening discussing the budget of the European Community and Britain's reaction to it. It is sad that when we come to discuss weighty matters of this kind, we so often return to the old battles and arguments that we have had in the House on many occasions. I hope that we can concentrate, as, indeed, the Government's proposition does, on the particular matter of the budget and on the fundamental problems which it poses to us.
It is not satisfactory for anybody to suggest that the way in which the budget contribution falls upon this country can continue or ought to continue. As hon. Members will know, those of us who have supported the whole concept of the European Community publicly and clearly all our political lives are taking the very clear stance which the Prime Minister, in her efforts in Europe, has taken to ensure that there is a more sensible way of running the Community and a more equitable way of financing it.
1112
We have done so within the context of believing that the Community ought to work, and we wish to make it work.
The sadness of tonight's debate is that we have listened to a speech from the right hon. Member for Stepney and Poplar (Mr. Shore)—although he has not heard much of the debate which has subsequently taken place—which has the difficulty behind it that he speaks as one who has never believed in the European Community. Therefore, it is difficult to take seriously his recommendations of the changes which would bring about the kind of improvements which we seek. I listened to his speech with the same care and distrust with which I would listen to the speeches of Communists or Fascists seeking to defend a change in the democratic way in which we run our country. They do not believe in the system to start with and, therefore, it is difficult to take seriously their proposals for alteration.
That is the first reason why I believe that the Government's recommendation, and not the amendment, ought to be accepted. The Government are making a proposition from the standpoint of believing in the Community and wanting to make it work. Indeed, one of the problems that we face is that for the earliest years in which Britain was part of the EEC we were represented in Brussels largely by Ministers who did not believe in that Community, who had voted against our accession and who did little or nothing to improve the situation. Yet they now have the effrontery to come to this House and complain about what this Government are doing.
It is sad that the right hon. Member for Stepney and Poplar did not do a great deal more when he was in a position to change the Community. It is sad that the CAP, which presented many opportunities for change, had a straight, flat "no" from the right hon. Member for Deptford (Mr. Silkin), who had in his hands a whole range of changes which would now be beneficial to us but the chances for which are now past. It is a heavy burden which will be laid at the door of the right hon. Member for Deptford for his handling of Britain's relationship with the Common Market through the CAP, as I am sure history will demonstrate.
We have been asked to show our support for the Government by going further

1113
than the Government proposal. The Opposition have pointed out that the amendment simply makes more clear and sharp that which the Government have proposed. Yet the very nature of their proposition is false at its heart, because it suggests that the real mistake with the Common Market is that it does not provide a simple payment-in and payment-out equation.
The problem with the Common Market at the moment is that the mechanism does not work satisfactorily. Too much of the resources is concerned with agriculture and too little with other matters. The resources demanded from agriculture are increasing every day and, as my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) reminded us, will increase so much that next year it will be impossible under present arrangements to pay for them in any event.
The problem with the budgetary system is that it does not work and that it must be changed. Those of us who fought for our entry into the Common Market and believed in the growing unity of Europe have said all along that one of the major changes which must take place is in the common agricultural policy. Anyone who looks at the speeches in those early days, when we argued for our entry, will see that is true. But, if we are to make those changes, we must do so in the context of believing that the Common Market ought to work and that we are going to try to make it work. We must also accept our own blame for the reasons for its present failure.
The right hon. Member for Stepney and Poplar, in a throw-away line, mentioned that we were seventh in the league of Nine. That should be laid not at the door of the European Community but at our own door.
When I first started to fight for growing unity in Europe, I used to argue on doorsteps and at meetings throughout the country that we should join. The immediate reaction of many of the audience was "Why should we join? We are the richest country in Europe." We were then unable to join. Eight or nine years later we were arguing the same points again. We had not been members in the meantime. Then the main argument from the floor was "We are one of the poorest
1114
nations in Europe. How can we possibly afford to join?"
That change took place not because of our membership of the European Community but because, as a nation, we failed to find a way of protecting the prosperity of our people in the world in which we now live. As a nation, we have been so concerned with our internal arguments and policies about nationalisation and similar programmes and with the belief that the world still owed us a living—that somehow or other we still had a place in the world without having to work for it—that we failed to face the real issue of how to put our own house in order. That has been part of the British character over these past 10 years.
I fear that the European Economic Community is being used by many as yet another excuse for the failure of our own nation. It is another excuse for getting out of the real issue of how Britain can put her own house in order and find her own place in the world.
I turn to my last point: how can we, with honour, debate this matter this evening and not face the real issue whether our inability to make the European Community work is basically because of what the right hon. Member for Stepney and Poplar called the wilful and arrogant opposition of France or whether it was because, unlike Eire, we did not start from the beginning with the enthusiasm and determination to make our association work? We did not do that because we did not from the beginning see that Britain has no future in the world unless she is prepared to build it for herself and to take the opportunities as they come.
There are opportunities within the European Community. There are many which we missed. We missed them because we failed to seize the whole concept of Europe. We have shown ourselves unable to raise the argument from the day-to-day argy-bargy about "You have got more than we have and you are taking more from us than we take from you." We have failed to raise the level of the debates in Europe and in the House. So often debates that should have been about the future of this nation and the great society that we could build in the growing Community have tended to be at the level of cat-calling others because they happened to be foreigners.

1115
If we really want to make the change, our only answer is for my right hon. Friend the Prime Minister to go to the summit and to have discussions there with three objectives in mind. First, there must be a determination by the House and the nation to remain a member of the Community and to make of that Community the kind of society in which we and our children want to live. Secondly, there must be a strength of argument which comes not only from the necessity but the clear logic that the present structure and payments cannot be defended and should be changed. Thirdly, we must make clear to our fellow members in Europe that we can succeed only if the Community takes itself more seriously and is not willing to be forced back to old and forgotten battles but wants to make the new start which the accession of the other three member States made possible.
It is our fault that we have wasted five years making such a start. My right hon. Friend goes to the summit with our support not only for a more equitable arrangement for this country but, more important, for the restructuring and the recreation of the greatest ideal of our time.
12.8 am
Mr. Douglas Jay: I strongly support the amendment tabled by my Front Bench. I say to the right hon and learned Member for Hertfordshire, East (Sir D. Walker-Smith) that I am all in favour of withdrawing from the Common Market in the most amicable and constitutional way possible, so long as we withdraw.
Tonight, for the sake of brevity, I want to make one point only, which is strictly relevant to the EEC budget that we are supposed to be discusssing but which hon. Members have not appreciated so far. There is no way of substantially altering the burden on the United Kingdom Budget by variations on the expenditure side of the EEC budget.
Some weeks ago the Prime Minister showed that at that time—I do not think that the Financial Secretary will disagree with me—she did not understand the facts when she talked of relieving the United Kingdom public sector borrowing requirement and eliminating the notorious £1,000 million or £1,100 million, or what-
1116
ever it is, net United Kingdom deficit by higher EEC expenditure here.
The facts, as I understand them, are as follows: If, by some magic, an extra £1 billion a year were spent in the United Kingdom from the EEC budget our balance of payments would be relieved. But the effect on the United Kingdom Budget and the PSBR is surely quite different. The crucial point is that either the extra EEC budget expenditure—say, on regional or social policy—is additional to what the United Kingdom Government would have spent or it is not, and the EEC is then paying for what otherwise would have been paid for out of the United Kingdom Budget.
If the EEC expenditure is additional there will be no effect on the United Kingdom Budget or the PSBR, one way or the other. All that will happen is that extra money will be spent by the EEC in the United Kingdom. If, however, the EEC expenditure is not additional, but merely replaces what would have been spent here anyway, I agree that to that extent the United Kingdom Budget is relieved.
Two other consequences follow if we make that assumption. First, only minor relief to the United Kingdom Budget is possible, measured perhaps in tens of millions of pounds rather than in hundreds of millions, for the simple reason that the total regional spending out of the EEC budget is so small as compared with that on the common agricultural policy and the total EEC budget that unless the CAP is drastically cut down in a way that is simply not practical politics there will have to be enormous increases in EEC regional expenditure if the United Kingdom Budget is to be relieved by hundreds of millions of pounds. I think that the Financial Secretary will agree that that is simply not practical politics at present.
Even if it were practical politics, a second consequence would follow if the EEC simply took over what otherwise would have been British Budget expenditure. In that case, existing regional or social expenditure now controlled by the United Kingdom Budget would be taken over by the EEC Commission or perhaps the Council of Ministers. The real consequences then of the operation would be the transfer of control over social and other priorities in this country from the

1117
United Kingdom Parliament and Government to Brussels. That is what is bound to happen if the expenditure is not additional but the EEC simply takes over the control that would otherwise have remained here.
I suppose that if this really happened we should be building a Channel tunnel instead of acutely needed houses, and motorways instead of hospitals, and so it would be all along the line. I do not think that many hon. Members would wish to do that if they understood what it would really mean, if it were possible. In any case, I do not think that it is quite the prospect that has been held out to people living in Scotland and Wales and other needy areas—that what is proposed is not that there should be additional spending on regional policy but simply that the control of it should be transferred from the British Parliament to Brussels, and that they should get no more in total.
The conclusion is, therefore—I hope that the Financial Secretary will tell us if I am wrong—that one cannot, even if one wanted to, significantly ease the United Kingdom Budget and PSBR problem by increasing EEC budget expenditure in this country without creating other consequences that would be unacceptable to almost all of us, namely, losing our own control of the priorities. The only way to remove the present intolerable burdens on the United Kingdom is for the United Kingdom to withdraw altogether from the EEC or to make drastic changes in the EEC system—changes which are too drastic to be politically possible, at least as long as France remains another member of the EEC.
If anyone thinks that we can get out of this difficulty simply by manipulating EEC expenditure and increasing it rather than reducing our contribution he is really following an illusion and we are brought back to the fact that to my mind is now proved up to the hilt—that there is no relief for this country from these economic burdens as long as we remain a member of the EEC.
12.14 am
Mr. Peter Lloyd: I think that all hon Members will agree that we are paying too much into the EEC budget. I am glad that this evening's argument has not been couched in whining terms, complaining of the United King-
1118
dom's poverty. That argument is undignified and irrelevant. Either our membership during the coming year will be worth the estimated £1.3 billion or it will not. The value of net contribution will remain unaffected by our relative poverty or riches.
When the Prime Minister goes to the summit meeting to negotiate a reduction she will certainly have the support of the majority of hon. Members and the overwhelming support of our people. As my hon. Friend the Member for Kensington (Sir. B. Rhys Williams) pointed out, she will receive some understanding and sympathy from our European colleagues. Nevertheless, it will be a struggle to reduce our contribution to the budget.
Our basic budgetary problems spring from the very structure of the EEC and our traditional trading patterns. It is not just a question of the CAP or of food levies. Indeed, we contribute about 19 per cent. of the total Community food levy. We contribute 27 per cent. of the tariff on trade. That figure shows that our extensive trading with the rest of the world punishes us. It is not true that we are in such a position purely because we have not taken advantage of the Community. If we had been more successful in our economic policies we would have faced a greater problem. If we had been more successful, we would have sold more to the rest of the world, we would presumably have bought more from them, and therefore our tariff contributions would be even greater.
The CAP is rightly seen as a bête noir. It makes food very expensive for consumers in Britain. If subsidising farmers is a way of justifying high food prices, we get little back. Many in Europe see the strength of the argument against the CAP. They would probably agree with many of the remarks that we have made. However, we must remember that the CAP is about the only full-blooded Common Market institution. It suits many EEC members. Contrary to some of my hon. Friends, I believe that it will prove surprisingly durable.
I concentrate on these difficulties because I wish to establish how hard it will be to change the existing structures. All eight of our colleagues must agree. They have to agree not that it would be nice if something were done but on what should be done. Five countries may

1119
think one thing but the other three may disagree, and prefer something else. That is a recipe for paralysis. That is why the Commission proposed special ad hoc aid promoting convergence—so often discussed—along lines congruent with existing EEC policies.
The Comission made no mention of the basic structures of the Community. No changes to the existing budgets in the regional and social policies were suggested. They remain undeveloped. That is a dangerous avenue. EEC aid is usually dependent on extra spending by the recipient Government. It has been argued that this would not be so. I am glad to hear such optimism. The right hon. Member for Battersea, North (Mr. Jay) also argued convincingly that any aid that we receive is unlikely to replace precisely the expenditure in train.
Perhaps Opposition Members will see that additional spending as a desirable element. However, they may agree that any expenditure that is limited and controlled in its nature, timing and priorities should not be welcomed. The greatest danger of the Commission's approach results from the fact that projects are temporary. They will come to an end. Our European colleagues may say that the United Kingdom could have claimed that it was poor, but that that is no longer so. They may say that Britain is awash with oil revenues. At that time special arrangements will cease. We will have forgone yet another opportunity to tackle the basic problems.
Another set of overriding dangers in the proposed approach is that concessions will be demanded in return for the temporary hand-out. We shall be asked to agree to agricultural price increases, even though they will exacerbate our long-term problem. We shall be invited to compromise over fish and North Sea oil. It may be suggested that now is the time to join the EMS. There are many hon. Members who want Britain to join the EMS to prove that we are good Europeans and that we can be trusted. They hope that that will depress the pound and increase exports. It will not do so. It will increase inflationary pressures in Britain. That is another argument.
The only way in which the EMS can work in the long term is if it is converted into a full-bodied monetary union. That
1120
is a large step along the road to a federal Europe. It is not a decision that should be lurched into as a package of other policies, when those negotiating it do not have their minds on the EMS and its implications but on reducing the budget.
Immense pressures will be put upon us to accept a settlement with some or all of those undesirable features. I know that my right hon. Friend the Prime Minister is determined to stand up for our longterm interests, but the best that she can achieve is a budget rebate with a promise that the basic structures will be reconsidered. I doubt whether those basic structures can be changed. If I am right, it would be better for the Eight to continue their present arrangements while Britain established a different association.
There is nothing humiliating or second-rate in that suggestion. It is appropriate to our different history and our different institutions. It would be far better for the EEC to work out how to accommodate its new connections and to prepare for the entry of Greece, Portugal and Turkey, whose economies cannot be readily integrated with the Eight.
There is a fear that that would split the West at a time when Russia is proving unpredictable and aggressive. I do not believe that those fears are well founded. NATO was at its zenith before the EEC was established. We are being distracted from political co-operation in Europe. Friendships are being poisoned by discords produced by cramming Britain into an EEC straitjacket which it does not fit.
12.23 am
Mr. Russell Johnston: Many hon. Members have left the Chamber, which is one of the regrettable aspects of debating an issue at this hour of the night. I shall make my speech much shorter than I would wish.
I do not agree with the hon. Member for Fareham (Mr. Lloyd). I wish to quote from the two documents that we are discussing. Paragraph 3 of document 4845/80 states:
"In its communication to the Council of 21 November the Commission had already drawn attention to the need to strengthen structural and general investment policies within the Community."

1121
That earlier communication document 11028/79, states:
"the existing policies of the Community are insufficient to bring about the degree of convergence between the economies of the Member States which is necessary for the progress and cohesion of the Community."
That is the nub of the matter. The basic problems that we are discussing will not be improved or changed fundamentally without further integration within the Community. That is my view. It is not the view held by Back Benchers or Front Benchers on both sides of the House. The basic problem faced by Britain is that neither of the two major parties is proposing any policy or has any clear attitude to change in the Community. They have no views on economic and monetary union, energy policy, regional policy, social policy, the increased power of the European Parliament, or any such matters. Their view seems to be simply that we should sustain the status quo, and I do not think that that makes much sense.
Alternatively there is the view condemned by the right hon. Member for Down, South (Mr. Powell), no doubt having read the magazine "Now", which has a splendid Boadicea-like picture of the Prime Minister on the cover, in which he and the right hon. Member for Plymouth, Devonport (Dr. Owen) debated in print the question "Stay or quit? The decision we must face." I found it extremely depressing to read the former Foreign Secretary's remarks. He said:
"We should take decisive action by legislating in the United Kingdom Parliament to, withhold our VAT contribution"
He went on to say:
"We will be challenged in the European Court and they will find against us, as they did against French restriction of lamb imports. But, if we stand firm as France has done, there is little scope for retaliation."
The argument appears to be that if the French break little laws we can break big ones. What is the point in having laws at all? What is the point of having a Community at all? That is a most extraordinary attitude to adopt in the circumstances.
I wonder how many hon. Members remember the political and economic arguments about entry. The idea was that Britain would give great leadership to the Community. That was touted about all over the place, and even those hon.
1122
Members who opposed our entry could hardly gainsay the fact that Britain had a democratic record second to none, and we would show them how to do it. Then, of course, there was the famous British talent for compromise, and the splendid British record for diplomacy—the fact that we were legendary in our democratic and diplomatic skills. What if left of that? What is left of our diplomacy and our capacity for compromise?—very tattered remnants. We are isolated, and that is quite an achievement. We are totally isolated—one out of nine. That is not something to be proud of.
It is not that we do not have a case. We have an argument of substance. What is wrong is the way that we approach the argument. It is rather like trying to dance Swan Lake in tackety boots. The only objective voice in the Community—the Commission—agrees that our contribution is inequitable, but it, like all our friends, cannot go along with arguments that are based simply on special pleading and seem to neglect general principles. We will not solve this impasse unless this country can bring to the Community some sense of direction, and there does not seem to be a great deal of that.
It is worth remembering that our net contribution, about which we complain so bitterly, is £1,000 million, which is equivalent to, or probably less—certainly less according to Professor David Mar-quand—than what we would be paying in deficiency payments now to agriculture had we not joined the EEC. That fact cannot be repeated often enough.
Equally, those young Tories who rush to sign motions on the Order Paper should ask themselves whether a fortress Britain is really what they want. Is their economic concept of Britain that of a vassal of the United States?
I must ask the fundamental question—how can this be changed? The Financial Secretary said that the fundamental character of the CAP must be modified. I agree, but I must emphasise that I am very glad that we have heard little tonight of the nonsense of cheap food. There is no cheap food in the world today. [Interruption] There is no cheap food in a world that is expanding at the rate described by the Brandt commission. If there is cheap food on that basis it is

1123
exploited—the West is exploiting the under-developed world.
Secondly, if our problems stem from industrial and regional difficulties, there should inevitably be more spending in those areas. Does the Financial Secretary favour larger regional and social funds? Britain has been noteworthy as the country that has blocked enlargement of those funds in the past, under the previous Government. Is it the case that the present Government will not do so? Even on so minor a matter they are preventing the spending of the non-quota element of the regional fund and are blocking the expenditure on the steel industry proposed through the social fund. Have the Government any view about a redistributive element in the budget?
We are in a serious position. We are talking not only about the present but about the future. I do not think that Britain has any future in the Community if she continues to renounce all the concepts of co-operation upon which the Community is established. That would cut her off from the major potential for stability in the whole world political structure. We should not underrate that. It would weaken our influence and reduce our capacity to contribute constructively to the relationship between the developed and the under-developed world.
I pray that that is not a course that we shall follow.
12.31 am
Mr. Denzil Davies: This has been an important debate, as most of the debates about our contribution to the EEC have been. In fact, it is too important a debate to be held at this time of night, with a limit of three hours. Indeed, the Government tried to tack the debate and the related documents on to some very important agricultural documents, and tried to have the whole debate last Thursday. When we protested, we were grudgingly finally allowed these three hours, so late on a Monday evening. If the Government were so serious about the summit, I should have thought that they would give us at least half a day to debate the matter at a reasonable hour.
My hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan), who moved an amendment to the Oppo-
1124
sition amendment, argued the case basically on the legal position over withholding payments. I do not wish to go into that, except to say that I am sure that no hon. Member, including my hon. Friend, would deny that this House has the legal right to repeal those sections of the European Communities Act under which the Government have the authority to make the payments. All the payments that we are complaining about are made under section 2 and possibly section 3 of the Act, which the House passed. I am sure that no one would argue that the House does not have the authority to repeal those sections if it wishes.
I can understand why the Government wanted to push the debate into the recesses of the late evening and the early morning. After they accepted our motion last summer—a motion that called for a balance in our contributions—and after all the fanfare that preceded the Dublin summit and then the total failure of the Prime Minister's negotiations in Dublin, I can well understand their desire to avoid a full debate.
This is the third occasion since last July that the matter has been debated in the House. Last July it was suggested that our estimated net contribution was about £1 billion. The Financial Secretary has been very coy about the figure for the next financial year but I should be very surprised if we learnt from the Chancellor of the Exchequer on Wednesday that it was much less than £1·3 billion. If that is so, the estimate of our net contribution has increased by almost 30 per cent. in nine months. During that period, despite the Prime Minister's huffing and puffing and the pious hopes of the Chancellor and the Financial Secretary, there has been not a penny reduction in our contribution across the exchanges to the EEC budget.
Indeed, the Prime Minister said in a lecture on 13 October last year:
"We seek a remedy which will restore a broad balance. We look for decisions at the European Council next month."
That was last November, and we all know what has happened since.
If the Italians can cobble together a Government, the Prime Minister will go again to the summit, cap in hand, to ask the Europeans to let us have back some of our own money. Even worse, and more pathetically, we have seen the British Prime Minister going on French

1125
television to beg the French to be nice to us at the forthcoming summit. The reasons for the Government's failure are clear. Their efforts have lacked credibility.
When the "Iron Lady" has spoken in the councils of Europe no one has really been very worried. Apparently the German Chancellor has gone to sleep and all the other Ministers have looked for an earlier train. It used to be said of the American President, Teddy Roosevelt, that he spoke softly and carried a big stick. Unfortunately, one can say to the right hon. Lady, in terms of these negotiations, that she speaks very loudly but carries a little stick.
One reason why the Government's negotiating position is not credible is that the Prime Minister and the Chancellor were the enthusiastic supporters of the very taxation system that is now the source of our problem. We are not debating, as the hon. Member for Fareham (Mr. Lloyd) said, simply payments across the exchanges, however important they are. We are debating a fundamental taxation system—a system that is enshrined in the treaties and that has been enshrined in the European Communities Act by, in the main, the votes of the Tory Party.
Mr. Spearing: My right hon. Friend said that the taxation system was enshrined in the treaties. Is he aware that the directive quoted by the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) earlier gives the origin of the articles of the Treaty of Rome for levies and tariffs but fails to mention any article relating to VAT? I have yet to hear on which article it is based.
Mr. Davies: I hear what my hon. Friend says. I do not want to pursue that legal argument. These payments are enshrined in the whole of the treaty mechanisms leading from the Treaty of Rome, and they are included in the European Communities Act.
Sir. D. Walker-Smith: The right hon. Gentleman will find that it is in the decision of the Council of Ministers of 21 April 1970, taken in pursuance of article 201 of the EEC Treaty.
Mr. Davies: I am grateful to the right hon. and learned Gentleman. I have no doubt that the VAT contribution some-
1126
how arises from directives and provisions in these many treaties. The point that I seek to make is that these matters were enshrined in the European Communities Act with the help of the votes of the Prime Minister and the Chancellor of the Exchequer. Indeed, the Chancellor, for the benefit of those hon. Members who were not in the House at the time, was was the architect of the Act. The right hon. and learned Gentleman actually moved the guillotine motion, which allowed us only 45 minutes from these Opposition Benches to debate the issue of our contribution. During that debate, time and again, we warned the Conservative Government that our contribution was likely to be what it is, and time and again they denied that that would be the case.
It is no wonder that when the Chancellor now goes to the Council of Finance Ministers his protestations are met with complete silence. Such protestations, coming from this Government, must have a hollow ring in the capitals of Europe, bearing in mind the history of the Tory Party in this matter.
When the Prime Minister and the Chancellor, and most of the Tory Party, voted for this tax system they voted for something else. They voted for a regime that sought to deny this House the power to change that tax system. Someone referred to the American War of Independence. The slogan in that war was "No taxation without representation." What we have in the Common Market is taxation with one-ninth representation.
Mr. Dykes: Oh.
Mr. Davies: The hon. Member should not say "Oh." It is taxation with one-ninth representation. Indeed, ultimately it means nothing at all to have that representation.
Mr. Dykes: I am sorry to interrupt the right hon. Gentleman's ignorant tirade about the way in which the Community started. If this taxation system was so fundamental and so objectionable to the Labour Party when in government why did it not renegotiate it in 1975 and submit it to the British people?
Mr. Davies: The hon. Gentleman knows that an attempt was made to renegotiate these payments and that that attempt was not successful. No one is

1127
seeking to deny that. The point that I seek to make is that the hon. Gentleman and his hon. Friends voted for this tax system. Now they seek to resile—
Mr. Gunner rose—
Mr. Davies: I am sorry. Time is pressing. I cannot give way. The hon. Gentleman has spoken in this debate.
The Government's position is also not credible because the Tory Party has been the European party of British politics. [HON. MEMBERS: "Hear, hear."] Conservative Members confirm that the Tories still are the European party of British politics. In opposition, they criticised Labour Ministers time and again for not being "good Europeans". My right hon. Friend the Member for Deptford (Mr. Silkin), in particular, came in for virulent criticism when he tried to stand up for British interests.
That much-tattered fraudulent prospectus, the Tory manifesto, said on Europe:
"The frequently obstructive and malevolent attitude of Labour Ministers has weakened the Community as a whole".
If the Tory Party is gradually becoming, if I may borrow a phrase from Dylan Thomas, the "no-good boyos" of the European scene, we welcome that conversion, but having heard the "Hear, hears" a moment ago, I doubt whether that is so. The Tory Party is still the European party of British politics, and that is why the Prime Minister's negotiating position is not credible.
Mr. Tim Renton: I appreciate that it is necessary for the right hon. Gentleman to show his militant tendencies on the Common Market for his own political future, but he represents a Welsh constituency and I should like him to tell us whether he thinks that the Ford plant at Bridgend, which has been so important in bringing employment to South Wales, would have been built there if Britain had not been a member of the Common Market.
Mr. Davies: I am sorry that I gave way to the hon. Gentleman. I was not arguing against membership; I was arguing against the contributions that we are making, which I gather the Government do not agree with either.
1128
In the last analysis, the other member States, including the French, know that the Government do not have the guts to withhold contributions, whether of VAT, customs duties, or anything else.
Last week the Prime Minister got some bloodcurdling headlines about what she was going to do. In fact, she made a rather wet statement. All that she said was that after the summit the Government would consider the matter. Doubtless the Government will consider the "empty chair" policy, obstruction, withholding VAT payments and all sorts of things. The right hon. Lady's statement meant little and was merely an exercise of phoney brinkmanship by the Prime Minister, and it will be seen as such in the capitals of Europe.
The Foreign Secretary gave the game away. Reporting an interview that he gave on television, an article in The Guardian on the Friday after the Question Time in which the Prime Minister made her statement said:
"The situation was further confused last night by Lord Carrington"
—in fact, the Foreign Secretary did not confuse the situation; he made it clear, because the article went on:
"Although he confirmed that failure at Brussels would produce a grave situation he also said that it would be wrong to respond by saying: 'I'm going to do A, B, C, D, E, F.' He added: 'Of course you have got to consider them, but what we have got to do is to get a solution'."
Retrieving the situation later, the Foreign Secretary said:
"I mean, supposing we get nowhere…at Brussels…the Government has to consider all the measures…as the Prime Minister has said."
The threat is not a credible threat, because after what we have heard tonight, I do not believe that the Government would face up to the political and constitutional crisis involved in withholding payments.
My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) dealt with the backsliding of the Government from the original motion that they accepted in July and that was reiterated in November, to the motion before us, which does not call for a broad balance in our contribution.
Whatever sum the Government get must be looked at not only in terms of the amount of money but of the rest of

1129
the deal that will be forced on the Government. No doubt the French will seek to link lamb imports and CAP prices and will seek to talk about energy prices and the EMS. I hope that the Government will treat those issues separately.
The hill farmers, fishermen and housewives of Britain must not be sacrificed to give the Prime Minister a spurious and phoney diplomatic triumph. In particular, I see no sense or purpose in linking the EMS to our budgetary contribution. I do not believe that even this Government, having got themselves entangled in the Treaty of Rome, will get themselves enmeshed in the EMS as part of the price for any deal.
The Government's negotiating tactics have been poor. That is why they have failed to obtain any money so far. The Sunday Times, in a searching article, this week, said:
"So what has gone wrong? 'Britain's negotiating tactics,' comments one highly placed Brussels observer, 'has been so grotesquely incompetent as to beggar belief.' This view is widely held."
The one reason that the negotiating tactics have been so poor is that the right hon. Lady and the Government have been arguing from a weak position. They have been making threats that have not been credible. Now that the summit has been postponed, why should the Chancellor of the Exchequer, on Wednesday, not announce that the Government intend to keep back the VAT contributions? Against that background, the Government's negotiating position would be much stronger. We could then negotiate from a position of strength. I do not know what the Government fear. We are one of only two contributors to the EEC. Seven countries pay nothing into the EEC. All receive something. Only two countries pay in money. We pay almost twice as much as the Germans.
What are we afraid of? They need our money. They need our markets. They need our trade. The Government should start negotiating from a position of strength. If the Government and the right hon. Lady fail again to achieve a satisfactory solution, and if the Government, at the end of the day, are not prepared to impose a just solution unilaterally, this House, one of these days, will take the matter out of the Government's hands. The House will determine the
1130
matter. If the matter is not resolved and it keeps coming back, this House will reassert itself and secure again for itself its traditional role as the only constitutional body with a moral and democratic right to impose taxation on the British people. I hope that the right hon. Lady makes this clear to other Common Market leaders.
The Government motion is too weak and too wet, and it fails to go far enough. If the Cabinet, at the end of the day, lacks the guts to act, this House will do so for it, and take the matter out of its hands.
12.49 am
Mr. Lawson: With the leave of the House, Mr. Deputy Speaker, I should like to reply. There is little time left. I hope that right hon. and hon. Gentlemen on both sides will forgive me if I do not deal with all the points made during this important debate. I have listened carefully to what has been said. I am sure that my right hon. Friend the Prime Minister will study carefully the report of the debate.
The right hon. Member for Llanelli (Mr. Davies) had the effrontery to talk dismissively of what the Government might achieve during the negotiations that are taking place. Anything that the Government achieve out of the negotiations will be an improvement on what the previous Government achieved. They achieved absolutely nothing in redress of this injustice. The right hon. Gentleman also said that we should withhold contributions now. I do not know whether that is official Opposition policy. It was certainly not the position rightly taken up by the Leader of the Opposition who, I suspect, speaks with a little more authority than the right hon. Gentleman.
A number of hon. Members, especially the right hon. Member for Battersea, North (Mr. Jay), asked about the expenditure route. My right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) also referred to this. The matter is made clear by the document before the House. There is no way in which our imbalance can be made good by expenditure through the regional and social funds or through any of the existing funds, for the reasons that the right hon. Member for Battersea, North rightly stated. It is appropriate to look at an expenditure route, if that

1131
will work. The greater part of the imbalance derives from the fact that we do not get the agriculture expenditure received by the other countries.
It has been suggested that a special fund should be set up under article 235 of the Treaty to direct expenditure to this country. The argument about the regional and social funds do not apply to this proposal.
Mr. Jay: Will the Financial Secretary make clear whether the expenditure from this special fund in this country will be additional to what the British Government were, in any case, spending here? If that is so, that does not relieve the British Budget.
Mr. Lawson: The point that the right hon. Member for Battersea, North was making was that if the expenditure is additional it does not affect the public sector borrowing requirement and if it is not additional it does affect it. That is absolutely correct.
The main speech from the Opposition was made by the right hon. Member for Stepney and Poplar (Mr. Shore). I would like to deal with some of the points that he made. He first asked how the United Kingdom contribution would be dealt with in the Budget. I can only ask him to contain his impatience and wait for the Budget on Wednesday and for the public expenditure White Paper that will be published at the same time.
The right hon. Gentleman also asked—this was a matter of concern to a number of right hon. and hon. Members, including my right hon. and learned Friend the Member for Hertfordshire, East, who made a powerful speech—about the legal steps that might be taken and the Government's interpretation of the legal position. The Government are concerned to uphold the rule of law, but the House will have noted with some interest the suggestion made by the right hon. Gentleman that article 6 of the Treaty placed certain obligations upon the Community institutions themselves. Those obligations are just as real as the obligations placed upon individual member countries.
I think it premature at this stage to talk about the legal technicalities. We have said quite clearly—this was the
1132
position of the Leader of the Opposition as recently as 11 March—that the question of withholding any part of the VAT contributions was very much a last resort. We hope that that last resort will not come about. We are seeking a solution that will not require measures of that kind.
Indeed, the right hon. Gentleman had the effrontery to complain bitterly about the whole of the terms under which we were members of the European Community. These were the terms that were renegotiated by the Government of which he was a member. They were the terms that they then put to the British people as being terms they could accept. The right hon. Gentleman did not resign from the Government; he accepted those terms. He cannot now tell the Government that the terms are no good after all.
Of course I accept the fact that the right hon. Gentleman has been a dedicated anti-Marketeer and a dedicated opponent of British membership of the Community throughout his political career, but that is not our position. His position is clear—though I do not know whether it is the official position of the Opposition; that is a mystery. He went back entirely on the helpful remarks of the Leader of the Opposition on 11 March, which I quoted earlier, deliberately to try to sabotage the efforts of the Prime Minister to secure justice for this country in the negotiations in Brussels.
Why does he wish to sabotage those negotiations? It is because their purpose is to secure a successful outcome within the framework of British membership of the European Community. That is what at all costs the right hon. Gentleman wishes to avoid. While we seek a remedy within the Community and the context of the EEC, he seeks to leave the Community.
There is a manuscript amendment in the name of the hon. Member for Caithness and Sutherland (Mr. Maclennan), supported, as I understand it, by the right hon. Member for Down, South (Mr. Powell). I advise my right hon. and hon. Friends to take no part in the bitter, internecine quarrel within the ranks of the Opposition that that amendment represents.
The official Opposition amendment is a more serious business. I still hope that

1133
even at this late hour they will not press it. I hope that they will adhere to the statesmanlike attitude demonstrated by the Leader of the Opposition on 11 March. But if they insist on pressing the amendment I must ask my right hon. and hon. Friends to reject it. It seeks to undermine the Prime Minister by committing her to a position that has already been overtaken by events and that would ensure the failure of the important negotiations that will shortly take place. Our purpose is to ensure that those negotiations are a success.
Mr. Tam Dalyell: Will the Financial Secretary clarify his remarks about additional expenditure?
Mr. Deputy Speaker: The hon. Gentleman has sat down.
Mr. Dalyell: Will the Minister clarify his remarks? It is not good enough—
Mr. Spearing: On a point of order, Mr. Deputy Speaker. When the Financial Secretary replied he complained of a
shortage of time. He deliberately and clearly refused to answer a question raised by my right hon. Friend the Member for Battersea, North (Mr. Jay), and in addition—
Mr. Tristan Garel-Junes: On a point of order, Mr. Deputy Speaker. The debate started at exactly five minutes to 10 o'clock.
Mr. Deputy Speaker: That is not a point of order, and if it were it would be a matter for the Chair.
It being three hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Questions necessary for the disposal of the proceedings pursuant to Standing Order No. 3 (Exempted business).
Question, That the amendment to the proposed amendment be made, put accordingly and negatived.
Question put, That the amendment be made:—
The House divided: Ayes 71, Noes 125.

Division No. 241]

AYES

[12.56 am

Archer, Rt Hon Peter

Harrison, Rt Hon Walter

Park, George

Ashton, Joe

Haynes, Frank

Powell, Rt Hon J. Enoch (S Down)

Benn, Rt Hon Anthony Wedgwood

Heffer, Eric S.

Powell, Raymond (Ogmore)

Bennett, Andrew (Stockport N)

Hogg, Norman (E Dunbartonshire)

Prescott, John

Booth, Rt Hon Albert

Holland, Stuart (L'beth, Vauxhall)

Roberts, Ernest (Hackney North)

Campbell-Savours, Dale

Homewood, William

Robinson, Peter (Belfast East)

Carmichael, Neil

Hooley, Frank

Ross, Wm. (Londonderry)

Cocks, Rt Hon Michael (Bristol S)

Jay, Rt Hon Douglas

Rowlands, Ted

Coleman, Donald

Jones, Barry (East Flint)

Shore, Rt Hon Peter (Step and Pop)

Cryer, Bob

Leighton, Ronald

Silkin, Rt Hon John (Deptford)

Cunliffe, Lawrence

Lestor, Miss Joan (Eton & Slough)

Silverman, Julius

Dalyell, Tam

McCartney, Hugh

Smith, Cyril (Rochdale)

Davies, Rt Hon Denzil (Llanelli)

McElhone, Frank

Soley, Clive

Davis, Terry (B'rm'ham, Stechford)

McKay, Allen (Penistone)

Spearing, Nigel

Dixon, Donald

MacKenzie, Rt Hon Gregor

Stoddart, David

Douglas, Dick

McNally, Thomas

Stott, Roger

Dunwoody, Mrs Gwyneth

Marshall, Jim (Leicester South)

Welsh, Michael

Evans, John (Newton)

Mitchell, Austin (Grimsby)

Whitehead, Phillip

Flannery, Martin

Molyneaux, James

Winnick, David

Foot, Rt Hon Michael

Morris, Rt Hon Charles (Openshaw)

Woolmer, Kenneth

Golding, John

Moyle, Rt Hon Roland

Wrigglesworth, Ian

Graham, Ted

Newens, Stanley

Hamilton, James (Bothwell)

Orme, Rt Hon Stanley

TELLERS FOR THE AYES:

Hamilton, W. W. (Central Fife)

Paisley, Rev Ian

Mr. George Morton and

Hardy, Peter

Palmer, Arthur

Mr. James Tinn.

NOES

Alexander, Richard

Brooke, Hon Peter

Dunn, Robert (Dartford)

Ancram, Michael

Brown, Michael (Brigg & Sc'thorpe)

Dykes, Hugh

Aspinwall, Jack

Bruce-Gardyne, John

Eggar, Timothy

Beaumont-Dark, Anthony

Buck, Antony

Faith, Mrs Sheila

Berry, Hon Anthony

Cadbury, Jocelyn

Fenner, Mrs Peggy

Best, Keith

Carlisle, John (Luton West)

Fisher, Sir Nigel

Biggs-Davison, John

Carlisle, Kenneth (Lincoln)

Fletcher-Cooke, Charles

Blackburn, John

Chalker, Mrs Lynda

Gardiner, George (Reigate)

Blaker, Peter

Chapman, Sydney

Garel-Jones, Tristan

Boscawen, Hon Robert

Clarke, Kenneth (Rushcliffe)

Gilmour, Rt Hon Sir Ian

Bottomley, Peter (Woolwich West)

Colvin, Michael

Gorst, John

Bright, Graham

Cope,John

Gow, Ian

Brinton, Tim

Dover, Denshore

Griffiths, Eldon (Bury St Edmunds)

Brocklebank-Fowler, Christopher

du Cann, Rt Hon Edward

Griffiths, Peter (Portsmouth N)

Grylls, Michael

Mills, Iain (Meriden)

Sproat, Iain

Gummer, John Selwyn

Moate, Roger

Stainton, Keith

Haselhurst, Alan

Montgomery, Fergus

Stanbrook, Ivor

Hawkins, Paul

Morris, Michael (Northampton, Sth)

Stevens, Martin

Hawksley, Warren

Morrison, Hon Charles (Devizes)

Stewart, John (East Renfrewshire)

Heddle, John

Morrison, Hon Peter (City of Chester)

Stradling Thomas, J.

Henderson, Barry

Myles, David

Tebbit, Norman

Hicks, Robert

Neale, Gerrard

Thompson, Donald

Hogg, Hon Douglas (Grantham)

Needham, Richard

Thorne, Neil (Ilford South)

Hordern, Peter

Neubert, Michael

Townend, John (Bridlington)

Howell, Ralph (North Norfolk)

Page, Rt Hon Sir R. Graham

Taylor Teddy (Southend East)

Hurd, Hon Douglas

Page, Richard (SW Hertfordshire)

Viggers, Peter

Johnston, Russell (Inverness)

Parris, Matthew

Waddington, David

Jopling, Rt Hon Michael

penhaligon, David

Wakeham, John

Kershaw, Anthony

Percival, Sir Ian

Waldegrave, Hon William

Knight, Mrs Jill

Rathbone, Tim

Walker, Rt Hon Peter (Worcester)

Knox, David

Rees, Peter (Dover and Deal)

Walker, Bill (Perth & E Perthshire)

Lawson, Nigel

Renton, Tim

Walker-Smith, Rt Hon Sir Derek

Le Marchant, Spencer

Rhodes, James, Robert

Waller, Garry

Lloyd, Peter (Fareham)

Rhys Williams, Sir Brandon

Watson, John

Loveridge, John

Ridsdale, Juliian

Wells, Bowen (Hert'rd & Stev'nage)

Lyell, Nicholas

Royle, Sir Anthony

Wheeler, John

MacGregor, John

St. John-Stevas, Rt Hon Norman

Wickenden, Keith

McNair-Wilson, Michael (Newbury)

Shaw, Giles (Pudsey)

Wolfson, Mark

Major, John

Shelton, William (Streatham)

Young, Sir George (Acton)

Mather, Carol

Shepherd, Colin (Hereford)

Maxwell-Hyslop, Robin

Skeet, T. H. H.

TELLERS FOR THE NOES:

Mellor, David

Speed, Keith

Lord James Douglas-Hamilton and

Meyer, Sir Anthony

Speller, Tony

Mr. Tony Newton.

Question accordingly negatived.
Main Question put and agreed to.
Resolved,
That this House takes note of Commission document No. 4845/80 on convergence and budgetary questions, and fully supports the Prime Minister in her efforts to secure agreement at the next European Council to action which will bring about a substantial, immediate and lasting reduction in the United Kingdom's net contribution to the Community Budget and furthermore to ensure that there is a commitment by the Council to long-term restructuring of the Budget which would bring about a significant reduction in the proportion of spending on the Common Agricultural Policy, particularly by reducing the production of surpluses, and a more equitable distribution of expenditure over the whole Community.

NUCLEAR WASTE (TRANSPORT)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Newton.]
1.8 am
Mr. Anthony Grant: I am glad to have the opportunity of raising the subject of the transportation of nuclear waste, because this matter causes great concern, in particular to my constituents. There is also general concern about the matter in London as a whole. Indeed, I know that the hon. Member for Brent, South (Mr. Pavitt) sought an Adjournment debate on the same subject. I am sure that my hon. Friends in the London area are equally concerned.
1136
Concern about the transportation of this waste is felt not only by what I call the minority of anti-nuclear cranks but by a large number of ordinary citizens who reside near the railways in my constituency. My purpose in this debate is to bring the subject into the open, because I believe that fear arises largely from ignorance. I hope that my hon. Friend the Minister will be able to reassure those who are anxious.
First, I query whether the development of nuclear energy is necessary, and whether the consequences of not proceeding with such a policy would cause even greater misery than the transportation of waste. For example, what would be the effect of not having such a policy on our standard of living, our ability to trade in the world, and our defences? All these factors must be considered.
It is interesting that only today it was announced that Sweden, which is usually a cautious country, has decided to proceed with a fairly substantial nuclear energy programme.
If, as I happen to believe, it is necessary to proceed with the development of nuclear energy, we must ask—I hope that the Minister will reply—why this nuclear waste material has to be transported by rail as opposed to road or, indeed, by sea, as some have suggested. Can my hon. Friend tell us for how long this material has been transported in flasks by rail and what accidents or near misses have occurred during this period?

1137
I hope that it is not considered to be a selfish Harrow or London point, but what consideration has been given to the possibility of this waste being transported through less densely populated areas? What tests have been conducted in anticipation of accidents on the railways? What tests have taken place to determine what happens to these flasks in a high-speed impact? This is very important to my constituents. The Minister will understand why they are anxious, because in 1952 perhaps the most appalling accident occurred at Harrow and Wealdstone station, with enormous loss of life, and that accident is indelibly imprinted upon the memories of many of my constituents. Recently, on the same line, only a few miles away at Watford and Bushey, there was a further accident, though happily not as serious as the previous one, and there have been derailments in the North Wembley area.
If such an accident occurs and flasks containing nuclear waste are involved, will the Minister state whether they explode? I understand that there is no danger of their exploding, but to listen to some one would think that a great mushroom cloud was going to appear over the whole of Greater London. What happens if fire ensues? Are these flasks vulnerable to prolonged fire before the fire services can come to the rescue?
Are the drivers of trains carrying nuclear waste in radio contact so that they can communicate with the emergency services immediately something untoward occurs? Can my hon. Friend assure the House and my constituents that after an accident, a derailment or a fault with a train the wagons are not merely put into a siding to be left for several days where they can be at the mercy of vandals, children, or anyone else?
What would be the consequences of the escape of this material from the flask? How does nuclear waste compare with other radioactive material which is all about us? Would it not be a sensible idea to hold some sort of practical exercise, involving British Rail, the Central Electricity Generating Board and the emergency services, to test the procedures to be followed in the event of the escape of hazardous materials from a major rail collision or accident?
1138
On these procedures, how do we compare with those of other countries? I understand that regulations are of an international nature, but I would be interested to know whether in Great Britain we are observing these as scrupulously and as accurately—indeed, perhaps more so; I hope that the Minister will tell us —as other nations that have similar situations.
Have the Government, or British Rail or the CEGB, considered the possible risks of a terrorist attack, or other criminal attack? It is within the memory of nearly all of us that in 1962 the Great Train Robbery took place. That was an occasion on which British Railways were certainly caught napping. In that case only money was involved, but here much more dangerous substances and consequences could be involved, particularly if it were a terrorist attack.
Obviously, I do not expect for a moment, of course, that the Minister would explain the details of what precautions are being taken. However, I should like his reassurance that the Government and the railway authorities are alert to the possibility of a terrorist attack and are taking the necessary precautions.
The nub of the debate is the expression of the hope that the Minister can allay the fears of the people of Harrow and, indeed, of the whole of Greater London and no doubt of other parts of the country, through which these materials are routed. The last thing that we want is to get into such a situation and a state of panic that we have to have a man with a red flag walking in front of these trains. Some of the arguments that I have heard seem to suppose that that is the only way that we should handle this matter.
We need this matter brought out into the open. We need a great deal of information and reassurance in order to prevent the epidemic of hysteria, which can be so damaging, from developing in some ill-informed quarters.
Mr. Nigel Spearing: These trains are marshalled in Newham, which I represent. On the question of routes, I agree with the hon. Gentleman. Does he agree that we should be prudent even if the flasks are very safe? In addition, prudence might suggest the use not of the high-speed railways but perhaps

1139
other routes throughout the country, which might be more appropriate. Does he agree that answers to these questions might reassure the public?
Mr. Grant: I agree with the hon. Gentleman. I shall be interested to hear what the Minister has to say on that matter. I should like to feel that the authorities have considered all possible routes. I shall not be selfish and merely say that Harrow should be bypassed. I simply want to hear that the matter has been fully looked into. If the Minister tells me that the trains must go through Harrow, or the hon. Gentleman's constituency, I shall accept it, provided that we are satisfied that all safety precautions are taken.
1.18 am
Mr. Robert Maclennan: The hon. Member for Harrow, Central (Mr. Grant) has done the House a service in emphasising the importance of openness in the consideration of the transportation of nuclear waste. His debate is timely in a respect of which, perhaps, when he initiated it, he was not aware. That was the publication of the Health and Safety Executive's Nuclear Installations Inspectorate's report on the transfer of plutonium nitrate from Dounreay, in my constituency, to Windscale. I greatly welcome the report and the thoroughness with which the whole question has been examined.
I also congratulate the Government on the way in which they have handled the report and on the efforts that the Government and the United Kingdom Atomic Energy Authority have made to disseminate the report so that local authorities in the vicinity can understand its findings and more fully grasp the issues at stake.
As the hon. Member for Harrow, Central said, it is right that if the public's legitimate questions are to he answered there must be complete openness on such issues. Openness does not mean that all the questions that are raised will necessarily be answered to the satisfaction of a layman. It means that those who have genuine questions can put them to the test of the opinion and study of those most qualified to answer. If the Government continue their programme as they began it—particularly the Department of
1140
the Environment, which is responsible for nuclear safety—we can take satisfaction from that.
Perhaps the Minister will ensure that that policy of openness, frankness and the most thorough and full investigation of safety, will continue. The nuclear programme should not go ahead in advance of public acceptance of its absolute safety.
1.20 am
The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): I am grateful to my hon. Friend the Member for Harrow, Central (Mr. Grant) for raising this subject. It has taken up much of my time since I took up this post. Once I discovered that one of my responsibilities was the transport of spent nuclear fuel by rail and road, I realised that a great deal of legitimate public concern existed.
I agree that part of that concern is generated by the anti-nuclear lobby. Some of that lobby deserve my hon. Friend's description of "anti-nuclear nuts". They put forward unfounded fears, allegations and rumours about how such substances are carried. The general lay public is happy to see the development of nuclear power, provided that is it is essential for our energy policies, but may wish to be reassured that proper priority is given to safety and that undue risks are not taken.
As a layman with no technical expertise in this subject, I had to discuss the issue with experts both inside and outside my Department. I had to satisfy myself that I could legitimately reassure the public that, to the best of my knowledge, these materials were being carried safely. So far, I have been able to do so. I am glad to have this opportunity of putting across what I have discovered about this subject. I am happy to answer some of the extremely silly rumours that have flown about. I go along with the policy advocated by the hon. Member for Caithness and Sutherland (Mr. Maclennan). The path of openness is the only path for a Government to take. We should use the best of lay language to describe this highly technical subject and we should state exactly what is happening. An informed and intelligent public can then decide for themselves. I hope that they will be reassured.

1141
It is a vital part of the energy programme to make the best use of nuclear power if that can be done in a safe and satisfactory fashion. Indeed, it is an important part of our energy programme to lessen our eventual dependence on fossil fuels and imported fuels. The Government must therefore look to the proper and safe development of nuclear power in order to maintain our living standards as an advanced Western industrial country.
It is well known that last December the Government announced a further 15 gigawatts of new capacity over 10 years from 1982—being our judgment of a safe and proper progress towards the greater use of nuclear power in Britain. There is a recycling plant at Windscale. It provides a valuable means of recycling spent nuclear fuel and of getting further energy out of that fuel. It is also a thriving industry. It has been subject to extremely close scrutiny in a full Windscale planning inquiry, which reported in 1977.
Turning to the question how to transport spent nuclear fuel materials round the country, from power stations to Windscale, or the plutonium nitrate that leaves Dounreay and travels by land and sea to Windscale, we should remind ourselves what was said by that inquiry as a result of its exhaustive investigations into the prospects of recycling spent nuclear fuel at Windscale.
I shall quote the conclusion expressed by the inspector, who said:
"I am satisfied on the evidence that the transport of spent fuel creates no significant risk and that such risks as may exist are less than those involved in the transport of other substances which cause no alarm to any substantial section of the public. The position appeared to me to be so clear that I say no more about it."
When I read some of the sillier allegations in the newspapers I wonder how the inspector reached that conclusion. There is a substantial basis for it. More effort has been devoted to the safe transport of nuclear material than to any other traffic. As a purely personal parenthesis, there are other forms of traffic which are taken by rail where it is necessary to carry out more work on their proper and safe transport.
The standards that we follow when transporting nuclear material are international standards, adhered to by all advanced countries that transport radioactive material on any scale. The stand-
1142
ards are laid down by the International Atomic Energy Agency, which is an agency of the United Nations. Our experts in Britain and in the Department are closely involved in drawing up the necessary regulations to meet those standards. They are among the most respected in the world, and they make a significant contribution to the constant revision of regulations.
The first IAEA regulations were devised in 1961, and since that time they have been revised regularly in the light of scientific advance's ever constant attempts to improve precautions. When considering the history of the transport of these materials it is worth noting that we have been transporting nuclear fuel in Britain for 18 years without any incident that has caused alarm. During that time about 9,000 tonnes of spent fuel have been carried on the railway, over 3 million rail miles. It is only recently that considerable public excitement has been aroused—not because there has been any serious incident but because more publicity has been given to the possibility of a further advance of the nuclear programme. Some anti-nuclear campaigners are turning to the transport of spent fuel by rail.
These irradiated nuclear fuels are carried under higher safety standards than any other material carried in Britain. It is worth making clear exactly what is the material that we are discussing. It is colloquially referred to as nuclear waste. It is mainly uranium fuel that has irradiated in a nuclear reactor to produce the energy to generate electricity.
The spent fuel contains a valuable mixture of uranium and plutonium. The uranium is extracted at Windscale for re-use in power stations. About 1 per cent of the material remains as actual waste after reprocessing. We move these irradiated fuel elements from the power stations to Windscale in massively constructed steel flasks. They weigh about 50 tonnes and incorporate massive shielding to reduce the radiation from the fuel to the levels laid down in the international regulations. They cost about £250,000 each, and are designed to meet the IAEA safety standards. They are transported only in accordance with detailed requirements.
I have seen the flasks, which are now appearing in photographs. I clambered

1143
over them when I visited Windscale to see how they were handled when they arrived there. To any layman they are a massive construction. Among the many myths that I hope I can dispel is the idea that if they are temporarily left in sidings they can be interfered with by passers-by. They weigh around 50 tonnes. The weight of the lead alone is substantial. The idea that some casually passing children might be able to clamber on to the equipment, unscrew the lid and play with the contents is one of the sillier myths that have been propagated by the newspapers.
The flasks are perfectly safe to go near, and require heavy, specially constructed lifting equipment to get inside by any legitimate means. The aim of their design is to make sure that they can not only withstand interference from passers-by but withstand impact in the middle of the most severe rail accident—far more severe than those they are likely to encounter on any ordinary railway used in this country. The whole design of these flasks is to ensure that they can withstand the most severe circumstances that one would reasonably contemplate.
My hon. Friend asked what would happen if one of these flasks failed to withstand pressure, or if we were wrong about them and one was smashed open or broken in the course of an impact or some other untoward event. Many people imagine a massive explosion taking place. There are bogus experts, some of whom I have met, who give the impression that a great explosion would take place. They ask me how I would evacuate many thousands of people in a short time.
I am glad that nothing so dramatic would occur. Making a hole might lead to some radiation within the immediate vicinity of the flask, as a result of radiation emitted through the hole and from possible leakage of contaminated water. This could lead to oxidation of the fuel elements, with substantial slow release over a period of hours of a small proportion of the flask contents. But appropriate measures could be taken to counter this. There would be no question of the immediate release of immense amounts of radioactivity on the scale that has been claimed. Far from there being a massive nuclear explosion, involving the evacuation of thousands of people in Newham,
1144
Harrow or Paddington, the effect would be a serious seepage of contaminated water on the ground, which would certainly involve sealing off part of the siding for some time thereafter. But that is a danger against which we take considerable precautions.
I deal now with the precautions, because they, too, have been attacked by people who claim expertise in this area. The regulations are very well tried internationally and are adhered to by the advanced countries, which, so far, have not had difficulties. It has been said that the regulations are not sufficiently severe. One common remark that has been repeated very often is that flask designs are tested for impact only up to 30 mph. That figure sounds rather low for rail transport, but it is not the right figure and it is deliberately misleading.
The point is that 30 mph is the terminal velocity in the IAEA nine-metre free fall drop test. But the tests are not intended directly to simulate accidents. By introducing other particular factors into the test it is possible to reproduce the sort of maximum damage effects that might be expected to occur in a more serious foreseeable accident. In the drop test the target must be assumed to be unyielding, which means that all the impact energy is absorbed into the flask itself. Additionally the flask is assumed to impact in what is considered likely to be its most vulnerable attitude. This would by no means be the case in a real accident. The combination of those features is such that one is simulating a far more serious accident than a nearly 30 mph collision and far more energy is being absorbed by the flask being tested than it would absorb in such a collision. Indeed the flasks have been tested at much greater speeds.
A great deal of fuss has been made about the fact that for much of the impact testing quarter-scale models are used rather than full-scale flasks. As the flasks cost £250,000 each, the idea of smashing them up regularly is one that would be adopted with reluctance and only if it were necessary. Anyone engaged in engineering design will know that scale model testing is recognised throughout the world as a valid design technique. Using models means that a repeated series of drops can be undertaken, from which a great deal of valuable information is

1145
obtained. Those model drops are then reproduced in occasional full-scale reproductions.
I have seen evidence of test crashes carried out in the United States with full-size flasks at speeds of over 80 mph, in which the flasks suffered only superficial damage. The evidence is easily intelligible to a layman such as myself, and I readily make it available to any hon. Member who wishes to see it. Films have been made of the tests, which were staged at considerable expense in the United States. They are spectacular films of full-scale locomotives driven by rockets crashing into the side of flasks. The scale of destruction seen by the layman is immense, but the flasks rise out of it and roll along, when all around is destroyed.
The flasks in the tests were designed to the same international standards as apply in this country. Those full-scale exercises were intended to show the correlation with previous scale model tests and calculative conclusions, and they bore out the results of the scale model tests.
The result is that what we are contemplating is a situation in which combined impact speeds might be in excess of 80 mph. I have explained the significance of the unyielding target and the other parameters in the international tests. We are talking about very high-speed accidents and other circumstances that the flasks can sustain.
I can assure the House that the tests adequately cater for the circumstances that my hon. Friend postulates. He talks about the terrible, once-in-a-lifetime accidents, such as that which took place in the lifetimes of us all, at Harrow and Wealdstone. I am told that the kinetic energy that would be absorbed by the flask in such accidents would be no greater than that which it would have to absorb in striking an unyielding target in the tests that we now carry out.
Mr. David Penhaligon: As an engineer, I can assure the hon. Gentleman that a combined impact of 80 m.p.h. is not very great. If two vehicles are each travelling at 60 mph, the combined impact velocity is 120 mph, and that is not the least unlikely on British Rail.
Mr. Clarke: We are dealing with traffic designed normally to be carried at speeds of up to 60 mph, being handled in those circumstances on freight trains. But in
1146
practice it rarely, if ever, travels at more than 45 mph.
I realise that there could be head-on collisions between trains travelling at those speeds, where the combined speed is 80 mph or more. But that does not involve a flask in the middle of one of the trains in a head-on impact with a solid target. A great deal of kinetic energy is absorbed in such a collision, and I am advised that any flask would be likely to survive.
I take the best advice available to me, which is corroborated by international experts. It is confimed to me not only by cross-questioning of those who give me the advice and comparisons with competing advice from other people's experts who have been brought along to challenge ours, but finally, in a simple layman's way, by the evidence seen with my own eyes of the spectacular crashes staged in the United States. The United States was reproducing the sort of crashes that do not occur even once in a lifetime in real-life railway activity.
The possibility of fire is also often raised, and the flasks must be tested for their resistance to this hazard, The fire risk is one of the principal aspects considered in design testing. The full fire test environment specified in the international regulations is designed to impose conditions more severe, in heat input terms, than those appropriate to a railway fire. In assessing the flask design against the fire test criteria one issumes that the flask has already been subject to the impact test. That constitutes a very severe combination of conditions. In the American studies that I mentioned earlier, a flask and wagon that had been involved in an 80 m.p.h. crash was subjected to the fire test environment for at least three times the duration of the IAEA test. The flask that has gone through the crash is then put through intense and prolonged heat, for three times the present required level, and still the flask design survives—
The Question having been proposed after Ten o'clock on Monday evening, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at twenty-two minutes to Two o'clock.