Commons Sitting of 25 March 1980

Preamble
The House met at half-past Two o'clock
The Clerk at the Table informed the House of the absence of Mr. SPEAKER from this day's sitting, pursuant to leave given upon Monday 17 March.
Whereupon Mr. BERNARD WEATHERILL, The CHAIRMAN Of WAYS AND MEANS, proceeded to the Table, and, after Prayers, took the Chair, as DEPUTY SPEAKER, pursuant to the Standing Order.

PRIVATE BUSINESS
  CANE HILL CEMETERY BILL [Lords]
  Read the Third time and passed, with-out amendment.
ORAL ANSWERS TO QUESTIONS
  SOCIAL SERVICES

    "Effects on the Personal Social Services"
    Mr. Bidwellasked the Secretary of State for Social Services what assessment he has made of the document "Effects on the Personal Social Services" published by the Association of Directors of Social Services; and if he will make a statement.
    The Under-Secretary of State for Health and Social Security (Sir George Young): I have read the document with interest. I sympathise with the anxieties expressed by the association, but its document was, in my view, too general in presentation to provide a useful assessment of changes in spending patterns. However, it makes a helpful contribution to the current debate about personal social services.
    Mr. Bidwell: Is the hon. Gentleman aware that because of the Government's expenditure cuts, and the consequent pressures on local authorities, there have been threats recently concerning ambulance services taking people to workshops for the infirm, and transporting the disabled and arthritic? The Minister's constituency is
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    in the same borough as mine. Would it not be the decent thing for him to resign? He would thus do the people a good service.
    Sir G. Young: As the hon. Gentleman has said, I share a director of social services with him, and I have made inquiries about the problems that he has raised. I understand that the loan of vehicles to voluntary organisations has ceased because of maintenance difficulties and because of the need to reduce expenditure. However, I am informed that an alternative scheme is to be considered by the authority in June.
    Sir Nigel Fisher: To be more serious about this important matter, would my hon. Friend agree that the cut in real terms is 6·7 per cent., which is harsher than for all other public services? Is he aware that my local authority has already trimmed its administrative manpower, and therefore the cuts will fall on much needed personal social services? That can only mean greater cost to the Health Service through longer stays in hospital, especially for geriatric and psychiatric patients.
    Sir G. Young: The figure to which my hon. Friend refers is contained in paragraph 12 of the White Paper. The figures are necessarily tentative, because it is for each individual local authority to decide the eventual distribution of savings in the light of local needs and conditions. There is no reason for a local authority to cut personal social services by 6·7 per cent. if it can meet its overall target, set by my right hon. Friend the Secretary of State, in some other way. It is for each local authority to determine how best to deploy its resources to meet the needs of its area, and we hope that it would have regard to the most needy.
    Mr. Ennals: We now know what local authorities are doing. Is the Minister aware that the figures published by the Association of Directors of Social Services last week show that 90 per cent. of all local authorities have cut back on residential care, and a third have cut back on home helps, on meals on wheels services, on aid for the handicapped, and on social support for the needy in the community? That has happened after several years of advance, and more cuts are planned next year. Is this not a shameful situation?
    Sir G. Young: The survey also shows that some social services departments have not made any cuts, and that the local authorities have still met their overall targets.

    Disablement Costs Allowance
    Mr. Hannamasked the Secretary of State for Social Services if he will hold discussions with disablement organisations with a view to producing a consultative document on a disablement costs allowance.
    The Minister for Social Security (Mr. Reg Prentice): I am well aware of the views of the disablement organisations and will continue to listen with care to any proposals that they put forward. However, the present is not the time to issue a consultative document on new benefits for disabled people.
    Mr. Hannan: Does my right hon. Friend agree that the present system of disablement benefits represents a rag-bag of conflicting contributory and non-contributory benefits? I take into account the economic constraints of the moment, but would it not be advisable to set out a ladder of objectives towards achieving a more reasonable system of benefits?
    Mr. Prentice: I agree with the expression "rag-bag". It is a confused and illogical system. It is our long-term objective to work towards a general disablement income. It would be wrong to raise false hopes by indicating that we can do so within the next few years.
    Mr. Dempsey: Is the right hon. Gentleman aware that such a study would reveal the plight of the severely visually handicapped, who are required to pay extraordinary costs for extremely expensive visual aids merely to enable them to get around? Is it not about time that something was taken from the Revenue to assist the visually handicapped overcome a great difficulty?
    Mr. Prentice: Those who are visually handicapped have a particularly strong case. Undoubtedly there are extra financial burdens arising from blindness or part blindness. I wish that we could do something for them. We cannot afford to do so at present any more than the previous Administration were able to afford to do so.

    Private Patients (Drugs)
    Mr. Alexanderasked the Secretary of State for Social Services how much it would cost to allow private patients who need drugs to obtain them on the same basis as they are obtained by National Health Service patients.
    The Minister for Health (Dr. Gerard Vaughan): Because the Department does not maintain records of the numbers of private patients, I cannot give my hon. Friend a specific figure. In any event, with so many competing claims for scarce NHS resources at this time, the Government do not feel that they can give a high priority to this particular proposal, although they have carefully considered it on several occasions.
    Mr. Alexander: As the private patient pays as much to the National Health Service as does the National Health Service patient, is it not only fair that he should be able to obtain his drugs on the same basis?
    Dr. Vaughan: I appreciate my hon. Friend's feeling. The total drug bill in England in 1979, excluding hospital pharmaceutical services, was almost £740 million. The bulk of that sum was incurred on prescriptions written by general practitioners and dispensed by general practice pharmacists. The average total cost per person was over £16. I cannot believe it prudent to entertain a proposal to increase that already enormous sum, especially when it would mean removing resources from areas of greater priority.
    Mr. Orme: Is the Minister aware that the question of the hon. Member for Newark (Mr. Alexander) is outrageous? Is he seriously asking for the provision of drugs by the NHS to the private sector when the private sector makes no contribution to the training of nurses or doctors and exploits NHS equipment? Will the hon. Gentleman bear that very much in mind?
    Dr. Vaughan: I do not accept what the right hon. Gentleman has said. He is displaying his ignorance, because only this morning in the Committee considering the Health Service Bill I gave a list of the various private institutions that undertake training for nurses.

    Elderly Persons
    Mr. Stallardasked the Secretary of State for Social Services if he is now able to give a date for the publication of the White Paper on the elderly.
    Sir George Young: Work is proceeding, but it is too soon for me to give a publication date.
    Mr. Stallard: Is the hon. Gentleman aware that, because of the serious shortage of local authority provision, many elderly people are living at risk in hostels and lodging houses throughout the country? Does he accept that existing legislations is confusing and weak? Does he agree that the need for the publication of the White Paper is urgent? Does he further agree that the need for implementation of any recommendations that emerge from a debate on the White Paper is even more urgent?
    Sir G. Young: Yes, indeed. The issue that the hon. Gentleman has raised is the subject of an Adjournment debate next week. It is the responsibility of the Home Office. However, I shall draw my right hon. Friend's attention to what the hon. Gentleman has said about the need to implement measures as quickly as possible.
    Mr. Bowden: Will my hon. Friend confirm that the White Paper will include a section dealing with the problems of the elderly who live in residential homes? Is he aware that 85 per cent. of them are over 75 years of age? They are a vulnerable section of the community and real action is needed quickly.
    Sir G. Young: I confirm that there will be a chapter on housing in the White Paper. I hope that we shall be able to come forward with some positive suggestions to meet the problems that my hon. Friend has described.
    Mr. Foulkes: Is the Minister aware that there are over 60,000 old people living in private old people's homes? Those who live in hostels and boarding houses are, perhaps, in greater danger. They are vulnerable. The legislation is extremely weak. May we have an assurance that the Minister will act quickly on any recommendations to tighten legislation governing old people's homes, to protect vulnerable, old people?
    Sir G. Young: The implementation of fire regulations is the responsibility of my right hon. Friend the Secretary of State for the Home Department and not that of my right hon. Friend the Secretary of State for Social Services. However, I shall draw to my right hon. Friend's attention the remarks of the hon. Gentleman.

    Teaching and Acute Services (London)
    Mr. Dubsasked the Secretary of State for Social Services, what representations he has received regarding the Flowers report and the report of the London Health Planning Consortium.
    Dr. Vaughan: I have received comments on these reports from a variety of sources. But I have made it clear that the Flowers report is a matter for the University of London and that I will not intervene in the issues raised by the report of the London Health Planning Consortium during the process of consultation which is now under way.
    Mr. Dubs: Does the hon. Gentleman accept that the two reports concern only teaching services and acute services in the London area. Will he give an undertaking that he will study, or have studied in detail, other aspects of the Health Service in London before any final decision is made about the future of the Health Service in the metropolis?
    Dr. Vaughan: Yes, of course. We wish to examine the whole of the Health Service in London. For that reason we have extended the remit of the London Health Planning Consortium to consider primary health care.
    Mr. Burden: Is my hon. Friend aware that the Health Planning Consortium has proposed the closure of the radiotherapy department at St. William's hospital, Rochester? Is he further aware that the proposal is causing grave disquiet in the area? Will he give an undertaking that he will soon be able to say that this closure will not take place?
    Dr. Vaughan: I can understand my hon. Friend's concern. It is an issue that we shall consider carefully.
    Mr. Pavitt: Does the Minister accept that it will be intolerable if the Flowers report is implemented by the university in isolation from any influence of his

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    Department? If we close 34 London medical schools and keep only six, the inevitable consequences upon allied health care and provision will have an effect on every patient in the London area. It will be especially intolerable if Westminster hospital is closed to hon. Members.
    Dr. Vaughan: I regret that the hon. Gentleman is constantly being alarmist. We are dealing only with the recommendations of the Flowers committee, which is a working party of the university. We must wait to hear what the university feels about the recommendations. We are setting up urgently a London advisory group to co-ordinate the recommendations that are put to us.
    Mr. Aitken: Will my hon. Friend take note that there will be great hostility from all parts of the House if centres of medical excellence, such as the teaching facility at the Westminster hospital, are closed?
    Dr. Vaughan: I share my hon. Friend's anxiety about any proposal affecting our great London teaching centres. I can assure him that we shall consider any such proposal with great care.
    Mr. Moyle: Does the London Health Planning Consortium's report and the Flowers committee report have any advice to give to the hon. Gentleman on what to do about the Merton, Wandsworth and Sutton area health authority, which I gather is over £4½ million overspent? Does not that put it in the Lambeth, Southwark and Lewisham class? What will he do about it? Would not he be wise to ease the strain under which the London health service is working by setting up an inquiry into the London health service as recommended by the report of the Royal Commission?
    Dr. Vaughan: The right hon. Gentleman knows that in our view an inquiry would be a recipe for further delay. The issues are now well known and most of them have been extensively studied. We do not believe that another inquiry is needed. We need action to overcome the problems—and that is something that our predecessors never undertook.

    Child Benefit
    Mr. Hooleyasked the Secretary of State for Social Services what would be
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    the cost in the financial year 1980–81 of increasing child benefit by £2 per week from 1 October.
    The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): In the region of £560 million, that is about £280 million per £1 increase in 1980–81.
    Mr. Hooley: Is the hon. Lady aware that an increase of that order will be the minimum required to offset the galloping inflation that has occurred since the Government took office? Does she agree that £560 million spent on this purpose would be a superb investment in the health and welfare of our children?
    Mrs. Chalker: The hon. Gentleman will not expect me to reply in detail to his question. We know that the benefit is much appreciated. He has over-exaggerated the extent of inflation in saying that a £2 increase is necessary.
    Mr. Peter Bottomley: Does my hon. Friend agree that if the level of child support had increased in line with pensions since 1955, the present child benefit would be substantially higher than £6 a week?
    Mrs. Chalker: Yes, Sir.
    Mr. Hardy: Will the Minister confirm that the Conservative Party made a clear commitment at the last general election to maintain the value of that allowance? May we expect that commitment to be fully upheld within the next few days?
    Mrs. Chalker: As the hon. Gentleman knows, I cannot reply in detail. Our commitment to the family is no less than it has been at any previous time. The hon. Gentleman must await the statement of my right hon. and learned Friend the Chancellor of the Exchequer.
    Mr. Orme: Is the Minister aware that we are interested in her response to the child benefit question, made in the presence of her right hon. Friend the Chief Secretary to the Treasury? Is she aware that it will require an increase of £1½20 to maintain the allowance at the current rate of inflation? If the Chancellor of the Exchequer does not announce an increase of £1½20 tomorrow, will she resign?
    Mrs. Chalker: I do not think that the last question is one that I am required

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    to answer at the Dispatch Box. I am sure that my right hon. Friend heard what has been said both today and on many previous occasions in the past. All representations have been carefully noted.

    Social Security Benefits (Abuse)
    Mr. Rookerasked the Secretary of State for Social Services what is his latest estimate of the extent of social security abuse.
    Mr. Christopher Priceasked the Secretary of State for Social Services if he will set out in the Official Report how his Department arrived at the figure of £200 million per annum for social security abuse.
    Mr. Stoddartasked the Secretary of State for Social Services what methods he used to calculate his recent estimate of the cost of social security abuse.
    Mr. Austin Mitchellasked the Secretary of State for Social Services whether he has now made a more exact assessment of the anticipated saving of employing extra Civil Service staff in detecting social security fraud.
    Mr. William Hamiltonasked the Secretary of State for Social Services what progress he has made in the prevention of abuse of social security payments; and what is the latest estimate of the cost of such fraudulent practices.
    Mr. Prentice: The nature of most social security fraud and abuse is such that we can know only about cases which are detected. However, new records have been introduced which should, over the next few months, provide fuller and more accurate estimates of the amount of benefit saved through the work of our fraud and abuse specialists. I shall make a further statement to the House when a sufficient number of these returns have been received and analysed to enable me to draw worthwhile conclusions.
    Several Hon. Members rose—
    Mr. Deputy Speaker: Order. I propose to call first the hon. Members whose questions are grouped with this question.
    Mr. Rooker: How does the Minister square his recent statement that he expects to gain £50 million out of the
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    alleged £200 million which is lost in the social security abuse to which he referred? How did he arrive at that figure? Will he confirm the leaked report from his Department that his officials rang around the large department stores and asked for their estimate of theft? Was that how he conjured up the figure of £200 million?
    Mr. Prentice: There is no need to ring around department stores to know that they, and other large commercial organisations, assume a loss through fraud of 1 or 2 per cent. in their operations. Applying that to the DHSS, with its expenditure of £20 billion a year, leads to an estimated figure of £200 million. Through this operation we are attempting to save this year at least £50 million. If Opposition Members think that that cannot be achieved, they had better stand up and state their case because their constituents will not believe them.
    Mr. Stoddart: Is it not a fact that the figures bandied around lately are sheer bogus figures? Is it not disgraceful that figures produced by a great Department of State should owe more to the experience of "Marks and Sparks" with shoplifters than to decent inquiry undertaken by the Department? Is it not true that far more money is involved in justified claims not taken up than there is in social security fraud?
    Mr. Prentice: If the hon. Gentleman will go into the DHSS office in his constituency—I extend the same advice to all Opposition Members—and talk to the officers working on fraud and abuse cases, he will find that they are very busy and that they are saving a great deal of public money. However, they are working at nowhere near the point of diminishing returns. There is a great deal more to be saved. The experience of the next 12 months will prove that.
    Mr. Austin Mitchell: Will the Minister call on his right hon. and learned Friend the Chancellor of the Exchequer to assess the relative cost-effectiveness of employing extra staff to deal with tax fraud and evasion rather than employing them in an increasingly counter-productive effort to hound social security beneficiaries for a return which must be far smaller than that which would result from strict inquiries into tax fraud and evasion?
    Mr. Prentice: I, and every Member of the Government, would be against fraud and abuse in any sector of our public life. I would have expected Opposition Members to take the same attitude. The attitude that they are taking at present, and have been taking in recent weeks, suggests that they are on the side of the scrounger and against the honest taxpayer.
    Mr. Hamilton: Is the Minister aware that I was approached last weekend by an employee of the DHSS who indicated that pressure was being brought to bear on DHSS employees to produce the answers that the right hon. Gentleman wants on this matter? Will he say whether he approves of the suggestion made by one of his hon. Friends recently that neighbours should snoop on their neighbours to find out whether there is abuse? Is not that absolutely disgraceful?
    Mr. Prentice: On the first point, the overwhelming majority of the staff of the DHSS share the same opinion as the majority of the general public, namely, they want to see those who are trying to cheat the system identified and prevented from doing so.
    As for snooping on neighbours, I have made it clear on many occasions in recent weeks that I am not appealing for that. Some information has always reached the DHSS from members of the public. Some of it is genuine, and some of it is malicious gossip. That information is, and always has been, followed up. I am not in any sense asking for snooping. I have announced that the Department would do a more effective job on its own account by carrying out its duty to root out fraud and abuse.
    Mr. McCrindle: While warmly welcoming the appointment of additional inspectors to detect fraud in the social security system—which is at least as much supported by genuine social security claimants as by anybody else—will my right hon. Friend take this opportunity to repeat that he has given instructions to the additional inspectors to move gently and slowly with those who are likely to be genuine social security claimants before attempting to detect the perpetrators of fraud?
    Mr. Prentice: The guidance that has been sent to officers carrying out this work is that we want an efficient and effective
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    campaign against fraud and abuse, without in any sense acting in a manner which would be offensive to the vast majority of claimants who are honest, and who are making claims to which they are entitled.
    Mr. John Townend: Does my right hon. Friend agree that many of those guilty of social security fraud are also working in the black economy, evading tax at the same time as they are defrauding the social security system?
    Mr. Prentice: One of the common examples of fraud concerns those who are drawing benefit and working at the same time without declaring it. Almost inevitably, that means tax avoidance at the same time.
    Mr. Orme: Is the Minister aware that it is absolutely ludicrous to compare the DHSS with firms such as Marks and Spencer? Will he confirm that after his original statement, he sent out circular 26/ 80, telling staff to take it easy and not to offend people? When will he give the first evidence to the House of the savings that he has indicated he will make?
    Mr. Prentice: I can only repeat the answer that I gave a few minutes ago on the question of the circular sent to staff. That text was approved before I made my public announcement about the extra officers. There has been no change of policy.
    The comparison with Marks and Spencer was made by the hon. Member for Swindon (Mr. Stoddart), not by me. Any large organisation finds that there is a loss of that order. If Opposition Members are saying that the loss in terms of the DHSS is less than 1 per cent. it would be an extraordinary argument, and I would like to hear the reasons for saying so.
    Sir Brandon Rhys Williams: Does my right hon. Friend agree that every honest person must wish him success in his drive to root out abuse? Does he agree also that the hest way to tackle social security abuse is to reduce the very large number of people who find themselves in circumstances where they have to apply for supplementary benefit?
    As it is generally the cost of housing which forces people to apply for supplementary benefit, will he make a study of

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    ways in which we can rationalise the subsidy system for housing so that that element at least is taken out of the qualification for supplementary benefit?
    Mr. Prentice: I think that goes a little wide of the original question, but we all want to see improvements in the Welfare State as and when the country earns the resources with which to carry them out. I am grateful to my hon. Friend for the welcome which he gave originally, because I am sure that he spoke for the great majority of his constituents, and the great majority of Labour Member's constituents, who will support what we are doing because they know that it is their money which is being lost as a result of fraud and abuse.

    Private Patients (Fees)
    Mr. Foulkesasked the Secretary of State for Social Services if he will publish a table showing, for the financial years 1978–79 and 1979–80, the amount of fees collected from private patients in National Health Service establishments, the amount of these payments which are regarded as arrears and the amount which has been written off as bad debts.
    Dr. Vaughan: For the year 1978–79. I refer the hon. Member to my reply to him on 28 January. The estimated figure for 1979–80 is £34 million.
    Mr. Foulkes: Does not the Minister agree that bad debts from defaulting private patients in England and Wales now total between £250,000 and £500,000 a year, and that the accumulated debts over the last six years are now approaching £1 million? As the Government are so concerned about curbing public expenditure, can the Minister tell me what they propose to do to reduce that burden on the NHS? For example, will they consider levying the charge against the consultants who irresponsibly admit these people to private beds?
    Dr. Vaughan: We think that the present arrangements are satisfactory. Bad debts from private patients are included in the total of all sums that are written off as bad debts. The total of bad debts from all sources, except road traffic accident claims, for the year 1978–79 was £302,112. We cannot identify how much of that sum relates specifically to bad debts arising from private patients.
    Mr. Robert Atkins: Can my hon. Friend tell the House when and if he expects to make a statement on the abuse of the NHS by foreigners? Is that likely to happen before Easter? Does that by any chance include anyone coming from the Eastern bloc, say, Russia.
    Dr. Vaughan: We have reciprocal arrangements with a number of different countries. My hon. Friend referred to Russia. As a part of the Government's response to the Russian invasion of Afghanistan, we have postponed the fifth joint medical committee which was due to have met in London earlier this month to review the reciprocal agreements. We are also carefully vetting all Russian visitors to the United Kingdom under the agreement, and we shall reject any proposals for visits by Ministers or VIPs. We were involved—
    Mr. Orme: On a point of order, Mr. Deputy Speaker. The Minister's reply is an abuse of Question Time, and I ask you to assert your authority on behalf of the House.
    Mr. Deputy Speaker: I have no responsibility for ministerial replies, but they should not be too long.

    Warrington General Hospital (Ophthalmic Services)
    Mr. John Evansasked the Secretary of State for Social Services what provision is being made for ophthalmic services in the new Warrington general hospital.
    Sir George Young: An ophthalmic unit of 15 beds has been built as part of the first phase of the redevelopment of Warrington general hospital, but it has not yet been commissioned.
    Mr. Evans: Is the Minister aware that the area health authority does not propose to open the ophthalmic unit because of shortage of funds? Does he not agree that to provide this desperately needed unit—which has been established by many thousands of pounds of taxpayers' money—and not to open it, because of a shortage of cash is lunatic economics? Is he aware that the people in the Greater Warrington area are appalled at the suggestion that this much-needed ophthalmic unit should not open?
    Sir G. Young: The Cheshire area health authority estimates that it will cost an additional £200,000 per annum to run the unit, as it will be a new service in Warrington, and the cash limits for 1979–80, which were set by our predecessors, were plainly inadequate. On taking office, we were faced with massive commitments on NHS pay which were not matched by the finance to meet them. However, when the cash limit for 1980–81 is known, the Cheshire area health authority will be able to decide what priority to give to funding the development to which the hon. Gentleman has referred.

    Mobility Allowance (Blind Persons)
    Mr. David Priceasked the Secretary of State for Social Services whether, in view of the further evidence of rising transport costs, he will now reconsider his decision not to extend the mobility allowance to registered blind persons.
    Mr. Prentice: While we have the greatest sympathy for blind people and the problems they face, there are no resources at present to finance new benefits or extend the scope of existing ones.
    Mr. Price: Is my right hon. Friend aware that if we were to apply the same rules to registered blind people that we apply to the generality of the recipients of mobility allowance, it would cost only £20 million, which is within the errors of accounting even within my right hon. Friend's Department, let alone the whole of Government expenditure?
    Mr. Prentice: The figure of £20 million is about right, if the allowance were applied only to blind people up to the age of 65. If it were applied to blind people of all ages, it would go up to as much as £65 million a year. As my hon. Friend will know, we have extended the mobility allowance in recent months to people between the ages of 60 and 65. However, the financial restraints that we now face will not permit an increase either in the number of categories of people covered or the ages covered in the foreseeable future.
    Mr. Allen McKay: Is the Minister aware that there are cases where mobility allowance has been paid and then with-
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    drawn because the person has gone blind? Is not that a despicable practice?
    Mr. Prentice: The allowance is paid in circumstances where someone is unable to walk or virtually unable to walk. Therefore, I am surprised at the scenario which the hon. Gentleman has set out. Perhaps he will write to me about the case that he has in mind.
    Mr. Pavitt: Is not it intolerable that the only section of the disabled which does not receive mobility allowance is the blind, who probably face the greatest difficulty? Is the right hon. Gentleman aware that those who are partially sighted, with very low acuity, get about only with a great deal of difficulty, especially in the conurbations? Will not he yield to the pressure from all parts of the House in the last four years—as evidenced, for example, in the early-day motions that have been signed by hundreds of hon. Members—and soften his heart to blind people?
    Mr. Prentice: I should very much like to be able to move on this matter, but the hon. Gentleman was not quite correct in the opening part of his supplementary question. Mobility allowance is not awarded to categories of disabled people according to the nature of their disablement. It is available to people who are unable to walk, or who are virtually unable to walk, no matter what the cause.

    Transplantation of Human Organs
    Mr. Farrasked the Secretary of State for Social Services if he will strengthen the wording of paragraph 37 of the code of practice for the transplantation of human organs, in relation to the anonymity of donors.
    Dr. Vaughan: I am sure that the whole House shares my hon. Friend's concern at the distress caused to a family in his constituency. I note that when my hon. Friend introduced his Bill, he told the House that he had complained to the Press Council. I am sure that this is the right method of pursuing the matter. The code of practice has only recently been issued, and we need to see how effective it is. However, I can assure my hon. Friend that I am ready to consider amending the wording if necessary.
    Mr. Farr: I thank my hon. Friend for what he has said. In the light of recent events, does he recognise that the present code of practice is couched in very casual terms? Will he help me to ensure that possibly something stronger is written into the Health Services Bill which is now before the House?
    Dr. Vaughan: I can understand my hon. Friend's point of view, and I shall certainly have a look at the wording to see whether it needs strengthening.

    Juvenile Offenders
    Mr. Jim Marshallasked the Secretary of State for Social Services if he is satisfied that there is adequate provision of community-based alternatives to residential care for juvenile offenders.
    Sir George Young: I refer the hon. Member to my reply to the hon. Members for Battersea, South (Mr. Dubs) and Hammersmith, North (Mr. Soley) on 18 March.
    Mr. Marshall: Does not the Minister agree that far too many juvenile offenders are at present in residential care and that that situation is likely to persist while local authority expenditure on things such as intermediate treatment is only 6 per cent. of the total spent on community homes? Will he encourage more local authorities to switch resources from community homes to community-based projects?
    Sir G. Young: On the first part of the hon. Member's supplementary question, I agree that there are too many children in institutions. But the number is falling. There were 6,800 children in community homes of education in 1976. That had fallen by 700 to 6,100 in 1978. On the last point, our public expenditure White Paper has asked local authorities to give priority, as far as possible, to expenditure on services for children concerned with the prevention and treatment of delinquency and intermediate treatmenl. Community-based alternatives are an integral part of this.
    Mr. Soley: Will the Minister make sure that fostering facilities such as the Kent fostering scheme are expanded in other areas?
    Sir G. Young: am interested in what is happening in Kent over fostering. I
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    am anxious to encourage other local authorities to follow this encouraging in intiative.

    Industrial Disputes (Benefit Entitlement)
    Mr. Meacherasked the Secretary of State for Social Services when he expects to be in a position to make a statement on the Government's plans to reduce supplementary benefit to families of persons on strike.
    Mr. Prentice: Shortly, Sir.
    Mr. Meacher: How many thousands of extra civil servants will be required to administer this proposal? How will union members and non-union members be differentiated? What is the formula proposed to cater for unofficial and official strikes?
    Mr. Prentice: Each of those questions will be answered by the statement when it is made. It will be made shortly.
    Mr. Dykes: Can my right hon. Friend say what would happen if the wife and children were left destitute because the striking husband did a hunk? What would the Minister do then?
    Mr. Prentice: If a wife and children had been deserted by a husband, who is legally responsible for the maintenance of the family, that family would have a claim, in any event, on supplementary benefit. That has nothing to do with the question of trade disputes.
    Mr. James Hamilton: Will the right hon. Gentleman accept from me that, on visiting my local office, I discovered that only a third of strikers in my constituency draw social security benefits? Will he ponder on that statement and ensure that there are no further attempts at blackmailing strikers to go back to work when there is no justifiable case for doing so?
    Mr. Prentice: The proportion of strikers' families in the steel strike drawing supplementary benefit is much larger than usual because, of all the unions involved in the strike, only the two general workers unions have been paying strike pay. The cost to the taxpayer so far is about £8 million.
    Mr. Budgen: Would not my right hon. Friend agree that our proposals may have the effect of encouraging people to join trade unions in order to enjoy the benefit

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    of support during a strike? It may have the effect of encouraging the unions themselves to concentrate on their legitimate role of trying to improve working conditions and wages and to give up their improper role of attempting to be a political party.
    Mr. Prentice: I think that our proposals, when they are made known, will be seen to have many healthy effects, including those enumerated by my hon. Friend.
    Mr. Rooker: If a striker is arrested while on strike, for any offence, and then serves a term of imprisonment, will his family be treated in the same way as other prisoners' families?
    Mr. Prentice: We shall be concerned in the imminent announcement, with the effect of a trade dispute, not the effect of a criminal act.
    Mr. NIcCrindle: In how many other countries of the EEC is social security benefit, or its equivalent, paid to the families of people on strike?
    Mr. Prentice: Some countries make some kind of payment on a means-tested basis, more often from local authority funds than from national funds. None subsidises strikes in the same way or to the same extent as the British taxpayer under our present arrangements.
    r.. Andrew F. Bennett: Will the Minister say what is the difference between someone on strike and someone who has committed a crime? Why should their families be treated differently over the payment of supplementary benefit?
    Mr. Prentice: Because the Govern-take the view as, I am sure, does the majority of the public, that if people go on strike, either they, as individuals, or their trade union, ought to make financial provision for the needs of their families.
    Mr. John Evans: In view of the fact that 81 per cent. of all strikes—official and unofficial—during the lifetime of the Labour Government were settled within 12 working days and therefore no social security benefit was payable to strikers' families, and in view of the additional staff that the right hon. Gentleman will have to appoint, does he not think that the scheme will work at a loss?
    Mr. Prentice: No, Sir. I think it will save public money. It will also direct the attention of the unions to the fact that they have a traditional and historic duty, which many have recognised and others have not, to help maintain the families of their members during an industrial dispute.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Montgomeryasked the Prime Minister if she will list her official engagements for Tuesday 25 March.
    The Secretary of State for Industry (Sir Keith Joseph): I have been asked to reply.
    My right hon. Friend is attending the enthronement of the Archbishop of Canterbury. Later she will be having meetings with ministerial colleagues and others.
    Mr. Montgomery: Will my right hon. Friend, some time today, study some of the speeches, made at the weekend? Does he agree with the Home Secretary that this is no time for faint hearts? Does he agree with the Prime Minister, who said that this Government will not be deflected from their strategy to curb inflation, on which they were elected last May?
    Sir K. Joseph: Yes. I certainly agree with my hon. Friend and with my right hon. Friend the Home Secretary. We always did warn that there was no instant cure and that it would not be possible to revive overnight an economy that has, for several years, been over-taxed, overspent, over-borrowed, over-governed and over-manned.
    Mr. Douglas: Will the right hon. Gentleman, if he is studying speeches, reflect on the speeches made last night in the debate on the convergence document in relation to the European Community, particularly the statement made by the Financial Secretary to the Treasury in which he alluded to a further document from the Community and did not present that document to the House? Is he aware that the press is inundated with extracts from the document and the Community has specifically rejected the gloss put on the document by Her Majesty's Government?
    Sir K. Joseph: I am aware of my hon. Friend's speech. The document concerned is in the Vote Office.
    Mr. Farr: May I first express my pleasure at seeing my right hon. Friend in this position, on a temporary basis? Is he aware of the reason for the postponement of the EEC summit meeting? Will he consider advising our right hon. Friend the Prime Minister not to attend another summit meeting until our budgetary contributions are ironed out satisfactorily in a fair and proper way?
    Sir K. Joseph: I am grateful to my hon. Friend for his kind personal reference. We understand that the summit meeting has been deferred because of the obligations of the current President of the EEC. We appreciate his difficulties but we have made clear that we expect an early date for a re-arranged summit meeting. My hon. Friend will. I think, agree that it is essential that the crucially important problem that we are putting to the summit meeting should be dealt with by Heads of Government.
    Mr. Foot: Does the right hon Gentleman understand that his reply about the document that was placed in the Vote Office today at 2.30 pm is unsatisfactory to the House? Can he explain why the document was not laid before the debate yesterday? The document had apparently been hanging around in Brussels and elsewhere since about 20 March. Why did the Financial Secretary not produce the document in the debate and say there was some mystery about it? When will there be another debate to enable hon. Members to discuss the full document and to allow the House to examine it?
    Sir K. Joseph: I understand that the document arrived from the Commission only at the end of last week, just before the weekend. It has been placed in the Vote Office today.
    Mr. Winnickasked the Prime Minister if she will list her official engagements for the 25 March.
    Sir Keith Joseph: I have been asked to reply.
    I refer the hon. Member to the reply which I have just given to my hon. Friend the Member for Altrinchant and Sale (Mr. Montgomery).
    Mr. Winnick: Perhaps next time Milton Friedman himself will stand in for the Prime Minister. Do not the opinion polls and the latest by-election results show quite clearly that there is the utmost hostility to the economic policies mainly associated with the Secretary of State for Industry and the Prime Minister, who are leading Britain back into the mass misery and unemployment of the 1930s?
    Sir K. Joseph: If the hon. Member supports the alternative policies he should note that they led to the Labour Party being defeated heartily in the last general election.
    Mr. Butcher: Is my right hon. Friend aware that a recent TUC report indicated that the trade unions spend an average of 88p per member on strike pay and an average of £9½72 per member on administration? Does this not support the Government's contention that the trade unions should be more responsible for their members' welfare in times of strike?
    Sir K. Joseph: My hon. Friend is quite right. We do not want the number of strikes to increase so that the unions have more money to spend on them, but we think that it is only fair that when strikes are called the unions should bear more of the costs than they do now.
    Mr. Alton: On this happy day when a new archbishop is being enthroned in Canterbury, will the right hon. Gentleman take time to express the House's outrage at the assassination of Archbishop Romero in San Salvador today?
    Sir K. Joseph: Yes, we certainly deplore the news of the assassination of Archbishop Romero.
    Mr. Eldon Griffiths: Will my right hon. Friend invite the Prime Minister, during her busy schedule, to contemplate the disarray of the West in the aftermath of Afghanistan? If NATO cannot find a common position on the Olympic Games and if the European Community cannot make common cause of lamb and fish, how can we expect the Soviet Union to take seriously our intention to unite to prevent further aggression?
    Sir K. Joseph: My right hon. Friend has played her part very vigorously in trying, with other Heads of Government, to reach common ground in constructive and positive ways. Compared with what

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    might have been the reaction a little whle ago on both sides of the Atlantic, there are encouraging trends.

    SECRETARY OF STATE FOR SCOTLAND
    Mr. John Home Robertsonasked the Prime Minister if she will dismiss the Secretary of State for Scotland.
    Sir Keith Joseph: I have been asked to reply.
    My right hon. Friend has no intention of doing so.
    Mr. Home Robertson: Does not the Secretary of State think that the Secretary of State for Scotland should be dismissed on the ground that he has stolen £2½6 million from the children of Scotland? Does he realise that the Secretary of State for Scotland reduced the funding for education in Scotland in anticipation of the anti-rural bus law which the Government could not even persuade the other place to accept? Will he ensure that the Secretary of State either makes good the missing money for education or resigns?
    Sir K. Joseph: My right hon. Friend the Secretary of State for Scotland is perfectly able to defend himself against that totally unjustified and extravagantly put charge.
    Mr. Henderson: Will my right hon. Friend recall that the Secretary of State for Scotland provided £10 per pupil more this year than last year? Will he assure the Prime Minister that the Secretary of State for Scotland has the fullest support and confidence of all Scottish Conservative Members?
    Sir K. Joseph: I am sure that my right hon. Friend the Prime Minister will read that comment with appreciation.
    Mr. Harry Ewing: If the Secretary of State for Scotland is able to defend himself, why does he always depend on United Kingdom Ministers to come to the Dispatch Box to make statements on his behalf? Since the election on 3 May, the Secretary of State for Scotland has never once made a statement on his own behalf. He has hidden behind either the Secretary of State for Industry or the Secretary of State for Education and Science. If he is surplus to requirements, why not sack him?
    Sir K. Joseph: I am sure that that is another extravagant allegation.
    Mr. Allan Stewart: Does not my right hon. Friend agree that few things could be worse for Scotland than the prospect of an Assembly with economic powers, as envisaged in the resolution passed by the Scottish Labour Party at its recent conference? Is it not just as well that Scottish Labour Members will have no chance of persuading their English colleagues to agree to such a course?
    Sir K. Joseph: I am sure that the contrast between the Labour Government's performance on Scotland and the irresponsible proposals put forward now will be clear to the people of Scotland.
    Mr. Robert Hughes: Does the Secretary of State for Scotland not have a bit of a cheek in advising local authorities in Scotland to adopt a policy of good housekeeping? Is he aware that the very high interest rates now being charged mean that the Grampian regional council, for example, will have to find an extra £4 million simply to service its debts?
    Sir K. Joseph: High interest rates are not welcomed by anybody anywhere, but they are part of the necessary process of abating inflation and the people of Scotland would be far worse off if inflation were not abated than they are with the temporary high level of interest rates.

    LEGISLATIVE PROGRAMME
    Mr. Wigleyasked the Prime Minister if she is satisfied with the progress of the Government's legislative programme as announced in the Gracious Speech.
    Sir Keith Joseph: I have been asked to reply. My right hon. Friend is satisfied that reasonable progress is being made.
    Mr. Wigley: Is the right hon. Gentleman not amazed by that statement, in view of the disastrous effects over the last 12 months resulting from the legislative programme? Has not the time now come to abandon the theory underlying the legislative programme in the last Queen's Speech, and particularly to abandon the idea that men can be starved back to work by refusing them social security benefits? Is not this the time to reconsider the

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    Government's whole attil ude towards creating employment?
    Sir K. Joseph: The hon. Member has brought together three different strands. The answer to his general question is "No". We believe that our policy is the only policy that can achieve the underlying purposes of both sides of the House, namely, a higher standard of living, more employment and better public benefits from the social services. We do not believe that it is right at present for the trade unions to count on the taxpayers to support the families of their strikers. We believe that the vast majority of people in this country agree with what we propose to do.
    Mr. Nicholas Winterton: Will my right hon. Friend agree that one of the major planks in the Gracious Speech was the objective of a genuine reduction in public expenditure? Will he agree that, in order to achieve this objective, we must reduce substantially our net contribution to the EEC budget? Will he give an assurance that, unless we can achieve that objective, we shall review our present position, bearing in mind that our membership of Europe prevents us from taking decisions that are in the best interests of the United Kingdom?.
    Sir K. Joseph: The answer to the first part of my hon. Friend's question is an unqualified "Yes". On the second part we very much hope that the Heads of Government will understand the equity and force of our claim.
    Mr. Cryer: Will the Minister accept that in the Employment Bill currently before the House there is a clause which requires an 80 per cent. vote for a closed shop? Has the Minister seen the Bill that I introduced to the House—which was not opposed by anyone—which requires that persons living in the area of the proposed cruise missile sites should have the opportunity to vote 80 per cent. in favour of the missiles before they are installed? Do the Government intend to apply the same principle and allow that Bill to go through as part of our legislative programme?
    Sir K. Joseph: No. It has always been the practice of Governments of both parties that defence decisions should be taken by the Government of the day, even though the Labour Government occasion-
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    ally hid crucial decisions from the people of this country.
    Mr. Shore: Referring to the Government's programme in relation to the EEC budget, is not the right hon. Gentleman aware, in spite of the ivory tower which he normally inhabits, that last night the House was subjected to what can only be described as a very deceitful, and indeed cowardly, course of action? Is he aware that this document was wholly relevant to last night's debate, was about the extent to which this country will continue to pay into the EEC, should have been laid before the House but was deliberately withheld with the result that the vote last night was cast upon totally inadequate evidence? Will he make sure that his hon. Friend comes to the House and makes a forthright statement about this matter.
    Sir K. Joseph: First, the document itself is a useful contribution and can form the basis of Ministers' discussion. Secondly, I take seriously what the right hon. Gentleman says; but I also believe completely in the integrity of my hon. Friend who is, on all occasions, a vivid and vigorous speaker.

QUESTIONS TO MINISTERS
Mr. Douglas-Mann: On a point of order, Mr. Deputy Speaker, On 21 February the Secretary of State for the Environment made a statement in the House concerning the allocations for the housing investment programme. In the course of questioning following that statement I received a reply from the Secretary of State which I considered to be incorrect and possibly misleading, but in view of the possibility of misunderstanding I thought it was more appropriate for me to pursue the matter by way of a written question to the Secretary of State to give him the opportunity of amplifying it.
I apologise for detaining the House, but I think it is essential that I should read the question that I tabled. I asked the Secretary of State for the Environment
"whether he will publish a revised table on the lines of table 111.28 of the Technical Volume of the Housing Policy Review, (Cmnd. 6951) showing the current estimates of demand or need for public sector housing in the period 1980–86 and of the supply from standing stock; whether he will outline the changes in assumptions"—
Mr. Deputy Speaker: Order. Will the hon. Gentleman come to his point of order? The content of questions and answers is not a matter for the Chair.
Mr. Douglas-Mann: I fully accept that, Mr. Deputy Speaker. Nevertheless, to enable me to establish my point of order it is essential that I explain the point that I sought to elicit from the Secretary of State, as will be apparent from the reply and from the points that I wish to make by reference to "Erskine May". I ask the indulgence of the House to enable me to make my point of order, which I believe is of importance to the entire House.
I asked wether the Secretary of State would outline the changes in assumptions and
"how many householders on current estimates who are in need of housing in the public sector would be deprived of the opportunity of obtaining such housing by the implementaton of the policies outlined in his statement on Thursday 21 February"
and whether he wished to reconsider or amplify the reply which he had given to me on that occasion.
The reply that I received was:
"I will write to the hon Member shortly."[Official Report, 11 March 1980, Vol. 1980 c. 531]
I considered raising a point of order at that time, but I tabled a further question immediately. I should state that I had given the Secretary of State 13 days in which to answer my first question. I put a further question to the Secretary of State asking him when he proposed to give an informative answer to the question about the demand for public sector housing—
Mr. Deputy Speaker: Order. It really is an abuse of the House to quote questions in a point of order. I repeat that the Chair has no responsibility for answers or the failure by a Minister to give an answer to an hon. Member.
Mr. Douglas-Mann: I accept that, Mr. Deputy Speaker, but my point will be apparent in one or two moments. The question that I asked the Secretary of State was whether he would now publish, so that the information would appear in the Official Report, the information requested and if he would state on what basis the housing investment programme allocations had been made. I received a further reply which said:
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"I shall be writing to the hon. Member very soon"
and that the HIP allocations were made in accordance with a statement that was in the Library.
At page 334 of "Erskine May" it is stated that:
"If a Member does not distinguish his question by an asterisk"
—in other words, it is a written question—
"the Minister to whom it is addressed causes an answer to be printed in the Official Report of Debates."
My point is that it is not an acceptable process to the House—I hope that right hon. and hon. Members will agree—for the Minister to say "I will write to the hon. Member" or to say that he will give the information requested in a form that will appear only in a letter. Replies to questions should appear in the Official Report. It is not sufficient or acceptable for the Minister to say that the reply will be contained in a letter.
I fully accept that it is in order for a Minister to say that the information is not available, or could not be made available without expense, or even that it is not in the public interest that the information should be disclosed, but it is not permissible for a Minister to say that he will give an answer in a form that is not public, but is contained in a secret letter to a Member. I submit that this is a matter on which the House should rule.
Mr. Deputy Speaker: In answer to the hon. Member I can only say that he has made his point. It really is not a matter for the Chair. It is a matter that the hon. Member should pursue with the Minister concerned, because the content of answers is not and has never been a matter for the Chair.
Later—
Mr. Douglas-Mann: On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker: If it is the same point of order, I believe that the right hon. Member has exhausted the question.
Mr. Douglas-Mann: My right hon. Friend the Member for Ebbw Vale (Mr. Foot) raised a totally different point of order further to my point of order. I wish to pursue my original point of order

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and invite a ruling, not necessarily today but on another day if you prefer, Mr. Deputy Speaker, on the question whether in answer to a written question the words "I will write to the hon. Member" satisfy the requirements on page 334 of "Erskine May" that:
"the Minister to whom it is addressed causes an answer to be printed in the Official Report".
It is of concern to the House and should be decided on authoritatively.
Mr. Deputy Speaker: I have always understood that that was a form of answer. I can understand the concern and resentment of the hon. Member that he has not received a full answer. Every Back Bencher wants a full answer to his question. I shall certainly look into that matter.
Mr. S. C. Silkin: Further to that point of order, Mr. Deputy Speaker I fully appreciate, and of course I accept, the ruling that you have given. In the light of the circumstances put before you by my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) would the position be that the letter subsequently written, if it is written, by the Minister to the hon. Member is incorporated by reference into the reply that he gave? Is there any machinery by which that letter can be published in Hansard in order to fulfil the purpose of the original question?
Mr. Deputy Speaker: I am advised that there is machinery for that to take place.

EUROPEAN COMMUNITY (CONVERGENCE AND BUDGETARY QUESTIONS)
Mr. Foot: On a point of order, Mr. Deputy Speaker. Reverting to the matter that arose during questions to the Secretary of State for Industry about the document that was mentioned in the debate last night but was not available, may I ask whether you have had a request from the Financial Secretary to the Treasury to make a statement on this subject? We regard this as a matter of major importance. We believe that because of the absence of the document that the Financial Secretary said could not then be supplied the debate necessarily took place, in a sense, under false pretences. I ask
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either that the hon. Gentleman makes a statement to the House today, as we assumed that he might, or that he will do so at a very early stage. We believe that the House has been gravely misled by what happened last night. Perhaps the best way for it to be cleared up would be for the Financial Secretary to make a statement to the House now, especially as this matter affects, to a considerable degree, the amount of money that may be available to the Government in the Budget tomorrow.
Mr. Bruce-Gardyne: Further to that point of order, Mr. Deputy Speaker. You will have noticed that in the final question from the right hon. Member for Stepney and Poplar (Mr. Shore) he made two allegations. One was that my hon. Friend the Financial Secretary had not placed before the House last night papers that the Chair had said he was under no obligation to place before the House. Therefore I hope—[Interruption.] Oh yes. Furthermore, the right hon. Gentleman made a personal allegation of cowardice against my hon. Friend which I thought was against the rules of the House. I hope that you, Mr. Deputy Speaker, will ask the right hon. Gentleman to withdraw a thoroughly offensive and totally unfounded personal allegation.
Several Hon. Members rose—
Mr. Deputy Speaker: Order. Two points of order arise. First, I am afraid that I did not hear any allegation of cowardice, but if such an allegation was made I am sure that the right hon. Gentleman will withdraw it. Secondly I was in the Chair last night, when this matter was debated and the Financial Secretary alluded to the document in his speech. A point was raised then about whether that document should be laid on the Table, and I stated that if a State Paper was being read from it should, correctly and properly, be laid on the Table, but that if it was merely alluded to that was not necessary.
Mr. Spearing: Further to that point of order, Mr. Deputy Speaker. In previous debates on EEC documents presented by the Scrutiny Committee, a document debated and decided on by the House has occasionally been overtaken by events and by another document.

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As a result, the decision of the House was rendered null and void. Leaving, aside the question of quotation, are we not now in that position? The phantom paper of yesterday has now been made available.
Can you confirm, Mr. Deputy Speaker, that the decision that the House took yesterday has been overtaken by events? Will you also confirm that any decision that appears in the Journal of the House is inoperative? The document is now available. Yesterday's debate concerned another document.
Mr. Harry Ewing: Further to that point of order, Mr. Deputy Speaker. Whether the House was deliberately misled last night is central to the points of order that have been raised. It may have been brought to your attention. Mr. Deputy Speaker, that the interpretation put on that document by the Financial Secretary to the Treasury was that it was a new document and that it contained new proposals. With respect. Mr. Deputy Speaker, it is irrelevant whether the Financial Secretary read from the document or whether he gave his impression of it. He implied that the proposals were likely to lead Her Majesty's Government to succeed in concluding an agreement with the EEC that would be in some way advantageous to the United Kingdom.
The EEC has issued a statement today saying that the contents of the document bear no relation whatsoever to the interpretation of the document given last night by Financial Secretary. The EEC has gone so far as to say that it has been inundated with telephone calls from member States. They wanted to know whether a secret document had been sent to the United Kingdom. The document that the Financial Secretary told us about did not come within their knowledge. If that is so—and it is obvious that there is a major disagreement about that document between the EEC and the Government—there can be no doubt that the House has been deliberately misled. The Financial Secretary is therefore under an obligation to make a statement to the House.
Mr. Deputy Speaker: Order. Perhaps it would be convenient to clear up this matter. We cannot hold another debate now on what took place last night. [Interruption.] Order. The hon. Member for Newham, South, (Mr. Spearing)
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knows that we have often debated such matters late at night and I have deprecated the fact that documents were not available. I was unaware that the document was available. I gave my ruling in that light. I now know that the document is in the Vote Office. It is not for the Chair to consider whether it was available last night, or whether it should have been in the Vote Office last night.
Mr. Foot: Further to that point of order, Mr. Deputy Speaker. The immediate trouble is that the Financial Secretary has not volunteered to make a statement. If he had done so, our questions would be in order. As we had not received a statement, we sought to raise the subject by means of a private notice question. For proper reasons, Mr. Deputy Speaker, you decided not to grant it. However, in order to clear up this issue, the hon. Gentleman should make a statement. If we do not receive a statement today, we give notice that we shall require one later this week.
Mr. Nicholas Winterton: Further to that point of order, Mr. Deputy Speaker. Whether my hon. Friend alluded to a document, or referred to it and quoted from it, would it not be in the best interest of all hon. Members if the Government were to state that they will soon make a statement about that document? What is the point of having a debate on the most sensitive issue, namely, our contribution to the European budget, if we cannot debate the most up-to-date position? The documents should have been published and made available to all hon. Members before today.
The Financial Secretary to the Treasury (Mr. Nigel Lawson): Further to that point of order, Mr. Deputy Speaker. We have seen a classic example of synthetic indignation. It is quite correct that a new document reached me on Friday. That document was laid before the House today. I alluded to it in the debate last night. I did so briefly, as I thought that it would be to the benefit of the House if some allusion were made. The document is now before the House. It is for the Scrutiny Committee to decide, in its normal way, whether it regards it as of sufficient importance to merit debate. The Scrutiny Committee can decide whether it should be recommended for debate.

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Matters can then take their normal course.
Mr. Shore: Further to that point of order, Mr. Deputy Speaker. The House will regret that the hon. Gentleman has not taken this opportunity freely to volunteer a statement. It is well within our recollection that in so far as the debate was guided by the Financial Secretary it rested upon his optimistic interpretation of a document that he had seen but that the rest of us had not. Therefore, whether inadvertently or deliberately, the House was placed in an intolerable situation. We are therefore right to say that the Government acted deceitfully and wrongly.
Reference was made to a word that I used. Apparently, Mr. Deputy Speaker, you did not hear it. I used the word "cowardly". I can hardly say that the hon. Gentleman behaved in a lionhearted manner. However, I certainly withdraw a word that is thought to be offensive and unnecessary, especially if it reflects upon his character. I withdraw the word, without any equivocation. However, the Minister's intervention has shown just how thick-skinned and insensitive he is. I am sure that he does not need the withdrawal that I have freely made.
Several Hon. Members rose—
Mr. Deputy Speaker: Order. I think that we should leave the matter there.

STEVENAGE DEVELOPMENT AUTHORITY BILL
Mr. Newens: On a point of order, Mr. Deputy Speaker. My point of order refers to the Stevenage Development Authority Bill. I hope to introduce that Bill tomorrow. The Secretary of State for the Environment replied to a question put by my hon. Friend the Member for Easington (Mr. Dormand) on the 12 December. He said:
"the Stevenage Bill is in conflict with Government policy and we shall oppose it on the Floor of the House."—[Official Report, 12 December 1979; Vol. 975, c.]
He explained that the Government's policy was to widen ownership and that that policy was at variance with that of
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transferring assets to a local authority, as envisaged by the Bill.
The policy was initiated when the Secretary of State met chairmen of development corporations and the New Town Commission on 16 July 1979. He called for the sale of £100 million worth of new town assets. He said that there would be a moratorium on new town development while that was being carried out. Subsequently that policy was put into effect by a number of corporations.
The Minister was not challenged at the time, but it now appears—this is the crucial point—that the Minister had no legal powers to require development corporations or the commission to make the sales, and the development corporations and the commission had no legal powers to make them.
It would appear that the issue is determined by section 18(1) of the New Towns Act 1965, where it is stated that a new town may dispose of any land acquired by it as it considers expedient for securing the development of the new town. The key words in that clause are:
"for securing the development of the new town".
In the view of legal authorities consulted in Stevenage and of a prospective buyer of new towns assets, the Minister was acting ultra vires in requiring the sales. Development corporations were similarly acting ultra vires in proceeding with them.
Stevenage Development Corporation—
Mr. Deputy Speaker: Order. We cannot have the speech that the hon. Gentleman should properly be making tomorrow night at 7 o'clock.
Mr. Newens: I am coming to the point of order, Mr. Deputy Speaker, which is important and should be raised before tomorrow evening.
Stevenage Development Corporation today issued a statement in whiah it affirms that there is dubiety as to its legal powers to sell properties solely for investment purposes and as to the Secretary of State's powers to require it to do so, and that it is accordingly taking no further action during the last three months of its life to sell any properties except for purposes clearly connected with the development

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of the town as specified in section 18 of the New Towns Act 1965.
The crux of my point of order is this: how can the Government oppose the Stevenage Development Authority Bill. It has already been stated by the Secretary of State—
Mr. Deputy Speaker: Order. With the greatest good will to the hon. Gentleman, this is not a point of order. It is a matter that should rightly be taken up when the Bill is debated tomorrow during opposed private business. I have no advance knowledge of what the Government will say tomorrow in opposing or supporting the Bill.
Mr. Newens: I am not anticipating what the Government will say tomorrow. I am quoting what they have said.
Can the Government take action on such a matter when it appears that they have no legal powers to act?
It appears that the only authority to which the assets referred to in my Bill can be disposed of is that development authority. The Bill is introduced in response to the Government's policy. Is it, therefore, in order for us to proceed? Will the Government make a statement?
Mr. Deputy Speaker: The hon. Gentleman kindly told me that he wished to raise the matter, but I was not aware that it would be at such length. It is not a matter for the Chair. It is a Private Bill that has been opposed. Because of that I have named it for debate tomorrow evening, and that is why it is being debated.
The hon. Gentleman may be wholly right in his point, but he should raise the issue tomorrow. It is not for me to say what the Government's reactions will be.
Mr. Radice: On a related point of order, Mr. Deputy Speaker. Is it in order for the Secretary of State for the Environment to require a new town, such as Washington new town, in my constituency, to sell off assets without the backing of legislation passed by this House?
Mr. Deputy Speaker: That is a matter of law and not of order. It is not something on which I can rule.
Mr. Eldon Griffiths: On a point of order, Mr. Deputy Speaker. I have two
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precise points on which I wish to ask your guidance.
In pressing his point of order the right hon. Member for Ebbw Vale (Mr. Foot) said that the Opposition had sought to put down a private notice question, which had not been possible because the Chair had not accepted it. Is it not convention that the Chair is not placed in the invidious position of being publicly exposed as having refused a private notice question for reasons that all hon. Members will understand? The right hon. Gentleman's knowledge of the procedures of this House surpasses my own, and perhaps he will acknowledge that he was quite wrong to place the Chair in that position? That is my first point of order.
Mr. Deputy Speaker: Does the hon. Gentleman wish to make both points together.
Mr. Griffiths: It may be more convenient, Mr. Deputy Speaker.
Without reverting to the matter disposed of, may I ask this in protection of the House? The EEC document that we have been discussing is printed by the EEC and brought into the House no doubt through the good offices of the Treasury. Is it therefore possible for you, Sir, or Mr. Speaker, to establish precisely when it arrived in this House, how it was to have been made available and why we have not had a chance until today to look at it?
Mr. Deputy Speaker: On the hon. Gentleman's second point of order, I shall cause inquiries to be made.
Mr. Foot: Further to the first point of order, Mr. Deputy Speaker. I apologise if anything that I said caused embarrassment to the Chair. However, it seemed to me that you were dealing admirably with every topic. I do not, therefore, believe that I caused embarrassment. I was merely emphasising that there had been various opportunities for a statement. I do not believe that that is in the same category as referring to a private notice question for other purposes.
Archbishops or no archbishops, this House of Commons goes on, and you, Mr. Deputy Speaker, have helped us to continue very well today.
Mr, Deputy Speaker: I thank the right hon. Gentleman for the spirit of his

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remarks. I fully understand. It was a heated moment, and I forgive him for mentioning the private notice question.

BILL PRESENTED
  SKYLINE PROTECTION
  Mr. Patrick Cormack supported by Mr. Geoffrey Rippon, Mr. Stephen Ross, Mr. Mike Thomas, Mr. A. J. Beith, Mr. Kenneth Baker, Mr. Andrew Faulds, Mr. Denis Price, Mr. Donald Stewart and Mr. Bruce Douglas-Mann presented a Bill to make provision for the protection of skylines of historic interest or outstanding natural beauty; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 4 July and to be printed [Bill 173].

  VOLUNTARY AID FOR LOCAL EDUCATION AUTHORITIES
  4.2 pm
  Mr. Gerry Neale: I beg to move,
  That leave be given to bring in a Bill to make legal provision for local education authorities to accept voluntary financial aid and voluntary services from any source for the purpose of furthering the teaching skills and expanding the ancillary facilities and teaching aids in all or any of their nursery, primary or secondary schools.
  I welcome the chance to recommend that the House gives due consideration to the difficulties surrounding voluntary aid to schools for educational purposes. The difficulties are being experienced by many voluntary agencies and they arise from the uncertainty over the statutory powers of local education authorities. It is becoming a matter of concern to Members on both sides of the House who support my Bill.
  The purpose of the Bill is to clarify the uncertainty that arises out of the Education Act 1944 about whether local education authorities may or may not accept offers of voluntary financial aid or services. The Bill would seek to remove that uncertainty by stating that such authorities may accept such offers from any source and in respect of all or any part of any school or schools in their areas.
  I believe that it is necessary to remind the House of the changes that have occurred since 1944 and which have conditioned attitudes to voluntary aid. That reminder is necessary, I think, so that we can appreciate how the current uncertainty is increased and why it is necessary to remove it.
  For example, since 1944 there have been far-reaching developments in education technology. Language laboratories and video systems demonstrate that. Both are trifling advances, however, compared with the educational possibilities opened up by the microchip. At the same time as this change has taken place the cost of available aids has far exceeded the purchasing power of education authorities in all but a minority of schools.
  During the 36 years since the passing of the 1944 Act we have moved through a period when parental willingness to delegate their entire responsibility for the education of their children seemed far

  1185
  greater than it is now. The school population was increasing rapidly and under successive Governments new and larger centralised schools were being built. In the latter part of that period the accelerated programme, as it switched to comprehensive schools, involved further change. There was change in the nature of schools and their location and in the provision of facilities.
  Whatever else was achieved in that period, it was responsible for opening a large and visible gap in the provisions and facilities available in the new as opposed to the old schools. The fact that many new schools were located in places decided upon as a result of planning criteria and not in relation to economic factors left some schools in areas whose viability was always at risk.
  The drop in the school population that followed—and which seems about to continue well into the 1980s—alerted education authorities and parents to the threat to local schools and to the disparity in the provisions. All these factors have had a fundamental influence on changing parental attitudes to the level of education provided by the State. No single factor to my mind has cemented that change more effectively than the effect of restraint on education expenditure by successive Governments and local authorities in recent years.
  The less Governments have been able to keep up with the expectations of parents, the less have those parents been willing to rely solely on the State and the more they have sought to do to promote the educational interests of their children. I shall return to the issue of parental participation later and to the way in which the concern and enthusiasm of parents have affected the attitude of employers and trade unions.
  It is becoming self-evident that parents wish to raise money by any means to improve education provision and facilities in their children's schools. There are those whose philosophy prohibits involvement in funding any facility or service by anyone outside the education authority. The reason is that they see such activity as an invasion of an area of free State provision which to them is sacrosanct. It is evident that some teaching organisations and some education authorities either place a total block on any offers of aid or become apprehen-
  1186
  sive, or even obstructive, once the offer has advanced beyond the provision of swimming pools or minibuses.
  Those views are undoubtedly sincerely held. However, I do not subscribe to them and I do not believe that many parents subscribe to them. That is demonstrated by the work of parents all over the country. What is more, I do not believe that it was the intention of those who drafted the 1944 Act that it should exclude the possibility of any form of voluntary financial aid or service being accepted by a local education authority.
  Many hon. Members, irrespective of political persuasion, would, I believe, join me in claiming that voluntary aid is not prohibited now. The 1944 Act is not clear. Nowhere does it say that local education authorities may accept voluntary aid—but nowhere does it say that they may not.
  There is no case law to go on. All we have is a multitude of inconsistent examples of what has been possible in one area and not in another. The more ambitious schemes become, the more likely they are to be challenged. As confusion increases, the more parents involve themselves. There has been all-party consensus on the need to encourage far greater voluntary participation in schools. The Taylor report confirmed that.
  The increasing influence in school affairs of parent-teacher associations must not be frustrated or blocked unnecessarily. Rather than complaining about the lack of provision, it is more and more evident that parents are now showing that they want to indulge in far-reaching collective self-help to benefit schools in their communities.
  That has been confirmed to me by the parent-teacher associations and it is borne out in my constituency of Cornwall, North. The threat of a primary school closure in my constituency at St. Wenn met with a remarkable response. The parents there, not wealthy people or living in an enclosed village, but living in a sparsely populated area took a practical view of the threat. First, they examined the official reasons for the closure and compiled a list of commendable proposals. The parents offered to enter into negotiations with the education authority to establish a rota to transport the only child receiving school transport

  1187
  and they also arranged to collect meals for school lunches. They offered to enter into an agreement to maintain the interior decoration of the school and to take on financial responsibility for the general rates, the water rates, the rent on the school field and even the telephone bill. One parent in the group, the lady responsible for the school meals, offered her future services free.
  The school won a reprieve of 15 months. However, I am informed by a parent that the education authority refused all the parents' offers because, it was said, the law prevented their acceptance.
  On behalf of parents, I and those supporting me wish to see a Bill introduced which would clarify the 1944 Act and state that local education authorities may accept any offers of voluntary financial aid or services from any organisation. Thus, not only could aid come from a parent-teacher organisation; it could conic from a local industrial organisation, perhaps in concert with a local trades council. If they were persuaded by the local need to offer to supplement the teaching skills in the authority area by providing by way of free secondment a person to advise pupils on the employment needs of local industry, that should be made possible.
  The desire to introduce this Bill does not spring from a wish to protect or limit the powers of local education authorities, teaching organisations or even parents. It springs from the conviction that all those who are sincerely interested in the educational welfare of our children, of any age, should be encouraged to offer, individually or collectively, any voluntary aid or service that they can give uninhibited by lack of clarity in an Act of Parliament.
  I seek the consent of the House for a Second Reading for my Bill.
  4.10 pm
  Mr. Martin Flannery: I oppose the proposed Bill. I have only just looked at it. It is in direct line with Tory Party education policy. I shall prove that it is a dangerous Bill. I am a member of a teachers' union.
  Gestures about voluntary aid in schools are always being made. We spent 100 hours in Committee on the Educa-
  1188
  tion (No. 2) Bill. The Education Act 1979 withdrew the comprehensive school provisions in the 1976 Act. We are heading hack to the provision of more private education.
  The Bill represents an attempt to introduce "dilutee-ism" into our schools. None of the Tory Members in the Chamber has taught, with one exception, for whom I have a deep respect. Educationists are constantly on guard about voluntary aid in schools. The word "voluntary" sounds attractive, but throughout history, teachers' unions have had to fight against the butcher's wife from next door who is "good with children" and totally unqualified but who helps with reading because classes are too big. If the same happened in the medical profession and unqualified people were used in surgeries because they were "good with patients", Government Members would be appalled.
  Tories pay for their medical attention in the same way in which they pay, with money which they have but which we do not, for every aspect of their lives. They used private hospitals, private schools and private everything. They want everything according to the size of their purses. We want a good education for our children. We strive might and main in all aspects of general education to ensure that more of our children can be educated at university. Tory Members have striven in the opposite direction. We know that; we are not daft.
  At Question Time the other day I opposed the suggestion that children should leave school at 14 or 15 years of age to go into factories on the specious excuse that they should be apprenticed because there are not enough apprentices. It is reported in the press that a Minister wants our children to be trundled out of school and into the factories. He was talking, not about the children of Tories but about our children.
  Whatever the motives of the hon. Member for Cornwall, North (Mr. Neale), he is misguided—and I am being charitable. He is promoting the idea that what happened in Kent recently should happen universally. In Kent children were kept behind after school to clean the school because there were not enough cleaners. The hon. Gentleman is suggesting that volunteers should replace skilled people, and even teachers, who are being sacked

  1189
  wholesale. The hon. Gentleman suggests that they should clean and paint the schools. That suggestion is transparent Tory Party policy. It is a pity that my hon. Friends and I did not quite take more note of it.
  When people are apprised of the Bill's dangers, they will realise that it is in direct line with Tory Party policy to educate their children and to keep them in school for the maximum length of time while volunteers teach our children. The Government are running down the educa-
  tion system which we are trying to build. I alert my hon. Friends to the dangers of the Bill, which is the thin end of the wedge for the state education system and is directed against the interests of our children.
  Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and Nomination of Select Committees at Commencement of Public Business):—
  The House divided: Ayes 191, Noes 171.

  Division No. 242]

  AYES

  [4.15 pm

  Adley, Robert

  Fowler, Rt Hon Norman

  Morrison, Hon Peter (City of Chester)

  Alexander, Richard

  Fox, Marcus

  Mudd, David

  Alton, David

  Fraser, Rt Hon H. (Stafford & St)

  Neale, Gerrard

  Ancram, Michael

  Freud, Clement

  Needham, Richard

  Aspinwall, Jack

  Garel-Jones, Tristan

  Nelson, Anthony

  Atkins,Robert (Preston North)

  Gorst, John

  Newton, Tony

  Baker, Nicholas (North Dorset)

  Gow, Ian

  Oppenheim, Rt Hon Mrs Sally

  Beaumont-Dark, Anthony

  Gower, Sir Raymond

  Page, Rt Hon Sir R. Graham

  Beith, A.J.

  Grant, Anthony (Harrow C)

  Page, Richard (SW Hertfordshire)

  Bell, Sir Ronald

  Gray, Hamish

  Patten, Christopher (Bath)

  Bendall, Vivian

  Greenway, Harry

  Patten, John (Oxford)

  Benyon, Thomas (Abingdon)

  Grieve, Percy

  Pattie, Geoffrey

  Berry, Hon Anthony

  Griffiths, Eldon (Bury St Edmunds)

  Pawsey, James

  Best, Keith

  Griffiths, Peter (Portsmouth N)

  Penhaligon, David

  Biffen, Rt Hon John

  Grist, Ian

  Percival, Sir Ian

  Biggs-Davison, John

  Gummer, John Selwyn

  Pollock, Alexander

  Blackburn, John

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

  Prior, Rt Hon James

  Blaker, Peter

  Hamilton, Michael (Salisbury)

  Proctor, K. Harvey

  Body, Richard

  Hannam, John

  Rathbone, Tim

  Bonsor, Sir Nicholas

  Haselhurst, Alan

  Rhodes, James, Robert

  Boscawen, Hon Robert

  Havers, Rt Hon Sir Michael

  Rhys Williams, Sir Brandon

  Bowden, Andrew

  Higgins, Rt Hon Terence L.

  Ridley, Hon Nicholas

  Braine, Sir Bernard

  Hooson, Tom

  Rifkind, Malcolm

  Brinton, Tim

  Hordern, Peter

  Roberts, Wyn (Conway)

  Brittan, Leon

  Howell, Ralph (North Norfolk)

  Shaw, Michael (Scarborough)

  Brooklebank-Fowler, Christopher

  Howells, Geraint

  Shelton, William (Streatham)

  Brooke, Hon Peter

  Hunt, David (Wirral)

  Shepherd, Richard (Aldridge-Br'hills)

  Brown, Michael (Brigg & Sc'thorpe)

  Hunt, John (Ravensbourne)

  Shersby, Michael

  Browne, John (Winchester)

  Johnson Smith, Geoffrey

  Silvester, Fred

  Buchanan-Smith, Hon Alick

  Jopling, Rt Hon Michael

  Skeet, T. H. H.

  Buck, Antony

  Joseph, Rt Hon Sir Keith

  Speller, Tony

  Budgen, Nick

  Kimball, Marcus

  Spicer, Michael (S Worcestershire)

  Bulmer, Esmond

  King, Rt Hon Tom

  Sproat, Iain

  Burden, F. A.

  Lamont, Norman

  Stanbrook, Ivor

  Cadbury, Jocelyn

  Langford-Holt, Sir John

  Stanley, John

  Carlisle, John (Luton West)

  Latham, Michael

  Steen, Anthony

  Carlisle, Kenneth (Lincoln)

  Lawrence, Ivan

  Stevens, Martin

  Chalker, Mrs Lynda

  Lee, John

  Stewart, Ian (Hitchin)

  Channon, Paul

  Le Marchant, Spencer

  Stewart, John (East Renfrewshire)

  Chapman, Sydney

  Lennox-Boyd, Hon Mark

  Stokes, John

  Churchill, W. S.

  Lester, Jim (Beeston)

  Stradling Thomas, J.

  Clark, Hon Alan (Plymouth, Sutton)

  Lewis, Kenneth (Rutland)

  Tapsell, Peter

  Clarke, Kenneth (Rushcliffe)

  Lloyd, Ian (Havant & Waterloo)

  Tebbit, Norman

  Clegg, Sir Walter

  Lloyd, Peter (Fareham)

  Thomas, Rt Hon Peter (Hendon S)

  Colvin, Michael

  Loveridge, John

  Thompson, Donald

  Cope, John

  Luce, Richard

  Thorne, Neil (Ilford South)

  Corrie, John

  McCrindle, Robert

  Thornton, Malcolm

  Costain, A.P.

  MacGregor, John

  Townend, John (Bridlington)

  Dean. Paul (North Somerset)

  McNair-Wilson, Patrick (New Forest)

  Townsend, Cyril D. (Bexleyheath)

  Dickers, Geoffrey

  McQuarrie, Albert

  Trippier, David

  Douglas-Hamilton, Lord James

  Marlow, Tony

  Vaughan, Dr Gerard

  Dunn, Robert (Dartford)

  Marshall, Michael (Arundel)

  Viggers, Peter

  Eden, Rt Hon Sir John

  Mather, Carol

  Waddington, David

  Edwards, Rt Hon N. (Pembroke)

  Mawhinney, Dr Brian

  Wainwright, Richard (Colne Valley)

  Elliott, Sir William

  Meyer, Sir Anthony

  Wainwright, Richard(Colne Valley)

  Fairgrieve, Russell

  Mills, Iain (Meriden)

  Wakeham, John

  Faith, Mrs Sheila

  Mills, Peter (West Devon)

  Walker-Smith, Rt Hon Sir Derek

  Fell, Anthony

  Molyneaux, James

  Walters, Dennis

  Fisher, Sir Nigel

  Monro, Hector

  Watson, John

  Fletcher, Alexander (Edinburgh N)

  Montgomery, Fergus

  Weetch Kenn

  Fookes, Miss Janet

  Morgan, Geraint

  Wells Bowen (Hert'rd & Stev'nage)

  Forman, Nigel

  Morrison, Hon Charles (Devizes)

  Wheeler, John

  Whitney, Raymond

  Winterton, Nicholas

  TELLERS FOR THE AYE.

  Wickenden, Keith

  Woltson, Mark

  Mr. Michael McNair-Wason

  Williams, Delwyn (Montgomery)

  Young, Sir George (Acton)

  Mr. Christopher Murphy

  NOES

  Abse, Leo

  Fraser, John (Lambeth, Norwood)

  Parker, John

  Adams, Allen

  George, Bruce

  Pavitt, Laurie

  Allaun, Frank

  Gilbert, Rt Hon Dr John

  Pendry, Tom

  Anderson, Donald

  Golding, John

  Powell, Raymond (Ogmore)

  Archer, Rt Hon Peter

  Graham, Ted

  Prescott, John

  Armstrong, Rt Hon Ernest

  Grant, George (Morpeth)

  Race, Reg

  Ashley, Rt Hon Jack

  Grant, John (Islington C)

  Radice, Giles

  Benn, Rt Hon Anthony Wedgwood

  Hamilton, James (Bothwell)

  Rees, Rt Hon Merlyn (Leeds South)

  Bennett, Andrew (Stockport N)

  Hamilton, W. W. (Central File)

  Richardson, Jo

  Booth, Rt Hon Albert

  Harrison, Rt Hon Walter

  Roberts, Allan (Bootle)

  Boothroyd, Miss Betty

  Hattersley, Rt Hon Roy

  Robertson, George

  Bottomley, Rt Hon Arthur (M'brough)

  Haynes, Frank

  Rooker, J. W.

  Brown, Hugh D. (Provan)

  Healey, Rt Hon Denis

  Ross, Ernest (Dundee West)

  Brown, Ronald W. (Hackney S)

  Hogg, Norman (E Dunbartonshire)

  Rowlands,Ted

  Buchan, Norman

  Holland, Stuart (L'beth, Vauxhall)

  Sandelson, Neville

  Callaghan, Jim (Middleton & P)

  Home Robertson, John

  Sever, John

  Campbell, Ian

  Hooley, Frank

  5heerman, Barry

  Campbell-Savours, Dale

  Hughes, Mark (Durham)

  Sheldon, Rt Hon Robert (A'ton-u-L)

  Cant, R. B.

  Hughes, Robert (Aberdeen North)

  Shore, Rt Hon Peter (Step and Pop)

  Carmichael, Neil

  Hughes, Roy (Newport)

  Silkin, Rt Hon S. C. (Dulwich)

  Cartwright, John

  John, Brynmor

  Silverman, Julius

  Clark, Dr David (South Shields)

  Johnson, James (Hull West)

  Smith, Rt Hon J. (North Lanarkshire)

  Cocks, Rt Hon Michael (Bristol S)

  Johnson, Walter (Derby South)

  Soley, Clive

  Cohen, Stanley

  Jones, Dan (Burnley)

  Spearing, Nigel

  Coleman, Donald

  Kaufman, Rt Hon Gerald

  Spriggs, Leslie

  Cook, Robin F.

  Kerr, Russell

  Stallard, A. W.

  Cowans, Harry

  Kilroy-Silk, Robert

  Stewart, Rt Hon Donald (W Isles)

  Cox, Tom (Wandsworth, Tooting)

  Lambie, David

  Stott, Roger

  Cryer, Bob

  Lamborn, Harry

  Strang, Gavin

  Cunliffe, Lawrence

  Leighton, Ronald

  Summerskill, Hon Dr Shirley

  Cunningham, George (Islington S)

  Lestor, Miss Joan (Eton & Slough)

  Taylor, Mrs Ann (Bolton West)

  Cunningham, Dr John (Whitehaven)

  Litherland, Robert

  Thomas, Dafydd (Merioneth)

  Davidson, Arthur

  Lotthouse, Geoffrey

  Thomas, Mike (Newcastle East)

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

  Mabon, Rt Hon Dr J. Dickson

  Thomas, Dr Roger (Carmarthen)

  Dean, Joseph (Leeds West)

  McCartney, Hugh

  Thome, Stan (Preston South)

  Dempsey, James

  McGuire, Michael (Ince)

  Tilley, John

  Dewar, Donald

  McKay, Allen (Penistone)

  Tinn, James

  Dixon, Donald

  McKelvey, William

  Tomey, Tom

  Dobson, Frank

  McMillan, Tom (Glasgow, Central)

  Urwin, Rt Hon Tom

  Douglas, Dick

  McNally, Thomas

  Varley, Rt Hon Eric G.

  Douglas-Mann, Bruce

  McWiIIiam, John

  Wainwright, Edwin (Dearne Valley)

  Dubs, Alfred

  Marks, Kenneth

  Walker, Rt Hon Harold (Doncaster)

  Dunwoody, Mrs Gwyneth

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

  Watkins, David

  Eadle, Alex

  Martin, Michael (Gl'gow, Springb'rn)

  Welsh, Michael

  Edwards, Robert (Wolv SE)

  Maxton, John

  White, Frank R. (Bury & Radclilfe)

  Ellis, Raymond (NE Derbyshire)

  Maynard, Miss Joan

  White, James (Glasgow, Pollok)

  English, Michael

  Mikardo, Ian

  Whitehead, Phillip

  Evans, loan (Aberdare)

  Miller, Dr M. S. (East Kilbride)

  Whitlock, William

  Evans, John (Newton)

  Mitchell, Austin (Grimsby)

  Wigley, Dafydd

  Ewing, Harry

  Morris, Rt Hon Alfred (Wythenshawe)

  Willey, Rt Hon Frederick

  Faulds, Andrew

  Morris, Rt Hon Charles (Openshaw)

  Winnick, David

  Field, Frank

  Morton, George

  Woolmer, Kenneth

  Fitch, Alan

  Newens, Stanley

  Wright, Sheila

  Flannery, Martin

  Oakes, Rt Hon Gordon

  Young, David (Bolton East)

  Fletcher, L. R. (Ilkeston)

  O Neill, Martin

  Foot, Rt Hon Michael

  Orme, Rt Hon Stanley

  TELLERS FOR THE NOES:

  Ford, Ben

  Palmer, Arthur

  Mr. Bernard Conlan and

  Forrester, John

  Park, George

  Mr. Ken Eastham.

  Foulkes, George

  Question accordingly agreed to.
  Mr. Clement Freud rose—
  Mr. Deputy Speaker (Mr. Bernard Weatherill): No point of order can arise.
  Bill ordered to be brought in by Mr. Gerry Neale, Mr. Edward du Cann, Mr. Ken Weetch, Mr. A. J. Beith, Mr. John Carlisle, Mr. W. E. Garrett, Mr. Michael McNair-Wilson, Mr. Michael Morris, Mr. Keith Wickenden and Mr. Peter Mills.

  VOLUNTARY AID FOR LOCAL EDUCATION AUTHORITIES
  Mr. Gerry Neale accordingly presented a Bill to make legal provision for local education authorities to accept voluntary financial aid and voluntary services from any source for the purpose of furthering the teaching skills and expanding the ancillary facilities and teaching aids in all or any of their nursery, primary or secondary schools: And the same was read the First time; and ordered to be read a

  1193
  Second time upon Friday 4 July and to be printed. [Bill 174.]
  Mr. Freud: On a point of order, Mr. Deputy Speaker. Standing Order 34 decrees that the doors shall be locked not sooner than eight minutes after a Division is called. It was difficult not to notice that the hon. Member for Poole (Mr. Ward) was nearly decapitated trying to get through the door. It seemed to me that you were watching at the time. To decide that there is one second in it either way, so that an hon. Member is almost impaled by the Lobby door, seems a strange interpretation, if I may say so, of Standing Orders.
  Mr. Deputy Speaker: I appreciate the hon. Gentleman's concern for the hon. Member. The last thing I want is for the hon. Member to be decapitated. I simply operate the rule. The doors are locked after eight minutes. It is a matter of great sadness if hon. Members do not get through the Lobbies.
  Mr. Freud: Further to that point of order, Mr. Deputy Speaker. The Standing Order refers to a period of not less than eight minutes. It does not say "eight minutes"
  Mr. Deputy Speaker: I hope that the hon. Member is not accusing me of having the doors locked so that people might be injured.

ORDERS OF THE DAY
  TRANSPORT BILL
  As amended (in the Standing Committee), further considered.
New Clause 12

  MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE SUCCESSOR COMPANY
  (1) Before the appointed day the Minister shall lay before both Houses of Parliament an order containing the memorandum and articles of association of the successor company to the National Freight Corporation.
  (2) The memorandum and articles of association shall contain provisions to ensure that the Minister shall retain a majority of the securities of the company and that the assets of the successor company shall not be sold without the consent of the Minister.—[Mr. Prescott.]
  Brought up, and read the First time.
  4.27 pm
  Mr. John Prescott: I beg to move, That the clause be read a Second time.
  The clause is concerned with an essential feature of the Bill, namely, the denationalisation of the National Freight Corporation. It is designed to achieve certain safeguards in the transition from being a public company, or perhaps a nationalised industry or corporation, to being a public-private company. It seeks to protect the public interests of the employees as expressed in the objectives and purposes of the new company.
  It is no secret that the Opposition will oppose the principle of denationalisation both in this piece of legislation and in others going through Committees. In the clause we are concerned with the doubts and uncertainties that have arisen as a result of the conversion of the National Freight Corporation into a private company. We must recognise that there is a phase 1 and a phase 2 in this transition. In phase 1 the company is transferred, on the appointed day, from the National Freight Corporation to a wholly-owned Government private company, and from there, eventually, with the selling of shares, to a private-public company or a public-private company.
  We are therefore particularly concerned in this new clause about the objectives of

  1195
  the company and with details and information about the operation of the successor company, which normally can be ascertained from the memoranda and articles of association of a company. The clause is designed to give an opportunity to the House to debate and see the purpose and policy of the new company that is to be brought into being by this denationalisation measure.
  During the passage of the Bill through Committee we expected and were not surprised to be told that the private company that will come into existence will be more favourably treated than the corporation. For example, it will not have to carry the heavy interest payments that are such a burden under the financial obligations of nationalised industries. Nor will it be required to accept the public duties that we have spelt out and the requirements under the 1968 Act that led to the creation of the National Freight Corporation. Indeed, it would appear that the sole objective is to maximise profits for private rather than the public good.
  This new company is to be financed by a form of equity financing, which will clearly make it much easier for it to earn profits and compete with its private competitors. That is exactly the same area of competition in which nationalised industries have been forced to exist without equity financing. Admittedly this is a criticism of nationalised industry financing, that it had to operate under the penalties of heavy interest payments and borrowing from the Government for investment, as distinct from the more advantageous procedures that are adopted by private companies.
  During the course of the debate in Committee we repeatedly requested copies of the memorandum and articles of association of this new company, but with no success, although we have noted that other Committees dealing with denationalisation measures have been fortunate enough to be provided by the Departments concerned with articles of association and memoranda. This applies to the denationalisation of British Aerospace and British Airways, where the same process is being pursued and nationalised companies are being converted to private companies.
  We have not been given a great deal of substantial information on why it was not possible for us to be provided
  1196
  with articles of association and the memorandum relating to the denationalisation of the National Freight Corporation. That has meant that we have been less clear about the objectives and policies of the new company. We have had to rely upon our probing in Committee, and it has become increasingly clear that the position is somewhat fluid. A great deal of reflection is going on, and if we compare the answers that have been given on different occasions it is possible to see a considerable change in the thinking and attitude in two specific areas.
  The first is in the proportion of Government shareholding. Members of the TUC and the trade unions have come away from meetings with the Minister under the impression that the Government will hold 51 per cent. of the shares, but the Minister has made it clear that that is not his view, and he has put it in writing that it is not his intention that the Government should have a majority holding. We have seen that what was to have been a substantial shareholding, as debated in Committee, has come down to a statement by the Minister that it is likely to be only a small Government shareholding. As yet we have not reached nothing, but according to the estimates of a number of people it is down to its lowest point. As I understand it, the Government still intend to have a certain number of shares in this company.
  The second area in which there has been some questioning is that of the Government's intention, clearly stated on a number of occasions, both in the House and outside, that there will be no hiving off; that the intention is to pass the Corporation over as one entity to this private company. This matter was debated in the Committee, and the Minister said:
  "I believe that State ownership has, up to now, denied the NFC the commercial freedom that is open to private sector firms and has shielded it from some of the rigours of commercial discipline." [Official Report, Standing Committee H, 19 February 1980; c. 1736.]
  That is the thinking that led the Minister to justify denationalisation—that the present corporation does not enjoy sufficient flexibility or commercial freedom. If that is the case, I think that it is useful for the House to bear in mind, as did the Committee, the record of the National Freight Corporation. There seems to be general agreement that the corporation

  1197
  was a unique company and was given the task of attempting to achieve integration, particularly between road and rail. I shall not today enter into the argument about integration. We put that argument in Committee, and there is a clear record of my thinking on what integration means. The corporation had the specific duty of integrating, conducting research and maintaining good industrial relations. Those aims were all written in as its statutory duties.
  The Minister of Transport (Mr. Norman Fowler): Is that an indication that it was the hon. Gentleman's personal view that he was putting in Committee, or was it the Opposition's view?
  Mr. Prescott: I do not want to delay the House, but the Minister is probably referring to the more controversial issue of whether traffic should be directed. I said in that speech that in the 1968 Act there were powers, which the Bill is now repealing, which make it possible to direct traffic. I think that there is an argument, particularly in regard to energy use, for determining the priorities of certain areas of traffic. This is done on the Continent and in certain other countries, and I think that there will be an increasing demand for that kind of action in an energy-conscious country such as we are likely to be in the next decade. I have put the arguments on record and people can see them, and I hope that we shall have another opportunity to debate this matter. We have lost one hour of the debate, and it is difficult to be brief if I get dragged off into arguments about integration.
  Mr. Fowler: I am sorry to delay the hon. Gentleman, but the simple question that I asked was whether he was speaking personally or whether, since he is speaking from the Front Bench, he was putting the view of the Opposition. He keeps talking about his own view. Is it also the Opposition's view?
  Mr. Prescott: I put forward the Opposition's attitude to the process of integration between road and rail as was embodied in the 1968 Act. We are in opposition, and we are thinking through the policies again. Clearly that is a matter for consideration. We have heard it over South Yorkshire, and we have heard it over freight, and that debate will continue. I am sure that others may not
  1198
  agree with that view. There was a Labour Government who were not necessarily convinced of that view and did not implement the direction of traffic.
  Things are changing rather rapidly in transport priorities, as the Minister must know, with the Channel tunnel, the Armitage inquiry into the effects of lorries, and all sorts of things. These changes are occurring not only in Britain but everywhere because of energy priorities. I have always believed, and opinion seems to be moving towards this, in the importance of having some form of direction of traffic based on certain criteria. At the moment it is directed only by price, but I think that other criteria should come in. That is the most that I can say about this matter. I have put my view. I think that it is shared by many people. Certainly it is shared by the trade unions and is Labour Party policy, as determined by conference decisions.
  The basic point is that the corporation was given a specific duty to integrate, and was given the tools with which to do it. Because of those policies, it would seem that the nationalised industry had a specific responsibility to the community, and that was set out. We want to know whether such obligations are likely to apply to a private company. We presume that the overall objective will be to maximise profit and to ensure the greatest private gain, and that the public good, as determined in the duties imposed on the National Freight Corporation, will be given a lower priority.
  Despite those major problems, and despite the fact that the National Freight Corporation existed in a highly competitive industry, in a depressed economy, which had a considerable effect on bankruptcies in the transport industry, it is generally recognised that the corporation did remarkably well.
  The Minister congratulated the corporation on the way it tackled the difficulties that it faced over the past few years. The Select Committee on nationalised industries has also made favourable remarks about it. According to the reports on nationalised industries, the corporation's record on industrial relations is as good as that of any other company, and better than most. The general secretaries did not want to give evidence in any way to

  1199
  criticise industrial relations. That is a remarkable tribute to the corporation.
  The productivity of the corporation increased considerably, although there was a 50 per cent. reduction in the labour force. That is a remarkable record, whatever the judgment about the loss of job potential. The corporation has been an innovator of certain types of traffic; so much so that Marks and Spencer has become a customer. It developed road rescue units, which can be seen on our motorways. It was successful in integraing the freightliner service—which was later transferred—and in the development of a computer to enable empty lorries to be used more efficiently. It has also played an important part in solving urban traffic problems and in energy conservation. Major training on heavy goods vehicles was done by the National Freight Corporation, which promptly lost its drivers to the commercial sector, which was not doing such training.
  That is a considerable record of success by a corporation which controlled only 10 per cent of the market. Congratulations should be given to workers and management, particularly to Dan Pettit, who used to be the chairman of NFC. We all pay our respects to him, especially in respect of the lectures on intermodal systems for which the NFC was responsible.
  Nevertheless, the Government gave a considerable amount of money to the corporation, as became clear in Committee. In 1978 the Labour Government wrote off £53 million of capital debt. That reduced the commencing capital debt to approximately £100 million. The reason why the original debt had increased to £53 million was the penal interest rate which the National Freight Corporation had to carry. That again is a reflection on the principles that we have imposed for the financing of nationalised industries.
  Grants were also given by the Government to assist with the additional difficulties associated with taking on National Carriers Ltd. The corporation was asked to take on National Carriers Ltd, and was given more than £40 million in grants. The corporation certainly turned the corner, but a considerable amount of taxpayers' money was involved. To
  1200
  that extent, when we are considering what is to be done in selling off these assets, we should bear in mind that the corporation had turned the corner sufficiently to be a candidate for selling to the private sector. A lot of money was put in by the taxpayer, and this is an opportunity to get some return for the future.
  The final accolade for the company is that the Government want to sell it off. They do not propose to sell off British Rail or other nationalised industries which are not able to make a profit. They are selling off only the profitable areas. A number of sweeteners have been thrown in to make it attractive to the market. For example, there is the writing off of high interest debt problems associated with the corporation. The burden of pension obligations has been made easier for the private company. There is the £40 million that will be available if the company becomes profitable for the setting off of profits against tax allowances. No doubt a good price will be set to enable as many shares as possible to be sold. The balancing act which the Minister will have to do is to decide how many shares he can sell and what price he will get for them. Substantial sweeteners are offered in selling off a concern that has considerable potential.
  4.45 pm
  There is considerable concern about the new company that will take the corporation's place, whether it is the mark I or the mark II version. The clause is designed to give the House an opportunity to debate the policy and objectives of the company that will he embodied in the articles of association and memorandum. The Committee was denied the opportunity to make that assessment. Yet other Committees dealing with aerospace and aviation in which holding companies are being established in a similar way have been able to see such documents. Why did the Government not give them to our Committee?
  In Committee the Parliamentary Secretary said:
  "We do not have any draft articles of association at the moment. They are being drafted by those who give legal advice to the Government. I understand that another Committee was given draft articles of association, but the arrangements for sale in that case were much more advanced than ours."

  1201
  I have taken advice from my colleagues, and I am told that the sale of British Aerospace and British Airways may be delayed because they will be facing the same problem, namely, when is the best time to float shares? There is not a great deal of difference in the delay time, although the Minister may indicate that he believes that the time perspective may be different. We believe, from our proceedings in Committee and discussions, that the Minister envisages a delay which depends on when is the best time to sell the shares. That is why there are these differing transition periods.
  When we pressed the Parliamentary Secretary in Committee, he said:
  "I shall inquire of our advisers about the present stage of the drafting of the memorandum and of the company's objectives."—[Official Report, Standing Committee H; 14 February 1980, c. 1574–75.]
  Six weeks have elapsed and the documents have still not been produced. Are we to be denied what has been given to other Committees of the House?
  It is essential that hon. Members acting on behalf of the taxpayer should be able to make a proper judgment about two important matters. What will be the Government's share? Perhaps the Minister will say that it is only a small share. Will he tell us the size of the share ownership? Is it a requirement by the brokers that the Government should have a guaranteed portion of the shares? The logic of the argument is that the Government should sell all the shares and get all the money. Why are we told that the Government intend to hold a certain percentage of the shares? If that is true, it will be seen from the articles of association or the memorandum.
  Secondly, if the Government's policy is to keep the NFC as a single holding and not to sell off the assets, they should make that commitment clear, as it was made clear in the articles of association in connection with aviation and aerospace. It was made clear that foreign domination of the company would not be allowed. Government policy was made clear in those documents, to which we have not had access.
  When we asked the Minister in Committee how he could guarantee that once the company becomes a private company it will not sell off the profitable assets
  1202
  and allow the unprofitable parts to go to the wall, he said:
  "Clearly, at some point, this must be a matter for the commercial decision of the new national freight company. I do not run away from that. I can give no guarantee about the future of the NFC over the next 10 or 20 years. That would be to limit its freedom.
  If it has the commercial freedom—as I believe it should have—to develop in the ways that are best for it, and if control should, as I believe, go to the private sector, clearly the control has to be exercised and decisions taken. I do not pretend that there is any way in which I can control the activities of the NFC after it has become a company and gone out of the public domain."—[Official Report, Standing Committee H; 19 February 1980, c. 1737.]
  That will hold only until the appointed day. The Minister was not guaranteeing anything. The legislation was doing that. The Minister was promising nothing. The corporation will remain as one unit. He meant that he was selling it as one unit. The industry wishes to maintain it as a successful integrated unit, as it is at present. Apparently the Minister is not concerned about that priority. He simply wants it to be sold as a commercial going asset, and what happens after that does not matter.
  The employees are concerned about conditions in the industry, which they feel are associated with the cross-subsidisation that has been practised in the industry. They are concerned whether the new company will maintain the benefits that they have derived from the industry. Whether those fears are realisable and whether they have substance are matters of judgment. The importance for this debate is that the employees and unions feel that they have substance.
  It is the Government's view that there must be maximum flexibility for continuing rethinking in the matter, but issues of policy must be decided. Some indication of policy is given in the articles of association and memorandums of British Aerospace and British Airways. I do not accept that it is a strategic matter. Questions need to be answered, and an indication of policy should be given in the articles of association and memorandum of the new company.
  What will be the principle of policy control? What will be the role of the nominees and their influence in stage 1 of the company? What will be the capital construction? What will be the

  1203
  nominal value of the shares and the proportion of equity and security, which are of concern to the existing company? What period of time is envisaged by the Government between the appointed day and the selling of shares? What payments and obligations will be required from the existing company to pay the Government if there is a considerable period between the appointed day and the selling of shares? Under the interest payments, the Government were guaranteed £8 million. What will be the payments under the new security role? What will the taxpayer receive? Will the Government not ask for money back from the company, in order to make it an attractive selling proposition and to influence the price? It is fair to ask what proportion of shares the Government will hold. They say that they will hold the majority of shares in British Aerospace. How do they interpret a small share? A prospective shareholder needs that sort of information. Some indication on those matters is given in the articles of association and memorandums of other companies. It should be given in the articles of association and memorandum of this company.
  I understand from the Minister that the Government have no intention of influencing commercial decisions. What will be the role of the Government if they hold only 10 or 15 per cent. of the shares? Is the taxpayer to be denied any right to participate in the commercial decisions of the company? If the Minister feels that there is some benefit in keeping the present corporation companies together, and if the new company proposes to break up the old company, will the Government use their shares to prevent such a policy?
  Some indication of Government policy should have been given to the Committee, and it should be included in the articles of association and memorandum of the company. We feel that the new clause gives the House an opportunity to debate policy matters that should be included in the articles of association before the appointed day. The Government should make clear the political purpose of the Bill. Without doubt, we feel that it aims to denationalise and transfer to the private sector the National Freight Corporation. The Bill plunders the taxpayers' assets. It makes
  1204
  the Government an asset-stripper. The Government aim to acquire ready cash. The Minister desires to feed the Treasury with some money, whether from pensions or the sale of assets. That is also the Government's aim in selling and hiving off British Rail hotels and in their actions over British Airways and British Aerospace. Flexibility means a quick and ready access to cash.
  The Bill is ideological because it rolls back the frontiers of the public sector. It also aims to please political and commercial friends—people who will gain from the transaction. It will reduce the public sector borrowing requirement. That is one of the fundamental reasons for this process—to fulfil the monetary madness policy of the Government, which even Professor Friedman found difficult to justify.
  We believe that the Bill is more ideological in character than in commercial sense. We ask the House to support our clause because it makes sense and because it will provide hon. Members with a further opportunity to assert the matters of policy that they have been unable to assert in previous debates.
  Mr. Fowler: It may be for the convenience of the House for me to intervene briefly at this stage to set out the Government's general policy on the National Freight Corporation.
  The hon. Member for Kingston upon Hull, East (Mr. Prescott) said that the articles and memorandum of association should be laid before the House, and that they should contain provisions to ensure that the Minister retains a majority of the securities of the company, and that the assets of the successor company shall not be sold without the consent of the Minister. That is a fundamental attack on our policy.
  First, I wish to set out Government policy on the National Freight Corporation. The corporation is a public corporation operating in road haulage, and in a number of other related areas —cold storage, removals, and personal travel. The corporation takes the form of a holding company, controlling about 50 subsidiary companies, many of which are familiar. They include British Road Services, National Carriers and Pickfords. The Government do not feel that the State should be involved

  1205
  in the running of a road haulage business, and even less in the running of cold storage or household removal services, a travel agency or any of the other business in which the National Freight Corporation is at present engaged. The corporation is not the sole provider of an essential public utility. It comprises about 10 per cent. of the road haulage industry. In every type of business it is necessarily competing with the private sector in areas where the level of service and price must be determined by the free market. It is our view that the corporation should be subject to the disciplines of the private sector and enjoy some of the opportunities of undertakings within that sector. The restraints upon it should be lifted. It should be able to operate with a commercial freedom that it does not have at present. That which we propose has the full support of the board of the corporation.
  5 pm
  Mr. Walter Johnson: It does not have the support of the unions.
  Mr. Fowler: The Government contend that the denationalisation of the corporation as proposed in the Bill is the best possible way to serve the interests of the corporation, those who work in it, its customers and the taxpayer.
  The Government intend to dispose of the controlling interest in the corporation. That will be achieved by changing the legal form of the corporation so that it becomes a normal Companies Act company with an appropriate capital structure, including shares which can be sold to investors.
  All the assets of the corporation will be transferred to a company formed specifically for that purpose. All shares in the company will be held initially by the Minister or his nominee on behalf of the public. It is impossible now to make a firm commitment on timing. I have already said that that will depend on a range of factors such as general Stock Market conditions and the company's track record.
  Our overall objective is clear—namely, to sell as quickly as possible a controlling interest in the company to private investors. I have made it clear—the hon. Member for Kingston upon Hull, East did
  1206
  less than justice to my case—that we have decided not to sell off individual corporation subsidiaries to the highest bidder. I recognise that I can give no guarantee on the future of the corporation after it goes into the private sector. I can give no guarantee on the corporation and the development of its business. However, the House should recognise that we have taken a strategic decision not to break up the corporation and to sell it part by part. We have decided to keep it together.
  We want the corporation to go into private ownership as a single entity without any major changes in its size or in the range of its interests. Its prosperity and future—I do not run away from this —must depend to a large extent upon its success after vesting day. We believe that we shall ensure the best possible future for the corporation.
  The corporation, as a nationalised industry, is subject to Government intervention at every stage of its operations. It is important that the House understands what nationalisation means in practice. Government control affects the appointment of the board of the corporation and the corporation's borrowing powers. It means that Government approval must be given for the corporation's investment programme. It means that there must be consultation on the corporation's general financial and business progress. There has to be consultation on issues that may have political implications. Government intervention also involves broader economic and social policies—for example, prices and incomes policy and employment policy. The corporation as a nationalised industry faces those constraints.
  The Bill will make no changes to the position of employees or to their existing rights.
  Mr. Walter Johnson: The Minister has said that the board supports the idea of selling shares in the corporation. He made no reference to the attitudes of the trade unions and those of the staff. As someone who knows something about the problem, I assure him that the vast majority of the corporation's staff want nothing to do with the Bill. All the indications are that they are concerned about their future prospects. They are especially concerned about resettlement

  1207
  and redundancy arrangements that might occur as a result of hiving off any part of the corporation. The Minister did not deal adequately with those issues in Committee, and he has not done so in the House.
  Mr. Fowler: I was about to deal with the employees' conditions of employment. If the hon. Gentleman is saying that many of those within the trade union movement, of which he is a much respected figure, do not agree with the Government's policy, I accept that that is so. I have never been left in any doubt about that. However, he has conceded that the board, which has responsibility for the direction of the corporation, is in favour of taking the course that the Government propose. We are taking this course because we believe that it will provide extra opportunities for those working in the corporation. There is no question but that nationalisation has held back the nationalised transport industries.
  Mr. Walter Johnson: Rubbish.
  Mr. Frank Dobson: Such as?
  Mr. Fowler: British Transport Hotels is a prime example. I do not mind taking the House into a general debate on nationalisation, but I have a feeling that the Chair would rule me out of order if I were to embark upon that.
  Notwithstanding the initial views that have been expressed by those who work for the corporation—I understand them —I hope that it will be understood that our proposals have been introduced with the intention of developing business. After all, the future for those working for the corporation can be assured only by developed and better business.
  There seems to be a feeling on the Opposition Benches that, because an organisation is in the public sector, job security is created for ever more. That is not so. That would not be so even if the corporation were to remain nationalised.
  Mr. Prescott: The right hon. Gentleman does not have to lecture the corporation about that. It lost 50 per cent. of its employees over 10 years. Nationalised industries, including the corporation, have
  1208
  been dissatisfied with the financial obligations of nationalised industries. They have argued for equity financing. That is what the corporation was interested in, and that is what the National Bus Company wanted. It was wanted, too, by British Rail. If the right hon. Gentleman addressed himself to that problem, he would be a greater friend of the nationalised industries.
  Mr. Fowler: I accept that Labour Members might want to go along the policy line that enables the public sector to expand further. The hon. Gentleman will be less surprised to hear that that is not the Government's policy. We believe that if undertakings such as the corporation want the opportunities of the private sector they should observe the disciplines of that sector. The board of the corporation is content with the arrangements that we are making. It is content because it believes that the Bill will lead to a developing business and not a receding business.
  Mr. Walter Johnson: The jobs of board members are also at stake.
  Mr. Fowler: I emphasise that the Bill will make no changes to the position of employees or to their existing rights. It was said in Committee that the Bill provided for the new company to assume all the existing obligations of the corporation. That includes its obligations to the staff. There will be no interference with the pension rights of individual employees or with their contracts of employment. Similarly, the proposals will not affect the travel concessions available to employees who were transferred from British Rail to the corporation on its establishment.
  I have set out why I believe that this is in the interests of the NFC and also in the interests of the taxpayer. It is certainly true that the position of the NFC has improved over the past few years. Opposition Members will remember that under the previous Administration there were times when the NFC was in a rather worse shape than it is now, and it was supported to the tune of £82 million. That position has improved. The real question is what is in the best interest of the NFC. How do we secure its future? We shall secure its future more effectively by following the course that I

  1209
  propose rather than by retaining it in the public sector and making it subject to restraints.
  The proposals embodied in the Bill will give everyone a better deal. The corporation will lose its unwanted and anomalous position as a nationalised industry, with no clearly defined role or objective. The employees will benefit through working for an organisation whose prospects for growth are greatly enhanced by a new freedom to compete in the market place on equal terms with private sector companies. The taxpayer will benefit also in an obvious way.
  The memorandum and articles of association are being drafted by those who advise the Government. The articles will contain no surprises. They will follow the form described in Table A of the Companies Act 1948. The final shape of the memorandum will depend on the capital structure of the new company. This need not be comprised entirely of shares. As the Bill stands, it could be part shares and part loan stock. The capital structure will therefore be decided by the Government on the appointed day.
  The second part of the new clause seeks to ensure that the Minister retains a majority of the securities. We covered that ground in Committee. I made it absolutely clear that that is not the Government's position. In the policy document that I sent out in August 1979, I said that ultimately the Government intend to dispose of the majority shareholding. I made the position equally clear in my Second Reading speech.
  There is absolutely no question of the Government retaining a majority shareholding in the successor company. We intend to ensure that a controlling interest passes to the private sector. That is fundamental to the aims of the Bill.
  The second section of this part of the new clause is another attempt by the Opposition to revive the weary topic of asset stripping. We have tried to explain that point before. All the major subsidiaries of NFC are trading profitably, and those engaged in transport operations could not be closed without higher costs in redundancy than could be realised from the sale of assets. At the same time it is essential to its business strategy, and to future employment prospects, that the corporation should continue the
  1210
  modernisation and rationalisation of its networks. Inevitably, that would mean the closure of some depots, and their sale to provide much needed cash for reinvestment in the business.
  It is ludicrous to propose that the Minister should be required to give permission in such cases. In 1979 the NFC raised more than £4 million in that way, without the need for any Ministerial consent. I certainly do not intend to impose any such restrictions on the new company.
  We intend to take the NFC out of the public sector, for a number of reasons. First, we do not believe that it should have been in the public sector in the first place. There is no justification for so-called public ownership of a company that depends for its future on its success in competing in the private sector and with private companies.
  Secondly, the NFC should not be subject to the restraints that public ownership provides, or the interference of Government and civil servants. That has never been a recipe for success in any commercial undertaking.
  Thirdly, there is a successful and developing business available, and that is in the interests of the NFC. It is also in the interests of those who work for the NFC. It should have the freedom to develop. It has a good and a prosperous future. I ask the House to reject the new clause.
  Mr. Ken Weetch: We have heard a speech from the Minister about the denationalisation of the NFC. We did not hear one transport argument. We heard a series of unsupported assertions based on political dogma and nothing else. It is odd that no transport arguments should be advanced in a transport debate when the Minister is speaking from the Front Bench.
  I rise to speak in support of new clause 12. In doing so, I wish to endorse and support the remarks of my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). New clause 12 touches upon matters relating to part II of the Bill. It is true to say that that is the most politically controversial area in the Bill. The arguments that we shall

  1211
  hear relate especially to clause 36, which contains the root principles of the matter.
  The twin aims of the new clause are, first, that there should be laid before the House the articles of association of the successor company, so that they could be properly scrutinised in the public interest. Secondly, we wish to ensure that enough power is left in the hands of the Minister for him to determine the size and financial structure of the new successor company.
  The new clause is related to crucially important political and economic principles, which are matters of substantial political controversy.
  In essence, the Government are proposing that the NFC—which is a State-controlled transport concern in the shape of a public corporation—should be convened into a private company under the Companies Acts. It is essential to argue the matter now, because we shall see it happening again. The Minister has already flown a kite on the privatisation of the railway assets. It is necessary for us to meet the argument head-on because we shall hear it again before, politically, hon. Members are much older.
  The mechanism is simple. The present fixed interest capital formation will be changed to equity shareholding, which immediately will be held by the Minister, guided by the Treasury, and then sold off.
  I have sifted the vast bulk of the Government's arguments. A number of reasons have been put forward for this major economic and political change. The clearest statement came from the hon. Member for Faversham (Mr. Moate), who has not spoken in the debate today. He said that the policy aims at:
  "a free-standing, highly competitive concern". —[Official Report, Standing Committee H, 14 February 1980; c. 1636.]
  In other words, the Government are putting forward this policy as a matter of principle and in relation to competitive principles which they wish to bring to bear upon the argument.
  Secondly, as I understand it, they are putting the policy forward for financial reasons. The NFC is under "investment constraints", whatever that may mean There are rigidities in the NFC's financial structure. It must be admitted that it is
  1212
  highly geared to fixed-interest loan capital, which in its wake brings financial disadvantages.
  Thirdly, the arguments are concerned with the Government's precept and practice of economic policy as it relates to the public sector borrowing requirement and control of the money supply. Any loss which the Government might have to meet would increase the PSBR which, as we all now live in the world of Samuel Smiles, we must avoid at any cost. The argument, although spurious, is put forward under the banner of financial responsibility.
  Therefore, the argument ultimately rests on all those assumptions. The purpose of the new clause is to counter the whole series of arguments that the Government have put forward. The Opposition are countering with new clause 12, in particular its second proposition, which seeks to present alternative and opposite assumptions through ministerial control, and ultimately, through control by this House. In order to argue the case for new clause 12, it is necessary to dispute all the assumptions which the Government have made about transport policy in general.
  In passing, I must say that none of the arguments that have been put forward from the Government Front Bench have anything to do with transport. They have been concerned not with transport economics, but rather with doubtful, general political propositions.
  The first argument put forward by the Minister related to competition. That differs from the arguments put forward by other Government Departments, which are attacking the present situation on grounds of monopoly. The NFC has no monopoly position at all in transport. It has 10 per cent. of the haulage business. It is true to say that the NFC is in a competitive position at almost every turn.
  The hon. Member for Faversham (Mr. Moate) said that we want an enterprise which responds to the needs of the market. Yet on various occasions the Minister's own words have suggested that it does so. For example, he said:
  "The National Freight Corporation is not run as some vast over-centralised nationalised industry".
  He also said:
  "It seems genuinely in no way to avoid commercial realities".

  1213
  If what is being looked for is a fresh commercial approach, what we have, on the Minister's own admission, is a commercial attitude which is already present in the NFC. I should again like to quote the hon. Member for Faversham, who has a detailed knowledge about these matters. He said:
  "current management is first class and its relationship with the work force has been superb".
  In fact, the real clue as to the Government's purpose was clearly brought out by the Parliamentary Secretary, who said that the NFC
  "is by no means out of the wood"—
  here he was talking about its past difficulties—
  "But it is in a very strong recovery position. We believe that we can time the sale in such a way that it will be an attractive proposition for investors".—Official Report, Standing Committee H, 14 February 1980; c. 1635–44.]
  Although the Parliamentary Secretary mixes with some doubtful political company, his integrity shines through in these matters. What he is saying is that although Government money has been used to see the NFC through difficult times, now that it is improving a little, and its future prospects are brighter, it will be sold off to the private sector. In brief terms, that is a precis of the argument which brings us to the truth at last.
  The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): I hate to rise critically when the hon. Gentleman has put his remarks in such a generous context. However, I am quite sure that the quotation which he used was not used in the context of giving my reasons for denationalisation. He has picked two sentences out of a debate about the way in which we would organise the sale. I hope that he is not suggesting that that was the only comment I made in Committee which was at all directed to the purposes of denationalisation. The reasons that I have given for denationalisation are strikingly similar to those given in the remarks which the hon. Gentleman has already quoted of my right hon. Friend and my hon. Friend the Member for Faversham (Mr. Moate).
  Mr. Weetch: The last thing that I would do is to quote things out of con-
  1214
  text or to accuse the Parliamentary Secretary of any sort of sharp practice. He said a good many other things, but I leave it to the judgment of the House. One would need acres of context if one were to misconstrue remarks such as those.
  However, such is the strength of the competitive principle which the Government have put forward that they are to give a public subsidy of £100 million to go with the sale. The Government will wipe off £58·7 million of commencing capital debt and £41·3 million of outstanding loans in order to dress up the shop window so that they can make a sale. There is not much of the competitive principle in that. That reeks of a subsidy principle, only it is a subsidy for wrong purposes.
  In transport terms, will the NFC be better under private enterprise? No arguments have been advanced to say whether that will be so. All that we have had has been a series of assertions. In fact, the argument boils down to financial and political sharp practice for very narrow ends.
  Let me take the argument about financial structure. Let us admit that the financial structure of the NFC is such that it is too rigid. I think that over the years the NFC itself has argued that there should be an injection of equity capital, and that there should be some sort of public dividend capital, because when so much of one's financial structure is geared to fixed interest payments, instability is introduced into the structure.
  The point that I am seeking, to make is that one does not have to go through the transfer into a successor private company in order to put that right. The Minister can put that right now with the present structure of the NFC.
  The third argument relates to the PSBR. Will the £100 million which the Government will give to the sale with their blessing, be put on the PSBR account? I suggest that it will not. The straight issue here is a political one. The kernel of the political argument from start to finish is that the Government intend to put the whole of the road haulage transport business into free enterprise.

  1215
  5.30 pm
  My quarrel with that argument is that I am a strong believer in the mixed economy. I believe that there should be a State sector in road haulage, which, according to the Minister's own admission, has made striking progress, in difficult conditions, over the years. I listened carefully to the Minister. He made a number of arguments in support of his case. He said that the Government have the support of the National Freight Corporation. That argument is not worth a light. People's jobs are at stake. I do not blame them for keeping their heads below the parapet. I might do the same in that situation. It adds no strength to what the Minister says.
  The Minister also did his best—it is a doubtful argument—by saying that the Government would keep the corporation together in the initial stages. That conflicts with the commercial responsibility of the successor company. If the board is to be commercially free to make business decisions, there is nothing to stop it from breaking up the corporation into lots and selling it off piece by piece. Commercial freedom means exactly that. If the Minister says that he intends to try to keep it together and retain some of the structure, his argument will not hold water. It conflicts precisely with the principle of commercial freedom that he is trying to establish. That is the centrepiece of the argument for moving into the private sector.
  I am certain that the corporation will be broken up. Those who seek to enter this market and 'who will buy their way into what is now the National Freight Corporation have their eyes on separate parts of it. They have no intention of running the framework of the unit as at present constituted. The purpose of the new clause is to try to maintain the structure by giving the Minister certain powers concerning the assets and the sale of such assets of the corporation with its improving record.
  The new clause seeks to keep the Government in a majority shareholding position and to enable them to keep the present NFC structure intact. Under the clause it would be necessary to have ministerial consent for the sale of assets in the successor company so that the predators can be kept at bay and so that
  1216
  the non-transport political dogma thrown up by this Bill can be minimised.
  Mr. Iain Mills: We talked yesterday about a fundamental divide that exists over several clauses. This is obviously another fundamental divide between our ideologies and attitudes. My greatest difficulty is in accepting or grasping the status quo. If one could guarantee that any organisation, nationalised or private, would be allowed, magically, for ever, to continue its business without change, some arguments proposed by the Opposition might be attractive. How can we live with the status quo? Do nationalised industries guarantee a status quo? We have seen in many nationalised industries the diminution of their asset.
  This precious asset—its value in financial terms and in employment—has diminished extraordinarily quickly in most nationalised industries over the last decade. How can hon. Members propose, as justification for the maintenance of the present status of the National Freight Corporation, that by being nationalised and being a Government concern, it will stay the same and guarantee the same levels of employment, retain the same asset value and still give guarantees to its customers, who, after all, play some part in this complex, and to its staff and work force, who play an enormous part?
  The answer is that life moves on. Industry is competitive. If hon. Members argue that nationalisation is an answer to meeting competitive changes and competitive forces, I ask them to quote any examples of success among present nationalised industries from steel to British Leyland and the rest. The answer is simple. I shall give way if any hon. Member has an example.
  Mr. Albert Booth: It is kind of the hon. Gentleman to offer to give way. I suggest that he is trying to bring about a self-fulfilling prophecy. If the Government sell off all the nationalised industries making a profit, what he suggests will come about.
  Mr. Mills: I thank the right hon. Gentleman for his interesting intervention. How does one compete in an international competitive situation? How can one guarantee that any one factor will remain the same? I give a hostage to fortune to the House and say that distribution arrangements of freight will change in

  1217
  this country. That is no hostage. How can the organisation adapt to that change and best guarantee that the asset value of the concern will remain the same or increase and that there will be growth and adaptation to new processes and to new technology? By direction? By integration? By nationalisation? The answer is "No".
  The answer is that it must be a keen competitive organisation. In defining a keen competitive organisation, one must, in essence, be able to compete. How can the National Freight Corporation compete in financial terms with private enterprise companies which have access to borrowing which is not available to the corporation? How can the corporation compete with private enterprise corn-panics that are not subject to political direction from the Government? The answer is self-evident.
  What is an asset? I became most frustrated in Committee when Opposition Members talked about assets and assets being stripped. An asset is really an asset only if it has a positive value through being able to exist in the same form or in some growth form. If it diminishes, it rapidly loses its asset value.
  Many companies, especially those in the private sector, have shown that they can adapt to modern conditions and changes in employment and industrial practice. I refer to a company near my constituency for which I used to work. A big multinational concern has started off a series of small industrial estates on its own grounds. That is private enterprise adapting. If the National Freight Corporation is to be allowed to change and to attract sufficient credibility in the City and among the financial institutions, in order to attract future capital to give its employees and customers better services and stability, it must be able to compete without political direction.
  The political and ideological divide is clear. If a majority shareholding is held by a Government, whichever party is in power, there is no doubt that the customers and finances necessary to fuel the competitive urge and to allow the National Freight Corporation to adapt to innovative changes and to innovate itself will be necessary. It is not enough to claim that past success is enough. This has been the claim, over decades of British indus-
  1218
  trial history, for industry after industry that has subsequently found itself, due to changed events and the emergence of new countries and new concerns, without that keen cutting drive. If we wish to allow the National Freight Corporation to continue to be an asset and to allow those who work for it and its board the freedom necessary to drive it against keen and cutting competition, we should reject this new clause. We should certainly not allow the majority of the shareholding to be held by the State through the Minister.
  Mr. Dobson: I have been amazed by the speeches of the hon. Member for Meriden (Mr. Mills) and the Minister. Both have portrayed the National Freight Corporation as some stultified, dying outfit with no clearly defined role or objectives, which is clearly not doing its job and will be so inflexible to be incapable of adapting to change.
  I refer the House to what the Minister said of this stultified nationalised industry when he was Opposition spokesman on 12 May 1978:
  "the NFC is not run as some vast over-centralised nationalised industry. The corporation is broken down into a federated structure, and maximum independence is given to the separate companies … the management in the NFC seems genuinely in no way to wish to avoid commercial realities. The opposite is the case. The approach of the corporation is … to achieve a commercially viable company, to invest in success and to disinvest in failure."— [Official Report, 12 May 1976; Vol 911, c. 587.]
  That would be a reasonable, flexible approach to the problems of a company that represents about 10 per cent. of the freight transport industry.
  There is a division of view even among Conservative Front Bench spokesmen. On the one hand they say that they want to get rid of nationalised industries because they are monopolies and on the other the Minister tells us today that he wants to get rid of the NFC because it is not a monopoly.
  The object of the new clause is to keep the National Freight Corporation together as an entity, and to prevent it from being sold off in bits. Above all, we wish to keep the corporations assets—material and human—as part of the freight transport industry because we have no faith that the prospects of the denationalised company would be very good once it was in the private sector, unless

  1219
  some form of protection to the existing entity were provided. We want the Minister to keep control of it so that he can veto the sale of assets.
  The Minister may say that he wants to keep this unit together. He said on Second Reading:
  "we are not going to be selling off individual NFC subsidiaries to the highest bidder. The whole purpose of this Bill is to enable us to sell shares in the enterprise as a whole. We want it to go into private ownership as a single entity, without any major change in size or range of interests."—[Official Report, 27 November, 1979; Vol. 974, c. 1129.]
  We agree that that is a laudable objective, but once the corporation is sold into private ownership there is no way of maintaining that objective, because of the likelihood that it would be broken up and sold off. Without the powers that we seek in the amendment the Minister would have no power to achieve his objective of keeping the National Freight Corporation as a single entity. There is no chance whatever of his attaining his own demonstrated objective. The reason for that is that he is not really interested. He is not actually committed to keeping the corporation as an entity. What he really wants—as with the other denationalisation measures going through the House, concerning BP, British Airways and British Aerospace—is a rip-off for his Tory friends in the City.
  During the Committee stage I referred to this as being a three-part rip-off. As it turned out, information provided in Committee revealed a four-part rip-off. The Minister, not content with three parts, announced a further part later in the day.
  The first part of this series of rip-offs is the write-off of £100 million of debts. The NFC currently owes the Government £100 million, or £8 million of income each year. Before this company is sold to the private sector the taxpayer will write off that £100 million so that the debt is not carried forward to the private company and so that the private company can flourish because it will not have to pay the NFC's debt to the Government.
  5.45 pm
  The next stage in this rip-off is the sell-off. Having written off the £100 million, the Government will sell off the
  1220
  remaining assets of the NFC. Hon. Members who heard me discourse on this aspect in Committee will know that the third stage in the rip-off is the strip-off. At that point the assets of the company will be stripped off separately. The fourth part of the rip-off that we discovered in Committee was the tax write-off. I shall come to that later.
  Referring to the debt write-off, I should draw the attention of the House to the fact that on Second Reading the Parliamentary Secretary said:
  "One of the immediate effects of our proposals is that the company's capital structure will be very much more attractive "—[Official Report, 27 November 1979; Vol. 974, c. 1242.]
  He can say that again. If a company has a debt of £100 million and that debt is written off there is no doubt that its capital structure becomes very much more attractive to those who want to buy it.
  We come now to the sell-off. During a debate on the Consolidated Fund Bill two weeks ago I discovered an aspect that had not occurred to me before about the selling off of nationalised assets. There is a great lining of pockets and greasing of palms in the City direct to those who handle the transaction—not just those who buy the public assets, but to those who help the Government sell those assets.
  When the last tranche of shares in BP was sold no less than £4·5 million was paid out in fees to the merchant banks and other City institutions for helping the Government to sell those shares in BP. I reckon that two or three hon. Members could have joined together and sold those shares in Leather Lane or Petticoat Lane market and still have received as good a price, even after the Government had paid out £4·5 million for financial advice. They may need a little more advice in selling shares in the NFC and therefore we can expect the level of fees paid to the merchant banks and others assisting the Government to be higher. We were told that the £4·5 million paid in fees for the BP shares was "an especially lean fee". Therefore, we can expect a rather fatter fee for helping the Government sell off the National Freight Corporation, because it will be harder to sell and harder to judge the value of the shares.

  1221
  It is worth pointing out to the House, when considering the strip-off rip-off, that the total assets of the NFC amount to about £100 million. Of that sum, about £60 million is in land and buildings. If hon. Members have visited the National Carriers depot they will know that the bulk of that value must be in the land, because it is certainly not in the buildings. We have £60 million worth of assets in the land of the NFC. It is worth knowing—I am sure that the asset-stripping property companies who contribute to Tory funds have observed this—that if one reads very carefully the last annual accounts of the NFC one will see that the £60 million valuation of the land was carried out as long ago as 1968. There has been a great deal of inflation since they, as well as a dramatic, catastrophic inflation in the value of land. The asset stripper always concentrates on identifying assets that are presently undervalued, so that he can sell them off at current values and make a killing
  A fourth point, the tax write-off, was something that came to light only as a result of the intervention of the hon. Member for Faversham (Mr. Moate), who has already been mentioned today. In Committee he said—
  Mr. Deputy Speaker: I have been in a very lenient frame of mind for some time this afternoon, but I am sure that the hon. Gentleman will relate his remarks to the new clause that we are discussing.
  Mr. Dobson: I will break off to explain, Mr. Deputy Speaker, that the object of the clause is to try to keep the NFC together as a single entity within the freight industry in future. I am outlining what the state of the company will be when it is transferred into the private sector if the clause does not go through, and trying to exemplify the dangers that will result and the threat to the NFC as an entity in the freight industry.
  The hon. Member for Faversham said:
  "The company has immense accumulated losses … If carried forward those tax losses would mean that the new company would not have to pay corporation tax for some years. That would be a helpful factor for the new company."
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  He went on:
  "If it is to begin life as a free enterprise company, let us give it a good start. The tax losses could be an immense asset to it." —[Official Report, Standing Committee H, 14 February 1980; c. 1633–4.]
  That rather took aback the Parliamentary Secretary, who, quite reasonably, had to consult his officials about Government policy in relation to the tax losses. However, he confirmed to the Committee that it was the intention of the Government that tax losses on the scale envisaged would be allowed to be carried forward from the nationalised sector into the new company so that they would be a substantial asset for the company.
  Mr. Peter Hordern: Surely the fact that the NFC has extensive tax losses proves beyond doubt the need to transfer a loss-making organisation into private enterprise hands.
  Mr. Dobson: The losses were incurred some time ago. One of the questions that need to be resolved and that the Ministers have not resolved to date is whether these tax losses from 1968 to 1980 will include the actual losses themselves and not just the tax losses that were written off at various stages during different times when the capital structure of the NFC was being sorted out. I do not think that that is a sound argument for denationalisation. It is certainly not a sound argument for denationalisation and carrying forward the tax losses so that, in effect, the taxpayer does without twice. That seems quite absurd.
  In Committee, in an effort to establish an NFC that would be retained as a single entity, which is the purpose of the amendment, and to ensure that it continued to operate in the national freight sphere, we put forward—the Minister has already referred to the terms and conditions of the existing staff—amendments that sought to carry forward the existing structure of industrial relations, so that the present machinery for negotiation of pay and consultation about other terms and conditions would be carried forward with the new company. We believed that that was an asset that any company would want if it was to operate in the private sector.
  Needless to say, our amendments were turned down by the Government, as was

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  our desire to carry forward certain of the existing rights of employees. The Government did not accept that suggestion. They said that people could rely on the Employment Protection Act and various other measures to which, ironically, the Government had earlier objected. I believe that there was a cavalier objection by the Government to our efforts to include in the structure of the new company proposals that would make it work as an organisation operating in the transport freight sector.
  Following that, the Minister, at a meeting with the TUC—groans, no doubt, from Government Members—said that it was his impression that employees of the NFC were looking forward to the challenge of the private sector. In the immortal words of the Duke of Wellington
  "If you believe that you will believe anything".
  I do not know whether Government Members have consulted people who work for the NFC, but I represent a substantial number of them in my constituency, and as a sponsored NUR Member of Parliament I have a great deal of contact with their official representatives. I have seen no sign whatever that they welcome this transference to the private sector, even though the hon. Member for Meriden (Mr. Mills) would have me hold out to them the glorious prospect of burgeoning wealth if they all battle together flexibly, responding to the call of the market and everything else that the right hon. Member for Leeds, North-East (Sir K. Joseph) continually talks about.
  The second part of our clause says:
  "The memorandum and articles of association shall contain provisions to ensure that the Minister shall retain a majority of the securities of the company and that the assets of the successor company shall not be sold without the consent of the Minister."
  I think that the people working in the NFC at present might be willing to bite on the bullet about the prospect of transfer to the private sector if they had a guarantee on those lines and were assured that they would not be put through the City's bacon slicer to the advantage of people working in the City and to their substantial disadvantage.
  Alternatively, I believe that if the Minister, by accepting this amendment,
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  could give worthwhile assurances that the NFC, even when in the private sector, would remain an entity and continue roughly as it is at present, and operate in the freight transport sphere as it does at present, the employees of the NFC might be a trifle less reluctant than they are at present. However, I know that he will ask the House to vote against this amendment, and consequently he will not give the guarantee for which I am asking. Therefore, I can only conclude—as we have concluded from everything that has been said by the Government in the House and in Committee—that the object of the sell-off of the NFC has nothing to do with freight transport and everything to do with property and financial speculation.
  Mr. David Penhaligon:I have listened to the debate with great interest and I still am not very worried about whether the NFC is sold or not. I am certain that if my party were in power we would not have gone through the process of putting this Bill together. Although we are basically against nationalisation, most of our objections do not apply to the NFC. It is not a monopoly. It has to compete in the market, and if it does not do so it will not survive. If the company competes successfully it will grow. Most of the historic objections that I have to nationalisation, therefore, do not apply.
  I wish that there were two separate votes on new clause 12, because I would vote enthusiastically for the first subsection. It is important, at least to me, to know precisely what the memorandum and articles of association say. If they included wide regulations, which greatly encouraged the owning of shares by employees, I could vote for the proposal with some enthusiasm.
  6 pm
  We must work towards a society in which those who work in large corporations have a direct financial interest. I look forward to a system in which those who work throughout their lifetimes for a company will share in its assets growth. When they retire I hope that they will have something worth while to invest.
  As the new clause stands, we are buying a pig in a poke. The Minister said that they will be the normal memorandum and articles of association. However, we

  1225
  have no idea of their content. It is incredible that the House has been asked to vote for the denationalisation of a company when it does not know the rules and regulations by which the new company is to be run.
  I would like to see the new rules and regulations put in a form that would allow us to debate them, and amend them if necessary. We should greatly increase an employee's ability to buy shares. I had understood that the Government were keen on that. Why will they not give a total commitment to that type of company?
  Turning to the second part of the new clause, one must make up one's mind whether to sell. The half-sale arrangement proposed in the new clause is unsatisfactory. British Petroleum has often been quoted. However, I suspect that that unique arrangement arose as a result of circumstances that existed many years ago. As that company is in the profitable energy sector, the arrangement has worked well. That does not apply to most industries. I am therefore against the second part of the new clause, but I am tempted to vote in favour of it as a whole.
  I hope that a privately owned company will not have to ask the Minister whether it can sell a motor-bike. The company should make that decision. I am tempted to vote in favour of the new clause because the memorandum and articles of association are unsatisfactory. The House should be given clear details before voting. We need the document. It should be presented in a form that can be amended. We could thereby reflect on the type of company that we should like to see restructured.
  The employees should be given a direct and personal interest in the success of the new company. That was the argument behind nationalisation 40 or 50 years ago. If I had been around at that time, those arguments might have appealed to me. It was envisaged that society and employees would benefit from nationalisation. However, it has not worked. There is an alternative. Employees could be given massive investment in the company and an opportunity to build up assets during their working lives. I should like to see that included in the memorandum and articles of association. The Liberal Party will probably vote in favour of the clause. However, we are against one part of it.
  Mr, Kenneth Clarke: The hon. Member for Ipswich (Mr. Weetch) chided us for failing to produce transport arguments against the new clause. I waited for him to produce his transport arguments in favour of it. However, I waited in vain. The nearest that Opposition Members came to offering a transport argument was when the hon. Member for Kingston upon Hull, East (Mr. Prescott) strayed into his favourite theme of integration and direction of freight traffic. He made a long speech on that subject in Committee. New clause 12 provided the hon. Gentleman with an ideal opportunity to express his enthusiasm.
  The basis of the 1968 Act, and of the Labour Party's belief in the National Freight Corporation, was that it would integrate freight transport. That belief accompanied quantity licensing and the direction of traffic from road to rail. The hon. Member for Kingston upon Hull, East is beaming with pleasure. He nods his head as he remembers those far-off days. His preferences are clear. However, it might have been useful if, in stating those preferences, he had made clear whether he was speaking for the Labour Party. Many of those involved in the road haulage and transport business would like to know where they stand. I understand that the right hon. Member for Barrow-in-Furness (Mr. Booth) will shortly speak in the debate. He speaks with the authority of a member of the Shadow Cabinet. I hope that he will make clear whether there has been a fundamental shift in the Opposition's transport policy. At one stage it was suggested that the Opposition would reconsider all their policies. However, if the Labour Party has no policy, perhaps the right hon. Member for Barrow-in-Furness could indicate when debate within the Labour Party will end.
  Those who operate in the transport business need to plan. They need to know the Opposition's transport policy. They want to know whether the Labour Party wishes to return to the so-called golden days of Barbara Castle; the days of integration, direction of traffic, quantity licensing and the rest of the rigmarole that the previous Labour Government found impracticable throughout their six years of office.
  That point relates to the National Freight Corporation and the reasons why

  1227
  the Labour Party might resist the method of denationalisation that we propose. We see no reason for subsidising or directing any part of freight transport. Freight transport exists primarily to serve its customers, including British industry. The National Freight Corporation can make its best contribution—as it has a 10 per cent. share of road haulage—by becoming a private enterprise road haulage company. It will be free of the constraints of the public sector and be able to operate in the market to the best of its competitive abilities. There is no reason to restrain that.
  As my right hon. Friend said, we cannot understand why the Government should continue to have a stake in operations such as cold storage, furniture removals, travel agents, and so on. We propose to sell the company for the best price available. The proceeds of that sale will go into public funds, for their benefit. Sale is also in the interests of those in the National Freight Corporation. We have the support of the board. It supports us not because individuals on that board fear for their positions, but because they see this as a desirable option. We have been opposed by the trade unions. Such opposition to denationalisation is predictable. Many of the corporation's employees should appreciate that their position wil be best ensured if the company is given the maximum commercial freedom to thrive—if it can—in a highly competitive market.
  The company does not have that commercial freedom now. The hon. Member for Ipswich made a disparaging reference to "investment constraints"—whatever they may be. If a trading company, such as the National Freight Corporation, operates in a commercially competitive market, it will find no advantage in nationalisation. The company has to operate under investment constraints. It needs Government approval for its investment programmes and for borrowing. The Government appoint the board.
  Previous Governments intervened heavily in the decisions of the board, for political reasons. Sometimes those reasons were wise, sometimes they were the result of expediency. The corporation might have wished to pursue a policy that would prove embarrassing and inconvenient to the Government. These problems are in-
  1228
  escapable, yet they face public sector corporations. If a corporation is given commercial freedom, it will be to the advantage of all those within it.
  Commercial freedom may be resisted because it is thought that nationalisation is a guarantee of job security and of high pay, thus avoiding the rigours of the market. That view is completely fallacious, yet it was implied by the hon. Member for Derby, South (Mr. Johnson) in the course of several interventions. The hon. Member for Kingston upon Hull, East knows that that is not true. The National Freight Corporation has lost 50 per cent. of its employees in the past 10 years. There is no guarantee except that it should have commercial freedom.
  The board has commercial freedom, subject to the necessary restraints of investment and borrowing imposed on any public company to enable the Government to retain control over public sector finances. It is also free from political interference. The logical next step is to turn it into a private sector company.
  As the proposers of the new clause know, its acceptance would put impossible inhibitions on the process by which lye seek to make the corporation a private sector company. What is the objection to the mechanics by which we propose to change the public corporation into a Companies Act company, privately owned and operating in the market? As so often throughout our proceedings, the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) phrased the attack in the most dramatic language, with elaborate descriptions of rip-offs, strip-offs and every other undesirable but exhausting sounding word. I wish to refute in the plainest terms the allegation behind those colourful words.
  There is no question of giving away public assets to anybody. We are maximising the amount that we shall get for the shares and making it an attractive and saleable company. In that way we shall increase the price that we get, and the public will benefit. My right hon. Friend and I do not have back pockets into which to slip even the merest percentage of the proceeds. We wish to transform the company's structure and organisation so that it will realise a sensible

  1229
  price upon quotation, which will benefit the public and the public purse.
  The Opposition cannot have it both ways. They accuse us of giving away a priceless asset. In Committee when I talked of making the corporation more saleable to attract a reasonable price and get a good return for the public, we were accused of helping our friends in the City.
  We are accused of writing off over £100 million of fixed interest capital debts that the company owes to the Government. We are being falsely accused of doing what the previous Government did. They wrote off £50 million as one of the many stages of propping up the company during its bad old days. That amount was wiped off with no return, together with the £82 million grant given to the corporation over the past five years. The previous Government waved goodbye to those sums.
  We are changing the capital structure of the company. It cannot be sold with the fixed interest capital debt. We are converting it into a proper capital structure. It will have a mixture of share capital and fixed interest stock in order to make it saleable on the market. We are not waving goodbye to £100 million. We are exchanging our marketable equity and stock for that debt, and we shall thereby produce a return. We are simply changing the nature of the Government's interest from an unrealisable £100 million of fixed interest debts into what we trust will be a realisable quantity of equity.
  We are accused of giving something away, because a first charge on the proceeds of sale will be to top up the pension fund. We have to put the pension fund into a soundly financed position as we dispose of this company. The company must have a proper actuarial-based fund to finance its pension obligations. It is currently a liability on the corporation's assets. We are merely discharging that liability, as we must, out of the first proceeds of sale. We are not giving anybody anything. If we did not do that, the liability would rest on the new company, just as it does on the old corporation.
  6.15 pm
  The tax losses have been referred to. They are there now for the benefit of the corporation. If we change the cor-
  1230
  poration into a company, they will remain there for the benefit of the company in the future. The hon. Member for Holborn and St. Pancras, South claims to want to see the company thrive. It is therefore entitled to the benefit of the tax losses. As the hon. Gentleman knows, there is no question of another business acquiring in a devious manner the advantage of those tax losses. The successor company will have the entitlement to those tax losses. We are not giving away any Government liability.
  Mr. Dobson: Does the hon. Gentleman agree that, once the National Freight Corporation is wholly privately owned, he will have no control over its capital structure? He can give no guarantee, particularly as the legislation for carrying forward these tax losses is not yet before the House, that a company will not move in and amalgamate its existing assets with the National Freight Corporation and use those tax losses to offset its unfavourable tax position.
  Mr. Clarke: The legislation is not yet before us. My hon. Friend the Financial Secretary, in reply to a question, made it clear that the Government intend to make early legislative provision for the circumstances in which the tax losses of these public corporations will, on denationalisation be carried forward to their private sector successors. There is no give-away in what I have described.
  I ask Labour Members to keep their eyes on the essential point in regard to the public's position—and perhaps this is the last time that I shall make that plea. At present the public have something of value—the National Freight Corporation. Its value cannot be measured by merely looking at what the public have put into the corporation in the past. The public do not have the sum total of loans, grants, capital debt, and so on. Most of that has been written off. It has been long since lost. The money came from the Exchequer, was poured away and was wasted. We simply have the corporation as a trading corporation.
  It has a value based mainly on its trading record and expectations in the competitive road haulage market. We shall realise the full value of what the public have now. We are not giving anything away. There is no way in which we can magic up something from the past

  1231
  to try to claim public credit for grants and leans that have long since gone into the sand.
  It is said that even if we get a good price we should prevent asset stripping by requiring Government control over all future disposals of property by the new private sector company. I have listened for weeks to these arguments about asset stripping. It is an elastic phrase, used particularly by those on the Left of politics to describe a wide variety of operations.
  I believe that I know what the phrase means. The hon. Member for Holborn and St. Pancras, South and his hon. Friends do not have a great future as asset strippers, because they do not appreciate the circumstances in which that happens. The idea is that a company with long undervalued land and other assets is bought at a knock-down price. Those assets are rapidly realised for a quick windfall profit, the business is closed down and the assets disposed of. We have tried to lead the Opposition through the position of the National Freight Corporation to explain that it is in no such position. We are glad to have their assistance in warding off any incompetent asset stripper who might blunder into the operation, believing that he might make a profit.
  The hon. Member for Holborn and St. Pancras, South mentioned National Carriers Ltd. depots. I agree that at the moment they are not all the most attractive property, but they stand on land that has a value. The National Freight Corporation is in the same position, but, as one has tried to explain, the possible value of these lands and assets on the market will be outweighed by the considerable redundancy payments required to get rid of the large number of people employed in that business. It would be a loss-making exercise as an asset stripping proposition. That is no basis upon which we can sell it, and it is not the basis upon which it will be sold.
  After it is sold, we cannot guarantee that the corporation will stay in its present shape. As a private sector company it will have to change and react successfully and well to the market. We could not guarantee the existing shape of the corporation against market pressures, any more than previous Governments have
  1232
  been able to ward off market pressures on the corporation. Despite all the money thrown at the corporation in its bad and unsuccessful old days, the last Government could not stop necessary change.
  We hope that the company will maximise its most successful features once it is in the market and go for growth where it can be achieved. In those sectors where the company is less successful it will have to retract, and it must be free to do so, as is any other private sector company. We believe there will be plenty of opportunities for the new company to benefit once it enters the market.
  However, the company could not trade under the conditions suggested by the second part of the new clause, where it would need Government approval to dispose of any asset. That is not even a requirement on the present corporation. The corporation raised £4 million last year by disposing of redundant land. The idea that any company, nationalised or private, can somehow trade in a competitive market while having to come to the Minister every time it wants to dispose of a redundant, derelict warehouse is ludicrous. We do not believe that the new company should be put under any such constraint.
  The other way in which the Opposition expressed their concern about the successor company and how it will behave was to ask for the articles of association and memorandum of the new company. We have explained exactly what we shall do on the appointed day to change the corporation into a Companies Act company, 100 per cent. owned by the Government. At that stage it will be a private company, but on flotation it will become a public company when we sell whatever proportion of our shareholding seems to us right at the time.
  The only commitment of my right hon. Friend in this context will be to dispose of at least a majority shareholding. We must be left free to make the eventual judgment whether, and if so to what extent, the Government need to retain any shareholding at all. So far as the articles of association and the memorandum are concerned—
  Mr. Prescott: Will the Minister tell us whether it is Government policy to keep some shares or whether, if they are able to do so, they will sell all of them?
  Mr. Clarke: The size of the Government shareholding, if any, will have to be decided when we come to flotation. We are not in a position, as the hon. Gentleman claims, analogous to the sale of British Aerospace and British Airways. If we were selling off shares in a company manufacturing military aircraft, or selling shares in a company that was the national flag flyer in the international airlines market, different considerations would apply.
  We wish to make the best decision commercially, and in the public interest, about the extent to which the Government should retain a shareholding in the corporation. The company to which we shall transfer the corporation—that is, the company whose shares we shall sell—will be an ordinary Companies Act company with no unusual quirks or sinister content in its articles of association or memorandum. The reason why we did not produce the articles in Committee was that we simply did not have them. They had not been drafted then, and they have not been drafted yet. But we have indicated that the articles of association will follow table A of the Companies Act and that the memorandum will contain nothing unexpected.
  The hon. Member for Truro (Mr. Penhaligon) is concerned that those details are not before the House at the moment. I must tell him we would resist that aspect of the new clause—even if we had articles of association ready—if it was sought to make them some kind of statutory instrument or to make them debatable or amendable in the House. Heaven knows what shape of company we would end up with if we were not careful, or what shape of company might be forced upon us.
  We see no need for that, but I can give this undertaking to the hon. Member.
  When the articles of association are available and we are approaching the appointed day, we shall make copies available. They will be placed in the Library or wherever is the most appropriate place for those hon. Members who are interested. The articles will contain no surprises and nothing sinister. They will contain nothing that will make this new company unusual.
  Mr. Penhaligon: When we eventually obtain one of these magnificent documents, and when, having read it, we come to the conclusion that it is an absolute
  1234
  load of old rubbish, what will we, as Opposition Members, be able to do about it?
  Mr. Clarke: The hon. Member for Truro can make representations to my right hon. Friend the Minister. We shall have a statutory instrument which might have to return constantly to the House for amendment. It is not unusual for the memorandum of a company to be amended from time to time, and it may even be necessary between the appointed day—when the corporation becomes a Companies Act company—and the day of flotation to make some amendments. It is not unusual if a private company—I use the words "private company" in the Companies Act sense of the word—is floated and made into a public company for there to be some necessary changes to the memorandum. But we do not wish to proceed on the affirmative resolution procedure before we are able to do that. We will produce these documents, and I assure the hon. Member for Truro that they will contain nothing startling or sinister.
  Though we do not intend to respond to the request of the hon. Member for Truro that the articles of association should be tabled before the House now and that they should show a commitment, in terms, to employee participation, we share his interest and enthusiasm for employee shareholding. It is the desire of the Government when they sell off their shares to offer them to employees of the company, and we are considering ways in which we can encourage the take-up of the shares. We hope that there will be a reasonable sale of our shares to the people who work in the National Freight Corporation so that there will be no conflict of interest between the owners and management of the company and those who work for the company, in its new private sector role.
  There is no conflict between ourselves and the hon. Member for Truro. The conflict of policy between the Government and the official Opposition on the new clause is predictably ideological. However, there is not much substance in the advocacy of the new clause on any other point.
  I hope that I have dealt in detail with particular points. It remains obvious that the fundamental motive of the Opposition in moving this new clause is a kind

  1235
  of Pavlovian reaction to any reduction of our public sector holdings or any privatisation or introduction of private capital. I thought that the Labour Party normally went in for this kind of thing in relation to the commanding heights of the economy. When last I heard a clear statement of official Labour Party policy, that was the theory. It may be that they are now coming down the slopes a little and that the glaciers are descending. It may be that a different definition of the commanding heights is coming into play.
  The National Freight Corporation is 10 per cent. of the road haulage business. It is a public sector company by sheer historical accident, and the attitude of the Opposition does no good to its employees, its customers or anyone else. It is startling that the Labour Party is determined to try to stop the escape of even a small company such as this from the public sector.
  For the Labour Party nationalisation remains just as much a shibboleth as ever it was, but the Opposition are extending the concept into some strange corners by moving this new clause and trying to keep Pickfords, BRS, the travel agents and the coal haulage business inside the public net.
  6.30 pm
  Mr. Booth: The new clause has three clear aims. One is to secure for the House copies of the memorandum and articles of association of the company that is to be sold under the Bill. The company is a public asset of some consequence. I shall not go down the path that the Parliamentary Secretary invited me to walk when he suggested that Members of the Labour Party were concerned principally with the commanding heights of the economy. Such an argument is not worthy of him because he knows that in Government and in Opposition we have demonstrated a concern for aspects of the economy that we believe to be important in the public interest, whether they are described as minor industrial and service aspects or major public aspects. We believe that a combination of industries and services alone can secure the social and economic objectives that we in the Labour Party pursue.
  The Parliamentary Secretary invited me to state the Labour Party's policy on the
  1236
  National Freight Corporation. We have never tried to hide our policy. The Labour Party is not averse to holding considerable policy debates about a number of subjects, and transport is not excluded. The Labour Party believes that there should be a public holding in the freight industry. The industry should be efficient, innovative and well-managed. It should have good industrial relations and maximum employee participation. The Government should be able to intervene with sensitivity on social and economic issues that arise from the operation of the freight industry. There has never been any secret about our policy.
  We have been given no explanation why we should not see the memorandum and articles of association connected with the transfer of an important public asset. The hon. Member for Horsham and Crawley (Mr. Hordern) made an embarrassing statement in an intervention. He said that the tax losses were evidence of the need for public ownership to secure profits and efficient working. Before the hon. Gentleman came into the Chamber the Minister said that each subsidiary of the National Freight Corporation was profitable.
  Mr. Hordern: I was in the Chamber when the Minister replied to the debate. He said that considerable sums had to be written off. That is why the National Freight Corporation became profitable. If it had been left as it was, endless losses would still have had to be made.
  Mr. Booth: Whatever way the NFC capital is constructed, and no matter how it is to be transferred to a Companies Act company, that is to be hidden from us. After all, we are only the elected representatives of the British people. We are not to be told. The reality is that the company is paying £8 million a year to the British people on that capital holding. That is the return which the British people receive from that group of public assets. It does not matter whether the previous money paid by the taxpayer is written off to the point where the capital value is £100 million or £15 million. The requirement is that NFC pays £8 million to the British taxpayer.
  Mr. Hordern: The right hon. Member for Barrow-in Furness (Mr. Booth) proves my point. Having written off £80 million, it is impossible to state that the profit is

  1237
  £8 million. If £80 million is written off the company must have been running at a loss.
  Mr. Booth: The hon. Member for Horsham and Crawley proves nothing of the kind. He misunderstands the argument. If the public possess an asset on which there is a return of £8 million a year the valuation put on the asset does not matter. The return is predetermined. Its percentage of the capital value, of course, depends on how the assets are valued, but one cannot deny that the possession of one-tenth of the road transport industry, on which there is a return of £8 million, is a valuable asset.
  Because the corporation is a valuable asset it cannot win under a Conservative Government. No nationalised industry can win under the Conservatives. When a nationalised industry is successful the Conservative Government try to sell it off to the private sector. When an industry is unsuccessful the Conservative Government try to cripple it with cash limits. When a nationalised industry occupies the whole of an industrial sector it is accused by the Conservatives of abusing its monopoly position. If it occupies only 10 per cent. of the market the Conservatives say that there is no reason why it should remain in public hands. The Conservatives cannot even understand why Labour Members wish the NFC to remain in public hands. Whatever the position of a nationalised industry, it is condemned by the present Government.
  Considerable restrictions are placed upon the operation of nationalised industries by those who manage them. I have some sympathy with the Minister's argument. To be forced to pay fixed interest of £8 million a year on an operation that covers one-tenth of the road freight industry is a considerable restraint.
  We explained in Committee how we believe that the Government should respond. They should explore ways in which greater flexibility and freedom might be exercised by those who manage the nationalised industries. A degree of flexibility that allows industries to pay less to the public in times of expansion and more at other times may be desirable. We do not reject the argument that nationalised industries work under restrictions that might not make sense,
  1238
  particularly when they compete vigorously in the public sector. However, we reject the idea that because of the restrictions an industry should be denationalised.
  One cannot argue that the NFC has not competed successfully. Perhaps its crime in the eyes of the Conservative Government is that it has competed too successfully—that it has been the innovator and the leader in many aspects of road freight. It has served a valuable public function. It enabled British road freight to move with the times in a way that many privately owned sectors of road freight would not consider. It has a value in that sense.
  Therefore, the public ownership limitations, to which I attach importance, along with the Minister, have not prevented its operating as a successful element in the road freight industry. Therefore the Opposition can state their side simply. The House needs much more information before this major and important public asset—because of its special position in road freight transport—is turned over to a private company.
  There may have been an unfortunate choice of words by the Parliamentary Secretary. He said that Ministers must have the right to decide these matters. It is a constitutional affront for any Minister to say that, be he the Prime Minister or the Parliamentary Secretary. It is for the House to decide whether Ministers should be free to construct the sale of public assets in the way they want, or whether it should have a sight of the proposition under which those public assets are to be disposed of. We favour the latter course.
  There is an onus upon those who argue, as the Opposition do, that part of the National Freight Corporation should be in public hands, to say how far the Government should intervene in that area. That fair challenge was thrown out by the Parliamentary Secretary. I want to respond to it briefly.
  The Opposition believe that nationalisation in road freight, as in a number of other areas, means that the Government have a responsibility to intervene on certain major policy issues, especially in the area in which they have a public holding. We also accept that the Government should have an employment policy regard for the area. The Government

  1239
  should be prepared to intervene, where they judge it right in the public interest, in the investment policy of the industry. In doing that, the Government must be sensitive to, and intelligently apprised of, the social and economic needs of all those who are affected by the way in which road freight is operated.
  The Government are completely blind to that as a result of their own mone-
  tarist theories and doctrinaire prejudice against public ownership. Therefore, the new clause represents an absolute minimal basis on which the House should approve any sale of any part of this important public asset.
  Question put, That the clause be read a Second time:—
  The House divided: Ayes 217, Noes 270.

  Division No. 243]

  AYES

  [6.44 pm

  Abse, Leo

  Fitch, Alan

  Meacher, Michael

  Adams, Allen

  Flannery, Martin

  Mellish, Rt Hon Robert

  Allaun, Frank

  Fletcher, L. R. (Ilkeston)

  Mikardo, Ian

  Alton, David

  Fletcher, Ted (Darlington)

  Miller, Dr M. S. (East Kilbride)

  Anderson, Donald

  Foot, Rt Hon Michael

  Mitchell, Austin (Grimsby)

  Archer, Rt Hon Peter

  Ford, Ben

  Mitchell, R. C. (Soton, lichen)

  Armstrong, Rt Hon Ernest

  Foulkes, George

  Morris, Rt Hon Alfred (Wythenshawe)

  Ashley, Rt Hon Jack

  Fraser, John (Lambeth, Norwood)

  Morris, Rt Hon Charles (Openshaw)

  Ashton, Joe

  Freud, Clement

  Morton, George

  Barnett, Guy (Greenwich)

  Garrett, John (Norwich S)

  Moyle, Rt Hon Roland

  Barnett, Rt Hon Joel (Heywood)

  Garrett, W. E. (Wallsend)

  Newens, Stanley

  Beith, A. J.

  George, Bruce

  Oakes, Rt Hon Gordon

  Benn, Rt Hon Anthony Wedgwood

  Gilbert, Rt Hon Dr John

  O'Neill, Martin

  Bennett, Andrew (Stockport N)

  Ginsburg, David

  Orme, Rt Hon Stanley

  Bidwell, Sydney

  Gourlay, Harry

  Owen, Rt Hon Dr David

  Booth, Rt Hon Albert

  Graham, Ted

  Palmer, Arthur

  Boothroyd, Miss Betty

  Grant, George (Morpeth)

  Park, George

  Bottomley, Rt Hon Arthur (M'brough)

  Grant, John (Islington C)

  Parker, John

  Bradley, Tom

  Hamilton, W. W. (Central Fife)

  Pavitt, Laurie

  Bray, Dr Jeremy

  Harrison, Rt Hon Walter

  Pendry, Tom

  Brown, Hugh D. (Provan)

  Haynes, Frank

  Penhaligon, David

  Brown, Ronald W. (Hackney S)

  Hogg, Norman (E Dunbartonshire)

  Powell, Raymond (Ogmore)

  Brown, Ron (Edinburgh, Leith)

  Holland, Stuart (L'beth, Vauxhall)

  Prescott, John

  Buchan, Norman

  Home Robertson, John

  Race, Reg

  Callaghan, Jim (Middleton & P)

  Homewood, William

  Radice, Giles

  Campbell, Ian

  Hooley, Frank

  Rees, Rt Hon Merlyn (Leeds South)

  Campbell-Savours, Dale

  Horam, John

  Richardson, Jo

  Carmichael, Neil

  Howells, Geraint

  Roberts, Albert (Normanton)

  Cartwright, John

  Huckfield, Les

  Roberts, Allan (Bootie)

  Clark, Dr David (South Shields)

  Hudson Davies, Gwilym Ednyfed

  Roberts, Ernest (Hackney North)

  Cocks, Rt Hon Michael (Bristol S)

  Hughes, Mark (Durham)

  Roberts, Gwilym (Cannock)

  Cohen, Stanley

  Hughes, Robert (Aberdeen North)

  Robertson, George

  Coleman, Donald

  Jay, Rt Hon Douglas

  Robinson, Geoffrey (Coventry NW)

  Concannon, Rt Hon J. D.

  John, Brynmor

  Rodgers, Rt Hon William

  Conlan, Bernard

  Johnson, James (Hull West)

  Rooker, J. W.

  Cowans, Harry

  Johnson, Walter (Derby South)

  Ross, Ernest (Dundee West)

  Crowther, J. S.

  Johnston, Russell (Inverness)

  Rowlands, Ted

  Cryer, Bob

  Jones, Rt Hon Alec (Rhondda)

  Ryman, John

  Cunliffe, Lawrence

  Jones, Dan (Burnley)

  Sever, John

  Cunningham, George (Islington S)

  Kaufman, Rt Hon Gerald

  Sheerman, Barry

  Cunningham, Dr John (Whitehaven)

  Kerr, Russell

  Shore, Rt Hon Peter (Step and Pop)

  Dalyell, Tam

  Kilroy-Silk, Robert

  Silkin, Rt Hon John (Deptford)

  Davidson, Arthur

  Lambie, David

  Silkin, Rt Hon S. C. (Dulwich)

  Davies. Ifor (Gower)

  Lamborn, Harry

  Silverman, Julius

  Davis, Clinton (Hackney Central)

  Lamond, James

  Smith, Rt Hon J. (North Lanarkshire)

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

  Leadbitter, Ted

  Snape, Peter

  Dean, Joseph (Leeds West)

  Leighton, Ronald

  Soley, Clive

  Dempsey, James

  Lestor, Miss Joan (Eton & Slough)

  Spearing, Nigel

  Dewar, Donald

  Lewis, Arthur (Newham North West)

  Spriggs, Leslie

  Dixon, Donald

  Litherland, Robert

  Stallard, A. W.

  Dobson, Frank

  Lofthouse, Geoffrey

  Steel, Rt Hon David

  Douglas, Dick

  Lyon, Alexander (York)

  Stewart, Rt Hon Donald (W Isles)

  Douglas-Mann, Bruce

  McDonald, Dr Oonagh

  Stoddart, David

  Dubs, Alfred

  McGuire, Michael (Ince)

  Strang, Gavin

  Dunnett, Jack

  Mckay, Allen (Penistone)

  Straw, Jack

  Dunwoody, Mrs Gwyneth

  McKelvey, William

  Summerskill, Hon Dr Shirley

  Eadie, Alex

  MacKenzie, Rt Hon Gregor

  Taylor, Mrs Ann (Bolton West)

  Eastham, Ken

  Maclennan, Robert

  Thomas, Dafydd (Merioneth)

  Edwards, Robert (Wolv SE)

  McMillan, Tom (Glasgow, Central)

  Thomas, Jeffrey (Abertillery)

  Ellis, Raymond (NE Derbyshire)

  McNally, Thomas

  Thomas, Mike (Newcastle East)

  Ellis, Tom (Wrexham)

  Marks, Kenneth

  Thomas, Dr Roger (Carmarthen)

  Ennals, Rt Hon David

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

  Thorne, Stan (Preston South)

  Evans, loan (Aberdare)

  marshall, Dr Edmund (Goole)

  Tilley, John

  Evans, John (Newton)

  Martin, Michael (Gl'gow, Springb'rn)

  Tinn, James

  Ewing, Harry

  Maxton, John

  Torney, Tom

  Field, Frank

  Maynard, Miss Joan

  Varley, Rt Hon Eric G.

  Wainwright, Edwin (Dearne Valley)

  Whitehead, Phillip

  Woolmer, Kenneth

  Wainwright, Richard (Colne Valley)

  Whitlock, William

  Wright, Sheila

  Walker, Rt Hon Harold (Doncaster)

  Wigley, Dafydd

  Young, David (Bolton East)

  Watkins, David

  Willey, Rt Hon Frederick

  Weetch, Ken

  Williams, Rt Hon Alan (Swansea W)

  TELLERS FOR THE AYES:

  Welsh, Michael

  Williams, Sir Thomas (Warrington)

  Mr. James Hamilton and

  White, Frank R. (Bury & Radcliffe)

  Wilson, William (Coventry SE)

  Mr. Hugh McCartney

  White, James (Glasgow, Pollok)

  Winnick, David

  NOES

  Adley, Robert

  Fell, Anthony

  Macfarlane, Neil

  Aitken, Jonathan

  Fenner, Mrs Peggy

  MacGregor, John

  Alexander, Richard

  Finsberg, Geoffrey

  MacKay, John (Argyll)

  Ancram, Michael

  Fisher, Sir Nigel

  McNair-Wilson, Michael (Newbury)

  Arnold, Tom

  Fletcher, Alexander (Edinburgh N)

  McNair-Wilson, Patrick (New Forest)

  Aspinwall, Jack

  Fletcher-Cooke, Charles

  McQuarrie, Albert

  Atkins, Robert (Preston North)

  Fookes, Miss Janet

  Madel, David

  Atkinson, David (B'mouth, East)

  Forman, Nigel

  Major, John

  Baker, Kenneth (St. Marylebone)

  Fowler, Rt Hon Norman

  Marlow, Tony

  Baker, Nicholas (North Dorset)

  Fox, Marcus

  Marshall, Michael (Arundel)

  Beaumont-Dark, Anthony

  Fraser, Rt Hon H. (Stafford & St)

  Mather, Carol

  Bell, Sir Ronald

  Fraser, Peter (South Angus)

  Maude, Rt Hon Angus

  Bendall, Vivian

  Fry, Peter

  Mawby, Ray

  Benyon, Thomas (Abingdon)

  Gardiner, George (Reigate)

  Mawhinney, Dr Brian

  Benyon, W. (Buckingham)

  Gardner, Edward (South Fylde)

  Maxwell-Hyslop, Robin

  Best, Keith

  Garel-Jones, Tristan

  Mellor, David

  Biffen, Rt Hon John

  Gorst, John

  Meyer, Sir Anthony

  Biggs-Davison, John

  Gow, Ian

  Miller, Hal (Bromsgrove & Redditch)

  Blackburn, John

  Gower, Sir Raymond

  Mills, Iain (Meriden)

  Blaker, Peter

  Grant, Anthony (Harrow C)

  Mills, Peter (West Devon)

  Body, Richard

  Gray, Hamish

  Molyneaux, James

  Bonsor, Sir Nicholas

  Greenway, Harry

  Monro, Hector

  Boscawen, Hon Robert

  Grieve, Percy

  Montgomery, Fergus

  Bottomley, Peter (Woolwich West)

  Griffiths, Eldon (Bury St Edmunds)

  Morgan, Geraint

  Bowden, Andrew

  Griffiths, Peter (Portsmouth N)

  Morris, Michael (Northampton, Sth)

  Boyson, Dr Rhodes

  Grist, Ian

  Morrison, Hon Charles (Devizes)

  Braine, Sir Bernard

  Grylls, Michael

  Morrison, Hon Peter (City of Chester)

  Bright, Graham

  Gummer, John Selwyn

  Mudd, David

  Brinton, Tim

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

  Murphy, Christopher

  Brittan, Leon

  Hamilton, Michael (Salisbury)

  Myles, David

  Brocklebank-Fowler, Christopher

  Hampson, Dr Keith

  Neale, Gerrard

  Brooke, Hon Peter

  Hannam, John

  Needham, Richard

  Brown, Michael (Brigg & Sc'thorpe)

  Haselhurst, Alan

  Nelson, Anthony

  Browne, John (Winchester)

  Hastings, Stephen

  Neubert, Michael

  Bryan, Sir Paul

  Havers, Rt Hon Sir Michael

  Newton, Tony

  Buchanan-Smith, Hon Alick

  Hawkins, Paul

  Oppenheim, Rt Hon Mrs Sally

  Buck, Antony

  Hawksley, Warren

  Osborn, John

  Budgen, Nick

  Hayhoe, Barney

  Page, John (Harrow, West)

  Bulmor, Esmond

  Henderson, Barry

  Page, Rt Hon Sir R. Graham

  Burden, F. A.

  Hicks, Robert

  Page, Richard (SW Hertfordshire)

  Butcher, John

  Higgins, Rt Hon Terence L.

  Parkinson, Cecil

  Butler, Kon Adam

  Hogg, Hon Douglas (Grantham)

  Parris, Matthew

  Cadbury, Jocelyn

  Hooson, Tom

  Patten, Christopher (Bath)

  Carlisle, John (Luton West)

  Kordern, Peter

  Patten, John (Oxford)

  Carlisle, Kenneth (Lincoln)

  Howell, Ralph (North Norfolk)

  Pattie, Geoffrey

  Chalker, Mrs Lynda

  Hunt, David (Wirral)

  Pawsey, James

  Channnon, Paul

  Hunt, John (Ravensbourne)

  Percival, Sir lan

  Chapman, Sydney

  Irving, Charles (Cheltenham)

  Pollock, Alexander

  Churchill, W. S.

  Johnson Smith, Geoffrey

  Porter, George

  Clark, Hon Alan (Plymouth, Sutton)

  Jopling, Rt Hon Michael

  Powell, Rt Hon J. Enoch(S Down)

  Clarke, Kenneth (Rushcliffe)

  Joseph, Rt Hon Sir Keith

  Prentice, Rt Hon Reg

  Clegg, Sir Walter

  Kaberry, Sir Donald

  Price, David (Eastleigh)

  Colvin, Michael

  Kershaw, Anthony

  Prior, Rt Hon James

  Cope, John

  Kimball, Marcus

  Proctor, K. Harvey

  Cormack, Patrick

  King, Rt Hon Tom

  Rathbone, Tim

  Corrie, John

  Kitson, Sir Timothy

  Renton, Tim

  Costain, A.P.

  Knight, Mrs Jill

  Rhodes James, Robert

  Critchley, Jullan

  Knox, David

  Rhys Williams, Sir Brandon

  Dickens, Geoffrey

  Lamont, Norman

  Ridley, Hon Nicholas

  Dorrell Stephen

  Lang, Ian

  Ridsdale, Juliian

  Douglas-Hamilton, Lord James

  Langford-Holt, Sir John

  Rifkind, Malcolm

  Dover, Denshore

  Latham, Michael

  Roberts, Wyn (Conway)

  du Cann, Rt Hon Edward

  Lawrence, lvan

  Ross, Wm. (Londonderry)

  Dunn, Robert (Dartford)

  Lawson, Nigel

  Rost, Peter

  Dykes, Hugh

  Lee, John

  Royle, Sir Anthony

  Eden, Rt Hon Sir John

  Lennox-Boyd, Hon Mark

  Sainsbury, Hon Timothy

  Edwards, Rt Hon N. (Pembroke)

  Lester, Jim (Beeston)

  St. John-Stevas, Rt Hon Norman

  Eggar, Timothy

  Lewis, Kenneth (Rutland)

  Scott, Nicholas

  Elliott, Sir William

  Lloyd, Ian (Havant & Waterloo)

  Shaw, Michael (Scarborough)

  Emery, Peter

  Lloyd, Peter (Fareham)

  Shelton, William (Streatham)

  Fairbairn, Nicholas

  Loveridge, John

  Shepherd, Colin (Hereford)

  Fairgrieve, Russell

  Luce, Richard

  Shepherd, Richard(Aldridge-Br'hills)

  Faith, Mrs Shella

  Lyell, Nicholas

  Shersby, Michael

  Farr, John

  McCrindle, Robert

  Silvester, Fred

  Skeet, T. H. H.

  Thomas, Rt Hon Peter (Hendon S)

  Walters, Dennis

  Speller, Tony

  Thompson, Donald

  Ward, John

  Spence, John

  Thorne, Neil (Ilford South)

  Watson, John

  Spicer, Michael (S Worcestershire)

  Thornton, Malcolm

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

  Sproat, Iain

  Townend, John (Bridlington)

  Wheeler, John

  Squire, Robin

  Townsend, Cyril D. (Bexleyheath)

  Whitney, Raymond

  Stainton, Keith

  Trippier, David

  Wickenden, Keith

  Stanbrook, Ivor

  Trotter, Neville

  Wiggin, Jerry

  Stanley, John

  Taylor, Teddy (Southend East)

  Wilkinson, John

  Steen, Anthony

  Vaughan, Dr Gerard

  Williams, Delwyn (Montgomery)

  Stevens, Martin

  Viggers, Peter

  Winterton, Nicholas

  Stewart, Ian (Hitchin)

  Waddington, David

  Wolfson, Mark

  Stewart, John (East Renfrewshire)

  Wakeham, John

  Young, Sir George (Acton)

  Stokes, John

  Waldegrave, Hon William

  Stradling Thomas, J.

  Walker, Bill (Perth & E Perthshire)

  TELLERS FOR THE NOES:

  Tapsell, Peter

  Walker-Smith, Rt Hon Sir Derek

  Mr. Spencer Le Marchant and

  Tebbit, Norman

  Waller, Garry

  Mr. Anthony

  Temple-Morris, Peter

  Question accordingly negatived.

New Clause 13

  PENSION FUNDS UNFUNDED PORTION VARIATION
  '(1) The Minister shall specify in writing to the persons administering each BR pension scheme what general economic assumptions he has used for determining the proportion referred to in section 45(1) and what modifications he has made to those assumptions in order to take account of the particular circumstances of the said scheme.
  (2) If the actuary to a BR pension scheme shall certify at any time after 1st April 1986:

  (a) that the assets held by that scheme in respect of the relevant pension obligations exceed or fall short of the amount required to meet the proportion of those obligations which is not being paid for by the Minister under section 43; and

  (b) that the reason for the said excess or shortfall, or part of it, is that the general economic assumptions made by the Minister in determinating the proportion referred to in section 45(1) have proved to be invalid;

  then the Minister shall make an order to increase or decrease the said proportion with effect from a date later than six months but not later than one year after the date of the actuary's certificate to such an extent as to place the scheme in as nearly as possible the same position as it would have been in at the date of the said certificate had the proportion determined under section 45(1) been based on valid economic assumptions.
  (3) An order under subsection (2) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament and may be amended by a further order under this section.'—[Mr. Booth.]
  Brought up, and read the First time.
  Mr. Booth: I beg to move, That the clause be read a Second time.
  The Minister has said that in the provisions of the Bill there is no intention on the Government's part to worsen the pension rights of any of those affected by the
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  Bill. The extent to which the pension rights are protected or worsened by this Bill is a matter of considerable contention between us and I have no intention on the new clause of rehearsing the very many arguments we had on that score in Committee, because, whatever else this new clause does, it does not attempt to state the basic position of the Opposition on historic railway pension rights. What it seeks to do, rather, is hold out to the Government the possibility of a compromise which would meet much of the concern of those responsible for the running of pension schemes.
  The reason for a clause of this sort springs from the way in which the Bill is constructed and the way in which the Government seek to legislate in this Bill to evade their current statutory responsibility fully to fund the historic pension rights of certain railway pensioners and certain NFC pensioners. It springs also from the great difficulty which exists for anybody who is running a funded pension scheme today in working out how much funding is required at this time to ensure provision for payments of certain pension rights at some time in the future. Both of those considerations bear on the clause.
  Clause 45 requires the Minister to determine the unfunded proportion of each of the pension schemes under which historic railway pension rights accrue before the end of 1981, and this is the proportion of the historic pension payments which from time to time the Minister will have to meet.
  The Government's proposal in the Bill is that for the present statutory commitment of the Government fully to fund these pension rights there should be exchanged an undertaking to meet a proportion of these pension demands. The

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  Government are proposing that such funding as has been paid up to now should be calculated as meeting the requirement up to a certain proportion of the funds and that the remaining proportion, what is called in the Bill the unfunded proportion, should be paid for on a pay-as-you-go basis by the Government in annual payments arrangements from now on.
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  The difficulty to which the clause is addressed is that there is no provision in the Bill for adjusting the percentage of the unfunded proportion if the assumptions upon which it is originally calculated prove to be wide of the mark in practice. Anyone who has studied pensions recently must agree that it is highly likely that the Government in making the calculation will get it wrong. That is not to say that the Government are trying to diddle pensioners, or that they do not have good actuarial advice. But it is extremely difficult to predict what will happen to the inflation rate, to wages or to the dividend-earning capacity of the pension fund investments.
  After consultation with the unions and the committee of the principal pension funds involved, the British Railways Board proposed to the Government that it was desirable for the unfunded proportion to be adjustable in future years. The board held that this would safeguard the position of members and pensioners and also of the Government. If it were adjustable, it was held that members and pensioners would have the safeguard that, if the assets held in respect of the historic pension funds became exhausted, the Government would have to adjust the proportion to be met on a pay-as-you-go basis upwards, possibly to 100 per cent. if the funded proportion had been fully exhausted. But the Government would have the safeguard on behalf of the British taxpayer that, if the actuarial basis used at the outset proved to be too conservative and a surplus arose on the funded proportion, it would be possible to adjust the unfunded proportion in a downward direction, even to zero, to avoid unnecessary calls upon public money. That is the basis of the proposition originally put to the Government which we argued for in Committee.
  The Government raised several objections to this proposal which I will try to state as succinctly and fairly as I can.
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  The Government said that if there were complete adjustability the incentive to those who manage railway pension funds to perform efficiently would be removed, and that it could even open the door to some abuse on their part because, so the Government argued, the board would not then have to meet the historic pension costs associated with any change in the definition of pensionable pay and, therefore, they could make those changes believing that the Government would pick up the tabs.
  We are putting forward in the clause a compromise proposal which attempts to meet fully the Government objections while still maintaining the principle that some adjustability is needed if the propositions on which the unfunded proportion was originally calculated turn out in future to be incorrect. So we are trying to maintain the principle of adjustability if those general economic assumptions prove to be wrong either in one direction or the other—and we acknowledge that that is possible.
  The clause proposes that the unfunded proportion shall remain fixed until 1 April 1986, no matter what happens, on exactly the same basis as the Government's proposals. If the clause is accepted by the Government, as I hope that it will be, there will be no change in the operation of the historic pension funds from what the Government propose until 1 April 1986. At any time after 1 April 1986, if there is a surplus or a deficiency in the fund in respect of the historic pension obligations, provided that it can be shown that the surplus or deficiency has arisen because the general economic assumptions that were made in calculating the historic pension obligation funding proportion were invalid, then, and then only, will the Minister be required to adjust the unfunded proportion to such an extent as to place the scheme in the position in which it would have been had those initial assumptions been correct.
  The clause proposes that that adjustment should take place with no retrospection. If a surplus or deficit in the fund arises at any time after 1 April 1986 for any reason other than wrong economic assumptions, that would have to be dealt with under existing arrangements. If a surplus became available for a reason other than that the economic assumptions were wrong, it would be open to those who

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  manage the funds to improve the benefits under them or to reduce contributions. If a deficit arose because the funds had not been managed well or terms other than those involved in the economic assumptions had turned against the funds, the deficit would fall to be met by the board under its guarantee of the solvency of the funds.
  The effect of the proposal would be that the Government would be responsible for a surplus or deficit that arose because the initial economic assumptions were wrong and for no other reasons, whereas the railways would remain responsible for any surplus or deficit arising from any other cause.
  The clause meets the Government's objection of incentive being removed. Clearly in the clause there is an incentive for railway pension schemes to be managed in the best possible manner and for the full costs of any proposed changes in pensionable pay to be taken into account on a proper basis before the board makes any decision about pension changes.
  In practice I believe that the clause would require the Minister at the outset, when determining the unfunded proportion, to specify in writing to the trustees or the management committee of each pension scheme what general economic assumptions he had used and what modifications he may have made to those assumptions to take account of the particular circumstances of a scheme.
  The reference that we make to general economic assumptions requires those assumptions to be defined, and we have sought to do that in the clause by saying that we are talking about future pay, prices and dividend increases in the United Kingdom. We are concerned with the effect of these factors on our economy and on future investment returns for United Kingdom pension funds in general. Either these assumptions, at the discretion of the Minister, could be as to a uniform rate for future years or the Minister could specify different Assumptions for different years. That is a matter for the Minister as long as he states the assumptions at the outset. Presumably, the Minister would make the same general economic assumptions for all the railway pension schemes in which he is concerned.
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  Modifications to meet particular circumstances of individual schemes might take the form of assumptions that the rate of pensionable pay will increase at a different rate from the assumptions made for the economy in general. Another possibility is that the Minister could assume a lower rate of investment return for railway funds because of their lack of new investment income. One change which the Bill brings about is the cutting off of these considerable funds to which the schemes have a right under present legislation. Those are all matters on which the Minister will have to make a decision in determining which proportion of the pension should be funded and which part should be covered by the annual pay-as-you-go payments.
  Having specified his general economic assumptions, the Minister should also specify what official indices he will use as an indication of actual experience from time to time in future, because at some time beyond 1 April 1986 we shall compare what has actually happened with what would have happened had the assumptions been correct.
  It would be a comparatively simple matter for an actuary, when making an actuarial valuation after April 1986, to estimate how much more or less the assets held in respect of historic pensions would have been if the unfunded proportion had been determined at the outset on the basis of assumptions which were in accord with the experience over the period from the outset to the date of valuation, and in accordance with the original assumptions from the date of valuation onwards.
  The implicit assumption is that the original estimate could still come true in the final result after 1986, even if the performance year to year had not been in accordance with the assumptions. If that were to be the outcome it should be accepted by those in the pension scheme as putting them in a position similar to that which would have been brought about if the assumptions had been correct. That would enable the Government Actuary to certify how much of any surplus or deficit was attributable to the incorrectness of the general economic assumptions.
  Once it has been determined that a deficit exists at the valuation date, because the general economic assumptions

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  had proved invalid, the Government actuary could calculate the increase required in the unfunded proportion in order to eliminate the deficit. The same would apply for a surplus. It might not be possible—I am trying to cover the full range of possibilities—for a deficit or a surplus to be completely eliminated, because the unfunded proportion could not be increased by more than 100 per cent. or decreased to less than zero. Any balance of the surplus or deficit attributable to invalid economic assumptions would have to be borne by the funds and by the board in the same way as any surplus or deficit that has arisen for any other reasons would have to be borne in respect of historic pension obligations.
  This proposal offers a compromise between the proposals in the Bill—where the unfunded proportion remains fixed for all time—and the proposals previously put forward by the board, which would entail complete adjustability. The proposal realistically meets the objections made by the Government on the basis of their assessment of the original proposals.
  It is difficult to predict at this stage the proportion of the historic pension rights that can be said to have been funded already. It must be accepted that the return on shares might be different. I shall not tease the Government with the suggestion that success or failure of their monetary theory or economic policy might be in question in this respect. It would have been true of any calculation made by any Government over the last 20 years. It is difficult to predict uprating costs, inflation and dividends.
  Our proposal gives a fair run to the Government's proposition, and it enables the Government to calculate on the basis of there being no change between now and April 1986. It has to be held also that the proposal offers a safeguard to pensioners, to those who manage the pension schemes, and to the public.
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  I hope that it will be agreed that our proposal in no way reduces the responsibility of those who operate the funds. The proposal does not relieve them of any obligations to make decisions to carry through their responsibility in a way which has proper regard for the needs of pensioners, the public, and the British Railways Board as guarantor, to
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  deal in a prudent way with the funds of the railways and the funds of the British public. It addresses itself to the simple question of the difficulty of calculation.
  I hope that the Minister will be able to respond to the proposal constructively, and I hope that he will not attempt to damn it on a minor technical point. If the Government have decided that there must be a change in the way in which the public will meet a statutory obligation which has previously been decided by the House and on which those who have operated historic railway pension funds have made decisions in good faith, this proposal can give a fair run to what the Government are seeking to do. It will safeguard against dangers which could occur through no fault of the pensioners or those who have been appointed to manage funds for them.
  Mr. Fowler: Before I turn to the amendment, it may be helpful if I make a few introductory comments at this stage.
  I should like to try to put the Bill into context and explain its relationship to the 1974 Act, which it will replace. The 1974 Act is a starting point for the Bill.
  The pension provisions of the 1974 Act were part of a general reconstruction of the finances of the British Railways Board. The reconstruction was directed towards the various obligations of the board. It was not concerned with the pension entitlements of members of the pension schemes. The reconstruction did not deal only with the means by which support was to be provided for railway passenger services; it observed an important general principle. The functions and responsibilities of the board and of the Government were to be kept separate. The Government did not take over the board's pension scheme. Instead, a system was devised by which the board received a defined measure of support to enable it to discharge the historic obligations that it owed to its pension schemes.
  Part III of the Bill reflects three main considerations. First, it retains the principle of support for historic obligations. As far as I am aware, that principle has not come under any criticism. Secondly, it is designed to meet the concern of the

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  Public Accounts Committee that substantial public expenditure was incurred in advance of need. Thirdly, it is designed to secure public expenditure savings in the years immediately ahead.
  I repeat that it is the Government's view that nationalised industry pension schemes should continue to be funded. It is right that the contributions should be collected from employees and employer and invested by management committees against future liabilities. The Bill maintains the principle of funding for a proportion of the liabilities of each scheme.
  The purpose of part III of the Bill is to change the method by which support is provided, rather than using either the principle of funding or the principle that support should be provided.
  The machinery of the Bill is in many ways similar to the machinery that was to have been adopted under the 1974 Act. The procedure is basically as follows: the actuary will have to assess the historic liabilities of each scheme. He will have to estimate the number of pensioners that there will be, how long they will live, and their pensionable salaries. I need not go into all the details.
  The end result will be that the actuary will put a total capital value on historic liabilities. He will likewise have to estimate the value of the assets corresponding to the liabilities. He will have to make crucial assumptions about the rate of return on investments, interest rates and dividends. Again, the end result will be the total capital value of the assets. The difference between the two capital values is the deficiency or surplus in the scheme concerned.
  It was proposed in the 1974 Act that funding debts should be created, equal in value to the deficiency. The schemes would then have assets and liabilities that exactly matched. The difficulty lay in the magnitude of the sums that were involved. Under the interim funding orders £1¼ billion stood to be paid from 1980–81 onwards. The board was arguing that that was nothing like enough fully to fund its obligations.
  The Bill proposes that the proportion of the liabilities of each scheme that is not covered by the assets should be met by Government payments. It is proposed that the payments should be made on
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  an emerging-cost basis as and when the corresponding pensions come to be paid. The remaining proportion of the liabilities would then exactly match the assets. Thus, as under the 1974 Act, the liabilities that were the responsibility of the scheme would be fully funded. The difference would be that the total sums involved would be proportionately smaller, and the risk with any future surplus or deficiency that emerged would be correspondingly less.
  Mr. Hordern: Will my right hon. Friend explain the position of any possible limit of Government support to the British Rail pension fund within his proposals? I understood that in any one year there is a limit of £52 million. Will my right hon. Friend confirm that there is such a limit and that that is the sum?
  Mr. Fowler: That is the real value. I shall ask my hon. Friend the Parliamentary Secretary to give my hon. Friend a full reply. I say, off the cuff, that that is the real value averaged over the next few years.
  The preliminary professional advice is that there would be great difficulties in operating the clause. However, I do not intend to seek to argue that. The starting point of the Bill was the 1974 Act. That measure provided for a once-and-for-all settlement by the end of 1979. No provision for adjustment was made after that. British Rail pension schemes would have been left with total responsibility for the historic pensions liabilities. They would have had a fixed quantity of assets with which to discharge the liabilities. Some of the assets would have been those that they have now—for example, equities, properties, gilt-edged stock, and works of art. The remainder of the assets would have consisted of funded debt.
  If the actuarial assumptions under the 1974 Act had been wrong, the whole of any deficiency that emerged would have been a renewed burden on the board's finances. That is what was proposed under the 1974 arrangement, and that was the whole philosophy of the 1974 Act. In other words, a defined and fixed measure of assistance was to be given to the board. It might have proved too much and it might have proved too little. However, the whole of the responsibility for the historic pensions obligation would have remained with it. The difference would

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  have been that it would have started from a higher base line, inasmuch as it had more assets.
  The Bill proposes to reproduce the support that would have been given under the 1974 Act. It follows the same philosophy. Once again, we are proposing a once-and-for-all settlement, after which the board will basically be on its own. The differences are technical but they are important. As the Minister will be taking responsibility for a fixed proportion of the historic pensions' outgoings, the surpluses or deficiencies that will emerge in the part of the funds that is the board's responsibility will be much smaller than under the 1974 Act.
  The substance of the amendment is that the Minister should take the main responsibility for the historic pensions' liabilities. It would isolate only factors local to the board and to British Rail pension schemes. That goes beyond the 1974 Act.
  It has been argued that the actuarial assumptions are bound to be wrong. I do not seek to pretend that there is not bound to be a measure of uncertainty.
  Mr. Walter Johnson: We are worried about the Bill and the actuarial valuation. Will account be taken of inflation proofing, especially for those superannuates who are not members of a new fund that automatically caters for inflation proofing? This is a real worry of the superannuates who are already on pensions.
  Mr. Fowler: I think that I can give the hon. Gentleman an assurance that it will do just that.
  It has been argued that the actuarial assumptions are bound to be wrong. I should be less than frank if I did not say that there is bound to be a measure of uncertainty. However, if the actuarial assumptions that are used when the unfunded proportions are determined are significantly wrong, the consequences will obviously go much wider than British Rail pension schemes. Every funded pension scheme depends on actuarial assumptions. That is self-evident. At any given time not every actuary will be using the same assumptions. However, there will be some degree of agreement.
  The actuarial assumptions that will be used in the determination of the unfunded proportions will not necessarily be exactly
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  the same as those currently being used in routine valuations of funded pension schemes. Such assumptions are likely to be the base line.
  If the actuarial assumptions used under the Bill are significantly wrong, the assumptions currently being used for most other funded schemes will also be wrong. Again, that will be a much greater problem than the problem being faced by British Rail. The clause will insulate the board and the British Rail pension scheme from general economic trends. That is an insulation that was not provided under the 1974 Act.
  Mr. Stanley Cohen: If the Bill is enacted in its present form, will any profits or surpluses made from the pensions schemes be distributed and used for other purposes, whereas any losses incurred will have to be covered by the scheme?
  Mr. Fowler: Profits and surpluses will be used for the benefit of the pensioners. We shall be discussing that issue in a later amendment.
  For all pension funds there is a risk that actual experience will differ from the assumptions on which actuarial assessments were based. It is then for the employer and the fund managers to decide what action to take. If a major difference emerged between the actual experience and the assumptions on which the determination of the funded proportion was based, that would pose a serious problem for all pension funds.
  There is no reason to legislate now to exempt BR funds from the risks that are faced by every other funded pension scheme. I know that that will come as a disappointment to Opposition Members. I thought that it was right to intervene at this early stage to indicate the Government's views.
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  Mr. Leslie Spriggs: To which of the pension funds is the Minister referring? The superannuation fund has been in existence for many years. It was started by the private railway owners and then passed on when public ownership took place. There is a male wages grades pension fund, and a later superannuation fund that includes a number of the male wages grades. Will the Minister make it

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  clear to which of the funds he is referring, so that we can follow his argument?
  Mr. Fowler: I refer the hon. Gentleman to schedule 8, where the pension schemes are listed.
  Mr. Dobson: I am finding it difficult to follow the Minister's arguments. He says that if there is a catastrophic error in the one-off valuation made by the Government Actuary there will be similar errors in the valuations made by the actuaries of other pension funds. That is nonsensical. The Government Actuary is not responsible for other valuations.
  All other pension funds, including the funded aspect of the BR pension funds, will be subject to revaluation from time to time. It is usual for the revaluations to be carried out every three or four years. If the Minister does not accept the new clause it will mean a one-off valuation by the Minister with the assistance of the Government Actuary.
  Representations were made by my right hon. and hon. Friends in Committee. Representations were made also by the management and the unions of BR against a one-off valuation. Those representations were unavailing. We are faced with a last effort in the House—although common sense may prevail in another place, as it did on another transport matter—to persuade the Minister to accept that he is not infallible. Certainly the Government Actuary is far from infallible.
  If the Minister does not accept this reasonable clause, he will have to guesstimate about half a dozen fluctuating factors for 20 years ahead. The consequences of a one-off valuation, if it were not changed, could carry on for 80 years from now, by which time everybody in the House, including those in the Public Gallery, would be dead.
  By asking the House to reject the clause the Minister is saying that he will carry out an actuarial valuation that could carry us forward until everybody in the House has died, probably from natural causes. That is not just nonsense; it is absurd. It is nonsense on stilts.
  The Minister, together with the Government Actuary, needs to consider the rate of price inflation for the next 20 years, the rate of increase in public sector pensions—which are inflation-proof at present
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  —and, because he has to value the funded part of the scheme, he needs to know the general rate of return on investment over the next 20 years.
  I was reluctant to believe that the Minister could do that. I tabled a question to the Chancellor of the Exchequer for answer on 3 March. I asked him
  "what is the Treasury's estimate for the next 20 years of the rate of price inflation, the increase in public service pensions and the general rate of return on investment."
  The Treasury mandarins considered the matter, but by 3 March all that the Minister could tell me was:
  "I shall let the hon. Member have a reply as soon as possible."—[Official Report, 3 March 1980; Vol. 980, c. 35.]
  A further two days' wait brought forth an interesting reply:
  "The Treasury has not made any estimates for the next 20 years of these three variables."—[Official Report, 6 March, 1980; Vol. 980, c. 211.]
  It was our understanding that the Government Actuary would not conjure these figures out of the air, but turn to the Treasury for advice. If he turns to the Treasury for advice, on the strength of the answers that have been given to me he will receive no worthwhile advice because such estimates are not made by the Treasury. I concluded that the Treasury did not know the answer.
  Because the Minister of State, Civil Service Department has to consider Civil Service pensions, I asked him for how many years ahead he estimated the cost of Civil Service pensions, what factors he took into account, and what rate of inflation he was assuming for each of the years for which he made such estimates. His reply on 24 March 1980 stated:
  "Estimates of expenditure on Civil Service pensions are made in the annual public expenditure surveys which are carried out in constant price terms; such estimates to 1983–84 will be included in the Government's forthcoming public expenditure White Paper. These take account of forecast retirements in each year as well as the assumed mortality rate of pensioners. The actuarial cost of Civil Service pensions is assessed by the Government Actuary in his review of the adjustment in pay research for differences in superannuation benefits. The assumptions about future price and salary inflation used in the 1979 review are set out in his 1979 report, a copy of which is in the Library."
  The Library staff, in their excellent and helpful manner, found the report.

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  There was no reference to future inflation—only references to past rates of inflation. Even those were presented in the form of graphs. I understand that it would not be in order to wave graphs about to demonstrate what has happened.
  Taken over the past 30 years, the average rate of return on equities has been 9·8 per cent. On occasions, the increase in the rate of return has dropped below 50 per cent., to minus 50 per cent., and has risen above 100 per cent. Those startling changes occurred within a span of two years during the latter part of that 30-year period.
  The Government Actuary does not guess 20 years ahead for the purpose of Civil Service pensions, but he will be expected to guess 20 years ahead for the purposes of BR pensions. That is absurd.
  I wish to demonstrate how much the position can change in 20 years.
  Mr. Kenneth Clarke: It is not possible to make actuarial valuations of funding that is needed to meet any pension obligations. Every actuary makes that sort of assumption when he issues a certificate to indicate that a pension scheme is properly funded. It is true that in this case, as a once-and-for-all funding, any further obligation to top-up if variations emerge will fall on British Rail as the employer, as it does with any other pension scheme.
  We are replacing the 1974 Act, which had a once-and-for-all valuation in 1979, with no review. It does not strengthen the hon. Gentleman's case to produce in this tortuous way arguments that all actuarial calculations are impossible or always wrong, because actuaries make those kinds of calculations day in and day out.
  Mr. Dobson: The Parliamentary Secretary has given the game away with his last sentence. They make those valuations day in and day out, and in some cases they keep revising those valuations. In this case there will be no procedure whatever for revising the valuation once it has been made. The purpose of the new clause is to allow those sorts of revaluation to take place. Under the Bill as drafted, they cannot take place, and the fact that they were in the earlier Bill does not oblige me to support the provisions of the earlier Bill.
  Mr. Harry Cowans: Surely the point at issue has been revealed by the Parliamentary Secretary. By saying that actuaries make such calculations daily, he gave away the fact that the Government should now accept the new clause. The new clause gives an actuary the opportunity of putting right a mistake that he has made. That is basically what it is all about. My hon. Friend is seeking to help the Government. Will not the Minister accept the help that has been offered to him?
  Mr. Dobson: I am always happy to accept the help that is offered by my hon. Friend. Indeed, I have accepted that help for quite a long time with regard to this Bill. My hon. Friend makes the point very cogently. We are asking the Government Actuary, the Minister and the Parliamentary Secretary to guess accurately 20 years from now, yet we do not expect actuaries to do that in any other sphere.
  I should like to illustrate my argument with two examples of what can happen over a period of 20 years. I do not claim to be able to predict. All that I can do is look back. When I looked back 20 years from 1980 to 1960, I discovered that the average wage in 1960 was £14 a week. In 1980, the average wage is, I understand, £114 a week. I do not think that any actuary who carried out actuarial valuations in 1960 would have guessed that that scale of increase was likely to come about. Had anyone made a one-off valuation at that time he would almost certainly have got it wrong.
  I turn to something that is closer to the hearts of hon. Members. In 1960, Members of Parliament were paid £1,750 a year. They had no secretarial allowance and, more appropriate to this debate, no pensions. Today, in 1980–20 years later—I understand that Members of Parliament now receive £10,750, a secretarial allowance of £6,850 and provision for a pension. Of course, Ministers will chuckle, because they get a lot more than honest Back-Bench Members. They are getting rather more than the Queen's shilling for their services. In addition, following the previous debate on this matter, Members' secretaries will in future be entitled to some sort of pension.

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  I do not believe that many hon. Members who were present in 1960—when President Eisenhower was President of the United States, when the Cuban missile crisis had not even taken place, when the Minister was chairman of the Cambridge University Conservative Association and when the Parliamentary Secretary would have to wait another year before he moved into that warm seat which his right hon. Friend would leave—would have predicted those sorts of changes.
  Mr. Spriggs: I am afraid that my hon. Friend will sit down before this matter has been clarified. A few moments ago, the Parliamentary Secretary said that the railway board would be left to fund its pension scheme as other pension schemes are funded by the employers. Will my hon. Friend try to discover from the Parliamentary Secretary how many of the non-contributory pension and superannuation schemes that operate today would fall into the scheme as it was explained to us? When I did my last research I discovered that there were quite a number of non-contributory schemes. The railmen contribute to their scheme. How are the other funds, which are non-contributory, actuarially funded?
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  Mr. Dobson: I trust that the Parliamentary Secretary will take my hon. Friend's question on board and will reply to it.
  The Minister also suggested that British Rail would have to take on anything that went wrong, as everyone does. However, that is not a reasonable comparison, because in that case what may go wrong will be the fault of the Minister and the Government Actuary. It is quite unreasonable to expect the British Rail pension fund to take on board the consequences of its own possible mistakes as well as someone else's.
  It seems to me that the Government will have to resort to necromancy or something of that sort in order to decide what the actuarial valuation should be. It reminds me of the three witches in Macbeth. We shall have the Minister, the Parliamentary Secretary and the Government Actuary going round some
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  cauldron into which they will throw ideas, muttering:
  "Double, double toil and trouble;
  Fire burn and cauldron bubble."
  I shall not go on to quote all that they say, except that at the end of that scene, Hecate, a strident female character, appears on the scene. I do not allocate that characterisation to any Member of the Government Front Bench, although other hon. Members may do so. Hecate comes in, sees the witches throwing all the stuff into the cauldron, Which will help them predict the future for Macbeth, and says:
  "O! well done ! I commend your pains,
  And every one shall share i' the gains.
  And now about the cauldron sing,
  Like elves and fairies in a ring,
  Enchanting all that you put in."
  I believe that the Government will need some enchantment in order to predict what they are trying to in a way that will protect the pensions of a large number of railway pensioners.
  Mr. Hordern: I followed with great interest what the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) said about the difficulty of forecasting what funds would be required to fund pensions. Not only do I have sympathy with what he said, but I agree with virtually every word that he said. The only exception was the current salaries that are now paid to Members of this House. Otherwise, what he said seemed to be accurate.
  It seems to me that the purpose of the new clause is to have a regular review, I think on a three-year basis, to see what the valuation of the fund is at any one time and, if necessary, to add to the fund if circumstances demand or, if there is a substantial surplus, to return such part of the surplus as may be required. In replying to the right hon. Member for Barrow-in-Furness (Mr. Booth), my right hon. Friend put the position very clearly. It is that the Government will set aside a certain sum annually which will account for the deficiency in the valuation which the Actuary has placed upon the historic obligations of the fund.
  When the Public Accounts Committee, of which I have been a member for some time, first looked at this matter in 1976, the deficit on the fund stood at £660 million. At the time we were told that the Government would do something

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  about it, and would pay large sums of money over to the British Rail pension fund. However, for one reason or another, which is understandable, those sums were not paid. As my right hon. Friend rightly said, that figure now amounts to £1¼ billion. That lends strength to the arguments of the hon. Member for Holborn and St. Pancras, South about the great difficulty in assessing what those obligations might be and what they will amount to. My hon. Friend the Parliamentary Secretary, in replying to the debate, will say whether there is to be a limit of £52 million, in real terms, in each year or any limit at all on what the Government propose to make available in paying off the unfunded proportion of the fund.
  I have what are generally called unsound views about funding in the public sector. I believe that I am regarded otherwise as a sound money man and a convinced monetarist. But a problem arises by the very nature of public sector pensions. They are schemes that aim to provide an index-linked pension. Such an index-linked pension is not available in the private sector, so far as I am aware. The comparison that might properly be drawn between one funded scheme and another in the public sector and the private sector is therefore impossible to draw.
  It is one thing to make an actuarial valuation of future liabilities with a funded scheme where one can forecast, perhaps inaccurately, what future pensions might have to be. It is quite another to have to make a forecast of future wage increases, because the pension depends on the salary at retirement and on future cost of living increases which arise because of the index-linking provision. How can anyone tell, 20 or 30 years away, what the cost of living will be at that time? I respectfully suggest to my right hon. and hon Friends that such an attempt is impossible in the present state of knowledge or in any reasonable course of prediction. I do not think that it is possible.
  I have already stated that I think that the difficulty arises due to the index-linking commitment. One way out might be to say that if there is to be a funded scheme it must be on all fours with all funded schemes in the private sector. If
  1262
  left on its own, there should not be an index-linking provision. It should be the same as the others. I concede that this is a real argument. I do not think, however, that it is the position that the Opposition or those employed in British Rail would prefer to see. I believe that the employees value the index-linking provision and regard themselves as public servants in the same way as civil servants do. That is a natural proposition.
  I should like to explain why I believe that the Government's proposals, if I understand them correctly, will prove ineffective as time goes on and why hon. Members were right to say that substantial increases will have to be given to the rail fund if this commitment is to be carried out.
  The real rate of return—the essential element of the matter—has been unsatisfactory for many years. The average rate of return on a typical fund—and I know that there are difficulties in establishing what a typical fund is—has, for the last 15 years, been 8 per cent. But the increase in salaries over the same period has been 10·9 per cent. There has been a negative rate of return over the last 15 years of some 2 per cent. Over the last 50 years, for each of the last five decades, taking each separately, there has been a negative real rate of return on each of those periods.
  The Government Actuary, when asked to report to the Wilson committee on what would be the position if a negative rate of return was achieved on a fund of investments, said that the contribution rate required to support the benefits of a new entrant to a scheme providing final salary pensions protected against inflation after award, assuming a negative rate of 2 per cent., which is what we have seen over the past 15 years, would be 50 per cent. of salary. He added:
  "Employers would increasingly find it impossible to pay the rates of contribution recommended by actuaries and they would certainly doubt the wisdom of paying contributions to a fund where those contributions would wither away in real terms."
  I ask the House to note that the Government Actuary was talking about an index-linked fund of the kind that British Rail runs. I indicate the difficulty of the real rate of return because the nature of the capital market means that the problem is likely to get worse and not

  1263
  better. This is because of the weight of the funds themselves. Year after year there is a substantial increase in investment by institutions on the Stock Exchange, in property, in equities, and in gilt-edged securities.
  In each of those areas, if the public sector fund has to be financed by the taxpayer, an extraordinary position arises. I invite the House to consider the gilt-edged market today. Where there is a deficit in a public sector fund, the deficit has to be made up by the taxpayer. If that money is invested in gilt-edged securities, the interest itself has to be paid by the taxpayer. So the taxpayer is paying both the contributions to the pension fund and the interest on the loan that arises from the investment. It is an extraordinary circular course.
  In the equity market, a great deal depends on what capital appreciation is possible within any fund of investments. It is no secret that capital appreciation has been hard to come by, in nominal terms, let alone in real terms, on the Stock Exchange in recent times. I say recent times. It would perhaps be more appropriate to say over the last 15 years or so. There remains the property market—
  Mr. Cohen: Does the hon. Gentleman agree that investment in the public or the private sector, and expenditure in both, are paid for by the public?
  Mr. Hordern: No, I do not agree. Investment by the private sector comes out of private savings. The same cannot be said of public sector contributions, except as forced savings. I do not agree with the hon. Gentleman. I was referring to property investment.
  The average yield on properties at the moment is 5 per cent. Let us suppose that when a fund is in deficit the managers invest in property. At the end of the year they come back to the trustees and explain that there is a deficit on the fund that they want the trustees to make up. Five per cent. does not represent anything like the increase in salaries or the increase in pensions that the fund has to pay for. More money is passed across to the trustees and invested in other property still yielding 5 per cent. It will be argued that the rate of return on property in-
  1264
  volves not only the rents but the capital appreciation. But pension funds and other institutions are competing with each other for blocks of offices and other blocks of property, the valuation of which is based on a random market competition for assets by tax-free funds.
  The House will remember what happened in 1972, 1973 and 1974 when there was a property collapse. Many pension funds found that the value of their investment had been halved, and sometimes gone down by two-thirds.
  Mr. Walter Johnson: On a point of order, Mr. Deputy Speaker. What have the hon. Gentleman's remarks to do with the clause under discussion?
  Mr. Deputy Speaker (Mr. Richard Crawshaw): I understand the hon. Gentleman's remarks to be pertinent to what is being discussed.
  Mr. Hordern: I should hope so. I am sorry that the hon. Gentleman has not been following what I say. I shall try to speak more slowly. It is difficult to achieve a real rate of return on investments by any fund, least of all a fund where the commitment is to provide a pension that is index linked. I would say that it is virtually impossible to do so. The hon. Gentleman may disagree. In the case of the British Rail pension fund, of which the hon. Gentleman probably has some knowledge due to his past experience, the position reached a height of absurdity. I am glad to say that the position has now been changed.
  The position was reached where the British Rail pension fund was investing in works of art, achieving no rate of return of any kind. At one stage that pension fund was competing with the British museum and others for the bottom half of a silver gilt candlestick. As it happened, British Rail won and got the candlestick. But we had one lot of taxpayers' money competing with another lot of taxpayers' money. The amount of money that was devoted by that fund to works of art at one stage actually exceeded the amount of money that the taxpayer gives to the Tate gallery, the National gallery and the British museum. That was the absurdity of the situation.
  8 pm
  Mr. Cowans: I am following the hon. Member's argument very closely, and I

  1265
  agree with a lot of what he says. However, I must correct him on one point. He talks about the British Rail pension fund speculating in works of art with taxpayers' money. That pension fund is contributed and it does not consist of taxpayers' money.
  Mr. Hordern: I am afraid that if the hon. Member looks at the forecast of public expenditure year after year he will see that this House has voted sums of money for the British Rail pension fund. I do not have the figures with me, but I assure the hon. Member that that is the case.
  I wish to draw attention to one aspect of that arrangement. One interesting thing about the British Rail pension fund's works of art is that many people ask where these pictures are. Many of them are hanging in the City Club—the bastion of the City itself—where they are not on view to the public at all.
  Finally, I turn to the general economic effect on pension funds, and particularly those of nationalised industries and local authorities—
  Mr. Spriggs: The Railways Board does not make a contribution to the male wages grades pension fund. Any investment that it has made is not as a result of grants from the Government to British Rail, but comes from the wages of the railway workers themselves.
  Mr. Hordern: I am sorry, but I did not fully grasp the hon. Member's point. My right hon. Friend the Minister says that he is wrong anyway. I assure the hon. Member that the taxpayer has made a continuing contribution to British Rail's pension fund for some years, and obviously will do so for many years to come.
  I wish to draw the attention of the House to the general economic effect of paying contributions to nationalised industries' pension funds in this way. The Government Actuary says that if all the funds in the nationalised industries and local authorities were frozen as of tomorrow and pensions were paid, index-linked as they arose, there would be a saving on the public sector borrowing requirement of £2,000 million a year. I believe that that is a significant figure, and it is worth having. If it were announced in the Budget tomorrow that nationalised industries pension funds
  1266
  would be frozen and that all future payments and obligations would be made on a "pay-as-you-go" basis, that would give an immense saving.
  I commend that argument to the right hon. Member for Barrow-in-Furness. I noticed in Committee that he had not definitely made up his mind about whether these pensions should be on a "pay-as-you-go" basis or on funded schemes. I ask the House to distinguish between the real nature of the guarantee for a person working in the nationalised industries, the local authorities or the Civil Service. In the Civil Service, pensions are "pay-as-you-go" and here seems to be no reason, in any proper sense, why pensions in the nationalised industries and local authorities should not similarly be so paid.
  What is the effect of this extra money going into the pension funds? I shall give some idea of the growth. Institutions account now for some 60 per cent. of the entire turnover of the Stock Exchange. The nationalised industries invested £184 million in property in 1974, and £386 million in 1978. That amount will grow every year. Substantial funds are given by the taxpayer to these pension funds, which will be devoted to property—not only property in this country, but abroad as well. Those property values will depend on considerable increases in rents.
  Let us take a typical City development. It may be funded by a nationalised industry pension fund, and it might have first-class tenants such as Marks and Spencer or Boots. The success of that scheme will depend entirely on substantial rent increases which those companies will have to pay. Of course they will pass these increases straight on to their customers. This money could be saved to the tune of £2,000 million a year if we simply paid the pensions on a "pay-as-you-go" basis.
  I have been in the investment business all my working life and I should like to feel that there was a real rate of return on investment in the future, but I fear that that will not be the case. It is my belief that, having regard to the experience of the last 15 years, even on an ordinary funded pension scheme where there is no commitment for an

  1267
  index-linked pension, it will be very difficult to pay satisfactory pensions in future. In the case of a public sector pension scheme where the pensions are guaranteed to be index-linked, I believe that such a commitment will be almost impossible to bear, and will be borne only with considerable exertion and distortion of the market, and considerable waste of money from the public purse.
  Mr. Walter Johnson: I shall not detain the House for long because I realise that we have a long way to go before the Bill receives its Third Reading this evening, or perhaps tomorrow morning. It is clear to me that the hon. Member for Horsham and Crawley (Mr. Hordern) knows nothing about the historic background of the railway pension scheme. Perhaps hon. Members do not realise that in 1948, when the railways were nationalised, the assets of the railway superannuation fund were taken over by the Government of the day—I am sorry to say that it was a Labour Government—on the understanding that pensions would be guaranteed, and that 4 per cent. would be paid as a result of the change in funding.
  Between 1948 and 1974 no proper funding took place at all and, as a result, the superannuation funds of British Rail were unfairly treated by successive Governments. Governments did not play the game with these pension funds until 1974, when it was decided to make good the massive deficit that had been built up over the period from 1948. We were talking in terms of £1,000 million by the end of last year.
  Had that money been properly invested, as it could have been during that period, we would not have any financial problem at all. Even with the 1974 Act, in time and with proper funding the pension fund would have been able to operate properly.
  I give an example. London Transport was allowed to stay out of this situation although it was taken under the umbrella of the British Transport Commission. London Transport—and its pension fund—was permitted to stay outside, and as a result of proper wide-ranging investment over the years, apart
  1268
  from two or three years when there was rapid inflation of the order of 27 per cent. to 30 per cent. it was able to pay its pensions out of the return on its investments.
  The point I am trying to make is that successive Governments have not played fair with British Rail funds. If they had we would not be in the present situation. I am convinced that, because the difficulties have never been understood by the House, we face problems today. I cannot for the life of me understand what the Government find so difficult about accepting the clause. I believe that it will provide the safeguards which are essential if we are to get proper consideration by the Government Actuary year by year so that this issue can be dealt with fairly.
  One of the difficulties for any actuary is to estimate the level of inflation in the following year. If we look at what has happened we will see that as a result of the Pensions (Increase) Act 1971 astronomical amounts have been passed on in the form of supplementation justified by the Government of the day—both the present Government and the previous Government. I believe that to be right. The hon. Member for Horsham and Crawley said that he thought this was grossly unfair. But does he understand that the British Rail Pension Fund and other pension funds in nationalised industries are being paid for by increased contributions? That is the difference. Had those pension funds been able to invest money which was taken from the funds there would be no problem as regards paying out pensions.
  Mr. Hordern: I must have misled the hon. Member, and I apologise for that. Clearly he has not grasped the drift of my argument. I fully agree that successive Governments have not handed over the money that should have been handed over, but my remarks concentrated on the fact that, even had money been passed over, a deficit would have emerged just as it has in virtually every private sector scheme. I ask the hon. Member to look at the public expenditure White Paper which, year after year, shows subventions to the British Rail pension fund.
  Mr. Johnson: Of course. That had to be done because the money was not funded. Surely the hon. Gentleman

  1269
  understands that. The Parliamentary Secretary knows about this because he sat on the Statutory Instruments Committee with me for two or three years when we dealt with it. It was something that had to be done because a guarantee had been given under the 1974 Act. Clearly that is the way in which we should proceed now, and not have the hotch-potch where an actuary determines just how much money is required to keep the fund going and to pay out any deficit.
  From the response I received from the Minister to a question I put earlier I am pleased to know that supplementation has now been understood and guaranteed for those who are on pension. When the Minister replies I should like him to reiterate that that is where the Government stand. Among my many jobs I happen to be the honorary President of the British Transport Superannuitants Federation.
  I believe that we have made a case why the House should support the new clause. I am surprised that the Government cannot see their way to accept it. It would provide a sensible approach to the problem and I believe that it would be supported by the House. I hope that the Minister will explain why he feels that he cannot accept it.
  8.15 pm
  Mr. Kenneth Clarke: I begin by touching on what lay behind the interventions made by the hon. Members for Derby, South (Mr. Johnson) and for Leeds, South-East (Mr. Cohen). They were not engaged in the Committee proceedings, but both of them are well-known for their interest in railway matters. Both of them were plainly concerned about the position of pensioners and beneficiaries under the various schemes. That has concerned a number of people.
  There is nothing in the Bill that affects the position of members of these pension schemes. Their rights and putative rights to pension depend on the rules of the pension schemes to which they belong supplemented by the practices which have sprung up in the area of railway pensions as regards the supplementation schemes.
  What we are concerned about in the Bill are the technicalities of how those pension obligations should be met. Essentially it is a conflict between two
  1270
  giant bodies with the resources between them to meet these obligations in one way or another. On the one hand, there is the British Railways Board assisted by the managers of their fund and on the other hand the taxpayer. We are trying to make sense of a historic division of liability between them on a particular aspect of British Railways pension funds.
  The battle is between the actuaries on both sides, the fund managers of the board and the Treasury, about who picks up how much of the bill towards these pension entitlements. The position of the members of the schemes remains as it was, determined by the rules and practices that have been accepted as of right.
  Who is actually liable to those pensioners? The liability to pensioners lies with the British Railways Board. It always has. It is the board's scheme. The board is the employer and the Government are no more stepping into its shoes in the Bill than the previous Government did in the 1974 Act which set up these arrangements. We are dealing with a Government involvement in assisting the Board with those obligations.
  The hon. Member for Derby, South, whose knowledge of these matters is considerable, said that it is a matter of history. Unfortunately, what we are talking about is constantly described as the historic obligations of the pension fund, which in railway terms turns out to be prior to 1 January 1975. That is historic enough to be going on with.
  The current beneficiaries expecting their pensions in years to come are in a funded scheme which is the responsibility of the British Railways Board and to which the taxpayer has no obligation whatever. We are dealing with the pre-1975 obligations. How did the Government become immersed in making a contribution to this Fund? I cannot remember, but I believe that it goes back even further than the hon. Member for Derby, South indicated. Eventually we shall be adding to schedule 8 the South-Eastern and Chatham Railway Motormen's Fund. That was a scheme we missed. It is a pre-1923 company. It is not just Government, but railway management and companies over the years which have adopted a quite bizarre view of how they should fund their pensions. There is a difference between myself and

  1271
  my hon. Friend the member for Horsham and Crawley (Mr. Hordern) on the funding of pensions. But neither of us can approve of what went on in the railways before 1974. The railways used to invest in their own companies and in time-affixed interest stock. The Government used to make notional interest payments on moneys they took from their own pocket. In 1974 the railways wound the scheme up, having agreed meanwhile to go on to fully-indexed final salary pension schemes, with obligations which they had no prospect whatever of meeting.
  In 1974 British Railways were faced with massive pension obligations which they could not meet. With respect to my hon. Friend the Member for Horsham and Crawley, one cannot draw analogies with other nationalised industries. I know of no equivalent of the unbelievable mess that the Government tried to sort out in 1974.
  Mr. Cohen: Why did the Minister decide to draw a demarcation line between the board of British Railways and the taxpayer, or those who fund that board? In the opinion of most people, British Railways exist as a result of their relationship with the taxpayer. It is ludicrous to try to draw such a demarcation.
  Mr. Clarke: The Government are anxious to draw clear distinctions between British Railways—a nationalised commercial business providing transport services—and the obligations of the taxpayer. Contributions to the funding of railwaymen's pensions come from employees' contributions and from the revenue of the board, as employer. That will apply as long as British Railways continue to provide index-linked pensions. The taxpayer does not make a contribution to current service pensions. There is no reason why the general public should chip in towards the cost of pensions. That cost should be met by the board, as employer, and by its employees.
  In 1974 it was decided that unfunded historic obligations should be funded. The board needed a financial reconstruction in order to get rid of its impossible debts. It was decided to try to convert those unfunded obligations into a funded scheme. Even then, the sums involved
  1272
  were massive. A fund could not be set up overnight. It was decided to fund it in instalments. Many of those instalments remain to be paid. As my hon. Friend has pointed out, by 1976 the Public Accounts Committee began to look at the size of the bills. Inflation took instalments steadily upwards. The Committee said that problems were involved in funding those pensions. It pointed out that one had started from nothing and that one was trying to build up a fund at a time when inflation and salaries were racing away. It pointed out that we were running up a down escalator at an impossible rate. It said that it would be impossible to finance that fund without a colossal cost to the Treasury.
  In response to the Public Accounts Committee, the Bill was introduced. We must save the taxpayer from the huge contributions that will be required by the pension fund during the next few years. However, we should meet the Government's obligations under the 1974 Act in a different way. We are taking over the situation part way through the 1974 Act settlement. It is not possible to fund. It cannot be done other than at an impossible cost to the Treasury and to the public. We shall therefore treat them on the basis that they are partly funded.
  We have got part way towards funding these pension obligations. I cannot say that we have got half way, because the clause seeks to determine that. A proportion is now funded. The funds must therefore look after that proportion. That is what they are there for. That is why the taxpayer has given his money. God bless all who sail in them. Funds are responsible for their proportion.
  The taxpayer will continue to accept liability for the unfunded proportion. He will no longer do so in a foolish and expensive attempt to fund it, but on an emerging cost basis as those pensions become payable. That is the rationale of the Bill. It will save £70 million in the first year of operation. It will save countless hundreds and millions of pounds thereafter.
  I realise that the Opposition would not choose this machinery. They say that they want regular reviews of the funded and unfunded proportion, according to the constant revisions of actuaries as assumptions emerge. Our reason for

  1273
  resisting that is simple. The Opposition seek to change the whole nature of the settlement made in the 1974 Act. They demand that the Government take on an obligation for all pensions, using the taxpayers' money. They want us to cover all eventualities and to relieve the fund of its basic obligations.
  Our policy is to repeat the arrangements made in the 1974 Act; no more, no less. We accept that the Government and the taxpayer have continuing obligations under that 1974 settlement. However, there is no reason why they should be enlarged, made more flexible or extended as the Opposition have urged. We do not see why this particular pension fund should be given further guarantees—in the form of regular revisions—against the uncertainties that face any pension fund in our present economic circumstances.
  Mr. Cowans: I do not believe that the hon. Gentleman has read the clause. It seeks only that there should be a revaluation where it is proved that the Minister's or the actuarial forecasts are invalid. That is not what the Minister is saying. He is saying that it will be for ever and a day.
  Mr. Clarke: The hon. Gentleman helpfully leads me on to the points made by my hon. Friend the Member for Horsham and Crawley and the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) about how actuarial assessments are made, and so on.
  In the ordinary case, an employer with a contributory pension fund for his employees has actuaries to advise him on the present level of funding. They have to make long-term assumptions about movements, final salaries, inflation and so on. They certify the level of the fund each year. They have to vary those assumptions regularly, because no assessments are ever right. If the assessments turn to the good, there is a surplus which is devoted to improving benefits. If they turn to the bad and the surplus goes down, they look for increased contributions or even a lump sum topping-up from the employer. That is the obligation that every employer has to accept.
  British Railways have that system for their in-service pensions for those who are contributing now. We are not relieving them of that obligation. To do so
  1274
  would be to subsidise labour costs in a way that no other business can be subsidised. We do not intend to do that.
  My hon. Friend the Member for Horsham and Crawley has great knowledge of these matters and great erudition in financial matters generally. He argues that it is not even possible to have index-linked pensions. I do not accept that and neither do others with more expertise than myself. It is an opinion that I have heard previously and it is at the root of the argument about funded pensions in the public sector and index-linked pensions.
  Many actuaries, however, believe that they can do it. At present about a dozen actuarial firms are engaged in issuing certificates about the funding of pensions that carry index-linked obligations. They are playing with a lot of variables, and assumptions may vary frequently. Nevertheless, they can do it. They have to respond to changes in their assumptions in the same way they have to in other pension schemes.
  I am told that some actuaries find easier to allow for index-linking than for final salary arrangements in schemes that are much more variable and difficult to estimate. There are people around who do not know their own salary, like the hon. Member for Holborn and St. Pancras, South.
  Mr. Walter Johnson: The hon. Gentleman is forgetting the 26 years. Had the pension fund been taken over and properly funded, there would be no problem for the taxpayer. The Government and the country are not doing the British Railways pension fund any favour. The money is owed to the pension fund.
  Mr. Clarke: We are doing no more nor less than the previous Government in 1974. Our method is different.
  I agree with the hon. Member for Derby, South (Mr. Johnson). I am an advocate of funded pension schemes and always have been. We are dealing with the consequences of failing to fund inflation-proofed final salary pension schemes.
  My hon. Friend the Member for Horsham and Crawley is right in pointing out that in the short term, if we ceased to fund the current contributory and index-linked pensions, there would be a massive saving in the PSBR. We do not have

  1275
  time to enlarge that argument. However, by doing so we defer to later generations or, in the case of British Railways, business managers in 20 years' time, the problem of finding from revenue the necessary resources for an incalculable quantity of liabilities that will then exist, based on what inflation has done to final salaries. Although my hon. Friend can probably counter it, I believe that savings made now by ceasing to fund pension schemes in the public sector will be short-term. The long-term cost and difficulties may be enormous. Meanwhile we will no longer top up but will adhere to the settlement made in 1974.
  We will do a once-and-for all actuarial calculation of what the funded and unfunded proportion is of each scheme. The 1974 Act was similarly based on a once-and-for-all actuarial assumption. Assumptions were made in 1979 and there was no provision for revision and the final payments of last instalments were to be made by 1986. If we had not introduced this Bill, the 1974 Act would still be in operation, there would be no revision of actuarial assumptions and the risks to the fund under the 1974 Act would have been much greater.
  8.30 pm
  If the actuarial assumptions had been found to be wrong by 1986 there would have been a large lump sum deficiency to be made up by British Rail. If we are wrong in our once-and-for-all calculation on this occasion it will become clear, year in and year out, that the proportions will be to the advantage of one party or the other. Sometimes British Rail may win and at other times the Treasury may win. The risks in that situation will be much more confined.
  The core of the argument is that not only are we not differing from the 1974 assumptions but we are relying on the same justification as that relied upon by the then Government. The reason why we do not intend to review and are not behaving as employers, where our actuaries will come along every three or six years—or whenever the new clauses suggests—and revise our assumptions so that we top up depending on the position, is that it is not our pension scheme. It is the British Rail pension scheme.
  1276
  We are taking over a 1974 financial reconstruction, when an agreement was entered into to put the scheme back on its feet to enable it to face up to its obligations. That was a once-and-for-all financial reconstruction. What will happen to final salaries as inflation progresses is within the control of the board just as what happens to basic pay rates and to the consolidation of overtime and bonuses is a matter for the board.
  We wish to adhere to a once-and-for-all settlement in the style of the 1974 Act. We cannot enter into the complications of three-yearly discussions between the fund managers and the Treasury. No matter what period is chosen, we cannot enter into a continuing dialogue year after year about actuarial assumptions and constant adjustments and readjustments of the Government's liability.
  The taxpayer's liability is fixed at £52 million at present prices for all payments throughout the years until the last beneficiaries have gone and all obligations are extinguished. What that means in money terms nobody knows. Anyone who hazarded a guess would be guessing at the rate of inflation over the next 20 years. The taxpayer's obligation is therefore limited and we are resisting pressure continually to review it. We all know in which direction that pressure will push us if the fund gets into further difficulties.
  That figure of £52 million is based on proper actuarial assumptions made by technical experts and they cover the next 20 years. The Government Actuary and the fund's actuaries are accustomed to making those assumptions every time they are asked to value the obligation of the fund to meet any pension liability.
  Mr. Booth: I cannot conceal that I am appalled at the Government's response to what was—putting it at its highest—a modest compromise proposal given acceptance of the Government's primary intention. The Minister and the Parliamentary Secretary have said that the provisions made by the historic railway pension fund under the terms of the Bill are as good as those made under the 1974 Act because the Government say that they are. The Government ignore the fact that the 1974 Act provisions for historic railway pensions were agreed with those who run the funds. The amount of

  1277
  funding was worked out and there was agreement. The Government's proposal will not be agreed; it will be imposed by the Minister, subject to Treasury approval, and rammed down their throats. Those who run the pension funds will be told to bear a certain proportion with a specified amount of funding and that the rest will be on a "pay-as-you-go basis".
  The Government argument is that people running funded pension schemes will have to face the results of assumptions made by actuaries today which may turn out to be wrong in 5 or 20 years' time. The Minister says that the British Rail pension fund managers must be put in the same position.
  British Rail pension managers are in charge of a different set of circumstances in several important ways. Those who run other funded pension schemes do not have to face a Tory Government who say "Whether you like it or not, funds guaranteed by legislation will be cut off and a certain proportion of the scheme will cease to operate on a funded basis".
  Mr. Hordern: I have sympathy with the problem. Is the right hon. Member really saying that in the event of the Labour Party being returned at the last election, it would have paid £1,250 million until 1986?
  Mr. Booth: I am not saying that. If a Labour Government had been returned at the last general election they would have either stood by the 1974 provisions and regarded themselves as being under a legal and moral obligation to pay to the trustees of the railways pension fund the amount promised in the 1974 Act or they would have gone to the trustees to see if they could agree on a different basis. A Labour Government would have asked the trustees to agree that if the 1974 Act provisions were carried out there would be an immediate call on public funds with no certainty of the pension fund being more than adequately or insufficiently funded.
  I do not say that a Labour Government would have said that they must use the 1974 Act and nothing but the 1974 Act—
  "till death us do part".
  1278
  They would have tried to find an agreed basis. A Labour Government would not have sought to impose an entirely different basis without consent.
  The hon. Member for Horsham and Crawley (Mr. Hordern) was a member of the Public Accounts Committee. That Committee did not suggest that its recommendation should be applied by any Government in such a way as to disadvantage those who run pension funds.
  No other body which runs a funded pension scheme will be called upon to reconstruct its investment pattern because guarantees have been totally changed. The managers of the British Rail historic pension fund have invested money on the assumption that they must produce returns from that investment from 1986 when the funding was to be cut off. They invested on that basis. Now they must change all that. There will be no compensation for difficulties or losses.
  If British Rail is unable to pay for the funded proportion in 1986, or at some later date, a limited number of options will face it. First, it can possibly seek to put the burden on rail fares and to say that the railway passenger can meet its historic pension obligations. It could ask those in existing British Rail pension schemes "Will you make a contribution by paying more into the present pension schemes?" in the hope of funding something else. It may be difficult to get that agreed. However, it is one of the theoretical possibilities. It could return to the House of Commons and say "You passed legislation in 1980 which changed the basis for 1984. A proportion has been fixed by a Minister, whom you authorised, which turned out to be wrong".
  In any of those circumstances it cannot lie in the mouths of any Ministers in a Conservative Government to say that they have not, in this Bill, put at risk guarantees and expectations on the part of pensioners and railway funds. I therefore call upon the House to vote for this modest amendment, which would do nothing more than to require in five years' time, if assumptions made on funding a proportion were wrong, that the matter should then be put right.
  Question put, That the clause be read a Second time:—
  The House divided: Ayes 225, Noes 283.

  Division No. 244]

  AYES

  [8.42 pm

  Abse, Leo

  Fraser, John (Lambeth, Norwood)

  Oakes, Rt Hon Gordon

  Adams, Allen

  Garrett, John (Norwich S)

  O'Neill, Martin

  Allaun, Frank

  Garrett, W. E. (Wallsend)

  Orme, Rt Hon Stanley

  Alton, David

  George, Bruce

  Palmer, Arthur

  Anderson, Donald

  Gilbert, Rt Hon Dr John

  Park, George

  Archer, Rt Hon Peter

  Ginsburg, David

  Parker, John

  Armstrong, Rt Hon Ernest

  Gourlay, Harry

  Pavitt, Laurie

  Ashley, Rt Hon Jack

  Graham, Ted

  Pendry, Tom

  Ashton, Joe

  Grant, George (Morpeth)

  Penhaligon, David

  Atkinson, Norman (H'gey, Tott'ham)

  Grant, John (Islington C)

  Powell, Raymond (Ogmore)

  Barnett, Guy (Greenwich)

  Hamilton, James (Bothwell)

  Prescott, John

  Barnett, Rt Hon Joel (Heywood)

  Hamilton, W. W. (Central Fife)

  Race, Reg

  Benn, Rt Hon Anthony Wedgwood

  Harrison, Rt Hon Walter

  Radlce, Giles

  Bernett, Andrew (Stockport N)

  Haynes, Frank

  Rees, Rt Hon Merlyn (Leeds South)

  Bidwell, Sydney

  Heffer, Eric S.

  Richardson, Jo

  Booth, Rt Hon Albert

  Hogg, Norman (E Dunbartonshire)

  Roberts, Albert (Normanton)

  Bottomley, Rt Hon Arthur (M'brough)

  Home Robertson, John

  Roberts, Allan (Bootle)

  Bradley, Tom

  Homewood, William

  Roberts, Gwilym (Cannock)

  Bray, Dr Jeremy

  Hooley, Frank

  Robertson, George

  Brown, Hugh D. (Proven)

  Horam, John

  Robinson, Geoffrey (Coventry NW)

  Brown, Ronald W. (Hackney S)

  Howells, Geraint

  Rodgers, Rt Hon William

  Brown, Ron (Edinburgh, Leith)

  Huckfield, Les

  Rooker, J. W.

  Buchan, Norman

  Hudson Davies, Gwilym Ednyfed

  Ross, Ernest (Dundee West)

  Callaghan, Rt Hon J. (Cardiff SE)

  Hughes, Mark (Durham)

  Rowlands,Ted

  Callaghan, Jim (Middleton & P)

  Hughes, Robert (Aberdeen North)

  Ryman, John

  Campbell, Ian

  Hughes, Roy (Newport)

  Sandelson, Neville

  Campbell-Savours, Dale

  Janner, Hon Greville

  Sever, John

  Carmichael, Neil

  Jay, Rt Hon Douglas

  Sheerman, Barry

  Cartwright, John

  John, Brynmor

  Shore, Rt Hon Peter (Step and Pop)

  Clark, Dr David (South Shields)

  Johnson, James (Hull West)

  Silkln, Rt Hon John (Deptford)

  Cocks, Rt Hon Michael (Bristol S)

  Johnson, Walter (Derby South)

  Silkin, Rt Hon S. C. (Dulwich)

  Cohen, Stanley

  Johnston, Russell (Inverness)

  Silverman, Julius

  Concannon, Rt Hon J. D.

  Jones, Rt Hon Alec (Rhondda)

  Smith, Rt Hon J. (North Lanarkshire)

  Conlan, Bernard

  Jones, Dan (Burnley)

  Snape, Peter

  Cowans, Harry

  Kaufman, Rt Hon Gerald

  Soley, Clive

  Spearing, Nigel

  Crowther, J. S.

  Kerr, Russell

  Spriggs, Leslie

  Cryer, Bob

  Kilroy-Sllk, Robert

  Steel, Rt Hon David

  Cunliffe, Lawrence

  Lambie, David

  Stewart Rt Hon Donald (W Isles)

  Cunningham, George (Islington S)

  Lamborn, Harry

  Stoddart, David

  Cunningham, Dr John (Whitehaven)

  Leadbitter, Ted

  Stott, Roger

  Dalyell, Tarn

  Lelghton, Ronald

  Strang, Gavin

  Davidson, Arthur

  Lestor, Miss Joan (Eton & Slough)

  Straw, Jack

  Davies, Rt Hon Denzil (Lianelli)

  Lewis, Ron (Carlisle)

  Summerskill, Hon Dr Shirley

  Davies, Ifor (Gower)

  Litherland, Robert

  Taylor, Mrs Ann (Bolton West)

  Davis, Clinton (Hackney Central)

  Lofthouse, Geoffrey

  Thomas, Jeffrey (Abertillery)

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

  Lyon, Alexander (York)

  Thomas, Mike (Newcastle East)

  Deakins, Eric

  Lyons, Edward (Bradford West)

  Thomas, Dr Roger (Carmarthen)

  Dean, Joseph (Leeds West)

  McCartney, Hugh

  Thorne, Stan (Preston South)

  Dempsey, James

  McDonald, Dr Oonagh

  Tilley, John

  Dewar, Donald

  McGuire, Michael (Ince)

  Tinn, James

  Dixon, Donald

  McKay, Allen (Penistone)

  Torney, Tom

  Dobson, Frank

  McKelvey, William

  Varley, Rt Hon Eric G.

  Douglas, Dick

  MacKenzie, Rt Hon Gregor

  Wainwright, Richard (Colne Valley)

  Douglas-Mann, Bruce

  Maclennan, Robert

  Walker, Rt Hon Harold (Doncaster)

  Dubs, Alfred

  McMillan, Tom (Glasgow, Central)

  Watkins, David

  Dunnett, Jack

  McNaily, Thomas

  Weetch, Ken

  Dunwoody, Mrs Gwyneth

  Magee, Bryan

  Wellbeloved, James

  Eadie, Alex

  Marks, Kenneth

  Welsh, Michael

  Eastham, Ken

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

  White, Frank R. (Bury & Radcliffe)

  Edwards, Robert (Wolv SE)

  Marshall, Dr Edmund (Goole)

  White, James (Glasgow, Pollok)

  Ellis, Raymond (NE Derbyshire)

  Marshall, Jim (Leicester South)

  Whitehead, Phillip

  Ellis, Tom (Wrexham)

  Martin, Michael (Gl'gow, Springb'rn)

  Whitlock, William

  Ennals, Rt Hon David

  Maxton, John

  Wigley, Dafydd

  Evans, loan (Aberdare)

  Maynard, Miss Joan

  Willey, Rt Hon Frederick

  Evans, John (Newton)

  Meacher, Michael

  Williams, Rt Hon Alan (Swansea W)

  Ewing, Harry

  Mellish, Rt Hon Robert

  Williams, Sir Thomas (Warrington)

  Field, Frank

  Mikardo, Ian

  Wilson, Rt Hon Sir Harold (Huylon)

  Fitch, Alan

  Millan, Rt Hon Bruce

  Wilson, William (Coventry SE)

  Flannery, Martin

  Miller, Dr M. S. (East Kilbride)

  Winnick, David

  Fletcher, L. R. (Ilkeston)

  Mitchell, Austin (Grimsby)

  Woolmer, Kenneth

  Fletcher, Ted (Darlington)

  Mitchell, R. C. (Soton, Itchen)

  Wright, Sheila

  Foot, Rt Hon Michael

  Morris, Rt Hon Alfred (Wythenshawe)

  Young, David (Bolton East)

  Ford, Ben

  Morris, Rt Hon Charles (Openshaw)

  Forrester, John

  Morris, Rt Hon John (Aberavon)

  TELLERS FOR THE AYES:

  Foster, Derek

  Moyle, Rl Hon Roland

  Mr. Donald Coleman and

  Foulkes, George

  Newens, Stanley

  Mr, George Morton.

  NOES

  Adley, Robert

  Fowler, Rt Hon Norman

  Meyer, Sir Anthony

  Altken, Jonathan

  Fox, Marcus

  Miller, Hal (Bromsgrove & Redditchi

  Alexander, Richard

  Fraser, Rt Hon H. (Stafford & St)

  Mills, Iain (Meriden)

  Ancram, Michael

  Fraser, Peter (South Angus)

  Mills, Peter (West Devon)

  Arnold, Tom

  Fry, Peter

  Mitchell, David (Basingstoke)

  Aspinwall, Jack

  Gardiner, George (Reigate)

  Moate, Roger

  Atkins, Robert (Preston North)

  Gardner, Edward (South Fylde)

  Moiyneaux, James

  Atkinson, David (B'mouth, East)

  Garel-Jones, Tristan

  Montgomery, Fergus

  Baker, Kenneth (St. Marylebone)

  Goodhew, Victor

  Morgan, Geraint

  Baker, Nicholas (North Dorset)

  Gorst, John

  Morris, Michael (Northampton, 3th)

  Beaumont-Dark, Anthony

  Gow, Ian

  Morrison, Hon Charles (Devizes)

  Bell, Sir Ronald

  Gower, Sir Raymond

  Morrison, Hon Peter (City of Chester)

  Bendall, Vivian

  Grant, Anthony (Harrow C)

  Mudd, David

  Benyon, Thomas (Abingdon)

  Gray, Hamish

  Murphy, Christopher

  Benyon, W. (Buckingham)

  Greenway, Harry

  Myles, David

  Berry, Hon Anthony

  Grieve, Percy

  Neale, Gerrard

  Best, Keith

  Griffiths, Eldon (Bury St Edmunds)

  Needham, Richard

  Bitten, Rt Hon John

  Griffiths, Peter (Portsmouth N)

  Nelson, Anthony

  Biggs-Davison, John

  Grist, Ian

  Neubert, Michael

  Blackburn, John

  Grylls, Michael

  Newton, Tony

  Blaker, Peter

  Gummer, John Selwyn

  Nott, Rt Hon John

  Body, Richard

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

  Oppenheim, Rt Hon Mrs Sally Osborn, John

  Bonsor, Sir Nicholas

  Hamilton, Michael (Salisbury)

  Osborn, John

  Boscawen, Hon Robert

  Hampson, Dr Keith

  Page, John (Harrow, West)

  Bottomley, Peter (Woolwich Wesl)

  Hannam, John

  Page, Rt Hon Sir R. Graham

  Bowden, Andrew

  Haselhurst, Alan

  Page, Richard (SW Hertfordshire)

  Boyson, Dr Rhodes

  Hastings, Stephen

  Parkinson, Cecil Parrls, Matthew

  Braine, Sir Bernard

  Havers, Rt Hon Sir Michael

  Parris, Matthew

  Bright, Graham

  Hawksley, Warren

  Patten, Christopher (Bath)

  Brinton, Tim

  HeddiG, John

  Patten, John (Oxford)

  Brittan, Leon

  Henderson, Barry

  Pattie, Geoffrey

  Brocklebank-Fowler, Christopher

  Heseltine, Rt Hon Michael

  Pawsey, James

  Brown, Michael (Brigg & Sc'lhorpe)

  Hicks, Robert

  Percival, Sir Ian

  Browne, John (Winchester)

  Higgins, Rt Hon Terence L.

  Pollock, Alexander

  Bruce-Gardyne, John

  Hogg, Hon Douglas (Grantham)

  Porter, George

  Bryan, Sir Paul

  Hooson, Tom

  Powell, Rt Hon J. Enoch(S Down)

  Buchanan-Smith, Hon Allck

  Hordern, Peter

  Prentice, Rt Hon Reg

  Buck, Antony

  Howell, Ralph (North Norfolk)

  Price, David (Eastleigh)

  Budgen, Nick

  Hunt, David (Wirral)

  Prior, Rt Hon James

  Bulmer, Esmond

  Hunt, John (Ravensbourne)

  Proctor, K. Harvey

  Burden, F. A.

  Irving, Charles (Cheltenham)

  Rathbone, Tim

  Butcher John

  Johnson Smith, Geoffrey

  Rees, Peter (Dover and Deal)

  Butler Hon Adam

  Jopling, Rt Hon Michael

  Rees-Davies, W. R.

  Cadbury, Jocelyn

  Joseph, Rt Hon Sir Keith

  Renton, Tim

  Carlisle, John (Luton West)

  Kaberry, Sir Donald

  Rhodes, James, Robert

  Carlisle, Kenneth (Lincoln)

  Kershaw, Anthony

  Rhys Wiliiams, Sir Brandon

  Carlisle, Rt Hon Mark (Runcorn)

  Kimball, Marcus

  Ridley, Hon Nicholas

  Chalker, Mrs Lynda

  King, Rt Hon Tom

  Ridsdale, Juliian

  Chapman, Sydney

  Kitson, Sir Timothy

  Rifkind, Malcolm

  Churchill, W. S.

  Knight, Mrs Jill

  Roberts, Michael (Cardiff NW)

  Clark, Hon Alan (Plymouth, Sutton)

  Knox, David

  Roberts, Wyn (Conway)

  Clark, Sir William (Croydon South)

  Lamont, Norman

  Ross, Wm. (Londonderry)

  Clarke, Kenneth (Rushcliffe)

  Lang,Ian

  Rossi, Hugh

  Clegg, Sir Walter

  Langford-Holt, Sir John

  Rost, Peter

  Colvin, Michael

  Latham, Michael

  Royle, Sir Anthony

  Cope, John

  Lawrence,Ivan

  Sainsbury, Hon Timothy

  Cormack, Patrick

  Lawson, Nigel

  St. John-Stevas, Rt Hon Norman

  Corrie, John

  Lee, John

  Scott, Nicholas

  Costain, A.P.

  Le Marchant, Spencer

  Shaw, Michael (Scarborough)

  Crltchley, Julian

  Lennox-Boyd, Hon Mark

  Shelton, William (Streatham)

  Crouch, David

  Lewis, Kenneth (Rutland)

  Shepherd, Colin (Hereford)

  Dickens, Geoffrey

  Lloyd, Ian (Havant & Waterloo)

  Shepherd, Richard (Aldridge-Br hills)

  Dorrell, Stephen

  Lloyd, Peter (Fareham)

  Shersby, Michael

  Douglas-Hamilton, Lord James

  Loveridge, John

  Silvester, Fred

  Dover, Denshore

  Luce, Richard

  Skeet, T. H. H.

  du Cano, Rt Hon Edward

  Lyell, Nicholas

  Speed, Keith

  Dunn, Robert (Dartford)

  McCrindle, Robert

  Speller, Tony

  Dykes, Hugh

  Macfarlane, Neil

  Spence, John

  Eden, Rt Hon Sir John

  MacKay, John (Argyll)

  Splcer, Michael (S Worcestershire)

  Eggar, Timothy

  McNair-Wllson, Michael (Newbury)

  Sproat, Iain

  Elliott, Sir William

  McNair-Wilson, Patrick (New Forest)

  Squire, Robin

  Emery, Peter

  McQuarrie, Albert

  Stainton, Keith

  Fairbairn, Nicholas

  Madel, David

  Stanbrook, Ivor

  Fairgrieve, Russell

  Major, John

  Stanley, John

  Faith, Mrs Sheila

  Marlow, Tony

  Steen, Anthony

  Farr, John

  Marshall, Michael (Arundel)

  Stevens, Martin

  Fell, Anthony

  Mather, Carol

  Stewart, Ian (Hitchin)

  Fenner, Mrs Peggy

  Maude, Rt Hon Angus

  Stewart, John (East Renfrewshire)

  Finsberg, Geoffrey

  Mawby, Ray

  Stokes, John

  Fisher, Sir Nigel

  Mawhinney, Dr Brian

  Stradllng Thomas, J.

  Fletcher, Alexander (Edinburgh N)

  Maxwell-Hyslop, Robin

  Tapsell, Peter

  Fookes, Miss Janet

  Mayhew, Patrick

  Taylor, Teddy (Southend East)

  Forman, Nigel

  Mellor, David

  Tebbit, Norman

  Temple-Morris, Peter

  Waddington, David

  Wickenden, Keith

  Thatcher, Rt Hon Mrs Margaret

  Wakeham, John

  Wiggin, Jerry

  Thomas, Rt Hon Peter (Hendon S)

  Waldegrave, Hon William

  Wilkinson, John

  Thompson, Donald

  Walker, Rt Hon Peter (Worcester)

  Wiiliams, Deiwyn (Montgomery)

  Thorne, Neil (Ilford South)

  Walker, Bill (Perth & E Perthshire)

  Winterton, Nicholas

  Thornton, Malcolm

  Walker-Smith, Rt Hon Sir Derek

  Wolfson, Mark

  Townend, John (Bridlington)

  Walter, Garry

  Young, Sir George (Acton)

  Townsend, Cyril D. (Bexleyheath)

  Walters, Dennis

  Younger, Rt Hon George

  Trippler, David

  Ward, John

  Trotter, Neville

  Watson, John

  TELLERS FOR THE NOES

  van Straubenzee, W. R.

  Wells, John (Maidstone)

  Mr. John MacGregor gnd

  Vaughan, Dr Gerard

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

  Mr. Peter Brooke.

  Viggers, Peter

  Whitney, Raymond

  Question accordingly negatived.

Clause 2

  DEFINITION OF "PUBLIC SERVICE VEHICLE"
  Mr. Kenneth Clarke: I beg to move amendment No. 1, in page 2, line 38, leave out from 'tramcar' to end of line 5 on page 3 and insert
  'which—

  (a) being a vehicle adapted to carry more titan eight passengers, is used for carrying passengers for hire or reward; or

  (b) being a vehicle not so adapted, is used for carrying passengers for hire or reward at separate fares in the course of a business of carrying passengers.

  (2) For the purposes of subsection (1) a vehicle "is used" as mentioned in paragraph (a) or paragraph (b) of that subsection if it is being so used or if it has been used as mentioned in that paragraph and that use has not been permanently discontinued.'.
  In Committee we had considerable discussion about the definition of a public service vehicle as set out in clause 2, and it was generally agreed that it was unsatisfactory and could be improved. As a result, we are bringing forward this drafting amendment, which in no way changes the meaning of the clause. It does not affect the debates in Committee. It is a tidying up of the way in which the definition is presented. This is a drafting amendment, which meets the undertakings that I gave in Committee, and I hope that it will be generally acceptable to the House.
  Mr. Booth: I agree with the Parliamentary Secretary. The amendment is a step forward, in that it makes the meaning clearer. I hope that it will be accepted by the House.
  Amendment agreed to.
  Mr. Vivian Bendall: I beg to move amendment No. 4, in page 3, line 24, at end insert
  1284
  'such costs to be based on the Motoring and Cycling Index'.
  Clause 2 causes me great concern. As I understand it, the Government will have no control over charges, the way in which charges are made, or how they are indexed. The clause provides that wear and tear can be included, but how much wear and tear can be included? How will the Government check on the amounts that are charged for car sharing?
  The other danger is that as people discover that there is no guide on the charges that can be made they will start a business of car sharing. Naturally, that concerns people in the licensed taxi trade who, in effect, have their arms tied because the tariff is set by the Government. It would be difficult for them to be in open competition with anyone who wished to start a business, because there would be no check on that person's charges.
  Another problem that has emerged—minicabs were discussed at length yesterday—is that many minicab owners and minicab companies—although illegally—are installing two-way radios. If people were to go into business on a car-sharing basis, and if two-way radios were used, immense problems could occur for the licensed trade.
  There should be some check, guide or index to which car sharing owners could relate regarding charges. I agree that there is a difficulty, but some safeguards must be provided. If not, there will be immense problems for the licensed trade, and particularly for London cab drivers. I urge the Minister to consider the matter again.
  Mr. Fowler: I appreciate my hon. Friend's desire to ensure that drivers tie the increase in their passenger contribution to some sort of index. He did not specify the type of index.
  Car sharing benefits ordinary people. It is a practical way in which they can reduce their cost of living, and in which

  1285
  they can make better use of their cars. Car sharing is already being practised in many parts of the country, particularly in rural areas, but it also has application in the commuter context. If we could persuade people who now drive into London to share a car there would be an impact in respect both of energy saving and of congestion.
  There is no difference between Conservative Members and Labour Members on the importance of car sharing. The Transport Act 1978 loosened the car-sharing provision. The only point that divides my hon. Friend the Member for Ilford, North (Mr. Bendall) and myself is how we seek to define the costs, and how they are shared. We have given much thought to that. At one stage we believed that mileage rates should be fixed for different types of cars.
  I am persuaded that if we intend to encourage tar sharing we must keep restrictions to a minimum and have as little formality and red tape as possible. The Bill sets out exclusions—for example, it will not be possible to make a profession of car sharing in the same way as taxi drivers. We are seeking to enable sensible and amicable arrangements to be made. We do not want people to be worried about detailed indexes, formulae or restrictions.
  9 pm
  I am encouraged, because all the reports that we have received so far seem to indicate that there have been no problems. For example, there is no problem about insurance. It is right that the public should know that the insurance conditions now cover car sharing. Car sharing can make an important contribution. We shall examine the arrangements as time passes, as my hon. Friend the Member for Ilford, North would expect. At this stage it would be wrong to encumber the new system with too many restrictions. I fear that I cannot accept my hon. Friend's amendment.
  Mr. Prescott: The Minister has given an assurance about car sharing. Is he aware that when the previous Labour Government initiated the rural route experiment, insurance companies charged more for premiums to cover the sharing provisions? Did the right hon. Gentleman take that into account before he eave his assurance?
  Mr. Fowler: I seek the leave of the House to reply, Mr. Deputy Speaker. The example that the hon. Gentleman has given will not arise generally. I have spoken to representatives of insurance companies. I shall take up the hon. Gentleman's example with them. I was not talking about premiums. I received an assurance from the companies that no difficulties would stand in the way of car sharing. In other words, I have been told that insurance policies cover car sharing. It was feared that insurance cover did not do so. The advice of the companies, and of insurance associations, is that those fears are unfounded and that the public should not be afraid to share cars. The Government hope that when the Bill becomes law car sharing will increase. I believe that such arrangements will ease congestion and benefit transport generally.
  Mr. Bendall: As my right hon. Friend has given me an assurance that he will undertake reviews from time to time, and in order to save the time of the House, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.

Clause 3

  CLASSIFICATION OF PUBLIC SERVICE VEHICLES AS STAGE, EXPRESS OR CONTRACT CARRIAGES
  Mr. Booth: I beg to move amendment No. 5, in page 4, line 35, leave out "(i)".
  Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to discuss the following amendments:

  No. 6, in page 4, line 35, leave out "30" and insert "40".

  No. 7, in page 4, line 35, leave out "30" and insert "35".

  No. 8, in page 4, line 37, leave out from "up;" to and"in line 40.

  No. 9 in page 4, line 39, leave out "30" and insert "40".

  Mr. Booth: If amendments Nos. 5 and 8 are taken together, they remove from the Bill a special definition of what constitutes an express bus service. It is a

  1287
  definition that has never previously existed in our law or in that of any other country. I have tried to think of a term or a word that would describe it. The best word is probably "dog-leg". I am referring to a route which involves picking a passenger up and putting him down, during which time he and the vehicle travel through a place that is 30 miles from the place at which he was picked up or put clown. That is the meaning of the provision. Therefore, one can have a dog-leg shaped course conveying each passenger, as the scheme works for each passenger, and not in respect of total routing, and still come within the definition of express service.
  There is a better way of looking at this matter, and that is to think of the scheme in terms of an area bounded by two arcs, each of 30-mile radius. It does not matter whether the centres of the arcs are less than 30 miles apart. Provided that one travels from the centre of one arc to the centre of the other, with the two bus stops passing outside the point where the arcs intersect, an operator can ensure that the service is classed as an express service.
  That is a rather complex concept by any criterion, and it is one that does not serve to meet the objection that I raised with regard to the initial definition in the Bill. In practice our objections to the way in which express service is defined are so substantial that they wipe out any limited advantage that it might have.
  My first objection is quite straightforward. If an operator wishes to avoid submitting an application for a road service licence, he will be able to construct his route in a way that will ensure that it can convey passengers, or a passenger, more than 30 miles, thereby avoiding the need for a road service licence. I do not think that such a provision is desirable in legislation.
  The other and more important objection is that this provision is almost unenforceable if one thinks of it in terms of realistic routing. Any operator who realistically wants to construct his route for the convenience of the public in whose area he is travelling in such a way as to allow someone to get off the bus after travelling 30 miles must keep on the bus anyone else who has embarked within
  1288
  the 30-mile limit. He must not let such people off at that stop, otherwise he ceases to operate an express service.
  I do not envy the task of the conductors or drivers engaged in express operations in trying to keep people on the bus until they have travelled more than 30 miles from the point at which they got on. Some people may be prepared to pay the fare for 31 miles because it offers the advantage of an express service, but I suggest that they will make darned sure that they get off when the bus stops at their destination.
  Another objection is that the scheme will be almost impossible to operate in a reasonable way. Therefore, I prefer the much simpler definition of express which would remain in the Bill if amendments Nos. 5 and 8 were carried. In that case, an express service would be one which carried passengers a set distance from the point at which they got on to the point at which they got off.
  I shall not comment on the circular routes that exist in some parts of the country, including my own constituency. But in that case, some people must travel around Morecambe Bay, which is a much greater distance than the distance across the bay, in order to travel to Barrow-in-Furness. That has occurred because no Government have had the wisdom to build the Morecambe Bay barrage. I make that as a non-party point.
  Amendment No. 7 extends the distance from 30 to 35 miles. Unlike the argument in Committee, the argument is now one of degree rather than of principle. I prefer the argument of principle, but I cannot advance it on this amendment. Given that one will exclude express services as defined in the Bill from the test of the traffic commissioners as to whether or not they are in the public interest, the question is whether the distance should be 30 or 35 miles.
  It is no part of the Opposition's argument that somebody should not be allowed to operate an express service that stops at distances less than 30 or 35 miles. We are saying that where that is done the traffic commissioner should consider the matter. If he is convinced that it is a reasonable service, with no adverse public effects or adverse effects on the maintenance of the stage carriage service.

  1289
  the express service should be allowed to operate.
  We are arguing only about where there should be applications for road service licences. We are not saying that there should be any prohibition on express services which allow passengers to disembark at distances between 30 and 35 miles.
  Up to 35 miles there is a greater likelihood of the introduction of the express service cutting across the cross-subsidised services. Therefore, it is proper that those who wish to operate that service, like those who operate a stage carriage service, should be subject to an application for a road service licence.
  Another consideration is that when travelling further than 35 miles passengers are more likely to use the stage carriage services to take them to the express bus stop. Some people may take a bus, even if it is going in the opposite direction, to the nearest terminus to catch the express bus. Up to distances of 35 miles, express services are more likely to affect the network arrangements, and even the single service arrangements, that have been subject to consideration by local authorities under their transport policies and plans.
  For all those reasons, it makes sense to widen the range of services that are subject to road service licences, leaving the issuing of such licences to the good sense of the traffic commissioner. It makes sense for a service to be run with stopping points of up to 35 miles, rather than to work on a 30-mile definition. It is an argument of degree rather than of principle.
  On the dog-leg, or intersecting arc, description of what constitutes an express service and a stage carriage, it is almost impossible to operate a service. The only operators who will gain any advantage from it are those who are prepared to create artificial routes so that they are not subject to road service licensing requirements.
  Mr. Penhaligon: I wish to raise the case of the ultimate dog-leg, namely, where a person returns to the point from which he started. I am referring to the day excursion, which is common in my part of the country for people on holiday. Someone coming to Newquay or Perranporth on holiday often takes a coach trip
  1290
  around the countryside, and at the end of the day he returns to precisely the point from which he started.
  Ironically and incredibly, that qualifies as an express service under this definition, provided that at some time during the day the bus travels more than 30 miles in a straight line from its departure point.
  9.15 pm
  I do not believe that the Government have malice. However, the clause could smash the only profitable part of the coach industry that exists in Cornwall. We have discussed before how few bus routes make a profit. One profitable activity in Cornwall is carrying passengers on day trips during the summer. The routes are licensed. They are highly fought over and much sought after: They are the backbone that keeps together the rudiments of a private bus service that still exists within the county.
  The pattern of the holiday industry is that people often come to the tourist areas of Cornwall by coach from the Midlands, London and other places. They arrive on a Saturday and the coach stays with them until the following Saturday. During the week, the driver and the coach are doing nothing. On marginal costings, the coach company could run a service in competition with local operators at low cost. Those coaches can be used at the moment to take on day trips the passengers that they have brought to the area. They cannot advertise the fact that they are going to Land's End. Only a licensed local operator can offer that service. I cannot believe that an amendment could not be produced to prevent what is defined as an express service from applying to people who arrive back from where they started. I am sure that is not what the Minister intended as an express service. It is not my understanding of an express service.
  I support the clause, but it is crazy that this one valuable part of the travel industry in Cornwall looks like being smashed for a general principle which I cannot believe was intended by the Minister. The repercussions on public transport in Cornwall will be substantial. I would vote to make the journey longer. Cornwall is not a wide county. If the distance could be increased to 50 miles, that would extend into Devon. No one in his right mind on holiday in Cornwall would go to Devon. That would perhaps

  1291
  largely solve the problem. The further the distance can be stretched, the fewer routes will be available for coaches coming into the area.
  As a percentage of the total British travel industry this must represent 0·1 per cent. In the peculiar financial structure of Cornwall, it seems that the only people who do not make money out of holiday visitors are those living locally. There seems a danger that the clause will unwittingly have the effect I have outlined on the one lucrative travel industry that exists.
  Mr. Bendall: I rise because my amendments are linked with this group. My concern, like that of the hon. Member for Truro (Mr. Penhaligon), is specific. I am concerned about the area between Heathrow and Gatwick airports, operated, to a large extent, by the London black cab service. If express operators are able to carry on business between those airports, it will affect the trade of the black cabs.
  When almost a year ago the Government granted an increase in tariffs for taxis, they saw fit to reduce the double tariff that operated out of Heathrow airport to a tariff and a half. That obviously affected those taxi drivers operating out of Heathrow airport. If they are to be further restricted by express carriages operating between Heathrow and Gatwick, their livelihood and income are liable to be affected.
  Another problem at Heathrow will have a serious effect. There has been a High Court decision which was taken to appeal with regard to the operating of minicabs out of Heathrow airport. Lord Denning made clear, on appeal, that there were abuses at London airport by minicabs and he suspenthd a certain number of people found not to be operating within the law.
  All these things will add up, and now we have the additional problem of people running express carriages between the two airports. This could affect the livelihood of taxi drivers. I cannot see why this clause could not be tidied up in order to exclude the airports. If that were done it would resolve the problem.
  Mr. Selwyn Gummer: I rise only to oppose the idea that we should make
  1292
  the distance even longer than it is. If one must travel 30 miles by road in a rural area one finds that that involves an enormous amount of travelling. If the 30-mile limit is extended even further it means that many of the services that we in Suffolk hope will arise from the implementation of the Act will not be possible.
  If the distance is increased to 40 miles the situation is even worse. The House contains a large number of hon. Members representing metropolitan areas. Therefore, we who represent rural areas must place on record the fact that in those areas we have long winding roads. To extend the 30-mile limit to 35 miles would have an entirely deleterious effect.
  Mr. Prescott: Whether we represent urban or rural areas, the fact remains that Labour Members have placed a great deal of emphasis on the rural argument. We believe that this measure will make the situation much worse in rural areas.
  Mr. Gummer: Although these arguments are put by the Opposition simply because they are in opposition, some of us live in rural areas and we put the arguments because the problem affects us.
  Mr. Kenneth Clarke: We are concerned with those features of the bus system that we intend to take out of road service licensing altogether, wherever they may be in the country. I shall deal with the individual local points in the course of my speech.
  Basically it is the Government's position that there are two categories of service for which there is no need to have road service licensing. One is the long-distance excursion and tour—that which does a circular journey returning to the place where it started. The second is the long-distance express service, which takes each passenger a distance of at least 30 miles from his starting point. Basically the policy of this part of the Bill is to take out of quantity licensing and road service licensing the long-distance excursion tours and the express services, because we see no worthwhile public interest in keeping those within the traffic commissioners' set-up.
  I shall deal with the English aspect of excursions and tours and come to the

  1293
  Cornish case later. Generally, our argument is to save bureaucracy and needless objections by competitors when there is no particular interest in having licensing arrangements for them.
  I turn to the question of inter-city express services and others which make long-distance journeys through urban and rural areas, taking people for considerable distances before setting them down. We want to encourage the growth of that type of service. We believe that the best and cheapest way of travelling by public transport in this country between major centres of population is by express bus services. We are encouraged by all the signs, at the moment, that people are contemplating extending their services in this field. We welcome the opportunity that will be given by the Bill for people to provide good express services between cities. If something equivalent to the United States' Greyhound network can be established in this country, it will provide a valuable addition to our passenger transport, particularly for low-cost travel for students and others who want to cut back on fares. We shall resist any attempt to eliminate them.
  What sort of distance should one choose above which the services will be taken out of road service licensing? The choice of any distance involves judgment. People make an application for their particular area. My hon. Friend the Member for Eye (Mr. Gummer) mentioned Suffolk and the rural areas that he represents. Given the huge geography of East Anglia, he is in favour of the retention of 30 miles. My hon. Friend the member for Ilford, North (Mr. Bendall) mentioned a service that runs between Heathrow and Gatwick. I am anxious to do everything possible for the taxi trade. I attempted to meet a representation yesterday. However, many air travellers look forward to the provision of an express coach service to Heathrow and Gatwick.
  We tried to hit on the right distance to fit Britain generally. We began with 25 miles. However, many representations were made to the effect that 25 miles was not long enough. Most of them came not from the public but from bus and coach operators. They felt that public interest demanded that they should have protection for another five miles. Some good general points were made about the
  1294
  damaging effects that that limit would have on stage carriage and on areas that need protection. In response to consultation, we therefore move to a 30-mile limit.
  If one accepted the various figures suggested in these amendments, long-distance and important express passenger services would be brought back into the licensing network. It is contrary to our policy to bring such services back into licensing. Operators have responded to our suggestions. I advise the House that we do not wish to go beyond that 30-mile limit.
  I appreciate the particular problems of Cornwall. To a certain extent those problems arise as a result of its peculiar shape. In particular, the area depends heavily on summer tourist traffic. The amount is probably out of proportion to that found in any other part of the country. My hon. Friends the Members for Cornwall, North (Mr. Neale) and for Bodmin (Mr. Hicks) made arrangements for me to attend a meeting at a hotel in Liskeard. A large number of bus and coach operators attended that meeting. Some of them may have been constituents of the hon. Member for Truro (Mr. Penhaligon). Not all those who attended would have come from Bodmin.
  Those operators pressed exactly the same point at considerable length. I appreciate that they are heavily dependent on summer traffic. They use coaches in the summer that fulfil school contracts during the winter. They fear that coaches from far away will suddenly bring passengers from Manchester and will spend a week in Cornwall making tours of over 30 miles up and down the peninsula.
  If we were to meet that problem we should undermine our policy and its effect on the rest of Britain. I examined some of the propositions. I tried to argue with those that I met and to persuade them that the damage would not be as great as they had initially feared. I found no example of anyone supporting a village stage carriage service.
  The vehicles used during summer peak periods to run excursions and tours do not, by definition, provide stopping services to villages. They are at a considerable advantage to coach operators from

  1295
  outside. Indeed, local operators might consider such operators as coming from abroad. Their garages and maintenance facilities are on the spot. Their drivers know the geography of the area and have better knowledge of the market. Local operators have a head start on outside competitors.
  If a firm in Manchester, Birmingham or Warrington wished to move in on a large scale, it would have to set up a branch operation in the summer, miles away from its base. It would have to try to get in on the Cornish trade.
  Many people were not reassured. Many believe that they will face serious problems, but there are others who accept that they will have to do what they can to respond. In practice it may not be as bad as they fear.
  9.30 pm
  I am glad to say that in Cornwall I found a number of operators—not always popular with their colleagues at the meeting—who said that they were looking forward to the Bill and had been waiting for it for years. They were the people who had fewer road service licences under the present arrangements and were being prevented from having more by the other operators at that meeting. No one wishes to undermine or destroy the Cornish bus and coach service, or those provided in similar districts. There are some coach and bus services on the West Coast of Scotland and in some of the tourist resorts along the coast.
  Having listened to those operators and considered whether we could revise the 30-mile limit, my right hon. Friend and I came to the conclusion that the dangers were not so great as feared and do not justify transforming the system for the whole of the United Kingdom. If we went beyond a 30-mile limit we would undermine the policy in the Bill. We believe that it is right, for the reasons that I put forward at the beginning, that we should take these long-distance excursions and tours and the express services out of the licensing system altogether. It is a needless restraint on the development of new services.
  Amendment negatived.

Clause 4

  ROAD SERVICE LICENCES
  Mr. Kenneth Clarke: I beg to move amendment No. 10, in page 6, line 4 at beginning insert
  'Subject to section 9(1A),'.
  Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 13.
  Mr. Clarke: This amendment deals with a small point that was drawn to my attention by my right hon. Friend the Member for Bournemouth, West (Sir J. Eden) after representations that he had received from a constituent. This was an occasion when an hon. Member brought to the attention of Ministers a problem that the drafting of the Bill had presented. There was no answer to the point that my hon. Friend made and I undertook, therefore, to bring forward an amendment to meet the point.
  As the Bill stands, a travel agent or tour organiser who organises a long-distance excursion or tour can provide that tour even though he himself does not have an operator's licence so long as he hires a vehicle and a driver from a licensed operator. However, because of the requirement in subsection (4) that a road service licence holder must also have an operator's licence, anyone running a service that requires a licence must also have an operator's licence.
  My hon. Friend found an example of a travel agent/small tour organiser who sometimes runs local tours within the 30-mile range by hiring a coach and a driver from a local operator who is licensed. However, because of the mistake of wording the travel agent would not have been able to obtain a road service licence unless she herself had an operator's licence. That would require her having to employ a competent transport manager and fulfilling the various other requirements of the Bill. That was not an intended consequence of the Bill. There is no policy reason for it. These amendments seek to change that and enable short-distance excursions and tours to be operated without the requirement to hold an operator's licence so long as the vehicle and the driver are provided by a licensed

  1297
  operator, so that public safety is satisfied. I therefore ask the House to approve the amendment.
  Amendment agreed to.

Clause 5

  GRANT OF ROAD SERVICE LICENCES
  Mr. Prescott: I beg to move amendment No. 11, in page 7, line 10, after 'authorities', insert 'or some other person'.
  The amendment deals with how the information is provided to the commissioners when they are issuing a road service licence. We are concerned about the public interest. In Committee we spent time arguing about the public interest and the definition of the clause, and I do not intend to go over that ground again this evening.
  In granting a road service licence the commissioners must consider the public interest. The clause deals with the information that the commissioners must consider in assessing an application for a road service licence. Subsection (3)(a) states that the commissioners must consider the relevant transport requirements of the area as a whole. Paragraph (b) states that they should consider:
  "any transport policies or plans which have been made by the local authorities".
  A great deal of such information, particularly TPPs, is prepared by local authorities. Local authorities may not necessarily provide the relevant information. The clause provides that the TPPs made by local authorities have to be drawn to the commissioners' attention by those authorities.
  The amendment seeks to add the words "or some other person". That would ensure that important information in the TPP, not only concerning matters with which the commissioners will deal in the application but also other relevant matters, may be provided by other persons.
  The amendment is simple. It seeks to ensure that if such information is not provided by an authority—we spent time in Committee on the different attitudes towards licence applications for bus services between local authorities and district councils arising from different
  1298
  transport policies and priorities—it can be provided by other persons.
  If a county authority does not provide such essential information to the commissioners it is possible for another person to do so. The Bill requires the commissioners to consider all the relevant information before granting the application. The amendment would provide the opportunity for anyone to provide such information to the traffic commissioners.
  Mr. Kenneth Clarke: We were expecting a Division. The Liberal Party spokesman entered the debate intending to divide the House. He listened to the argument and was so persuaded that he went away. I trust that the official Opposition will be as responsive to many of our arguments, which will save a great deal of time.
  It is not a good beginning. I am surprised that we are debating this matter again. We are rather splitting hairs. In Committee I thought that hon. Members were satisfied by the Government's response.
  The amendment will make no practical change. Subsection (3)(c) enables anyone to make any objection or representation that he wishes. It is open to a district council to point to a TPP produced by the county and urge it upon the commissioners. It will be perfectly proper for the commissioners to consider that.
  Subsection (3)(b) underlines the fact that county councils have a particular responsibility for transport. There is a duty on the commissioners to have regard to transport policies and plans brought to them by the county councils that made them and presented them to my right hon. Friend. It seems right to us as a matter of presentation that that particular duty of local authorities should be put in a special category in this list of matters to which the traffic commissioners must have regard.
  However, a member of the public who wishes to take out a TPP can do so. A member of the public might wish to refer to an out-of-date TPP, whereas a county council, if it brought forward a TPP, would be underlining to the commissioners that that was the one under which it was acting. Anyone may draw

  1299
  anything to the attention of the commissioners but I think that we are splitting hairs. I prefer the presentation of the Bill as it is and I hope that the hon. Member will be satisfied—as I thought he was in Committee—and withdraw his amendment.
  Mr. Prescott: We will certainly cooperate. We were hoping that there would be no more votes until the final stages of the debate. I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.

Clause 9

  GRANT OF ROAD SERVICE LICENCES FOR CERTAIN EXCURSIONS OR TOURS
  Amendment made No. 13, in page 11, line 6 at end insert—
  '(1A) Section 4(4) does not prevent a road service licence granted in pursuance of this section from having effect for the purposes of the provision of a service by means of a vehicle whose operator holds a PSV operator's licence granted by the traffic commissioners, for any traffic area, not being a licence which is for the time being of no effect by reason of its suspension.".—[Mr. Newton.]

Clause 12

  DESIGNATION OF TRIALS AREAS
  Mr. Fowler: I beg to move amendment No. 14, in page 12, line 33 at end insert—
  "(3A) Subject to subsection (4), the Minister may by order vary or revoke a designation order but shall not do so except on an application made to him by the local authority concerned; and the Minister—

  (a) on an application for an order varying a designation order, may at his discretion refuse the application or make the order applied for either with or without modifications; and

  (b) on an application for an order revoking a designation order may at his discretion refuse the application or make the order applied for.".

  Mr. Deputy Speaker: With this amendment it will be convenient to take the following amendments:
  No. 15, in page 12, line 33 at end insert—
  "(3A) No designation order shall be made for the whole or part of the area of a local authority which contains a district council operating a bus service unless that district council has signified its agreement in writing to the Minister."
  1300
  Government amendment No. 16.
  No. 17, in page 12, line 37, at end insert:
  "unless the local authority concerned applies to the Minister to revoke the order in which case the Minister shall revoke the order not later than 30 days after receiving the application."
  Government amendments Nos. 18 and 59 to 61.
  Mr. Fowler: This is an important group of amendments and they cover an area that we discussed at some length yesterday, when we considered the work of the traffic commissioners.
  Amendment No. 17 deals with trial areas and is the result of concern expressed in Committee about the revocation of trial areas. We agree that the original Bill was inflexible and that some county councils may have been discouraged from beginning an experiment for fear of the cost of reinstatement after as long as three years of an unsuccessful trial.
  We are, therefore, moving a group of amendments that will give flexibility in the minimum period in a trial area. Instead of the period being three years for all, it will be whatever period between two and five years is specified in the original designation order. That is a matter for discussion between the Government and the county council.
  The balance may be struck differently in different cases. In the other amendments with which we are dealing local authorities are more involved in the revocation procedure than they were under the original Bill. This follows concern expressed by my hon. Friend the Member for Meriden (Mr. Mills) in Committee. It is logical that if the initiative to start experiments comes from local authorities so should the initiative to bring them to an end.
  A further change is designed to encourage new providers of transport to engage in the investment in vehicles necessary for new stage carriage services. Such investors might be put off by the fear that there could be revocation before they had recouped their investment and that after revocation the licensing procedure would be exploited by their competitors to deprive them of their routes.
  There will, therefore, be an automatic right to a road service licence for anyone

  1301
  who has been providing an established service while the area was a trial area. This issue was thoroughly debated yesterday and I think that the House will be well aware of the input of these proposals.
  Mr. Prescott: We spent some considerable time discussing trial areas yesterday, as we did in Committee. Our concern is with the designation orders. We give a general welcome to the Government amendments that have been spelt out by the Minister. They are largely concerned with consultation rights, which we argued should be extended. The Government have gone some way to meet our wishes, particularly in regard to revocation and the variation of designation orders and to the period of application.
  9.45 pm
  We are anxious about what will happen if a designation order is shown not to be working. I welcome the reduction of the three-year period, although if an area is found to be in difficulties in less than three years action should be taken. The Minister argued that three years was the minimum that could be allowed for sufficient return on investment by the operators providing the service. The Minister's guarantees are welcome. If an operator finds that he cannot maintain a service and the trial area runs into difficulties the Minister will be prepared to give a road service licence to that operator. One does not need to worry too much about compensation for a bankrupt company, because no further help can be given to such a company.
  If the relevant local authorities believe that a trial area is not working they can make an application to the Minister. However, I understand that the Minister will not contemplate a period under two years. Only after between two and five years will any variation or revocation be considered by the Minister after an application from local authority. The proposition is an improvement and because of the time of night I shall not argue the two-year question.
  In amendment No. 15 we tried to give a veto to district bus authorities, of which there are 40 or 50. We felt that political difficulties could be caused in the designation of trial areas because many district councils are Labour-controlled in Conservative-controlled county areas. All
  1302
  bus authorities, whether Tory- or Labour-controlled, resent the possible imposition.
  The Government amendment gives district bus authorities further consultation rights. That is welcome. Another amendment provided for the revocation of an order within 30 days. That is an absolute way of saying that the Minister should act within 30 days. In view of the lateness of the hour we shall accept the Government's amendments and not press ours to a Division.
  Mr. Iain Mills: I thank the Minister and the Parliamentary Secretary for their swift and comprehensive reaction to the amendment tabled by my right hon. and hon. Friends in Committee. We withdrew the amendment as a result of assurances. The Minister has done an excellent job, particularly on the two-year issue. We were worried about possible problems and the need for flexibility. I thank the Minister for considering the needs of district councils, many of which have a need for more detailed consultation.
  Amendment agreed to.
  Amendments made: No. 16, in page 12, line 35, leave out 'of three years' and insert
  'specified in the order, as originally made, as the minimum period for which the order is to be in force, being a period of not less than two and not more than five years'.
  No. 18, in page 13, leave out lines 1 and 2.—[Mr. Newton.]

Clause 14

  DUTY TO PUBLISH PARTICULARS OF STAGE CARRIAGE SERVICES IN TRIAL AREAS
  Mr. Kenneth Clarke: I beg to move amendment No. 23, in page 14, line 9 after 'concerned', insert
  ', and to every district council in whose area passengers will be or are taken up or set down in the course of the service in question (including, in a case within paragraph (b), the service as proposed to be changed),'.
  This amendment meets the substance of one moved in Committee by my hon. Friend the Member for Meriden (Mr. Mills). Once again, it was based on his concern that the district councils should be properly recognised in the new structure that we are setting up. It requires that operators should let districts as well as counties know of changes in the pattern of services which result from the changes that we propose in the Bill. My

  1303
  right hon. Friend agreed to consider that point when it was made in Committee. It seems to us to be an entirely worthwhile suggestion. We hope that it will lead to a useful level of co-operation developing between district councils, on the one hand, and operators and county councils on the other. I am glad to honour the undertaking that my right hon. Friend gave. I recommend the amendment to the House.
  Mr. Booth: This amendment applies only to district councils in trial areas. They are in a special position when the trial is operating. I agree that they should be notified by operators if new services are to be brought into the areas or if services are to be withdrawn or changed. I hope that the proposal will lead to their making representations to the local and county authorities, which have the power to apply to Ministers for revocation. Where this happens, I hope that the Minister will be prepared to respond quickly. We know that there is a great deal at risk in this issue.
  The initial decision by the Minister on a previous amendment allows him to make a designation for varying periods of from two to five years. If, for example, he designated one county as being a trial area for five years and if, after a couple of years, district councils prevailed upon the county council in their part of the county to accept that this area operation was such a disaster that they wanted a revocation, there should be a quick response.
  Mr. Iain Mills: I thank my right hon. and hon. Friends for their comments in Committee. I wish to say how much Government supporters appreciate their action. We are glad about this demonstration of local democracy, which is so much part of the Government's philosophy.
  Amendment agreed to.

Clause 16

  CERTIFICATE OF INITIAL FITNESS (OR EQUIVALENT) REQUIRED FOR USE OF PUBLIC SERVICE VEHICLE.
  Mr. Booth: I beg to move amendment No. 25, in page 16, line 11, at end add—
  '(5) For the purpose of this section only a bus run by a local authority for providing
  1304
  transport in pursuance of arrangements made under any Education Act shall be treated as a Public Service Vehicle for the purposes of this section.'.
  The Bill, which has as one of its early purposes the definition of "public service vehicles", omits from the definition school buses run by school authorities. The purpose of the amendment is to make a school bus that is run by an education authority a public service vehicle solely for the purpose of the requirements of initial certificates of fitness under the Bill.
  The Opposition can see no reason why school buses run by school authorities should be excluded from a provision that applies to all vehicles which are designated as public service vehicles. I believe that that is a mistaken judgment in the Bill.
  I understand why the Government were especially sensitive, possibly when the Bill was being drafted, about school buses, in view of the b charaing provisions. I do not want to stir up that difficulty tonight. The argument for the amendment rests on a simple proposition which is unassailable—namely, that carrying children to school on a bus, the arrangements for which are made by school authorities using their own buses, is just as much a matter about which the House should be concerned. The vehicles should be as fit for that purpose as those carrying passengers where charges are made. Here I am not concerned with whether a charge is made. That seems to be irrelevant. The certificate of fitness has nothing to do with whether or not charges are made on buses; it is really the starting point at which, in the whole construction issue in relation to safety, it is ensured that the vehicle is a proper one for the purpose.
  Yesterday, in debating new clauses 1 and 8, we were concerned with the need for annual tests of public service vehicles. I am grateful to the Minister for pointing out on his new clause 1 at that time that by removing the bar in the 1972 Act to making test requirement provisions concerning public service vehicles he was going wider than public service vehicles as defined within this Bill and asking the House to give him power to require by regulation the testing of other vehicles.
  I make a plea on this amendment that if the Minister accepts the logic of making

  1305
  buses which run solely as school buses subject, as the amendment requires, to an initial certificate of fitness, he will accept, within the spirit of the definition of new clause 1 yesterday, that he should later follow this by regulations making them subject to annual tests as well.
  Mr. Fowler: I sympathise entirely with the right hon. Gentleman's intention. I would not plead that the safety requirements for school buses are particularly logical, but I argue that they have worked reasonably well over the years. It is not strictly true to say that the Bill is making any change in this respect. What we are doing is preserving the status quo. I think we have to consider the cost of any changes we seek to make, and I am advised that the amendment would impose considerable costs on local education authorities. I do not think that there is any doubt about that.
  The amendment would produce a rather curious change. It would require fitness; it would require all school buses to have a certificate of initial fitness, but it would not give the PSV examiners or certifying officers any powers to inspect vehicles once the certificate had been issued or to prohibit the driving of unfit vehicles. The amendment would apply to existing as well as new vehicles and might well require substantial refitting and even structural adaptations to most of the 800 or so school buses owned by local education authorities.
  My reaction to the right hon. Gentleman's proposals—and I certainly sympathise with what he is seeking to do—is twofold. First, I take the view that local authorities are responsible public bodies which can be trusted to ensure the safety of school children. Indeed, this is probably a point which the Opposition recognise. They are not, for example, seeking powers to examine school buses or to prohibit the driving of unfit vehicles, so by implication that point is accepted. I would add that the system whereby we have undoubtedly put this responsibility on local authorities has worked well.
  The scond point of which I wish to remind the House is that new clause 1 and the annual test for buses, which, as I announced yesterday, is to be implemented, will cover all school buses and that, I believe, is more relevant to the continued fitness of a vehicle than an initial certifi-
  1306
  cate of fitness. In other words, I claim that what we are doing in new clause 1, which we debated yesterday, has more relevance to the continued safety of school buses, in the concern as to which I am entirely at one with the right hon. Gentleman; clearly he is right in everything he says on that.
  I must conclude, therefore, that the costs resulting from this amendment would not be justified by any gain there might be in public safety. I would also claim that new clause 1 deals more satisfactorily with the problem about which the right hon. Gentleman and we are concerned.
  Mr. Booth: With the leave of the House, Mr. Deputy Speaker, I speak again. I totally retract anything I said that may have implied that the Bill created the problem of the school bus. I accept that previous transport legislation failed to grapple with the problem, and did not define the school bus run by a school authority as a public service vehicle.
  It was not the intention of my hon. Friends and me—
  It being Ten o'clock, the debate stood adjourned.

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Transport Bill and the consideration of Lords Amendments to the National Heritage Bill may be proceeded with, though opposed, until any hour.—[Mr. Newton.]

  TRANSPORT BILL
  Question again proposed, That the amendment be made.
  Mr. Booth: It was not the intention of my hon. Friends and myself in addressing the amendment to convey the impression even by implication that we do not want as full and rigorous a testing procedure applied to the school bus run by the school authority as that applied to any other public service vehicle. We may have been remiss in not having introduced the point earlier, although it was raised in

  1307
  Committee by my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson).
  Our intention was to raise the question in the House in the hope of persuading the Minister that we want as full and rigorous a testing procedure as possible. If all local education authorities are running perfectly safe buses fit for carrying children, I cannot see why it should cost a lot of money to put the buses through the initial certificate of fitness procedure.
  The other question that arises is how the annual inspection requirements which the Minister is to introduce will be defined in respect of vehicles which have not been subject to the initial certificate of fitness procedure. Obviously, where there is no initial certificate, vehicles cannot be tested to see whether they are still of the standard required by that certificate.
  I appreciate what the Minister told the House about his intention to apply the
  1308
  annual test regulations to the vehicles. That is a considerable step forward. While I would not want it to be taken from anything I say that I am suggesting that local education authorities are not concerned about the safety of youngsters, I feel that this is an area in which we should demand uniformly high standards right across the board and should not distinguish between buses run by local authorities to carry children and buses run by private operators to carry fare-paying passengers.
  In many cases the buses which are contracted to carry children will have public service licences and be subject to test procedures, but they will be buses used for other purposes as well as for carrying children. That is a particular category in which local authorities have a high standard. Will the Minister tell us how the annual tests will be carried out, and to what standard or criterion, if there is no initial certificate of fitness for the school bus run by the school authority?
  Mr. Fowler: If I may reply to that point, with the leave of the House, what is being proposed would not give PSV examiners or certifying authorities powers to inspect vehicles once a certificate had been issued, or to prohibit the driving of unfit vehicles. The annual test for buses that is to be implemented will cover all school buses.
  There is little difference of opinion between Conservative Members and Labour Members on that point. I shall examine the matter raised by the right hon. Member for Barrow-in-Furness (Mr. Booth) in more detail and if there is a further point to be discussed I shall be happy to have talks with him to see whether any improvements can be made. My advice is that the annual test will provide all the safeguards that the right hon. Gentleman will require.
  Mr. Booth: In the light of that assurance, I beg to ask leave to withdraw the amendment.
  Amendment, by leave withdrawn.
  Mr. Booth: I beg to move amendment No. 27, in page 19, line 25 at end insert—
  '(aa) that the operating centre for those vehicles is suitable for the operations authorised in the licence; and'.
  The amendment makes the granting of an operator's licence conditional upon the operating centre being suitable for the operation of the number of vehicles included on such a licence. This is a difficult issue, because there is an enormous variation in the standards of operation. There are many good public service vehicle operators who have excellent offices that are well administered, and who have good maintenance facilities for their buses and good garaging arrangements. The amendment will be welcomed by them. They have nothing to fear from it and everything to gain.
  The amendment is aimed at the small minority of operators who seek to operate on a shoestring, without proper office provision and without proper garaging facilities. I do not suggest that this is a problem peculiar to the bus industry; it happens also in the freight industry. If we are to attach the importance to the operator's licence that the Bill suggests,
  1310
  before an operator's licence is granted there should be consideration of the question whether the person making an application to run 10, 20, 30, 40 or 50 public service vehicles has an office in which he can admiinster their operation, a garage in which he can park them, and arrangements by which he can suitably deal with them.
  I appreciate that maintenance facilities are covered in another part of the Bill. I am not suggesting that this amendment is necessary to secure maintenance arrangements. It is necessary to ensure that there are adequate parking facilities for all vehicles covered by operators' licences and that an operating centre can be located.
  Mr. Gummer: Wherever possible, we must not extend the number of regulations for people wishing to operate a business. The right hon. Member for Barrow-in-Furness (Mr. Booth), in introducing his proposals, made great play of the word "office". I understand that there might be some argument about parking, and that many difficulties have arisen because operators have not had adequate parking facilities. However, the Bill should be concerned with safety and the maintenance necessary for that safety.
  This amendment is widely drawn. We are talking about a suitable operating centre and we are extending the word "suitable" to cover the offices in which the operation is administered. We are moving into an area that has laid considerable increases on the costs of running services in Britain.
  We have begun to be a nation that sets standards that are applied universally to many areas where local conditions and situations do not demand such standards. I should be happier—I am sure that many of my right hon. and hon. Friends would be happier—if we made clear that our main and central purpose is to ensure the safety of the travelling public. We are not in this place to implement detailed regulations that govern how people run their offices and operations. We should strenuously object to the amendment.
  Mr. Kenneth Clarke: I echo the words of my hon. Friend the Member for Eye (Mr. Gummer). The right hon. Member for Barrow-in-Furness (Mr. Booth) confined the application of the amendment. Most of his arguments bore on

  1311
  the requirements of the operator's licence that appertain to public safety. However, the amendment goes much wider. I contend that the Bill as drafted gives sufficient power to the traffic commissioners to ensure that the operator is a proper and competent person with maintenance facilities that enable him to keep his vehicles in a safe and sound condition. That is what the Bill is concerned with, and that is its limit. It is a proper limit and there is no need to go further.
  The amendment would open up the prospect of traffic commissioners entering into town and country planning considerations and deciding whether in their opinion the centre chosen by the operator who wants to set up a business is "suitable"—a very wide term—for the operations authorised. That would bring the commissioners into dreadfully contentious areas.
  Everyone thinks that a bus operation is good in principle as long as the garage is not next door. Of course, we have to protect the environment when bus services are being contemplated. Garages have to be sited, so far as possible, so that they do not constitute a nuisance to neighbouring properties. That is a function of the local authority, the planning authority and those who are charged with town and country planning. As my hon. Friend said, it would be an inappropriate additional function to give to the commissioners.
  It seems that yet another hurdle is being set for a business man to overcome before he obtains the necessary licence to enable him to operate a bus. Before anyone says that the Foster committee recommended similar arrangements for heavy goods vehicles, I hasten to say that the Government intend to respond very soon to the Foster report. We have not closed our minds to the heavy goods vehicle recommendation. However, we feel that the considerations that apply to heavy goods vehicles are different from those that apply to passenger transport vehicles.
  Mr. Booth: The Parliamentary Secretary seems to ignore one of the propositions that the Bill raises, namely, that there must be an operating centre for the purpose of establishing the appropriate
  1312
  traffic commissioner to which the operator should go. Therefore, someone will have to take a decision. For this purpose I do not mind whether it is the planning authority or the traffic commissioner.
  An operator may properly be asked by the commissioner "Where is your operating centre? Why are you applying to me as opposed to applying to another commissioner? On what grounds do you say that the area for which I am the commissioner is the one in which your operating centre falls?" If it is a matter for the planning authority, and the operator is able to say "I have planning consent to operate from this centre", the point is met.
  The issue of what is suitable is, I suggest, a matter for the commissioner. What is suitable for running a two-bus business may well be a small bureau in the front room, which a man might reasonably say is his office. A different situation exists when a major bus company makes an application to operate.
  Mr. Gummer: Will the right hon. Gentleman explain why an official rather than the operator should decide whether an office is suitable? Surely this is totally outwith the purposes of officials. Surely a man is able to decide whether his office is suitable for his operation without someone popping along to tell him whether it is suitable.
  Mr. Booth: The individual who is considering the application is placed under a statutory duty that the Minister has decided to impose. Application must be made to the traffic commissioner for the area in which the applicant has his operating centre. The Parliamentary Secretary said that the planning authorities for the area must decide whether the operating centre is suitable. That is the proposition with which I am dealing; it is not my own concept of the matter.
  10.15 pm
  Following the logic of the Minister's remarks and the requirements of the Bill, the commissioner will have to ask applicants whether they are applying to him because their operating centre is within his area. Applicants will have to assure him that that is the case. That is why it is necessary to consider the location of the operating centres. It is also a matter of enforcing the requirements of the operator's licence. To enforce those

  1313
  requirements the commissioner must be able to locate the operating centre.
  Mr. Kenneth Clarke: The right hon. Gentleman is overlooking clause 35, where the operating centre is defined as the
  "base or centre at which the vehicle is normally kept".
  It does not follow that there is a need for suitability, which is the point at issue. The traffic commissioner is not required to visit an operating centre and say that it would be more suitable if the building were half-timbered and thatched. That matter is best left to the local authority.
  Mr. Booth: The Minister's point is relevant if we rely purely on the definition clause. All that the applicant has to say is that he normally keeps his vehicle in a certain place. If he says that he normally keeps it on the public highway at the place where it will start its operation he is giving a perfectly honest answer to the commissioner, but one that should not satisfy the House if the House is serious about providing a Transport Bill—
  Mr. Ronald W. Brown: Will my right hon. Friend bear in mind that recently I referred a problem to the Government where somebody in my constituency made an application for a licence in another borough? The advertisement for that licence was in another borough. The commissioner did not know that the vehicles were in use in our area. My right hon. Friend's point is valid, and I hope that he will pursue it.
  Mr. Booth: I am grateful to my hon. Friend for his intervention. If the other borough to which he referred was in the area of another traffic commissioner, it is one of the problems that the Bill should tackle. I accept that the term "suitable" could be interpreted widely, but it would be interpreted by a commissioner in whom the Government repose enormous faith.
  In the Bill the Government are proposing to give commissioners responsibility for making difficult decisions. Therefore, the Government must believe that they are responsible and capable men. On that basis, they are sufficiently responsible and capable to decide whether a person who applies for an operator's licence has a suitable operating
  1314
  centre within his area. If the commissioner thinks that the proper operating centre lies elsewhere, or that no such suitable centre exists, he must take that into account when deciding whether to grant a licence.
  Mr. Kenneth Clarke: With the leave of the House, Mr. Deputy Speaker, I shall reply. Clause 20 sets out the conditions that must be fulfilled to obtain an operator's licence. Subsection (1) sets out the various criteria for the operator himself, which we all agree are sensible. One criterion about which the traffic commissioners must be satisfied is set out in subsection (3)(a), namely, that commissioners should be satisfied, before they grant a licence
  "that there will be adequate facilities or arrangements for maintaining in a fit and serviceable condition the vehicles proposed to be used under the licence".
  I cannot intervene in the details of any one case, but given that the application for an operator's licence must give the location of the operating centre—which is where the vehicles are usually kept—the operator must show that operating centre to somebody. If he showed an oily patch on the ground in Acacia Gardens, somewhere in the area of a traffic commissioner, it would be open to the commissioner to say that there were not adequate facilities or arrangements to maintain the vehicles in a fit and serviceable condition—for example, if there were no pits or workshops.
  Mr. Ronald W. Brown rose—
  Mr. Clarke: I shall give way to the hon. Gentleman in a moment. I know of his problems, and I supect that he wishes to embroil me in the details of one operator. That is a matter for the traffic commissioners. The Bill tells them not to grant operators' licences unless there are adequate facilities. I am merely suggesting as a matter of fact that a person will not normally be regarded as having adequate facilities if he proposes to stick his vehicle out in the street.
  Mr. Brown: I should like the hon. Gentleman to take account of the fact that when applications are made it is possible for operators to show that the place at which they maintain their vehicles is valid in the eyes of the traffic commissioners. What the commissioners do

  1315
  not know, and do not ask, is where an operator leaves his vehicles at night. Therefore, if an operator runs his business off the street, a commissioner is not involved. It has been claimed that the commissioners' concern is whether or not the vehicles are in a good condition, and whether they are properly maintained. That is not the same as granting a licence to operate off the streets.
  Mr. Clarke: That brings us back to the basic point of the argument. In granting an operator's licence, the commissioner's sole concern is public safety. He will take into account whether the person is reputable, whether he will comply with the law, and whether the vehicles are in a fit and serviceable condition. If an operator runs his business off the street, he is defying the parking regulations. That is a matter for the police, the local authority, the planning authority, and so on. However, I believe that the duties of traffic commissioners must be confined to the safety of vehicles and to licensing. We must find other ways of ensuring that the law of nuisance is enforced, that people can protect their premises, and that the town and country planning regulations are adhered to, and so on. I do not believe that the amendment will be of very much help in terms of operators' licences.
  Mr. Brown: I am told that no one has any right of appeal whatever, and that when an application is made to the traffic commissioner only the local authority and/or the police can make such an objection. Therefore, the ordinary individual, who knows the truth, cannot make any representations. Am I right in saying that the Bill, as drafted, retains that provision? If so, will the hon. Gentleman please have a look at it and see whether, in another place, we ought not to introduce an amendment to ensure that ordinary people have the right of objection?
  Mr. Clarke: I shall have a look at it. As the hon. Gentleman is anxious to pursue that problem I shall write to him setting out exactly the position about the revocation of an operator's licence once it has been granted, as well as the powers and duties of the traffic commissioners.
  Amendment negatived.
  Mr. Kenneth Clarke: I beg to move amendment No. 28, in page 20, line 7 at end insert—
  "(8) Where an application is made to the traffic commissioners by the holder of a PSV operator's licence for the grant to him of a new licence to take effect on the expiry of the existing licence and the traffic commissioners decide not to grant the new licence, they may direct that the existing licence continue in force for such period as appears to them reasonably required to enable the business carried on under the licence to be transferred to another person duly licensed to carry it on.".
  Mr. Deputy Speaker: With this we may take Government amendment No. 30.
  Mr. Clarke: This amendment deals with the situation in which one applies for the renewal of an operator's licence and it is refused or, under clause 22, which relates to amendment No. 30, the traffic commissioners decide to revoke an operator's licence. In both cases the operator is potentially going out of business, either because he has been refused renewal or because he has had his licence revoked. Howeved, we think it right to give him a breathing space in which to transfer the business to someone else, who can carry it on as a going concern. In fact, we are enjoined to do just that by a European Community directive that covers that point.
  I suggest that it is a perfectly sensible provision, as it enables someone who is being put out of business because of the drastic powers of the traffic commissioners to sell the business as a going concern. It also protects the public against a sudden, overnight withdrawal of services where the traffic commissioners have taken the drastic step of ending an operator's licence. In practice, it will give protection to the public and also to a company that would otherwise go out of business overnight, with a consequent effect on employment, and so on.
  Mr. Booth: This amendment bears out the point that I was making, that the Government are reposing enormous confidence in and placing enormous responsibilities on the traffic commissioners. If, as the Parliamentary Secretary suggests—I am not saying that he is wrong—there is adequate safeguard, that is only because the traffic commisioner is able to judge accurately that a business should be carried on beyond the point at which the operator could get his licence renewed,

  1317
  or even beyond the point at which the traffic commissioner has intervened to revoke his licence for a limited time. Whether that can be done safely or without any risk to the public depends very much on the judgment of the commissioner as to the reasons why he is revoking the licence and the reasons why he is refusing to renew. He may be refusing to renew because the present owner has not got proper maintenance facilities for his vehicles, through allowing them to be run by an incompetent manager, or has not ensured that drivers have properly carried out their duties.
  These amendments, following that decision, inform the commisioner that he has the power to allow the business to be run in spite of the fact that he has decided that he must revoke the licence and will not renew for a period. Under both amendments the commisioner will have power to fix the period. While we do not oppose these Government amendments, because we see there is a genuine difficulty and appreciate the point that the Parliamentary Secretary makes about EEC requirements, we feel that we should be given further assurance and some evidence of the number of cases, possibly at some time in the future, when we return to the matter, when commissioners grant to operators the right to continue to run a business, and the reasons for which licences have been revoked or renewal refused in such circumstances.
  Mr. Clarke: I am not sure on what occasion we are likely to return to this interesting topic, relating to how many licences have been revoked or not renewed. We have every confidence in the ability of the traffic commissioners to look after public safety in passenger transport. Nothing in the Bill weakens their ability to judge the suitability of operators, the safety of vehicles, and so on. We are giving them a new permissive power. They may, in circumstances where they think fit, extend the period within which an operator may continue to operate, although they intend not to renew his licence or to revoke it. They will use this power only where they are satisfied that safety will not be threatened by the way in which the business is conducted in the meantime. The right hon. Gentleman is right. They will be allowed to fix whatever period seems to them fit.
  1318
  I do not think that it would be the general will of the House if I answered at this stage the questions that have been asked about the number of cases that have arisen in which licences have not been renewed or have been revoked, and what were the causes. I shall try to gather together such statistics as exist within the Department and put them in a letter to the right hon. Gentleman. In Committee we canvassed thoroughly the various situations within which an operator might lose his licence. All can broadly be stated to relate very much to the safety of vehicles and the competence of the operation, and the way in which the public can be assured that an operator will comply with the law and put on the road only those vehicles that should be on the road.
  Amendment agreed to.

Clause 22

  REVOCATION, SUSPENSION, ETC. OF LICENCES
  Amendment made: No. 30 in page 22, line 14, at end insert—
  '(5A) Where traffic commissioners decide to revoke a licence under this section, they may direct that the revocation shall not take effect for such period as appears to them reasonably required to enable the business carried on under the licence to be transferred to another person duly licensed to carry it on.'.—[Mr. Kenneth Clarke.]

Clause 27

  AMENDMENT OF TRANSPORT (LONDON) ACT 1969
  10.30 pm
  Mr. Prescott: I beg to move amendment No. 32, in page 27, line 2, leave out 'Minister' and insert 'independent body'.
  Mr. Deputy Speaker: With this, it will be convenient to take the following amendments:
  No. 33, in page 27, line 2, at end insert—
  '(1A) The independent body shall be appointed by the Minister and shall be comprised of nominees of the Greater London Council, trade unions representing bus workers, and the Transport Users' Consultative Committee.'.
  No. 34, in page 27, line 13, leave out 'Minister' and insert 'independent body'.
  No. 35, in page 27, line 16, leave out 'Minister' and insert 'independent body'.
  No. 36, in page 27, line 28, after 'On', insert:
  'the recommendation of the independent body on'.
  Mr. Prescott: We had intended to debate the issue of appeals but we are faced with the time element, and there is clearly not time to deal fully with all the arguments. The clause has already been amended in Committee in relation to the appeals procedure to apply in London. Again, one must face the fact of the uniqueness of the London area and its transport system. For example, there is not a requirement for a road service licence, as such. For a London bus service one must make an application to the London Transport Executive.
  The Government orginally wanted to establish that the appeal would be to a commissioner, but the commissioner did not deal with bus applications in London. In this case the appeal was not to be to the commissioner but to the Minister. The arguments were put forward by a number of bodies and by the hon. Member for Faversham (Mr. Moate) that the appeals system should be changed and that the commissioner should be bypassed and the appeal made directly to the Minister. In areas outside London the appeals are directly to the commissioner in the case of bus operations, but there is always then a right of appeal to the Minister. Under this arrangement any refusal to grant a bus operation certificate or licence to operate can be denied by the London Transport Executive as before, but the appeal now will be directly to the Minister.
  By these amendments we had hoped to discover whether an independent body could be returned. Such a body would consist of appointed representatives, and that in itself would cause considerable controversy. The argument might be that the representatives should be elected, but in the amendment we suggest that they should be appointed in the same way as commissioners in the rural areas are appointed, and that representatives of the Greater London Council, the trade unions
  1320
  representing the bus workers and the Transport Users' Consultative Committee should be members of this independent committee. To call it an independent committee presupposes that the Minister himself may not be considered to be independent.
  Much of the transport system in London is extremely controversial, and a Tory Minister and a Tory GLC deciding whether a private bus service should operate in the London area might well be considered more than a coincidence. If the Minister and the GLC were to come together in the agreement. some might feel that they were undermining the London Transport system.
  This amendment takes the matter of appeals a little further than the Committee agreed. I have been wondering for some time whether the commissioners' role is satisfactory, but I do not think that this is the time to continue the debate on the appeals, so we do not intend to press the amendment.
  Mr. Ronald W. Brown: I wish to intervene briefly, as I did not have the privilege and benefit of being on the Committee. I was a little surprised when I saw that the hon. Member for Faversham (Mr. Moate) had been chosen in Committee to move an amendment concerned with London. There are about 47 Conservative Members for London constituencies and apparently not one could be found to move the amendment. I can understand why—he would not be very popular for bringing forward this sort of proposal.
  I want to speak about the change that has been made. The Minister must accept that it is not a good one. At present the position is quite satisfactory. I contacted London Transport to ask about the current position regarding the numbers of applications dealt with under this procedure and I was told that London Transport had approved 99 applications and had refused only 23. I am told by all those who have had to deal with London Transport under the clause that they are satisfied that they are treated fairly and generously.
  There is a suspicion in the minds of many of us about the new concept that the Government are bringing forward. They claim that in London we shall be subjected to enormous competition from

  1321
  outside operators, and we are concerned. The present system is not satisfactory, not wholly because of bad management by London Transport or inadequate finances but because of the traffic conditions in London.
  At present the amount of money available to local authorities has been substantially cut back, so that they are unable to carry out the necessary roadworks to get traffic in London moving again. It seems odd that this Government are now introducing a system that will apparently allow operators to come along on the pretence of being able to improve the transport facilities in London, in terms of public transport, by acting like the old pirate buses used to do.
  I took the opportunity of re-reading a book by Barker and Robbins about the history of London Transport. It is a fascinating book, and I urge the Secretary of State to take time to read it. He will see how, in 1923, the now Lord Ashfield argued that though he was not against competition, in the context of providing transport in London it would only create increasing problems. He also identified many of the problems.
  That book takes one through the development of the pirate buses of 1923 through to 1924, which in the main resulted in the Act of 1924. That book highlights how many of the privateers operated. At first they service only the lucrative parts of the routes. They carried many destination boards, so that when they saw a lucrative area that was clearly waiting to he serviced they changed the destination board, turned the bus round, joined the queue and picked up the passengers.
  Those pirate buses also searched out areas where there was a free run. They would look for an area where passengers were waiting to travel and where there was also a good run. They would ply that area, running back and forth making money, and when they had finished carrying the bulk of the traffic—which in London is between the hours of 7 am and 9 am and again between 4 pm and 7 pm—they stopped running. That meant that it was necessary for someone else to run services during the unprofitable hours.
  Is that what the Government have in mind? The Secretary of State has taken
  1322
  to himself the power to overrule London Transport should it make a decision against which someone appeals. When I read what the Minister said in Committee I was not sure that he had established the case for the criteria that he said he would use. In answer to one of my hon. Friends, he said that the Minister would be able to check the criteria to see whether he was satisfied with it. What is laid down as the Minister's criteria? We want to know, and so does London Transport.
  Normally, when one goes to the traffic commissioner—and London Transport is the traffic commissioner in inner London—one knows the criteria by which they work. It is no longer clear from the proposal in clause 27. There are a lot of words there. It is all negated by the Minister saying that he will call it in if there is an appeal and that he will make up his mind according to what he sees.
  I am dissatisfied with that argument. I am not satisfied that the case for change has been made. I looked at the report of the Standing Committee. It appears that the amendment was delivered as a backhander. The hon. Member for Faversham suddenly tabled a very complicated clause. I do not believe that he sat in the Lobby outside, drafting it in detail. My suspicious mind leads me to feel that the amendment was the result of departmental briefing.
  The amendment is much too detailed. It is too well drafted for an ordinary amateur from Faversham, who no doubt knows London like the back of his hand. That suggests that it was handed to him. Why? Was it a departmental amendment? That would be perfectly honourable. However, I wish to know if that occurred. If so, was London Transport consulted. Was the GLC consulted? The GLC is an elected body. It controls London Transport. By taking the power embodied in clause 27 the Minister is overruling an elected council. Why? Has he discussed the issue with the GLC? Did it agree that this was the best solution? We are somehow changing something that has worked satisfactorily to date. No complaints have been made. No complaints have been heard in London. Perhaps complaints have been heard in Faversham. The House and Londoners are entitled to know why this

  1323
  interference factor is being used tonight. There is no reason for it. I hope that the Minister will give an explanation before winding up. What advantages to London does lie envisage? How will it help London Transport to operate efficiently and effectively? How will it help the GLC to fund London Transport? Indeed the Government are keen to cut down its money.
  Mr. Dobson: I shall be brief. The measure and the amendment have little to commend them. There is not much to choose between the rag, tag and bobtail independent body that we propose and that proposed by the Minister. They both fall into the, same category. They are both unnecessary interventions in the affairs of London Transport.
  As my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) pointed out, last year London Transport received 122 applications from independent bus operators. It approved 99 of them. My hon. Friend failed to point out that some of the remaining 23 applications were not turned down for reasons of quantity control; some were turned down because applicants' vehicles and professional competence were inadequate to run anything, least of all a public bus. Therefore, it would be best if the Minister were to withdraw this pathetic attempt at intervention in the affairs of London Transport.
  I cannot go along with my hon. Friend in lauding the intervention of the GLC. The sooner the law is changed and the less the GLC has to do with London Transport, the better for those who work for it and who like to travel on it. The introduction of the GLC is complicated by the Minister, the London boroughs, the Metropolitan Police and Lord knows who. All the parties involved in providing London's transport can happily blame one another for its failure to work properly.
  Mr. Ronald W. Brown: As my hon. Friend knows, I am a great believer in party conference decisions. It was a party conference decision that the GLC should take over London Transport.
  Mr. Dobson: There are certain party conference decisions that I do not agree with, and I shall not change my mind merely because policy decisions have re-
  1324
  cently been changed.
  10.45 pm
  Mr. Fowler: The internal debate within the Labour Party is indicative of the state of the party. We have had three short speeches on this fairly uncontroversial clause, and all three speakers have disagreed with each other. The hon. Member for Holborn and St. Pancras, South (Mr. Dobson) does not support the amendment put forward by his Front Bench. I am not altogether clear what the hon. Member for Hackney, South and Shoreditch (Mr. Brown) thinks of the amendment.
  We are saying for the first time that there should be a right of appeal against a decision of London Transport. The hon. Member for Hackney, South and Shoreditch is right that at present there are comparatively few applications, and only a quarter of those are turned down. Nevertheless, we believe that an independent operator should have the right of appeal against the decision of London Transport. It is a check. It serves notice on London Transport that it is not judge and jury in its own cause. It emphasises to the new operator that there is a right of appeal if he believes that he has been unjustly treated. That is all that we are setting out to do. It is a moderate and reasonable right of appeal.
  The only issue between us is where the appeal should go. We believe that it should come to the Minister as in other appeals from traffic commissioner decisions. The Opposition want an independent body set up, appointed by the Minister and comprising nominees of the Greater London Council, the trade union movement, representing bus workers, and the Transport Users' Consultative Committee.
  I shall not weary the House by setting out all the ways in which this group of amendments is defective, but it is not at all clear whether the decision of that great new body would be binding on the Minister or merely advisory.
  Having listened to the arguments in Committee, I am surprised that the Opposition should suddenly introduce this totally new body into the London appeals procedure. The hon. Member for Holborn and St. Pancras, South spent most of the time in Committee complaining. He has at least been consistent in his

  1325
  remarks. First, he did not want to see anyone interfering, but, worst of all, he felt, was a proliferation of the authorities responsible for London Transport. I fully understand why he is not in sympathy with the amendments.
  We would have another quango that would be asked to do an uncertain job, without its powers being clearly defined. Until 12 months ago we had too many quangos. At long last we are cutting back on that form of life. We should not add new quangos, particularly for transport.
  Amendment negatived.

Clause 29

  REDUCTION OF MINIMUM AGE FOR DRIVERS OF PUBLIC SERVICE VEHICLES
  Mr. Fowler: I beg to move amendment No. 37, in page 28, line 19, leave out from 'Act' to end of line 21 and insert
  '(PSV drivers' licences: minimum age and other conditions) for the words from "unless" in the first place where it occurs to the end of the subsection there shall be substituted "unless he fulfils such conditions as may be prescribed".'.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this it will be convenient to take Government amendments Nos. 38, 39 to 41, and 55.
  Mr. Fowler: When, in Committee, I accepted the original amendment relating to the age of PSV licence holders, I said that it would require alteration to take account of Community law. These amendments do that, and they also take account of the debate in Committee that centred on the need for bus companies to be able to employ younger drivers.
  The amendments therefore restrict the driving of large passenger vehicles to people employed by PSV operators. I believe that we may be confident that those drivers will be carefully selected and trained, and will take tests of competence.
  The minimum age for holding a PSV licence has been removed, but—as was explained in Committee—Community law prevents 18-year-olds from driving PSVs in some circumstances. The amendments to the Road Traffic Act
  1326
  1972 enable 18-year-old employees of PSV operators to be trained to drive public service vehicles. When qualified they would therefore be able to drive on regular passenger services on distances up to 50 kilometres. They are also authorised, when qualified, to drive empty buses between depots.
  Mr. Michael McNair-Wilson: Amendment No. 38 seeks to ensure that a professionally regulated training schedule approved by the Ministry of Transport should apply to those who are intending to take the PSV vehicle test. I tabled this amendment because, surprising as it may seem, there is no statutory requirement on local authorities to enforce tests for the issue of public service vehicle licences. There is no Ministry-structured training scheme that those seeking PSV licences must enter, nor is there a Ministry-approved training code.
  From these two statements I would not like to give the impression that I know of any local authorities that do not insist on tests. I merely make the point because it seems incredible that it is possible for a local authority to allow a PSV licence to be obtained without a test. As the law now stands it is purely at the discretion of the traffic commissioners.
  The situation varies from area to area, and in the South-East the National Bus Company told me that either its drivers have to take a test organised by the Metropolitan Traffic Commissioners or, if they come within the area of the South-Eastern Traffic Commissioners, the training and testing of the driver is done by the National Bus Company.
  I am also told that London Transport has, dare I say it, so little faith in the PSV licence, as such, that it insists that its drivers take a further test although they might already possess a PSV licence. London Transport has been known to fail drivers who hold such a licence.
  On the other hand a small coach company in my constituency called "Swansdown" told me that it devises the training schedule for its drivers but that the testing is done under the auspices of the South-Eastern Traffic Commissioners at Swindon and Reading, who impose a one-and-a-half-hour test.
  I hope that in those few words I have at least made it clear to the House that

  1327
  the pattern for training and testing varies. While small companies may embark on such training as they believe to be necessary, the larger companies follow training procedures laid down by the Road Transport Industry Training Board and if they use a qualified instructor they are given a grant by that board.
  By the same token, if training is an arbitrary business, so is testing. It appears that, depending on the area, one's luck in getting a PSV licence may or may not be good, since some examiners are known to impose much stricter tests than others. Of course, it may be said that even if the situation is as arbitrary as I have described the system has worked well and that, by and large, the safety rate for buses in this country is at a reasonable and low level and that we should therefore, leave well alone.
  I do not dissent entirely from that argument, However, if 18-year-olds are to be allowed to have PSV licences to drive on regular bus routes and perhaps drive school buses we should rationalise the training and testing procedure to give it more structure.
  Eighteen-year-olds are likely to have only recently won their driving licences, and their road experience is likely to be minimal. In the bus industry maturity and experience are considered to be two of the greatest assets that drivers can possess, and yet we are giving young people the ability to drive large vehicles—with some limitations—and are not insisting on a training procedure approved by the Ministry of Transport or a statutory direction to local authorities that tests must be carried out under the auspices of the traffic commissioners. If we are to make a change in the age at which PSV licences can be granted we should make another nationwide change.
  No charge is made for the test. As a result, applicants apply for tests but do not turn up. There is no penalty. It is not surprising that my local coach company says that the waiting time in the area is from six to eight weeks. A company might not be able to employ a driver because he cannot take an early test, although another driver might not bother to turn up. The time has come to impose not only a structured training procedure but a charge for the test.
  One of the organisations representing
  1328
  the bus industry says that it does not oppose reducing the minimum age to 18 but that it believes that for safety the first year after a PSV licence has been awarded should be probationary. During that time the young driver should acquire practical knowledge before taking passengers on a regular route or driving a school bus.
  I hope that the Minister will accept the spirit of my amendment. He said that we have brought clause 29 provisions within the European directive. In addition to the 50-kilometre stipulation, is the Minister agreeing that young drivers should not drive public vehicles that can carry more than 15 passengers? I understand that that is in the directive, and yet it does not appear to be covered by the amendment.
  Mr. Booth: I have sympathy with the arguments advanced by the hon. Member for Newbury (Mr. McNair-Wilson). I regret that there has been so little consultation by the Government on the proposition. The major operators have not assented to it. They believe that there is a case for allowing people to begin training before 21 years of age and for allowing them to drive vehicles only in certain circumstances. They suggested that they should drive buses from maintenance depots to bus sheds and on similar journeys that would give the drivers experience of handling the vehicles in advance of driving buses containing large numbers of passengers in difficult traffic conditions.
  11 pm
  I go along with the argument of the hon. Member for Newbury that if younger people are to drive public service vehicles we should ensure that there are high standards of training. I am tempted to feel rather conservative in the arguments that I advance. However, I rest to some extent on the accident statistics and the views of insurance companies, which think that a young driver, or someone who does not have considerable experience in this area, is a considerable insurance risk and often load insurance premiums accordingly. There are a number of opportunities to introduce young people to driving skills in advance of allowing them to drive public service vehicles. The matter was introduced suddenly on Report.
  It is nonsense to apply the EEC

  1329
  regulations in an unqualified way. Those regulations appear to say that it is quite all right for a young driver to drive a bus full of passengers around Marble Arch in the rush hour but that it is not all right for him to drive a much smaller bus along a country road on a 32-kilometre route. That seems to be the effect of the EEC regulations. Yet the Minister is now introducing them in an unqualified way into the United Kingdom driving situation.
  For those reasons I hope that the Minister will give us assurances that he will consider more carefully the special problems that apply to driving public service vehicles in British urban and rural driving conditions. He must ensure that nobody takes a bus out in those conditions unless he is trained. He must be thoroughly satisfied that there will not be an increased risk from relatively untrained and inexperienced drivers conveying their passengers on stage and other bus service routes.
  Mr. Iain Mills: I regret having to rise to reply to the comments made. However, having moved an amendment in Committee on behalf of my right hon. and hon. Friends I feel that I should say a few words.
  First, I heartily condemn the use of the term "young driver". Surely in this age we should be talking of trained or untrained drivers. To imply that youth automatically means incompetence is quite wrong. One should apply the regulations for PSV licences to drivers of all ages, on a basis of competence, not age. There must be many young men and women who at the age of 18 are far more competent, both physically and in their manual dexterity skills, than some people with bad eyesight or health, or who lack training or experience. I also condemn any suggestion that age automatically brings experience. In terms of public service vehicles, surely skill is a result of experience.
  From Back Benchers' investigations before we proposed the amendment, it was clear that the use of young drivers of 18 would occur for three reasons. First, the National Bus Company has a great shortage of drivers. It finds it difficult to get them. In some areas there is a shortage of up to 2,000 people. Secondly, the
  1330
  career development is difficult. If drivers may start work only at 21, what can they do from the age of 18? Presumably they must sit on oil drums in the garage and do nothing. Thirdly, the unsocial hours during which drivers must operate are much more easily tackled by young people. Finally—and probably this is the most telling remark—we seem to be out of line with our EEC compatriots on many of our regulations in this respect.
  I seriously ask the House to be very careful in its judgment of young drivers. It is a question not of experience but of competence, and I hope the Minister will cover that point.
  Mr. Fowler: First, I will give an assurance to my hon. Friend the Member for Newbury (Mr. McNair-Wilson) on the question of fees. He will not be surprised to know that my Department has taken that on board and that in the Bill there is a fees clause under which a charge can and will be made.
  The second assurance that I should like to give him and the right hon. Gentleman is that most certainly we agree that training is important, particularly for young drivers. The amendments that I have moved make it clear that young people without PSV drivers' licences must drive large passenger vehicles under supervision. I would consider a more formal scheme, and I certainly gladly give my hon. Friend the assurance that I shall consider his suggestion to see whether there is further movement that we can make to meet the point that he and the right hon. Gentleman made.
  Amendment agreed to.
  Amendments made:
  No. 39, in page 28, line 22 leave out 'In the Table in section 96(1)' and insert 'Subsection (1) of section 96'.
  No. 40, in page 28, line 24, leave out from first 'vehicles)' to '"large' in line 29 and insert—
  'shall have effect as if in the Table in that subsection, in item 6, the age of 18 were substituted for the age of 21 in relation to a large passenger vehicle where—

  (a) the driver is not engaged in the carriage of passengers and either holds a PSV driver's licence or is acting under the supervision of a person who holds a PSV driver's licence, or

  (b) the driver holds a PSV driver's licence and is engaged in the carriage of passengers on

  1331
  a regular service over a route which does not exceed 50 kilometres, and in either case the operator of the vehicle holds a PSV operator's licence granted by the traffic commissioners for any area not being a licence which is of no effect by reason of its suspension.

  (3) In subsection (2)—'.
  No. 41, in page 28, line 32 at end insert—
  '"PSV driver's licence" means a licence to drive a public service vehicle granted under section 144 of the 1960 Act.
  (4) The provisions of subsections (2) and (3) may be amended or repealed by regulations under section 96(2) of the Road Traffic Act 1972.'.—[Mr. Fowler.]

Clause 35

  INTERPRETATION OF PART I
  Mr. Kenneth Clarke: I beg to move amendment No. 50, in page 31 leave out lines 39 and 40 and insert—
  '"excursion or tour" means a stage or express carriage service on which the passengers travel together on a journey, with or without breaks, from one or more places to one or more other places and back;'.
  Mr. Deputy Speaker: With this we may take Government amendment No. 73.
  Mr. Clarke: These amendments substitute a new definition of "excursion" or "tour" in the Bill to replace that which is in the 1968 Act. The new definition is reasonably clear and succinct. It replaces 21 lines of unintelligible gobbledegook in the old Act and I hope that the House will therefore accept it as an improvement.
  Mr. Booth: I congratulate the Government on this amendment. In Committee we found that the most appalling difficulties arose from the original definition, which has been carried forward in British law for a considerable time. I think it is worthy of note that the Government have applied their mind to it and come forward with a definition that makes considerable sense, and that I hope will be interpreted by the British courts in the way in which it is obviously intended to be interpreted.
  Amendment agreed to.
  Mr. Kenneth Clarke: I beg to move amendment No. 52, in page 32, line 25 leave out
  'of another member State or'.
  Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 53.
  Mr. Clarke: In the Standing Committee the hon. Member for Birmingham, Stechford (Mr. Davis) asked me why the relevant convictions in terms of an application for an operator's licence had to be in the EEC area and why, for instance, countries such as Switzerland, outside the EEC, were not equally relevant places. He and the other members of the Committee will well remember that I could not think of the slightest intelligent reply. We have therefore produced these two amendments, which meet the point and extend relevant convictions to relevant convictions in any country.
  Amendment agreed to.
  Amendments made:
  No. 53, in page 32, line 26, after 'Ireland', insert
  ',or of a country or territory outside the United Kingdom,'.
  No. 55, in page 33, line 3, leave out from 'vehicle' to 'is' in line 4. [Mr. Fowler.]

Clause 36

  TRANSFER OF THE UNDERTAKING OF NATIONAL FREIGHT CORPORATION
  Mr. Fowler: I beg to move amendment No. 76A, in page 33, line 34, at end insert 'and nominated'.
  This amendment is entirely consequential on the amendment accepted in Committee by my hon. Friend the Parliamentary Secretary to substitute "formed" for "nominated" in subsection (1) and should not delay the House for very long.
  Amendment agreed to.

Clause 37

  INITIAL GOVERNMENT HOLDING IN SUCCESSOR COMPANY
  Mr. Booth: I beg to move amendment No. 77, in page 34, line 34, at end insert—
  '(4A) Where the Minister proposes to exercise any power to dispose of shares in the

  1333
  successor company he shall not issue or register to any person or nominee of that person more than 5 per cent. of the shares in the company, and any shares issued or registered in contravention of this subsection shall be deemed for all purposes to be owned by the Minister.'.
  The purpose of the amendment is to prevent the sale of more than 5 per cent. of the shares in the National Freight Corporation to any one person and so to ensure a spread of ownership when the Government's holding in the NFC is dispersed and make certain that no one obtains a dominant position. The operation of the NFC is commonly agreed in the House, by people who have followed its activities closely, to be efficient, and it is more likely to remain that way if the ownership is spread. That is why we are proposing the amendment.
  Mr. Fowler: Although I have some sympathy with the purpose underlying the amendment, I am afraid that the Government cannot accept it. It is certainly the intention, in accordance with normal practice, to give preference to small applications in the event that the initial offer for sale is oversubscribed, but I do not agree that it would be desirable to impose a maximum limit on the proportion of shares any applicant can purchase. Such a limit might deter some institutions from subscribing and might result in some shares on offer not being taken up. I see no reason why the Government should be subject to special restrictions in this respect and thus risk securing a poorer return for the taxpayer than could otherwise be obtained.
  Mr. Cowan: Will the Minister give an assurance that the terms and conditions of service and rates of pay of employees of the NFC will not be undermined in the event of the Government's policy being carried out?
  Mr. Fowler: That takes us back several hours to an earlier debate. I can only refer the hon. Gentleman to what was said then, when we went over this question in some detail. We are dealing now not with that question but with the amendment proposed by the right hon. Gentleman. I do not believe that it is justified, and I fear that we cannot accept it.
  Amendment negatived.

Clause 38

  TRANSITIONAL PROVISIONS WITH RESPECT TO RESERVES ETC.
  Mr. Booth: I beg to move amendment No. 78, in page 35, line 28, at end insert:
  '(6) Notwithstanding any other provisions of this Act any tax losses which before the appointed day were available to the Corporation shall not for the purposes of the Taxes Acts be available to the successor company.'.
  The purpose of the amendment is to prevent the tax losses of the NFC being transferred to the successor company. In an earlier debate this afternoon I was told, I think by the hon. Member for Horsham and Crawley (Mr. Hordern), that the existence of the tax losses was evidence of the NFC's unprofitable operation in the past.
  I was assured by the Minister that all the subsidiary companies of the NFC now in operation are operating profitably, so I suggest to the House that there can be no possible justification for handing over the tax losses of the NFC to a successor company. By handing them over to a successor company to which the Government's securities will be sold we shall in effect be sanctioning the offsetting of tax liabilities by other people. I put it to hon. Members who are interested now, and might be interested in 12 hours' time in the special tax arrangements that we shall have over the period during which the Minister will be selling off this public asset, that if people are able, because they buy shares in the NFC, to acquire tax losses, they will be buying into a position in which they can avoid a tax liability that would normally be placed upon them as a result of other operations that they have carried on.
  I remember being told by Conservative Members that people who evade taxes do not remove the need for taxes. They merely push the burden on to others. The Government are conniving at an arrangement whereby those people who purchase shares in the successor company to the NFC will be given, as a bonus, a duty of other people to pay the tax burden that they would otherwise normally have to pay. It is unjustifiable on any grounds of public propriety, or any reasonable financial basis, that those

  1335
  people who purchase shares when the NFC is transferred from a nationalised industry to a Companies Act company should have a special facility accorded to them that will not be accorded to anyone else in the country.
  11.15 pm
  They will be relieved of taxation as a result of a transaction to which they have made no contribution and to which the public has paid in the past in dealing with the losses that were made by the National Freight Corporation. I can see no reason why the public should be further disadvantaged by the Government passing on those tax losses.
  Mr. Fowler: The amendment springs from a misconception that we thought we had cleared up in Committee. It seeks to withhold from the successor company any tax losses incurred by the NFC before the appointed day.
  As we pointed out in Committee, tax losses made by NFC subsidiaries, principally National Carriers, can be set off only against future trading profits of the same business. Therefore, there is no way in which another company can buy a controlling interest in the successor company and in some way use the NFC's past tax losses to offset future profits in another subsidiary or another part of the business. Those tax losses cannot, therefore, be considered as some sort of asset that a purchaser might wish to acquire so as to avoid paying taxes on his other businesses.
  If the amendment were accepted, it would create a positive tax disadvantage for subsidiaries of the successor company that would not otherwise exist. If the amendment were to become effective, companies such as National Carriers would not be able to set off past tax losses against future trading profits. Their competitiveness would suffer, and prospects for both companies involved and their employees would be severely worsened. I cannot believe that Labour Members wish that to happen. I am prepared to talk further with them, but I should have thought that at this stage they might wish to ask leave to withdraw their amendment.
  Amendment negatived.

Clause 41

  MEANING OF "THE RELEVANT PENSION OBLIGATIONS"
  Mr. Fowler: I beg to move amendment No. 79, in page 38, line 1, leave out from "pay" to "employment" in line 2 and insert
  "contributions in respect of current periods of".
  Mr. Deputy Speaker: With this, we may take Government amendment No. 80.
  Mr. Fowler: These amendments clear up an ambiguity to which the Opposition drew our attention in Committee. For the reasons that I gave in the earlier debate on British Rail pensions, it is not the intention that current service pensions will be covered by the provisions of the Bill. There was a possible doubt about the provision of so-called antedating contributions. It is our intention that antedating contributions will not be treated as current service pensions, and that they will be covered as relevant pensions obligations by the Bill. The amendments resolve that doubt, and meet the undertakings that we gave to the Committee.
  Amendment agreed to.
  Amendment made: No. 80, in page 41, line 16, leave out from 'pay' to 'employment' in line 17 and insert
  'contributions in respect of current periods of'—[Mr. Fowler.]

Clause 45

  UNFUNDED PROPORTION OF RELEVANT PENSION OBLIGATIONS
  Mr. Deputy Speaker: I understand that amendment No. 81 is not desired to be moved.
  Mr. Kenneth Clarke: A slip has been made in the tabling of amendment No. 81, Mr. Deputy Speaker. It was intended to follow up an offer of a manuscript amendment that was made in Committee. At that stage the Government sought to insert the words contained in this amendment, or similar words, in line 25 on page 42 of the Bill. Unfortunately in drafting the amendment for Report an error was made, and the Amendment Paper refers to the words appearing in line 20. The

  1337
  words would make sense, as a matter of law, in line 20, and if I recollect the Committee proceedings, that would be more welcome to the Opposition.
  In Committee the Government undertook to enter into a duty to consult the various bodies concerned before the final, second determination of the unfunded proportion of each pension fund. We made it clear that we were not prepared to enter into an undertaking that bound us to consult by statute on the first rough and ready determination of the unfunded proportion.
  We intend the words in the amendment to apply only to clause 45(1)(b) and not to (1)(a) as well. If the Opposition are prepared to treat what I am now saying as moving a manuscript amendment in the terms of amendment No. 81 by substituting line 25 for line 20, I commend the manuscript amendment to the House.
  Mr. Deputy Speaker: I am not quite sure what has been proposed.
  Mr. Clarke: I shall move amendment No. 81, Mr. Deputy Speaker. I shall then seek the leave of the House to withdraw it. I shall then move a manuscript amendment that will be in the same terms except that it will have line 25 in the place of line 20.
  I beg to move amendment No. 81, in page 42, line 20, at beginning insert:
  'After consulting with the persons administering the scheme and the Board or, as the case may be, the successor company'.
  Mr. Deputy Speaker: At the moment I think that we are discussing amendment No. 81. The Chair has been informed of the manuscript amendment and has selected it. We are dealing with amendment No. 81 and amendment (a).
  Mr. Booth: I am tempted to take advantage of the amendment, but I shall not do so. I acknowledge that there was a genuine mistake. When I first read the amendment I found it enlightening. It seemed that all our arguments in Committee about the importance of consultation on the initial determination of the unfunded proportion had fallen not on stony ground, as we thought, but on fertile ground. It has never been our claim that the Government are infallible. I accept that in this instance an error has been made. The Opposition will not seek
  1338
  to oppose the withdrawal of the amendment.
  Mr. Clarke: I beg to ask leave to withdraw the amendment. I shall seek to be allowed to move formally the manuscript amendment.
  Amendment, by leave, withdrawn.
  Manuscript amendment made: In page 42, line 25, at beginning insert:
  'After consulting with the persons administering the scheme and the Board or, as the case may be, the successor company'.—[Mr. Kenneth Clarke.]

Clause 47

  REDUCTION OF PAYMENTS IN RESPECT OF CERTAIN SUPPLEMENTATION SCHEMES
  Mr. Booth: I beg to move amendment No. 82, in page 43, line 35 leave out 'exceed its liabilities' and insert—
  'exceeded its liabilities on 31st December 1979'.
  Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 83, in page 43, line 44, at end insert—
  '(2A) If the actuary to the basic scheme certifies that following a reduction as specified in subsection (2) of this section in payments to the persons administrating the supplementation scheme the basic scheme has liabilities exceeding its assets at any time later than one year after the reduction was made, the payments to the persons administering the supplementation scheme made under section 43(1) shall he increased for each financial year after the date of the actuary's certificate by the aggregrate amount for that year of such of the increases mentioned in subsection (1) as become payable from that date or, if less, the relevant proportion of those increases.'.
  No. 84, in page 44, line 2, leave out from first 'by' to end of line 3 and insert
  '85 per cent. of the amount by which the assets of that scheme exceed its liabilities'.
  Amendment (a) to amendment No. 84, leave out '85 per cent.' and insert '70 per cent.'.
  No. 85, in page 44, line 7, leave out 'exceed its liabilities' and insert
  'exceeded its liabilities on 31st December 1979'.
  No. 86, in page 44, leave out lines 11 to 13.
  Mr. Booth: The amendments all relate to a group of railway pension

  1339
  schemes. A serious problem is posed. Where a reduction has been made in payments to a supplementation scheme and consequently the basic scheme runs into deficit, amendments Nos. 82 and 83 require that the payments to the supplementation scheme must be increased. That probably is a somewhat abstruse proposition to those who did not serve in Committee. Therefore, I shall offer some explanation.
  It has been the practice for a number of years for pension increases granted by the British Railways Board under schemes of supplementation to be reduced by the amount of any increase that pensioners have had from their basic schemes after retirement. The basic schemes are those that pay fixed pensions. Supplementation schemes have been set up with the sole objective of adding to the payments made under the basic scheme to maintain their purchasing power.
  The justification for reducing the supplementation scheme payments is the increase in the basic scheme. The payment under the supplementation and the payment under the basic scheme, added together, maintain what was the original purchasing power of the basic scheme.
  In practice, the offsetting of the increase in the supplementary pension payments against increases in the basic pensions has been less than complete. That is partly because the offsetting does not occur until the supplementation scheme is reviewed, and partly because there is no offsetting in the case of people who have not yet retired. It does not apply to active members of a scheme.
  The net effect of these factors is that in the various distributions of surplus that have occurred in railway pension schemes over the past few years the proportion of the surplus that has been offset averaged 60 per cent., or perhaps a little less.
  I shall give an example that may help to make the position clearer. On 1 January 1976 the Great Western Railway Salaried Staff Widows and Orphans Pension Society increased its benefits. The cost was met out of a surplus revealed at an actuarial valuation. A comparatively small part of the increase related to serving employees, and was not offset. The majority of the improvement related to pensioners, and consisted of an increase
  1340
  of 29 per cent. in the pensions payable from the society.
  The board did not seek to reduce the existing supplement that had been granted because of cost of living increases. Instead, the offsetting was achieved by not granting any supplement in December 1976 and by granting only a much reduced supplement on 1 December 1977. There was a delay of about 18 months before the whole of the pension increase was fully offset against supplementation. That was a significant factor. The net effect was that only 59 per cent. of the total surplus revealed for active members and pensioners was clawed back on that occasion.
  There was no uniformity of practice between the clawback in the various schemes, and I have information on that matter. In the case of the North Eastern Railway Servants' Pension Society, the clawback averaged about 49 per cent.; in the London and North Western Railway Provident Society for providing Pensions for Widows and Orphans of Members of the Salaried Staff, 78 per cent.; in the Great Western Railway Salaried Staff Widows and Orphans' Pension Society, 44 per cent.; in the Great Western Railway Enginemen and Firemen's Mutual Assurance, Sick and Superannuation Society—I am throwing that in to prove that I am not being too selective—there was no clawback. In the LMSR (North Staffordshire Section) Friendly Society there was no clawback; in the Thomas Bantock and Co. Benevolent and Pension Fund the clawback was 61 per cent.; and in the Great Western Railway Widows and Orphans' Benevolent Fund, it was 75 per cent. In practice, there has been a range of clawback of the additional amounts paid out under the supplementation schemes following an increase in the basic scheme.
  Having regard to that history, it is fair to say that if the Bill is not to worsen the position of the pensioners in the older schemes, not more than about 60 per cent. of the surplus should be clawed back by the Government.
  The way in which the Government propose to claw back the surplus is to reduce the payments that they make to those administering the pensions in the basic schemes. Has the Minister ensured that there is a mechanism that allows such a cutback in payments to be covered by

  1341
  the other scheme? I presume that there is, but I would like it confirmed and on the record. If there is not, it would be difficult for those administering the funds to take money from another fund to make up for the reduced Government payment.
  11.30 pm
  That is not the principal issue that we are raising in the amendment. We are raising two principal issues. One is the amount of the clawback and the number of occasions on which it may occur. We propose in amendment (a) to amendment No. 48 to reduce the amount that the Government can claw back from the surplus in the supplementation scheme from 85 per cent. to 70 per cent. That is splitting the difference to some extent. We think that this is a reasonable request to make to the Government against the historic position where only about 60 per cent. has been clawed back.
  Coupled with that there is a provision in amendments Nos. 85 and 86 that the clawback should take place only once. As the Bill is drafted, the Government can decide to claw back on any occasion when the Government Actuary certifies for them that these funds have assets in excess of their liabilities.
  These are matters of argument. A matter about which there can be no argument is that there will he a considerable problem for people who have to administer these supplementation funds if on some future occasion the actuary certifies that the fund has assets in excess of its liabilities and the Government then claw back and at a future date the basic scheme runs into deficit and, because of what the Government have clawed back in the past from the supplementation fund, that fund is unable to sustain the purchasing power of the pension.
  Amendments Nos. 82 and 83 provide that in those specific cases where the clawback has taken place and subsequently the combined operation has run into deficit—that is, where the supplementation fund out of which the Government have taken the money by clawback is then unable to carry out the purpose for which it was set up—the Government should reinstate—in other words, the Government should then adjust the
  1342
  deduction in payments which they have made to the basic fund. That is the least that the Government can do.
  Surely it cannot be the intention of a Government whose Minister of Transport has said that whatever else the Bill will do it will not worsen the position of the pensioners, to use their majority in the House to claw back up to 80 per cent.—the point applies even though it is only 60 per cent. or 70 per cent. of the surplus in a fund set up specifically for supplementation of basic pension schemes—and to leave schemes in a position where they will not be able to fulfil the purpose for which they were set up—that is, to supplement basic schemes to maintain their purchasing power.
  I do not know how much money is involved. I have been amazed by some of the sums we have had to talk about in Committee on the wider historic pension rights. Some of these are relatively small schemes. The principle is crucial. In Committee the Minister rejected a proposition that I thought was highly equitable—that if he was to have the right to claw back from those that were in surplus he should make some contribution to those that were in deficit. The Minister would have nothing to do with that. However, tonight the Minister has the opportunity to show that it is not his intention to use this clawback provision in such a way as to destroy the basic purpose for which some of these supplementation schemes were set up.
  If the Minister uses his power here and, as a result—although I admit that at the time he makes the claw-back from a supplementation scheme he may not be able to foresee that two or three years later the basic scheme that it exists to supplement will run into deficit; we cannot necessarily foresee what will happen to basic schemes any more than we can foresee what happens to wider funded schemes—a scheme inadvertently runs into deficit, it is of crucial importance that he should then put the payments back to the position that they were in at the time the Bill was passed and pay to the basic schemes the proportion that he should fund under the provisions of the Bill but for this very peculiar provision wthin the clause which allows him to claw back part of surpluses by reducing his liability to make payments to basic schemes.
  Mr. R. A. McCrindle: I have been keeping a watching brief on this part of the Bill that relates to pension matters on behalf of the British Transport Police pensioners, to whose federation I offer some parliamentary advice. My impression is that few of the members of the British Transport Police appear to be other than convinced that as a result of the provisions they will be no worse off in terms of the pensions that they are likely to receive. They have, however, expressed concern on some points. I beg the indulgence of the House to mention them.
  Under the best pension schemes in the private sector, not only is there some form of protection for rising prices after the person has retired, albeit less generous than is normally the case in public service pension schemes; there is also a tendency in the best private schemes to improve benefits, sometimes benefits outwith retirement benefits, as the scheme progresses. It is possible to achieve improvements only by allocating surpluses as they are thrown up. The point made by some British Transport policemen is that with the sizeable proportion of any foreseeable surplus being taken away under the provisions proposed by the Government the possibility of improving the provisions of the scheme becomes remote.
  The second point that the British Transport Police pensioners wish me to draw to the attention of the House is the magnitude of the surplus offset at the level of 85 per cent., which, it is contended, almost eliminates the chance of making some of the improvements to which I have already referred. We are discussing in this collection of amendments not only the Government amendment that specifies 85 per cent. but amendment (a) to that amendment, which refers to 70 per cent.
  I have no wish to put before the House any particular percentage, although it is instructive that even the percentage proposed by the Opposition may be seen as comparatively high in some quarters. I am not pressing on my hon. Friends that they should opt for this or that percentage. I am suggesting, even at this advanced stage of discussion of the Bill, that there might be some advantage if
  1344
  they were to retain a degree of flexibility so that they do not feel that they should specify any particular percentage but could lay down a maximum that the percentage would be allowed to reach, thereby leaving them with flexibility of operation.
  My last point relates to a problem particular to the British Transport Police. I should like to quote one short paragraph from a letter directed to my right hon. Friend the Minister of Transport by the chairman of the British Transport Police Superannuation Fund, in which he says:
  "As you probably know, the Police Fund is divided into two sections. The 1968 section which now mainly comprises pensioners and which is closed to new entrants, and the 1970 section which is open to new entrants. The former does not provide any pensions increases, whilst the latter makes provision within the rules for the same increases to be paid as are granted to retired civil servants. Although there are these two sections, the Fund is treated as one entity for valuation and investment purposes. It seems to me, and to my colleagues on the Management Committee to be totally wrong for such a large slice of future surpluses to be used in the manner which you propose".
  The point that I wish to make can be summarised in two brief sentences. Can the Minister guarantee that if there is a surplus in the British Transport Police Superannuation Fund 1970 section it will not be used to pay increases to pensions payable from the British Transport Police Superannuation Fund 1968 section? If he cannot, many will feel that this is discrimination against the officers who joined the 1970 section and accepted higher contributions in order to safeguard increases to their pensions after retirement.
  To have any of this money used to pay increases to pensioners under the 1968 section would be a misuse of members' contributions paid to the 1970 section.
  I conclude by reminding the House that under the Wright report last year the British Transport Police were placed on all fours with the civil police in relation to pay, conditions and experience. One area in which they do not receive comparable treatment is pensions. It is contended that unless the Minister can meet the perfectly valid points that I have made tonight the gap on pensions will be widened between the civil police and the British Transport Police. I am sure that Ministers would not wish that to happen.
  Mr. Kenneth Clarke: I begin by agreeing with my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) that normally the position in a pension scheme which builds up a surplus is that that surplus is used to inflation-proof as far as possible the benefits in payment. Also part of the surplus is used to improve the benefits of the scheme for those still in service.
  In this case we are dealing with a set of exceptional circumstances that have arisen in the transport area where in a number of basic pension schemes that paid non-inflation-proof pensions it became the custom to pay inflation-proof pensions, and special supplementation schemes were set up to pay those inflation-proof additions to benefit. The Government then took over the obligation to pay the supplementation schemes and the inflation proofing of the benefits in payment.
  As inflation has gone up, the cost to the Government of giving that inflation proofing has gone up considerably. At the same time, that same inflation has enabled the basic schemes to start building up surpluses over and above their non-inflation-proofed pension entitlements. Given that the Government are paying a large part of the bill to inflation-proof benefits under these schemes, the Government should also have a good share of what inflation has brought to the basic schemes, and most of what the basic schemes earn by way of surplus should be devoted to defray the Government's expenditure in meeting the cost of supplementation.
  What is the proper division between the Government and the pension schemes? The main problem arises when one considers the position of those who are in service contributing to basic schemes and not receiving pensions. Those who have retired and are receiving pensions are getting all the benefit of the inflation proofing, and any surpluses under the scheme should go to the Government who are paying for the inflation proofing.
  Those still in service are paying contributions from which they are getting no benefit if every time a surplus arises nothing is done to improve their potential final benefit. We have tried to produce a fair division that would meet the position of the funds and the members still in service on the one hand, and
  1346
  the Government and the taxpayer on the other.
  11.45 pm
  All kinds of possibilities have been canvassed, but in the end those who manage these schemes preferred some fixed rule applied to all the schemes rather than a complicated formula. For that reason, in amendment No. 84 we have gone back to suggesting that 85 per cent. of any surplus in a basic scheme should be used to defray the Government's expenses for supplementing benefits under that scheme.
  Having said that, I can give one piece of good news. All the concern in the Committee turned on the LNER new section, which has surpluses of £30 million, and it was thought that the large number of members of that scheme who were in service would be deprived if 85 per cent. of that surplus went to the Treasury. However, we discovered that so great was the surplus under that scheme that it could cover the cost of supplementation many times over, so in practice the percentage taken by the Government from that—the biggest scheme of all—will be far below 85 per cent. and will not in any way damage the serving members. The benefits to the taxpayer arising out of amendment No. 84 are comparatively modest and, for the reasons that I have given, entirely fair.
  Dealing with the other points raised by the right hon. Member for Barrow-in-Furness (Mr. Booth), I cannot meet his point about what happens when a basic scheme goes back into deficit. Summarised, the argument is that if we were to accept this amendment, or anything along the lines proposed, it would be possible, as soon as a basic scheme got into surplus, for the fund managers hastily to rearrange matters, to start giving out improvements in benefits to their members, and to make sure that they were in deficit again fairly smartly to prevent the Treasury from taking its 85 per cent. We would have to take powers to control the scheme to prevent that temptation arising, and we would rather not do that.
  The right hon. Gentleman's point about pensioners who get their pensions from two funds gives rise to some complications. Clause 47 needs tidying up, and we shall table some amendments in another place to meet that point.

  1347
  I thought that we had covered every conceivable possibility of basic schemes am supplementation schemes in our debates on the clause. However, my hon. Friend the Member for Brentwood and Ongar has produced a new variety of railway pension fund—the British Transport Police Superannuation Fund, which turns out to have part of its fund paying out index-linked pensions and the other part not doing so but relying on supplementation by the Government. I should have relied on my hon. Friend to produce a new animal to make our problems worse, because I remember his expertise in this area when he and I were involved with the social security legislation in 1975.
  My hon. Friend is quite right. Clause 47 as it stands would not meet the problem and would give rise to the sense of grievance that was expressed in the letter that he read to the House. For that reason I give him an undertaking that we will table appropriate amendments in another place. We shall have to devise arrangements whereby any such surplus can be divided into two parts, one part of which is subject to the 85 per cent. that has to go to the taxpayer when it produces a surplus and the other part of which can devote its surplus to improving benefits because there will be no claim upon it by the taxpayer. I see that my hon. Friend agrees that that meets his point. On that basis I ask the House, to accept amendment No. 84 but to resist the other amendments that the right hon. Member for Barrow-in-Furness has canvassed.
  Mr. Booth: With the leave of the House, Mr. Deputy Speaker, may I say that the Parliamentary Secretary has not addressed himself to the Point of amendments Nos. 85 and 86? I will remind him. The Bill as presently drafted would allow the Government to extend the clawing back to future services and not just to the surplus at the time when the Bill is enacted. I remind him and the Minister of the assurance that they gave us time and again in Committee. They assured us that they would not worsen the position beyond the point that was guaran-
  teed by the 1974 Act.
  We have had many arguments about other improvements subsequent to that Act, but never before tonight have we had the Government doing something that could worsen the position. Under the 1974 Act, although an allowance may have been made in calculating the fund in debt for any surpluses existing at the end of 1979—that was clearly allowed under the 1979 Act—no account could have been taken for clawback purposes of any surpluses made after 1979. If the Bill is left in this form it will worsen the position guaranteed by the 1974 Act.
  I ask the Parliamentary Secretary to accept amendments Nos. 85 and 86. If he does not, I shall invite my hon. Friends to vote in favour of them, just as we would vote for the reduction of the claw-back percentage.
  Mr. Kenneth Clarke: I am sorry that I overlooked that point. The answer is "No." I do not accept that what we are doing will worsen the position compared with the 1974 Act. I shall not go once again into the technical differences between the settlement under the 1974 Act and that embodied in this Bill. We seek to achieve the same end by a different method.
  The argument of the right hon. Member for Barrow-in-Furness (Mr. Booth) overlooks what the board has been doing under the settlement in the 1974 Act to ensure that any surpluses arising on basic schemes are diverted to British Railways 1974 fund. That is the basic supplementation fund. I notice that the right hon. Gentleman nods his head. Perhaps he will not press these amendments to a Division. If we had carried on without the Bill the board would have taken steps to ensure that surpluses under the basic schemes were devoted to improving the supplementation scheme. We are changing the mechanics. We are using the method set out in the Bill to achieve precisely the same result.
  Question put, That the amendment be made:—
  The House divided: Ayes 211, Noes 276.

  Division NO.245]

  AYES

  [11.51 pm

  Abse, leo

  Anderson, Donald

  Ashley, Rt Hon Jack

  Adams, Allen

  Archer, Rt Hon peter

  Atkinson, Norman(H'get, Tott'ham

  Allaun, Frank

  Armstrong, Rt Hon Ernest

  Barnett, Guy (Greenwich)

  Barnett, Rt Hon Joel (Heywood)

  Harrison, Rt Hon Walter

  Pavitt, Laurie

  Benn, Rt Hon Anthony Wedgwood

  Haynes, Frank

  Pendry, Tom

  Bidwell, Sydney

  Heffer, Eric S.

  Penhallgon, David

  Booth, Rt Hon Albert

  Hogg, Norman (E Dunbartonshire)

  Powell, Raymond (Ogmore)

  Boothroyd, Miss Betty

  Holland, Stuart (L'beth, Vauxhall)

  Prescott, John

  Bradley, Tom

  Home Robertson, John

  Race, Reg

  Bray, Dr Jeremy

  Homewood, William

  Radice, Giles

  Erown, Hugh D. (Provan)

  Hooley, Frank

  Rees, Rt Hon Meriyn (Leeds South)

  Brown, Ronald W. (Hackney S)

  Horam, John

  Richardson, Jo

  Brown, Ron (Edinburgh, Leith)

  Huckfield, Lea

  Roberts, Albert (Normanton)

  Buchan, Norman

  Hudson Davies, Gwilym Ednyfed

  Roberts, Ernest (Hackney North)

  Callaghan, Jim (Middleton & P)

  Hughes, Mark (Durham)

  Roberts, Gwilym (Cannock)

  Campbell, Ian

  Hughes, Robert (Aberdeen North)

  Robertson, George

  Campbell-Savours, Dale

  Hughes, Roy (Newport)

  Robinson, Geoffrey (Coventry NW)

  Carmlchael, Neil

  Janner, Hon Greville

  Rodgers, Rt Hon William

  Cartwright, John

  John, Brynmor

  Rooker, J. W.

  Clark, Dr David (South Shields)

  Johnson, James (Hull West)

  Rowlands,Ted

  Cocks, Rt Hon Michael (Bristol S)

  Johnson, Walter (Derby South)

  Ryman, John

  Cohen, Stanley

  Jones, Rt Hon Alec (Rhondda)

  Sandelson, Neville

  Coleman, Donald

  Jones, Dan (Burnley)

  Sever, John

  Concannon, Rt Hon J. D.

  Kaufman, Rt Hon Gerald

  Sheerman, Barry

  Conlan, Bernard

  Kerr, Russell

  Sheldon, Rt Hon Robert (A'ton-u-L)

  Cowans, Harry

  Kilroy-Silk, Robert

  Shore, Rt Hon Peter (Step and Pop)

  Crowther, J. S.

  Lamble, David

  Silkin, Rt Hon John (Deptford)

  Cryer, Bob

  Lamborn, Harry

  Silkin, Rt Hon S. C. (Dulwich)

  Cunliffe, Lawrence

  Leadbitter, Ted

  Silverman, Julius

  Cunningham, George (Islington S)

  Leighton, Ronald

  Snape, Peter

  Cunningham, Dr John (Whitehaven)

  Lestor, Miss Joan (Eton & Slough)

  Soley, Clive

  Dalyell, Tam

  Lewis, Ron (Carlisle)

  Spearing, Nigel)

  Davidson, Arthur

  Litherland, Robert

  Spriggs, Leslie

  Davies, lfor (Gower)

  Lofthouse, Geoffrey

  Stallard, A. W.

  Davis, Clinton (Hackney Central)

  Lyon, Alexander (York)

  Stoddart, David

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

  Lyons, Edward (Bradford West)

  Stott, Roger

  Deakins, Eric

  McCartney, Hugh

  Strang, Gavin

  Dempsey, Jame

  McDonald, Dr Oonagh

  Straw, Jack

  Dewar, Donald

  McGuIre, Michael (Ince)

  Summerskill, Hon Dr Shirley

  Dixon, Donald

  McKay, Alien (Penistone)

  Taylor, Mrs Ann (Bolton West)

  Dobson, Frank

  McKeivey, William

  Thomas, Jeffrey (Abertillery)

  Douglas, Dick

  MacKenzie, Rt Hon Gregor

  Thomas, Mike (Newcastle East)

  Douglas-Mann, Bruce

  Maclennan, Robert

  Thomas, Dr Roger (Carmarthen)

  Dubs, Alfred

  McMillan, Tom (Glasgow, Central)

  Thorne, Stan (Preston South)

  Dunnett, Jack

  McNally, Thomas

  Tilley, John

  Dunwoody, Mrs Gwyneth

  Magee, Bryan

  Tinn, James

  Eadie, Alex

  Marks, Kenneth

  Torney, Tom

  Eastham, Ken

  Marshall, David (Gl'sgow.Sbettles'n)

  Urwin, Rt Hon Tom

  Ellis, Raymond (NE Derbyshire)

  Marshall, Dr Edmund (Goole)

  Varley, Rt Hon Eric G.

  Ellis, Tom (Wrexham)

  Marshall, Jim (Leicester South)

  Walker, Rt Hon Harold (Doncaster)

  Evans, loan (Aberdare)

  Martin, Michael (Gl'gow, Springb'rn)

  Watkins, David

  Evans, John (Newton)

  Maxton, John

  Weetch, Ken

  Ewing, Harry

  Maynard, Miss Joan

  Wellbeloved, James

  Field, Frank

  Meacher, Michael

  Welsh, Michael

  Flannery, Martin

  Meliish, Rt Hon Robert

  White, Frank R. (Bury & Radcliffe)

  Fletcher, Ted (Darlington)

  Mlkardo, Ian

  White, James (Glasgow, Pollok)

  Foot, Rt Hon Michael

  Millan, Rt Hon Bruce

  Whitehead, Phillip

  Ford, Ben

  Miller, Dr M. S. (East Kilbride)

  Whitlock, William

  Forrester, John

  Mitchell, Austin (Grimsby)

  Willey, Rt Hon Frederick

  Foster, Derek

  Mitchell, R. C. (Soton, Itchen)

  Williams, Rt Hon Alan (Swansea W)

  Foulkes, George

  Morris, Rt Hon Alfred (Wythenshawe)

  Williams, Sir Thomas (Warrington)

  Fraser, John (Lambeth, Norwood)

  Morris, RI Hon Charles (Openshaw)

  Wilson, Rt Hon Sir Harold (Huyton)

  Garrett, John (Norwich S)

  Morris, Rt Hon John (Aberavon)

  Wilson, William (Coventry SE)

  Garrett, W. E. (Wallsend)

  Morton, George

  Wlnnick, David

  George, Bruce

  Moyle, Rt Hon Roland

  Woolmer, Kenneth

  Gilbert, Rt Hon Dr John

  Newens, Stanley

  Wright, Sheila

  Ginsburg, David

  Oakes, Rt Hon Gordon

  Young, David (Bolton East)

  Golding, John

  O'Neill, Martin

  Graham, Ted

  Orme, Rt Hon Stanley

  TELLERS FOR THE AYES:

  Grant, George (Morpeth)

  Owen, Rt Hon Dr David

  Mr. Joseph Dean and

  Grant, John (Islington C)

  Palmer, Arthur

  Mr. James Hamilton.

  Hamilton, W. W. (Central Fife)

  Park, George

  NOES

  Aitken, Jonathan

  Benyon, W. (Buckingham)

  Bright, Graham

  Alexander, Richard

  Berry, Hon Anthony

  Brinton, Tim

  Ancram, Michael

  Best, Keith

  Brittan, Leon

  Arnold, Tom

  Biffen, Rt Hon John

  Brocklebank-Fowler, Christopher

  Aspinwall, Jack

  Biggs-Davison, John

  Brown, Michael (Brigg & Sc'thorpe)

  Atkins, Robert (Preston North)

  Blackburn, John

  Browne, John (Winchester)

  Atkinson, David (B'mouth, East)

  Blaker, Peter

  Bruce-Gardyne, John

  Baker, Kenneth (St. Marylebone)

  Body, Richard

  Buck, Antony

  Baker, Nicholas (North Dorset)

  Bonsor Sir Nicholas

  Budgen, Nick

  Beaumont-Dark, Anthony

  Boscawen, Hon Robert

  Bulmer, Esmond

  Bell, Sir Ronald

  Bottomley, Peter (Woolwich West)

  Burden, F. A.

  Bendall, Vivian

  Bowden, Andrew

  Butcher, John

  Benyon, Thomas (Abingdon)

  Boyson, Dr Rhodes

  Butler, Hon Adam

  Cadbury, Jocelyn

  Irving, Charles (Cheltenham)

  Proctor, K. Harvey

  Carlisle, John (Luton West)

  Johnson Smith, Geoffrey

  Raison, Timothy

  Carlisle, Kenneth (Lincoln)

  Jopling, Rt Hon Michael

  Rathbone, Tim

  Carlisle, Rt Hon Mark (Runcorn)

  Kaberry, Sir Donald

  Rees, Peter (Dover and Deal)

  Chalker, Mrs Lynda

  Kershaw, Anthony

  Rees-Davies, W. R.

  Channon, Paul

  Kimball, Marcus

  Renton, Tim

  Chapman, Sydney

  King, Rt Hon Tom

  Rhodes, James, Robert

  Churchill, W. S.

  Kitson, Sir Timothy

  Rhys Williams, Sir Brandon

  Clark, Hon Alan (Plymouth, Sutton)

  Knight, Mrs Jill

  Ridley, Hon Nicholas

  Clark, Sir William (Croydon South)

  Knox, David

  Ridsdale, Jullian

  Clarke, Kenneth (Rushcliffe)

  Lamont, Norman

  Rifkind, Malcolm

  Clegg, Sir Walter

  Lang, Ian

  Roberts, Michael (Cardiff NW)

  Colvin, Michael

  Langford-Holt, Sir John

  Roberts, Wyn (Conway)

  Cope,John

  Latham, Michael

  Ross, Wm. (Londonderry)

  Corrie, John

  Lawrence, Ivan

  Rossi, Hugh

  Costain, A.P.

  Lawson, Nigel

  Rost, Peter

  Critchley, Julian

  Lee, John

  Sainsbury, Hon Timothy

  Crouch, David

  Le Marchant, Spencer

  St. John-Stevas, Rt Hon Norman

  Dickens, Geoffrey

  Lennox-Boyd, Hon Mark

  Scott, Nicholas

  Dorrell, Stephen

  Lester, Jim (Beeston)

  Shaw, Michael (Scarborough)

  Dover, Denshore

  Lewis, Kenneth (Rutland)

  Shelton, William (Streatham)

  du Cann, Rt Hon Edward

  Lloyd, Ian (Havant & Waterloo)

  Shepherd, Colin (Hereford)

  Dunn, Robert (Dartford)

  Lloyd, Peter (Fareham)

  Shepherd, Richard(Aldridge-Br'hills)

  Dykes, Hugh

  Loveridge, John

  Shersby, Michael

  Eden, Rt Hon Sir John

  Luce, Richard

  Silvester, Fred

  Edwards, Rt Hon N. (Pembroke)

  Lyell, Nicholas

  Skeet, T. H. H.

  Eggar, Timothy

  McCrindle, Robert

  Speller, Tony

  Elliott, Sir William

  Macfarlane, Neil

  Spence, John

  Emery, Peter

  MacGregor, John

  Spicer, Michael (S Worcestershire)

  Fairbairn, Nicholas

  MacKay, John (Argyll)

  Sproat, Iain

  Fairgrieve, Russell

  McNair-Wilson, Michael (Newbury)

  Squire, Robin

  Faith, Mrs Sheila

  McNair-Wilson, Patrick (New Forest)

  Stainton, Keith

  Farr, John

  McQuarrie, Albert

  Stanbrook, Ivor

  Fell, Anthony

  Madel, David

  Stanley, John

  Fenner, Mrs Peggy

  Major, John

  Steen, Anthony

  Finsberg, Geoffrey

  Marlow, Tony

  Stevens, Martin

  Fisher, Sir Nigel

  Marshall, Michael (Arundel)

  Stewart, Ian (Hitchin)

  Fletcher, Alexander (Edinburgh N)

  Mather, Carol

  Stewart, John (East Renfrewshire)

  Fookes, Miss Janet

  Maude, Rt Hon Angus

  Stokes, John

  Forman, Nigel

  Mawby, Ray

  Stradling Thomas, J.

  Fowler, Rt Hon Norman

  Mawhinney, Dr Brian

  Tapsell, Peter

  Fox, Marcus

  Maxwell-Hyslop, Robin

  Taylor, Teddy (Southend East)

  Fraser, Peter (South Angus)

  Mayhew, Patrick

  Tebbit, Norman

  Fry, Peter

  Meyer, Sir Anthony

  Temple-Morris, Peter

  Gardiner, George (Reigate)

  Miller, Hal (Bromsgrove & Redditch)

  Thatcher, Rt Hon Mrs Margaret

  Gardner, Edward (South Fylde)

  Mills, Iain (Meriden)

  Thomas, Rt Hon Peter (Hendon S)

  Garel-Jones, Tristan

  Mills, Peter (West Devon)

  Thompson, Donald

  Goodhart, Philip

  Miscampbell, Norman

  Thorne, Nell (Ilford South)

  Goodhew, Victor

  Mitchell, David (Basingstoke)

  Thornton, Malcolm

  Gorst. John

  Moate, Roger

  Townend, John (Bridlington)

  Gow, Ian

  Molyneaux, James

  Townsend, Cyril D. (Bexleyheath)

  Gower, Sir Raymond

  Monro, Hector

  Trippler, David

  Gray, Hamish

  Montgomery, Fergus

  Trotter, Neville

  Greenway, Harry

  Morris, Michael (Northampton, Sth)

  van Straubenzee, W. R.

  Grieve, Percy

  Morrison, Hon Charles (Devizes)

  Vaughan, Dr Gerard

  Griffiths, Eldon (Bury St Edmunds)

  Morrison, Hon Peter (City of Chester)

  Viggers, Peter

  Griffiths, Peter (Portsmouth N)

  Mudd, David

  Waddington, David

  Grist, Ian

  Murphy, Christopher

  Wakeham, John

  Grylls, Michael

  Myles, David

  Waldegrave, Hon William

  Gummer, John Selwyn

  Neale, Gerrard

  Walker, Bill (Perth & E Perthshire)

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

  Needham, Richard

  Waller, Garry

  Hamilton, Michael (Salisbury)

  Nelson, Anthony

  Walters, Dennis

  Hannam, John

  Neubert, Michael

  Ward, John

  Haselhurst, Alan

  Newton, Tony

  Watson, John

  Hastings, Stephen

  Oppenheim, Rt Hon Mrs Sally

  Wells, John (Maidstone)

  Havers, Rt Hon Sir Michael

  Page, John (Harrow, West)

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

  Hawksley, Warren

  Page, Rt Hon Sir R. Graham

  Wheeler, John

  Hayhoe, Barney

  Page, Richard (SW Hertfordshire)

  Whitney, Raymond

  Heddle, John

  Parkinson, Cecil

  Wickenden, Keith

  Henderson, Barry

  Parris, Matthew

  Wiggin, Jerry

  Heseltine, Rt Hon Michael

  Patten, Christopher (Bath)

  Wilkinson, John

  Hicks, Robert

  Patten, John (Oxford)

  Williams, Delwyn (Montgomery)

  Higgins, Rt Hon Terence L.

  Pattie, Geoffrey

  Winterton, Nicholas

  Hogg, Hon Douglas (Grantham)

  Pawsey, James

  Wolfson, Mark

  Hooson, Tom

  Percival, Sir Ian

  Young, Sir George (Acton)

  Hordern, Peter

  Pollock, Alexander

  Younger, Rt Hon George

  Howell, Rt Hon David (Guildford)

  Porter, George

  Howell, Ralph (North Norfolk)

  Powell, Rt Hon J. Enoch (S Down)

  TELLERS FOR THE NOES:

  Hunt, David (Wirral)

  Price, David (Eastleigh)

  Lord James Douglas-Hamilton and

  Hunt, John (Ravensbourne)

  Prior, Rt Hon James

  Mr. Peter Brooke

  Question accordingly negatived
  Amendment proposed: No. 84, in page 44, line 2 leave out from first "by" to end of line 3 and insert
  "85 per cent. of the amount by which the assets of that scheme exceed its liabilities" [Mr. Kenneth Clarke.]
  Amendment proposed to the proposed amendment: (a), leave out "85 per
  cent. "and insert "70 per cent.". [Mr. Booth.]
  Question put, That the amendment to the proposed amendment be made:
  The House divided: Ayes 207, Noes 275.

  Division No. 246]

  AYES

  [12.03 am

  Abse, Leo

  Gilbert, Rt Hon Dr John

  Oakes, Rt Hon Gordon

  Adams, Allen

  Golding, John

  O'Neill, Martin

  Allaun, Frank

  Graham, Ted

  Orme, Rt Hon Stanley

  Anderson, Donald

  Grant, George (Morpeth)

  Owen, Rt Hon Dr David

  Archer, Rt Hon Peter

  Grant, John (Islington C)

  Palmer, Arthur

  Armstrong, Rt Hon Ernest

  Hamilton, James (Bothwell)

  Park, George

  Ashley, Rt Hon Jack]

  Hamilton, W. W. (Central Fife)

  Pavitt, Laurie

  Atkinson, Norman (H'gey, Tott'ham)

  Harrison, Rt Hon Walter

  Pendry, Tom

  Barnett, Guy (Greenwich)

  Haynes, Frank

  Powell, Raymond (Ogmore)

  Barnett, Rt Hon Joel (Heywood)

  Heffer, Eric S.

  Prescott, John

  Benn, Rt Hon Anthony Wedgwood

  Hogg, Norman (E Dunbartonshire)

  Race, Reg

  Bidwell, Sydney

  Holland, Stuart (L'beth, Vauxhall)

  Radice, Giles

  Booth, Rt Hon Albert

  Home Robertson, John

  Rees, Rt Hon Merlyn (Leeds South)

  Boothroyd, Miss Betty

  Homewood, William

  Richardson, Jo

  Bradley, Tom

  Hooley, Frank

  Roberts, Ernest (Hackney North)

  Bray, Dr Jeremy

  Horam, John

  Roberts, Gwilym (Cannock)

  Brown, Hugh D. (Provan)

  Huckfield, Les

  Robertson, George

  Brown, Ronald W. (Hackney S)

  Hudson Davies, Gwilym Ednyfed

  Robinson, Geoffrey (Coventry KW)

  Brown, Ron (Edinburgh, Leith)

  Hughes, Mark (Durham)

  Rodgers, Rt Hon William

  Buchan, Norman

  Hughes, Robert (Aberdeen North)

  Rooker, J. W.

  Callaghan, Jim (Middleton & P)

  Hughes, Roy (Newport)

  Rowlands, Ted

  Campbell, Ian

  Janner, Hon Greville

  Sandelson, Neville

  Campbell-Savours, Dale

  John, Brynmor

  Sever, John

  Carmichael, Nell

  Johnson, James (Hull West)

  Sheerman, Barry

  Cartwright, John

  Johnson, Walter (Derby South)

  Sheldon, Rt Hon Robert (A'ton-u-L)

  Clark, Dr David (South Shields)

  Jones, Rt Hon Alec (Rhondda)

  Shore, Rt Hon Peter (Step and Pop)

  Cocks, Rt Hon Michael (Bristol S)

  Jones, Dan (Burnley)

  Silkin, Rt Hon John (Deptford)

  Cohen, Stanley

  Kaufman, Rt Hon Gerald

  Silkin, Rt Hon S. C. (Dulwich)

  Coleman, Donald

  Kerr, Russell

  Silverman, Julius

  Concannon, Rt Hon J. D.

  Kilroy-Silk, Robert

  Snape, Peter

  Conlan, Bernard

  Lambie, David

  Soley, Clive

  Cowans, Harry

  Lamborn, Harry

  Spearing, Nigel

  Crowther, J. S.

  Leadbitter, Ted

  Spriggs, Leslie

  Cryer, Bob

  Leighton, Ronald

  Stallard, A. W.

  Cunliffe, Lawrence

  Lestor, Miss Joan (Eton & Slough)

  Stoddart, David

  Cunningham, George (Islington S)

  Lewis, Ron (Carlisle)

  Stott, Roger

  Cunningham, Dr John (Whitehaven)

  Litherland, Robert

  Strang, Gavin

  Dalyell, Tam

  Lofthouse, Geoffrey

  Straw, Jack

  Davidson, Arthur

  Lyon, Alexander (York)

  Summerskill, Hon Dr Shirley

  Davies, Ifor (Gower)

  Lyons, Edward (Bradford West)

  Taylor, Mrs Ann (Bolton West)

  Davis, Clinton (Hackney Central)

  McCartney, Hugh

  Thomas, Jeffrey (Abertillery)

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

  McDonald, Dr Oonagh

  Thomas, Mike (Newcastle East)

  Deakins, Eric

  McGuire, Michael (Ince)

  Thomas, Dr Roger (Carmarthen)

  Dempsey, James

  McKay, Allen (Penistone)

  Thorne, Stan (Preston South)

  Dewar, Donald

  McKelvey, William

  Tilley, John

  Dixon, Donald

  MacKenzie, Rt Hon Gregor

  Torney, Tom

  Dobson. Frank

  Maclennan, Robert

  Urwin, Rt Hon Tom

  Douglas, Dick

  McMillan, Tom (Glasgow, Central)

  Varley, Rt Hon Eric G.

  Douglas-Mann, Bruce

  McNally, Thomas

  Walker, Rt Hon Harold (Doncaster)

  Dubs, Alfred

  Magee, Bryan

  Watkins, David

  Dunnett, Jack

  Marks, Kenneth

  Weetch, Ken

  Dunwoody, Mrs Gwyneth

  Marshall, David (GI'sgow,Shett!es'n)

  Wellbeloved, James

  Eadie, Alex

  Marshall, Dr Edmund (Goole)

  Welsh, Michael

  Eastham, Ken

  Marshall, Jim (Leicester South)

  White, Frank R. (Bury & Radcliffe)

  Ellis, Raymond (NE Derbyshire)

  Martin, Michael (Gl'gow, Springb'rn)

  White, James (Glasgow, Pollok)

  Ellis, Tom (Wrexham)

  Maxton, John

  Whitehead, Phillip

  Evans, loan (Aberdare)

  Maynard, Miss Joan

  Whitlock, William

  Evans, John (Newton)

  Meacher, Michael

  Willey, Rt Hon Frederick

  Ewing, Harry

  Hellish, Rt Hon Robert

  Williams, Rt Hon Alan (Swansea W)

  Field, Frank

  Mikardo, Ian

  Williams, Sir Thomas (Warrington)

  Flannery, Martin

  Millan, Rt Hon Bruce

  Wilson, Rt Hon Sir Harold (Huyton)

  Fletcher, Ted (Darlington)

  Miller, Dr M. S. (East Kilbride)

  Wilson, William (Coventry SE)

  Fool, Rt Hon Michael

  Mitchell, Austin (Grimsby)

  Winnick, David

  Ford, Ben

  Mitchell, R. C. (Solon, Itchen)

  Woolmer, Kenneth

  Forrester, John

  Morris, Rt Hon Alfred (Wythenshawe)

  Wright, Sheila

  Foster, Derek

  Morris, Rt Hon Charles (Openshaw)

  Young, David (Bolton East)

  Foulkes, George

  Morris, Rt Hon John (Aberavon)

  Fraser, John (Lambeth, Norwood)

  Morton, George

  TELLERS FOR THE AYES:

  Garrett, John (Norwich S)

  Moyle, Rt Hon Roland

  Mr. Joseph Dean and

  Garrett, W. E. (Wallsend)

  Newens, Stanley

  Mr. James Tinn.

  George, Bruce

  NOES

  Aitken, Jonathan

  Fry, Peter

  Mitchell, David (Basingstoke)

  Alexander, Richard

  Gardiner, George (Reigate)

  Moate, Roger

  Ancram, Michael

  Gardner, Edward (South Fylde)

  Molyneaux, James

  Arnold, Tom

  Garel-Jones, Tristan

  Monro, Hector

  Aspinwall, Jack

  Goodhart, Philip

  Montgomery, Fergus

  Atkins, Robert (Preston North)

  Goodhew, Victor

  Morris, Michael (Northampton, Sth)

  Atkinson, David (B'mouth, East)

  Gorst, John

  Morrison, Hon Charles (Devizes)

  Baker, Kenneth (St. Marylebone)

  Gow, Ian

  Morrison, Hon Peter (City of Chester)

  Baker, Nicholas (North Dorset)

  Gower, Sir Raymond

  Mudd, David

  Beaumont-Dark, Anthony

  Gray, Hamish

  Murphy, Christopher

  Bell, Sir Ronald

  Greenway, Harry

  Myles, David

  Bendall, Vivian

  Grieve, Percy

  Neale, Gerrard

  Benyon, Thomas (Abingdon)

  Griffiths, Eldon (Bury St Edmunds)

  Needham, Richard

  Benyon, W. (Buckingham)

  Griffiths, Peter (Portsmouth N)

  Nelson, Anthony

  Berry, Hon Anthony

  Grist, Ian

  Neubert, Michael

  Best, Keith

  Grylls, Michael

  Newton, Tony

  Bitten, Rt Hon John

  Gummer, John Selwyn

  Oppenheim, Rt Hon Mrs Sally

  Biggs-Davison, John

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

  Page, John (Harrow, West)

  Blackburn, John

  Hamilton, Michael (Salisbury)

  Page, Rt Hon Sir R. Graham

  Blake-, Peter

  Hannam,John

  Page, Richard (SW Hertfordshire)

  Body, Richard

  Haselhurst, Alan

  Parkinson, Cecil

  Bonsor, Sir Nicholas

  Havers, Rt Hon Sir Michael

  Parris, Matthew

  Boscawen, Hon Robert

  Hawksley, Warren

  Patten, Christopher (Bath)

  Bottomley, Peter (Woolwich West)

  Hayhoe, Barney

  Patten, John (Oxford)

  Bowden, Andrew

  Heddle, John

  Pattie, Geoffrey

  Boyson, Dr Rhodes

  Henderson, Barry

  Pawsey, James

  Bright, Graham

  Heseltine, Rt Hon Michael

  Penhaligon, David

  Brinton, Tim

  Hicks, Robert

  Percival, Sir Ian

  Brittan, Leon

  Higgins, Rt Hon Terence L.

  Pollock, Alexander

  Brocklebank-Fowler, Christopher

  Hogg, Hon Douglas (Grantham)

  Porter, George

  Brooke, Hon Peter

  Hooson, Tom

  Powell, Rt Hon J. Enoch(S Down)

  Brown, Michael (Brigg & Sc'thorpe)

  Hordern, Peter

  Price, David (Eastleigh)

  Browne, John (Winchester)

  Howell, Rt Hon David (Guildford)

  Prior, Rt Hon James

  Bruce-Gardyne, John

  Howell, Ralph (North Norfolk)

  Proctor, K. Harvey

  Buck, Antony

  Hunt, David (Wirral)

  Raison, Timothy

  Budgen, Nick

  Hunt, John (Ravensbourne)

  Rathbone, Tim

  Bulmer, Esmond

  Irving, Charles (Cheltenham)

  Rees, Peter (Dover and Deal)

  Burden, F. A.

  Johnson Smith, Geoffrey

  Rees-Davies, W. R.

  Butcher, John

  Jopling, Rt Hon Michael

  Renton, Tim

  Butler, Hon Adam

  Kaberry, Sir Donald]

  Rhodes, James, Robert

  Cadbury, Jocelyn

  Kershaw, Anthony

  Rhys Williams, Sir Brandon

  Carlisle, John (Luton West)

  King, Rt Hon Tom

  Ridley, Hon Nicholas

  Carlisle, Kenneth (Lincoln)

  Kitson, Sir Timothy

  Ridsdale, Julian

  Carlisle, Rt Hon Mark (Runcorn)

  Knight, Mrs Jill

  Rifkind, Malcolm

  Chalker, Mrs Lynda

  Knox, David

  Roberts, Michael (Cardiff NW)

  Channon, Paul

  Lamont. Norman

  Roberts, Wyn (Conway)

  Chapman, Sydney

  Lang, Ian

  Ross, Wm. (Londonderry)

  Churchill, W. S.

  Langford-Holt, Sir John

  Rossi, Hugh

  Clark, Hon Alan (Plymouth, Sutton)

  Latham, Michael

  Rost, Peter

  Clark, Sir William (Croydon South)

  Lawrence, Ivan

  Sainsbury, Hon Timothy

  Clarke, Kenneth (Rushcliffe)

  Lawson. Nigel

  St. John-Stevas, Rt Hon Norman

  Clegg, Sir Walter

  Lee, John

  Scott, Nicholas

  Colvin Michael

  Le Marchant, Spencer

  Shaw, Michael (Scarborough)

  Cope, John

  Lennox-Boyd, Hon Mark

  Shelton, William (Streatham)

  Come. John

  Lester, Jim (Beeston)

  Shepherd, Colin (Hereford)

  Costain, A.P.

  Lewis, Kenneth (Rutland)

  Shepherd, Richard (Aldridge-Br'hills)

  Critchley. Julian

  Lloyd, Ian (Havant & Waterloo)

  Shersby, Michael

  Crouch, David

  Lloyd, Peter (Fareham)

  Silvester, Fred

  Dickens, Geoffrey

  Loveridge, John

  Skeet, T. H. H.

  Dorrell, Stephen

  Luce, Richard

  Speller, Tony

  Dover, Denshore

  Lyell, Nicholas

  Spence, John

  du Cann, Rt Hon Edward

  McCrindle, Robert

  Spicer, Michael (S Worcestershire)

  Dunn, Robert (Dartford)

  Macfarlane, Neil

  Sproat, Iain

  Dykes, Hugh

  MacKay, John (Argyll)

  Squire, Robin

  Eden, Rt Hon Sir John

  McNair-Wilson, Michael (Newbury)

  Stainton, Keith

  Edwards, Rt Hon N. (Pembroke)

  McNair-Wilson, Patrick (New Forest)

  Stanbrook, Ivor

  Eggar, Timothy

  McQuarrie, Albert

  Stanley, John

  Elliott, Sir William

  Madel, David

  Steen, Anthony

  Emery, Peter

  Major, John

  Stevens, Martin

  Fairbairn, Nicholas

  Marlow, Tony

  Stewart, Ian (Hitchin)

  Fairgrieve, Russell

  Marshall, Michael (Arundel)

  Stewart, John (East Renfrewshire)

  Faith, Mrs Sheila

  Mather, Carol

  Stokes, John

  Farr, John

  Maude, Rt Hon Angus]

  Stradling Thomas, J.

  Fell, Anthony

  Mawby, Ray

  Tapsell, Peter

  Fenner, Mrs Peggy

  Mawhinney, Dr Brian

  Tebbit, Norman

  Finsberg, Geoffrey

  Maxwell-Hyslop, Robin

  Temple-Morris, Peter

  Fisher, Sir Nigel

  Mayhew, Patrick

  Thatcher, Rt Hon Mrs Margaret

  Fletcher, Alexander (Edinburgh N)

  Mellor, David

  Thomas, Rt Hon Peter (Hendon S)

  Fookes, Miss Janet]

  Meyer, Sir Anthony

  Thompson, Donald

  Forman, Nigel

  Miller, Hal (Bromsgrove & Redditch)

  Thorne, Nell (Ilford South)

  Fowler, Rt Hon Norman

  Mills, Iain (Meriden)

  Thornton, Malcolm

  Fox, Marcus

  Mills, Peter (West Devon)

  Townend, John (Bridlington)

  Fraser, Peter (South Angus)

  Miscampbell, Norman

  Townsend, Cyril D. (Bexleyheath)

  Trippier, David

  Waller, Garry

  Wilkinson, John

  Trotter, Neville

  Walters, Dennis

  Williams, Delwyn (Montgomery)

  Taylor, Teddy (Southend East)

  Ward, John

  Winterton, Nicholas

  van Straubenzee, W. R.

  Watson, John

  Wolfson, Mark

  Vaughan, Dr Gerard

  Wells, John (Maidstone)

  Young, Sir George (Acton)

  Viggers, Peter

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

  Younger, Rt Hon George

  Waddington, David

  Wheeler, John

  Wakeham, John

  Whitney, Raymond

  TELLERS FOR THE NOES:

  Waldegrave, Hon William

  Wickenden, Keith

  Lord James Douglas-Hamilton and

  Walker, Bill (Perth & E Perthshire)

  Wiggin, Jerry

  Mr. John MacGregor.

  Question accordingly negatived.
  Proposed amendment agreed to.

Schedule 1

  PUBLIC SERVICE VEHICLES: CONDITIONS AFFECTING STATUS OR CLASSIFICATION
  12.15 am
  Amendment proposed: No. 56, in page 50, leave out lines 7 to 28.—[Mr. Bendall.]
  Question, That the amendment be made, put and negatived.

Schedule 2

  ORDERS DESIGNATING TRIAL AREAS
  Amendments made:
  No. 59, in page 51, line 18, leave out paragraph 4 and insert—
  '4. Before making an application to the Minister for an order under section 12(3A) varying or revoking a designation order the local authority concerned—

  (a) shall notify—

  (i) every local authority (if any) whose area adjoins the trial area in question;

  (ii) every district council whose area adjoins the trial area;

  (iii) any person who is for the time being providing a stage carriage service in the trial area; and

  (iv) such organisations as appear to the local authority concerned appropriate as representing persons providing or employed in the provision of public passenger transport services (within the meaning of paragraph 2) in the trial area; and

  (b) shall consult with every district council whose area is wholly or partly comprised in the trial area.

  5. Paragraph 3 shall apply in relation to an application for, and the making of, an order under section 12 (3A) as it applies in relation to an application for, and the making of, a designation order.'.
  No. 60, in page 51, line 24, at beginning insert—
  1358
  '(1) Subject to sub-paragraph (2)'.
  No. 61, in page 51, line 26, at end insert—
  '(2) An order under section 12(3A) which revokes a designation order or varies it so as to exclude from the area designated by it any part of that area shall contain such transitional provisions as the Minister thinks fit for securing that any person who has throughout the relevant period ending with the date of the order provided a stage carriage service which he will be unable to continue to provide after the time when the revocation or variation takes effect unless granted a road service licence in respect of it, can obtain as of right a road service licence that will enable him to continue to provide that service for as long as the licence remains in force after that time.
  (3) In sub-paragraph (2) "the relevant period", in relation to an order under section 12 (3A), means such period of not less than three months as may be specified in the order.'.—[Mr. Fowler.]

Schedule 4

  INCREASE OF PENALTIES IN THE 1960 ACT
  Mr. Kenneth Clarke: I beg to move amendment No. 68, in page 54, line 6, column 4, leave out '£200' and insert '£500'.
  Mr. Deputy Speaker: With this it will be convenient to take amendment No. 69.
  Mr. Clarke: This is a matter of no controversy, I think, and I ask the support of the House for it.
  Amendment agreed to.
  Amendment made: No. 69, in page 54 line 7, column 5, leave out '£200 and insert '£500'.—[Mr. Fowler.]

Schedule 5

  MINOR AND CONSEQUENTIAL AMENDMENTS RELATING TO PUBLIC SERVICE VEHICLES
  Mr. Iain Mills: I beg to move amendment No. 70, in page 56, line 24, leave out paragraph 6 and insert—
  '6.—(1) Section 146 (regulations of conduct of drivers and conductors) and section 147 (regulations of conduct of passengers) shall apply in relation to inspectors as they apply in relation to conductors.

  1359
  (2) In sub-paragraph (1) "inspector", in relation to a public service vehicle, means a person authorised to act as such by the holder of the PSV operator's licence under which the vehicle is being used.
  (3) In section 14'7(1)(d) the words "or other person authorised by the licensee of the vehicle" shall be omitted.'.
  Mr. Deputy Speaker: With this it will be convenient to take amendment No. 90, in schedule 9, page 68, line 46, column 3, at end insert—
  'In section 147(1)(d) the words "or other person authorised by the licensee of the vehicle".'.
  Mr. Mills: In moving this amendment I promise that I will take no longer than is necessary for the House to appreciate its importance. The amendment makes only small changes to two sections of the Road Traffic Act 1960 but these changes, I can assure right hon. and hon. Members opposite, are of real consequence to bus operators and their staff. Recent events have highlighted the difficulties and dangers the public transport staff face in dealing with some sections of the travelling public. [Interruption.] It is important. I must tell right hon. and hon. Gentlemen opposite that this is not a laughing matter. If hon. Members were driving the buses they might well appreciate the situation and pay a little more attention to these points. I can assure hon. Members that my speech will last as long as their interjections.
  The dangers that the public transport staff face in dealing with some sections of the travelling public are real, and it is important that those public servants should be backed by sufficient and unambiguous authority. Bus drivers and conductors are given a range of powers under the regulations mentioned in sections 146 and 147—[Interruption.]
  Mr. Deputy Speaker: Order. It is convenient if the Chair at least can hear what is going on.
  Mr. Mills: I can assure right hon. and hon. Members that bus drivers will not appreciate the sort of concern that they are showing. I say again that my speech will take as long as hon. Members' interjections.
  Bus drivers and conductors are given a range of powers under the regulations mentioned in sections 146 and 147 of the 1960 Act.
  I should like to express here my gratitude to the right hon. Gentleman who
  1360
  leads for the Opposition on these matters for bringing to my attention the slight confusion over the application of sections 146 and 147. Section 146 empowers the Minister to make regulations providing for the conduct of drivers and conductors and section 147 empowers the Minister to make regulations providing for the conduct of passengers, and then goes on to other matters.
  By amendment No. 90 it is intended to delete the words
  "or other person authorised by the licensee of the vehicle"
  in section 174. Bus drivers and conductors have a range of powers under the Vehicles (Conduct of Drivers, Conductors and Passengers) Regulations 1936, as amended in 1946 and 1975. The powers include the right to check passengers' tickets, demand fares, take names and addresses of passengers who may be committing an offence, and so on.
  Unfortunately, under present regulations it is not clear—this is the crux of the matter—whether inspectors are also covered. As inspectors are having increasing contact with passengers, and one-man buses become more usual, because of this lack of clarity—
  Mr. Deputy Speaker: Order. There still seems to be a slight background of noise.
  Mr. Mills: For the third time—I am determined to continue. We should proceed far more quickly if hon. and right hon. Members could hear me. I am delighted to detain the House because, as a new Member, I have heard right hon. and hon. Members making long speeches. They are being most discourteous.
  Inspectors are having increased contact with passengers on one-man operated buses, and we must therefore make unambiguous the regulations governing their powers. The amendment ensures that in future the regulations will apply to inspectors as they apply to conductors and drivers. I sincerely beg the House to support the amendment.
  Mr. Kenneth Clarke: I am grateful to my hon. Friend for raising the matter. He is quite right; there is genuine doubt under the present law whether the powers extend to inspectors. With more one-man operation the more likely it is that inspectors will have contact with the public and need these powers. I commend the

  1361
  amendment to the House.
  Amendment agreed to.
  Amendments made:
  No. 71, in page 58, leave out line 1.
  No. 72, in page 58, line 10, leave out 'or disc'.
  No. 73, in page 59, line 34, at end insert—

  'TRANSPORT ACT 1968 (c.73)
  In section 159(1) (interpretation) for the definition of "excursion or tour" substitute—"'excursion or tour' means a stage or express carriage service on which the passengers travel together on a journey, with or without breaks, from one or more places to one or more other places and back; ".'.—[Mr. Fowler.]
  Mr. Fowler: I beg to move amendment No. 74, in page 61, line 31, at end insert—
  '1. In section 1(5) (power of non-metropolitan counties to make grants) for paragraph (b) substitute—
  "(b) to persons providing facilities for sharing motor vehicles not adapted to carry more than eight passengers with a view to meeting the social and welfare needs of one or more communities.".'.
  The amendment concerns social car schemes and is fairly non-controversial. I ask the House to support it.
  Amendment agreed to.
  Amendments made:
  No. 75, in page 61, line 32, leave out from 'For' to (1) 'in line 33 and in-sert—
  'subsections (1) to (9) of section 5 (community bus services) substitute the following subsections—'.
  No. 76, in page 63, line 48, at end insert—
  '2. Section 6 shall be omitted.'.—[Mr. Fowler.]

Schedule 8

  B. R. PENSION SCHEMES
  Mr. Kenneth Clarke: I beg to move amendment No. 89, in page 68, line 10, at end insert—
  'Southern Railway (South Eastern & Chatham Section) Enginemen & Motormen's Pension Fund Society'.
  The amendment seeks to add to the list of pension schemes under the Bill the Southern Railway (South Eastern &
  1362
  Chatham Section) Enginemen & Motormen's Pension Fund Society. This is an important pension scheme which the Government forgot when they first drafted the Bill. We have discovered that it is run from Wandsworth Common station and we have yet to discover how many beneficiaries it has.
  There is an obligation upon British Rail to maintain the fund if interest rates should drop below 4 per cent. This liability has not been called upon for some time, and we should like to add it to Schedule 8 in case it is. I commend the amendment to the House.
  Amendment agreed to.

Schedule 9

  REPEALS
  Amendments made, No. 90, in page 68, line 46, column 3 at end insert—
  'In section 147(1)(d) the words "or other person authorised by the licensee of the vehicle".'.—[Mr. Iain Mills.]
  No. 91, in page 70, line 26, column 3, after 44(4)' insert'—

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

  (b) the words from "but shall apply" to "1978";

  (c)'.

  No. 92, in page 70, line 50, column 3, at beginning insert—
  'Section 5(10).
  Section 6.'.—[Mr. Fowler.]
  Mr. Kenneth Clarke: I beg to move amendment No. 94, in page 77, line 26, at end insert—
  '1977 c. 20 Transport (Financial Provisions) Act 1977. Section 2.'
  The amendment repeals an obsolete section of the 1977 Act.
  Amendment agreed to.
  12.25 am
  Mr. Fowler: I beg to move, That the Bill be now read the Third time.
  The merits of the Bill are self-evident and overwhelming, and I ask the House to support it.
  Mr. Booth: The Bill rejects the appearance and judgment of public transport operators in Britain. It frustrates local authorities that seek to develop good transport services. It creates a major

  1363
  problem for those people who run railway pension schemes. It throws an efficient and properly run public sector of the freight transport industry to the private sector. It will win some cheers at the Tory Party conference, but those cheers will be purchased at a high price for the public service operators and the
  people who are served by them. I therefore ask my hon. Friends to vote against the Bill.
  Question put, That the Bill be now read the Third time:—
  The House divided: Ayes 272, Noes 207.

  Division No. 247]

  AYES

  [12.26 am

  Alexander, Richard

  Farr, John

  Lyell, Nicholas

  Ancram, Michael

  Fell, Anthony

  McCrindle, Robert

  Arnold, Tom

  Fenner, Mrs Peggy

  Macfarlane, Nell

  Aspinwall, Jack

  Finsberg, Geoffrey

  MacGregor, John

  Atkins, Robert (Preston North)

  Fisher, Sir Nigel

  MacKay, John (Argyll)

  Atkinson, David (B'mouth, East)

  Fletcher, Alexander (Edinburgh N)

  McNair-Wilson, Michael (Newbury)

  Baker, Kenneth (St. Marylebone)

  Fookes, Miss Janet

  McNair-Wilson, Patrick (New Forest)

  Baker, Nicholas (North Dorset)

  Forman, Nigel

  McQuarrie, Albert

  Beaumont-Dark, Anthony

  Fowler, Rt Hon Norman

  Madel, David

  Bell, Sir Ronald

  Fox, Marcus

  Major, John

  Bendall, Vivian

  Fraser, Peter (South Angus)

  Marlow, Tony

  Benyon, Thomas (Abingdon)

  Fry, Peter

  Marshall, Michael (Arundel)

  Benyon, W. (Buckingham)

  Gardiner, George (Reigate)

  Mather, Carol

  Best, Keith

  Gardner, Edward (South Fylde)

  Maude, Rt Hon Angus

  Biffen, Rt Hon John

  Garel-Jones, Tristan

  Mawby, Ray

  Biggs-Davison, John

  Goodhart, Philip

  Mawhinney, Dr Brian

  Blackburn, John

  Goodhew, Victor

  Maxwell-Hyslop, Robin

  Blaker, Peter

  Gorst, John

  Mayhew, Patrick

  Body, Richard

  Gow, Ian

  Mellor, David

  Bonsor, Sir Nicholas

  Gower, Sir Raymond

  Meyer, Sir Anthony

  Boscawen, Hon Robert

  Gray, Hamish

  Miller, Hal (Bromsgrove & Redditch)

  Bottomley, Peter (Woolwich West)

  Greenway, Harry

  Mills, Iain (Meriden)

  Bowden, Andrew

  Grieve, Percy

  Mills, Peter (West Devon)

  Boyson, Dr Rhodes

  Griffiths, Eldon (Bury St Edmunds)

  Miscampbell, Norman

  Bright, Graham

  Griffiths, Peter (Portsmouth N)

  Mitchell, David (Basingstoke)

  Brinton, Tim

  Grist, Ian

  Moate, Roger

  Brittan, Leon

  Grylls, Michael

  Molyneaux, James

  Brocklebank-Fowler, Christopher

  Gummer, John Selwyn

  Monro, Hector

  Brooke, Hon Peter

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

  Montgomery, Fergus

  Brown, Michael (Brigg & Sc'thorpe)

  Hamilton, Michael (Salisbury)

  Morris, Michael (Northampton, Sth) Morrison, Hon Charles (Devizes)

  Browne, John (Winchester)

  Hannam, John

  Bruce-Gardyne, John

  Haselhurst, Alan

  Morrison, Hon Peter (City of Chester)

  Buck, Antony

  Havers, Rt Hon Sir Michael

  Mudd, David

  Budgen, Nick

  Hawksley, Warren

  Murphy, Christopher

  Bulmer, Esmond

  Hayhoe, Barney

  Myles, David

  Burden, F. A.

  Heddle, John

  Neale, Gerrard

  Butcher, John

  Henderson, Barry

  Needham, Richard

  Butler, Hon Adam

  Heseltine, Rt Hon Michael

  Nelson, Anthony Neubert, Michael

  Cadbury, Jocelyn

  Hicks, Robert

  Carlisle, John (Luton West)

  Higgins, Rt Hon Terence L.

  Newton Tony

  Carlisle, Kenneth (Lincoln)

  Hogg, Hon Douglas (Grantham)

  Oppenheim, Rt Hon Mrs Sally

  Carlisle, Rt Hon Mark (Runcorn)

  Hooson, Tom

  Page John (Harrow, West)

  Chalker, Mrs Lynda

  Hordern, Peter

  Page, Rt Hon Sir R. Graham

  Channon, Paul

  Howell, Rt Hon David (Guildford)

  Page, Richard (SW Hertfordshire)

  Chapman, Sydney

  Howell, Ralph (North Norfolk)

  Parkinson, Cecil

  Churchill, W. S.

  Hunt, David (Wirral)

  Parris, Matthew

  Clark, Hon Alan (Plymouth, Sutton)

  Hunt, John (Ravensbourne)

  Patten, Christopher (Bath)

  Clark, Sir William (Croydon South)

  Irving, Charles (Cheltenham)

  Patten, John (Oxford)

  Clarke, Kenneth (Rushcliffe)

  Johnson Smith, Geoffrey

  Pattie, Geoffrey

  Clegg, Sir Walter

  Jopling, Rt Hon Michael

  Pawsey, James

  Colvin, Michael

  Kaberry, Sir Donald

  Penhaligon, David

  Cope, John

  Kershaw, Anthony

  Corrie, John

  King, Rt Hon Tom

  Percival, Sir Ian

  Costain, A. P.

  Kitson, Sir Timothy

  Pollock, Alexander

  Critchley, Julian

  Knight, Mrs Jill

  Porter, George

  Crouch, David

  Knox, David

  Powell, Rt Hon J. Enoch (S Down)

  Dickens, Geoffrey

  Lamont, Norman

  Price, David (Eastleigh)

  Dorrell, Stephen

  Lang, Ian

  Prior, Rt Hon James

  Douglas-Hamilton, Lord James

  Langford-Holt, Sir John

  Proctor, K. Harvey

  Dover, Denshore

  Latham, Michael

  Raison, Timothy

  du Cann, Rt Hon Edward

  Lawrence, Ivan

  Rathbone, Tim

  Dunn, Robert (Dartlord)

  Lawson, Nigel

  Rees, Peter (Dover and Deal)

  Durant, Tony

  Lee, John

  Renton, Tim

  Eden, Rt Hon Sir John

  Le Marchant, Spencer

  Rhodes James, Robert

  Edwards, Rt Hon N. (Pembroke)

  Lennox-Boyd, Hon Mark

  Rhys Williams, Sir Brandon

  Eggar, Timothy

  Lester, Jim (Beeston)

  Ridley, Hon Nicholas

  Elliott, Sir William

  Lewis, Kenneth (Rutland)

  Ridsdale, Julian

  Emery, Peter

  Lloyd, Ian (Havant & Waterloo)

  Rifkind, Malcolm

  Fairbairn, Nicholas

  Lloyd, Peter (Fareham)

  Roberts, Michael (Cardiff NW)

  Fairgrieve, Russell

  Loveridge, John

  Roberts, Wyn (Conway)

  Faith, Mrs Sheila

  Luce, Richard

  Ross, Wm. (Londonderry)

  Rossi, Hugh

  Stewart, Ian (Hitchin)

  Waldegrave, Hon William

  Ron, Peter

  Stewart, John (East Renfrewshire)

  Walker, Bill (Perth & E Perthshire)

  Salisbury, Hon Timothy

  Stokes, John

  Waller, Gary

  St. John-Stevas, Rt Hon Norman

  Stradling Thomas, J.

  Walters, Dennis

  Scott, Nicholas

  Tapsell, Peter

  Ward, John

  Shaw, Michael (Scarborough)

  Tebbit, Norman

  Watson, John

  Sheiton. William (Streatham)

  Temple-Morris, Peter

  Wells, John (Maidstone)

  Shepherd, Colin (Hereford)

  Thatcher, Rt Hon Mrs Margaret

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

  Shepherd, Richard (Aldridge-Br-hills)

  Thomas, Rt Hon Peter (Hendon S)

  Wheeler, John

  Shersby, Michael

  Thompson, Donald

  Whitney, Raymond

  Silvester, Fred

  Thorne, Nell (Ilford South)

  Wiggin, Jerry

  Sheet, T. H. H.

  Thornton, Malcolm

  Wilkinson, John

  Speller Tony

  Townend, John (Bridlington)

  Williams, Delwyn (Montgomery)

  Spence, John

  Townsend, Cyril D. (Bexleyheath)

  Winterton, Nicholas

  Spicer, Michael (S Worcestershire)

  Trippler, David

  Wolfson, Mark

  Sproat, Iain

  Trotter, Neville

  Young, Sir George (Acton)

  Squire, Robin

  Taylor, Teddy (Southend East)

  Younger, Rt Hon George

  Stainton, Keith

  van Straubenzee, W. R.

  Stanbrook, Ivor

  Vaughan, Dr Gerard

  TELLERS FOR THE AYES:

  Stanley, John

  Viggers, Peter

  Mr. David Waddington and

  Steen, Anthony

  Wakeham, John

  Mr. Anthony Berry.

  Stevens, Martin

  NOES

  Abse, Leo

  Ewing, Harry

  Magee, Bryan

  Adams, Allen

  Field, Frank

  Marks, Kenneth

  Allaun, Frank

  Flannery, Martin

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

  Anderson, Donald

  Fletcher, Ted (Darlington)

  Marshall, Dr Edmund (Goole)

  Archer, Rt Hon Peler

  Foot, Rt Hon Michael

  Marshall, Jim (Leicester South)

  Armstrong, Rt Hon Ernest

  Ford, Ben

  Martin, Michael (Gl'gow, Springb'rn)

  Ashley, Rt Hon Jack

  Forrester, John

  Maxton, John

  Atkinson, Norman (H'gey, Tott'ham)

  Foster, Derek

  Maynard, Miss Joan

  Barnett, Guy (Greenwich)

  Foulkes, George

  Meacher, Michael

  Barnett, Rt Hon Joel (Heywood)

  Fraser, John (Lambeth, Norwood)

  Mellish, Rt Hon Robert

  Benn, Rt Hon Anthony Wedgwood

  Garrett, John (Norwich S)

  Mikardo, Ian

  Bidwell, Sydney

  Garrett, W. E. (Wallsend)

  Millan, Rt Hon Bruce

  Booth, Rt Hon Albert

  George, Bruce

  Miller, Dr M. S. (East Kilbride)

  Boothroyd, Miss Betty

  Gilbert, Rt Hon Dr John

  Mitchell, Austin (Grimsby)

  Bradley, Tom

  Golding, John

  Mitchell, R. C. (Soton, lichen)

  Bray, Dr Jeremy

  Graham, Ted

  Morris, Rt Hon Alfred (Wythenshawe)

  Brown, Hugh D. (Provan)

  Grant, George (Morpeth)

  Morris, Rt Hon Charles (Openshaw)

  Brown, Ronald W. (Hackney S)

  Grant, John (Islington C)

  Morris, Rt Hon John (Aberavon)

  Brown, Ron(Edinburgh, Leith)

  Hamilton, James (Bothwell)

  Moyle, Rt Hon Roland

  Buchan, Norman

  Hamilton, W. W. (Central Fife)

  Newens, Stanley

  Callaghan, Jim (Middleton & P)

  Harrison, Rt Hon Walter

  Oakes, Rt Hon Gordon

  Campbell, Ian

  Haynes, Frank

  O'Neill, Martin

  Campbell-Savours, Dale

  Heffer, Eric S.

  Orme, Rt Hon Stanley

  Carmlchael, Nell

  Hogg, Norman (E Dunbartonshire)

  Owen, Rt Hon Dr David

  Cartwright, John

  Holland, Stuart (L'beth, Vauxhall)

  Palmer, Arthur

  Clark, Dr David (South Shields)

  Home Robertson, John

  Park, George

  Cocks, Rt Hon Michael (Bristol S)

  Homewood, William

  Pavitt, Laurie

  Cohen, Stanley

  Hooley, Frank

  Pendry, Tom

  Coleman, Donald

  Horam, John

  Powell, Raymond (Ogmore)

  Concannon, Rt Hon J. D.

  Huckfield, Lea

  Prescott, John

  Conlan, Bernard

  Hudson Davies Gwllym Ednyfed

  Race, Reg

  Cowans, Harry

  Hughes, Mark (Durham)

  Radice, Giles

  Crowther, J. S.

  Hughes, Robert (Aberdeen North)

  Rees, Rt Hon Merlyn (Leeds South)

  Cryer, Bob

  Hughes, Roy (Newport)

  Richardson, Jo

  Cunliffe, Lawrence

  Janner, Hon Greville

  Roberts, Ernest (Hackney North)

  Cunningham, George (Islington S)

  John, Brynmor

  Roberts, Gwilym (Cannock)

  Cunningham, Dr John (Whitehaven)

  Johnson, James (Hull West)

  Robertson, George

  Dalyell, Tarn

  Johnson, Walter (Derby South)

  Robinson, Geoffrey (Coventry NW)

  Davidson, Arthur

  Jones, Rt Hon Alec (Rhondda)

  Rodgers, Rt Hon William

  Davles, Rt Hon Denzil (Llanelli)

  Jones, Dan (Burnley)

  Rooker, J. W.

  Davies, Ifor (Gower)

  Kaufman, Rt Hon Gerald

  Rowlands, Ted

  Davis, Clinton (Hackney Central)

  Kerr, Russell

  Sandelson, Neville

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

  Kilroy-Silk, Robert

  Sever, John

  Deakins, Eric

  Lambie, David

  Sheerman, Barry

  Dean, Joseph (Leeds West)

  Lamborn, Harry

  Sheldon, Rt Hon Robert (A'ton-u-L)

  Dempsey, James

  Leadbitter, Ted

  Shore, Ft; Hon Peter (Step and Pop)

  Dewar, Donald

  Leighton, Ronald

  Silkin, Rt Hon John (Deptford)

  Dixon, Donald

  Lestor, Miss Joan (Eton & Slough)

  Silkin. Rt Hon S.C. (Dulwich)

  Dobson, Frank

  Lewis, Ron (Carlisle)

  Silverman, Julius

  Douglas, Dick

  Litherland, Robert

  Snape, Peter

  Douglas-Mann, Bruce

  Lofthouse, Geoffrey

  Soley, Clive

  Dubs, Alfred

  Lyon, Alexander (York)

  Spearing, Nigel

  Dunnett, Jack

  Lyons, Edward (Bradford West)

  Sprlggs, Leslie

  Dunwoody, Mrs Gwyneth

  McGuire, Michael (Ince)

  Stallard, A. W.

  Eadie, Alex

  McKay, Allen (Penistone)

  Stoddart, David

  Eastham, Ken

  McKelvey, William

  Stott, Roger

  Ellis, Raymond (NE Derbyshire)

  MacKenzie, Rt Hon Gregor

  Strang, Gavin

  Ellis, Tom (Wrexham)

  Maclennan, Robert

  Straw, Jack

  Evans, loan (Aberdare)

  McMillan, Tom (Glasgow, Central)

  Summerskill, Hon Dr Shirley

  Evan]), John (Newton)

  McNally, Thomas

  Taylor, Mrs Ann (Bolton West)

  Thomas, Jeffrey (Abertillery)

  Weetch, Ken

  Wilson, Rt Hon Sir Harold (Huyton)

  Thomas, Mike (Newcastle East)

  Wellbeloved, James

  Wilson, William (Coventry SE)

  Thomas. Dr Roger (Carmarthen)

  Walsh, Michael

  Winnick, David

  Thorne, Stan (Preston South)

  White, Frank R. (Bury & Radcliffe)

  Woolmer, Kenneth

  Tilley, John

  White, James (Glasgow, Pollok)

  Wright, Sheila

  Tinn, James

  Whitehead, Phillip

  Young, David (Bolton East)

  Torney, Tom

  Whitlock, William

  Urwin, Rt Hon Tom

  Willey, Rt Hon Frederick

  TELLERS FOR THE NOES:

  Varley, Rt Hon Eric G.

  Williams, Rt Hon Alan (Swansea W)

  Mr. George Morton and

  Walker, Rt Hon Harold (Doncaster)

  Williams, Sir Thomas (Warrington)

  Mr. Hugh McCartney.

  Watkins, David

  Question accordingly agreed to.
  Bill read the Third Time and passed.

NATIONAL HERITAGE BILL
Lords Amendments considered.
Clause 1

  ESTABLISHMENT OF NATIONAL HERITAGE MEMORIAL FUND
  Lords Amendment: No. 1, in page 1, line 7, leave out from beginning to "which" in line 8 and insert:
  "There shall be a fund known as the National Heritage Memorial Fund, to be a memorial to those who have died for the United Kingdom, established in succession to the National Land Fund,"
  12.37 am
  The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker (Mr. Richard Crawshaw): With this we may take Lords amendment No. 3.
  Mr. St. John-Stevas: I do not think that these amendments, or any of the others, are especially controversial. The words are the fruit of much drafting in another place by Lady Birk, Lord Donaldson, Lord Reigate and others. They explain in what sense the fund serves as a memorial and bring in a reference to the National Land Fund.
  With regard to amendment No. 3, some may ask why we need this provision as well as the definition in subsection (2) of the interpretation clause—clause 18. It is good practice to have a definition where possible, when such terms as "the Ministers" first appear in the Bill, as well as in the interpretation clause.
  Mr. Tam Dalyell: In the absence of my hon. Friend the Member for Warley, East (Mr. Faulds), I wish to say that many of those who stood at the Bar of the other place and listened to the debate have considerable regard for the serious scrutiny that the other place gave the Bill. There is no doubt about that at all. Many of the Lords worked very hard on the matter. We are impressed by their work.
  1370
  The truth of the matter is that we do not wish to engage in any sort of pingpong with the Lords. They have reached a fairly sensible and satisfactory compromise with my right hon. and hon. Friends who worked on the Bill.
  We accept that it is the best compromise of all that the Prime Minister should be responsible. We accept the idea that the Crown responsibility has been taken out.
  Question put and agreed to.
  Lords amendment: No. 2, in page 2, leave out from "appointed" to end of line 15 and insert
  "by the Crown on the advice of the Prime Minister."
  Read a Second time.
  Amendment to the Lords amendment tirade: leave out
  'the Crown on the advice of '.—[Mr. St. JohnStevas.]
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment, as amended.
  Question put and agreed to.
  Consequential amendments made to the Bill:
  In schedule 1, page 12, line 23, leave out 'either of the Ministers' and insert 'the Prime Minister'.
  In page 12, line 25, leave out 'Ministers' and insert 'Prime Minister'.
  In page 12, line 26, leave out 'they are' and insert 'he is'.
  In page 12, line 37, leave out 'Ministers' and insert Prime Minister's'.
  In page 13, line 5, leave out 'either of the Ministers' and insert 'the Prime Minister'.—[Mr. St. John-Stevas.]
  Lords amendment No. 3 agreed to.

Clause 3

  GRANTS AND LOANS FROM THE FUND
  Lords amendment: No. 4, in page 2, line 33, leave out second "or".
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: With this we may take Lords amendments Nos. 5, 6, 7 and 8.
  Mr. St. John-Stevas: The purpose and effect of the amendment is to extend the range of interest over land in respect of which the trustees may give assistance to rights which it would be desirable to acquire for the benefit of outstanding land such as shooting rights near a bird sanctuary. These amendments bring within the scope of the fund's assistance a range of rights associated or connected with land which, while outstanding, might or might not be the subject of assistance from this fund. Examples are shooting rights and rights of way connecting pieces of land. This was a rather illusive concept, but I think that the clause pins it down.
  Mr. Dalyell: It would be churlish of me to do other than thank the Minister for the attitude that he has taken on this matter. It was discussed at considerable length in Committee. It was a point of view put forward strongly by both the English National Trust and the Scottish National Trust. We certainly welcome the amendment.
  Question put and agreed to.
  Lords amendments Nos. 5 to 8 agreed to.
  Lords amendment: No. 9, in page 3, line 5, leave out "or".
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: It may be for the convenience of the House to discuss with this amendment Lords amendment No. 10.
  Mr. St. John-Stevas: During the discussion on the various amendments in Committee many speakers suggested that we should declare explicitly that the trustees could take into account a case for limiting public access to property. Amongst the examples given were bird sanctuaries, other nature reserves, and houses with fragile furnishings. The word "controlling" is designed to convey this point.
  Mr. Dalyell: Once again, the Government clearly have listened to the feelings expressed on both sides of the Committee. Therefore, we accept the amendment.
  Question put and agreed to.
  Lords amendment No. 10 agreed to.
  Lords amendment: No. 11, in page 3, line 7, leave out subsection (4).
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment.
  This amendment strengthens the trustees' independence. It was always anomalous to require Treasury consent to loans but not to grants.
  12.45 am
  Mr. Dalyell: At a quarter to one in the morning this is not the time to start a long argument on a related topic to this amendment, namely, the question of confidentiality on which the Treasury approached some hon. Members on 20 March. This is the subject of long correspondence between the Treasury and a number of hon. Members who served on the Committee. I ask the Leader of the House to note only that the issue of confidentiality is complex. There are various parliamentary means by which some hon. Members would like to return to it, but not tonight.
  Question put and agreed to.
  Lords Amendment: No. 12, in page 3, line 29, leave out from "gallery" to "a" in line 31 and insert
  ",library or other similar institution having as its purpose or one of its purposes the preservation for the public benefit of".
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: With this, it will be convenient to take Lords Amendments Nos. 13 to 15, 19, 20, 23 and 25.
  Mr. St. John-Stevas: The amendments are designed to ensure that private libraries such as cathedral libraries can secure assistance from the fund. The amendments to the provisions on indemnity are consequential, because the definitions of the eligible institutions for indemnities should be in line with those on assistance from the fund.
  Mr. Dalyell: I heard the bishop in the other place put forward his argument. It seems to have convinced many of the experts. We accept it.
  Question put and agreed to.
  Lords amendments Nos. 13 to 15 agreed to.

Clause 9

  DISPOSAL OF PROPERTY ACCEPTED BY COMMISSIONERS.
  Lords amendment: No. 16 in page 6, line 40, after "it" insert
  "to the National Art Collections Fund or the Friends of the National Libraries if they are willing to accept it,"
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment.
  This amendment is designed to make clear that the Government may allocate objects to the National Arts Collection Fund or the Friends of the National Libraries if they are willing to accept. This makes the matter clear on the face of the Bill. These bodies are not final recipients. They will retain discretion to allocate the objects as they see fit subject to certain conditions that have been agreed with the Treasury.
  Mr. Dalyell: This case was argued strongly by the National Library for Wales and others. We accept it.
  Question put and agreed to.

Clause 12

  APPROVAL OF PROPERTY FOR ACCEPTANCE IN SATISFACTION OF TAX
  Lords amendment: No. 17 in page 8, line 20, at end insert—
  "(d) at the end of sub-paragraph (5) there shall be inserted the words "and, in determining under sub-paragraph (4) above whether an object or collection or group of objects is pre-eminent, regard shall be had to any significant association of the object, collection or group with a particular place","
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: With this it will be convenient to take Lords amendment No. 18.
  Mr. St. John-Stevas: These amendments concern the definition of pre-eminence and the importance of leaving property in situ. They have been constant
  1374
  themes in our debates. The amendments are designed to clarify an obscure passage in the Finance Acts on which rests the Government's policy in situ. It is clear that in assessing an object of pre-eminence account can be taken of the significance of the setting. That is an important clarifying consideration. It was always our intention that this should be so. This puts the matter beyond doubt.
  Mr. Dalyell: My hon. Friend the Member for Warley, East (Mr. Faulds), for whom I am standing in, will be pleased at the acceptance of this Lords amendment. He and other hon. Members argued this case strongly in Committee. It is a matter on which the so-called heritage lobby felt strongly. We are glad that it is now in the Bill.
  Question put and agreed to.
  Lord amendment No. 18 agreed to.

Clause 16

  INDEMNITIES FOR OBJECTS ON LOAN
  Lords amendments Nos. 19 and 20 agreed to.
  Lords amendment: No. 21 in page 10, line 16, leave out "or" and insert "and"
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment.
  Mr. Deputy Speaker: With this it will be convenient to take Lords amendment No. 22.
  Mr. St. John-Stevas: I do not think that the House need spend much time on these amendments, which substitute "and" for "or" and "to" for "and". These are drafting amendments, consequential on amendments made on Report in this House.
  Question put and agreed to.
  Lords amendments Nos. 22 and 23 agreed to.

Clause 18

  COMMENCEMENT
  Lords amendment: No. 24, in page 11, line 1, leave out Clause 18.
  Mr. St. John-Stevas: I beg to move, That this House doth agree with the Lords in the said amendment.

  1375
  The purpose of the amendment is to delete the provision for a commencement order. Therefore, the Bill will come into effect automatically on receiving the Royal Assent.
  When this Bill was originally introduced we were not sure whether it would move so rapidly that it would receive Royal Assent well before 31 March or so slowly that it would not receive Royal Assent until much later.
  Despite the thorough discussion that has taken place on the Bill in this House and another place, we are now on course to receive the Royal Assent on 31 March, as planned.
  The procedure involved with the commencement order is now no more than an unnecessary complication, which could delay the establishment of a fund and the transfer of acceptance in lieu to the departmental Ministers. Removing this clause means that the Bill's provisions will come into effect automatically on Royal Assent.
  I thank the hon. Member for West Lothian (Mr. Dalyell) for standing in on this occasion for his hon. Friend the Member for Warley, East (Mr. Faulds), whom we wish a speedy recovery. I pay
  1376
  tribute to the hon. Member for Warley, East for his services to this Bill and to the hon. Member for West Lothian, who has made such a valuable contribution.
  Mr. Dalyell: I thank the Leader of the House. The Opposition are glad that this Bill is on course. We realised that by having a very thorough discussion we might delay it in a way that most of us did not want.
  I pay tribute to the understanding and great care that has been taken throughout the passage of the Bill by the Under-Secretary of State for the Environment —the hon. Member for Dumfries (Mr. Monro)—who has been very accommodating. If the discussion was thorough it was certainly eased greatly by the attitude of the Minister, who bore the brunt of the Committee stage. He was invariably courteous and helpful. We were also greatly pleased by the attitude of many of the civil servants who helped us and who are obviously as keen to protect the heritage of this country as any of the politicians.
  Question put and agreed to.
  Lords amendment No. 25 agreed to.

HER MAJESTY'S STATIONERY OFFICE (TRADING FUND)
12.53 am
The Minister of State, Civil Service Department (Mr. Paul Channon): I beg to move,
That the draft HMSO Trading Fund Order 1980, which was laid before this House on 29th February, be approved.
I hope it will be convenient to the House if I introduce the order quite briefly and deal with any particular points that hon. Members may raise when I reply.
This is the fourth order to be moved under the Government Trading Funds Act 1973. The Act enables the responsible Minister to direct that a Crown service to which the Act applies shall be financed by a trading fund, when he considers that this will lead to improved commercial-style operation and public accountability. The introduction of such a trading fund requires the making of an order which is subject to approvel in draft by resolution of this House. There have been three such orders in the past. This order applies to Her Majesty's Stationery Office and it follows closely on the report of the Expenditure Committee in 1977, which unanimously recommended such a change.
The House will see that the services provided by the Stationery Office are briefly set out in the schedule to the draft order. They are essentially trading services, such as publishing and procurement, with a limited measure of production.
The Stationery Office is a Government Department existing to provide services to Parliament and the Government and there must be considerations other than purely commercial ones. But the Government are satisfied that it would now be right for Her Majesty's Stationery Office to move to a system of financing more appropriate to a trading service than the present system of annual Votes and appropriations. There has been some progress in this direction already by the introduction of new commercially oriented annual accounts. I hope that the establishment of the trading fund will continue this process and enable Her Majesty's Stationery Office management to operate more effectively and economically and improve accountability.
1378
I do not think that I need to go into all the details of the trading fund unless hon. Members wish me to do so. The point really is that in future the services that the Stationery Office provides to Govern ment Departments will no longer be avail able as free, so-called allied services; they will have to be paid for by those receiving them. I think that this is a significant change that will put financial accountability for stationery and printing where it properly belongs—with those who generate the demands rather than with the agency whose task it is to satisfy them.
For the time being, stationery and printing supplied to Parliament will con tinue to be provided as an allied service and the cost of this will be financed from a Vote which the Stationery Office will administer. In due course it may be con sidered appropriate for this Vote to be transferred to the responsibility of this House and another place, but that is a matter yet to be settled; no decision has yet been taken.
Mr. Nigel Spearing: Rather than leave the matter until the Minister winds up the debate, may I ask him to enlarge a little on that important sentence concerning Parliament? He said "For the time being" and then instanced the possibility of another arrangement. Can he enlarge on that a little, because it is important not only for this House but for the other place? It would be terminating an arrangement that has worked reasonably well for some time.
Mr. Channon: There is no decision to terminate the present arrangement. All I am saying is that, in the light of a decision to move to a trading fund in general, there remains the problem of what to do about Parliament. There will have to be a special Vote dealing with the printing and stationery services for this House and the other place. It may be decided in the future—it may not be, but there is that possibility—that it would be right to transfer responsibility to this House in the same way that Government Department responsibility has been transferred. No decision has been taken and clearly the views of the House would be necessary, but in principle I think that it is just as right for the House to have to face the consequences of seeing what the costs of stationery and printing are as it is for Government Departments. I can

1379
assure the hon. Gentleman that before any decision is taken we would wish to have the views of the House to see whether it thought appropriate that a change should be made. Therefore, if the hon. Gentleman has any views, I would be grateful for them tonight, or on any other appropriate occasion.
It is right in principle that services of this kind provided to Government Departments should be charged for so that Government Departments can see on what they are spending money, how much money they are spending and decide on a proper system of priorities. This principle goes far wider than the comparatively narrow issue of the Stationery Office with which we are dealing tonight, and there will be exceptions to the general rule. But the onus of proof must be on those who are against a repayment principle. I believe, and I think this is a generally shared view, that Departments should know what they are consuming, what resources they are using and what the costs are. Ministers will then be in a better position to make sensible decisions on priorities.
There is one other Vote that the Stationery Office will continue to have responsibility for and this is in respect of certain major services that are inevitably uneconomic. There is a considerable loss every year on the publishing and sale of Hansard for the House and Standing Committee debates. This is inevitable, given the overnight service that Parliament operates. There is also a long-standing arrangement, which I cannot believe the House would wish to disturb, under which public libraries have been able to buy Stationery Office publications at half price. Therefore, Vote provision is also being made available in this limited area.
The House will notice that the order is extremely short. There are four articles and a schedule. The fund will come into operation, if the House agrees, on 1st April 1980. As that is the first day of the new financial year, it is the most convenient starting date.
Article 4 sets a limit of £50 million on the amount that the trading fund may borrow from the National Loans Fund, over and above its originating debt without a further order being made. If hon. Members wish, I shall deal with the detailed accounting points. However, I
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suspect that they will not want me to do so. If they do, I shall answer any questions. At this late hour, I need say only that this proposal represents a step towards a proper and more commercial system of accountability for the Stationery Office. It also provides a better discipline for Government Departments. I hope that the House will join me in wishing the Stationery Office well in this venture.
Mr. Ron Leighton: What representations has the Minister received from the employer's organisation, the British Printing Industries Federation?
Mr. Channon: I have been able to assure the British Printing Industries Federation. It is particularly worried about the tying of Government Departments and whether it should continue to use the services of the Stationery Office. Any decision about that is irrelevant to this issue. We are moving Government Departments from a system of allied services to a repayment system. That will not affect the decision. There is no need for any concern by the—
Mr. John Garrett: Does not the hon. Gentleman agree that this process permits untying? Lucrative parts of Her Majesty's Stationery Office may therefore be handed over to the private sector.
Mr. Channon: It would be possible to untie. However, the Government have made no decision to do so. Were such a decision ever to be taken, it would be considered on its merits. Any such decision will be unaffected by this order. Until any other decision is taken, Government Departments will be bound by the tying arrangements that already exist. Under this system, or the past system, it would be open to the Government to change that practice. The Government will examine that possibility. However, no decision has been taken to change the system of untying. I cannot say that the system will remain for ever. A decision would not be affected by this order. It could, in theory, have been changed, even in the past.
I hope that hon. Members will join me in wishing the Stationery Office well in its new venture. The Department will have a new status. It will be asked to adopt a new commercial approach. I hope that

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[Mr. Channon.]
the House agrees that it is right to pass this draft order. I commend it to the House.
Mr. Spearing: Perhaps the Minister could clarify a point relating to untying. We understand that the order relates to trading funds. It is not specifically related to a possible venture of untying Government Department audits. Should that come to pass, what type of authority—it any—would be required from the House? What time scale does the Minister have in mind? Although it may not be related to this order, it is clearly related to the Government's attitude towards publicly owned services. They have made no secret of that attitude in the past.
Mr. Channon: Perhaps it will be deemed that I did not sit down. As far as I know, the Government could take a decision about untying without any reference to the House. However, I cannot believe that the issue would remain a secret. Obviously, we shall wish to examine that. We wanted to examine every Government activity. I assure the House that no decision has been taken. Any decision remains unaffected by tonight's debate. Whether it is right to tie or untie Departments from the Stationery Office will be decided on the merits of the case. I believe that if one has a centralised Department, such as the Stationery Office, Government Departments should use it; otherwise, there is little point in having it. That is a matter for Government examination. It is an important matter relating to the future of the Stationery Office and it should be examined by Ministers and officials. I shall bear the hon. Gentleman's views in mind.
1.4 am
Mr. Ian Wrigglesworth: As the Minister says, this change has been envisaged for some time, and we do not seek to oppose it. Hon. Members and the public greatly appreciate the work of the Stationery Office. We use its publications all the time and are familiar with the services provided. I was in the Government bookshop in London the other day and was reminded of this debate when I saw its plethora of publications. It provides an enormous service to the public, and should be congratulated.
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I enjoyed reading the first annual report of the Stationery Office produced pursuant to the change envisaged. Compared with the Appropriation Accounts and the lack of detail previously published, the move towards open government is welcome. Much more information about the activities of the Stationery Office is provided.
I was pleased to read the comment that its staff are the Office's most valuable resource. I also welcomed the comments on its various activities, including the Stationery Office's awareness of its wider social responsibilities. It mentions its policy of employing disabled people, furthering sheltered industries, recycling paper and other welcome activities, which demonstrate sensitivity to the wishes of the public and the House.
I wish to ask the Minister certain questions about the proposal. The draft order states that the debt shall be no more than £50 million. Hon. Members may also get the Stationery Office's estimated balance sheet from the Vote Office. It appears only to be half a balance sheet.
How will the net assets of £62.2 million be financed with a maximum debt of only £50 million? I assume that the insurance account, trading surplus and other items mentioned in the previous accounts in the annual report will also be taken into account in funding those assets. Will the Minister clarify the position?
There is mention in the schedule of certain subsidies. In the last sentence it says:
"other than such of the operations as are, or may from time to time be, the subject of subsidies".
Was the Minister referring to that when he talked of subsidies for Hansard and for the use of Government publications by libraries? What are those subsidies to be?
The estimated balance sheet is a sparse document. How will it be drawn up in future, who is responsible for valuation of the assets and who will check it? Will it be left simply to the Comptroller and Auditor General or will other organisations and individuals be involved in auditing those accounts?
Mr. Spearing: Is the document my hon. Friend refers to as "sparse" the document that has come with the order?

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Or is he referring to the rather fuller accounts contained in the annual report?
Mr. Wrigglesworth: I am referring to the document that accompanies the order, which is much sparser than the report and accounts for last year. I would be interested to learn why that is so. Will the Minister assure the House that the details contained in the annual report will also appear in subsequent annual reports?
How will the staff be affected by the change, if they are affected at all? It would be helpful—in view of the anxiety felt by the staff and their trade unions—if the Minister could make it clear that their terms and conditions of service will not be affected by the new style of management and acccounting. It is natural that there should be anxiety and if the Minister can give some assurances they would be welcomed. I feel sure that they would calm anxieties.
As we know, the Stationery Office has suffered from industrial action. There have been industrial relations difficulties and I see from the annual report that a proposed joint industrial council is still being considered by management and the trade unions. I assume that that will be a body designed to bring all trade unions together—not just white collar workers on the one hand and industrial workers on the other—into a wider forum. I would be grateful if the Minister would say something about industrial relations in the Stationary Office and about what is proposed for the joint industrial council. The details of the proposals would be of interest because of the known disruption that has occurred in the past.
My hon. Friend the Member for Newham, South (Mr. Spearing) raised the matter of hiving off, which naturally makes the staff of the Stationery Office anxious. The Opposition are concerned that the policy of tying which has been in operation for many years should be maintained. I was encouraged by the Minister's comment that there was not much point in not using the Stationery Office. There is considerable justification for sustaining that policy to maintain the benefits of scale which have accrued as a result of the tying arrangements.
As a result of that policy the Stationery Office, to its credit, has been able to maintain a lead among the front run-
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ners in printing technology and print buying. I am sure that that lead has been established as a result of the substantial scale of the Stationery Office's operations and I like to think that that could be maintained and that the benefits to the Government and to the country could continue.
It would be helpful if the Minister could tell the House what proportion of Government business is handled by the Stationery Office and what proportion of stationery comes directly from the Stationery Office. What proportion of the procurement of printing and the supply of stationery come from the Stationery Office's own resources and how much comes from outside? If the Minister can give an indication that those proportions will be maintained that would reassure the Opposition and help us feel that potentially lucrative contracts would not be hived off to the detriment of the public interest and the service provided by the Stationery Office to Government Departments. I wish Her Majesty's Stationery Office well. It has the good will of the House. It is to change its style of operation. We hope that it will succeed and continue to provide high quality services and facilities to the House and the country.
1.15 am
Mr. John Garrett: I have a constituency interest. Her Majesty's Stationery Office is an important and valuable employer in Norwich. It is to be put on a trading fund basis as a consequence of the need to establish managerial and public accountability. I agree with that. I must, because it follows the Fulton committee principles established over a decade ago which I had a hand in drafting. I served on the Expenditure Committee which reported in 1977 on this and other Civil Service issues. The principle of charging out was recommended and a trading fund is one aspect of this.
The Supply procedure of Estimates, Votes and Appropriation Accounts does not establish managerial accountability adequately. The common, or allied service, arrangements which have applied to property and information services and to the services of Her Majesty's Stationery Office do not establish accountability because the Vote is carried on the user Department. Trading funds are a means

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of ending allied or common arrangements.
Will the arrangement be used for untying? The Minister has said that the existence of the trading fund does not predicate untying but it makes it much simpler. That does great damage to an important national and Norwich institution—Her Majesty's Stationery Office. Under such an arrangement a Department could shop around and a potential supplier could take on some of Her Majesty's Stationery Office business on the basis of a single offer or pre-sale price. Accountability and trading funds are meant to clarify, not to assist "Privatisation"—the flogging off of lumps of Government enterprise to the private sector.
Let us consider a commercial analogy. I have no doubt that the Ford motor company's foundry is a cost centre and charges the price of castings to power, train and assembly divisions. That does not mean that engines can be bought on the basis of special offers from outside companies to gain business. There is a danger of distorting a useful reform so that it causes permanent damage to Her Majesty's Stationery Office. Untying could lead to loss of output, redundancies and loss of technical skills.
The Minister does not wish to be drawn on the question. I understand why. I hope that he will state his intentions for the future of Her Majesty's Stationery Office. Will it continue to be a major supplier to the Government, or will it be sacrificed to public expenditure cuts? Is the proposal to set up a trading fund a genuine attempt to continue the progress to ending the allied service arrangements and establishing an effective control system for public expenditure? Alternatively, is it a means of handing over lucrative business to the private sector so that Her Majesty's Stationery Office is left with the unprofitable business and becomes a target for further expenditure cuts?
Are we discussing a good managerial principle being used for short term political gain? The Minister is asked to prove his machismo by cutting Government bureaucrats, civil servants and technical staff at every opportunity. He should explain his general view about the relationship of Her Majesty's
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Stationery Office to the Departments which it has supplied for many years.
Mr. Spearing: This is a debate and this is a debating Chamber. I make no apology for interrupting my hon. Friend. This is an important matter concerning a £250 million a year business. Before he sits down, does my hon. Friend agree that the Minister answered this point in earlier exchanges? He cannot tell us, in terms of the order. Therefore will not the matter be left open?
Mr. Garrett: I do not think that the matter will be left open. The Government have already made up their mind to seek further economies in public expenditure wherever possible, and Her Majesty's Stationery Office is a sitting target under a trading fund arrangement.
1.21 am
Mr. Nigel Spearing: I am grateful for the remarks of my hon. Friend the Member for Norwich, South (Mr. Garrett). The debate has now taken a different turn from what some people imagined, even on entering the Chamber. My hon. Friend was right to draw the attention of the House to the trading fund technique which, if allied to overall accounting of a different type, allows proper management procedures to take place, to ensure efficiency within a public service. Whether we turn that public service into a revenue-raising commercial service which is required by a Government trading fund is another matter. There is a distinction between those two.
The history of the Government Trading Funds Act is unfortunate. By some act of irony, in 1973 the Bill went to a Second Reading Committee, which was summoned at very short notice. No Opposition Front Bench Members were present. Nobody knew the results of that Committee or could read about them as Hansard's printers were on strike. It was only on 23 July 1973 that a rather extended Report stage brought out the full implications of Government trading funds when applied to a range of quasi-Government services, of which Her Majesty's Stationery Office and Ordnance Survey are perhaps two of the most spectacular examples.
This debate is yet another chapter in that rather shady history. We are having

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a very late debate on a matter which may well be of much greater importance as time passes.
For a long time I have been a qualified admirer of Her Majesty's Stationery Office. Indeed, for some years before I came to this House I had an account, as a private citizen using my taxable income, paying £10 a year. I posted postcards and received White Papers and other matter almost by return of post. I do not know whether that admirable service is as quick now as it was then. I hope that it is. A democracy runs only on information which is complete and up to date and which can be obtained easily, quickly and in time—to use a parliamentary expression—to influence debate and discussion.
This is where something of my qualification of this organisation comes in. One of my first questions on entering the House 10 years ago was whether the Civil Service Department would open an Her Majesty's Stationery Office branch in Bridge Street for the many thousands of visitors who pass the area and the millions of Londoners who would like to obtain Her Majesty's Stationery Office publications there rather than from the rather inept and Eastern European-style Government bookshop in Holborn. That is, incidentally, difficult to find if one does not know where it is. That is the head office.
Every Civil Service Minister except the present one has received a question from me about opening up in Bridge Street. They have always said "No" to my request, and added that it was impossible to carry the whole range of publications. I replied that I did not want the whole range of publications. Let us have the things that are most attractive, particularly to visitors to London, and a range of White Papers and Hansards. We can order for collection or delivery by post the items which must be obtained from the warehouse or Holborn.
But there has been no change, no imagination, no initiative. Yet of all the printing organisations in the world Her Majesty's Stationery Office has perhaps the most magnificent range of very good publications, often produced in excellent quality and excellent print. It has a great tradition. Yet those responsible—and this is where my qualification comes in—or perhaps it is those above them,
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do not seem to be willing to make available the best of their production close to this House.
We must not forget, of course, that a vast proportion of Her Majesty's Stationery Office business is the supply of stationery and equipment to Government Departments and offices all over the country. Indeed, I know from the accounts that that is, in money terms, the more important part of its business, and perhaps the part which it would be easiest to transfer, because there are other people in other lines of business providing other sorts of offices with similar equipment. The Minister obviously has untying in mind, and that part of Her Majesty's Stationery Office's duties could very easily be transferred.
But, leaving that aside, the variety of publications by Her Majesty's Stationery Office is staggering. I did a check earlier today and I found that in the daily list there were no fewer than 50 ISBN publications, which works out on average at something like 250 a week, or 12,000 to 13,000 a year. Many publications are available, and rightly so, over a number of years. Recently some of the Acts of 1688 have been reprinted, and very interesting reading they are, being some of the basic Acts affecting our democracy. This means, of course, that overheads must be bigger.
If stocks are to be carried of relatively small books, the prices of which are not excessive, the storage costs and the overhead costs of sorting, recovery and despatching must be greater. These documents must be available. I am not talking about museum or scientific documents or historical manuscripts, but the official documents which Government Departments, this House, the public and all sorts of semi-official organisations require for the proper operation of our community machinery.
From what the Minister has said and as I understand the Government Trading Funds Act, it means that all this must be subsumed into some commercial venture. In many organisations an equalisation job can be done by using the profits from long prints and profitable lines to finance the others. But I would not imagine that there are many of the former in Her Majesty's Stationery Office. It publishes a selection of some of its more interesting publications. "Driving—The Department

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of Transport Manual" third edition, with a print of 250,000 and a price of £2.25, probably yields a modest profit, but I would not expect there to be a large number of publications with a large sale which would be sufficient to sustain the operations I have just described.
What does that mean? Leaving aside the whole question of equipment, if the publication side is to be sustained on a commercial basis—and I understand that is what this order is about—it can mean only that the standard of service will fall or the prices will go up. I suspect that both will happen. I think that would be to the public disadvantage. The Government may say—and if so I hope the Minister will confirm it when he winds up—that that is part of their policy. They do not wish to appropriate funds to Her Majesty's Stationery Office through the Appropriations Act and the Consolidated Fund, other than, perhaps, for Hansard or the services required by the House where there is a subvention either direct to Her Majesty's Stationery Office or through the House. With the exception of matters of that sort it appears that the Government have no intention of sustaining this public service and I have suggested two consequences that must follow from it.
I also noticed in the annual accounts the interesting surplus, which is much greater than it was a few years ago when the Government Trading Funds Bill was introduced. The appropriation quoted in the debates at that time for Her Majesty's Stationery Office was quite substantial, about £30 million on a £57 million sales figure with a turnover of £88 million. There is now a turnover of £250 million and a small trading surplus, and the Government are charging £3 million interest on that.
The plant and equipment—much of it of a large capacity—built up by Her Majesty's Stationery Office, no doubt on a freehold interest, is valued at current value or possibly at updated cost. But that £3 million is being taken out of interest in a notional way whereas, as I have outlined, the operations of Her Majesty's Stationery Office cannot really be commercial. I wonder why that has been done. Even if it was taken out in a commercial style, why cannot it be repaid
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to cover some of the natural costs and overheads I have outlined?
I hope that the publication of the interesting annual report referred to by my hon. Friend the Member for Thornaby (Mr. Wrigglesworth) will be continued, together with the suggestions mad by the Public Accounts Committee, even without the change to a trading services account. In the conclusion to the preface of the report of the Controller, Mr. Thimont, says:
"I referred in paragraph 3 above to the decision by the present Government that, subject to the approval of Parliament, Her Majesty's Stationery Office should move to a trading fund system of financing on 1 April 1980. This will mark the end of the allied service basis of operation which has continued for a century and a half. It means that from 1980–81 onwards Her Majesty's Stationery Office will finance its operations entirely from the income it gets by selling its goods and services to its customers and there will be no Vote for Stationery and Printing."
The final sentence is almost the ultimate in Civil Service diplomacy:
"This offers new challenges and new opportunities for Her Majesty's Stationery Office in a commercial style environment."
I make no comment on that. It says almost everything, allied to what I believe to be a general overall account of the non-commercial services for non-commercial people with which Her Majesty's Stationery Office is primarily concerned. That is why I share the concern of my hon. Friend the Member for Norwich. South. I am sorry that my hon. Friend the Member for Thornaby did not indicate the concern felt by other hon. Members. Perhaps I am being unfair, because I did not communicate it to him, but he should have discerned it almost from first principles.
The order is perhaps of greater interest than people would think. In the words of the Controller, it means the end of a century and a half of operations by Her Majesty's Stationery Office on the present basis. That by itself is an important decision. Secondly, it ushers in the new style of commercial operations, with the probable consequence that I have indicated. Thirdly, it was indicated only during the course of the debate, although no doubt experts could have predicted that it would happen, that there is a possibility, without any further consideration by the House, that a proportion of the

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services of Her Majesty's Stationery Office —printing, but more likely equipment—will be put up for tender.
The challenge is similar to the challenge that confronts some direct labour organisations or some of the quasi-commercial operations of publicly owned services. That raises a whole range of issues which it would not be in order to discuss tonight. However, if we cannot discuss them tonight, in view of what the Minister said earlier, I do not see how they can be discussed de jure by the House unless the subject is raised by a Member in private Members' time.
I am loth, without further consideration, to agree the order at this stage. There should have been greater consideration of its implications. I am not sure that any hon. Member would be justified in approving such an order—in view of the prospects of hiving off or of changing the nature of Her Majesty's Stationery Office that lie ahead without the Government's intentions being made clear in this respect. Knowing the intentions of the Government in respect of public service manpower, and in respect of the role of centralised services to the community, we have every expectation that hiving off is in their mind.
Until I have heard the Minister's reply, I wish to reserve my position on the order.
1.38 am
Mr. Michael Morris: The hon. Member for Newham, South (Mr. Spearing) made the point that this debate should be of interest to many hon. Members, although that is not reflected by the attendance in the Chamber.
There is unanimity about the approach to the changeover to the trading fund order, but Labour Members are not prepared to face the consequences of that unanimity. They seem to be saying that it is fine and dandy to establish an operation such as Her Majesty's Stationery Office on a proper financially attributable basis, but if there are deficiences and weaknesses, they should be denied.
The service that my constituents receive from Her Majesty's Stationery Office leaves much to be desired. The lawyers in Northampton have difficulty in obtaining publications through Her Majesty's Stationery Office in sufficient
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time to enable them to carry out their tasks and on many occasions they send junior clerks to London by train to collect publications from the London offices of Her Majesty's Stationery Office—mainly the Holborn branch.
I hope that we shall examine the opportunities that this new method of accounting will bring. The publications side is unexploited. Whether it should be exploited by Her Majesty's Stationery Office or hived off is another matter. When I am reminded of the equipment provision of Her Majesty's Stationery Office, I can think of no service that should be hived off more quickly. It should certainly be put out to tender. If Her Majesty's Stationery Office makes the most successful tender, good luck to it. If it does not, tough luck. That side of it should be wound up. I look forward to hearing what my hon. Friend the Minister has to say.
1.40 am
Mr. Channon: I shall try to answer all the arguments and questions that have arisen during the debate. If I omit to answer any tonight, I shall try to answer them at a later date. I shall, of course, study carefully the report of the debate.
I was sorry to hear from my hon. Friend the Member for Northampton, South (Mr. Morris) about the problem in his area. If he cares to give me the details, I shall ascertain whether there is anything that can be done to assist those who are faced with the problem that he has described.
I am grateful to the hon. Member for Thornaby (Mr. Wrigglesworth) and to others who have contributed to the debate for their tribute in general to the work of Her Majesty's Stationery Office, which has an international reputation. That is a reputation that is generally well recognised. We may have to face certain difficulties, but I am not sure that we all realise the extent of Her Majesty's Stationery Office's international reputation in so many respects.
I am sorry that Labour Members are so suspicious about the order. All that I am doing is implementing a unanimous recommendation of the ninth report of the Expenditure Committee in 1977. As I understand it, it was signed by hon. Members in all parts of the House, including the hon. Member for Norwich. South (Mr. Garrett). However, it seems

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to be represented by some Labour Members as a sinister Tory plot to do wicked things to the Stationery Office. I wish that Labour Members would not vote for recommendations of the Expenditure Committee if they do not want them implemented.
The main issue raised by Labour Members is that of tying. Even that is not new. The hon. Member for Norwich, South referred to it during the debates on the Expenditure Committee report in 1977. It is not a magical new issue that was thought of at the last moment. The Expenditure Committee divided and decided by 10 votes to five to remove the sentence that provided that Departments—like nationalised industries—should be free to determine whether they should use the Stationery Office. There was a genuine division of opinion within the Expenditure Committee at that time. I have referred to the Division list and at least one Labour Member took the minority view. It is not exactly a new topic.
The Government wil consider tying on its merits. We shall study it. The issue has no relevance to the debate. If the Government wanted to untie, they could do so irrespective of whether the order is accepted by the House. We are merely producing what might be described as a trading fund. The Government could easily take other steps to untie the Stationery Office without turning it into a trading fund. It is for the Government to decide whether to untie. We shall do so when we have considered all the evidence, which we shall study with the greatest care. However, tying is irrelevant to the debate. Hon. Members may vote for or against the order and sleep easy in their beds without thinking that they have taken a decision on tying.
Mr. Spearing: I recognise that the two issues can be separated in debate. However, does the hon. Gentleman agree that the situation would be different if the order had not come before the House, Her Majesty's Stationery Office was continuing in its present form and untying took place within that framework? Does he agree that untying within the framework of a trading fund produces a different situation?
Mr. Channon: That is possible. However, it is easy to untie without producing a trading fund. All that we have to do is produce a repayment without making a trading fund. The Government could untie without producing a trading fund. To untie may be right or may be wrong, and I do not wish to pre-judge that issue. That is a something which we shall study with care. I shall take note of the views of hon. Members. However, that is not a relevant consideration.
I was asked about the balance sheet, the £50 million debt and the elaborate accounting arrangements that take place as a result of the change. The £50 million borrowing power is arrived at because of the need for working capital. The Stationery Office will not be able to bring forward to the trading fund any cash balances from 1 April. It will, therefore, need to borrow immediately to pay its staff and contractors. In the early months there will be a large amount of borrowing. That will settle down to a permanent level. It is estimated that that will be about £14 million as the cash flow is established.
There may be another need during the next few years to finance an increase in stocks, a temporary interruption in income, or for some other purpose. That is why the £50 million borrowing power is included in the order. There is an extensive programme to modernise premises and plant. A large investment of about £30 million is required and there may be a need to borrow in the early stages.
The need for subsidised publishing arises for the House Hansard and Standing Committee reports. Their overnight production is extremely expensive. The cost cannot be recovered from the sale of the items concerned. HMSO received a payment of about £4 million in respect of expected losses on Hansard in 1980–81. There is also a subsidy for the sale of Government publications to public libraries at a 50 per cent. discount, involving about £500,000. That has been the case for about 100 years, and it would be a pity if the House were to decide that that was no longer acceptable.
Mr. Wrigglesworth: I thought that the Minister was about to explain the balance sheet. He gave the figures for working capital, and I can well understand that.

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I asked about the fixed assets and how they would be financed. The Minister did not deal with that subject.
Mr. Channon: The fixed assets have been valued in the way that is explained in the balance sheet. They have been transferred at a valuation that we think is as realistic as possible. Their value is related to the cost of replacing the assets. It is not a historic cost. It has been carried out on the basis of current market values and normal modern terms. If I have not answered the hon. Gentleman's question in full, I shall consider the matter in the light of the debate and write to him further. It is a technical matter that I should like to get right before I reply to him in detail.
I was asked about the financial objectives to be met by Her Majesty's Stationery Office. It will have to cover its outgoings chargeable to the revenue account, any additional depreciation on the difference between book value and the replacement cost of assets and on the cost of sales and monetary working capital adjustments. It will have to find 5 per cent. of the average net value of assets at current values. From that 5 per cent. the fund will have to pay the interest on its long term borrowing. It is a complicated matter, and if hon. Members wish to question me further I shall be delighted to try to give further information.
The staff will remain civil servants. There is no question of any change as a result of the order.
The JIC is a body designed to bring together the industrial trade unions. The non-industrial unions are covered already by the existing Whitley system. Discussion on the JIC continues, but to date no agreement has been reached. I should be delighted to see those discussions taken further and brought to a satisfactory conclusion.
About one-third of printing is produced in Her Majesty's Stationery Office presses, and about two-thirds is produced by the trade. I am told that the proportion has not changed by any substantial degree for many years.
The hon. Member for Newham, South (Mr. Spearing) raised a number of questions, especially about a shop in Bridge Street. I do not think that we lack imagination or initiative. If the hon. Gentleman can convince me that such a
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shop will pay, we shall start one. If he cannot do that, we will not start one. If we do so I may make the hon. Gentleman the manager and make him totally responsible for any losses. It is purely a question of whether such a shop would be profitable. If it can be shown that it could be profitable, we would consider the matter seriously.
Mr. Michael Morris: Will my hon. Friend also consider the possibility of offering the shop on an agency basis to discover whether that would be viable?
Mr. Channon: I shall consider any suggestions on the matter. I am told that it has been considered, but was not thought to be a profitable proposition.
Mr. Wrigglesworth: I am sorry to interrupt the Minister again. There was a Department of the Environment shop, which was a very attractive feature in Parliament Street. I do not know whether it is still there. That is an equally good position for tourists and others. It was a very small shop.
Mr. Channon: There was a brief moment, years ago, when I was responsible for that shop. I well remember it. I am reluctant to say tonight, without notice, whether it was a great commercial success. My recollection, for what it was worth—I am probably wrong—is that it was not. That makes me all the more suspicious about whether it is wise to have a Stationery Office shop there. I will check whether I am right about that point. Certainly I remember being very suspicious as to whether it was a wise idea. I was not the only one to take that view at that time.
There are a number of other points. I think that hon. Members have raised much the same points again. There is the question of privatising. All these other allegations have been made. All these matters should be considered by the Government. It must be right to consider whether Departments should be tied to the Stationery Office. That is a very important matter which should be settled on its merits. The Government will examine that on its merits. However, that is not a relevant issue tonight. If it ever were to be changed, that is obviously a matter the House would become aware of and hon. Members would have their opportunities to debate it, if

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that is what they wanted, in the same way as they can debate anything else.
Tonight I am merely asking the House to allow the Stationery Office to become a trading fund in the same way as there have been three other trading funds in the past. It was recommended unanimously by the Expenditure Committee. Even the hon. Member for Norwich, South supported it. I ask him to support it tonight with his vote and his voice. In fact, we brought it forward because we knew that he suggested it. If he had been against it, we should not have brought it forward in the first place. We knew the hon. Gentleman would not have suggested it if he had not been thoroughly convinced that the trading fund was in the interests of the Stationery Office and of his many constituents who work in it. To meet his request and that of hon. Members in all parts of the House, we have for once—it is very rare that a Government actually do it—met unanimously and in full the recommendations of a report of the Expenditure Committee.
Therefore, I hope that we shall get at least six marks out of 10 and that the House will allow us to form this trading fund so that the Stationery Office can operate in a commercial environment as from 1 April of this year. I hope that, if that is allowed, the House will wish it well and that it will be a great success.
Question put and agreed to.
Resolved,
That the draft HMSO Trading Fund Order 1980, which was laid before this House on 29th February, be approved.

FOOTWEAR INDUSTRY
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Waddington.]
1.52 am
Mr. John Garrett: I wish to raise the question of the condition of the footwear industry, with particular reference to Norwich. The footwear industry is of substantial economic significance in Britain. It consists of some 560 firms employing 74,000 people directly and a further 25,000 in
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supplying industries. It had a value of output of £728 million last year.
In spite of being bigger, for example, than the paper industry and the machine tool industry, the footwear industry until recently has received remarkably little attention from the Government or from the House. For years, in spite of a catastrophic decline in employment and severe trading problems, it was rightly called "the forgotten industry". Part of the reason for this neglect may well be its location, principally in country towns outside the great industrial areas—in Norwich, in Northampton, in Leicestershire, in Lancashire and in Somerset. These locations in predominantly non-industrial areas give it an even greater significance in the local economy, because it tends to be situated in low-wage areas. As an industry employing 56 per cent. female labour, it often provides a second, much-needed wage packet.
It is an industry with good labour relations and with a good record for improving labour productivity. As much as anything else, this has been due to the progressive attitude of the officials of the main trade union in the industry, NUFLAT, to whose general president, Mr. H. Comerford, all those who know the industry pay tribute.
The physical output of the industry peaked at 202 million pairs in 1964. Since that time output has declined steadily. In 1979, it fell to 151 million pairs, the lowest annual output since the war. Employment was over 100,000 in the late 1960s. Up to the mid-1970s, the decline in employment in footwear exceeded that of any of the main sectors of manufacturing industry. At least 25,000 jobs have been lost in the past decade. The contraction of the industry in Norwich has been much greater than the national average with a 35 per cent. loss of jobs in the decade. Today, the Norwich industry employs a little over 5,000 workers in 10 firms in 26 factories against an employment of over 8,000 in 1969. The Norwich industry is the fastest declining sector of the fastest declining industry in the country. Between 1971 and 1978, there were 11 factory closures in Norwich. In 1976 factories were closing at the rate of one every two months.
Against this background, a group of Labour Members in 1975 decided that something had to be done. We were concerned that the condition of the industry

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was never discussed in the House. We therefore secured an Adjournment debate and demanded action. As a result of this pressure from Labour Members, the Labour Government, to their everlasting credit, acknowledged that the industry needed help and set up a thorough study of the industry that led to the important report of the footwear study group, on which I had the honour to serve, and eventually to a scheme of assistance for the industry in the form of a footwear EDC that has produced its second annual report.
In this short debate, I wish to raise three issues: Government assistance to the industry, the structure and influence of the retail trade and trade matters—namely the uncontrolled flood of imports and obstacles to export. The footwear study group sat for two years and produced a comprehensive analysis of the industry and its problems and a most imaginative prescription for reviving and promoting growth in the industry. To be honest, it found that one of the most important problems of the industry was the weakness of its general management, its export management and design. It therefore proposed a scheme of Government assistance in nine sections, five of which involved the assembly of new management cadres for the industry in these functions. The total cost of the scheme, spread over five years or more, was only £11 million, which the industry would more than match. The cost for the whole industry would be little more than the cost of a modem fighting aircraft.
The Government response was much less imaginative, though welcome. In April 1978 the Secretary of State announced a scheme of financial assistance with an initial allocation—he clearly said an "initial allocation"—of £4·5 million for 50 per cent. of the cost of the use of consultants by small and medium-sized firms, for 25 per cent. of the cost of new machinery and for concessionary loans for rationalisation projects. This scheme was taken up enthusiastically by the industry. The response was the highest of all to such industry-wide schemes. By the end of last year, 329 applications for assistance had been received for projects costing a total of £19 million. Thirty-three applications, of which 21 have been approved, came from Norwich. The initial tranche of £4·5 million will run out at the end of this month and the Govern-
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ment have said that it will not be extended.
My first request to the Minister is that the scheme should be extended by further Government funds and developed in new areas such as the areas for development of the industry originally proposed by the footwear study group. This scheme has an exceptionally high cost-benefit ratio. The industry can effectively use a further tranche of Government funds and there is still much modernisation work to be done. In particular, the industry has requested of the Government further assistance for one crucially important but modest project—namely, a scheme to encourage freelance designers into the industry, originally proposed by the study group and now wholeheartedly endorsed by the footwear EDC. This scheme could markedly improve the design capability of the industry and be of particular importance to the fashion end of the trade in Norwich.
On 30 January the Minister attended a meeting of the EDC and refused a request for financial assistance for design. I urge the Government to change their mind and grant this modest but important request. The cost is no more than £½ million over five years—one might say half the cost of a battle tank spread over five years. The impact on the performance of the industry would be out of all proportion to the cost.
When we come to the structure and behaviour of the retail trade, we are on less tangible ground. The issue here centres on the enormous power of the footwear multiple retailers and the way they use that power. Two-thirds of all footwear sales are through specialist footwear shops, and of this two-thirds are through multiples. No less than 20 per cent. of the market is held by one company—the British Shoe Corporation, which totally dominates High Street trading.
The footwear study group was much concerned about this concentration of power. The independent consultants employed by the study group were highly critical of the use made by the British Shoe Corporation of its buying power. They considered that this had a detrimental effect on the manufacturing industry in that it enjoyed very high margins, but it reduced the profits of manufacturers and enfeebled British

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design by a policy of copying rather than innovating in design. The consultants proposed that no retail chain should have more than 300 to 400 shops. This would have led to the conclusion that the British Shoe Corporation should be broken up.
The footwear study group could not go so far as to accept that recommendation, although it was sufficiently impressed by the analogies to make a recommendation that a study should be carried out of the feasibility of referring footwear distribution to the Monopolies and Mergers Commission. The most telling aspect for a group which included Conservative Members of Parliament was that the study group suggested that the Government of the day should discuss a planning agreement with all distributors, including the British Shoe Corporation. Just imagine Conservative Members of Parliament signing a report calling for a planning agreement with a large private enterprise!
In June 1978 the Price Commission reported on footwear distribution. It found that in 1977 gross margins in footwear distribution ran at 40 to 53 per cent—the third highest of all retail trades. Net margins for multiples other than the British Shoe Corporation ran at 8 per cent. while the British Shoe Corporation managed a 16 per cent. net margin. The Price Commission concluded that gross margins achieved by footwear distribution multiples had become higher than could be achieved in a fully competitive market. It observed that the BSC was an efficient company and did not deploy its competitive strength in the market to the fullest extent. But it was not asked to comment on the behaviour of the British Shoe Corporation vis-a-vis its suppliers in this country, its purchasing practices or its threat to manufacturers.
One sore point is the extent to which the British Shoe Corporation and other multiples import their products. Today 50 to 60 per cent. of the stock of these multiples is brought from abroad. It was to this problem that the concept of a planning agreement was directed. The Department of Industry did not fancy producing a planning agreement—the civil servants in that Department did not know how to cope with it. The result was the retail commitment produced by the
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Footwear Distribtuion Federation in May 1978. This pledged co-operation and support for British manufacturers in an effort to buy British. The EDC now reports disappointment at the extent of progress under the retail commitment. It has certainly not fulfilled its objective in maintaining the volume of home manufactures at the level of 1976.
The position of the multiples in general and the British Shoe Corporation in particular calls for constant pressure and vigilance by the Government. I ask the Minister to make a standing reference to the Monopolies and Mergers Commission of the British Shoe Corporation and to call for an investigation by the Director General of Fair Trading of multiple retailers. If he really believes in limiting the abuse of market powers—this Government always say they are in favour of doing this—let him show us. I suggest that he also talks to the boards of the top two or three multiples in this country about the retail commitment and asks them whether they think that they are behaving in the national interest.
I come finally to the present crisis in the industry. The footwear industry is being ruined by a flood of uncontrolled imports, many of them unfairly priced or produced under substandard working conditions, and also by the loss of exports due to the rising value of the pound. That is partly caused by ours being a petro-currency and partly by the monetarist policies of the present Government and the draconian restrictions in foreign markets. Import penetration of the home market has reached 46 per cent. to a value of £350 million. Increasingly, imports are moving into the higher-quality leather sector.
The case of low-cost COMECON imports is well known. There is a limitation on COMECON imports. However, we limit them to a lesser extent than any other EEC country. The average cost, insurance and freight value for a pair of shoes from Poland and Czechoslovakia is now £3·50. It has risen by only 50p to 96p since 1977. Their costs must have risen as our have.
It is cumbersome to prove dumping from these countries. As in other cases, the process is extremely slow, by means of the Department of Trade and the EEC. Imports from the Far East are produced at low wages and in appalling conditions.

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Low-price shoes flood into Britain from Spain, Brazil and Portugal. Much of that trade is at unfair and probably dumped prices. Anti-dumping action is handled with sluggish deliberation by the Department of Trade.
Brazil is notorious for an export subsidy and for rigging its leather export trade. The major problem facing Norwich is that of increasing Italian imports. Last year 32 million pairs of shoes were imported. That is 30 per cent. up on 1978. Those imports occur right in the Norwich sector of high-quality women's fashion shoes.
On 24 February, The Sunday Times reported on the conditions under which Italian shoes are produced. They are produced in a "submerged economy". Home workers do piecework for 25p a shoe. A woman must work all day to earn £100 a month. Home workers have been paralysed by poisonous glue. They are inadequately protected in terms of health and safety. They do not pay social security contributions and neither do their employers. That is a clear example of unfair trading and should be limited.
At present, the Americans are threatening to limit imports of Italian footwear. For some reason, the Italians have already guaranteed that they will not send as much footwear to the United States next year as they did last year. At the end of last year, the Government ended surveillance licensing of footwear imports from some non-EEC countries. They did not consult the industry. Surveillance licensing—for which some of us argued for a long time —was abolished by the Government without any consultation. The British Footwear Manufacturers' Federation protested strongly. Of the world's shoe manufacturing capacity, 75 per cent. is protected from our exports. We have import quotas, for example, in Australia, New Zealand, Canada and Japan. The United Kingdom should also have some protection. The industry is putting its house in order. The EDC has been set up and is doing good work.
In Norwich, the industry produces high-quality footwear with increasingly modern styling. Its management has improved its performance in recent years. It is alert. Its work force is superlatively skilled. The industry simply needs more help. It is no good saying that import controls will cause retaliation from other countries.
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Retaliation has already begun.
The previous Labour Government did an enormous amount for the footwear industry. Do the Government consider the industry expendable in the interests of free market, non-interventionist ideology? I hope that the Minister has come prepared with some news of action in the three crucial areas that I have tried to identify.
2.8 am
Mr. Michael Morris: I am glad that the hon. Member for Norwich, South (Mr. Garrett) has raised an Adjournment debate on the problems facing the footwear industry. Norwich is probably the queen of the women's shoe industry. I hope that he will not think me too boastful if I say that Northampton is the king of the men's shoe industry.
The hon. Gentleman is right to say that the footwear study group was set up on an all-party basis and that it was highly successful. It is also true that it took three years to get it going. My hon. Friend the Under-Secretary has spent only nine months in office. He therefore has some time in hand.
On the multiple side, the hon. Gentleman is right to say that there was a firm commitment from the retail trade to co-operate. If the retail trade is not cooperating—according to our evidence—the Director General of Fair Trading should be informed.
As regards exports, I recognise that there is no doubt that this industry is still unusually skewed towards the former colonies and towards the richer nations of the world.
There are increasing restrictions in Australia, Canada and the United States, which the hon. Member for Norwich, South did not mention, which affect the sale of the sophisticated men's shoes that are made in Northampton. Yet the penetration into Europe is under 2 per cent. So the export of shoes is a major problem for the industry.
Conversely, we have enormous import penetration. As soon as we close one hole, another one appears. We closed the hole made by COMECON in 1975 and now it is Brazil that is carrying out a dumping operation. Who knows which country will be next if we manage to

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curtail Brazilian imports?
The Minister must be under no illusions. The footwear industry is important and significant. It has a long record of success in terms of man mangement and productivity. It needs help in organising itself. It may be that the Government will say that the £4·5 million needs to be analysed in terms of its success. If that is what my hon. Friend says, when he carries out his analysis he will discover that the money has been well spent. If necessary, the industry should look again at the other propositions laid down some time ago. Nevertheless, much of what the hon. Member for Norwich, South said deserves my hon. Friend's very serious consideration. I agree with much of what the hon. Member put forward.
2.11 am
The Under-Secretary of State for Industry (Mr. David Mitchell): I begin by congratulating the hon. Member for Norwich, South (Mr. Garrett) on bringing this important matter before the House, even at this somewhat early hour of the morning. I also congratulate my hon. Friend the Member for Northampton, South (Mr. Morris) on his perceptive contribution. He is also intensely interested in the footwear industry. The Government appreciate the importance to the United Kingdom economy of a healthy, viable footwear industry and we are anxious to encourage it.
The hon. Member for Norwich, South listed the size and importance of the industry and I agree that it is an important industry. It is a basic industry and we are anxious to ensure that it continues in a prosperous fashion.
I recently received a delegation from the footwear economic development committee and I visited the Footwear Manufacturers' Federation. I am, therefore, already aware and anxious to study more of the problems currently facing the industry and intend to take a personal interest in it. I expect that from time to time the hon. Member for Norwich, South and I will be able to discuss the industry further.
I appreciate the industry's worries about import penetration, the number of closures and the extent of short-time working. However, I understand that companies in Norwich are less hard-
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pressed than other parts of the footwear manufacturing industry. The hon Member for Norwich, South is exceedingly fortunate. As he will know, the Norwich travel-to-work area has a 4·4 per cent. unemployment rate, which is well below the national average of 6 per cent. Indeed, I am told that at present there are about 12 footwear manufacturers in the Norwich area employing about 3,000 people in the manufacture of children's shoes and ladies' quality fashion and comfort footwear.
Trade in Norwich is generally buoyant with almost all companies reporting to us having full or near-full order books for at least the next six months. This contrasts fairly substantially with other parts of the country. Significant business for the companies operating in Norwich has been secured in the EEC markets, but I am under no illusion about the problems facing other parts of the industry. There some 10,000 on short-time working and 2,000 are under notice of dismissal. Those are serious figures for the industry, but, as it happens, less so in Norwich. It causes me substantial concern.
At the invitation of my hon. Friend the Member for Rossendale (Mr. Trippier), I visited a shoe factory in his constituency to see for myself. I intend before long to visit the trade union headquarters.
Mr. Michael Morris: The headquarters are in the constituency of my hon. Friend the Member for Wellingborough (Mr. Fry). My hon. Friend will be welcome there, and I hope that he will spend a little time in Northampton discussing our problems.
Mr. Mitchell: I am grateful for that invitation. Perhaps we may discuss it in greater depth on another occasion.
The hon. Member for Norwich, South will appreciate that I am concerned about the industry and its problems. He first made a plea for further Government funds for modernisation. There are many applicants from different industries for Government funds. Regretfully, I tell the hon. Gentleman that money is not available for the long queue of industries and individuals seeking support. It is easy for a Government to dole out parcels of money if they merely print more money. We are suffering substantially

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from the previous Government resolving their problems in that way. The inevitable consequence is inflation. We are suffering the full flood tide of the printed money madness of the previous Government 18 months ago. It will lead us to levels of inflation of 20 per cent. and possibly 21 per cent. in the next couple of months. We shall not follow that path. We dare not risk the consequences of further money madness.
I am anxious to see modernisation in the industry, and there is a system of 100 per cent. allowances against investment in plant and machinery.
The hon. Gentleman's second point concerns the scheme for financial assistance for freelance design facilities. The hon. Gentleman is right to say that I met the economic development council for the industry. The hon. Gentleman used the phrase "only £½million", as if money grows on trees. It is a substantial sum when all the applications for a little bit here and a little bit there are added up.
Mr. John Garrett: I made the point about £½million compared to the size of the industry. Many smaller industries have received much greater subventions. That amount could make a substantial difference to the fashion end of an industry that employs 100,000 people.
Mr. Mitchell: I do not disagree. There is a need to raise the standards of design and fashion consciousness in the industry. I dispute that it is necessary to spend £½million of taxpayers' money to enable the industry to do what is in its own interests. In the United Kingdom we already have three freelance design operations. One is in the Northampton area and another in London, if my recollection serves me right. I am discussing with the EDC small practical plans to try to encourage more people to operate in that area.
Let us be clear about the fact that much of the design work is carried out by people who work for firms in the industry. Much of the work is concerned with going to fashion exhibitions and looking at the most advanced designs. The themes are picked up and then repeated in varying forms within the firm or the design capability in this country. I shall certainly look further at that point with representatives of the industry.
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The third point raised by the hon. Gentleman concerned the concentration of High Street retailing in the multiples. He named a particular company. This is a matter for the Department of Trade but I will make sure that its attention is drawn to the point made by the hon. Gentleman. He also referred to unfair imports and the draconian barriers to exports, as did my hon. Friend the Member for Northampton, South. I am bound to say that I am enormously impressed by the determination of the industry to succeed. I agree with the hon. Gentleman that the industry starts from the sound base of good industrial relations. That is one of the reasons why I plan to visit the trade union at its headquarters before very long. I have already visited the main trade association, which is an effective organisation. The EDC in its 1980 conference programme has emphasised design and the importance of technology.
I turn to the points about imports and the problem of closed overseas markets. I want to mention at the same time the growing opportunities for sales into Europe. I am pleased to see the increase that has already taken place in sales into Europe, but I have to say that they now account for 1·3 per cent. only of the European market. However, I hope that it may be possible for the industry to build on the expansion it has already achieved in that market.
I would draw the attention of the hon. Gentleman to the clothing industry. Last week I attended the launching of the first report of the clothing industry's resources agency. The agency did a survey of 23 English companies and one German company. Its report reveals some interesting facts about the capability of a major industry—with problems not dissimilar from the boot and shoe industry—for improving its own productivity, competitiveness and ability to export without Government aid.
The Question having been proposed after Ten o'clock on Tuesday 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 past Two o'clock.