Commons Sitting of 1 May 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
DEATH OF A MEMBER
Mr. Speaker: I regret to have to inform the House of the death of Thomas McClellan McMillan, esquire, Member for Glasgow, Central, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.
PRIVATE BUSINESS

  LONDON TRANSPORT (No. 2) BILL (By Order)
  Order for Second Reading read.
  To be read a Second time upon Thursday 15 May.

  BANGOR MARKET BILL [Lords] (By Order)
  Order for Second Reading read.
  To be read a Second time upon Tuesday 6 May.

  GREATER LONDON COUNCIL (GENERAL POWERS) (No. 2) BILL (By Order)
  Read a Second time and committed.
TYNE AND WEAR BILL [Lords] (By Orders)
  BRITISH RAILWAYS BILL (By Order)

    SOUTH YORKSHIRE BILL [Lords] (By Orders)
    Orders for Second Reading read.
    To be read a Second time upon Thursday 8 May.

ORAL ANSWERS TO QUESTIONS
  HOME DEPARTMENT

    Mr. Jimmy Kelly
    Mr. Flanneryasked the Secretary of State for the Home Department if he intends to take any further steps arising from the inquest on Mr. Jimmy Kelly.
    The Minister of State, Home Office (Mr. Leon Brittan): My right hon. Friend the Secretary of State has asked me to apologise to the House on his behalf for his absence this afternoon. I am sure that the House will understand and appreciate the reason.
    After the most detailed examination possible of all the evidence, the inquest jury reached a unanimous verdict of death by misadventure, finding the cause of Mr. Kelly's death to be heart failure, brought on by acute alcoholic intoxication and exertion. It made no adverse comment about the police, and I understand from the chief constable that no additional evidence was revealed in the course of the inquest which in the view of the investigating officer would require him to make a further submission to the Director. In these circumstances, as my right hon. Friend has already announced, we are satisfied that no useful purpose would be served by setting up any further public inquiry or by taking any other action in the case.
    Mr. Flannery: I am grateful for that answer, but is the hon. and learned Gentleman aware that there is grave public disquiet and that many people do not accept that any trial by inquest can occur?
    Mrs. Kellett-Bowman: Rubbish.
    Mr. Flannery: Will the hon. and learned Gentleman further accept that, despite the objections from the Government Benches, what I have said is the reality? Will he therefore ask his right hon. Friend whether there can be a public inquiry, because a large amount of the evidence was not given at the inquest? Is the hon. and learned Gentleman aware that the relatives of the deceased man feel that much more needs to be examined? Does the hon. and learned

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    Gentleman agree that there is also grave disquiet because large sections of the police are in conflict with the public on many issues?
    Mr. Brittan: I do not accept the hon. Gentleman's premises or conclusions. I do not believe that there is grave public disquiet. This is a serious matter, which has been looked into carefully and thoroughly at the inquest. I do not accept for one moment that there is material evidence of a substantial character that was not before the inquest. For those reasons it would not be right for me to suggest to my right hon. Friend that -there should be an inquiry of the kind suggested.
    Mr. Chapman: In view of the serious and unfounded allegations against the police, does my hon. and learned Friend intend to take an initiative to redress the balance of fairness? Will he take this opportunity to state that the allegations are completely unsubstantiated?
    Mr. Brittan: I am happy to make it clear to the House—as the verdict of the jury itself did—that what my hon. Friend has just said is absolutely the case.
    Mr. J. Enoch Powell: Can one get justice for an individual through a public inquiry?
    Mr. Brittan: Underlying that question is the suggestion that the best way in which justice for the individual can be achieved is within the normal existing judicial procedures. I entirely agree with that and I believe that public inquiries should be reserved for the extremely rare situations in which matters of general consequence need to be examined, rather than rights between parties.

    Citizenship
    Mr. Lathamasked the Secretary of State for the Home Department what progress is being made in the review of the law of citizenship; and whether he will make a statement.
    The Minister of State, Home Office, (Mr. Timothy Raison): We hope to be ready to publish a White Paper before the Summer Recess.
    Mr. Latham: Does my hon. and learned Friend recall—because he was
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    heavily involved in helping me on this matter—the case of my constituent who came here from the Bahamas in 1938, served for five years in our Army and has now been told that he cannot have a British passport any more, but that he must have a Bahamian one? Is this not an absurd situation which should be sorted out?
    Mr. Raison: I am aware of this case. I must point out that when the Bahamas became independent, Parliament provided that people like Mr. Hanna, who had been born there, should become citizens of the Bahamas and cease to be citizens of the United Kingdom and Colonies. Parliament also provided entitlement to United Kingdom citizenship by registration, and I know of no insuperable obstacles to Mr. Hanna's being able to do that.
    Mr. Alexander W. Lyon: To what extent are the Government consulting Commonwealth countries about the position of citizens of the United Kingdom and Colonies who would not be accepted as British citizens under any proposed scheme? Can that consultation take place before the White Paper is produced so that we can have some indication of Commonwealth thinking?
    Mr. Raison: We are having a number of discussions with Commonwealth Governments on a wide variety of topics to do with nationality.
    Mr. Bruce-Gardyne: When the Home Secretary publishes his White Paper will it include provisions for withdrawal of the totally anomalous and unreciprocated right to vote given to citizens of the Irish Republic in this country? If not, why not?
    Mr. Raison: As my right hon. Friend said on 26 October, we do not think it appropriate to deal with any voting entitlement in a nationality Bill.

    Special Constables (Bounty)
    Mr. Neil Thorneasked the Secretary of State for the Home Department whether, in view of present recruitment levels into the Special Constabulary, he will consider paying a bounty to special constables who successfully fulfil their annual duty in the public service.
    Mr. Brittan: This is one of the possibilities being considered by the working party set up by the Police Advisory Board.
    Mr. Thorne: I thank my hon. and learned Friend for that encouraging answer. Does he not agree that in the 1980s an entirely different situation arises from that which existed at the time when the Special Constabulary was first established? Therefore, is it not essential to introduce some measure along these lines?
    Mr. Brittan: That proposal is being considered and I welcome the opportunity of telling the House that we are concerned to reverse the decline in the strength of the Special Constabulary. It has a valuable role to play and our concern for it is reflected in the presence of my right hon. Friend the Home Secretary at the Metropolitan Police Special Constabulary annual dinner later this month. He will show by his presence the high regard and importance that we attach to the work of the Special Constabulary.
    Mr. Aitken: Will my hon. and learned Friend accept that relations between the regular police and the Specials have improved considerably, particularly since the implementation in full of the Edmund-Davies report? As a result of some of the old tensions disappearing, will he not agree that the time is now right for an imaginative expansion of the Special Constabulary? The idea of using a Territorial Army-type bounty is worth considering urgently.
    Mr. Brittan: I certainly agree that the time has come to assist in the expansion of the Special Constabulary. That is why the working party is looking into these matters. I think that the climate is right, both for the reasons given by my hon. Friend and the more general fact that the support that the Special Constabulary can give to the regular police is increasingly recognised. I very much hope that we shall make progress in this direction.
    Sir William Clark: Does not my hon. and learned Friend agree that it is essential for the Government to encourage any sort of voluntary service? Will the working party look into the possibility of ensuring that whatever bounty is given, a certain amount each year is free from tax?
    Mr. Brittan: If the working party favours the recommendation for a bounty, it will have to consider the tax implications. I am grateful to my hon. Friend for drawing that aspect of the bounty proposal to the attention of the House.

    Race Relations
    Mr. Dubsasked the Secretary of State for the Home Department what plans he has to improve race relations.
    Mr. Raison: The Government are committed to securing equal opportunities and promoting racial harmony. Existing legislation and Government programmes are already designed to further these objectives though we are thinking carefully about developments in this field. Good race relations also require a positive effort from all of our citizens, whatever their colour.
    Mr. Dubs: Is the Minister aware that his answer sounds incredibly complacent in that he has not put forward a single positive measure to improve race relations at a time when cuts in public expenditure and increasing unemployment are making the lot of our minority community worse than ever before?
    Mr. Raison: I refute those observations. We are considering this matter very carefully and are maintaining the level of expenditure in Government programmes. We are reconsidering the exact scope of section 11 and we have the whole problem very much to the forefront of our minds at present.
    Sir Ronald Bell: Will my hon. Friend bear in mind that nothing would be more conducive to improving race relations than a reduction in the inflow of ethnic minorities to this country?
    Mr. Raison: As my hon. and learned Friend knows, the Government have introduced new measures for immigration control which will have some impact in this area. However, we must consider the interests of all sections of our country at present.
    Dr. Summerskill: In his review of the appeals system in immigration cases, will the Minister, in the interests of maintaining good race relations, recognise the importance of preserving the right of Members of Parliament to appeal directly to Home Office Ministers about individual cases when those Members feel that

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    it is appropriate to do so? Will he assure us that this right will be preserved?
    Mr. Raison: We have no plans to remove the right of hon. Members to raise questions with Ministers. There are occasions when it seems to me that that right is carried to almost excessive lengths. However I assure the hon. Member that we have no plans to remove that fundamental right.
    Mr. Hill: May I congratulate my hon. Friend on the success of the various offices that have been set up in the regions, particularly in Southampton, to deal directly with immigrants' problems? Is my hon. Friend aware that my concern at present is about the fact that the Southampton office is about to close? Could its life be extended for another six months?
    Mr. Raison: I am aware of this, but I am afraid that this has been forced upon us by lack of resources. I shall consider what my hon. Friend has said, but I cannot hold out any hope that the position will be changed.

    Police Force (Ethnic Membership)
    Mr. Leeasked the Secretary of State for the Home Department what are the latest available figures for members of the police force who originate from coloured ethnic communities; and what percentage of the total this represents.
    Mr. Raison: On 29 February 1980, 268 police officers in England and Wales—0·2 per cent. of the total police strength—were members of the ethnic minorities.
    Mr. Lee: I am sure that the majority of hon. Members will find these figures rather disappointing—
    Sir Ronald Bell: Why?
    Mr. Lee: I said the majority of hon. Members. In view of these figures has my hon. Friend any initiatives to implement with a view to increasing the size of the coloured police population?
    Mr. Raison: I accept the need to increase the number of recruits from the ethnic minorities. A special recruitment campaign, with advertisements in the appropriate languages, was conducted in the ethnic press over a three-month period in 1979, and a similar campaign will be launched later this year.
    Mr. Christopher Price: Will the hon. Gentleman agree that the National Front march through my constituency two weeks ago would have been less of an affront to both black and white citizens on the route of the march if the 5,000 policemen guarding the marchers had been less exclusively white?
    Sir Ronald Bell: Why?
    Mr. Christopher Price: What is the Minister doing to make the Metropolitan Police, in particular, more aware of its responsibilities to create racial harmony?
    Mr. Raison: I cannot comment on the policing of that particular event. But, as I have said already, we hope to see an increase in the number of members of ethnic minorities in the police forces. There is no doubt at all that the Commissioner of Police of the Metropolis is aware of the importance of good community relations and I believe that much good work is being done in that area.
    Dr. Glyn: Will my hon. Friend realise that it is not a question of ethnic minorities? We must not reduce the standards of entry into the police simply because of the colour of a person's skin.
    Mr. Raison: I am not aware that my right hon. Friend or the police forces have any plans to reduce standards.

    Interception of Communications
    Mr. Cookasked the Secretary of State for the Home Department if he will now name the senior member of the judiciary who will review the interception of communications; and when he expects to publish his first report.
    Mr. Brittan: My right hon. Friend hopes to be able to do so shortly.
    Mr. Cook: Will the Minister's right hon. Friend reconsider the proposal in the White Paper that only the initial report to the senior judge will be published and that, thereafter, there will be no annual statement? What is the merit in having an independent check on the system if the independent assessor cannot communicate to Parliament or to the public his concern for, or confidence in, the system that he is checking?
    Mr. Brittan: No, Sir. My right hon. Friend indicated in his statement to the

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    House that the initial report would indeed be published but that subsequent reports would not be published. That does not mean that Parliament would not have any knowledge of the nature of those subsequent reports. My right hon. Friend added that Parliament would be informed of any findings of a general nature and of any changes that are made in the arrangements as a result of subsequent reports. That seems to be a reasonable balance in what must, inevitably, be an extremely sensitive area.
    Mr. Race: Why is the Minister's Department refusing to say whether the criteria set out in the White Paper cover the interception of communications for those engaged in trade disputes?
    Mr. Brittan: I do not believe that the question of the appointment of a member of the judiciary to review the interception of communications is an appropriate vehicle for ventilating further the general issues of policy which were put before the House and explored in some depth when my right hon. Friend made his statement.

    Boundary Commissions
    Mr. George Cunninghamasked the Secretary of State for the Home Department if he has any plans to propose changes in legislation governing the activities of the Boundary Commissions.
    Mr. Brittan: We are considering whether any such changes are necessary or desirable.
    Mr. Cunningham: Does the Minister remember the remark that he let slip a month ago to the hon. Member for Morecambe and Lonsdale (Mr. Lennox-Boyd) suggesting that the Government had in mind the possibility of changing the law relating to Boundary Commissions in order to speed up the process? Since it is generally accepted that the next redistribution will benefit the Conservative Party, does the Minister accept that it would be a political scandal if the Government were to use their majority in the House to alter the law relating to the Boundary Commissions in a direction which benefited the Conservative Party?
    Mr. Brittan: I accept that we have a lot to learn from the Opposition about political scandals in relation to these matters. I think that it would be a politi-
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    cal scandal to hold the next General Election on the basis of the present boundaries, which are hopelessly out of date and do not reflect the quality of representation that should be paramount in our thinking. There is a strong case for thinking that it is quite unnecessary that the Boundary Commission should have to complete its consideration of the European constituencies before reporting the outcome of its consideration of the Westminster parliamentary constituencies.
    Mr. Shersby: Does my hon. and learned Friend recall the gerrymandering of the Boundary Commission's report by the Leader of the Opposition when he was Home Secretary? Does not my hon. and learned Friend agree that it is quite scandalous that some constituencies could be at a grave disadvantage compared with others? Some hon. Members represent constituencies with 100,000 electors and others represent only 40,000 electors. Will my hon. and learned Friend take urgent steps to see that that situation is remedied?
    Mr. Brittan: I think that it is quite indefensible that one should fight an election with the present disparity in the size of constituencies. I merely referred, in passing, to past experience, and I do not think that we need to look back. We should be looking to the future and to implementing the representations of the Boundary Commission in an appropriate way in order to safeguard democracy.
    Mr. Merlyn Rees: The Boundary Commission procedure to ensure that there are not over-small or over-large constituencies is right. The Minister referred to the European elections and changing procedures there and my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) was trying to find out what is in the mind of the Government. Why are the Government thinking of changing the law so that the procedures for the European elections can be carried out in a way that was not envisaged when the original legislation was carried? We do not understand what the Government have in mind in this context. The question has nothing to do with gerrymandering and the Boundary Commissions. Is the hon. and learned Gentleman aware that many of us feel strongly about the nature of the European Parliament and the way in which it is organised?
    Mr. Brittan: I do not think that anything I have said, or canvassed, relates to the organisation of the European Parliament, or its powers. What I have said relates to the fact that, at the moment, the parliamentary Boundary Commission—including the English, Scottish, Welsh and Northern Irish Commissions—cannot report until it has considered any changes that it thinks appropriate in the European Parliament boundaries. I am talking of boundaries alone. It seems to us that there is no justification for holding up the implementation of the Boundary Commission proposals concerning the Westminster constituencies because it may not be able to complete consideration of the European constituencies.
    Mr. Donald Stewart: Will the Minister remind the hon. Member for Islington, South and Finsbury (Mr. Cunningham) of the saying that people who live in glass houses should not throw stones, bearing in mind that his 40 per cent. provision gerrymandered the Scotland Act?
    Mr. Brittan: I am afraid that I cannot be drawn on that, because on that issue I believe that the hon. Gentleman showed more wisdom than in his lapse today.
    Mr. Peter Bottomley: Does my hon. and learned Friend agree that the way in which the hon. Member for Islington, South and Finsbury (Mr. Cunningham) phrased his question suggested that the way the boundaries were left at the last General Election gives great advantage to the Labour Party? Is not the important point that the boundaries should be fair? Whether that fairness removes an advantage presently enjoyed by the Labour Party is a totally separate issue.
    Mr. Brittan: I entirely agree with my hon. Friend. I ignore speculation as to the effect or otherwise of the implementation of any proposals that might or might not come. Such speculation is always extremely hazardous. What is sure and firm is that it is quite wrong that there should be constituencies with over 100,000 electors and others with under 30,000 electors.

    Hooliganism and Vandalism (London Underground)
    Mr. Shersbyasked the Secretary of State for the Home Department if he will
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    set up a working party into hooliganism and vandalism on the London underground.
    Mr. Brittan: My right hon. Friend will be holding, with my right hon. Friend the Minister of Transport, a working conference on violence on public transport next Tuesday. I am sure that hooliganism on the London underground will be among the problems discussed.
    Mr. Shersby: Is my hon. and learned Friend aware that, welcome though his announcement is, a conference is not, in the judgment of many Londoners, sufficient? Is he further aware that the acts of hooliganism and vandalism which took place at Neasden and at Finsbury Park seriously shook public confidence in the ability of people to travel safely on the London underground? Will my hon. and learned Friend address his mind specifically to the problems—first, of getting the Metropolitan Police more actively involved in policing the London underground and, secondly, of reviewing the range of penalties which are available to deal with these Tube thugs? We simply cannot go on with the present situation much longer.
    Mr. Brittan: I appreciate, understand and completely share the public anxiety articulated by my hon. Friend. Of course, the conference that is to be held next Tuesday is not enough. However, I think that it is more likely than a working party to reveal to Government and the other organisations involved—whether local authorities or transport bodies—pointers to constructive action for the future.
    The Metropolitan Police already assists the British Transport police where necessary. Any recommendations for greater co-operation may well emerge from the conference. The House will be aware that the Government are reviewing the scope and content of the criminal law to seek ways in which it can be strengthened where appropriate.
    Mr. Bagier: Does the hon. and learned Gentleman accept that the railway men are extremely concerned about what is happening? Does he accept that there should be urgent co-operation between the British Transport police and the Metropolitan Police to ensure that the known danger spots

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    are policed properly at times when vandalism and hooliganism take place? Is he aware that the fervent opinion of those who work on the system is that it is their job to work for the railways and not to fight for them and that they should be afforded protection when they are doing their jobs?
    Mr. Brittan: I do not think that I would disagree with a single word that the hon. Gentleman has uttered.
    Mr. Grieve: Will my hon. and learned Friend bear in mind that there might be long-term solutions to the problem but that short-term remedies are urgently needed? Does he agree that it is not only a question of hooliganism but that people are anxious because of the extreme violence on the underground and on public transport? Will he do his best to urge that the Metropolitan Police cooperate with the transport police to ensure that urgent measures are taken to meet the grave crisis?
    Mr. Brittan: I can assure my hon. and learned Friend that there is no need to urge the Metropolitan Police to co-operate. They are ready and anxious to do so. It is a question of the best way in which they can co-operate. I hope that the conference next week will produce constructive, short and long-term suggestions.
    Mr. Campbell-Savours: Is there not another solution? Could we not fill London Transport carriages with passengers rather than vandals if we reduced the scandalously high cost of fares?
    Mr. Brittan: I do not believe that that would help in any significant way.

    Urban Centres (Public Order)
    Mr. Lawrenceasked the Secretary of State for the Home Department what action he proposes to take to ensure that there will not be any " no-go " areas in British urban centres.
    Mr. Raison: As my right hon. Friend made clear in his statement to the House on Monday on the recent disturbances at Bristol, however quickly or fiercely public disorder may occur, we must ensure that the police are able swiftly to restore the peace and enforce the law. Such speed of response is a central issue for the re-
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    view of arrangements for handling spontaneous disorder which the Department is undertaking with chief officers of police.
    Mr. Lawrence: Is my hon. Friend aware that few people will not wholeheartedly support what the Home Secretary said about his determination that there should not be any no-go areas in Britain? Is the Minister aware that it will be possible to give effect to those fine words only if either enough police officers are recruited into potentially inflammable areas, or if enough police officers are recruited to special groups to be used in particularly inflammable areas? Is my hon. Friend satisfied with the level of police recruitment and the capacity of the police force to deal with conflagrations if, by chance, they should take place in future?
    Mr. Raison: I am grateful for my hon. Friend's comments on what my right hon. Friend said on Monday. There has been a great improvement in recruitment in recent months since the present Government came to power. On the more specific question of how to handle disorder, that is exactly what the conference, which the Home Office is setting up in conjunction with the Association of Chief Police Officers, intends to examine.
    Mr. Alexander W. Lyon: As the police were walking about the place peacefully shortly after the disturbances may we get away from the obsession about no-go areas and ask ourselves why there was so much hostility to the police in the first place when the outbreak took place? Is it not time that we began to consider community policing on a national scale rather than reactive policing, which was the cause of the riot?
    Mr. Raison: The conference to consider police operations might examine such questions. The Bristol incidents have been analysed fully. A full summary of the chief constable's report is available in the Library. Inquiries will be made by the Select Committee of which the hon. Gentleman is a member. It is well known that local authorities are examining the situation.
    Mr. Wilkinson: Since many areas of our big cities are populated by Indian, Pakistani and Bangladeshi communities,

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    does my hon. Friend agree that it would be to the advantage of effective policing if there were more police from those communities, who speak the language and understand more fully what is going on?
    Mr. Raison: We hope to have more members of the ethnic minority communities in the police force.

    Community Relations Councils
    Mr. Budgenasked the Secretary of State for the Home Department if he has any proposals for making the councils for community relations more accountable either to Parliament or to local authorities.
    Mr. Raison: Community relations councils are already answerable to the Commission for Racial Equality through the conditions imposed in connection with the grants that the Commission makes to them. I understand that the Commission is reviewing all these arrangements and that the question of accountability forms part of this review. Where grants are made by local authorities or other bodies it is for them to attach what conditions they think appropriate.
    Mr. Budgen: May I draw my hon. Friend's attention to two recent examples of behaviour by the community relations councils? Is he aware of the violent and offensive attack by the Northampton community relations council on my hon. Friend the Member for Northampton, North (Mr. Marlow)—an attack which would be proper in a political party but which was grossly improper in a non-political bureaucracy? Secondly, is my hon. Friend aware of the refusal by the Wolverhampton community relations council to accept the advice of the Commission for Racial Equality on the appointment of an official? Do not those two examples point to the proposition that the community relations councils should be directly responsible either to the Home Office or to local authorities?
    Mr. Raison: I do not believe that it is generally thought that my hon. Friend the Member for Northampton, North (Mr. Marlow) is incapable of defending himself against attack. I understand that the Commission for Racial Equality's policy is to require political representation on community relations councils to
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    be broadly balanced. Events in Wolverhampton have aroused considerable interest. I understand that the Commission for Racial Equality is reviewing its relationships with community relations councils generally and is examining carefully the position in Wolverhampton.
    Mr. Speaker: Order. I remind the House that when hon. Members are called to ask a supplementary question it is unfair if they ask two or three questions. That stops questions by other hon. Members.
    Mr. Dubs: Does the Minister agree that it would be the worst thing possible if community relations councils lost their independence in the local areas? Does he agree that they should be accountable to their local communities?
    Mr. Raison: We certainly do not want community relations councils to be puppets. They are expected to express honest opinions. To an extent, they are accountable to the people who pay for them, and that includes local authorities and the Commission for Racial Equality.
    Mr. Marlow: Is my hon. Friend aware that many community relations councils are beginning to regard themselves as pressure groups for ethnic minorities? Does my hon. Friend agree that, although it would be ideal if they had political balance, sadly, some of them have fallen into the hands of Left-wing extremists and are using Government and local authority money in a way which is damaging to racial harmony? Will the Minister examine the whole area of activity to see whether it can be brought under more effective control?
    Mr. Raison: The CRE is looking into the local community relations councils. I agree that some councils are not as politically balanced as is desirable. However, what really matters is that the councils should fulfil a constructive purpose rather than merely indulge in politics.

    Metropolitan Police
    Mr. Raceasked the Secretary of State for the Home Department whether he will introduce measures to ensure that the Metropolitan Police force is democratically accountable to the people of London through their local authorities.
    Mr. Brittan: I see no reason to change the present constitutional position, under which my right hon. Friend is answerable in Parliament for the exercise of his responsibilities as police authority for the Metropolitan Police district.
    Mr. Race: Does the Minister accept that a number of local authorities are thinking of withholding their rate precept to the Metropolitan Police unless a more substantial element of accountability is introduced? Such an element might make the Metropolitan Police more accountable to local authorities. What possible justification can there be for allowing a police force not to be accountable to the local community that it serves?
    Mr. Brittan: I am aware that one local authority has made such a threat. It is deplorable to threaten to break the law by withholding the precept. I hope that wiser counsels will prevail. It is peculiarly illogical to claim to stand for law and order by breaking the law.
    Mr. Eldon Griffiths: Does not my hon. and learned Friend agree that the task of policing London is operationally and logistically a seamless garment, that cannot be split between particular boroughs? Is it not true that certain police operations, such as the one now taking place, should not be messed about by politically-motivated local councillors?
    Mr. Brittan: I entirely agree with my hon. Friend.
    Mr. George Cunningham: Does not the Minister agree that the Metropolitan Police force is as accountable as any police force outside London, but that it is accountable in a different way—through Members of Parliament, not councillors? Does not he accept that it may be argued that Members of Parliament can do the job better? Will he accept that many local authorities in London are concerned that there is no formal means of consultation between the police and local authorities? Will he open his mind to the possibility of change?
    Mr. Brittan: I agree with the first part of the hon. Gentleman's question. However, as regards the second question, the Commissioner is anxious to encourage local police commanders to establish liaison arrangements with local authorities in
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    their districts. The Government very much support those developments. They are entirely consistent with the general position as regards responsibility. Any suggestions towards the further extension of that co-operation will be considered sympathetically.

    Cuban Refugees
    Mr. Adleyasked the Secretary of State for the Home Department if he will facilitate the granting of entry and residence facilities to a token number of Cuban refugees from the Castro dictatorship.
    Mr. Raison: We shall certainly consider sympathetically applications from Cubans who have left the Peruvian embassy for countries of first asylum and who wish to resettle in the United Kingdom, if they have ties with this country or other connections suggesting that the United Kingdom is the natural country of resettlement.
    Mr. Adley: Bearing in mind the campaign that was organised by the political Left on behalf of Chilean exiles, has the Home Office received any representations from members of the Labour Party on behalf of exiles from a Communist dictatorship? Would not the arrival of a few exiles provide a timely reminder to British people of the alternative to a free capitalist society?
    Mr. Raison: I agree with my hon. Friend's last point. As far as I can ascertain, neither we nor the Foreign Office have received any representations from right hon. or hon. Members. We have received only one representation from another source.

    Local Radio
    Mr. Beithasked the Secretary of State for the Home Department whether he will ask his Department's working party on local radio to give special consideration to the phasing of local radio development with cuts in the British Broadcasting Corporation's regional radio news bulletins.
    Mr. Brittan: The Home Office local radio working party prepares proposals for the consideration of the Secretary of State for the Home Department for the further development of local radio by stages, over the United Kingdom as a

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    whole. The working party has no responsibility for regional radio as such but is aware of the BBC's intention to withdraw its regional services in England and to extend its local radio services as resources permit, and will, therefore, obviously be working in that context.
    Mr. Beith: I thank the Minister for that reply. Will he do his best to ensure that the withdrawal of regional radio services is matched by an attempt to develop local radio not on a duplicated basis, but on one that brings local radio to as much of the country as possible? Will he facilitate the attempts made by the BBC to extend local radio into north Northumberland?
    Mr. Brittan: As regards north Northumberland, the BBC has recently put forward proposals to provide alternative arrangements for extending the VHF coverage of BBC Radio Newcastle northwards, to include the hon. Gentleman's constituency.
    Mr. Latham: Is my hon. and learned Friend aware that there is great support in Leicestershire for Radio Leicester and that it is widely listened to? Does not he accept that if cuts have to be made, many people would prefer them to be made on regional programmes, which are more widely spread and less relevant than local programmes?
    Mr. Brittan: I am aware of my hon. Friend's concern and of local support for that station. It is in accordance with the BBC's general policy to move from regional to local coverage.

    Commission for Racial Equality
    Mr. Marlowasked the Secretary of State for the Home Department if he will seek to change the constitution of the Commission for Racial Equality.
    Mr. Raison: No. The Race Relations Act 1976, which set up the Commission, has been in force for just under three years and we do not consider it necessary to consider further changes at this stage.
    Mr. Marlow: Is my hon. Friend aware that, according to one estimate by the OPCS, the current coloured population of 2,000,000, is likely to increase to 4,000,000 by the end of this century? Is he further aware that the Government
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    may well find it necessary to go back on some of their commitments in order to reduce a seemingly endless flood of immigration? Will he take care that the Commission for Racial Equality is not enabled to interfere with any policies that the Government may introduce?
    Mr. Raison: My hon. Friend is aware that we have already taken steps to reduce the flow of immigrants. It is for the Government to decide their policies. The CRE has the right to give its views, but it is for hon. Members and the Government to decide such issues.
    Mr. Speaker: Order. I shall allow one minute extra for Prime Minister's Question Time, in order to call the Opposition Front Bench spokesman.
    Dr. Summerskill: Will the hon. Gentleman confirm or deny the report that the Home Office is considering combining the Commission for Racial Equality with the Equal Opportunities Commission?
    Mr. Raison: At present, we have no plans to do that.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Campbell-Savoursasked the Prime Minister what are her official engagements for 1 May.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be having further meetings with ministerial colleagues and others.
    Mr. Campbell-Savours: Will the Prime Minister take time off today to answer more fully the question put by my hon. Friend the Member for Eton and Slough (Miss Lestor), and the accusations being made to the effect that the right hon. Lady openly condoned the use of Diego Garcia by Carter's task force, as a result of his decision to intervene in Iran and secure the release of the hostages?
    The Prime Minister: I cannot get myself into a position where I have to confirm or deny movements through allied bases. There is nothing that I can usefully add to that reply.
    Mr. Campbell-Savours: On a point of order, Mr. Speaker—
    Mr. Speaker: Order. If the hon. Gentleman's point of order relates to the reply that he received, it might be better to raise it at the end of Question Time, as otherwise it will take up the time of other hon. Members.
    Mr. Kenneth Carlisle: I was encouraged to read in the press that the Government—[HON. MEMBERS: " Question."] Is the Prime Minister aware that it was stated in the press that the Government are reviewing their public sector buying policy? Will she confirm that that is true? Does she agree that the Government should positively encourage Government Departments and public sector buying bodies to buy British? That would do much to help industry at a difficult time.
    The Prime Minister: My hon. Friend is quite right. I referred to this matter in the debate on the confidence motion. Our policy is to encourage all Departments to buy British as far as possible, commensurate with getting good value for money.
    Mr. Foot: Talking of encouragement from the press has the right hon. Lady had an opportunity during her busy day to read the magnificent May Day issue of the Daily Mirror? Has she given instructions—I trust that she has—that it should be read by all members of her Cabinet, wet or dry?
    The Prime Minister: I have glanced at the Daily Mirror. I did not think that it was worth doing more than that. I noted a picture of shoes, kept for children to wear at a school in The Wirral. I made inquiries. There has been no change in practice at that school since the election.
    Mr. Renton: Now that the dust has settled after Monday night, does my right hon. Friend think that EEC Governments, and the French Government in particular, will be able to accept a far-reaching reform of the budget so that a smaller proportion of Community money would be spent on the agricultural policy and on funding agricultural products that go straight into surplus? Is not that fundamental to the whole issue?
    The Prime Minister: We require two things: a reform of the common agricultural policy, and ass change in the way in which the budget is financed. It would
    1614
    have helped if the proposed price settlement had represented a smaller proportion on agriculture. Unfortunately, it did precisely the opposite. Those two things will have to be brought about. The opportunity will be when the 1 per cent. VAT ceiling is reached, but we shall have to press for both reforms very hard.
    Mr. Cookasked the Prime Minister if she will list her official engagements for Thursday 1 May.
    The Prime Minister: I refer the hon. Gentleman to the reply which I gave earlier.
    Mr. Cook: Will the Prime Minister today find a moment to re-read the Conservative Party manifesto, particularly that section entitled " Helping the Family "? Will she compare it with the annual report of the NSPCC, published this week, which notes an increase in family tension as a result of diminished support for families from public funds? How do the conclusions of that respectable body, sponsored by Her Royal Highness the Princess Margaret, square with the Conservative commitment to support family life?
    The Prime Minister: With respect, there have been problems with which the NSPCC has been dealing splendidly over the years, and I do not believe that those problems have changed since the election. I believe that it is a disgrace that there is even need for such a society, but so long as there is cruelty—and it occurs at all levels of income throughout society—we shall need such a body. As to the more detailed reply which I could give the hon. Gentleman, since the Government have been in power, with the increases in benefit which they have already made, coupled with those which have been announced, by next November lone parents will have benefited by a 50 per cent. increase in the child benefit addition, low-wage income earners with children, including single parent earners, will have been helped by the doubling of the family income supplement, and there are many more things proposed.
    Sir Paul Bryan: While the Prime Minister, quite rightly, only glanced at the Daily Mirror, will she look rather more carefully at The Sun, which reveals that 85 per cent. of the population and 75 per cent. of trade unionists are against

    1615
    the futile strike which is due to take place on 14 May?
    The Prime Minister: I saw that article, and I think that it shows enormous common sense on the part of those who are being called upon to take part in the day of action.
    Miss Joan Lestor: While thanking the Prime Minister for the courtesy of her reply to myself and two of my hon. Friends relating to the letter we sent her about Diego Garcia, in which she reiterated what she has already said to my hon. Friend the Member for Workington (Mr. Campbell-Savours), may I ask her to confirm that if the base at Diego Garcia was used by the Americans in the rescue attempt in Iran, British permission should have been received?
    The Prime Minister: I am being asked the same question in a different guise, and there is nothing that I can usefully add to what I have already said.
    Mr. Nicholas Winterton: Will my right hon. Friend, who is giving such positive and dramatic leadership to the free Western world and to our country in a time of difficulty, take a little time out of her busy programme to study the philosophy and policies of Benjamin Disraeli, who believed in the national interest above all else and the good sense of one nation of all people, in order to sustain her in the wonderful work which she is doing?
    The Prime Minister: I shall certainly try to do so, perhaps during next Monday's bank holiday. Like my hon. Friend, I am a great admirer of Disraeli, and staunchly believe, as both of us do, in true Conservative policy.
    Mr. Skinner: As a wife and a mother—[Laughter.]
    Mr. Speaker: Order. The House ought to listen because we do not know what is coming next.
    Mr. Skinner: —who only glances at the Daily Mirror from time to time, is the Prime Minister proud of the fact that she has cheated the old-age pensioners by introducing a 54-week session, and punished schoolchildren by pushing the price of school meals through the roof? Is she proud that she is seeking revenge upon the miners by removing State liability from the pneumoconiosis scheme and the
    1616
    miners' voluntary retirement scheme? Is she really proud that, at the general election, she led a party which peddled a pack of lies?
    The Prime Minister: I rather thought that under the Tory Government it was reported that some miners now had an income of £10,000 a year. I am very proud of the Government's record during the past year. I am proud of the fact that the married pension has gone up by £12·25p a week; that by next November the disabled will have been helped by a 45 per cent. increase in mobility allowance; that by next year no fewer than 2 million needy people will receive help with their fuel bills—which in real terms means £20 million more than in the last year of the previous Government; that we have cut the standard rate of income tax by 3p in the pound; that we shall have compulsory tenants' rights to purchase council houses, and that we have managed to get the Employment Bill through this House.
    Mr. Raceasked the Prime Minister if she will list her official engagements for Thursday 1 May.
    The Prime Minister: I refer the hon. Gentleman to the reply which I gave some time ago.
    Mr. Race: As the Prime Minister is said by the press to enjoy the nickname of " the Iron Lady", can she say just how much she enjoys the prospect of cutting unemployment benefit in real terms by 5 per cent., cutting by a similar amount the benefits paid to pregnant women and cutting the benefit which is paid to invalids in real terms?
    The Prime Minister: I believe that this year it was right to cut the increase in unemployment benefit by some 5 per cent. below the level that it would otherwise have been, because I believe that it is right to have a larger difference between those in work and those out of work.
    Mr. Grylls: In her review of public sector orders, will my right hon. Friend try to ensure that a fair share goes to small firms, as that would help them very much?
    The Prime Minister: I shall endeavour to do that. As I have gone around firms in the country, I have noticed that quite a

    1617
    lot of public sector ordering is done through small firms because they are excellent with regard to delivery dates and industrial relations.
    Mr. Foot: Is the right hon. Lady so proud of the cuts in real benefits which have been carried through in the last two Budgets? Is she proud enough of that to publish the full list in the Official Report? Is she proud of the fact that she has pushed up the rate of inflation to 20 per cent., that the unemployment figures have gone up to more that 1½ million and that the mortgage rate has gone up to 15 per cent.? As the " day of action " is partly a protest against all those things, can she advise us to whom we should send our protest? Should it be sent to the Secretary of State for Industry, the Chancellor of the Exchequer or No. 10 Downing Street?
    The Prime Minister: I am proud of the Government's records as a whole, including the fact that, in spite of everything the right hon. Gentleman has said, the standard of living rose last year by 6 per cent., that we have just had a very good month for exports and the fact—which I forgot previously—that we settled the Rhodesian problem.
    Mr. Foot: In the same generous spirit as that of the right hon. Lady, may I congratulate her and the Government on the settlement of the Rhodesian problem? We were all very glad to see it, because that represented a real U-turn on their part. Will the right hon. Lady now tell us whether she is still proud of the speech which she delivered in Australia on that subject?
    The Prime Minister: Yes, because in that speech in Australia I said that the sanctions issue would be resolved by November, and it was.
    Mr. Stanbrook: Will my right hon. Friend consider this afternoon warning the TUC, in connection with the calling out of its members on 14 May, that neither the law nor the Government will protect them by one penny from action for damages which might result?
    The Prime Minister: It is my understanding—although it would need to be confirmed with my right hon. and learned Friend the Attorney-General—that the " day of action " on 14 May would not be a trade dispute of the kind which would give immunity from action in a court of law.
    Mr. Barry Jones: Is the right hon. Lady preparing any measures to help combat the serious rise in unemployment in Britain?
    The Prime Minister: I am every bit as concerned as the hon. Gentleman about rising unemployment figures. They have not yet passed the peak that was reached by the previous Government. I fear that they will rise during the coming months. We shall do everything we can, but we need help and support from the rest of the country. Unemployment will rise if some groups demand increases in pay which are too high and take away the jobs of others.
    Mr. Wilkinson: Has my right hon. Friend read the account in the press today of the preposterous resumption of surplus butter sales to the Soviet Union by the EEC? Has she also read that that butter is not being sold at subsidised prices to the Soviet housewife, but in a way which greatly profits the Soviet exchequer? Does not that constitute a subsidy from the European taxpayer to the Soviet exchequer at a time when it cannot possibly be justified?
    The Prime Minister: I read that report, and I should like to make it clear that the United Kingdom voted against that sale. However, it is not one that requires the unanimous support of each and every member of the Community. I confirm what my hon. Friend said, that the normal export refund was higher in this case than previously. I condemn this sale totally.
    Mr. Campbell-Savours: On a point of order—
    Mr. Speaker: Order. I shall take points of order after the statements.

BUSINESS OF THE HOUSE
Mr. Foot: Will the Leader of the House state the business for next week?
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): The business for next week will be as follows:
TUESDAY 6 MAY—Consideration of a timetable motion on the Social Security (No. 2) Bill.
Mr. Race: I spy strangers. I spy strangers.

Division No. 278]

AYES

[3.30 p.m.

NIL

TELLERS FOR THE AYES:

Mr. Andrew F. Bennett and

Mr. Reg Race.

NOES

Adley, Robert

Fisher, Sir Nigel

Marlow, Tony

Aitken, Jonathan

Fletcher, Alexander (Edinburgh N)

Marshall, Michael (Arundel)

Alexander, Richard

Fletcher-Cooke, Charles

Marten, Neil (Banbury)

Ancram, Michael

Forman, Nigel

Mates, Michael

Atkins, Rt Hon H. (Spelthorne)

Fraser, Rt Hon H. (Stafford & St)

Mather, Carol

Atkinson, David (B'mouth, East)

Freud, Clement

Mawby, Ray

Baker, Kenneth (St. Marylebone)

Glyn, Dr Alan

Meyer, Sir Anthony

Baker, Nicholas (North Dorset)

Goodhew, Victor

Miller, Hal (Bromsgrove & Redditch)

Beith, A. J.

Goodlad, Alastair

Moore, John

Bell, Sir Ronald

Gow, Ian

Morrison, Hon Peter (City of Chester)

Bennett, Sir Frederic (Torbay)

Grieve, Percy

Myles, David

Biffen, Rt Hon John

Griffiths, Eldon (Bury St Edmunds)

Nelson, Anthony

Body, Richard

Griffiths, Peter (Portsmouth N)

Neubert, Michael

Bottomley, Peter (Woolwich West)

Grimond, Rt Hon J.

Newton, Tony

Bradford, Rev. R.

Grist, Ian

Page, Rt Hon Sir R. Graham

Brittan, Leon

Grylls, Michael

Penhaligon, David

Brooke, Hon Peter

Hannam, John

Percival, Sir Ian

Browne, John (Winchester)

Hawkins, Paul

Pollock, Alexander

Bruce-Gardyne, John

Hayhoe, Barney

Pym, Rt Hon Francis

Bryan, Sir Paul

Heath, Rt Hon Edward

Raison, Timothy

Buck, Antony

Heddle, John

Renton, Tim

Bulmer, Esmond

Heseltine, Rt Hon Michael

Rhys Williams, Sir Brandon

Butcher, John

Hill, James

Ross, Stephen (Isle of Wight)

Butler, Hon Adam

Holland, Philip (Carlton)

Rost, Peter

Cadbury, Jocelyn

Howell, Rt Hon David (Guildford)

Sainsbury, Hon Timothy

Carlisle, John (Luton West)

Howell, Ralph (North Norfolk)

St. John-Stevas, Rt Hon Norman

Carlisle, Kenneth (Lincoln)

Hunt, John (Ravensbourne)

Scott, Nicholas

Carlisle, Rt Hon Mark (Runcorn)

Hurd, Hon Douglas

Shaw, Michael (Scarborough)

Chalker, Mrs. Lynda

Jenkin, Rt Hon Patrick

Shepherd, Colin (Hereford)

Channon, Paul

Jessel, Toby

Shersby, Michael

Chapman, Sydney

Jopling, Rt Hon Michael

Sims, Roger

Churchill, W. S.

Joseph, Rt Hon Sir Keith

Spicer, Jim (West Dorset)

Clark, Sir William (Croydon South)

Kellett-Bowman, Mrs Elaine

Squire, Robin

Clarke, Kenneth (Rushcliffe)

Knight, Mrs Jill

Stanbrook, Ivor

Cope, John

Lamont, Norman

Stanley, John

Costain, A. P.

Lang, Ian

Steel, Rt Hon David

Cranborne, Viscount

Latham, Michael

Steen, Anthony

Dorrell, Stephen

Lawrence, Ivan

Stevens, Martin

Dunn, Robert (Dartford)

Lee, John

Stradling Thomas, J.

Dykes, Hugh

Lennox-Boyd, Hon Mark

Tapsell, Peter

Edwards, Rt Hon N. (Pembroke)

Lester, Jim (Beeston)

Taylor, Teddy (Southend East)

Eggar, Timothy

Lewis, Kenneth (Rutland)

Temple-Morris, Peter

Elliott, Sir William

Lloyd, Ian (Havant & Waterloo)

Thatcher, Rt Hon Mrs Margaret

Emery, Peter

Lloyd, Peter (Fareham)

Thorne, Neil (Ilford South)

Eyre, Reginald

Lyell, Nicholas

van Straubenzee, W. R.

Fairgrieve, Russell

McCrindle, Robert

Waddington, David

Faith, Mrs Sheila

MacGregor, John

Wakeham, John

Farr, John

MacKay, John (Argyll)

Waldegrave, Hon William

Fenner, Mrs Peggy

McNair-Wilson, Michael (Newbury)

Wall, Patrick

Finsberg, Geoffrey

McNair-Wilson, Patrick (New Forest)

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

Mr. Andrew F. Bennett: I spy strangers. I spy strangers.
Mr. Speaker: Order.
Mr. St. John-Stevas: Remaining stages of the Port of London (Financial Assistance)—
Mr. Andrew F. Bennett: I spy strangers. I spy strangers.
Notice being taken that strangers were present, Mr. SPEAKER, pursuant to Standing Order No. 115 (Withdrawal of strangers from House), put forthwith the Question, That strangers do withdraw:—
The House divided: Ayes 0, Noes 157.

Whitelaw, Rt Hon William

Wolfson, Mark

Whitney, Raymond

Young, Sir George (Acton)

TELLERS FOR THE NOES:

Wilkinson, John

Younger, Rt Hon George

Mr. Spencer Le Ma

Winterton, Nicholas

Mr. Anthony Berry.

Question accordingly negatived.
Mr. St. John-Stevas: As I was saying, Mr. Speaker—to continue with Tuesday's business: Remaining stages of the Port of London (Financial Assistance) Bill.
Motion on the Local Loans (Increase of Limit) Order.
WEDNESDAY 7 MAY—Debate on a motion to take note of the Government's expenditure plans, 1980–81 to 1983–84, (Cmnd. 7841).
Motions on the Southern Rhodesia (Sanctions) (Amnesty) Order and on the Zimbabwe (Independence and Membership of the Commonwealth) (Consequential Provisions) Order.
THURSDAY 8 MAY—Second Reading of the Finance (No. 2) Bill.
Consideration of the Instruction to Standing Committee D on the Local Government, Planning and Land (No. 2) Bill.
FRIDAY 9 MAY—Private Members' motions.
MONDAY 12 MAY—Until 7 p.m. consideration of Private Members' motions. Afterwards, Second Reading of the Gas Bill.
It may be for the convenience of the House to know that it will be proposed that the Whitsun Adjournment should be from Friday 23 May to Monday 2 June.
Mr. Foot: Leaving aside the rest of the proposed business and coming back to the timetable motion proposed by the right hon. Member for Tuseday 6 May, does he not appreciate that that proposal by the Government for dealing with the Bill is bound to give rise to extremely bitter feelings on the Opposition Benches? Does he think that there is any possible excuse for having a timetable motion on a Bill that is only in its second week, that has had two all-night sittings, that is to be discussed again at 4.30 this afternoon, and on which there has not been obstruction?
Of course, there is bound to be lengthy debate on a Bill of such importance, which cuts benefits and interferes with the rights of people throughout the
1622
country. Can the right hon. Gentleman give us any excuse whatsoever for introducing this timetable motion on this Bill in this manner?
Hon. Members: Yes.
Mr. Adley: Following the right hon. Gentleman's example.
Mr. St. John-Stevas: It hardly lies in the mouth of the right hon. Gentleman to complain about guillotines, since we recall that he set an all-time record in this matter by introducting five guillotines on one day—20 July 1976. There is a further precedent in 1966, also by the Labour Government supported by the right hon. Gentleman. The Selective Employment Payments Bill was guillotined by that Government after the Second Reading—before the Committee stage.
Unlike the right hon. Gentleman, I have had the advantage of being present at quite a number of the sittings of the Committee and I have seen the progress that has been made. After nearly 40 sitting hours the Committee is only halfway through one clause, with only nine groups of amendments tabled. There have been 15 Opposition speeches of half an hour each There have been three Opposition Front Bench speeches of over an hour each, two of which I heard, from the hon. Member for Birmingham, Perry Barr (Mr. Rooker). There were five hours on a sittings motion and one and a half hours of points of order. Surely it is clear that the Opposition have no intention of making reasonable progress on the Bill.
Mr. Foot: The right hon. Gentleman has quoted the five timetable motions that I introduced on a single occasion. Can he give me the name of any one of those Bills on which the time for debate was as short as that which he is proposing?
Mr. St. John-Stevas: It is likely that there will be up to 70 sitting hours on the Bill. So far we have had 40 sitting hours. We shall probably have another 30 hours. Seventy hours for a six-clause Bill is not unreasonable.
Sir William Clark: Will the report of the Select Committee on the Treasury and Civil Service be available to hon. Members before the public expenditure debate on Wednesday?
Mr. St. John-Stevas: As my hon. Friend knows, we arranged this debate at such a point that it would be possible for the report of the Select Committee to be available. It should be available in the Vote Office at noon tomorrow, and the evidence should be available on Tuesday.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call those hon. Members who have been rising, before we move on to the next business.
Mr. William Hamilton: On the guillotine motion, is the Leader of the House aware that the Social Security (No. 2) Bill is the first Bill in 50 years that deliberately sets out to cut national insurance benefits? Is he further aware that on the first sitting the Minister in charge of the Bill created a precedent by initially moving a sittings motion providing for three afternoon sittings—Tuesday, Wednesday and Thursday—openended from 4.30 onwards, and that on no occasion in the course of the proceedings has a closure motion been moved on a major debate?
Mr. St. John-Stevas: There are precedents for sittings motions of that character. In fact, benefits will be increased. It is the rate of increase that is reduced.
Mr. Peter Bottomley: Will my right hon. Friend arrange to have a debate next week or the week after—perhaps on 14 May—on bank holidays and other national days off? Is he aware that we need to discuss, first, whether May Day should remain the first Monday in May or should come back towards St. George's Day, or some other more suitable day? Secondly, the House should be able to discuss the " day of action" and to discover why trade union leaders suggest that their members are all in favour of such action when every piece of available evidence indicates that the vast majority of trade unionists are utterly opposed to it.
Mr. St. John-Stevas: I agree with my hon. Friend. I think that the major mistake that was made by my predecessor, the late Mr. Crossman, was the substitution of a secular bank holiday for the traditional Christian Whitsun. One option that might be investigated is a return to the old arrangements, which were much more acceptable.
Mr. Greville Janner: In view of the report of the National Society for the Prevention of Cruelty to Children and the expected increase in child abuse and child battering in the deepening recession, will there be time for a debate on these problems, especially having regard to the need of the society for funds and the need of local authorities for more resources to deal with the problems, which are getting so much worse?
Mr. St. John-Stevas: I think that my right hon. Friend the Prime Minister dealt with any connection between these two events. The House should debate social matters from time to time, and the hon. and learned Gentleman has referred to an important report. I shall consider what he suggests and whether it can be fitted into the context of a general social affairs debate.
Mr. Faulds: As Diego Garcia comes under British sovereignty, and as its use by foreign forces, for whatever purposes, must have the agreement of Her Majesty's Government, will the right hon. Gentleman arrange for somebody more responsible than me Prime Minister to make a definitive statement?
Mr. Speaker: I shall be giving a ruling on this issue at the end of the statements.
Mr. St. John-Stevas: I drink that the essence of the reply made by my right hon. Friend the Prime Minister when this issue was raised earlier was precisely to state the Government's responsibility. It is rather irresponsible of the hon. Gentleman to attempt to raise the matter again.
Mr. Race: Is the Leader of the House aware that in Standing Committee B on the Social Security (No. 2) Bill the Government have been introducing amendments to cut benefits because they forgot to put those provisions in the original Bill? Does not that make a mockery of the guillotine motion that will be put before the House next Tuesday?
Mr. St. John-Stevas: I have dealt with the point of substance on cuts. It is normal for any Bill that goes into Committee to be subject to amendment by both the Government and the Opposition.
Mr. Dubs: Is the right hon. Gentleman aware that on at least two occasions m recent weeks Ministers have refused to commit themselves on policy issues on the ground that Select Committees were considering the same issues? Will the right hon. Gentleman give the House a chance to consider the implications of Ministers taking that course? If Ministers are to refuse to answer questions because Select Committees are in existence, the position of Back Benchers who are not members of Select Committees will be considerably weakened.
Mr. St. John-Stevas: The hon. Gentleman has raised an interesting matter. Naturally a number of problems are arising from these new institutions, which on the whole have been working highly successfully. If the hon. Gentleman draws particular instances to my attention I shall investigate them and take them up with the Ministers concerned.
Mr. Soley: Is the right hon. Gentleman aware that there are many hon. Members on both sides of the Chamber who are unhappy about the statement made by the Secretary of State for the Home Department yesterday on prisons, which leaves at risk many of our prisoners and prison staff? When can we have a debate on this urgent matter?
Mr. St. John-Stevas: Some hon. Members may not have been totally satisfied, but I think that a large number were extremely pleased at the progress that my right hon. Friend was able to announce in a difficult financial and economic period. I agree with the hon. Gentleman that it is right that we should have a full debate on the vital subject of our prisons. I hope to be able to provide time for a debate. That will be not next week but after we return from the Whitsun Recess.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call the hon. Member for Rutland and Stamford (Mr. Lewis) after I have called those who had risen before I said that I was drawing the line for further questions. I
1626
shall call the hon. Gentleman at the end of questions on the business statement.
Mr. Christopher Price: May we have a debate on the Government's recently issued Green Paper on processions and the criteria under which they might be banned? Is the right hon. Gentleman aware that my constituents were subjected to great inconvenience and affront by the National Front a fortnight ago? Is he further aware that it is absurd that the taxpayers should have to pay millions of pounds on such events throughout the year? We are grateful to the Government for making various suggestions about banning processions on the grounds of inconvenience, affront and cost, but may we debate the issue as soon as possible?
Mr. St. John-Stevas: I am grateful to the hon. Gentleman for what he said. It is an issue that raises important questions of public order and important constitutional questions on freedom. My right hon. Friend the Home Secretary has asked for replies and comments on his Green Paper. I think that the time for a debate will be after the replies have been received, and when he has had time to consider them.
Mr. Skinner: Would it not be a more sensible course for the Leader of the House not to introduce a guillotine motion on the Social Security (No. 2) Bill, especially at a time when I believe that consultations are taking place between civil servants of the National Coal Board and some Ministers on the effect that the Bill will have on the miners' voluntary retirement scheme, which I assume was supported by all parties and accepted by the Government? It will also have a special effect on pneumoconiotics. Surely it would be more sensible for all the negotiations to take place—especially the ones that I have mentioned—before a guillotine is introduced on such an important and vicious Bill.
Mr. St. John-Stevas: The most desirable outcome would have been to reach an agreement with the Opposition through the usual channels to discuss the Bill in an orderly way. If we could have done that we would have avoided the need for a guillotine.
Mr. Kenneth Lewis: I am grateful to you, Mr. Speaker. I was not in my place

1627
when you made your announcement. What is happening to the Local Government, Planning and Land (No. 2) Bill, which is apparently to be separated into two Bills? Does my right hon. Friend expect to get both through the House?
Mr. St. John-Stevas: The Local Government, Planning and Land (No. 2) Bill is still in Committee. I announced today that on Thursday consideration will be given to an Instruction to the Committee to enable one of the clauses to be considered as a priority to assist with the new towns' borrowing requirement. Following that, the Bill will proceed in the normal way. It is for the convenience of the House that it is being dealt with as I have described.
Mr. Orme: I take up the question asked by my hon. Friend the Member for Bolsover (Mr. Skinner) on consultations with the National Coal Board and the National Union of Mineworkers.. Is the right hon. Gentleman aware that the manner in which the Government are conducting the Social Securtiy (No. 2) Bill removes the chance for proper consultation? Indeed, the Secretary of State for Social Services has refused to see any outside body, including the TUC, until consideration of the Bill in Committee has been completed. I think that this is unique in our parliamentary history.
Mr. St. John-Stevas: I obviously treat with great attention anything that the right hon. Gentleman says on this subject. However, I do not think that he is quite right in saying that consultations cannot take place, or that my right hon. Friend has excluded them. I was in Committee. I heard what he said. When hon. Gentlemen were not speaking I was able to listen to one or two other people. As I understood it, my right hon. Friend said that he could not see them all directly, but he did not exclude seeing them. He hoped to fit them in, as he could, in his busy schedule.

IRANIAN EMBASSY, LONDON
The Secretary of State for the Home Department (Mr. William Whitelaw): Mr. Speaker, I will, with permission, make a further statement about the events at the Iranian embassy. I undertook yesterday to keep the House informed of developments and it may be convenient if I summarise what has happened so far.
As right hon. and hon. Members will know, yesterday morning at about 11.30 three armed men forced their way into the Iranian embassy at Princes Gate, Knightsbridge. A police constable who was on duty at the embassy was forced inside at gunpoint as a hostage. Two people who work for the BBC were in the embassy at the time and they, too, were taken hostage, together with a locally engaged member of staff and some of the Iranians who work there. In all about 20 people are being held. One woman hostage, an Iranian, was released yesterday and one British hostage was released this morning. Despite reports of injuries to the hostages, I understand that no one has been seriously injured. The terrorists said this morning that the British hostages would not be harmed.
Since the incident first occurred the building has been surrounded by the police, who have cordoned off the area. They have maintained communication with the terrorists and their aim, as in all such cases, is, if it all possible, to bring this incident to a peaceful conclusion without loss of life.
The terrorists have identified themselves as Iranians. They claim to belong to a dissident organisation calling itself " The Group of the Martyr ". They have addressed certain demands to the Government of Iran, including the freeing of 91 people currently imprisoned there. They have also asked the Iranian Government to recognise the rights of the Iranian peoples.
I am naturally keeping in continuous contact with the direction of events by the police. I had a discussion a short time ago with the Commissioner of Police of the Metropolis. I will continue to keep the House informed of developments.
Mr. Merlyn Rees: Is the Home Secretary aware that we understand that for

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24 hours he will have been in constant involvement in this incident through his overall operational control, that we understand his absence from Question Time, and that we appreciate his statement, limited as it has to be, today? Hon. Members on both sides of the House wish him and the Commissioner well in this difficult, developing situation.
In view of the discussions that are taking place within the embassy—we all realise the difficulties of that—the less said the better at this stage. However, in view of what the media reported about a direct contact from the Iranian Government, I wonder what that is. May not it be salutary for the Iranian Government to realise that we take seriously the need to protect those in diplomatic missions?
There are a number of questions on the law and other matters that I feel inclined to ask, but I shall not do so. I believe that it is best to leave the questioning until later on.
Mr. Whitelaw: I am naturally grateful to the right hon. Gentleman for what he said. I apologise to the House for not having been here at Question Time, but I thought that my duty lay elsewhere at that time. I hope that the House appreciates it.
On the problem of saying very little at this stage, again I am grateful to the right hon. Gentleman. It is so easy for anyone to say something which could make the task of the police, in their negotiations, more difficult. I am sure that everyone in the House appreciates that point.
As to the messages to the Iranian Government, our ambassador in Tehran has been in touch with the Foreign Minister of the Iranian Government, who is out of Iran at the moment. My right hon. Friend the Prime Minister sent a message to the President of Iran, making clear our determination to deal with this matter and to bring the trouble to an end without loss of life.
Several Hon. Members rose—
Mr. Speaker: Order. It may be the will of the House that we move on at this stage.

BRITISH STEEL CORPORATION (CHAIRMAN)
The Secretary of State for Industry (Sir Keith Joseph): Sir Charles Villiers, whose term of office ends in September, has tackled the difficult task of adapting the BSC to changing market conditions with energy and dedication. I am glad to pay tribute to his work and to express our appreciation of it. As his successor I have appointed Mr. Ian MacGregor. He will tomorrow join the BSC board as a part-time deputy chairman. Sir Charles Villiers and I are agreed that, now that a successor has been appointed, it would be best if he were to take on the job as chairman with the minimum of delay. Mr. MacGregor will therefore become chairman on a full-time basis on 1 July.
Mr. MacGregor was born in Scotland but has spent most of his working life in America, where he has had an outstandingly successful business career. He was chief executive of AMAX, the metals and natural resources company, from 1966 to 1977, and remains on that board. He has many other appointments, including deputy chairman of BL, director of the LTV Corporation, a large steel producer, and a partnership in Lazard Freres and Co., a New York-based investment bank.
In Mr. MacGregor I believe that we have found a man with the qualities needed to lead the BSC out of its present difficulties. Mr. MacGregor's personal salary will be paid by the BSC at the appropriate rate, based on the recommendations of the Review Body on Top Salaries—currently £48,500 a year.
Mr. MacGregor has commitments as a senior partner in Lazard Freres, but his partners have agreed to release him in return for certain financial conditions. These conditions comprise two elements: the first is a payment to Lazard Freres of £675,000—[Interruption.]—for the three years of the appointment, two-thirds of which will be returnable pro rata if he completes less than three years; the second involves payments, again to Lazard Freres in the range of nil to £1,150,000, linked to the performance of the BSC under Mr. MacGregor's chairmanship. [Interruption.]
Mr. Speaker: Order.
Sir K. Joseph: These performance payments would be made in 1984 and 1985.
Mr. Barry Jones: Is the right hon. Gentleman well?
Mr. Speaker: Order. I suggest that the House now listens to the statement from the Minister.
Sir K. Joseph: These performance payments would be made in 1984 and 1985 and would be related to certain performance criteria to be agreed between the Department of Industry and Lazards. The level of the performance payments will be assessed by a performance review committee, comprising two persons nominated by me—[Interruption.]
Mr. Speaker: Order. Opportunities for questioning will follow. We must hear the statement.
Sir K. Joseph: The level of the performance payments will be assessed by a performance review committee, comprising two persons nominated by me and two persons by Lazards, with an independent chairman acceptable to both.
During the period of his appointment, Mr. MacGregor will cease to be an active partner in Lazard Freres—[Interruption.]
Mr. Speaker: Order. Hon. Members must be fair. I think that the Minister should be heard out, and then we can have some questions.
Sir K. Joseph: He will cease to be an active partner in Lazard Freres but will become a limited partner with a reduced interest in the firm. On taking the post of chairman of the BSC he will relinquish most of his current directorships, including that of BL, but I have agreed that he should continue his longstanding links with AMAX.
I should make it clear that the payments to Lazard Freres that I have described are not for payment in whole or in part to Mr. MacGregor, except in so far as they contribute to Lazard Freres' profits, in which he retains a small share. Their purpose is to compensate Lazard Freres for losing the business services of Mr. MacGregor. I should also emphasise that they are substantially conditional on his serving for the full three years and achieving results.
We have been prepared to secure the release of Mr. MacGregor because the
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willingness of a man of his calibre to be chairman of the BSC reflects our belief that the current problems can be solved and that the corporation can be restored to profitability as an efficient producer of steel and become a secure employer. For the Government to set financial targets is not enough; we must also seek to appoint people capable of achieving those targets. In appointing Mr. MacGregor, that is what I believe that I have done, and I am sure that the whole House will wish him success in his difficult task at the BSC.
Mr. John Silkin: Regardless of the suitability of Mr. Ian MacGregor for this post—on that, no doubt, we shall suspend judgment until the time comes—is this not the most staggering statement that this House has heard in a long time? What the Secretary of State is talking about is a transfer fee, which, when we work out the reward that goes to Mr. MacGregor himself, comes to very nearly £2 million. Does the Secretary of State envisage a signing ceremony? If so, on which pitch will it be—Shotton, Corby or half of Llanwern?
Is it not a fact that Mr. MacGregor will be serving—the Secretary of State hopes—until his seventieth birthday; which is five years after the age at which all steel workers finish their term of contract; and that he will be offered this sum of money, as will Lazard Freres, at a time when the steel workers still remember the offer of 2 per cent. because, according to the Secretary of State, the industry could not afford more?
First, can the Secretary of State tell us on what authority this payment is to be made and on what Vote it is to come? Second, can he tell us in general terms—since I gather they have to be worked out—what are the performance criteria on which so large a sum is to be given to these American bankers at the Secretary of State's behest? Is the sum to be given, for example, for improving industrial relations? If so, the statement of Mr. MacGregor, reported in a newspaper this morning, that he reckons that he can take on Mr. Bill Sirs, is not the most promising way of establishing industrial relations. Is it for the improved production of steel? If so, when we are told that steel production is going down—perhaps to 12 million or 13 million tonnes—the loss of steel may be the criterion. Is it for

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our export markets in steel, at a time when imports are coming in at an alarming rate?
Finally, does the Secretary of State understand that this is so important a matter, not only for the Opposition but for the whole House, that we shall expect an early debate on it, in which the Secretary of State will make the matter clear?
Sir K. Joseph: I should have thought that it was common ground that the chairmanship of the BSC is an extremely important and responsible job. If the new chairman succeeds, with the help of all those concerned, in converting the present situation into a successful one, any payment that is made on his account—not necessarily to him—will be very good value for the country and for all those who work in the steel industry or use its products.
Mr. MacGregor is a man of proven performance. He is subject to a partnership agreement and it was up to his partners to decide whether they would release him. They have released him on the conditions that I have explained. It is, as the right hon. Gentleman said in the only valid comment that he made, a transfer fee, and perhaps the bigger the transfer fee the better the player. The bulk of the money to be paid will be paid depending upon performance. It will not, except for the salary that I have announced, go to Mr. MacGregor himself, except for his share as a limited partner in the profits of the partnership. The cost of the transfer payment will not fall on the BSC; it will fall on my Department, or on the Exchequer.
Mr. Skinner: It will fall on the British taxpayer. The Government do not have any money.
Sir K. Joseph: It will certainly fall on the taxpayer, but the transfer fee is paid only—[Interruption.]
Mr. Speaker: I remind the House about interruptions from a sedentary position. It is a long time since I said it, but it remains valid. They are grossly unparliamentary when they are persisted in—[Interruption.] The hon. Member for Bolsover (Mr. Skinner) really must harken to what I say.
Mr. Skinner: I am doing so.
Mr. Speaker: I have no wish to quarrel with the hon. Gentleman, but he must behave himself.
Sir K. Joseph: I repeat to the House that the bulk of the transfer package—that is, all except the £225,000—will be paid by the taxpayer only according to performance.
I was asked finally what will be the ingredients of the performance criteria. [Interruption.] The workers in the industry stand to benefit enormously by having an effective and successful chairman.
The performance criteria still have to be defined. They will include not only the financial performance but such other matters as the strength of management, the stability of industrial relations, success in the export market, and productivity.
Mr. John Silkin: The Secretary of State did not answer a number of questions that I asked him. First, what is his authority for payment; secondly, are we to have a debate; and thirdly, does he really believe that industrial relations are going to be improved by a man whose first statement is that he is going to take on the trade union leader with whom he will have to work?
Sir K. Joseph: The authority is the agreement of my colleagues, within action that is within our power; a debate is up to the usual channels; the man about whom we are talking was appointed by the previous Government as deputy chairman of British Leyland, and I am sure that the remark that the right hon. Gentleman quoted is taken totally out of context of Mr. MacGregor's character or views.
Mr. David Steel: Is it not a thousand pities that the appointment of a man of Mr. MacGregor's abilities should be clouded by the farcical nature of the arrangements surrounding it, including the setting up of a mini-committee to decide precisely what those arrangements are? Has the right hon. Gentleman stopped to think what will be the effect of arrangements of this kind on the climate of pay negotiations?
Sir K. Joseph: I should have thought that the House would appreciate the importance of getting the best man for

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this job. All that has not been agreed is the criteria by which any payment by the taxpayer for performance will be judged. The taxpayer's money is not to be used except to the limited extent that I have stated—as justified by performance.
Mr. Aitken: Is my right hon. Friend aware that, however excellent may be the qualities of Mr. MacGregor, the Gilbert and Sullivan complexity of the deal with Lazard is so open to misunderstanding and ridicule that many of us on the Government Benches will have the greatest possible difficulty in supporting him?
Sir K. Joseph: I am disappointed that my hon. Friend should take that view. He cannot doubt that, where there is an obligation by the man concerned—as there is in this case because he is subject to a partnership agreement—if he wants to leave, his partners can impose conditions. I have judged that this is the best man available for a vital national task and the transfer fee seems to me to be totally justifiable.
Mr. Jay: Is there any precedent for this extraordinary arrangement, and was it approved by the Cabinet and the Prime Minister as well as by the right hon. Gentleman?
Sir K. Joseph: There is no precedent to my knowledge in this country, but it is normal in America for rewards according to performance to be paid to executives. In America they have option shares. There is no need for a committee to judge performance, because performance is judged by the level of the shares on the market, according to which the executive concerned will, if it seems justified, gain an advantage.
Sir Anthony Meyer: My right hon. Friend will know—and his right hon. Friend the Prime Minister will know still better—that I am no uncritical supporter of his. Does my right hon. Friend accept that if Mr. MacGregor can achieve the kind of results for British Steel that Mr. Edwardes has achieved for British Leyland he will be cheap at the price—indeed, cheaper at a much higher price, and that the price in any case by comparison with what is paid in football transfer fees is not excessive? Will my right hon. Friend
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also confirm that when Mr. MacGregor takes office he will be at liberty to put forward plans for a reduction in the rate of the phasing out of the capacity of British Steel, provided that those plans in the long term result in no greater cost to the taxpayer?
Sir K. Joseph: My hon. Friend has made extremely sensible and justifiable comments. As for his last question, it will be for Mr. MacGregor to form his own judgment and make proposals, and I shall hope to hear from him in due course.
Mr. John Silkin: The right hon. Gentleman did not answer the question put by my right hon. Friend the Member for Battersea, North (Mr. Jay). In view of the totally unprecedented nature of this transaction, did it have the knowledge and support of the Cabinet and the Prime Minister personally?
Sir K. Joseph: The right hon. Gentleman knows very well that details of such matters are not revealed in the House. This is the Government's policy, and I am announcing it.
Mr. Emery: Will my right hon. Friend assure the House that no British-oriented senior executive manager could be attracted to undertake this task who would be willing to do so as a service to the country? Is not the problem that so much abuse is poured on the chairmen of nationalised industries by the press and the public, and the chairmen of nationalised industries are so concerned about Government interference, that many senior executives feel that they cannot undertake this task? How can that underlying problem be corrected?
Sir K. Joseph: My hon. Friend has put his finger on a real problem. The salaries recommended by the Review Body on Top Salaries bear very little relation to some salaries in the world market. I repeat that Mr. MacGregor is taking on this job at the salary which his predecessor, the present chairman, gets. The only additional benefit is a share as a limited partner in the profit of the partnership, which is hypothetical and cannot be known by us or predicted. I have been involved in the search for a new chairman for the BSC when Sir Charles Villiers should come to the end of his tenure for

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nine or 10 months. A couple of score of names have been considered, several of them very seriously. One or two people active in British industry who would have been highly suitable in the event found it impossible or wrong in their judgment to extricate themselves from their present responsibilities. In the event, this is the best man available, and I judge it to be greatly in the interests of the BSC and all those concerned with it that he has accepted this responsible task.
Mr. Barry Jones: Does the right hon. Gentleman realise that it appears to Members on the Labour Benches that the Prime Minister has heard this statement for the first time now?
Sir K. Joseph: I must leave such guesses made by hon. Members to themselves. It is not for me to discuss the processes by which a decision like this is reached.
Mr. Eggar: Is my right hon. Friend aware that we are fortunate in getting the services of Mr. MacGregor, as under his chairmanship AMAX grew faster than any other American metals corporation? Will he comment on whether it was open to Mr. MacGregor to retire from his partnership with Lazard Freres and, if so, whether Mr. MacGregor was willing to retire?
Sir K. Joseph: I acknowledge the validity of my hon. Friend's first comment. The question about Mr. MacGregor's freedom, subject to the partnership agreement, is for him. All I know is that the decision by him involved the agreement of Lazard Freres.
Mr. Grimond: Is the Minister aware that this extraordinary arrangement will have a devastating effect on what is supposed to be the Government's policy of restraining wage demands? It is one rule for the rich and one for the poor. Why should Lazard Freres be rewarded to the tune of £1,150,000 if Mr. MacGregor does well for the Steel Corporation? What object is there in that? If he does badly, will Lazard Freres pay up? Is a man who is almost as old as I am likely to make a success of the Steel Corporation, which is an unmanageable business? Will he remain a paid director of Lazard?
Sir K. Joseph: I forget the first point—I remember it now—a bad example for the pay of other people. Surely the right hon. Gentleman understands that unless the management is the best available, the interests of the workers are sacrificed. In allowing Mr. MacGregor to leave in breach of his partnership agreement, Lazard is sacrificing the earnings that this highly active man has been bringing to the company since he has been with it. He has been a prolific profit earner for the company. That is why the figures have been set as they have. However, the bulk is payable only according to performance. As to AMAX, yes. I have agreed that Mr. MacGregor may keep a fee from AMAX.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call three hon. Members from each side.
Mr. Eldon Griffiths: As the British Steel Corporation has to operate in an international environment, will my right hon. Friend accept that many of us understand the need to offer internationally competitive remuneration to anyone who takes on a job of that size?
Lest I have misunderstood one point, I wonder whether my right hon. Friend could say whether Lazard Freres, in the course of the performance review, is to participate in profits made by the British Steel Corporation.
Sir K. Joseph: No participation is envisaged for Lazard Freres in the profits that we hope will be made by the British Steel Corporation.
Mr. David Watkins: May I press the right hon. Gentleman on the point raised by the hon. Member for Flint, West (Sir A. Meyer)? Will the criteria of performance of this immensely expensive new chairman, appointed in this Gilbertian situation, include his willingness to reconsider the proposals to shut down one-third of the steel industry, including highly profitable and viable plants like that at Consett?
Sir K. Joseph: He will make his own assessment of the situation, but in the meanwhile the plans that have been proposed by the BSC, to the extent that they are ready for fulfilment, will go ahead.
Mr. Adley: I recognise the right of companies in the private sector to do

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what they feel is right, but does my right hon. Friend agree that in the public sector, and particularly in a company such as the British Steel Corporation, which has been subjected to almost intolerable strains, one of the criteria in appointing a new chairman should be that he is a man whose appointment, both in its circumstances and in his person, can heal the harm done to that corporation? Does my right hon. Friend feel that the arrangement with Lazards can possibly be beneficial in bringing about a harmonious relationship? Would it not, in fact, have been better if the NEB had bought Lazard Freres and Mr. MacGregor with it?
Sir K. Joseph: What matters is that British Steel should get the best chairman that we can find. I believe that that has been achieved.
Mr. Homewood: Is the Minister aware that, following the 13-week strike and in view of the closures affected and projected, industrial relations in the steel industry are at an all-time low and that his monstrous announcement this afternoon will make matters much worse? If the Government intend to steamroller this appointment through the House, will he at least give us an undertaking—to give Mr. MacGregor a chance—that he will institute an inquiry into the BSC before this gentleman takes over?
Sir K. Joseph: I do not at all have the impression that moral in the BSC is at its lowest. I believe that many steel workers will welcome the importance that the Government attach to getting the best man available in the world to carry out the vital task of putting the industry back on its feet.
Mr. Kenneth Lewis: If my right hon. Friend believes, as I am sure he does, that Mr. MacGregor is twice as good as anyone else available and that therefore the British Steel Corporation needs him and the Government need him to run the corporation, would it really not have been better if he had taken on Mr. MacGregor on a half-time basis? In that way, he would still have got a good man and this would have allowed him to keep his other appointments. Are we not reaching a position in which we do not appoint people to run nationalised industries in conjunction with other appointments, simply because it is customary not to do
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so? Is it not time we looked at this? There are plenty of people in the free enterprise sector who have more than one half-time appointment.
Sir K. Joseph: I repeat that Mr. MacGregor is taking on this responsibility for the salary that the present chairman is getting. I do not think that it would have been better to try to get him on a half-time basis.
Mr. Maclennan: Does the Secretary of State recall that when a distinguished Conservative predecessor—Disraeli— sought to acquire an expensive foreign asset for this country—the Suez Canal—he went to the merchant bankers—the Rothschilds—to raise the money, and did not seek to pay them for this help? Does he recognise that despite the farcical nature of his announcement today, the judgment that will be made must depend on the track record of that distinguished international business man, who has proved so successful in all that he has turned his hand to and whose success was recognised by the previous Labour Government in appointing him to the post that he held at British Leyland? Does he recognise that by the manner of his announcement today he has made the task of the new chairman very much more difficult?
Sir K. Joseph: I welcome the tribute of the hon. Gentleman to the performance of this remarkably effective business man, Mr. MacGregor. I do not accept his appraisal of what I have done. I think the House would have been critical if I had gone to the private sector and, by some means of persuasion, obtained the money from it.
Mr. Foot: Turning to the question already put by my right hon. Friend about the possibility of a debate, will the right hon. Gentleman urge upon his right hon. Friend the Leader of the House that he should make a statement to the House tomorrow about the possibility of a rearrangement of business next week, so that the opinion that has been expressed by all sides of the House on this matter can be debated at a very early stage?
Sir K. Joseph: I think that my right hon. Friend the Leader of the House will have heard what the right hon. Gentleman said. The right hon. Gentleman, I believe, is not considering adequately the interests of the steel workers.

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It is not sensible to chew over this decision of the Government. Let Mr. MacGregor go into action and have his opportunity.
Mr. Foot: When the right hon. Gentleman says that he does not think that I am considering the interests of the steel workers, will he bear in mind that I am considering not only their interests but those of the management and people who work in that industry, and that I and many of my people who have been associated with the steel industry regard both the manner of his announcement and the way in which he has acted as an insult not only to the people who work in the industry but to all the management in the industry. There are plenty of people in the industry who could have done this job without all the farcical bribery that the right hon. Gentleman has introduced.
Sir K. Joseph: The efforts made by the previous Government to find chairmen of nationalised industries are not within my knowledge—
Mr. Skinner: He would have got a Labour Member.
Sir K. Joseph: Yes, he might have got a Labour Member. We are seeking a chairman who will rescue this industry and those who depend on it, and I do not think it makes sense to forget the reality that the better the chairman, the better the management, the men and the users of the British steel industry will be served.

STANDING ORDER No. 9
Mr. Campbell-Savours: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, in order to—
Mr. Speaker: Order. I thought that the hon. Gentleman was going to raise the point of order about the Prime Minister's question. I want to explain to him—and I might as well explain to the House—that I cannot take an application under Standing Order No. 9 because the Prime Minister's answer, as the House knows, was a blocking answer, inasmuch as it prevents further questions being tabled on this subject for at least three months. I have already ruled privately to one hon. Member who wrote to me on this matter.
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It will, therefore, be out of order for supplementary questions that would not be in order for the Order Paper to be put on this question to the Prime Minister or, indeed, to any other Minister concerning movements in such bases.
Mr. Campbell-Savours: Inasmuch as the right hon. Lady took the opportunity to reply to my question, despite the nature of the reply, surely that in itself, as it came after noon today, would give me the right to raise this application under Standing Order No. 9?
Mr. Speaker: I am afraid that nothing new came up from the exchange of questions. The blocking therefore stands for three months, and I shall have to rule out of order even supplementary questions on that issue which would otherwise be in order within the rules of the House, which the House expects me to safeguard.
Mr. Campbell-Savours: It seems to me, Mr. Speaker, that for an item of national importance to be removed from the Chamber by a deliberate blocking mechanism used by the Secretary of State and the Prime Minister is clearly against the national interest. I believe that the Government should make a statement about what happened in respect of the use of the facilities at Diego Garcia.
Mr. Speaker: I understand the hon. Gentleman's feelings, but I am here to see that our rules are adhered to.

SECRETARY OF STATE FOR INDUSTRY (STATEMENT)
Mr. English: I must apologise, Mr. Speaker, for not giving you notice of this point of order. I think you will understand why when I mention what it is.
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
" the statement made by the Secretary of State for Industry ".
The particular point that must be brought to the attention of the public is that, in answer to a question from my right. hon. Friend, the Member for Deptford (Mr. Silkin) about his authority, he replied, in effect, that he had no legal authority; he said that he had the authority of himself

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and of his fellow Ministers. That is not legal authority. Legal authority to pay money must be by statute, by warrant of two Treasury Ministers and by the approval of the Comptroller and Auditor General.
No legal authority was quoted in answer to my right hon. Friend's question. The Secretary of State used the words " authority " to mean " executive will" which is not the same thing. Many cases in English constitutional law prove that.
I think, therefore, that there is a matter of far greater importance than the particular issue, and that, in all conscience, is sufficient. But if the proposal to spend public money is unlawful the law must be changed. There is no proposal to introduce a Bill to do so. If it is lawful, the Secretary of State clearly does not know what law empowers him to do it.
The particular point, Mr. Speaker, not to mention the other issues involved, which have already been gone into, must be discussed as soon as possible by the House. I therefore seek your authority for that to happen. However, since I have not given you notice of my application I do not suggest that you will wish to answer it at once.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
" the statement made by the Secretary of State for Industry this afternoon ".
I listened with care to the exchanges and to the references to conversations between the usual channels on this question. Without giving my reasons to the House I must rule that the hon. Gentleman's submission does not come within the provisions of the Standing Order and that I therefore cannot submit his application to the House. I have noted the reference to conversations that have been held.

ORDERS OF THE DAY
  SUPPLY
  [16th ALLOTTED DAY]—considered.

  PUBLIC ACCOUNTS
  Mr. Andrew Faulds: Further to the point of order, Mr. Speaker—
  Mr. Speaker: Order. I will call the hon. Gentleman to make his point of order, but that will be a little untidy because I had already called the Clerk to read the Orders of the Day. I did not notice the hon. Gentleman rising to speak. I shall, as an exception, take the point of order so that the hon. Gentleman should not feel any sense of lack of fair play.
  Mr. Faulds: Since I can pursue the matter with you privately, Mr. Speaker, I will hold my peace on this occasion because, as you said, I rose after the Clerk had read the Orders of the Day.
  Mr. Speaker: I am much obliged to the hon. Gentleman.
  4.41 pm
  Mr. Joel Barnett: I beg to move
  " That this House takes note of the First, Second, Third, Fourth, Fifth and Sixth Reports, and the First and Second Special Reports from the Committee of Public Accounts in the last Session of Parliament, and of the First, Second, Third and Fourth Reports from the Committee of Public Accounts in this Session of Parliament, and of the Treasury Minutes, and the Northern Ireland Department of Finance Memorandum on those Reports [Com-ands. 7631, 7788, 7787, 7824 and 7882], and of the Fifth, Sixth, Seventh and Tenth Reports from the Committee of Public Accounts in this Session of Parliament."
  I begin by expressing my appreciation of the great honour that was done to me in my election as Chairman of the Public Accounts Committee. I am most conscious of the influential position of the Committee and its Chairman. It has always had a very influential position under a whole series of distinguished Chairmen over more than 100 years. I therefore greatly appreciate the honour that has been done to me in my election to the post.
  As a former Chief Secretary to the Treasury, I know that it might have been

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  thought that there would be some conflict between the position of Chairman of the PAC and that of Chief Secretary—a sort of gamekeeper turned poacher. In practice, I see nothing of the sort. That thought could be anything but the truth, because I see both tasks as being similar. Both are concerned with ensuring that we get value for money and effective spending of public funds. I certainly therefore see no conflict between the two posts. Indeed, I hope and believe that my experience as Chief Secretary will not be unhelpful to me in my post as Chairman of the PAC.
  I have a feeling that when the witnesses have come before the Committee and have been subject to my questioning, they have been not unaware of my former position or of a little of the knowledge that I have had in putting those questions to them.
  The chairmanship is a demanding task, and I can promise only to do my best and to follow the excellent example of my predecessors. At this stage, I should like to pay tributes, and I start with one to my immediate predecessor, the right hon. Member for Taunton (Mr. du Cann), who did a first class job, as everyone who knows anything about the matter will be aware. He will be a very difficult Chairman to follow. I hope that it will be understood if I do not attempt to emulate his style—I shall have to follow my own inimitable style in these matters—but I should like to try to emulate his success in the manner in which he chaired the Committee. I know that all members of the Committee appreciated the excellent job that he did.
  I also pay tribute to the Committee members on both sides who equally do an excellent job in coping with the Committee's work. I thank them publicly for their help and support, particularly in the early period of my chairmanship, and I know from my experience of them that that will continue. I take this opportunity also of paying a personal tribute to the work of the Comptroller and Auditor General, Sir Douglas Henley, and the Northern Ireland Comptroller and Auditor General, Mr. Sythes, and their staffs. They do a first class job throughout the year, and have done for many years. They greatly deserve any tribute that I can pay to them.
  That applies, too—and I am sure that my predecessor will agree—in respect of
  1646
  my Clerk, Mrs. Irwin, and her very small staff. The manner in which she serves the Committee and the public at large is one for which we on the Committee are very grateful. I pay a final tribute to the witnesses, who do not have an easy task in coming before the Committee. I include among them Mr. Carey from the Treasury, who is always there as a witness. He has equally been excellent in his service to the Committee.
  The main work of the PAC and of the Comptroller and Auditor General who reports to it is set out in the new document issued recently by the Government on " The role of the Comptroller and Auditor General", Cmnd. 7845. On page 7 we are told that their work covers a financial and regulatory audit, a value for money audit and an effectiveness audit.
  Mr. Michael English: My right hon. Friend will of course be aware that that Green Paper is inaccurate in that it mentions the audit functions of the Comptroller and Auditor General but omits his functions as comptroller. For example, he is the person who has to authorise the expenditure of Government money such as we were discussing a moment ago.
  Mr. Barnett: I am happy to say that I am not responsible for that document. I look forward with great interest to the reply of the Financial Secretary on the point in question. As far as I am concerned, it is a Green Paper—a consultative document—on which my hon. Friend the Member for Nottingham, West (Mr. English) will have the opportunity to comment. If an occasional dot and comma in it are incorrect, I would personally not take too much objection to that.
  Mr. English: It is more than a dot and comma.
  Mr. Barnett: Well, I do not object even if it goes a little further. I do not wish to pursue the matter with my hon. Friend because, although this is a fairly quiet debate, it is an important one and we have large numbers of reports to comment upon. I shall make one or two comments later on the document to which my hon. Friend referred.
  May I comment at this point on the general control by the House of Commons

  1647
  of the very large sums of public expenditure with which we have to deal? I have never doubted, whether I have been in Government or out, that control of public expenditure by the House of Commons is wholly inadequate. I doubt whether any hon. Member would argue that the way in which we control these huge sums of money is adequate. We all know that Estimates for billions of pounds still go through on the nod, in spite of the many excellent reforms we have had. The control will therefore remain inadequate for as long as that situation applies.
  I had the privilege, as Chief Secretary, of introducing the assimilation of cash limits and Estimates. That was a useful move.
  On 9 January 1978, the hon. Gentleman who is now Financial Secretary said:
  " There is little point in implementing this great merger only to allow the new-style Estimates through on the nod just like the old ones."
  I agree entirely. The PAC recognised the problem that exists where there is no rigid or formal incomes policy. The hon. Gentleman went on to say:
  " The Expenditure Committee was absolutely right to say in its recent report on the Civil Service that ' effective cash limits should be fixed before pay negotiations are entered into.' I stress the word ' before'."—[Official Report, 9 January 1978; Vol. 91, c. 1342–5.]
  The PAC had a further look at the problem this Session, which is dealt with in the fourth report on Civil Service pay estimates. The Treasury and the Civil Service Department claimed that they could not provide, in the 1980–81 main Estimates for each Government Department, any provision for pay increases for non-industrial civil servants which could be negotiated in February-March 1980 to take effect from 1 April. They sought the views of the PAC, the Treasury and the Civil Service Committee on a proposal to provide one lump-sum Estimate for those pay increases and for increases for industrial civil servants, which could be assessed in February 1980 when the results of the Pay Research Unit investigation were known. That lump sum would be redistributed to individual Departments' Votes by means of revised Estimates before the Appropriation Act was passed,
  1648
  when the new pay scales had been determined after negotiation with the unions.
  The PAC recognised the practical difficulties, but considered that parliamentary control had overriding importance. I hope that the hon. Gentleman agrees. In future years, if not for 1980–81, full provision should be made in each Department's main Estimate on the basis of the Government's considered judgment of the amount available. My Committee felt that it would be a retrograde step to revert to the earlier arrangement of making no Estimate provision for expected price and pay increases. That appears to be in line with the hon. Gentleman's remarks, which I quoted. I hope that he can therefore assure us on the matter.
  I turn briefly to comment on some of the other reports, although I cannot comment on everything contained in them. The programme of the 1978–79 Public Accounts Committee was cut short by the Dissolution. That Committee submitted eight reports to the House which have not been debated. In the motion, they are referred to as the first to the sixth reports and two special reports. The right hon. Member for Taunton hopes to participate in the debate, so I shall refrain from commenting on those reports and leave it to the right hon. Gentleman.
  Our 1979–80 Committee only started in July 1979. We have already published seven reports, plus one on excess Votes, and five more have been approved and are at the printers. I hope that we shall have them before too long. I shall comment briefly on a few items in the first seven reports. I wish to relate my comments to the wider issue of the role of the Comptroller and Auditor General and the Public Accounts Committee and the political and policy conflicts that may arise from the work of a Committee which is essentially a non-Party Committee—a necessary requirement if its work is to be effective.
  The right hon. Member for Taunton once said that if the Government decide to build greenhouses on the moon, they are entitled to do so. The PAC can only ensure that the Government build them effectively and get value for money. That is an amusing way to define the issue, but I do not entirely agree with the definition. The work of the Public

  1649
  Accounts Committee and the Comptroller and Auditor General is bound to impinge on policy. That cannot be avoided, especially if the PAC goes into the whole question of control of public expenditure. The PAC may come to the conclusion that it would be preferable to build those greenhouses either in Taunton or in Heywood and Royton, which would be an essential difference in policy. There are other issues where the Committee is bound to become involved in policy if it is concerned, as it should be, with value for money and the use of public money.
  In our first report this year we deal with EEC agricultural problems. Whatever one's views about EEC agricultural policy, while it exists we have what is referred to in paragraph 8 as the EEC farm and horticultural development scheme. The PAC wishes to prevent large numbers of farmers from being wrongly admitted to the scheme. That is an example of a matter on which there is no party-political conflict. It is straightforward. The PAC wants to ensure that such expenditure is properly administered and that those who are not eligible under the scheme are not admitted.
  That same report deals with the Polish shipbuilding order, where clearly there are major political differences of opinion, as illustrated by a Conservative Member during Question Time the other day. However, we are an all-party Committee, and we should remain as non-party political as we can. In paragraph 84, we state that we accept that the Government needed to take the circumstances of the United Kingdom industry in 1977 into account in accepting the first Polish shipbuilding order. They rejected the second. Some people believe that even that first order should not have been taken because it was not cost-effective. The PAC was pleased that the Government did not proceed to a second order. Another view is taken by those representing shipbuilding areas or who are concerned about unemployment in their constituencies. They would be willing to take even the second order, regardless of price. The Public Accounts Committee has to try to avoid the most direct forms of party-political intervention in order to make the Committee more effective.
  1650
  The matter would have become highly controversial had the Government decided to take the second order, despite the high cost. What should the PAC have done? It would have commented only on the narrow value for money issue and the effectiveness with which the order was carried out. The PAC is bound to consider that in the wider context. I do not see how it can avoid doing so. It must consider that question and many others and ask whether the cost will be £20,000 a job or £40,000 a job. For example, in some recent evidence in a Northern Ireland case we found that there was substantial cost in a shipbuilding order. In such cases not only is there a high cost per job, but the jobs are temporary, anyway. Clearly, that is a factor that the PAC must look at, particularly if it gets involved in a wider context. It will have to examine closely the cost-effectiveness of public spending.
  The work of the PAC is very difficult and delicate. Inevitably, it impinges on social and political policies and the consequences of a particular piece of expenditure. In an all-party Committee where members will have widely-differing views on these and other issues, it is clearly very difficult to get a balance. I shall certainly try to ensure that we negotiate that path without becoming too overtly party political. However, this is a tricky problem and, when we consider the Green Paper, we shall have to bear in mind the whole question of widening the scope of the work of the PAC and the Comptroller and Auditor General.
  I turn now to the second report, in which there are five matters relating to Northern Ireland. In the past there has been a sort of tradition that such matters are left to Northern Ireland Members to comment on. I hope that I shall be forgiven if I follow that tradition, although I make it quite clear that there are many very important issues raised there with implications stretching far wider than Northern Ireland. But, given the pressure of time, and the fact that we are considering 14 reports, I hope that I shall be forgiven for not commenting on all these matters.
  The third report exposes a different type of conflict. It concerns the off-shore supplies interest relief grants. Again, there are no political differences on this

  1651
  occasion. The grants were introduced under an Act of one Government in 1973, and continued by another Government. There was little disagreement between the two major political parties about the fact that the grants helped to obtain a considerable number of orders in the United Kingdom which might not otherwise have been obtained. On this occasion, the criticism was different. It was a question of what might be called a PAC-type issue of poor administration. The issue was overshadowed by unfortunate errors by the accounting officer who, throughout a long and distinguished career, has otherwise given fine service, not least to the PAC over many years.
  Nevertheless, I hope that the experience with the evidence given by that accounting officer on that occasion will not be lost on others who give evidence to the PAC. In fact, I would be very surprised if it was lost. I note that a Treasury minute assures us that every effort is being made to see that officials are fully briefed. I shall be interested to hear whether anything new has emanated from the Treasury to other accounting officers in this respect.
  The real conflict in this case was different. It exposed the importance, on the one hand, of keeping the rules laid down by the Treasury for the disbursement of large sums of public money and, on the other hand, of not totally destroying the initiative of civil servants. That is a very difficult balance. In this case, comparatively junior officials saw that the guidelines had to be exceeded on a time basis. Had they decided immediately to get authority to extend the time from three months to six months, there would have been no problem and they would not have been subjected to criticism. Instead, they decided on their own initiative to breach the guidelines. They thought that that was the sensible course. Perhaps it was, but there is still a very important issue at stake. On this occasion, it cost the public no money, but there could be other occasions on which such a breach could cost money. If those guidelines were not necessary, they would not have been laid down. If guidelines are laid down in conjunction with the Treasury and they are ignored by officials, clearly it is an important issue, but I would not want to see it resolved in such a way as to deaden the initiative of civil servants.
  1652
  A further serious concern that arose from that occasion was the question of internal audit. We found that the internal audit concerned in this case did not throw up what the Comptroller and Auditor General himself found later. Questions of internal audit are of paramount importance, not only in that Department but in many others. We recommend that there should be a review. We have had a note from the Treasury that the Department of Energy is considering again the resources that should be available for internal audit. I hope that the Financial Secretary will tell us more about that because I consider it to be a most important matter. Internal auditing should not be weakened by rightful concern about an excessive growth in staff. This is not an area which should be reduced in size because of the general need to curtail expenditure on the staff side. It is important that any Department should have the necessary resources to ensure a full and adequate internal audit system.
  Mr. John Bruce-Gardyne: I am very interested in what the right hon. Member says about the affair of the interest relief grants. He has conceded that the stretching of the guidelines was perfectly justified in this case. It worries me that the way in which this issue was treated and the publicity that it received will result in precisely what the right hon. Member expressed an anxiety about—a feeling throughout the administration that any degree of individual initiative is dangerous. I believe that the PAC should bear that consequence in mind.
  Mr. Barnett: With respect to the hon. Member, who is a distinguished journalist on a Sunday newspaper, I am not responsible for the way in which the press treats a piece of evidence. I regret anything that harms the desire of civil servants to take initiative in a proper way. But that does not mean that I can condone the breaching of properly laid down guidelines. That could well result in serious breaches occurring involving the unintended expenditure of substantial sums of money. That was not the case here. But it could happen on another occasion. Therefore, I do not think that the matter should be treated as such a minor issue as the hon. Member suggests. It is not a minor issue.
  Of necessity, I have to deal very briefly with many of the important matters raised

  1653
  in the various reports. Some matters I have not been able to deal with at all, but I know that a number of hon. Members will want to comment on them. The real trouble stems from the limited opportunities that we have in this House to debate reports from the PAC. The last debate that we had was in December 1978. We now have these 14 reports. If any hon. Member wished to speak on all of them—which he would be perfectly entitled to do—the Government would have to apply a guillotine. Otherwise, we would never reach other business.
  There is a serious problem, and I recognise that no Government could find enough time for us to debate all the reports of the Select Committees. Now that we have a considerable increase by the addition of the new Select Committees, the position will, inevitably, get worse. If it has taken as long as this to debate the reports of the most important Select Committee of the House, when on earth will we get round to debating the equally important reports from the other Select Committees? I do not blame the Government in this matter. Any Government would find it impossible to allocate enough time to debate Select Committee reports.
  I suggested in the Liaison Committee that a possible reform would be to have debates on Select Committee reports in the style of a Grand Committee debate. Not everyone will like that proposal. Many would prefer that the reports be debated on the Floor of the House. However, that choice may not be left to us. It will not be a choice between whether we debate the reports on the Floor of the House or in Grand Committee. It will be whether we debate them in Grand Committee or not at all.
  We all know that the likelihood is that report after report will come from the various Select Committees and will not be debated, or, if they are debated, it will be in a year or two. That is wholly unsatisfactory, and we must do something about it. I hope that serious consideration will be given to the issue. I do not suggest that my idea is necessarily the best; there may be better ones. I want to make it quite clear that I welcome reforms by way of new Select Committees. I am not sure that all present Ministers
  1654
  and their officials welcome them, and I can understand why they might not.
  The reforms which I hope will come as a result of the Government's Green Paper on the role of the Comptroller and Auditor General, and the possible reforms of the PAC, mean that there will be an increasing demand for time on the Floor of the House. I have thought about the matter, and I cannot see how as a House we shall find the time for such debates.
  It would be foolish of the Chairman of the Public Accounts Committee—and certainly for a former Chief Secretary to the Treasury—to say that he was satisfied with the control being exercised now through the PAC and the Comptroller and Auditor General. I am certainly not satisfied. Nobody can doubt that it would be possible to do better, though I imagine that Departments already feel that the PAC investigations are tough enough. In fairness to the Departments concerned, if any organisation, public or private, large or small, were to be subjected to a PAC-type investigation, there is no doubt that waste would probably be exposed to an even greater extent than is discovered during our investigation of Government Departments.
  When huge sums of money are spent, it is inevitable that there will be waste. Indeed, there is often waste when small sums of money are spent. There was waste in the public sector before Sir Derek Rayner appeared on the scene. There is waste now that he is on the scene, and there will be waste when he has left the scene. I do not say that cynically or to criticise his work. As far as I can see, he is doing a first-class job.
  Our problem as a House—certainly the problem we face as a Public Accounts Committee—is that cutting waste can sometimes have political connotations. Indeed, the Government found that with sub-postmasters, where, in order to eliminate or change a method of administering something in order to save money, there were party political or apolitical repercussions. In other words, we have learned—if we did not know it before—that one man's waste is another man's living.
  There is a problem in eliminating waste and making more cost-effective the spending of large sums of money. The

  1655
  problem arises when one attempts to do the job without incurring opposition on the grounds that decisions are party political.
  I have sympathy with anyone seeking to make savings in the administration of a particular scheme. If one can save £20 million, that money can then be made available for more important use. I am not opposed, therefore, to saving money on administration. The task of the PAC has always been to eliminate waste and to do so, as far as it can, without being party political. Wherever possible, we wish to see public expenditure made more cost-effective and efficient. We wish to get the best value for money.
  I know that there are some hon. Members—my hon. Friends among them—who think that cutting out waste and getting value for money is synonymous with cutting public expenditure. I had some experience of that activity, and I know that that was the way it was seen. That view, however, is wrong. It does not follow that cutting out waste and ensuring efficient administration of public expenditure inevitably means that public expenditure is cut.
  On the contrary, it can mean that money saved is spent more cost effectively in order to maintain a particular level of public expenditure. I therefore hope that those of my hon. Friends who from time to time expressed a modicum of disagreement with me when I was Chief Secretary to the Treasury will at least agree with me in recognising the need to eliminate waste and achieve the most efficient system of public administration.
  My hon. Friend the Member for Norwich, South (Mr. Garrett), who takes a great interest in these matters, cannot be here today, and he has asked me to apologise on his behalf. He is in his constituency at the local elections. I should like to have been at the elections in my own constituency. I know that my hon. Friend wishes the work of the Exchequer and Audit Department to go much wider than it does now. Let me make it clear that I agree with him.
  In the debate on 9 January 1978, my hon. Friend, talking about widening the scheme, said that he would like to have
  " professionally qualified as economists, accountants, analysts and engineers who evaluate and report on the objectives of expenditure
  1656
  programmes, the costs and benefits of programmes, the quality of management of programmes and possible alternatives."—[Official Report, 9 January 1978; Vol. 941, c. 1369.]
  That is a sizeable proposition, and we should not underestimate what it means. My hon. Friend was, of course, referring in this context to the work of the GAO in the United States, which is a wholly different organisation from our Exchequer and Audit Department. My hon. Friend usually combines his constructive views—whatever we feel about them, they are certainly expressed constructively—with a criticism of the Exchequer and Audit Department which I feel is unjustified. I agree with his desire to widen the scope of the work, but that desire for a new and extended role—if it was eventually provided for—is not a reason for critcising the valuable work being done by the Exchequer and Audit Department as currently devised.
  Misunderstanding of the Exchequer and Audit Department arises among many people when they compare the number of qualified accountants in the Department with the number of qualified accountants in a private firm. What is not generally understood is that in many of the large firms of accountants the people doing the nitty gritty work of detailed audit are not accountants at all. That work is the last thing in the world that qualified accountants would be doing. The people who do that work are usually articled clerks or unqualified audit clerks.
  In practice the work done by the Exchequer and Audit Department with—I am happy to say—a growing number of qualified staff can be done equally well by people without a specific qualification other than the qualification of a vast amount of experience on the job. Often it is not possible to do better than to have somebody with experience doing a job.
  Mr. English: I do not wish to enter into an argument about accountants, since my right hon. Friend is an accountant. However, he is a little unfair. My hon. Friend the Member for Norwich, South (Mr. Garrett) and I criticised the Comptroller and Auditor General's intake of staff before the present Comptroller and Auditor General was in post—before 1975—basically because we were making comparisons with the Civil Service which his staff audits. The Civil Service is headed by first-class or high second-class honours graduates. Before 1975, the Comptroller

  1657
  and Auditor General was not allowed to employ graduates or professionally qualified people. That was rather odd when their job was to audit the work of people more highly educated than they were.
  Mr. Barnett: I hope that I shall not offend too many fellow accountants if I say that the audit work done by the Comptroller and Auditor General's department and by private firms is frequently done just as well by people without first-class honours degrees as it is by those with them. The sooner we stop thinking that the job of an audit clerk, or any other job, depends upon a degree, the better. We should not regard the problem in that way. More and more, my profession is becoming a graduate's profession. I do not object to that and I do not object to graduates. However, the idea that a non-graduate is somehow inferior is unacceptable.
  I take the point made by my hon. Friend the Member for Nottingham, West (Mr. English). He implied that he is now much happier with the staffing of the Exchequer and Audit Department. I am sure that the Comptroller and Auditor General, Sir Douglas Henley, wants a steady improvement in the quality and quantity of his staff. There must be an improvement over the wole range if the scope of the Department is to be widened, as my hon. Friend the Member for Norwich, South suggests. I am sorry that he sometimes includes in his justifiable and constructive comments on the need for reform a blanket criticism of the work done by the Exchequer and Audit Department and its staff who, in my experience, do a first-class job.
  Nobody, least of all myself, pretends that the present position is even remotely perfect. I look forward to a substantial improvement in the roles of the Exchequer and Audit Department and of the Public Accounts Committee. I accept that we have an inadequate system of control over public funds, but I believe that the work of the PAC, under many distinguished predecessors, has given great service to the House. I shall try to continue that service. I hope that we shall produce a report on the Green Paper fairly quickly. However, I read in a newspaper recently—and I know that I should not believe all that I read in newspapers—that the Government
  1658
  plan in their next legislative programme a Bill to reform the old Acts. It would be surprising if they did that in advance of receiving our report. I am sure that the Financial Secretary will be able to tell us what they have in mind—or what he has in mind, which is not necessarily the same.
  Whatever we do about the Green Paper, I am sure that the objectives of the Government and the PAC are the same. We all want to ensure that we get value for money and achieve the most efficient and effective method of conducting public expenditure. In the interests of that, I ask the House to note the vast number of reports before it.

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

  1. Companies Act 1980.

  2. Consular Fees Act 1980.

  3. Limitation Amendment Act 1980.

  4. Insurance Companies Act 1980.

  5. British Aerospace Act 1980.

  6. West Yorkshire Act 1980.

  PUBLIC ACCOUNTS
  5.26 pm
  Mr. Michael Shersby: I am grateful for being called so early in the debate.
  Mr. English: On a point of order, Mr. Deputy Speaker. We are all in your hands, of course, but the hon. Gentleman did not even have the courtesy to stand up to indicate that he wished to speak.
  Mr. Shersby: I was on my way up. No doubt, Mr. Deputy Speaker, your acute eye detected that.
  This is the first such debate to which I have contributed. I wish to refer to the first report from the PAC in Session 1978–79 dealing with housing associations and the Housing Corporation. My interest is in the efficiency of the Housing Corporation and of the many associations which receive grants from it. I was particularly interested to note

  1659
  in the Committee's report that the 1977–78 accounts show a deficit for the year of £6 million, and an accumulated deficit of £7·7 million.
  The Committee's conclusions are set out in paragraph 21, part of which is of particular interest. The final sentence of that paragraph states that the contribution made by the Housing Corporation
  " has resulted in the rapid growth of new housing associations run by voluntary committees with varying degrees of competence and financial expertise."
  I wish to speak about the competence and financial expertise of housing associations. I make it clear that I make my remarks on the basis of information provided by a number of sources which I believe to be substantially correct.
  My interest is in the allocation of funds to housing associations, which appear to have been made by the Housing Corporation without regard to the record or financial performance of the associations. For example, I am told that grants were made to the Utopian housing association, which is referred to in the Housing Corporation's recent report. That association had a negligible performance record when it was given funds by the corporation to build 334 houses in Farnborough, Kent, 700 units in Southend and 340 units on the Bayswater Road cemetery site.
  If my information is correct, as I believe it to be, that seems a somewhat remarkable decision. One cannot help but wonder what information was available to the Housing Corporation which led it to conclude that the association had the necessary degree of competence and financial expertise for such large projects. Perhaps my hon. Friend the Financial Secretary will give some indication of the criteria that are adopted by the Housing Corporation when considering suitability for grant-aid. I should also like to know whether the Public Accounts Committee considered that aspect during its investigations.
  Another example that has been drawn to my attention concerns the Community housing association. Apparently it was given a large allocation, out of proportion to its previous limited experience. The allocation included funds for a block of 120 flats in Candover Street, London,
  1660
  W.1. The association had not previously operated in that area. Tenants were not notified of the purchase, and no discussion took place. I understand that only one flat was vacant.
  As hon. Members know, the Housing Corporation has a policy that no more than 50 per cent. of acquisitions should be tenanted. Obviously, that policy is based on the necessity to rehouse tenants in available rehabilitated units. Inevitably, the Community housing association could not make proper progress, as it had not had adequate consultations with the tenants beforehand and as the units were not available. For each day that the scheme is delayed, the taxpayer will be saddled with added expense, in addition to interest charges. The chairman of the Public Accounts Committee and his colleagues will naturally be concerned about such activities.
  Some highly undesirable rumours are circulating, which I shall mention as discreetly as possible. It is said that grants are sometimes given to housing associations as a result of a close relationship with an official or other person within the Housing Corporation. I hope that that is not so. I hope also that the Public Accounts Committee will always satisfy itself that there are adequate safeguards and that public money is being spent properly.
  The Auriol housing foundation operates very satisfactorily in my constituency. It has a long and satisfactory performance record. I am happy to say that as a result of its splendid work many of my constituents—who would not have been housed by the local authority, for one reason or another—have been housed quickly and decently. They now have good accommodation in which they live as happy families. The foundation has made a significant and important contribution to the housing needs of the London borough of Hillingdon and elsewhere.
  The foundation operated at over 300 units a year in 1975–76. In 1976–77 the corporation reduced its allocation to 155 units a year. That figure was subsequently reduced to 108 units a year. Finally, it was reduced to 80 units. The Auriol housing foundation had planned to convert 300 or more units, but it found that it had been allocated funds for only 80 units. That is a sad contrast to the two

  1661
  previous examples. I began to question the way in which the Housing Corporation operated. I wrote to my hon. Friend the Minister for Housing and Construction, and he knows my views.
  As Member of Parliament for Uxbridge, I am deeply concerned that the Housing Corporation may be holding up the Auriol housing foundation's excellent work. It may be depriving my constituents of good homes. The House cannot fail to be uneasy. My representations to the Minister on behalf of the Auriol housing foundation, and other questions put directly to the corporation, apparently remain unanswered. It seems that there has been a substantial deterioration in the relationship between the corporation and this association.
  In pursuit of its aims, the corporation apparently made an inter-association comparison. It considered the many different indices of performance. I am told that the comparison was done properly. It was also written up well. However, I am dissatisfied, because nothing has happened as a result of that study. I believe that a committee should have been appointed to recommend future dealings with housing associations on the basis of the evidence. Although this action was agreed at the outset, no committee has been appointed. Not only has no action been taken as a result of the study, but the decisions that have been made fly in the face of the corporation's evidence.
  Only three associations have been run effectively enough to fulfil their commitments and operate with a surplus. All the other associations have shown a deficit. However, greater funds have been allocated to one of the less efficient associations. That should be of concern not only to the House and those interested in housing but to the Public Accounts Committee.
  As a result of reading the report of the Public Accounts Committee, I am concerned, first, that funds appear to have been allocated without proper regard to the track record or financial performance of individual associations. Secondly, funds appear to be inadequately monitored. I am not aware that the Housing Corporation keeps a record of the number of unconverted properties owned by each association. If such information is not available, it should be. Thirdly, I
  1662
  am worried because the corporation uses funds to enable an association to contract to purchase large property holdings and to turn the contracts at a higher figure to other associations. Fourthly, the Housing Corporation has apparently failed to act on its 1977 inter-association comparison. That comparison revealed that some associations lost hundreds of thousands of pounds annually, while others, carrying out a similar activity, made surpluses.
  The study highlighted enormous differences in productivity. There is a certain degree of dissatisfaction among those in the housing association movement about the way in which the corporation operates. It is slow and perhaps administratively inefficient when required to deal rapidly with correspondence.
  Although the level of scheme approvals has been reduced, I am advised that the number of staff at the Housing Corporation has almost doubled in the past two years. If that is correct, it should be a cause for concern. I understand that in June 1978 the Public Accounts Committee received an assurance that the Housing Corporation had adequate numbers of staff.
  The Public Accounts Committee has done a great service by reporting on the many matters that it has investigated. However, I should be interested to know whether the points that I have mentioned have been considered in any detail.
  I personally wish the Housing Corporation success. I want to see it operate efficiently, and I want to see the associations which work with it operating well, because that is essential if we are to make a substantial contribution towards solving London's housing problems. I thought it right to mention that there is considerable uneasiness among the housing associations about some of the problems to which I have referred. I hope that the PAC will bear those in mind when it looks at the work of the corporation on the next occasion.
  5.40 pm
  Mr. Robert J. Bradford: It is always interesting and enlightening to listen to the contributions of the right hon. Member for Heywood and Royton (Mr. Barnett) in these debates. He was somewhat over-modest in denying himself the right to s somewhat over-modest in denying himself the right to

  1663
  make observations on the situation in Northern Ireland. Indeed, on any future occasion, we would welcome his observations on public expenditure in Northern Ireland.
  It will be noted that these debates are in a sense out of phase, because the three documents which are relevant to Northern Ireland relate to 1977–78, and are derived from the Comptroller and Auditor General's report of that year. One accepts that we had the slightly important matter of the intervening general election. Therefore, one is not being over-critical of the PAC. Far from it. I should simply like to make two brief points at this stage. First, the ideal situation would be to look at the PAC report in the financial year following the year with which the Committee dealt. Secondly, it would also be helpful to Northern Ireland Members if the PAC's report was based upon the 1978–79 Comptroller and Auditor General's report, perhaps in time for the appropriation order debate in July.
  However, I should like to concentrate on matters relating to the Northern Ireland Housing Executive. Of course, other matters arise in the report, but I want to limit myself to this aspect, which is of grave importance. Perhaps we can leave the other matters to another time.
  On page 29 of the second report, there is an examination of the accounts of the Northern Ireland Housing Executive for 1976–77. There, Mr. Bloomfield and Mr. Brett—Mr. Brett is chairman of the Northern Ireland Housing Executive—accepted that serious criticisms were made two years previously. When they appeared before the PAC, they said that they took those cricitisms very seriously. One of those criticisms related to the appalling extent or rent arrears in respect of the Housing Executive. That concern was expressed in the answer to question 1699 on page 31 of the report. The question was:
  " That is good news, but at the same time, the actual rent arrears are going up by 20 per cent. They have gone up from £5·5 million to £6·5 million. Can you tell me, as you have already mentioned that the current year's figures for income and expenditure are known to you, how that figure has moved during the year?"
  1664
  Mr. Brett replied:
  " I can tell you that the rent arrears figure, expressed as an absolute, has continued to rise, but I am happy to be able to tell you that the rent arrears figure, expressed as a percentage of the sums recoverable, has been falling steadily."
  In order to put that complaint about rent arrears into perspective, I should like to take the House through the relevant figures. In 1975–76, rent arrears amounted to £5½ million, as can be discovered from the report. In 1976–77, they reached £6½ million. In 1977–78, they amounted to £8½ million. In 1978–79, the figure was £9½ million, and in 1979–80, it reached a record of £10½ million. That is a deplorable record, and the House should be concerned to examine it carefully.
  That increase to £10½ million has occurred in spite of the fact that there are rent and rate rebates, which to an extent have been publicised, and in spite of the fact that action is now being taken through what are locally called " benefit allocation branch orders" to reap in some of those arrears. Yet the present level of arrears is £10½ million. It is quite unacceptable for Mr. Brett to say that the percentage of recoverable money is falling.
  That is to be expected, because all the time the Housing Executive is embracing more and more houses. Each year, it assumes responsibility for more and more homes, which it rehabilitates and rents out. It also builds more homes each year. Therefore, the percentage figure is bound to fall in terms of the overall recoverable sum. Yet these statistics speak for themselves. Total arrears have increased from £5½ million in 1975–76 to £10½ million now.
  There are three concerns which my constitutents and many people in Northern Ireland entertain. First, in view of those figures, they wonder whether the loyal rent and ratepayers, if I can so term them, are in a sense paying for the debtors. Are they being penalised because they are prepared to abide by the law? I hope that we can be assured that that is not the case. If it is, there will be a greater incentive to those who are paying their lawful debts to discontinue doing so. I hope that we can be reassured on that point.

  1665
  The second concern is whether the recovery process is being fully utilised. I accept that the Secretary of State for Northern Ireland said recently—we welcomed the statement greatly—that there were now the possibility and facility of deducting up to 95p for each area of debt owed in Northern Ireland from all kinds of longer-term benefits. I hope that there will also be the possibility of arranging for the supplementary benefits branch to pay, indirectly, current rent amounts in respect of those who are in arrears, because that is not the situation at present. While we welcome that, we still have to ask whether the recovery process is being fully utilised.
  We must make it clear to the Housing Executive that even if good tenants are not being penalised in respect of the debts, and even if recovery takes place over a long period, at the end of the day the United Kingdom must meet the bill for the interest charges on this rent arrears amount of £10½ million. It is unfair that the taxpayers in the whole of the United Kingdom—not simply Northern Ireland—should be levied with this sort of interest charge.
  Lest some people feel that I am indulging in my pet pursuit of knocking the Housing Executive, I shall give a comparison. In the Birmingham area, for instance, which has control of about 155,000 dwellings, rent arrears for the year 1977–78 amounted to £2¾ million, compared with £8½ million in Northern Ireland. In the year 1978–79, rent arrears in Birmingham amounted to £1½ million, compared with £9½ million in Northern Ireland. In 1979–80, rent arrears amounted to £1 million in Birmingham, compared with £10½ million in Northern Ireland. Surely there is a lesson to be learnt somewhere.
  We urge seriously that the Northern Ireland Housing Executive should be taken to task for allowing this situation to develop and for allowing this sort of liability to devolve on the people of the whole of the United Kingdom.
  This is not a wholesale indictment of tenants in the public sector in Northern Ireland. Happily, there are many thousands of public sector tenants who meet their commitments without delay, and without hesitation. We are dealing with a legacy of the rent and rates strike initi-
  1666
  ated by the Social and Democratic Labour Party in Northern Ireland. At the beginning of the decade, Mr Austin Currie said in the then Northern Ireland Parliament " The Revolution is on." All his friends joined him to state clearly to the people whom they purported to represent that no rents and rates should be paid. As is the case in most revolutions, the last date is much worse than the first. The SDLP, through its irresponsibility, has left a dreadful legacy of misery, uncertainty, and in some cases guilt—because there are some good tenants amongst the minority community. That party has been responsible for much of the debt.
  In the Divis Street flats area—a complex of about 400 homes—the current debt is £338,000. I am sure that the reason for that debt is that many of the people concerned listened to the irresponsible words of members of the SDLP when they told them not to pay rent and rates. That is the way in which to perpetuate civil disorder. I repeat that this is not an indictment of the majority of tenants in Northern Ireland.
  Bearing in mind that only a small section of the community owes money, we have to ask whether the recovery process is as successful and speedy as it might be. At present, the law is such that payments cannot be made direct from supplementary benefit to a housing authority. I ask the Minister of State for Northern Ireland—who has kindly joined us for the debate at short notice, for which we are grateful to him—to convey to the Secretary of State for Northern Ireland that it is the official Unionist Party's view that we need to be able to pay supplementary benefits for housing direct into a housing authority such as the Northern Ireland Housing Executive. That is essential, and the facility should be introduced in the near future.
  I turn to another facet of the poor stewardship of the Northern Ireland Housing Executive. There is an acute problem of overstaffing—mainly in central administration. I shall illustrate that again by a comparison with the Birmingham housing authority. The Birmingham housing authority has responsibility for administering 155,000 dwellings, and it has non-manual staff of 1,622. The Northern Ireland Housing Executive has

  1667
  responsibility for 194,000 dwellings and has staff of 2,500. If a comparison were made on a pro-rata basis in respect of the number of homes for which each administration had responsibility, it would show that the Northern Ireland Housing Executive should have 2,000 staff, rather than 2,500. Most of the excess number of 500 can be traced to the central hierarchy. The Northern Ireland Housing Executive should be brought into line with the Birmingham housing authority in terms of staff numbers. That would save £2½ million a year.
  Those 500 people could quickly be reemployed to look after the administration of homes that could be built with the £2½ million saved. However, I do not believe that the Government will immediately order the sacking of those 500 people, so I shall make a suggestion to the House about how we should use them. Northern Ireland has a rent arrears level of £10½ million. Why do we not use some of the excess staff to recover that amount? All that has been recovered so far is £300,000—a paltry sum in comparison to the total. If we used some of the 500 excess staff to recover the debt, it would justify their existence and enable the Northern Ireland Housing Executive to build more homes.
  If other housing authorities throughout the United Kingdom realised the seriousness of the problem, there would be much disconcertment. Therefore, we should be careful not to allow the Housing Executive to permit this arrears debt of £10½ million to increase still further. It is incumbent upon this House to undertake, if possible, a sort of censure action against the Housing Executive, stating that it has broken the commitments that it gave at hearings two years ago. No commitment that was made then has been honoured, and that is deplorable. I suggest that an investigation be initiated immediately to ensure that the Housing Executive does not add to this deplorable level of rent arrears.
  6 pm
  The Minister of State, Northern Ireland Office (Mr. Hugh Rossi): I am grateful to you, Mr. Speaker, for allowing me to intervene briefly to try to respond to some of the important points made by the hon. Member for Belfast, South (Mr. Bradford)
  1668
  about the arrears of rents owed to the Housing Executive in Northern Ireland.
  This is a matter of grave concern to the Government, not only in so far as it relates to rent arrears, but because the entire area of public debt in Northern Ireland has reached unacceptable proportions. As the hon. Gentleman indicated, there is a political history to this matter. No doubt part of the large amounts now owing are due to the politically motivated strike, when people were urged not to pay their public debts. But that block of money has been owing for some considerable time. It has not been written off. Measures are taken constantly to seek to recover those moneys wherever possible.
  The information that I have on the present figures is slightly at variance with the figures given by the hon. Gentleman. At 31 March this year, the gross arrears for rents amounted to £9·9 million, compared with £8·7 million at 31 March 1979. Those figures vary slightly from those mentioned by the hon. Gentleman, who referred to a current figure of about £10½ million. That is not the figure that I have.
  Mr. Bradford: There is what is known as a technical arrears figure of more than £500,000, which is separate from the £9·9 million mentioned by the Minister. Therefore, the total figure is about £10½ million.
  Mr. Rossi: I take the hon. Gentleman's point. I was referring to the gross arrears, with which we are principally concerned.
  The hon. Gentleman talked about the growth of the rent arrears and criticised the suggestion that the percentage of arrears had not gone up, whereas the totality had. He must bear in mind that the collectable rental income has grown much faster in recent years than the arrears in comparative terms. For example, the average number of weeks' arrears has fallen from 6·8 in 1978 to 5·5 in 1980. That indicates that an effort—albeit perhaps in the hon. Gentleman's eyes too modest an effort—is being made to keep down the rate of arrears and to keep control of this difficult situation.
  The hon. Gentleman mentioned the deployment of staff to try to tackle this problem. The executive has recently been reorganised, and a regional controller has been appointed and made directly responsible for making sure that

  1669
  the level of arrears is reduced. All district staff of the executive are being set targets for reduction of their arrears figures. The computerisation of rental records will assist the effort by releasing staff to make further visits to debtors to try to persuade them to enter into arrangements whereby they can reduce their debts. Whether it will be exactly 500 staff, to which the hon. Gentleman referred, I do not know, but certainly staff are being redeployed for this purpose.
  As the hon. Gentleman knows, it is better, wherever possible, to make a personal visit to a debtor to seek to collect a debt than to send letters. Letters get put on one side, whereas a visit can be a matter of embarrassment, and frequently it produces the money. Constant visits and reminders have that effect. But the hon. Gentleman will appreciate that there are difficulties in some parts of Northern Ireland, even for people who seek to make visits for these purposes.
  Mr. Bradford: Especially for these purposes.
  Mr. Rossi: Indeed. I need not underline that problem, which is unique to Northern Ireland.
  My right hon. Friend the Secretary of State has recently announced that the recipients of supplementary benefit who are persistently in default of payment of their rent will have their rent allowances paid direct to the executive. I shall certainly convey to my right hon. Friend the further suggestion made by the hon. Gentleman to see what can be done.
  It may be of interest to the hon. Gentleman to know that the whole question of public debt—including rent arrears—was the subject of a review by Sir Derek Rayner. Sir Derek Rayner's recommendations are now before my right hon. Friend, who is considering them to see how they can best be introduced to deal with this difficult problem.
  I hope that those remarks answer some of the matters raised by the hon. Gentleman. If I have not covered all of them. I shall speak to my right hon. Friend and to my hon. Friend the Under-Secretary who has direct responsibility for the Housing Executive, and if the hon. Gentleman feels that it would be of value we can arrange a meeting to discuss these matters further.
  6.7 pm
  Mr. Barry Jones: I shall not follow the Minister of State and the hon. Member for Belfast, South (Mr. Bradford) into the details of the situation in Northern Ireland. I should like to refer to the shrewd and statesmanlike remarks of my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), who referred to the other and new departmental Select Committees.
  I notice that some commentators are now writing off the Public Accounts Commmittee as no longer being Parliament's most prestigious and powerful Select Committee. Yesterday, the meetings of 11 Select Committees were notified on the Order Paper, most of them the new departmental Committees. Before Christmas the proceedings of the Public Accounts Committee were frequently broadcast, but since the setting up of the new departmental Committees there have not been any indications of interest in our proceedings. I understand that when the Treasury departmental Committee met less than a fortnight ago and had before it as a witness the Chancellor of the Exchequer. there was not even standing room.
  The Public Accounts Committee does not send for Ministers as witnesses. It has to make do with the so-called mandarins. Those who watched the recent television series " Yes, Minister " may say " Yes, but perhaps the mandarins are the real masters" and that the PAC is interrogating those who really count, but I do not agree with that statement. I believe that it would be most unwise to write off the Public Accounts Committee. It is back by 700 professionals, and it is always well equipped for members of the Committee to be given the in-depth reports that they require.
  Currently, there is considerable discussion about the role of the Comptroller and Auditor General. He has great integrity, and I should like his independence to be preserved. To that end, we should ensure the removal of certain of the Treasury's powers of direction. The Comptroller and Auditor General should have his own exchequer and audit department. He should take over the local government district audit. It is arguable that in local government expenditure some of the more flagrant and widespread wastes of money are occurring.

  1671
  The audit service of central Government should have access to the books of our State industries. I refer especially to the British Steel Corporation. There was recently a crisis of confidence in the board and an unprecedented, lengthy and bitter strike. That was partly because, over a period, leaders of the steel workers, and later some of the middle management, were saying that the corporation's financial calculations were, to say the least, faulty. As tens of thousands of jobs were at stake, the subjection of the board to a public audit was an important request by the leaders of the steel workers. The charge was made in the recent dispute that value for money had not been obtained over the past decade. Investment in the industry had been about £3 billion.
  It is true that in the sixth report there are examples of where the Committee has probed to ensure value for money. I have been able to see how important the Government's cash grants have been to attempts to regenerate Britain's industrial structure. I have in mind the examination of witnesses from the National Enterprise Board. I cite as an important example our deliberations over the two new Rolls-Royce engines that we debated, probed and examined. I believe that about £400 million of State money is currently programmed for the two engines. That is vital for the survival of the British aerospace industry. It was in the Public Accounts Committee that we were able to establish that we would be into the 1990s before that vast sum invested in the aerospace industry, especially in the engines division of Rolls-Royce, turned to profits. That was the view of the Department of Industry and the National Enterprise Board. We learnt in that same Session that it was vital speedily to build a new titanium smelter in the United Kingdom before the end of 1982, or else the mineral required in the new engines would have to be imported from abroad, thus putting us at a considerable disadvantage.
  As a result of the probing questions of Committee members, we learnt that if the 1990s profits were to be realised we would have to hope—perhaps that is the operative word—that the pound would be reasonably strong in relation to the dollar. I think that $1·80 was mentioned. In that
  1672
  one Session, it was the Public Accounts Committee that was able to bring into prominence important facts and pieces of information such as the £400 million investment, the industrial base of Great Britain and the hopes of exports and prosperity.
  I shall conclude by trying to assess briefly the work of the Committee. I get the impression that the mandarins of the Whitehall complex do not take lightly any appearance that they make before my right hon. Friend the Member for Hey-wood and Royton and the Committee. I judge by observation that it must be a considerable ordeal to be examined by my right hon. Friend and the Committee for more than two hours and to be called to account before Members of Parliament for actions and policy. It is clear that some of the witnesses occasionally play for time. I have seen some of them rendered literally speechless by some of the techniques employed and questions asked by my right hon. Friend and other members of the Committee.
  I have formed some overall impressions. Accounting officers take the Committee with deadly seriousness. Audit staff have considerable professional expertise. The contribution of Members of Parliament as watchdogs makes for a successful operation, and there are the contributions of the various witnesses. Every one of them, whatever the nature of his remarks and contributions, oversees the massive expenditure of his Department—literally hundreds of millions of pounds of taxpayers' money.
  Members of the Committee are faced with frequent and lengthy meetings. They receive many detailed reports and other papers. It is becoming harder to keep up to date with the papers that we receive. The work of the Committee takes up a great deal of a Member's time. Finally, my right hon. Friend said that his predecessor was a very good Chairman. There is no doubt that he was, but I think that my right hon. Friend is a good Chairman.
  6.16 pm
  Mr. Peter Hordern: The hon. Member for Flint, East (Mr. Jones) referred to the work of the new Select Committees and contrasted them with the work of the Public Accounts Committee. The new Select

  1673
  Committees have a good deal of glamour attached to them and much interest, but for my part I think that the PAC will be around long after the new Select Committees have been left foundering in its wake.
  Select Committees that do not have the staffing which is available to the PAC will find themselves altogether too easily upset by a flood of documents and contrasting opinions. The Select Committee that is examining the Government's economic policy has attached to it no fewer than three economists, all of whom have contrasting opinions.
  The Financial Secretary to the Treasury (Mr. Nigel Lawson): There are five.
  Mr. Hordern: My hon. Friend corrects me and tells me that there are five economists. No doubt they all have contrasting opinions. As my hon. Friend and my right hon. and learned Friend the Chancellor of the Exchequer think little of forecasts and assumptions anyway, it does not seem that that Committee will get very far in elucidating the truth or in enlightening the general public.
  I do not wish to be diverted from the work of the PAC, which is what the debate is all about. The Committee starts with a considerable advantage, as it deals mostly with facts. It deals with what has already happened and facts which are agreed by all the Departments concerned. When the Departments come to us, they know that they have something to answer for. I should like to think that under the chairmanship of the right hon. Member for Heywood and Royton (Mr. Barnett) they have some penetrating questions to answer. Indeed, I know that that is so.
  I shall not waste the time of the right hon. Gentleman by paying him a glowing tribute, although I know that it is the custom of the House to do so in these debates. I know him well enough merely to say that I knew that he would make a good chairman, and he has. He follows a long tradition of good chairmen. I shall have something more to say later about his speech and the work of the Comptroller and Auditor General.
  One of the features that strike me about the work of the Committee over the years is the repetitiveness of some of the incidents that we are invited to examine year after year. Broadly speaking,
  1674
  the work of the Committee can be divided into two main sectors. One sector involves the accident-prone Departments which provide examples of waste or over-expenditure that occur from time to time. These are not necessarily repetitive in nature. The other sector, which is much more important, involves successive Governments making fundamental decisions, usually the same ones, in carrying forward large and expensive projects which the Committee finds itself examining year after year.
  A good example used to be Concorde. It is now too late to examine Concorde any further. Happily, it is at least flying. For many years, when we were examining it, it was not even doing that. I regret to say that it has been swiftly replaced by several other candidates that are long-term losers.
  The hon. Member for Flint, East mentioned Rolls-Royce. I can think of two examples. Rolls-Royce is certainly one, and British Leyland is the other. Until very recently, both of those were under the purview of the National Enterprise Board. Rolls-Royce was taken out of it for what appeared to me to be very good reasons, namely, the fact that the chairman of Rolls-Royce did not get on at all with the chairman of the NEB, and one had to go. One has gone. In my humble opinion, the right one has gone.
  It has never seemed to me to be a good aspect of management policy to have, as it were, an intermediate manager in a company as large and complex as Rolls-Royce. It is important that the chairman and managing director of Rolls-Royce should have immediate access to the Department of Industry, which is its sponsoring Department.
  Mr. English: The Department of Industry has very few people who have ever run an industry. The chief executive referred to by the hon. Gentleman was inefficient enough not to insure against a possible change in the exchange rate and so totally ruined whatever else he had done in at least one year's accounts. Does not the hon. Gentleman think that such a person needs a little advice, possibly from the Treasury, if not the Department of Industry?
  Mr. Hordern: The hon. Gentleman anticipated my remarks. I was not about

  1675
  to pay a glowing tribute to Rolls-Royce. That was the last thing that I proposed to do. I was coming to the meat of the matter. The hon. Gentleman is wrong in saying that the Department of Industry has few people who know about Rolls-Royce. It has more than a few. The NEB had only two people to look after Rolls-Royce. The Department of Industry, which has been much more closely involved, has greater expertise in the matter. However, whether or not the Department has expertise, Rolls-Royce landed a number of orders that have proved to be disastrously expensive for the country so far, and I do not think that there is any question that they will prove to be extremely expensive in years to come. One of the reasons for this is the fact that the contracts were placed—the hon. Member for Flint, East said at $1·80 to the pound—at $2 to the pound. Whatever the figure was, Rolls-Royce got it wrong. The contract is bound to continue to be very expensive.
  The hon. Gentleman will know that the Export Credits Guarantee Department had a big and expensive hand to play in all this. It guaranteed not just the Rolls-Royce engines but those of Lockheed and Boeing. This is the first time, as far as I know, that the Export Credits Guarantee Department has guaranteed not just British products but American products, over which we have no control. We have something to say about that in our most recent report. I am sure that we shall return to the matter. At any rate, it was a departure that I did not like and that I hope and trust will not recur.
  Nor is that all. In considering Rolls-Royce, we discovered that far from being one of the most efficient companies in the country in terms of productivity, there appeared to be twice as many people employed in Rolls-Royce as there were in General Electric and Pratt and Whitney for the same operation. Therefore, there is a good deal of improvement yet to come.
  Mr. Barry Jones: Does the hon. Gentleman agree that, if it were not for the National Enterprise Board and the enterprise that it is showing, we might not have had an aerospace industry, and certainly Rolls-Royce would not have been
  1676
  in production, supplying many thousands of jobs?
  Mr. Hordern: I do not believe that the National Enterprise Board had anything to contribute in that way. The decision was made originally by the Department of Industry and should always have been monitored by it. I do not think that the NEB had anything to contribute.
  The other company to which I wish to refer is British Leyland. I do not wish to talk about the troubles of the motor industry or the particular problems in which British Leyland has found itself. If the case for Rolls-Royce being managed and run by the Department of Industry more directly is strong, the same applies to British Leyland. I do not think that the intervention or interposition of the NEB does anything to help the position of British Leyland. It would be very much better, given my right hon. Friend's policy towards the NEB, to hive off the British Leyland responsibility more directly to the Department of Industry.
  The National Enterprise Board is now happily changing direction rapidly. I cannot help but say that I have a passing regret for the brave old days when Lord Ryder was chairman and launched such products and projects as Thwaites and Reed, and presided over the continuing losses of Alfred Herbert, Cambridge Instruments and British Tanners Products. My right hon. Friend's policy will mean fewer losses for us to inquire about and to enjoy watching the prognostications of those involved, simply because, with any luck, those concerns will be wound up quite soon.
  The NEB received a great deal of money from the taxpayer. I know that the hon. Gentleman is keen on some of the activities of the NEB. It is true that it has a marginal regional role still left to it, in the North-West, at any rate. However, £78 million has been invested not in British Leyland or Rolls-Royce but in activities of its own. The record of the NEB has gone from bad to worse in this respect.
  The original target set for the NEB was that it should make between 15 per cent. and 20 per cent. on its assets in

  1677
  1981. So far from reaching that target, it achieved 11 per cent. by the middle of last year. But the position is a good deal worse than that. The NEB was given a considerable amount of equity capital directly by the Government. This means that the taxpayer is having to pay for the difference between what the Government have to pay to borrow money from the market, which nowadays is about 18 per cent., and the money that they advanced to the NEB at no rate of interest at all. From the taxpayer's point of view, the return has not been 11 per cent. or anything like it. There has scarcely been a profit.
  It is worth saying this if only to strengthen the ambition of my right hon. Friend the Secretary of State for Industry to run down the NEB. I view its activities as those of liquidator and receiver. I hope that it will get on with that.
  I do not think that the chairman of the NEB, in his role as receiver, should be renting a flat in Grosvenor House at £36,000 a year. He should be found more modest accommodation.
  I leave the subject of the NEB and turn to the question of the Polish shipbuilding order. To my great regret, last year the Committee said that it accepted the inevitability of seeking that order. We published that in July 1979. At that time, the loss in respect of the order was thought to be about £28 million. We discovered only recently that the loss was really much greater than that. It was £40 million. In addition, British Shipbuilders borrowed $65 million with which to buy the ships that it was to hand over to the joint Anglo-Polish company.
  When we asked the civil servant who was giving evidence to us at the time what the Poles had advanced towards this company, we were told that they had advanced the sum of £50,000, for which they had the right to buy the ships that the taxpayer was providing for the Polish marine to sail in, from which only half of the profits, if any, would come to the taxpayer.
  I ask the House to consider what a crazy proposal this is. I know that it is easy to argue this in retrospect. I cannot think how I ever got myself to put my name to the original report, but it is there. Seen in retrospect, of course, it is a disastrous position. Not even on the most
  1678
  sanctimonious and regional grounds could such an order ever have been justified. If it was right that a ship-owning company should be advanced money by the taxpayer in this way, it surely should have been a British ship-owning company and not a foreign one providing competition for our own companies. A more ludicrous position it would be difficult to imagine. I hope that that lesson has been well and truly learnt.
  I have taken the examples of the National Enterprise Board, Rolls-Royce, British Leyland and, now, the Polish shipbuilding deal, all of which happen to be examples of profligacy by the Department of Industry. I want to say something about that. It is very noticeable how the Department of Industry has grown in recent years. When I first came to this place, there was no Department of Industry. Very soon after I came, the first Ministry of Technology was formed. If the performance of the Department of Industry is to be judged by results, I regret to say that the aim established for it—that is, to provide industrial regeneration—has resulted in higher unemployment and lower production. Yet all this has been met with increasing numbers of civil servants. There are more than 9,000 now in the Department of Industry, and many more in the Welsh and Scottish Development Agencies, but their results have not yet been shown to be at all good, so far as one can observe.
  In West Germany, there is no Department of Industry. The House really has to consider what is the point of some of the aspects of the Department. Of course, it has a major function to perform in relation to companies such as Rolls-Royce and British Leyland, but in terms of industrial regeneration it is becoming increasingly clear that other much more direct regional incentives, notably a differential tax regime, would be much more effective than the subjective judgment that the Department displays in putting forward its grants.
  The Department itself and the whole question of industrial grants—a very complicated question—are a relic of what one might call Keynesian intervention, which was popular with both parties for many years after the war. I am glad to say that my right hon. Friends have departed from this policy, and I think that they need to look very seriously at the whole

  1679
  question of industrial intervention and whether or not the regional regeneration that all of us want to see could not better be achieved by a much simpler and more direct tax incentive system.
  I come finally to the role of the Comptroller and Auditor General. The right hon. Member for Heywood and Royton—I regret to say that I missed his earlier remarks—referred, I understand, to the new direction in which the Comptroller and Auditor General appears to be moving—that is to say, in the direction of examining policy alternatives. This is a major departure, and I think that we ought to consider it very carefully before endorsing it fully.
  I do not say that it is right or wrong; I merely think that we ought to consider it fully, because it seems to me that it is most important—I know that the right hon. Gentleman agrees with this—that the Comptroller and Auditor General, with the Exchequer and Audit Department, should continue with its main function, which is to audit every Department of State and make sure that its operations are carried out properly and efficiently, and are properly accounted for.
  I have in the past thought that the Comptroller should have a role closer to that of the post in the United States, which is a much wider role in terms of examining the functions of different departments and how they can best order their affairs. On the whole, I am inclined to think that it is right that the Comptroller should have responsibility for looking into policy matters, but the whole matter needs to be carefully thought about and debated.
  I say that in passing, because it seems to me that the Comptroller has another role plainly open to him. It is one that involves a managerial revolution in Government expenditure and, in particular, in local government expenditure and expenditure in the Health Service.
  Enough time has passed for me at any rate to be able to say, with some of my right hon. and hon. Friends, that the reorganisation of the Health Service and of the local authorities in 1973 and 1974 was a disaster. I think that those most closely involved in those reforms now admit that. It was disastrous because it
  1680
  was thought at the time that a managerial revolution in the sense of making those bodies separately accountable would increase their efficiency. I do not think that there is any evidence to show that. What has been shown is a huge increase in the number of people employed by the local authorities and the Health Service, both of which increases far exceed the increase in the number of civil servants.
  In 1949 local authorities employed 1·6 million people. Last year they employed 2·9 million. That is three times more than the whole of the Civil Service itself. Of course, much of it is accounted for by the growth in the number of teachers and lecturers. That number increased from 456,000 in 1965 to 693,000 last year. But what was much more striking was the enormous increase in the number of those employed in the education service who neither lectured nor taught. In 1965, there were about 500,000 people who neither lectured nor taught. Last year, there were 717,000. It might well be asked what all these people are doing, but there is no one whom we can ask why so many people are employed in the education service.
  I regret to say that the same is true of the Health Service. In the Health Service in 1961, 575,000 people were employed. In 1978, which is the latest year for which we have figures, there were 1·175 million. Of course, the Health Service comes under the jurisdiction of my right hon. Friend the Secretary of State for Health and Social Security, but for practical purposes it has been very difficult to stop the recruitment of extra people by the area health authorities, even after the reorganisation.
  Mr. English indicated dissent.
  Mr. Hordern: If the hon. Member for Nottingham, West (Mr. English) doubts that statement, let me quote an example. I asked my right hon. Friend to let me have examples of the amount of outside consultants' advice that the Department had asked for over the years. I have one example of office work measurement on which an outside consultant was called in, and under " description of job" it says that the job was aborted owing to staff side opposition. So the question could not even be looked at.
  Mr. English: The reason why I was shaking my head was that the Secretary of State for the Environment and the Secretary of State for Social Services both

  1681
  have sections of auditors under their immediate command, as civil servants, to deal with the responsibilities that the hon. Gentleman is talking about. They really are the only two departmental Secretaries of State who have no excuse. They have people of whom to ask the questions that the hon. Gentleman poses. The Secretaries of State have auditors of their own quite different from the Comptroller and Auditor General. If they are not asking the questions and publishing the answers, that is their fault.
  Mr. Hordern: The hon. Gentleman really mistakes the position. There was a major reorganisation of both services in 1973 and 1974 and, of course, technically speaking the Secretaries of State are responsible for those Departments. But, as the hon. Gentleman knows, the point of that reorganisation was to separate those authorities—both the local authorities and the health authorities—in a management sense. I am quite sure that it was never intended that they should go in for an orgy of recruitment, as they in fact did. The fact of the matter is that our education service and our Health Service are grossly overmanned, both for the jobs that they do and in terms of any international comparison that can be made.
  The country cannot afford to have so many people employed in the public service. It is enormously difficult to control public expenditure, in any case. The Government are doing their best to reduce the number employed in the Civil Service, but that number does not begin to compare with the number employed in the Health Service and the education service, which greatly exceeds the number employed in the Civil Service and over which there is little effective control.
  There is an important additional role for the Comptroller and Auditor General to pursue. It is to examine the operations of the Health Service and the education service to establish what all these people are doing. I over-simplify the matter, I know, but we are grossly overmanned by any standards. This is a major matter into which the Comptroller and Auditor General should be able to inquire, and he should have the power to do so. I would much prefer him to get on with that aspect than to examine other aspects of Government policy over which there
  1682
  can be continuous and considerable political disagreement.
  Several Hon. Members rose—
  Mr. Speaker: I hope that the hon. Member for Nottingham, West (Mr. English) will understand if I call next the hon. Member for Folkestone and Hythe (Mr. Costain), who has been present throughout the debate. He docs not usually speak for very long.
  6.41 pm
  Mr. A. P. Costain: I promise, Mr. Speaker, that my average time of six minutes will barely be exceeded on this occasion. Earlier this afternoon, an hon. Member spied strangers. When you look round the Chamber now, Mr. Speaker, you might say that you spy a Member of Parliament or two.
  I have attended every Public Accounts Committee debate for 21 years, ever since I came to the House. It always astounds me that these debates should be so poorly attended. Today, on the Government Front Bench there is the biggest attendance that I have ever seen in such a debate, and I am grateful to the Government for that.
  This debate has a special significance for me. The Committee has a new Chairman, who has batted in very well. He gave me the impression today that the Committee had something to do with policy. I have always understood that the Public Accounts Committee was an auditing Committee, which looked into what had happened. I hope that it wilt remain so.
  Mr. Joel Barnett: I am sorry if I misled the hon. Gentleman. The point that I sought to make was that the Committee's proceedings were bound to impinge on policies when the Committee looked at the effective use of money. I gave as an example the greenhouses-on-the-moon syndrome. When looking at the effectiveness of greenhouses, should we consider whether they should be built on the moon, or somewhere else? I gave the example of the Polish shipbuilding order, and one or two other matters.
  Mr. Costain: I thank the right hon. Gentleman for clarifying the position. What he said confirms what I understood him to say. Once the Committee gets on to policy, it cannot avoid party politics.
  On 10 December, I was lucky enough to draw a place in the ballot for Private

  1683
  Members' motions. I made a speech on that occasion. I had a stinking cold, and the press said of my speech that I sounded like a worn-out concrete mixer; I certainly felt like one. I said that it was most important that the new Committee should have terms of reference and the right to call whom it wished. The hon. Member for Nottingham, West (Mr. English) intervened. A characteristic of all debates on the Public Accounts Committee is that the hon. Member for Nottingham, West always intervenes in every speech. He has such great knowledge of the subjects. I do not remember any member of the Liberal Party taking part in the debates, although they pop in from time to time. I rather expected the Leader of the Liberal Party to turn up when he saw my name on the television annunciators.
  I have said on many occasions that the Public Accounts Committee is a mirror that enables Departments to look at themselves and judge their own performances. It is the only Committee that does not interview Ministers. It interviews civil servants and accounting officers because it deals with accounts. It should take evidence from people who have a direct relationship with the Departments. The Committee normally relies on the statements made by the accounting officers. Accounting officers have enormous responsibilities, and it is impossible for them always to be up to date. Certain accusations are made against people and firms who deal with the Departments, and we should have the right to interview them. We have the right to call for persons and papers, but we should also interview the people who are directly concerned. That would stop the passing of the buck.
  The Public Accounts Committee has now admitted the public. I and one other member of the Committee voted against going public. I think that I was wrong. I thought that, if we went public, people would play to the galleries and even members of the Committee would act as if they were on the television screen. I am glad to say that that has not happened.
  There has been another innovation in recent years. We visited Chatham dockyard. I am delighted to see that the First Lord of the Admiralty is here today. We had a very good reception, and learnt a
  1684
  lot. If we made more visits, we could become more kindly disposed to the people whom we go to criticise. That is probably why they entertain us so well. We also visited a teaching hospital. That taught us a lot, too, and I hope that it taught the teaching hospital a lot.
  Over the years, the Public Accounts Committee has drawn attention to certain failures—certain matters that cost enormous sums of money. I wonder whether the Departments have learnt from our example. Time and again, when we are on an economy drive, we cut off Supply and cut off expenditure, yet time and again, as elections get near, politicians decide to start projects. I refer particularly to building projects, which, naturally, I know something about.
  We have found with a number of construction jobs that the work has been started before the plans have been properly prepared. We can quote job after job—£14 million in Liverpool, £15 million somewhere else, £40 million for a power station—where the money is wasted because it has not been realised that to spend half a million pounds in preparing plans for a £14 million contract will save an enormous amount of money. When the job is properly prepared, not only is money saved but labour relations are improved. Nothing upsets men on a building site more, when, for the good of the contract, they have worked very hard to erect a wall, to be told three weeks later that they must pull it down because it should not have been there in the first place. It is our fault, as politicians, for starting work before the plans are prepared, and it is the Government's fault for not realising that a little money spent in the early stages will save an enormous amount of money later.
  My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) has gone into detail about some of the points that we have disclosed, and I do not wish to waste the time of the House by repeating them. Everybody in the Committee has read the report, and Ministers are aware of its contents. What we look forward to is the Financial Secretary's telling us, at the end of this debate, that he has studied these figures, that mistakes have been made, and that he will be a very good boy and put them right. In the last debate he spoke from the Opposition side of the

  1685
  House. I shall be fascinated to know what he says from the Government side.
  He promised that during the first Session of this Parliament he would reorganise the whole system of Committees, and I am very grateful to him for doing so. Now he has the opportunity of ensuring that everything is properly organised so that the Committees themselves can do the work and not duplicate the work of the Public Accounts Committee.
  6.51 pm
  Mr. Michael English: It is always a pleasure to follow the hon. Member for Folkestone and Hythe (Mr. Costain), because he can almost be described as " Mr. Public Accounts". He has, by his assiduity, put other members of the Committee to shame. He must admit that I have not interrupted him on this occasion. That is partly because I gathered from your remarks in relation to him, Mr. Speaker, that you might be kind enough to call me to speak in this debate. In previous debates, I have sometimes not been called.
  As my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) said, we cannot in this debate discuss 14 reports. We must be selective. Two to which I should like to refer briefly are the fourth report of 1979–80 on provision for Civil Service pay and the second report of the same Session on matters relating to Northern Ireland. That on Civil Service pay illustrates the much better relations that now prevail between the Public Accounts Committee and the successor to the Expenditure Committee, the Treasury and Civil Service Committee, than has been the case upon occasions in the past. I do not mean the immediate past. I am not casting reflections upon the right hon. Member for Taunton (Mr. du Cann).
  There was a time when, to put it bluntly, the Clerks of the two Committees did not even speak to each other and one was capable of writing a report which did not refer to three reports written by the other. That is no longer the case, and, as the Chairman during the last Parliament of the General Sub-Committee of the Expenditure Committee, I pay tribute to all the Officers of the House
  1686
  who are concerned in this. They are now co-operating with each other. The two Committees provide each other with evidence, and of course this is the sensible way to proceed. The results are shown in the fact that, although we may have different aspects of matters to examine, one being the past, the audit, and one being future expenditure, nevertheless we are working in tandem. I think that my right hon. Friend the Member for Heywood and Royton and the right hon. Member for Taunton should both take part of the credit for this.
  Turning to Northern Ireland, I have done a modest amount of research into the whole question of the audit, and indeed the Public Accounts Committee has been kind enough to request me to give some evidence to it on the Green Paper. I am still a little puzzled about Northern Ireland. There is a separate Civil Service, called the Northern Ireland Civil Service, which is roughly 4 per cent. of the total of the two Civil Services of the United Kingdom and Northern Ireland. I presume that in the days of Stormont there was a separate individual called the Comptroller and Auditor General for Northern Ireland. I am fishing for information here, and I hope that when the Financial Secretary returns he will give us it.
  I presume that this Northern Ireland Comptroller and Auditor General reported to Stormont. I regard that as a bad principle. I must be careful in what I say, because in this Parliament I normally chair the Northern Ireland Standing Committees, and the question whether functions should be uniform throughout the United Kingdom, or should be autonomous in Northern Ireland, is, of course, a sensitive political issue into which I do not wish to enter.
  If I might remove it from the context of Northern Ireland, one of the things that I thought ridiculous about the devolution Bills for Scotland and Wales was the fact that they devolved the audit. I say this as one who was basically in favour of devolution. A reference was made earlier to the Comptroller General of the United States and the General Accounting Office which he controls. In a federal state, where the constitution specifically protects the legal sovereignty of each one of the 50 States, the auditor

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  is allowed to chase federal money wherever it goes. That means that he can chase it if it is given as a grant to one of the States, if it is given as a grant to a local authority subordinate to one of the States or if it is given to a private company or person. If he has reason to believe that there is some audit reason, he can follow the money.
  It is not possible to devolve the audit of the taxpayer's money. It is possible to do so if it is some other taxpayer's money. If it is a question of rates raised by a local authority, the authority might have the power to audit it itself, but if it is out of income tax, or value added tax, or whatever it may be, that is national taxpayer's money, and surely the national taxpayer's agent, the Comptroller and Auditor General, has a right to audit how that money is spent.
  With the greatest respect to the hon. Member for Horsham and Crawley (Mr. Hordern), who spoke about auditors investigating policy, it is rather a side issue. My right hon. Friend the Member for Heywood and Royton raised it, but this question of policy is something of a side issue. Incidentally, I hope that he realises that the moon would be an excellent place on which to put a greenhouse, since it is a place without an atmosphere to interfere with the rays of the sun. I agree that it might be a little costly in capital terms, but in terms of running costs it would be extremely efficient because there would be no atmosphere to cause erosion.
  One cannot " second guess ". At least, one can, but it is an enormous waste of resources to do so. What one can do is to decide whether a person who has made a decision has carried it out efficiently—whether, for example, as the hon. Member for Folkestone and Hythe said, a person has made detailed plans for building a hospital before the building work has been started. That is a sensible thing to audit and investigate, and it is a bit more than just auditing whether someone has pinched the cash, or committed fraud, or something of that nature.
  However, I am intrigued by the scope of the audit. Apparently, the PAC receives reports from the Comptroller and Auditor General of Northern
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  Ireland. I am all in favour of widening the scope of the audit in that sense—not in the sense of introducing policy into it, but in the sense that public money can be followed everywhere.
  In this context, one is bound to be concerned with two reports of the Committee in the last Parliament. The second special report on the work of the Committee of Public Accounts and the status and functions of the Comptroller and Auditor General partly relates to, and in this case mentions, reports of the former Expenditure Committee. That Committee and, subsequently, the Procedure Committee were both extremely critical of the present position of the auditor. I stress that I do not mean Sir Douglas Henley himself or any member of his staff. I am talking of the organisation, and I hope that it will be recognised that I am not referring to people personally in any way.
  We must all be concerned about what Dr. Normanton said in the standard work on the subject. These were not my words or those of my hon. Friend the hon. Member for Norwich, South (Mr. Garrett). Dr. Normanton who is now, I believe, an auditor with NATO, described our system of public audit—and he is the world's expert on it—as the worst in the Western world. Surely we must be concerned about that and about why he said it in a book which is now a textbook used by students. He may not be right, but, since he has said it, we should investigate his reasons.
  The Expenditure and Procedure Committees found, on investigating this, that our auditor was one of the least independent in the world. Let me explain. It is commonly said that the Comptroller and Auditor General is independent because he can be removed from office, like a judge, only by the Crown upon an Address by both Houses of Parliament. That, of course, secures him against dismissal.
  However, the person appointed has traditionally been a former high Treasury civil servant—in this century, at least. He has usually been a second permanent secretary in the Treasury, or someone of that character. The poacher is turned into a gamekeeper. I mean no criticism when I say that perhaps one of the reasons for that is to exclude any other possible

  1689
  poacher. He is not a professional accountant or anything of the kind. He is not someone with audit experience but a civil servant who has risen in the Service in the usual way. More than being a case of poacher turned gamekeeper, it is a case of the gamekeeper being made into a registered poacher by the authority of the squire in order, as I have said, to exclude any other possible poacher. The system is obviously not independent.
  The second aspect of the non-independence of the auditor is in section 3 of the Exchequer and Audit Departments Act 1921. That says that, in the event of any dispute between the auditor and the Department, the decision of the Treasury shall be final. I can think of some dubious company chairmen who would be extremely pleased if they thought that, in the event of any dispute between their accountant and their auditor or any of their executives and the auditor, their decision should be final. It seems an odd provision to put in an Act of Parliament.
  A third aspect is that the Comptroller and Auditor General is not allowed to control his own staff. Whether they fall within the highly technical description of civil servant, which is an unofficial definition coined in 1931 and not the one in the Act of Parliament that governs Civil Service pensions, I should hate to try to find out. However, it is certain that their pay, grading and numbers have been controlled for more than a century by the Civil Service Department. Again, the very people who are being audited say who is to be their auditor in terms of pay. This is highly important, because I would have thought that any one of the senior partners of the big six accountancy firms in this country receive more money than does our Comptroller and Audit General. I shall not stress that point further.
  My right hon Friend the Member for Heywood and Royton said that I was wrong to assume that because someone was a graduate he would be a better auditor. The Civil Service makes that assumption about civil servants. France is supposedly a highly elitist country, but, if one can get into the Ecole Nationale d'Administration, one can become a top civil servant without even a baccalaureat. The only institute of higher education in France that admits anyone who it believes
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  will be a capable and competent civil servant is the Ecole Nationale d'Administration. It is the Civil Service in this country that says that the Civil Service Commission shall recruit into the First Division Association only graduates who are either first-class honours graduates or II. 1 honour graduates. However, it said something quite different in relation to the Exchequer and Audit Department. It said, until 1975, that the Department could not recruit graduates and professional people.
  I pay full tribute to the present Comptroller and Auditor General. He is now recruiting graduates, and they are being trained and qualified as accountants in one particular institute—not in all six. That is excellent, but for more than a century they were prohibited from this by the very executive that the Department was supposed to be auditing. The Department was prohibited from exercising a free choice in respect of personnel. No choice was allowed and the matter was determined by the executive that was being audited.
  The last of the reports to which I want to refer is the Third Report of Session 1978–79 concerning the parliamentary control of public expenditure, and it is there that we see part of the results of this process. The Comptroller and Audit General, who is described in the earliest of the Acts—the first was in the 1860s—is described as acting on behalf of the House. He is not allowed a lawyer. Yet one of his functions is not just as an auditor of past events but as a comptroller, an English word that descends from the Latin contra rotulator, meaning the person who keeps the counter roll, the person who approves expenditure because he has the legal check upon it. He authorises the expenditure in the sense of authorising payment out of the Exchequer Account at the Bank of England to Departments of State on the ground that they have the authority of Parliament and of the Treasury by warrant signed by two Treasury Ministers and all the other legal processes that have to be followed.
  What mention is there of that in the Green Paper? It says that there are certain other aspects of the Exchequer and Audit Department Acts that may have to be looked at. On this whole question of the pre-audit of the public

  1691
  expenditure of the United Kingdom, that is all it says. I begin to wonder whether the person who wrote the Green Paper has ever read those Acts. It mentions in great detail past event auditing, but the pre-event auditing of the Comptroller and Auditor General is not mentioned. That is very puzzling. Even more puzzling is that that is exactly where the matter has fallen down. I am sure that because of the sub judice rule you would rule me out of order, Mr. Deputy Speaker, if I referred to the aspects of the Crown Agents case, which are currently under investigation by a tribunal. However, there is one matter that has been remedied by an Act of Parliament in relation to the Crown Agents to which IS can refer, because it is not the same issue. We had to pass a brief Act of Parliament indemnifying every Comptroller and Auditor General from the unification of the office until the present day from not carrying out effectively his duties as Comptroller General. They had authorised expenditure of moneys from the Exchequer Account to the Crown Agents illegally under a statute passed, admittedly, before the Comptroller and Auditor General's two offices were united in one person.
  I shall say one final thing to prove where control over the audit lies. The hon. Member for Horsham and Crawley mentioned local authorities and the Health Service. Both those Departments of State have civil servants who audit those bodies for them. In the case of local government, district auditors audit their accounts. They are civil servants directly responsible to the Secretary of State. I do not believe that they should be. The audit of local authorities should be independent.
  The hon. Gentleman said that certain things had not been done because of staff pressure in Ministries. That may be right, but there will always be staff pressure in Ministries. A Cabinet Minister who is in charge of a Department for, on average, two or three years will not necessarily resist that pressure. I have nothing against the Secretary of State. It is a secondary issue in terms of politics. However, a Minister will not put punch into the audit if there is staff pressure in his Department and he wants to make his name before, say, a Conservative or Labour Party conference.
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  No Minister should be in charge of the audit. Ministers should be in charge of current events. The body that should be in charge of the audit, as the Procedure and Expenditure Committees have said, is the House of Commons Commission, which is the most impartial body that we have. It consists of Mr. Speaker, only one Minister, one Front Bench Opposition Member and three Back Benchers, drawn from three parties. In this political world, that is as near to impartiality as one will get. They should be the employers of the Auditor General, the district auditors in the Department of the Environment, and so on. I shall go into further detail with my right hon. Friend's Committee.
  We must first make sure that the control of the audit is responsible ultimately to hon. Members of all parties, and not only those who happen to be in government. To do that, we need agents in their hundreds, who are professionally qualified and able people. We could call them the Exchequer and Audit Department, but I should prefer even to change the name. The Exchequer has always been associated with the Executive since it was founded in the eleventh century. Let us have auditors on behalf of the people, run ultimately by the House of Commons. Let them be truly independent of the Executive that is spending the people's money. They may then be able to resist staff pressures inside the Executive. Civil servants are part of the Executive, as well as Ministers. They may even be able to take a slightly more long-term attitude than Ministers, who may feel that they will not be in their Departments next year or that their party will not be in office in five years' time.
  May I add one further point to prove where control over the Exchequer and Audit Department lies? Who audits the Comptroller and Auditor General? It is the Permanent Secretary to the Treasury in his capacity as auditor of the Civil List, which is almost certainly a breach of the law. The Exchequer and Audit Department Acts lay down that all Appropriation Accounts, without exception, shall be signed by the Comptroller and Auditor General. They were signed by him, even in his own case, until changes took place, partly as a result of the 1921 Act. He then stopped doing that.

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  The first change was that he felt, naturally enough, that he needed an assistant. He recruited the auditor of the Civil List, which was fair enough. It was not a breach of law. In 1921, the post of Deputy Auditor General, who had the job of auditing the Civil List, disappeared. The permanent secretary to the Treasury became the auditor of the Civil List. That is in bare outline.
  At that time, the Comptroller and Auditor General ceased to sign the accounts. There was no change in the law, but from then on the sole auditor of the Auditor General was the permanent secretary to the Treasury. I do not believe that that is right. The average firm of accountants in this country which audited, say, ICI would not accept that its own auditor ought to be the principal accountant of the firm that it was auditing. That is absolute nonsense. A firm of accountants would not allow the pay and grading of its staff to be determined by the people it was auditing. However, that is the nature of the audit at present.
  Something must be done. I am sure that my right hon. Friend will be doing something about it in the inquiry that his Committee is undertaking. The right hon. Member for Taunton, in the Treasury and Civil Service Committee, which he chairs and on which I serve, is also likely to suggest something. We need an independant professional system of audit. We cannot have total confidence in a system of audit controlled by the Executive that is supposed to be the subject of the audit.
  7.16 pm
  Mr. Edward du Cann: I am pleased to follow the hon. Member for Nottingham, West (Mr. English). He has his admirers in this House and, like us all, his detractors. I am one of his admirers. We are all indebted to the hon. Gentleman for his consistent and competent work on behalf of the House as a whole. The hon. Gentleman's speech was important and well-informed. I hope that my hon. Friend the Financial Secretary will be good enough in due course to comment on his suggestions. I find myself in agreement with many of them.
  As former Chairman of the Public Accounts Committee, I had the honour on five occasions to move motions similar to that which was so agreeably moved by the right hon. Member for Heywood and Royton (Mr. Barnett). All hon. Members
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  and many people outside would agree that that important Committee has served the House well in the past. I hope that it will continue to do so under the chairmanship of the right hon. Gentleman. I wish him and the Committee well in their future deliberations.
  I was grateful to the right hon. Gentleman for the kindly personal comments that he made about me, and I was grateful also to the House for the way that they were received. I enjoyed my time as Chairman of the Committee. I hope that it was a constructive time. During that period, we published no fewer than 250 reports.
  I hope that the innovations to which my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) referred, which we introduced carefully and slowly, will become permanent features of the scene. I took the view that it was right and appropriate to endeavour to associate the public more with the work of the Public Accounts Committee. It was the determination of that representative body of the House of Commons to endeavour to obtain value for the taxpayer—and promote better administration in terms of method especially. As my hon. Friend said, we therefore embarked on visits outside the House to see the work of Government Departments and its effects. We opened our proceedings to the public. I was pleased to hear my hon. Friend say that he thought that on the whole those experiments had been a success.
  If the Committee is successful, it is successful because of the devoted service of its members and those who assist them. I join the hon. Member for Nottingham, West in paying tribute to a very remarkable member of the Clerk's Department who has worked hard on that Committee for some time, also to the Comptrollers and Auditors General for the United Kingdom and Northern Ireland and to my fellow Committee members—who are present in the chamber—my hon. Friend the Member for Folkestone and Hythe who is a devoted and conscientious member, and my hon. Friend the Member for Horsham and Crawley (Mr. Hordern). Perhaps I may also refer particularly to four people who were members of the Committee in my time but who are no longer Members of the House. We very quickly forget those

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  who have given service here and have left. I mention particularly Mr. Hugh Jenkins, Mr. John Ovenden, Mr. John Watkinson and the late Mr. Maurice Orbach.
  I was only concerned with the Committee's work in the 1978–79 Session which was curtailed by the dissolution of Parliament in April last year. The Committee of that period issued eight reports covering 13 main subjects. It took evidence on a further 13 subjects, and the Committee under the right hon. Member for Heywood and Royton was good enough to publish those.
  I wish to refer to one of the particularly important points that the right hon. Member for Heywood and Royton raised. As in former years, the Committee continued to carry out its work in an entirely non-party spirit. Whatever differences of opinion hon. Members may have on the Floor of the House—and there certainly are differences which show very clearly all the time—in the Committee we were united in our aim of contributing to the better management of the country's resources. That was the practical ideal that united us. Therefore, we had no difficulty in agreeing the terms of all of our reports without any formal division in the Committee. Further, we made factual reports to the House of Commons which was then free to take whatever partisan view it wished. I agree very much with my hon. Friend the Member for Folkestone and Hythe that it is important to preserve, wherever possible, that bipartisan approach.
  I turn now to some examples of the work of the PAC. We covered a whole range of subjects, just as the right hon. Gentleman is doing today. How wise he was to talk about the continuity of the PAC's work. We inquired into excess Votes, the underspending of cash limits, the Contingency Fund, in which the hon. Member for Nottingham, West has a great interest, the meteorological services, for which I have great admiration, the cost of Harrier aircraft, contract incentives and four other matters which I would like to mention in detail.
  The first, which was referred to by my hon. Friend the Member for Uxbridge (Mr. Shersby)—and I apologise to him for the fact that I was unable to hear his speech—concerns the Housing Cor-
  1696
  poration. The Committee was shocked to find a number of serious items for criticism in this area—the overpayment of grants, the inadequacy of initial vetting and subsequent monitoring of housing associations, weakness over accounts and so on. The Housing Corporation is now disbursing more than £400 million of public money each year. It was amazing to discover that these slacknesses had gone on undetected for such a long time. I am glad that legislation is now being brought in by the Minister for Housing and Construction and his colleagues. I am glad that the Comptroller and Auditor General now has access to the books and records of the Housing Corporation, and I hope that that, too, will help to improve control.
  Second, I turn to defence matters. Our inquiries ranged over several diverse aspects of the Ministry of Defence's vast responsibilities. One of these was the operation of arrangements for the placing and pricing of non-competitive contracts. Where one has monopoly suppliers and monopoly buyers, it is important to keep what is done under close surveillance all the time. If the spur of competition is absent, one cannot be sure that the prices being quoted and those at which orders are executed are the right prices. This is a necessary and continuing subject for the PAC to examine.
  Third, another defence subject inquired into is the declining productivity in the naval ship building industry, which continues to receive substantial subsidies from public funds. We are talking about large sums of money, often hundreds of millions of pounds. My hon. Friend the Member for Folkestone and Hythe and the right hon. Member for Llanelli (Mr. Davies) will remember that in the past we have looked at the work done in Naval dockyards. A continuing impression that I have about defence matters is worrying. Defence is enormously expensive. It is very important to ensure that an increasing proportion of our gross domestic product is spent on defence. I support the Government's efforts in this regard. Yet, on the other hand, all the time that I spent in the PAC indicated to me that defence spending Departments are also extravagent Departments. I am quite convinced that the scope for savings in the defence Department is immense.

  1697
  The fourth matter that I wish to mention is the inquiry that we made into the operation of the exchange equalisation account. Obviously this is a matter which requires examination with discretion and privacy. I take the view that the Government by and large are obsessive about secrecy. They do too much in private. Here we have the Public Accounts Committee looking at a matter which is commercially sensitive. It was proper for the PAC to study how the exchange equalisation account had been operating over a period, and I am happy that we were able to make one or two minor constructive suggestions which I hope will be of use in the future operation of that account.
  These are the bread and butter issues. They were all in the form of an inquest, but I hope that they were, in their way, a stimulus and a spur to financial effectiveness and efficiency.
  I wish to turn now to the more general matters that were mentioned by the hon. Member for Nottingham, West. Our second special report to which he referred was particularly significant because it considered certain recommendations made by the Procedure Committee and the Expenditure Committee—of both of which the hon. Member was a distinguished member—affecting the work of the PAC and the role and functions of the Comptroller and Auditor General and his staff in the Exchequer and Audit Department. As the PAC was the Committee directly affected by these recommendations, we thought it right to record our views on some of the issues raised before decisions were taken by the House or the Government.
  We particularly welcomed the Procedure Committee recommendation that the PAC should be excluded from the restructuring of Select Committees and left to continue its indispensable, specialised role. However, we were less happy about the recommendation that the new Departmental Select Committees should examine and comment on all the PAC reports before they were debated in the House, and that the PAC should be invited to take part in the examination of Departmental witnesses. Those two recommendations surprised me greatly. I took the view that such procedures would doubtless lead to unacceptable delays in
  1698
  the PAC's proceedings, and that they certainly could jeopardise the completely non-partisan nature of the Committee's work. Our view was that the differing objectives of the departmental Committees should be pursued separately. As Chairman, now, of the Treasury and Civil Service Select Committee and as Chairman of the Liaison Committee I confirm that view.
  The Procedure Committee's recommendations on the role and functions of the Comptroller and Auditor General and the Exchequer and Audit Department were overtaken by the Government study to which the hon. Gentleman referred and which has now taken the form of this Green Paper. I was pleased—and I dare say that my hon. Friend the Member for Folkestone and Hythe and the right hon. Member for Llanelli will confirm it—that it was perhaps because of some of the proposals made by the PAC that that study was launched. We now have it, and it is a matter that needs to be discussed at an early date. I am glad to know that the right hon. Gentleman's Committee is doing exactly that.
  I spoke earlier of the outside visits made by the old PAC. As my hon. Friend will remember, we not only took evidence from the Comptroller and Auditor General about his function. We also visited the headquarters of the Exchequer and Audit Department and met and talked with all the senior staff. I was astonished to learn that ours was the first visit to the Department by a PAC since the Department was established in 1867. It seemed to me extraordinary, when the insight that we derived from its work was so useful to us, that no one had thought of paying a visit to the Department before then, but there it is.
  What I wish to say clearly to the House on this subject can be said under two headings. My first point is that, over the years, the work of the PAC and the Exchequer and Audit Department has developed through mutual support and with, I may say, much help from the Treasury into a powerful combination for monitoring and improving Government administration. It may well be that there is room for further development and improvement, but I believe that it is most important that, whatever changes may eventually result from the present review, those changes should not in any way

  1699
  jeopardise the substantial benefits derived from the existing arrangements.
  In particular, I stress the risks to the independence of the Comptroller and Auditor General, and the audit-based nature of his inquiries, if he were subject to more direct parliamentary control and was required to undertake investigations at the request of the House or of one of its Committees. That was the view taken by the old PAC.
  I began by paying a tribute to, and associating myself with, the speech of the hon. Member for Nottingham, West. I shall not rehearse his arguments, but I agree with him that perhaps it is wrong that the Exchequer and Audit Department should be to such a degree subject to the general control of the Civil Service. I think that that Department and the Comptroller and Auditor General should be more independent of the Treasury than they are today.
  I do not believe that the appointment of the Comptroller and Auditor General should always be made from the Civil Service, and I do not believe that the pay of the staff of the Exchequer and Audit Department and of the Comptroller and Auditor General should be on all fours with that of the Civil Service. I do believe, however, that the Comptroller and Auditor General should have a wider remit and, to use a phrase which is not original, that he should have a wider duty to follow public money wherever it is spent.
  I can now make some common cause with the right hon. Member for Heywood and Royton, particularly in relation to his analogy about greenhouses on the moon. I do not believe that the responsibility of the Comptroller and Auditor General should be financial only. I believe it is right that he should move, increasingly, into the orbit of managerial efficiency.
  The right hon. Gentleman was correct to point out that risks are involved in this context. We were able in the last PAC, as my hon. Friend will remember, to get into this area a good deal, particularly in looking at some of the larger Government projects by deliberately choosing those which were probably—in party political terms—non-controversial. I see no reason why that work should not continue and be extended. However, one must recognise that there are certain risks.
  1700
  Perhaps the best testimonial to the Comptroller and Auditor General and the Exchequer and Audit Department is demonstrated by the increasing volume of the work of the Public Accounts Committee. When I was first elected to the House 24 years ago, the reports of the PAC consisted of 36 pages and 136 paragraphs. In the last full year when I was Chairman—1977–78—the reports consisted of 152 pages and 491 paragraphs. That was a four-fold increase.
  The right hon. Gentleman gave us a snapshot of the volume of the work with which he is currently dealing. There is no question but that if there were not a Public Accounts Committee, a Comptroller and Auditor General and an Exchequer and Audit Department, it would be necessary to invent them. When I say that I wish them well, it is not out of parliamentary politeness. Their work is essential in the national interest.
  In its third report of 1978–79, the PAC also reviewed various aspects of parliamentary control of public expenditure arising from previous recommendations of the Committee and from the fourteenth report of the Expenditure Committee with which, again, the hon. Member for Nottingham, West is connected. The most important of these—and one which the PAC strongly supported in paragraph 4 of the report—was the assimilation of cash limits and Votes which had been largely completed in the financial year 1979–80 and for which the right hon. Gentleman and his colleague the hon. Member for Llanelli deserve considerable commendation.
  This assimilation seeks to achieve the objective that the cash provision which Parliament is asked to authorise in the original departmental Estimate will now be expected, except in exceptional cases, to cover the whole expenditure for the year. That means the House will no longer be faced with voluminous Supplementary Estimates for pay and price increases which it cannot effectively scrutinise and control. In this way, I hope that there will be a new and significant opportunity to improve Parliament's control of public expenditure, provided only that the House can devise an effective means of scrutinising those Supplementary Estimates presented by the Government.

  1701
  The Treasury and Civil Service Select Committee, of which the hon. Member for Nottingham, West is a member, has reported on this matter. He and I are associated with the report made to this House. We have just received the Treasury's reply, and perhaps I may say to my hon. Friend the Minister of State and the Financial Secretary to the Treasury that we shall be studying what the Treasury says.
  Howsoever the matter is eventually decided does not, perhaps, matter too much, provided that the House has an effective means of scrutinising those Supplementary Estimates presented by the Government. Upon that, I think it would be right for right hon. and hon. Gentlemen on both sides of the House to insist.
  Increasingly, as time goes on, we provide better, more effective methods of parliamentary control over the Executive. There is no better way of achieving that than by controlling the way in which taxpayers' money is spent. We are trustees for the taxpayers. They trust us, particularly on the Back Benches, to ensure that by and large they get value for money. I hope that the new Select Committees will have an important part to play in that process and increasingly associate Parliament with the policy-making process.
  Increasingly, I come to the conclusion that it is necessary for Parliament, by whatever method it may devise, to review organisations and systems just as much as transactions. All the reports are on cash, not activities. The PAC, crucial though its work is, is in a sense a forerunner only of other systems of parliamentary scrutiny and control that perhaps we have yet to devise.
  I should like to see us evolve methods and systems towards a form of departmental reporting which identifies clearly to the House, and through the House to the nation, policy objectives, what the measurable progress is towards obtaining policy objectives, an assessment of the resources devoted to achieving planned levels, even if they are intermediate, and, last but by no means least, some measure of achievement. We have done no work of any kind to establish performance indicators. There is an urgent need to do that. What I am trying to say, in a sentence, is that it is crucial to look at more than just the figures.
  1702
  The Public Accounts Committee will be needed for ever. There is perhaps even more virtue in adopting the systems approach to auditing. If there is an area for examination and work in the future, it is that. Our controls over expenditure, as the right hon. Member for Heywood and Royton wisely said, remain inadequate. They need strengthening urgently.
  The present Lord Chancellor was right when he complained that our democratic system provided an elected dictatorship. It is essential that we on the Back Benches—the people's representatives—should be more closely associated with the business of policy-making, comparing results with forecasts and outturn with proposals, and examining policy alternatives. To devise a new system of auditing is the first essential. Through that method, my burning ambition remains—it is in no way mitigated now that I have left the Public Accounts Committee—to ensure that it really is Parliament that rules.
  7.44 pm
  Mr. Denzil Davies: I congratulate my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) and pay tribute to him for presenting his first report as Chairman of the Public Accounts Committee. I have no doubt that he brings, and will bring, to his task the diligence, skill and good humour that he displayed when he was Chief Secretary to the Treasury. I also pay tribute to the previous Chairman, the right hon. Member for Taunton (Mr. du Cann). I was privileged to serve under him for a few years. He displayed skill as Chairman of the PAC, and I learnt a great deal from him. I appreciate the experience.
  This is the first time that we have debated PAC reports since the new departmental Committees were established. The new Committees, at least initially, cast a certain shadow over the PAC, because they seem more glamorous. They examine the broad sweep and do not have to deal with specific factors or actions. Perhaps that is their attraction.
  As the right hon. Member for Taunton said, there will always be a PAC and a Comptroller and Auditor General. The work of the Committee is unique. It examines transactions and tries to chase

  1703
  and trace money paid out by the Government. This afternoon, we heard an extraordinary statement by the Secretary of State for Industry, who said that the Government were arranging to pay moneys to a foreign partnership. The PAC is the best body to investigate such transactions. I do not know whether it will wish to do that, but it is for such situations that the PAC exists. I am sure that it will continue to do its job diligently.
  I have no doubt that the Financial Secretary will deal with all the issues in detail. The fourth report from the 1979–80 Session deals with Civil Service pay. A few weeks ago, we discovered through questioning in the new Treasury and Civil Service Committee that Civil Service pay might go up by 25 per cent this year. That was an important fact for the Committee to elicit. I hope that the Financial Secretary will tell us whether the Treasury accepts the recommendations in paragraph 15 of the fourth report, which deals with the way in which the main Civil Service Estimates are to be brought to the House.
  A report in a Sunday newspaper said that in the next Session the Government intended to legislate on the structure of the PAC and on the Comptroller and Auditor General. I appreciate that the Government might not wish to go into much detail, but I hope that the Financial Secretary will say something about it, because the PAC is examining the matter and there is a Green Paper.
  Much of the debate has involved the role of the PAC. If legislation is passed eventually, I hope that it will provide for an extension in the PAC's role, so that it can cover matters that have been mentioned in the debate. I hope that the Government will not be too timid in their proposals. I hope that they will not pay too much attention to Treasury suspicions. The Treasury is naturally suspicious of other organisations that appear to poach on its territory.
  My hon. Friend the Member for Nottingham, West (Mr. English) made an interesting speech, but he did not use the correct analogy. He said that Comptrollers and Auditors General tended to be former Treasury second permanent
  1704
  secretaries and that they were gamekeepers turned poachers. I think that they are gamekeepers in both cases. They are doing a different job.
  The Treasury should not be suspicious. The Public Accounts Committee and the Comptroller and Auditor General can do work for which the Treasury is not equipped. That is no criticism of the Treasury. It does not and cannot pursue such payments and transactions. Once the Treasury has agreed levels of expenditure with Departments, it is ill-equipped to carry out such a role. I had expected it to welcome the strengthening of the roles of the Public Accounts Committee and of the Comptroller and Auditor General. Indeed, I would have thought that that might help the Treasury.
  Reference has been made to the Acts governing the work of the Comptroller and Auditor General and the Public Accounts Committee. Perhaps those Acts should be reconsidered. Perhaps the institution should be more independent. This is a difficult area. I believe that the Acts should be reconsidered. This may appear to be a reactionary note from a reactionary lawyer, but we should not talk too much of the Executive and the legislature. There is a tendency to look at the British constitution as though it contained a separation of powers. At the end of the day, the Executive sits in this House. If the two are divorced, it may create edifices that do not serve us well. However, we must consider the independence of these bodies in relation to the Government.
  I should like to see the role of the Public Accounts Committee extended to cover local authorities. Perhaps the Comptroller and Auditor General's office could be merged with that of the district auditor. I do not know the answer.
  There has been a vast increase in the amount of money spent by local authorities. A case can therefore be made for amalgamation or extension of the Comptroller and Auditor General's office. I should also like to see its role extended to cover " value for money " or " efficiency " audits. The right hon. Member for Taunton mentioned the Ministry of Defence. I make no criticism, but I do not think that the Comptroller's office and the Public Accounts Committee are equipped to pursue waste in the Ministry of Defence.

  1705
  I remember those Committees and the difficulty of understanding and discovering what was happening when technical matters were involved. Considerable waste probably occurs, particularly in the Ministry of Defence. However, neither the Treasury nor the Public Accounts Committee is equipped to go into intricate areas of waste. I therefore hope that the role of the Committee will be extended into areas of " efficiency " and " value for money ".
  The Committee has, and will continue to have, a unique role. I hope that we shall witness a development of that role. Criticisms have been made. Dr. Norman ton's book has been mentioned. I am not qualified to say whether the criticisms that have been made are valid However, criticism is understandable, because little change has been made during the past 100 years. The amount of money spent by the Government has grown enormously. I hope for a change, but it should not detract from the role of the Public Accounts Committee as the guardian and watchdog of public expenditure.
  I hope that the Government will tell us something of their thoughts. If they bring forward legislation, we shall consider it with an open mind. We hope that any such legislation will be of a fairly radical nature.
  7.53.
  The Financial Secretary to the Treasury (Mr. Nigel Lawson): I shall begin my remarks in a special way. I wish to pay tribute not merely to the present Chairman of the Public Accounts Committee—as is customary—but, on the rare occasion of a debate on reports of the Public Accounts Committee, I pay tribute also to his predecessor, my right hon. Friend the Member for Taunton (Mr. du Cann). I pay tribute to them for the achievements of their Committees. One is in his maiden year and the other is in his valedictory year. They both made excellent speeches today.
  I do not wish to be invidious, but it is right to pay special tribute to my right hon. Friend the Member for Taunton. He has steered the Public Accounts Committee for many years with great skill and to great effect. I am sure that his successor, the right hon. Member for Heywood and Royton (Mr. Barnett), will make an equally illustrious Chairman.
  1706
  He will have noted that his predecessor gave one or two tips in his speech. There are few matters about which all parties agree. However, it is widely agreed that the work of the Public Accounts Committee is an effective vehicle for enforcing the accountability of Ministers.
  Since the last debate, in which I had the honour to take part as an Opposition Member, the House has opted for a major enhancement of the accounability to Parliament of Ministers and Departments. We now have a new departmental Committee system. My right hon. Friend the Member for Taunton is playing an important part in that development. Various hon. Members have touched on this subject. There seems to be general agreement that the new Committees do not diminish the relevance and importance of the Public Accounts Committee. In some quarters, it was felt that the new Committees might be something of a nine-day wonder. My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) said that the Public Accounts Committee would still be forging ahead while the new Select Committees wallowed in the mire.
  I do not believe that the departmental Committees will be a nine-day wonder. They are much more important than that. However, they have yet to find clear terms of reference and a clear role. The Public Accounts Committee has established its role over the decades. In addition to their being new, the work of the Select Committees is less clearly defined.
  During the last Parliament, the recommendations of the Select Committee on Procedure gave rise to these new Committees. As my right hon. Friend the Member for Taunton said, the Committee on Procedure concluded that the Public Accounts Committee had an indispensable, specialised role quite distinct from the general scrutiny of administration. The Government agree with that judgment. I also pay tribute, along with the right hon. Member for Heywood and Royton, to the Comptroller and Auditor General and his staff.
  I should like to confine my remarks—to a greater extent than usual—to answering the points that have been raised during the debate. I do not wish to make general observations on the

  1707
  role of the Comptroller and Auditor General and the Exchequer and Audit Department. The Government have published a Green Paper. We have set out our views and the areas in. which we have an open mind or have reached a provisional view. It is a discussion document. We look forward to hearing the views of the House and of the Public Accounts Committee.
  Mr. English: I welcome the presence of the Financial Secretary, as he was a member of the former Expenditure Committee. However, I hope that he will answer a point that I raised while he was momentarily out of the Chamber. Perhaps he can explain why the Green Paper does not mention the pre-audit functions of the Comptroller and Auditor General.
  Mr. Lawson: I shall come to that point, if the House is patient. Having made a few preliminary remarks, I should like to consider in order the points raised by various hon. Members. The last speaker that I could forget is the hon. Member for Nottingham, West (Mr. English). Who could forget him, particularly in the context of a debate on the reports of the Public Accounts Committee? I was fortunate in that my hon. and learned Friend the Minister of State took a note of what the hon. Gentleman said while I was momentarily out of the Chamber.
  There is one point in the Green Paper which I should like to underline. It is the Government's view that the effect of the working relationship between the Comptroller and Auditor General and the PAC should be preserved. That very special working relationship has a great deal to do with the unique character of the PAC's work and its unique effectiveness. The Committee's reports are based on work by the Comptroller and Auditor General, which in turn is based on facts which have been researched by the staff of the Exchequer and Audit Department in the various Government Departments. The audit-based character of the Committee's reports explains why no Government of any kind can afford to ignore a recommendation of the PAC. Certainly, this Government do not. I hope that answers one of the questions put to me by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), who admonished me not to ignore anything
  1708
  which the PAC was to recommend or to state. I assure him on behalf of the Government that I shall not and that we do not.
  The right hon. Member for Heywood and Royton raised a number of points. He referred among other things to the inter-relationship between cash limits and public sector pay. That was also touched on by my right hon. Friend the Member for Taunton. Indeed, the right hon. Member for Heywood and Royton referred to the remarks that I made on this subject during a debate some years ago on the PAC's reports. I think he suggested—certainly, the PAC suggested in its report on this matter—that provision for Civil Service pay increases should have been made in the Votes of the individual Departments and not in a single Vote. But, as I think he knows—and it is important to understand this—there were two reasons why we did not follow that procedure for 1980–81. First, the Civil Service pay award differs between grades. Therefore, the cost varies from Department to Department, depending on the mix of grades. Again, many of the departmental Votes, relatively speaking, contain very little but pay, as a result of which they lack the flexibility to meet variations of this kind. The idea of the central Vote was partly to provide for that necessary flexibility.
  Secondly, work on the single Vote could be delayed until a much later date than work on the many departmental Votes. That enabled the Government to consider the pay research review before providing for Civil Service pay. That was in line with our manifesto commitment, which was that we would reconcile the system of pay research in the Civil Service with the system of cash limits to which we are committed. In my judgment, those arrangements in no way detract from parliamentary control, which I think was the main point made by the right hon. Gentleman.
  A revised Estimate will be presented before the House votes on the Estimates. It will allocate provision to the individual departmental Votes. Making provision in departmental Votes from the outset would have resulted only in Supplementary Estimates reallocating provision among the various Departments. These Supplementary Estimates, which would

  1709
  have been the real outcome, would have occurred no earlier than the revised Estimates on which the House will now have the opportunity to vote. Therefore, the House would have been no better off and there would have been no greater parliamentary control.
  I should like to emphasise—and this relates to another point which the right hon. Gentleman made—that the central Vote was set before the pay settlement. It was the framework for the negotiation. That is precisely in line with the comments I made in our debate in January 1978, to which the right hon. Gentleman referred.
  Mr. Joel Barnett: I do not wish to be difficult about this, but that is not precisely what the Minister said in January 1978. He quoted the Expenditure Committee as saying:
  " effective cash limits should be fixed before pay negotiations are entered into".—[Official Report, 9 January 1978; Vol. 941, c. 1345.]
  He stressed the word " before ".
  I recognise the difficulties in the current year. Is he saying that, for the future, he will abide by what he said then and also that he accepts what we said in paragraph 15 of our report, that whatever else he did, we would be strongly opposed to reverting to the previous arrangements whereby provision for pay in the main Estimates reflected only pay settlements already made or whose lines had already been settled with sufficient precision?
  Mr. Lawson: We are thinking of the best way of treating future years in the light of our experience this year and in the light of the remarks made by the PAC and the report to which the right hon. Gentleman has just referred. But the main point I was making, which preserves the essence of what I said in 1978, was that the overall limit was set before the pay settlement. That provided the framework within which the pay settlement took place.
  There is obviously a difficulty in reconciling the system of pay research with the cash limit system. I think that we have achieved a method of doing that which makes sense. We shall have to see how we get on in the light of experience.
  Mr. Joel Barnett: I take it from that—obviously, many people would be ex-
  1710
  tremely interested in this matter—that pay research will continue and that the new system will be devised in line with that.
  Mr. Lawson: Certainly, pay research is in operation at the present time.
  My right hon. Friend the Member for Taunton—although he spoke at the end of the debate, it is relevant to bring him in at this point—also referred to Civil Service pay, as did the right hon. Member for Llanelli (Mr. Davies), who praised the Treasury and Civil Service Committee for unearthing the fact that in this coming year Civil Service pay is expected to be 25 per cent. above what it was last year. Of course, those are not new figures. They are published figures. But all credit to the Committee for having noted that they existed. However, it would be a great pity—and I counsel the House to take heed of this—if it were thought that that meant that Civil Service pay settlements this year have been of the order of 25 per cent. That is very much not the case.
  The right hon. Member for Llanelli looks surprised. I do not want to read the letter which my right hon. and learned Friend the Chancellor sent to my right hon. Friend the Member for Taunton, which clearly set out the position. That letter is available for all who wish to see it. Roughly speaking, the 14 per cent. cash limit has been adhered to for the total pay increase this year. But the total pay bill is very much more than last year as a result of the staging of pay settlements which was introduced by the previous Administration, which meant that there was a delay in the coming into effect of the previous year's pay increase.
  Mr. Hordern: Am I right in thinking that the 25 per cent. is made up of 14 per cent., representing the cash limits for this year, plus 11 per cent. for last year? What will be the position in regard to next year? Can my hon. Friend say that no part of any phased settlement will run into next year as well?
  Mr. Lawson: A very small part of a phased settlement will run into next year, but the amount next year will be much smaller, because the 14 per cent. has been met largely by the fining down of the amount of the pay bill by a reduction in Civil Service numbers. There is some element of staging, but it is very small.
  Mr. Denzil Davies: In order to clarify the matter, is the Minister saying that the total pay for Civil Service staff for the year 1980–81 will be 25 per cent. higher than in 1979–80?
  Mr. Lawson: That is precisely the position—a position that I find most unsatisfactory. But it is not a position for which we are responsible. The figures were published, and the letter from the Chancellor to my right hon. Friend the Member for Taunton explained precisely how it came about.
  The right hon. Member for Heywood and Royton made some specific points with which I shall deal before turning to the more general matters. He spoke about the Department of Energy and the offshore interest relief scheme—which no longer exists. He gave a fair account of what was wrong, and he put it in perspective. I have only one quarrel with what he said. When he was challenged by my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) about why this matter had been put totally out of perspective in the press, he said that he was not responsible for what the press reported. However, he chaired the press conference that led to those reports. He must regret that he allowed this matter to be raised prematurely, before the Public Accounts Committee had reported. That is totally contrary to all custom, but it is the right hon. Gentleman's first year as Chairman of the Public Accounts Committee, and I am sure he will not do that again.
  Mr. Joel Barnett: I am sure the hon. Gentleman will wish to be fair, in his customary manner—if I may put it so inaccurately. He will know that, if the press had been present while the evidence was being taken—it was not—everything that was said at a later stage would have appeared in the press two months later, whoever had been in the Chair. The information given to the press on that occasion was given after I had closed the meeting, so I did not say that as chairman of a press conference. I am not responsible for remarks of members of my Committee. The hon. Gentleman must understand the facts of the case.
  Mr. Lawson: I think that enough has been said about that. I was dealing with what happened, rather than with hypotheticals.
  1712
  The right hon. Member for Heywood and Royton asked specifically about the improvement of the internal audit, which is an important matter. The Department of Energy has noted the suggestion of the Public Accounts Committee. An early review of the resources needed by the Department for internal audit has been launched, and is still in progress. The Civil Service Department, the Exchequer and Audit Department, the Treasury and the Government accountancy service have all been consulted, and any conclusions of general interest to those departments will be widely disseminated. We take this matter extremely seriously.
  The right hon. Member for Heywood and Royton asked about early legislation during the next Session—a point that was picked up by the right hon. Member for Llanelli. I have not read the report, but I can give both right hon. Gentlemen the assurance that there is no question of the Government introducing new legislation to amend the Exchequer and Audit Acts in advance of receiving and considering the report of the Public Accounts Committee. I say that without hesitation or qualification.
  The right hon. Member for Heywood and Royton discussed in delicate terms—but nevertheless he was weighing his words, and he attached great importance to them—the new development of the Public Accounts Committee which he wished to see under his chairmanship. He said that the dividing line between administration and policy was somewhat tenuous, and that attempts to examine one in isolation from the other were likely to be sterile. That is very much the approach that the Government have adopted in the Green Paper. I began to have doubts—I sensed that hon. Members from all parties had doubts—when he made a virtue of the Public Accounts Committee delving into and assessing the merits of different policy objectives. Generalisations in this sphere are dangerous.
  Mr. Joel Barnett: I spoke about how to achieve a policy objective. A policy objective cannot be achieved without questioning a Government's right to have a policy objective, but it may be able to be achieved in different ways. If one looks at it in cost-effective terms, I think that the Green Paper recognises that point.
  Mr. Lawson: The Green Paper recognises precisely that the right hon. Gentleman gave as an example the case of shipbuilding, where he said that on the one hand there was apparent waste of money, and that on the other hand there were constituency interests to be taken into account. This takes us not beyond the ambit of Parliament, but beyond the proper ambit of the Public Accounts Committee, and it could weaken the position of the Public Accounts Committee in our system. The great value of the audit-based Public Accounts Committee is its non-partisan character, which it has always had, and still has. The audit-based nature of both the work of the Comptroller and Auditor-General and the Public Accounts Committee is something that we should never lose.
  My hon. Friend the Member for Ux-bridge (Mr. Shersby) made a number of remarks about the Housing Corporation. In general, his words were not so much addressed to me as to the Public Accounts Committee, urging it to look into the matter. It has access to the books of the Housing Corporation, and I am sure that the Chairman of the Public Accounts Committee and others who were present today will have taken note of what my hon. Friend said.
  With regard to the inter-association study, I am advised that this has not turned out to be of such great value as my hon. Friend had imagined. The criteria used by the Housing Corporation in advancing money to the housing associations include all the proper criteria which he mentioned. If there are any matters which disturb him, I suggest that he writes to my hon. Friend the Minister for Housing and Construction and asks him to look into the matter. The Department of the Environment has a responsibility in this respect, of which he will be very conscious.
  My hon. Friend the Member for Horsham and Crawley referred to the longtime losers—as he called them—Rolls-Royce and British Leyland. He commended the decision of the Government to transfer Rolls-Royce from the National Enterprise Board to the Department of Industry, and I am grateful to him for that. He suggested that British Leyland should be similiarly transferred. I am sure that my right hon. Friend the Secre-
  1714
  tary of State for Industry will consider the matter.
  At this point, it is right to pay tribute to what Sir Michael Edwardes has done for British Leyland within the existing framework, which my hon. Friend feels is unsatisfactory.
  The other specific point to which my hon. Friend referred was the Polish shipbuilding order. I agree entirely with him and with my right hon. Friend the Prime Minister that that was a classic case of a waste of public money and a bad bargain for this country.
  My hon. Friend also dealt with the role of the Comptroller and Auditor General. We have put forward our views in the Green Paper. But my hon. Friend was concerned specifically with the vast increase in the numbers employed by health authorities and local authorites, and he suggested that the Comptroller and Auditor General ought to be allowed to look at this area.
  The Comptroller and Auditor General is responsible for the audit of the National Health Service. In recent years, the Public Accounts Committee has examined and reported on the numbers of administrative staff in the NHS. It is a matter for the Public Accounts Committee whether it considers that it is time for a further inquiry into that question.
  The Comptroller and Auditor General has no standing with local authorities. Our constitutional position is such that a system of district audit has grown up separately from the work of the Exchequer and Audit Department. One of the issues in the Green Paper is whether the Comptroller and Auditor General and the Exchequer and Audit Department should be involved or whether it might be better to seek other ways of improving the local government audit on its own merits.
  Mr. Hordern: On the question of the Comptroller and Auditor General's right to oversee various accounts, my hon. Friend is right about the powers concerning local authorities. But one aspect of the local authorities which concerns the Government deeply is the provision of education services. That is a national service and forms the largest part of local authority expenditure. Docs my hon. Friend feel that here is a case for the Comptroller and Auditor General to

  1715
  have particular powers and rights of examination, considering that these are national, not local authority, powers of expenditure?
  Mr. Lawson: I take my hon. Friend's point. No one who has seen how local government numbers have increased over the years could in any way be complacent about the position. I am certainly not complacent. However, my hon. Friend will know, from some of the discussions which have taken place outside the House in the context of the Local Government, Planning and Land (No. 2) Bill which is going through the House at the moment, how delicate and highly charged is the relationship between local and central government. This matter requires a great deal of thought, but there are paragraphs on this subject in the Green Paper. I look forward to hearing what the Public Accounts Committee, of which my hon. Friend is such a distinguished member, recommends in this regard and to hearing its reasons.
  If I am taking time in answering the debate, it is because I wish to respond to the occasion and to the special plea by the right hon. Member for Llanelli that I should reply to every point made in the debate.
  My hon. Friend the Member for Folkestone and Hythe, from his special experience as, I think, the longest serving member of the Public Accounts Committee present, made some wise observations on the way that the PAC should operate. He expressed some of the concern that I have about the dangers of a change in the nature of the Public Accounts Committee. He also had some stern words for the Government. He asked whether Departments had learned the lessons of the costly failures unearthed by the Public Accounts Committee. I hope that they have. I am in no doubt that the situation would be much worse if it were not for the efforts and successes of the Public Accounts Committee.
  I come now to my colleague on the old General Sub-Committee of the Expenditure Committee, the hon. Member for Nottingham, West. He made a number of points. He was concerned about the power of the Treasury over the Comptroller and Auditor General.
  1716
  The Green Paper admits that certain provisions of the Exchequer and Audit Acts, which reflect an outmoded concept of the role of the Treasury, could be removed or recast in any fresh legislation. We shall be happy to see that. However, we argue that, as operated at present, the relevant Treasury powers have had no material impact on the independence of the Comptroller and Auditor General. Incidentally, the Consultative Committee of Accountancy Bodies, an outside impartial witness, when it appeared before the Treasury and Civil Service Committee on 5 March, testified that the Treasury had not used these powers and that the Comptroller and Auditor General had had total independence. I think that is correct.
  The Green Paper also indicates that the Government are ready to consider dispensing with CSD control of the staffing and grading of the Exchequer and Audit Department's staff in favour of control by the House of Commons Commission. I hope that that goes some way towards meeting the points made by the hon. Gentleman on that matter.
  The hon. Gentleman also asked, and intervened a little while ago to remind me that he had asked, about the comptroller function. This has come to be a trivial function in the way that our systems work. I know that it appeals to his tidy legal mind, but the fact that it is a comptroller function means that it is a sort of pre-audit by which the Comptroller and Auditor General examines control over the vires from the Consolidated Fund to the National Loans Fund. It is important, but chiefly in a formal sense. It is largely automatic. That is why it was not mentioned in the Green Paper.
  Mr. English: I am grateful for that startling piece of information. Every textbook on constitutional law points out that the sole safeguard of the House of Commons in its control of the Executive is the Comptroller and Auditor General's certification that money may properly be paid out of the Exchequer account of the Bank of England to Departments of State under the authority of Parliament. This is now described as trivial.
  The point that I was making earlier, when the hon. Gentleman was momentarily out of the Chamber, was that the Comptroller and Auditor General, who has no lawyers to help him to determine

  1717
  whether the expenditure is legal, had to have an Act of Parliament passed to rectify the errors of every Comptroller and Auditor General in allowing money to be paid to the Crown Agents illegally.
  Mr. Lawson: Reality sometimes transcends the descriptions in the textbooks. I am concerned, as the whole House must be, about the dangers of public expenditure getting out of control. There are many reasons why public expenditure can get out of control. However, the one reason why it can get out of control is not the defect in the technical comptroller aspect of the Comptroller and Auditor General's work.
  If the hon. Gentleman has some suggestions to make, we shall be more than happy to receive them. The fact that there is no mention of this issue in the Green Paper does not mean that we shall reject the suggestions that he has to make. I am sure that the Public Accounts Committee, too, would be more than happy to accept his suggestions on this front and weave them into its report on the Green Paper.
  The hon. Gentleman referred to the position of the Northern Ireland Comptroller and Auditor General. The basic reason why he remains separate is a technical one. I am sure that this will appeal to the hon. Gentleman's tidy legal mind. The reason is that the Stormont Parliament has been not abolished but suspended.
  I have already referred to part of the speech of my right hon. Friend the Member for Taunton. He, too, said that he would like to see the Comptroller and Auditor General more independent of the Treasury. I have already referred to that issue in my answer to the remarks made by the hon. Member for Nottingham, West.
  Mr. English: The Minister has not answered the other part of my question about the Comptroller and Auditor General for Northern Ireland. I am aware that he is a separate person and that Stormont has been suspended and not abolished. However, how did he come to be reporting to a Committee of this House?
  Mr. Lawson: There was no other Committee to whom he could report. I thought that was fairly clear. I am glad to say that hon. Members who repre-
  1718
  sent Northern Ireland constituencies seem well content with the arrangement. My hon. Friend the Minister of State, Northern Ireland Office intervened specifically to deal with Northern Ireland matters.
  My right hon. Friend the Member for Taunton spoke about the importance of the merger of the cash limits with the Estimates. This may mean that Supplementary Estimates will take on a new meaning. It is a thoroughly good development, and it is now up to the House to find some means of taking advantage of the opportunity to exercise surveillance over public expenditure in a way that it has not found possible hitherto.
  I have great sympathy with the argument that parliamentary surveillance is inadequate. However, that is a matter not for me but for those who are responsible for the procedures of the House. As the hon. Member for Heywood and Royton implied when he advanced his suggestion of a Grand Committee system, it is a matter that concerns the procedures of the House and one that should be discussed in those channels that are responsible for arranging our procedures.
  My right hon. Friend the Member for Taunton gave us something of a curtain raiser for what I assume he wants his Committee, the Treasury Committee, to do in future. He said that the Public Accounts Committee was in some sense an hors d'oeuvre to a somewhat wider investigation into Government policy and expenditure. I wish him every success in the development and evolution of his wider inquiry.
  The right hon. Member for Llanelli spoke from the Opposition Front Bench. I have already dealt with the issues of Civil Service pay this year, and legislation on the Green Paper. The right hon. Member said that the Treasury should not be suspicious of the Comptroller and Auditor General and the Public Accounts Committee. We are not suspicious of them. I am sure that the right hon. Gentleman must know, as a former Treasury Minister, that we regard the Comptroller and Auditor General and the Public Accounts Committee especially as among the few allies that the Treasury has in the House. We cherish that relationship.
  The right hon. Gentleman said that he would like to see the Comptroller

  1719
  and Auditor General's remit extended to local government. I have already dealt with that issue. He also said—I did not quite understand this—that he would like it extended to cover efficiency and value for money. That is precisely what the Comptroller and Auditor General and the Public Accounts Committee examine now.

  Division No. 279]

  AYES

  [8.35 p.m.

  Barnett, Rt Hon Joel (Heywood)

  Hordern, Peter

  Ross, Stephen (Isle of Wight)

  Bonsor, Sir Nicholas

  Hunt, David (Wirral)

  Shaw, Michael (Scarborough)

  Boscawen, Hon Robert

  Jenkin, Rt Hon Patrick

  Shersby, Michael

  Bottomley, Peter (Woolwich West)

  Joseph, Rt Hon Sir Keith

  Squire, Robin

  Carlisle, Kenneth (Lincoln)

  Kilfedder, James A.

  Stevens, Martin

  Chalker, Mrs. Lynda

  Lawson, Nigel

  Stewart, Rt Hon Donald (W Isles)

  Chapman, Sydney

  Lester, Jim (Beeston)

  Stradling Thomas, J.

  Cope, John

  MacKay, John (Argyll)

  Townsend, Cyril D. (Bexleyheath)

  Costain, A. P.

  Major, John

  Waddington, David

  Davies, Rt Hon Denzil (Llanelli)

  Maude, Rt Hon Angus

  Walker, Bill (Perth & E Perthshire)

  Dean, Paul (North Somerset)

  Moore, John

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

  du Cann, Rt Hon Edward

  Myles, David

  Wheeler, John

  Finsberg, Geoffrey

  Newton, Tony

  Whitney, Raymond

  Fletcher, Alexander (Edinburgh N)

  Page, Rt Hon Sir R. Graham

  Wilkinson, John

  Gow, Ian

  Powell, Rt Hon J. Enoch (S Down)

  Wolfson, Mark

  Griffiths, Peter (Portsmouth N)

  Prior, Rt Hon James

  Grimond, Rt Hon J.

  Pym, Rt Hon Francis

  TELLERS FOR THE AYES:

  Gummer, John Selwyn

  Rees, Peter (Dover and Deal)

  Mr. Spencer Le Marchant and

  Hamilton, W. W. (Central Fife)

  Rhodes James, Robert

  Mr. John MacGregor.

  NOES

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

  Richardson, Jo

  TELLERS FOR THE NOES:

  Ellis, Raymond (NE Derbyshire)

  Soley, Clive

  Mr. Jim Marshall and

  Haynes, Frank

  Stallard, A. W.

  Mr. Andrew F. Bennett.

  Orme, Rt Hon Stanley

  Question accordingly agreed to.
  Resolved,
  That this House takes note of the First, Second, Third, Fourth, Fifth and Sixth Reports, and the First and Second Special Reports from the Committee of Public Accounts in the last Session of Parliament, and of the First, Second. Third and Fourth Reports from the Committtee of Public Accounts in this Session of Parliament, and of the Treasury Minutes, and the Northern Ireland Department of Finance Memorandum on those Reports [Cmnds. 7631, 7788, 7787, 7824 and 7882], and of the Fifth, Sixth, Seventh and Tenth Reports from the Committee of Public Accounts in this Session of Parliament.

  ELECTRICITY SURCHARGE (SCOTTISH ISLANDS)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope]
  8.45 p.m.
  Mr. Donald Stewart: The need for the debate arises from the decision of the North of Scotland
  1720
  We have had a very wide-ranging debate. It has been a very worthwhile debate, as these debates always are. I have done my best to answer all the points that were put to me. If there are any that I have omitted, I apologise to the hon. Members concerned.
  Question put:—
  The House divided: Ayes 52, Noes 7.
  Hydro-Electric Board to increase tariffs in the Scottish Islands by a surchange where the supply is generated by diesel stations. The proposals mean that consumers in these areas have faced an increase in their bills of more than 28 per cent. from 1 April. The rise for the rest of the country is 17·2 per cent. It also means that the tariffs in the islands have risen by more than 37 per cent. in one year.
  When the North of Scotland Hydro-Electric Board was set up, Tom Johnston took great pride in the social clause that was written into the board's constitution. The clause took into account the longstanding deprivation of the Highlands and islands. The electricity board has almost completely ignored that remit. It has taken the line that the social clause became redundant as a result of the setting up of the Highlands and Islands Development Board, although that board states that at no time has it been called on, or offered, to relieve the electricity board of this obligation.
  The board has also failed to carry out the duty laid upon it by section 6 of the

  1721
  Electricity (Scotland) Act 1979, which states:
  "The North Board shall, so far as their powers and duties permit, collaborate in the carrying out of any measures for the economic development and social improvement of the whole or any part of their district."
  In 1965, the electricity consultative council for the North district persuaded the board that island consumers should be treated in the same way as those on the mainland. It is the desertion of that principal that is the issue here.
  There are also certain anomalies that call in question the justice of this additional tariff. There are, for instance, two hydro schemes in Lewis and Harris, and an oil-fired station at Peterhead, so that no area can be classified as totally deisel or totally hydro. It would be interesting to know what adjustments the hydro board intends to make in its accounts in respect of that factor.
  There is another aspect of the board's operations that I challenge. According to The Scotsman of 20 March, the British Aluminium Company has refused to pay a bill due to the board of about £19 million. The aluminium smelter is at Invergordon in the area of the North board, and the North board has been saddled with the cost of repair and meeting lost production from the accident at Hunterston in the area of the South board.
  The surcharge at issue is opposed by bodies such as the Highlands and Islands Development Board, the electricity consultative council for the area, the Highland Area committee of the Scottish Council (Development and Industry), the Crofters Commission and the local authorities. Mr. Ian MacAskill, the secretary of the Highlands and Islands Development Board, said:
  " We would expect that economic development on the islands would lead to a higher demand for electricity. To attempt to contain demand is positively to discriminate against development in these areas ".
  Already several firms in my area such as Alginate Industries, which provides a lot of employment, with three seaweed-processing factories in the Western Isles—many crofters make a reasonable income from cutting seaweed—have suffered from the reduction by the board of a tariff which they previously enjoyed. They are now affected by this new surcharge and are experiencing severe competition from
  1722
  imports. This surcharge may be the straw that breaks the camel's back.
  I have had long experience of the hydro board, in business, in local government and as a Member of Parliament, and the experience has not been happy. I have always found the board to be totally inflexible. As a Member of Parliament, I have written scores of letters to the board on general and specific constituency affairs, and I cannot recall a single occasion on which the board agreed that I had a case and changed its attitude accordingly. I have never experienced that with Government Departments, private firms or any other organisation.
  I draw the attention of the Minister to an allocation of EEC funds to
  " extend electricity supplies in the Western Isles."
  I asked the board to let me know which areas that were still without a supply of electricity would benefit from this grant by an acceleration in the programme. To my astonishment, the board says that this grant will make no difference. Here is an organisation receiving a handout specifically earmarked for the extension of electricity supplies in the Western Isles, and the only result for the isles is an unfair increase in prices.
  Diesel generation is the result of a board decision that was taken when oil was cheap. It is a sick joke to tell the consumers in the area of the right hon. Member for Orkney and Shetland (Mr. Grimond) that oil prices have pushed up their electricity costs when they are up to their necks in oil.
  The hydro board appears to have slept in when it came to considering alternative energy sources—something that it ought to be doing as an energy producing body. Nothing has been done, for instance, to utilise the enormous peat resources of Lewis, although Bord Na Mona, the peat board in Eire, has several peat-fired stations. The current experiments in the Western Isles with wave power are apparently being funded by the Highlands and Island Development Board, without the involvement of the North of Scotland Hydro-Electric Board. The Highlands and Islands Development Board concludes that the Western Isles could be lit by wave energy at a cheaper cost than that of the diesel-fired generators on which they now depend.
  In my view, the hydro board is a callous, tyrannical, stick-in-the-mud body. Its only reaction to the increased oil price is the wooden and unimaginative expedient of slapping on increased tariffs. I ask the Government, on the grounds of fairness, and in the interests of the Islands, to reject this imposition by the board.
  8.54 pm
  Mr. John MacKay: I am very sorry to have to take part in this debate tonight. I do so because my constituents in Tiree and Coll have been affected in exactly the same way as the constituents of the right hon. Member for Western Isles (Mr. Stewart).
  I say that I am sorry because, unlike the right hon. Gentleman, until last month my experiences of the North of Scotland Hydro-Electric Board in my year in this House had been very favourable. The board had been most helpful in a few constituency cases involving electricity problems. It is a great disappointment to me that the board has increased prices in this way.
  The right hon. Gentleman did not mention the time scale within which this was sprung on us. I see from my records that it was in mid-March that we had the first public indication that the board intended to do this, and that the date for its implementation was to be 1 April. The board therefore did not give any time at all for my constituents or those of the right hon. Member for Western Isles and the right hon. Member for Orkney and Shetland (Mr. Grimond) to make a proper protest. It all had to be done in a most hurried way.
  It is worth saying that the electricity consultative council for the North of Scotland board area, which represents, by and large, the consumers most affected, is utterly against this decision by the board. It is unanimous in its objections. I back it in this, and I am prepared to defend that support, even though the majority of my constituents might be asked to pay a little more. I am sure that the consumers on the mainland in the hydro-electric board's area would have been quite prepared to have an extra decimal point inserted in the second place of their unit cost in order to help the people in the more remote islands,
  1724
  who have enough difficulties. I have found that everybody outside the Islands has great sympathy with the islanders. For example, on Tiree, which has a population of 800, the one and only baker calculates that he will face a surcharge of £160. That could easily make the difference between his staying and going.
  What annoys me—I am sure that it annoys my hon. Friend the Under-Secretary—is that the Government have made some sensible and reasonable decisions about the Islands in the last two or three months. They gave an extra £1 million to the airports authority, putting up the grant to £2·5 million. They gave Caledonian MacBrayne an extra £1·3 million and produced a discussion document on the road equivalent tariff. Then, just to hit us all over the head, the board took this action, which runs counter to the aims in the charter under which it was established, which are to generate and distribute electricity in the Highlands area and have some regard to the social consequences.
  I know that Government policy is that nationalised industries should run their own affairs, but, when a nationalised industry makes a mistake such as this, the Government ought perhaps at least to tell it to think again and consider the alternatives.
  My constituents on Tiree, led by the community council, are threatening, with almost universal support on the island, to deduct the surcharge from their July bills and to pay only a charge based on the mainland tariff. I have absolute sympathy with them in this regard.
  I hope that my hon. Friend the Under-Secretary will indicate ways in which the board will consider alternative courses of action. The right hon. Member for Western Isles was quite right. This is the easy way out for the board. It will not examine other ways of saving money or of generating power, such as by harnessing the wind. The one resource that Tiree has in abundance, like all the Western Isles, is wind, which goes whistling past everyone's ears. An experiment could be conducted, and people would put up with some inconvenience if they could see some long-term benefit for themselves.
  I ask my hon. Friend the Under-Secretary to have a discussion with the

  1725
  board and to put to it the point that I, as a mainland consumer who is probably consuming rather cheap hydro-generated electricity, may be looking, as some of my friends have suggested, for a reduction in my charges if the hydro board is to be true to its principles. Most of the electricity in my part of Argyll is hydro-generated. Perhaps we should get it more cheaply than anyone else. The board has opened a Pandora's box which could prove embarrassing for it in the future.
  I speak for my constituents when I say that the people in the North of Scotland would far rather carry a tiny bit more of the burden if it meant helping the people of the islands and avoiding their carrying the extra charge that the board intends to place upon them.
  8.58 pm
  Mr. J. Grimond: I begin by emphasising what has already been pointed out by the right hon. Member for Western Isles (Mr. Stewart) and the hon. Member for Argyll (Mr. MacKay). namely, that our constituents in the islands have been singled out for an increase in electricity charges of 37 per cent. this year. They are paying up to 28 per cent. extra, where others are paying 17 per cent. extra. That is far outside Government policy.
  The Government are on record as saying that they want to help the islands, and I agree with the hon. Member for Argyll that in certain directions they have done so. I support the right hon. Member for Western Isles when he says that everybody who is concerned with the welfare of the islands has protested against the charge. This includes the consumer council, the consultative council, the Highlands and Islands Development Board and the Crofters Commission. If the imposition were not made, the impact on electricity bills in the rest of the area would be very small. However, if it is made, the increase in the islands will be devastating to individuals and to industry.
  Why does the hydro board complain of more demand? Why does an increase in demand apparently put it into difficulty? I fail to understand how it has made the losses that it claims. If it has, the Government should look into the way that it is run. Most industries—for instance, oil—would rejoice at an increase in demand.
  1726
  That brings me to the subject of oil. In many parts of the country, it is believed that oil is of enormous benefit to the islands. I have pointed out again and again in this House that that is not so. It is of benefit to Britain, to those working on the oil construction side and to the oil companies. To the crofter, fisherman and ordinary person in Shetland, it means higher prices, high rates and disruption of local industries.
  We are deeply concerned that, when the oil construction period is over and eventually oil runs out, we shall be left with no fishing industry, crofting in a poor state and no industries to take up the slack. In four or five years, we shall face a serious problem of depopulation. I agree with everything that the right hon. Member for Western Isles says about the effects of the increase. His example is all too true. All these little industries will be put out of business if it goes on.
  As has also been said, the hydro board chose to make electricity by diesel. I impress on the Government that in the days of the Orkney county council the convener went again and again to the public authorities and beseeched them to get in touch with the oil companies in order to make use of some of the flared-off gas. They would not do so, and nor would they allow anyone else to make electricity on the islands. They sat on their monopolies and insisted on diesel generation. As far as I know, they did not even make use of the huge resources afforded by the oil companies in Shetland. That is an abuse of a monopoly, which should not be tolerated.
  The right hon. Gentleman drew attention to section 6 of the Electricity (Scotland) Act 1979. I draw the Minister's attention to section 4, which reads:
  " In exercising and performing their functions the Boards "—
  that is the North and the South boards—
  " shall, subject to and in accordance with any directions given by the Secretary of State under section 33—(a) promote the use of all economical methods of generating, transmitting and distributing electricity ".
  That is a duty laid upon them, but, apart from a very small experiment years ago, they have done absolutely nothing about it. They have carried out no experiments with wind or waves. They have not approached the oil companies to see

  1727
  whether they could come in on their generation or make use of the gas.
  The section continues:
  " (b) secure so far as practicable, the development, extension to rural areas and cheapening of supplies of electricity "—
  the Board's action contradicts that; it is hardly cheapening supplies of electricity—
  " (c) avoid undue preference in the provision of such supplies ".
  When the South board was arguing in Orkney about uranium, it laid stress on the fact that it was its statutory duty not to discriminate between different parts of its area. That is exactly what the North board is doing, to the detriment of the poorer parts of its area. It is doing it in areas that particularly need heat. We have long winters and an extremely cold and damp climate. Local authorities and the welfare services generally have been putting up houses heated entirely by electricity. Many people in my constituency will either have to refuse to pay their bills or suffer from cold.
  I do not believe that it is the business of the hydro board to rely on the local authorities or the social services to make good its own inaction. It is the board's fault, and the blame lies fairly and squarely on it. Therefore, like others who have spoken in this debate, I ask the Government to exercise their powers under the Act and revoke this charge. It is contrary to Government policy; it is contrary to the 1979 Act; and it is an extremely serious blow to the Islands. Far from it being possible to make good the effects of this out of oil revenues, it will add to the high rates and all sorts of other charges that the Islands will suffer as a result of increased oil prices. The surcharge is to be levied to save the population of the rest of that area from an increase of about 2p a head on their bills. The charge is indefensible, and I ask the Government to use their powers to negative it.
  9.6 pm
  The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): The right hon. Member for Western Isles (Mr. Stewart) has taken the opportunity of this Adjournment debate to raise a matter which is of great concern to his constituents and to electricity consumers on the islands of Orkney, Shetland, Coll and Tiree, where, as in the Western Isles, elec-
  1728
  tricity supply is provided mainly from diesel generating stations.
  I have listened most carefully to the comments that the right hon. Member for Western Isles, the right hon. Member for Orkney and Shetland (Mr. Grimond) and my hon. Friend the Member for Argyll (Mr. MacKay) have made in pressing the case for some action under the statute. They have all pressed their points most fairly.
  The decision by the North of Scotland Hydro-Electric Board to reintroduce a diesel surcharge has provoked, as we are aware, a very strong reaction from representatives of the communities affected. It is, therefore, appropriate that the matter should be aired in this House, although, for reasons which I shall explain later, I am not at present in a position to say a great deal in reply to the points which have been raised.
  It might be helpful if I began by describing the background, as I understand it, to the hydro board's decision. The first notice of charges published by the board after its creation in 1943 made provision for a separate tariff to be applied to the diesel areas to reflect the higher costs of generation on the islands, and this arrangement continued until 1965. By that time, the introduction of larger and more efficient diesel generators had led to the elimination of much of the disparity between island and mainland generating costs. The board therefore decided in 1965 to introduce uniform tariffs to apply throughout the whole of its district.
  Following the oil crisis in 1973, diesel prices rose steeply and the board began to incur losses on its diesel generation. Those losses have increased significantly in recent years as the price of diesel fuel has continued to rise. In an effort to contain the problem, the board first introduced in 1975 a fuel clause surcharge on all electricity users in the diesel areas with an annual consumption in execess of 1 million units and then reduced the level at which this surcharge came into operation to half a million units in September 1979. These measures were not, however, sufficient to eliminate the losses on diesel generation. The board has estimated that these amounted in 1979–80 to £5 million and could rise to some £8 million in the current financial year.

  1729
  Against the background of losses of this order, the board concluded that it should reintroduce a differential tariff for the diesel areas. It therefore announced on 14 March its intention to apply from 1 April a surcharge of 0·3p per unit to all the diesel area unit rates, with the exception of the charges relating to consumption in excess of half a million units. Thus charges to consumers in the diesel areas have on average been increased from 1 April by some 28 per cent., whereas mainland consumers in the hydro board's district have had their charges increased;on average by only 17·2 per cent. I apologise for saying " only " because 17·2 per cent. is a sizeable increase. The board estimates that the surcharge will enable it to recover only about one-tenth of the expected diesel losses in the current financial year. One of the objects of the diesel surcharge has been presented by the hydro board as being to conserve a scarce and expensive fuel. Starting this month, the board is to mount a campaign to encourage energy conservation in the diesel areas in an attempt to hold back the growth of demand for electricity which in recent years has been very much higher than on the mainland.
  The right hon. Member for Western Isles suggested that this was interfering with natural economic growth of activity on the islands. With respect, I think that, allowing for the natural increase and, hopefully, the natural expansion of economic activities, there was always a case—bearing in mind the cost of energy today—for carrying out conservation policies to the full. That, I think, is what the board has in mind.
  Mr. Grimond: But does not the Under-Secretary remember that the board carried on an advertising campaign to encourage people to use electricity when gas was closed down in Orkney? A great campaign was mounted saying how splendid electricity was. We were encouraged to put in more and more electrical apparatus. The board now has the effrontery to say that that was all wrong and that electricity must now be conserved by doubling the price.
  Mr. Fletcher: I cannot argue with the right hon. Gentleman's logic because I agree with him. One of the aspects of State-owned monopolies which fascinate
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  me is that, having no competition, they decide to compete with companies in a related field which are not making quite the same product.
  I have never understood the urge of the nationalised industries to sell their products in the way suggested by the right hon. Gentleman. Perhaps it is because they feel they would be deprived if they were not employing the same PR and advertising consultants as other companies. I hope that the board will pay attention to the right hon. Gentleman's remarks, because he is perfectly right.
  There has, however, been this attempt at energy conservation because electricity usage in the islands has been greater than that on the mainland. Perhaps that is the point that the board has been trying to-put across. The board is also investigating means of reducing its dependence on diesel generation, including the possible use of wind power and the sale of waste heat from its power stations.
  My hon. Friend the Member for Argyll raised the question of wind power, as did the right hon. Gentleman. The hydro board has indicated that it intends to undertake experiments in its diesel areas to establish whether the costs of generation might be reduced by the introduction of a measure of wind generation. That is part of the board's programme.
  As the House will be aware, the board's decision to reintroduce a diesel surcharge has given rise to a great deal of criticism and concern about the adverse effects which this additional imposition could have on the island communities. Representations have been received from a large number of sources seeking action by the Government to prevent the board from implementing its decision.
  I should make it clear that the determination of tariffs is a matter for the electricity boards, and my right hon. Friend's powers to intervene in this area are strictly limited. If, however, on consideration of representations from an electricity consultative council, it appears to him that there is a defect in an electricity board's general plans and arrangements for the exercise and performance of its statutory functions, he may give a direction to the board to remedy that defect.
  The electricity consultative council for the North of Scotland district has

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  submitted formal representations to my right hon. Friend to the effect that the diesel surcharge constitutes such a defect. In putting forward these representations, the council has indicated that it has the support of all of its area committees, including those which represent the interests of consumers in the mainland areas of the hydro board's district.
  The statutory provisions relating to representations of this nature, which are contained in schedule 7 of the Electricity (Scotland) Act 1979, require my right hon. Friend to consult the electricity board and the consultative council before forming a view whether a defect has been disclosed which would make it appropriate for him to give a direction to the board. The consultations are in hand and are being pursued urgently. My right hon. Friend's decision will be announced as soon as possible. For reasons which will be understood, I am not able to go any further in this debate on that important aspect.
  The right hon. Member for Orkney and Shetland pursued the question of undue discrimination, which was also mentioned by my hon. Friend the Member for Argyll. The consultative council referred
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  in its representations to the possibility that, in introducing the diesel surcharge, the board would be exercising undue discrimination. That would be contrary to the duty imposed on the board by section 22(5) of the Electricity (Scotland) Act 1979. I am unable to comment on that at present because of the legal aspects of the matter.
  I appreciate the anxiety of the right hon. Member for Orkney and Shetland and that of my hon. Friend for Argyll, who paid tribute to the Government's policies generally towards the islands communities and to the help that has been given in a number of places in the last year. I appreciate the concern expressed by the right hon. Member for Western Isles on behalf of his constituents. However, we must await the outcome of my right hon. Friend's consideration of representations by the consultative council.
  I hope that the matter will be concluded in the shortest possible time so that the right hon. Gentleman and others who are deeply concerned will be able to assess whatever action my right hon. Friend decides to take.
  Question put and agreed to.
  Adjourned accordingly at seventeen minutes past Nine o'clock.