Commons Sitting of 14 December 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    DERBYSHIRE BILL [Lords]
    Read the Third time and passed, with amendments.

HUMBERSIDE BILL
Order for Third Reading read.
To be read the Third time tomorrow.

Oral Answers to Questions
  TRADE

    Road Vehicles (Imports-Exports)
    Mr. Edwin Wainwrightasked the Secretary of State for Trade what were the values, in £ sterling, of imports and exports of road vehicles for each of the past five years.
    The Secretary of State for Trade (Mr. John Biffen): With permission, I will publish the information in the Official Report. At current prices, exports of road vehicles increased by 33 per cent. between 1976 and 1980 and imports by 134 per cent.
    Mr. Wainwright: Are there not tremendous opportunities for our vehicle industries if the Government will
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    only change their policies to give much greater help to exports? When will the Government take action to help our exports surpass our imports?
    Mr. Biffen: The hon. Gentleman will be delighted to know that for the four months of the current year for which figures can be identified—January, February, September and October—we are showing a £13 million surplus in the business.
    Mr. Geoffrey Robinson: Is not the situation deteriorating terrifyingly? Will the right hon. Gentleman confirm that in the last year for which figures are available our deficit on visible trade with the European Community was £2 billion, of which £1·3 billion was accounted for by our deficit on motor vehicles? With his long-standing and reasoned opposition to the Common Market, will the right hon. Gentleman take action over that unacceptable state of affairs?
    Mr. Biffen: The figures that the hon. Gentleman quotes are broadly true, but they could just as well reflect on the fortunes of our abilities in the motor trade as on our membership of the Community.
    Following is the information:

    United Kingdom Trade in Road Vehicles, 1976–80

    £ million

    Imports cif

    Exports fob

    1976

    1,431

    2,376

    1977

    2,134

    2,872

    1978

    2,797

    3,070

    1979

    3,943

    3,148

    1980

    3,348

    3,156

    Source: Overseas Trade Statistics of the United Kingdom, sac (R2) Division 78 and equivalent coverage under SITC (R1)).

    Channel Tunnel
    Mr. Dubsasked the Secretary of State for Trade what is his assessment of the likely reduction in demand for capacity at airports in the South-East as a consequence of the diversion of traffic through a Channel tunnel.
    The Under-Secretary of State for Trade (Mr. Iain Sproat): This has been considered by the air traffic

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    forecasting working party, which states in its report that the most modest tunnel schemes are expected to divert well below a year's growth of air traffic. The promoters of one of the more ambitious schemes claim that as many as 3·9 million passengers a year could be diverted from air routes by the end of the century, but even then the effect on South-East air traffic would be relatively small.
    Mr. Dubs: Is not the demand for airport and runway capacity more a function of the number of flights than of the number of passengers? As the Channel tunnel is likely to divert traffic from short-haul flights, will the hon. Gentleman reconsider his answer, as the Channel tunnel might make some planned expansion in airport capacity unnecessary?
    Mr. Sproat: My answer to the hon. Gentleman's first question is "No". Demand depends on flights and passengers. There is no point in running flights if there are no passengers on them.
    The fixed Channel link would probably draw some passengers away from the regional as well as the London airports, but the lead times for construction means that it is unlikely to have a significant impact during this decade. On the estimates provided by the promoters, the number of passengers diverted from air travel by the end of the century is likely to be very small in comparison with forecast air traffic demand.
    Mr. Teddy Taylor: Bearing in mind the importance and potential of Southend airport, will the Government maintain the principle of fair competition and not pour funds into the Channel tunnel project, when it may not be needed?
    Mr. Sproat: I and all my colleagues are acutely aware of the importance of Southend airport, but my hon. Friend should speak to my right hon. Friend the Secretary of State for Transport about the Channel tunnel.
    Mr. Ginsburg: In the light of that encouraging information, will the Minister tell the Secretary of State that, in the present state of the economy, the need to make progress in constructing the Channel tunnel is urgent, as, if it is not built soon, it never will be?
    Mr. Sproat: I shall ensure that the hon. Gentleman's remarks are drawn to the attention of my right hon. Friend the Secretary of State.

    Consultative Council on Local Government Finance
    Mr. John Fraserasked the Secretary of State for Trade if he attends meetings of the Local Government Consultative Council.
    The Under-Secretary of State for Trade (Mr. Reginald Eyre): When necessary, I represent my right hon. Friend at meetings of the Consultative Council on Local Government Finance.
    Mr. Fraser: In which case, I sympathise with the hon. Gentleman. Will the amount of money that is likely to be spent next year by local authorities on consumer protection be more or less than, or about the same as it is this year?
    Mr. Eyre: Expenditure by local authorities on consumer protection is estimated at £47 million for 1982–83, and that estimate has been agreed with the local authority associations concerned.
    Mr. Fraser: Is the figure for this year up, down or the same?
    Mr. Eyre: It is up.

    British Airports Authority
    Mr. Robert Atkinsasked the Secretary of State for Trade whether he expects to bring forward proposals to privatise the British Airports Authority.
    Mr. Sproat: I have no plans to do so at present.
    Mr. Atkins: Is my hon. Friend aware of the view held by many Conservative Members, that early privatisation of the British Airports Authority will be in the interest of airline operators, airport operators and, above all, the personnel, who could buy shares if such privatisation were to go through? Does he recognise that implicit in that demand is no criticism of the general management of the British Airports Authority—indeed, quite the reverse—but that urgent action in this sphere would be greatly appreciated?
    Mr. Sproat: I am glad that my hon. Friend made those remarks about the management of the British Airports Authority, with which remarks I completely agree. I am aware of the strong feeling among certain of my hon. Friends, and I draw attention to the remarks of my right hon. Friend the Secretary of State in c. 42 of Hansard of 16 November, which says all that needs to be said at present.
    Mr. Jay: Have the Government any plans for privatising the Palace of Westminster?
    Mr. Sproat: If they had, it would not arise on this question, and if it did, it would not be me who would answer.
    Mr. Anthony Grant: Is my hon. Friend aware that there is great scope for the use of private contract services in many of the activities undertaken by the British Airports Authority? Will he consider issuing a circular—as my hon. Friend the Minister for Health has done to health authorities—urging the use of private enterprise wherever possible?
    Mr. Sproat: The British Airports Authority already uses many private enterprise companies within the airports and draws substantial profits and benefits from the duty-free franchise. I shall ensure that its attention is drawn towards examining what more can be done in that regard.

    Industrial Goods (European Free Trade Area)
    Sir Anthony Meyerasked the Secretary of State for Trade if he has discussed with his European Economic Community counterparts the possibility of a free trade area for industrial goods in Europe.
    Mr. Eyre: The Community's free trade agreements with the EFTA countries already extend to nearly all the rest of Western Europe all the principal benefits of industrial free trade available within the Community itself. There are also preferential trade agreements with nonmember Mediterranean States. Greece will be fully integrated into the Community customs union in 1986, and negotiations for Portuguese and Spanish membership of the Community are in progress.
    Sir Anthony Meyer: I am grateful to my hon. Friend for that full reply. Does he accept that the idea of a free

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    trade area between this country and the remainder of the Community that excluded trade in agricultural products would be a non-starter? Does he further accept that even if such a project were available it would do nothing to solve the problem of British failure to compete in the industrial markets of the world?
    Mr. Eyre: I have noted my hon. Friend's judgment with regard to his first point, but I emphasise to him that in 1981 there is evidence of our increasing competitiveness in the export of industrial goods.
    Mr. Geoffrey Robinson: Does the Minister agree that the remarks of the hon. Member for Hint, West (Sir A. Meyer) were utter nonsense? Does he further agree that in his initiative with our partners in the EEC he should be working either for the abolition of the CAP, or for its combination with a common industrial policy, which would have the same aims for the weaker industries as the CAP has for the weaker agricultural countries? Will he take that initiative?
    Mr. Eyre: I have noted the hon. Gentleman's points. The responsibility for those areas lies mainly with my right hon. Friend the Minister of Agriculture, Fisheries and Food and with my right hon. and learned Friend the Chancellor of the Exchequer.

    West Germany (Trade Deficit)
    Mr. Teddy Taylorasked the Secretary of State for Trade if he will take steps to discuss with the Government of West Germany the deficit in manufactured trade with that country of over £2,000 million in 1980 with a view to improving the balance of trade.
    Mr. Biffen: No, Sir. With Western European countries our trade in manufactures largely reflects competitive differences.
    Mr. Taylor: Since the Foreign Secretary has already stated that our deficit with Japan of about £1 billion last year is costing this country tens of thousands of jobs, should not the Government consider seriously the horrendous £2 billion deficit with West Germany—the greatest deficit with any country? Will they investigate particularly whether any of that deficit stems not from competitiveness, but from non-tariff discrimination?
    Mr. Biffen: The two situations are simply not analogous. Japan has a well-established resistance to taking imports, as a result of which only 3 per cent. of its economy is accounted for by manufactured imports, whereas West Germany has a more open economy, taking over four times that percentage. That is an indication that we are in a free trade position where it is up to our manufacturers to do as well as they can.
    Mr. J. Enoch Powell: Does not that deficit show how wide of the mark was the hon. Member for Hint, West (Sir A. Meyer) in his intervention?
    Mr. Biffen: I am not sure upon what nuance the right hon. Gentleman is seeking to alight, but I am certain that my hon. Friend the Member for Flint, West (Sir A. Meyer) is right in saying that our trading role in Western Europe will be largely a factor of our competitiveness.
    Mr. Hoyle: Does the right hon. Gentleman agree that, in line with his remarks, the EEC has been a disaster for this country? Does he further agree that now is the time
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    to introduce import controls on exports of motor vehicles, electronics, and so on, particularly from West Germany? Would that not be of great benefit to British industry?
    Mr. Biffen: I am sure that the experiences of the EEC are a disappointment for those who had euphoric expectations. When we come to apply descriptions the word "disaster" will relate to those who seek to introduce trade controls and import restrictions.
    Mr. Ian Lloyd: Will not that deficit figure and others of an equally depressing character disappear rapidly when the term "strike command" becomes associated once again with the Royal Air Force rather than the Transport and General Workers Union?
    Mr. Biffen: My hon. Friend makes a pertinent point.

    World Trade
    Mr. Dykesasked the Secretary of State for Trade whether he anticipates any improvement in world trade by volume in 1982; and what prospects he sees for improving the United Kingdom's share therein.
    Mr. Eyre: World trade in manufactures seems likely to grow rather faster next year than in 1981. Whether we shall raise our share will depend on our ability as a nation to sustain and build on this year's success in reducing inflation and increasing productivity.
    Mr. Dykes: Will that stimulate the reaction of Western Governments or can it all depend on the hidden hand?
    Mr. Eyre: I hesitate to try to define exactly what my hon. Friend has in mind, but I believe that our future performance will be greatly affected by our efforts to return to being fully competitive in world trade.
    Mr. John Smith: Will the Minister explain what possible logic there is for a Government who profess to be keen to stimulate our exports cutting back drastically their assistance to the British Overseas Trade Board and to exporters trying to obtain markets abroad?
    Mr. Eyre: The right hon. Member is wrong in his assessment. It is necessary for all Departments of Government, in these times of economic restraint, to accept that resources available to them may be reduced. Nevertheless, it requires them to make the best possible use of those resources. With regard to the British Overseas Trade Board, there were areas where expenditure was not justified. We have sought to concentrate the resource s and to use them most beneficially in developing overseas trade.
    Mr. Eggar: Has not one of the most notable achievements of British industry in the past two years been the high level of exports made as against the expectations of, amongst others, the Treasury?
    Mr. Eyre: My hon. Friend is right, and our exporters deserve congratulations for doing distinctly better than was expected last year by the extra successes that they have registered.
    Mr. Ioan Evans: The Minister talks repeatedly about being competitive. How does he explain that countries in Europe, such as West Germany with a Socialist Government, are far more competitive than we are with a Tory Government?
    Mr. Eyre: If the hon Gentleman studied the policies followed in West Germany he would realise how

    7
    unsuitable his comments were. Our greatest weakness has been our loss of 50 per cent. in competitiveness in the period between 1975 and 1980. During 1981 we recovered that loss of competitiveness to the extent of 10 per cent. But we have to go on and be entirely successful in being competitive in world trade terms.

    Multi-Fibre Arrangement
    Mr. Strawasked the Secretary of State for Trade if he will make a statement on progress on the renegotiation of the multi-fibre arrangement.
    Mr. Meacherasked the Secretary of State for Trade if he will make a statement on the latest progress towards renegotiation of the multi-fibre arrangement.
    Mr. Biffen: As my right hon. Friend the Lord Privy Seal reported on 10 December, the Council of Ministers met on 8 December to consider further arrangements covering low-cost textiles and clothing imports. It resolved a number of points outstanding from the November Council. These decisions will enable the Commission to continue its full participation in the negotiations in Geneva on multi-fibre arrangement renewal, and also to open negotiations on future arrangements with the preferential suppliers.
    Negotiations in Geneva are continuing.
    Mr. Straw: Is the Secretary of State aware of the very grave anxiety and concern on both sides of the House and on both sides of industry about the lack of information on the decisions reached in the Council of Ministers in Brussels? Is the right hon. Gentleman aware, further, that there are fears that the quota base level may be set at the level of 1982 quotas, with a foreseen loss of 30,000 jobs if that happens, rather than 1980 actual levels of imports? Will the right hon. Gentleman now say what base level—is it 1980 quotas, 1982 foreseen quotas or somewhere in between—the Council of Ministers has decided to adopt as its negotiating plank in Geneva?
    Mr. Biffen: The hon. Gentleman will be aware that it has always been the practice not to reveal the detailed negotiating mandate that is in the hands of the Commission.
    As for the issue of 1980 actuals or quotas being used as the basis for multi-fibre arrangements No. 3, the Community is operating upon 1980 quotas with the use of a surge mechanism to moderate any take-up in the under-used quotas.
    Mr. Meacher: Is the right hon. Gentleman aware that it is both undesirable and dangerous to base the anti-surge mechanism on actual import levels in 1982, because it gives every incentive to supplying countries overseas to maximise their exports to us next year by every possible means, and because any restocking then will benefit them rather than domestic suppliers? Will not the anti-surge mechanism be ineffective if quotas currently under-utilised are filled by 1982?
    Mr. Biffen: The Commission has been charged to interpret and table the anti-surge proposals specifically to try to mitigate the differences which the hon. Gentleman has understandably identified.
    Mr. McQuarrie: When my right hon. Friend continues the discussions on the multi-fibre arrangement, will he ensure that an import control clause is incorporated
    8
    in the agreement to prevent unfair competition from foreign imports, which have affected British manufacturers seriously over the last few years and continue to do so?
    Mr. Biffen: Clearly, such action would have to come within Community competence, but I should like to consider what my hon. Friend has suggested.
    Mr. Woolmer: Will the Secretary of State say again whether agreement was reached at last week's meetings on resolving the various issues before the negotiators? Is he aware that there is a widespread feeling in the House and outside it that no agreement has been reached on growth rates, quotas, and the various ways of avoiding problems?
    Will the right hon. Gentleman say again whether the base level is, as he said, the 1980 quotas or whether the Government have accepted, against our advice, that the 1982 quotas should be used as the base level?
    Mr. Biffen: I have nothing to add to my first reply.
    I congratulate the hon. Member for Batley and Morley (Mr. Woolmer) on his first appearance at the Dispatch Box, speaking from the Front Bench on behalf of the Opposition. I can tell him that the negotiations at Geneva are proceeding, and that today could be one of the most decisive days. There is little that I can tell the House, other than to await the outcome, especially of today's discussions.
    Mr. Woolmer: I thank the right hon. Gentleman for his kind remarks, but I have to tell him that his answers are unsatisfactory. Will he say again whether agreement was reached at the Council of Ministers last week? If it was not reached, the right hon. Gentleman is in serious danger of grossly misleading the House.
    Mr. Freud: The Minister should congratulate the hon. Gentleman on a second occasion.
    Mr. Biffen: I hope that the hon. Member for Batley and Morley will grow more charitable with experience in his new post. I believe that agreement was not reached. But the negotiations continue. I must remind the House that these negotiations are being undertaken on behalf of the European Community nations by the European Commission. It is one of the inevitable consequences that I cannot answer blandly for what is happening minute by minute and hour by hour in the negotiations, given the relationships that we have in the Community.
    Mr. Bowen Wells: Has my right hon. Friend's Department made any progress on defining what is meant by a "recession clause" in the MFA, and is my right hon. Friend using that definition in the negotiations?
    Mr. Biffen: The Commission has the securing of a recession clause as one of its negotiating objectives. Again, it would not be consistent with precedent—and I do not intend to break precedent—to reveal the circumstances that the Commission counts as constituting a recession clause.

    Japanese Light Vehicles
    Mr. Marlowasked the Secretary of State for Trade what is the level of penetration of the United Kingdom market by Japanese light vehicles.
    Mr. Biffen: Nineteen per cent. of the light commercial vehicles registered in the United Kingdom in the first 11 months of this year were manufactured in Japan.
    Mr. Marlow: Is such a high level in the interests of the United Kingdom economy as a whole? If it is not, what action will my right hon. Friend take, bearing in mind the action that the Japanese take against United Kingdom exports, especially of footwear?
    Mr. Biffen: The Society of Motor Manufacturers and Traders, which is responsible for the voluntary restraint arrangement that we have with Japan on these matters, has itself been involved in discussions with its opposite number in Japan. It has stated that the understanding that has resulted from its recent meeting should mean a sharp decrease in the Japanese share of the light commercial vehicle market.
    Mr. Hoyle: Does not the right hon. Gentleman agree that we have now reached the stage with the Japanese, with all the hidden trade barriers that there are to exports from this or any other country to Japan, where we should tell the Japanese that we shall import one Japanese vehicle for every vehicle that they import from Britain?
    Mr. Biffen: I cannot think of a narrower, more unilateral approach to trade. The fact that the hon. Gentleman represents the soft Left reminds us how terribly difficult things must have become.
    Mr. Shersby: Will my right hon. Friend remind the House of the precise nature of the restraint agreement with Japan about the level of British imports of light vehicles?
    Mr. Biffen: It is an arrangement conducted between the SMMT and JAMA, its Japanese equivalent.
    Mr. Straw: Is the right hon. Gentleman aware that the market of BTB Engineering Ltd., a firm in my constituency that manufactures light vans, has been adversely affected by the continuing and rising imports of light vans from Japan? What positive hope can he offer to the employees of that firm and many others in the country that make light vans? When will we get from the Government the same tough approach to imports from Japan as has been shown by both Right and Left Governments in France?
    Mr. Biffen: I cannot give the specific message to the hon. Gentleman's constituents that he seeks, but I can tell him that the SMMT has said that it is
    "clearly satisfied with the outcome"
    of the latest agreement. If one is obliged to have such trade restraints it is far better done in that way than by arbitrary Government quotas and tariffs.
    Mr. Hal Miller: Does my right hon. Friend agree that it is better for such agreements to be left to the industries to negotiate than for Governments to interfere, even if, as is the case with light commercial vehicles, one of our major manufacturers is a significant importer of Japanese products?
    Mr. Biffen: I am reluctant to give an off-the-cuff reply to the main part of my hon. Friend's question. I am not a great enthusiast of government by trade association, but any arrangement that involved the Government taking unilateral action could easily provoke counter-action under article 19 of the GATT, with serious and harmful consequences for our national economy. That is something that we have experienced.
    Mr. John Smith: With regard to the right hon. Gentleman's remarks to my hon. Friend the Member for
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    Warrington (Mr. Hoyle), is it not crystal clear that the Japanese attitude to external trade is somewhat unilateral in character, in the sense that they have a low level of manufactured imports? Is it not also clear that, because our level of exports to Japan is so pitifully low, the scope for retaliation is necessarily limited? Will the right hon. Gentleman confirm that it is necessary continuously and relentlessly to put the maximum amount of Government pressure on the Japanese to get them to alter their attitude to world trade?
    Mr. Biffen: As a distinguished Scotsman, the right hon. Gentleman should not be too flippant about the ability of the Japanese to take harmful trade retaliation measures against us. The Scotch whisky industry is particularly well established in that market. Indeed, Scotch whisky is our largest single selling item in Japan. I believe that the most helpful way forward is to open up the Japanese market to our exports and for us to welcome Japanese investment in this country.
    Mr. Hardy: The Secretary of State may be right to reject the idea of a narrow. unilateralist approach to trade, and he frequently shelters behind the Commission's responsibility, but will he confirm that we are the most open market in the Community and that the French, Germans, Italians and everyone else in the Community seem much more capable of reducing Japanese imports, without facing any risk of retaliation?
    Mr. Biffen: It is a matter for genuine debate whether the United Kingdom is a more open market to the Japanese than is Germany.

    USSR (United Kingdom Exports)
    Mr. Chapmanasked the Secretary of State for Trade what recent initiatives he has taken to encourage exports to the Union of Soviet Socialist Republics.
    The Minister for Consumer Affairs (Mrs. Sally Oppenheim): A number of initiatives discussed at the May 1981 meeting of the British-Soviet Joint Commission are being pursued, including co-operation in the energy and automotive sectors.
    Mr. Chapman: I commend those initiatives. Will my right hon. Friend confirm that trade between the two countries has consistently been at an imbalance of 2:1 in Russia's favour for about 20 years? A significant reason is that it is in our interests to re-export some Russian imports, but does my right hon. Friend agree that the time has come when we can say to the Russian Government, with legitimate concern, that if they do not take more of our exports, particularly machinery and goods. we have the right to review imports of what we regard as inessential goods, including, though not exclusively, vodka and caviar?
    Mr. Robert Atkins: And Christmas cards.
    Mrs. Oppenheim: Leaving out the movement of diamonds, which benefits British firms, the trade balance is not too adverse to us. For example, we have a considerable surplus of trade in manufactured products. We are not significantly dependent on Soviet imports, except diamonds and precious stones. Our imports from the Soviet Union largely comprise raw materials, such as oil products and timber, and any replacement of those supplies would certainly take place at a higher cost to the economy and the consumer.
    Mr. Wilkinson: Can my right hon. Friend assure the House that the Government are being exceedingly cautious about trade with the Soviet Union at present, particularly on high-technology items that could improve the Soviet Union's military potential? Can she also confirm that if the Soviet Union sent even one man across the Polish border trade with the Soviet Union would be terminated?
    Mrs. Oppenheim: We trust that Poland will be left to settle its own affairs without interference from any quarter. I cannot speculate on how the United Kingdom and other Western countries would react if the Soviet Union intervened. We very much hope that it will not do so. It is clear that Soviet intervention would have far-reaching consequences for our relations in every sphere. In line with the policy agreed after the invasion of Afghanistan, the United Kingdom is not processing export licence cases that would require the unanimous approval of our COCOM partners. There are limited exemptions to that policy; for example, equipment intended for medical use only.
    Mr. John Fraser: Apart from what the right hon. Lady has already said, does any aspect of Russian foreign policy or Russia's denial of civil rights have any effect on trade policy?
    Mrs. Oppenheim: The hon. Gentleman will be aware that the Government have made abundantly clear their view about the Soviet Union's appalling—I repeat appalling—human rights record, but I believe that trade that is genuinely to our mutual advantage should continue.
    Mr. Emery: Can my right hon. Friend assure the House that the Government will not provide export credits to the Soviet Union for vast sums at massively subsidised rates, as did the previous Government, much to the detriment of the United Kingdom?
    Mrs. Oppenheim: I can give my hon. Friend that assurance. We offer credit to the Soviet Union on the same terms as those offered by other OECD countries. There would be no sense in offering either worse or better terms or discriminating in favour of the Soviet Union. The agreement that ended in February 1980 is not to be renewed.

    European Community—Japan
    Mr. McNallyasked the Secretary of State for Trade if there are further plans for co-ordinated European Economic Community approaches to Japan to encourage a more equitable and economically stable trading relationship with the Community; and if he will make a statement on the present position.
    Mr. Biffen: At the meeting of the Foreign Affairs Council on 8 December a list of requests for specific action was adopted. The list is being transmitted to the Japanese Government. It stresses the need for Japan both to open up her home markets and to moderate her exports in sensitive sectors. The Council will be assessing the Japanese response in February 1982.
    Mr. McNally: As I have addressed the question to the Secretary of State in his communautaire role, I hope that he will not be as tetchy as he was last time. Is there any time scale on the request to the Japanese or any threat of retaliatory sanctions if they do not respond positively? With reference to the right hon. Gentleman's earlier remarks about Scotch whisky, may I remind him that he is here as a representative of the Tories and not of Suntory?
    Mr. Biffen: I am sorry that my tetchiness provokes such music-hall humour. I will do much to avoid that in future. The hon. Gentleman must not take the fact that I remind him that he belongs to the most communautaire party in the House as a sign of tetchiness. As to the time scale involved, I have said that the Council will be assessing the Japanese response in February 1982 and I cannot go beyond that.
    Mr. Waller: Will my right hon. Friend continue, both directly and through the channels of the Community, to make it clear to the Japanese Government that we are anxious to see an expansion of open world trade, but that the continuation of such free trade depends on all countries opening their markets to one another and that if calls for restrictionism continue to grow it will be the fault of the Japanese themselves?
    Mr. Biffen: I am happy to give that assurance to my hon. Friend. The same points have been noted by the American Administration as well as the nations of Western Europe.
    Mr. J. Enoch Powell: Will the right hon. Gentleman confirm that the less the Japanese import from other countries the more capital they have to export to other countries?
    Mr. Biffen: Yes. That is why I think that the two factors should be kept clearly in context.
    Mr. Ian Lloyd: Will my right hon. Friend accept that everyone wishes to encourage and support his efforts to liberalise Japanese trade? Does he agree that if we want to turn the recession into the most catastrophic international slump, the best way of doing so would be to endeavour to insist that every country's trade must balance exactly 50 per cent. with that of every other country?
    Mr. Biffen: Yes. I have no intention of picking up that bacillus from the Bennites.

    Monopolies and Mergers Commission
    Mr. Neubertasked the Secretary of State for Trade whether he is satisfied with the powers of the Monopolies and Mergers Commission.
    Mrs. Sally Oppenheim: Yes, Sir.
    Mr. Neubert: Does my right hon. Friend agree that the powers of the Monopolies and Mergers Commission would be better used in tackling public sector monopolies such as coal, gas, electricity and the British Leyland price ring—which maintains car prices in the United Kingdom at thousands of pounds in excess of prices on the Continent—rather than using its powers to determine who should run that over-large sweet shop in Knightsbridge?
    Mrs. Oppenheim: I have a good deal of sympathy with what I think is the point that my hon. Friend is making, which is that the service to consumers, the prices offered by the public sector industries and the service that they render to the economy as a whole are far less satisfactory than the contribution made by the private sector. If that is my hon. Friend's point, I entirely agree with him. The Government have recently announced measures to strengthen the Commission's role in the external scrutiny of the nationalised industries' efficiency. The membership and staff are being reinforced as necessary. Existing powers to call for information are sufficient for all present purposes.
    Mr. Freud: If the Minister is so satisfied with the powers of the Commission, might she also explain to it the difference between commercial danger and crises of identity, an example of which was raised in the House of Fraser and Lonrho merger?
    Mrs. Oppenheim: I think that the legislation is sufficiently explicit for the Monopolies and Mergers Commission. The hon. Gentleman will be aware that the Commission has wide discretion in determining the criteria—
    Mr. Freud: Too wide.
    Mrs. Oppenheim: These are all matters for ongoing Government consideration. The Commission is an independent body and that is its main strength. It has wide expertise to call upon and the Government will not criticise individual reports from the Commission.
    Mr. Squire: Does my right hon. Friend recognise that to some of us, at least, the criteria adopted by the Commission in considering the House of Fraser issue, and to some extent the Sealink reference, are rather worrying? Will she continue to ensure that she keeps an eye on the criteria that are adopted? Is she aware that some of us think that we are getting the wrong answers and that we may be asking the wrong questions?
    Mrs. Oppenheim: I am not sure whether my hon. Friend is aware of the recommendations contained in the Liesner report of July 1980. The Government took a keen interest in the recommendations and they will continue to consider them. That matter will be part of the ongoing consideration of policy concerning the Monopolies and Mergers Commission and the competition policy that is involved. These are matters for continuing consideration and are dependent on the legislative timetable.
    Mr. John Smith: Is the right hon. Lady aware that, following the decision of her right hon. Friend on the inquiry into the acquisition of the House of Fraser, it was said that undertakings were expected to be given by Lonrho Ltd. to the Director General of Fair Trading? Since that time there has been considerable comment in the press and elsewhere to the effect that the undertakings have not been forthcoming. It is rumoured that some artifices are being adopted to try to avoid the recommendation and the Secretary of State's decision. Will the right hon. Lady make it crystal clear that the decision is meant to stick on all the parties to that effect?
    Mrs. Oppenheim: I am much gratified by the right hon. Gentleman's knowledge of commentary and rumour. Any action that had to be taken would depend on the circumstances. I can give him the assurance that if necessary there would be recourse to the order-making powers under the fair trading legislation.

    Spain (Balance of Trade)
    Mr. Hal Millerasked the Secretary of State for Trade what is the United Kingdom's balance of trade with Spain in motor vehicles, castings and forgings.
    Mr. Biffen: In 1980 there was a crude deficit of £135 million on trade with Spain in motor vehicles and a surplus of £93,000 on trade in iron and steel castings and forgings. It is not possible to identify separately trade in either all castings and forgings or those specific to motor vehicle use.
    Mr. Miller: Does my hon. Friend realise that the imbalance of trade in motor vehicles could be speedily rectified if the discriminatory Spanish import duties and export subsidies were removed, thus allowing the Metro, for example, to compete with the Fiesta? Will my right hon. Friend ensure that no further progress is made in the discussions on Spain's accession to the EEC until suitable undertakings are received from the Spanish Government on discriminatory import duties and export subsidies?
    Mr. Biffen: My hon. Friend is right to say that the present Spanish duties have an impact upon our car exports to that market. We have made the most vigorous representations to the Spaniards about this inequity. As my hon. Friend may know, there is a European Community-Spanish joint committee and we have today in Brussels sought to have this issue further discussed.
    Mr. Deakins: Is it the Government's policy in the negotiations over Spain's entry into the EEC to insist that there should be free trade in industrial products from the start of any long transition period or at the end of it?
    Mr. Biffen: The Government would like to see a transitional arrangement that was reasonably short and that had substantial tariff cuts from the beginning.

    British Products (Counterfeiting)
    Mr. Canavanasked the Secretary of State for Trade what complaints he has received recently about counterfeiting of British products by overseas manufacturers; and what steps he has taken.
    Mrs. Sally Oppenheim: In the past six months we have received three complaints about the counterfeiting of British products by overseas manufacturers. We urge British companies to secure the greatest possible protection for their patents, trade marks and designs and we are prepared to back them in pursuing cases where patents, trade marks and designs are infringed. In many cases these efforts are successful, but I shall not he satisfied until the practice has been brought effectively under control.
    Mr. Canavan: Why is the Minister so reluctant to give maximum support to complaints by Smith and Welstood, whose heating stoves, which are manufactured at Bonnybridge in my constituency, are being counterfeited by unscrupulous manufacturers in Taiwan, who are using the counterfeits to undermine Smith and Welstood's position in the international market? If the international courts are unable or unwilling to take effective action against the pirates, will the right hon. Lady consider imposing import restrictions on Taiwan until such time as it stops illegal practices that are damaging to industry and that destroy jobs in Britain?
    Mrs. Oppenheim: We very much sympathise with the dilemma of Smith and Welstood and other small companies. We have advised Smith and Welstood on how it might protect its rights. The company has yet to respond to our offer of a meeting to discuss how it might pursue its complaints. As the United Kingdom has no diplomatic relations with Taiwan it is not possible to make direct representations to the Taiwanese Government. However, the British Government have warned Taiwan publicly on a number of occasions of their deep concern about counterfeiting. It appears that the Taiwanese authorities

    15
    are now taking these warnings seriously, because in August they introduced a series of measures aimed at stopping malpractices. These measures included a review of policy and of fines as alternatives to prison sentences, which may be made longer.
    Mr. McNally: The Minister may be aware that 12 months ago the Prime Minister of Taiwan assured the Select Committee on Trade and Industry that prosecutions would take place if specific instances were provided by British firms. Is the right hon. Lady aware of successful prosecutions in Taiwan against counterfeiters?
    Mrs. Oppenheim: I was not aware of the statement to which the hon. Gentleman referred. However, the number of cases brought to the attention of the Department has decreased significantly in recent months. I hope that that is the result of the successful resolution of such cases in Taiwan and the result of the measures to which I have referred.
    Mr. John H. Osborn: Will my right hon. Friend outline the role of the Sheffield defence fund and its relationship with the Government? The term "Made in Sheffield" hitherto implied "Made in Sheffield" and not in a Sheffield elsewhere in the world. Is she now satisfied that the relationship between the Government and that fund is working well?
    Mrs. Oppenheim: I am sure that my hon. Friend is aware, as is the whole House, that I laid regulations before the House to require country-of-origin marking in particular on such goods as those produced by the Sheffield manufacturers to which he is referring, and that those country-of-origin markings make the matter perfectly clear if blanks, for example, are produced in Taiwan or any other country, or in any place other than Sheffield.
    Mr. John Fraser: Is the right hon. Lady aware that it is not enough to refer British companies to their legal rights in third countries and that she ought to make it clear to the Taiwanese Government that if they cannot control the export of counterfeit goods from that country to third countries, we most certainly can control the entry of Taiwanese goods, whether counterfeit or genuine, into Britain?
    Mrs. Oppenheim: I have already said that the Government have publicly made it clear to the Government of Taiwan that we disapprove of counterfeiting. We have made public statements to that effect—not through diplomatic channels, because they do not exist—and the Taiwanese authorities have taken action. It now remains to be seen whether that action is appropriate and adequate. From the reduction in the number of cases, it would appear that it is proving to be successful. It is far too soon to make a judgment.

  OVERSEAS DEVELOPMENT

    Least Developed Countries
    Mr. Deakinsasked the Lord Privy Seal if he will take steps to increase United Kingdom aid to the least developed countries.
    The Minister for Overseas Development (Mr. Neil Marten): It remains the Government's intention to continue to give priority to the poorest countries, including
    16
    the least developed, in allocating aid. When the health of the economy improves, the Government hope that they will be able to do more.
    Mr. Deakins: Will there be any increase in British aid in real terms to these countries next year as a result of pledges made by the Government at the recent United Nations conference on this subject?
    Mr. Marten: At that conference we pledged ourselves to the target of 0·15 per cent. of GNP but no specific time was given for it. We shall attempt to achieve it as soon as we can.
    Mr. Kenneth Carlisle: Is my hon. Friend aware that the best aid that we can give to the least developed countries is to provide a market for their goods in this country? In this regard, will he be particularly delicate with the least developed countries in respect of the multifibre arrangement negotiations, because they have not increased their markets substantially in this country, and if we are genuine in our desire to help them we must provide a reasonable market for their textiles here?
    Mr. Marten: Yes, I take note of the points that my hon. Friend has made. They are points of which the Community, which is the negotiating body on this occasion, is well aware. It is a question more appropriate to my right hon. Friend the Secretary of State for Trade.
    Mr. McElhone: Are not double standards revealed in the Minister's answer? Will he confirm that in Mexico the Prime Minister approved a subsidy of £30 million to a British firm for a steel project in that country, which is not one of the poorest countries? Will he also confirm that she approved a grant of £150 million to the same British firm for a steel project in India without that project going through the normal procedures in the right hon. Gentlemen's Department? If that is so, how does the Minister justify the disgraceful fact that this money came from a much reduced aid budget?
    Mr. Marten: It came from that section of the aid budget called the aid/trade provision, which was set up under the Labour Government, and it is doing exactly what that Labour Government wanted to do, which was to use a certain proportion, albeit a small proportion, of our aid to help our industries in Britain with orders that have to be subject to developmental appraisal.
    Mr. Bowen Wells: Does my hon. Friend agree that one of the best ways to increase aid to the least developed countries is through the Commonwealth Development Corporation, which has considerably increased its dispersals to the least developed countries in the past five years? Is my hon. Friend yet able to tell us the conclusions of the interdepartmental review on the future of the CDC?
    Mr. Marten: I agree with the first part of that question. On the second part, perhaps my hon. Friend would await the answer to his question later on the Order Paper.

    Students (Underdeveloped Countries)
    Mr. Teddy Taylorasked the Lord Privy Seal what progress has been made by his Department in providing assistance through overseas aid to enable students from underdeveloped countries to be educated at British universities.
    Mr. Neil Marten: As my hon. Friend the Minister of State, Foreign and Commonwealth Office told the House

    17
    last March, we are making additional funds available this year to restore to the levels of 1978 and 1979 the number of new awards available under our training programme for the Governments of developing countries. In 1980–81 there were about 3,900 new awards and in the current year the number is expected to exceed 4,600.
    Mr. Taylor: Were the Minister and his Department consulted over the amazing decision on overseas student fees, whereby foreign and Commonwealth medical students are being charged £6,000 a year this year, while students coming from the EEC or the French overseas territories are paying only about £900? In view of this ridiculous situation, will the Minister give an assurance that underdeveloped countries in the Commonwealth will continue to get increased aid to help their students to come to Britain?
    Mr. Marten: Yes. The developing countries concerned are able to use part of their development aid for education. As I have just said, we hope to have 4,600 new awards this year. In 1980 there were over 14,000 students under the aid programme in Britain, which was exactly the same number as in 1978.
    Mr. Spearing: Does the Minister agree that his answer in regard to the multi-fibre arrangement and the difference in fees that have to be charged in Britain to students from the French overseas départments and the Commonwealth show that the House and the British Government have no control over either matter? Will he make representations about these matters to his right hon. and noble Friend the Foreign Secretary, bearing in mind that people in Britain are fearful of the extent of the erosion of the powers of this House by the EEC?
    Mr. Marten: My right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs always reads Hansard in respect of the questions that I answer, and he will read the hon. Gentleman's very sage observations. My hon. Friend the Under-Secretary of State for Education and Science told the House on 23 November that the Government are committed, in common with other member States, to promoting student mobility within the Common Market. It is as a result of our membership of the Common Market that this has happened. I think that it is within the memory of hon. Members that this was not a matter of which I, and one or two others, including my right hon. Friend the Secretary of State for Energy, approved at the time.
    Mr. Alton: Does the Minister accept that last year's decision by the Government to reduce the amount of money available for overseas students and the introduction of full cost fees have been disastrous for many students in underdeveloped countries? Does he not accept that, even if enlightened and humanitarian reasons should not prevail, in terms of our self-interest it has been a disastrous decision to introduce full cost fees and that we ought to reverse that decision and include more people from those countries in our educational institutions so that courses at universities in Great Britain will not have to close?
    Mr. Marten: I do not think that the policy has been disastrous. There is no question of a return to the earlier general subsidy for all overseas students. If the hon. Gentleman would be kind enough to read what I said in my previous answers, he would understand that it has not been quite as disastrous as he has made out. Commonwealth students alone predominated by a ratio of 2:1.
    Mr. Wilkinson: Does my hon. Friend not agree that the matter to which my lion. Friend the Member for Southend, East (Mr. Taylor) referred is a preposterous situation that demands the collective attention of the Government to get it put right in negotiation with our Common Market partners?
    Mr. Marten: Yes, it is a question for the whole Government. An interdepartmental group of officials are monitoring the impact of increased fees on overseas student numbers. It has done it for one year, and it is doing it for a second year.
    Mr. Christopher Price: Was the interdepartmental group consulted about the decision last week, when the home student fee was halved, thus doubling the subsidy to EEC students and increasing the differential, making the position far worse than that suggested by the hon. Member for Southend, East (Mr. Taylor)? Was the Minister consulted about the decision taken last week to increase the differential between Commonwealth students and EEC students?
    Mr. Marten: No, I do not think that I was.

    India
    Mr. John Townendasked the Lord Privy Seal if, in view of the proposed purchase by India of Mirage fighters from France to a value in excess of £100 million, he will reduce the aid to that country by a similar amount.
    Mr. Neil Marten: No, Sir.
    Mr. Townend: My right hon. Friend will not be surprised that I am somewhat disappointed by his reply. Does he agree that where a country can afford to spend this amount on sophisticated weapons, particularly with our overseas competitors, the whole question of the need for aid is brought into doubt?
    Can my right hon. Friend understand the irritation of my constituents, who, with a local male unemployment rate of 23½ per cent., are told that the Government cannot find the money to make Bridlington a development area, but find that the Government can grant large sums of money to countries that are spending massive sums on sophisticated arms?
    Mr. Marten: Yes, I can understand the feeling of those people, but they should understand that, under article 51 of the United Nations charter, every country has the right to self-defence. India has bought Jaguar aircraft from Britain. The contract for the Mirage deal is still being negotiated; nothing has yet been finalised.

Poland
3.30 pm
The Lord Privy Seal (Mr. Humphrey Atkins): With permission, Mr. Speaker, I will make a statement on Poland.
Martial law was declared in Poland from midnight on 12–13 December. A Military Council for National Salvation, consisting of military leaders, has been set up under the Prime Minister and Party Secretary, General Jaruzelski. Military commissars have been appointed to oversee central and local government. Other steps taken include the sealing of the borders, the severing of telex and telephone links, the imposition of a curfew, the suspension of civil liberties, a ban on strikes and gatherings other than religious ceremonies, a takeover of the broadcasting system, and suspension of regional broadcasts.
General Jaruzelski announced these measures in a speech broadcast to the Polish people early on 13 December. He stressed that they were intended to be of short duration and would be rescinded when calm and order were restored. He said that the measures were intended to preserve the fundamentals of the Polish "Renewal" and that reforms would be continued. We regard these two commitments as very important.
There are no reports of danger to the safety of members of the British community in Poland. The British embassy is in touch with British nationals and as a precautionary measure has advised them to stay at home. This advice has also been broadcast, at the Government's request, on the BBC world service.
Her Majesty's Government are following developments with the closest attention and with great concern. We are, and shall remain, in close consultation with our partners in the Ten and in the North Atlantic Alliance. The next few days would appear to be of critical importance to the future of Poland. We sincerely hope that the Polish Government and people will be able to resolve their problems without bloodshed, by compromise and consensus. We shall observe a policy of strict non-intervention, and we expect the same of all signatories of the Helsinki Final Act.
Mr. Denis Healey: The official Opposition share the concern of Her Majesty's Government at what has happened in Poland in the last 24 hours. I think that we would all agree that it is a tragedy that the movement towards greater freedom and democracy in Poland over the last 12 months has been halted. We must hope, with Her Majesty's Government, that the progress will be resumed as soon as possible.
We agree that there must be no intervention by foreign Governments in the attempts of the Polish people to solve their own problems peacefully by their own efforts. It would be a disaster if any action or statement by any representative of any Western Government were taken as justification or excuse for intervention by the Soviet Government or by any East European Government.
The right hon. Gentleman will be aware that the Polish economy is extremely fragile and that it depends very largely on the readiness of Western banks and Governments to reschedule Polish debt. I understand that agreement has been reached at the technical level between the banks and Governments concerned on such a rescheduling. It was due to have taken place during the next week or so. Can the right hon. Gentleman assure the
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House that Her Majesty's Government will use their influence with all concerned, both banks and Governments, on the Western side, to ensure that the debt is rescheduled and that Poland is enabled to have access to the amount of foreign exchange that she needs to keep her economy on the road. If they do so, they will have the full support of Her Majesty's Opposition.
Mr. Atkins: I am grateful to the right hon. Gentleman for his support for the position that I have enunciated on behalf of Her Majesty's Government. In particular, I am grateful for his support for our view that intervention by any other State in the internal affairs of Poland would be a most serious matter.
The right hon. Gentleman is correct about the Polish economy. Poland's economic difficulties are well known. Over the past few months Her Majesty's Government have agreed to the rescheduling of debt and to the provision of new credit, but the Government are not solely involved; there are also the commercial banks. Our view is that it would be premature for them to take any decision to change what they had agreed.
Mr. J. Enoch Powell: What justification or business have we to express the opinion that the matters on which there is disagreement in Poland ought to be settled by compromise?
Mr. Atkins: If there were intervention by a foreign Power, or if there were any attempt in Poland to settle matters by force, it might well involve our friends and allies in Western Europe. This is a matter that must concern Her Majesty's Government and, I should have thought, the right hon. Gentleman.
Mr. Powell: Why?
Mr. Julian Amery: I appreciate that we must pursue a policy of non-intervention in physical terms, but does my right hon. Friend agree that the Polish Government and Poland have been subjected to completely unacceptable pressures from the Soviet Union and other members of the Warsaw Pact? Would it not be more appropriate for Her Majesty's Government at least to express regret at the suppression of the degree of freedom that had developed in Poland over the last few months?
Mr. Atkins: It is always a matter of regret to Her Majesty's Government if civil liberties are suppressed and a curfew and martial law are imposed by any Government over their people. Our chargé d'affaires in Warsaw had a meeting yesterday with the Polish Deputy Foreign Minister and made Her Majesty's Government's views very clear.
Mr. James Wellbeloved: Is the Minister aware of the widespread support in Britain for the struggle of the Polish people against the tyranny and inefficiency of the Communist regime? Is he also aware that he commands the full support of the SDP—[Interruption.]—in his call for non-intervention by the Soviet Union in the internal affairs of Poland? Will he bear in mind that the stark tragedy occurring today in Poland should be a warning to us all of the fate that would engulf us if we were to fall under the jackboot of the Marxist philosophy?
Mr. Atkins: I am, as always, grateful for the support of the hon. Gentleman and his party. I am particularly

21
grateful for the support that he and others have expressed for Her Majesty's Government's view that intervention by any other Power would lead to an extremely grave situation. It must be for the Polish people themselves to decide.
Sir Bernard Braine: I share the concern expressed by my right hon. Friend about the developments in Poland, and I support his warning against any intervention by a third party, but is he aware that there is a further pressing problem? Is he aware of the considerable effort mounted by British and Polish charities in this country in recent months to channel essential food and medical supplies, through the Church and through Solidarity, to people in dire deed? If he is correct in saying that the frontiers have been closed and all communications cut off, is that flow of humanitarian aid to cease? As some contact has evidently been made at diplomatic level, will the right hon. Gentleman use his good offices to ensure that at least humanitarian aid of that nature does not cease and that the Polish people are not left to go through the depths of a hard winter at the mercy of a cruel and oppressive regime?
Mr. Atkins: Yes, the Government are well aware of the substantial efforts made by voluntary and Church organisations, particularly in the supply of food and medicines. As my noble Friend the Under-Secretary of State said in the House of Lords only last week, the Government have been helping to co-ordinate those efforts. I am sorry to tell the House that the restrictions imposed from Sunday have gravely hampered that work. We shall, of course, make representations that such humanitarian work should be allowed to continue.
Mr. David Ennals: Is the Lord Privy Seal aware that his reply to the hon. Member for Essex, South-East (Sir B. Braine) is unsatisfactory? Is he aware also that, as voluntary organisations have been sending substantial amounts of food and medicine, I inquired of the Polish Government this morning about the position? Is he further aware that the lorries supplying those goods are in Britain and that permission would be granted for them to take supplies to homes for the elderly and for children and to hospitals? Would not our solidarity with the Polish people be better shown by positive help than by some of the bellicose statements that have been made today?
Mr. Atkins: I am delighted to hear that the right hon. Gentleman has been in touch with the Polish Government, and I hope that his efforts to further that humanitarian work will bear fruit. We, too, are seeking to pursuade the Polish Government to allow into Poland vehicles containing food, medical supplies, and so on, raised by the voluntary efforts of people in this country.
Mr. David Alton: I echo the sentiments expressed by other parties. Is the Lord Privy Seal prepared to press the various banking and other agencies further on the rescheduling of the Polish hard currency debt? Will he contact the director-general of the BBC to ensure that objective, impartial news services are available to the Polish people through the BBC overseas service?
Mr. Atkins: As I have said, the Government believe that it is too early for anyone—the Government or private commercial banks—to make any change in the
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arrangements so far agreed with the Polish Government about the rescheduling of debt and the provision of further credit. We must see how the situation develops.
I have no doubt that the BBC will continue to give impartial reports of events in Poland. As I have said, the world service has been broadcasting advice to British citizens in Poland. In view of the difficulties caused by the suspension of telephone links, and so forth, it is important that our subjects in Poland should be aware of the Government's advice.
Mr. Healey: Will the right hon. Gentleman clarify his comments about the rescheduling of debt? I understand that the agreement reached between the Polish Government and Western Governments and Western banks at the technical level was due to be signed last week. Will the right hon. Gentleman confirm that the meaning of his comments is that the rescheduling agreement should be signed forthwith? Can he give any information about the position of Mr. Lech Walesa? Is he at liberty and perhaps in negotiating contact with the Polish Government?
Mr. Atkins: I understand that the final agreements were due to be signed this week. Clearly, we shall have to decide how to proceed as day succeeds day. From the information that we have so far, it is clear that we should not jump into making changes in what was previously agreed. That is the position as I speak today.
I understand that Mr. Lech Walesa is at liberty and is in touch with the Polish Government.
Several hon. Members rose—
Mr. Speaker: Order. I shall do my best to call those hon. Members who have been rising in their places, but there is a Private Member's motion on unemployment in Wales, which will have to finish at 7 o'clock, and there is also another statement, so I hope that questions will be brief.
Mr. Kenneth Warren: Does my right hon. Friend consider that it would help the right hon. Member for Down, South (Mr. Powell) if he were to recall the gallant way in which the Polish soldiers kept the bright light of freedom burning in this country during the Second World War and the special relationship that we have with the Polish people? Will my right hon. Friend therefore, be stronger and ask the Soviet Government not to intervene in Poland?
Mr. Atkins: If my hon. Friend studies my statement he will find that that is precisely what the Government are asking of the Soviet Government, and, indeed, of every other Government. With regard to the Polish people, I do not think that anyone in the House would disagree with the view that what affects Poland must be of great concern to us.
Mr. Giles Radice: Although what happens in Poland is clearly a matter for the Poles, will the Government remind the new military authorities that Solidarity is in a real sense the Polish nation and that any repression or reversal of the reforms achieved since August 1980 would in the end be self-defeating? Secondly, what efforts is the Minister making to ensure that food parcels from this country get through to Poland?
Mr. Atkins: I think that I have already dealt with the second part of the hon. Gentleman's question. W e are

23
doing all that we can to persuade the Polish authorities to allow food parcels and other gifts of a humanitarian nature to help to alleviate the sufferings of the Polish people, which everyone recognises to be extremely serious.
On the first part of the hon. Gentleman's question, I must repeat that this is a matter that can be settled only by the Polish people themselves.
Mr. Eldon Griffiths: Will my right hon. Friend confirm that the bans on meetings and on a free press are clearly in breach of the human rights basket of the Helsinki agreement? In the light of that, does he intend to continue with the Helsinki process? Can he give an assurance that on all the practical matters that the West must now consider, such as food supplies, credits and technology, the NATO Allies will act in concert and will remain united on this issue, which they failed to do on Afghanistan?
Mr. Atkins: The answer to the first part of my hon. Friend's question is "Yes". The answer to the second part is that we are in close touch with our NATO partners—we were in touch yesterday, and another meeting is scheduled for today—because we believe that it is essential that we keep closely together and act in concert.
Mr. Phillip Whitehead: Will the Minister seek an early meeting with the new Polish ambassador and impress upon him that, although we wish to continue to help the Poles to overcome their economic crisis, it will be on the basis that there is widespread support in this country for the aims of the free trade union, Solidarity, and a widespread view that the economic crisis has been brought about not by Polish trade unionists but by those who have held a monopoly of power in Poland for 35 years?
Mr. Atkins: We are using every means available to us to convey our views to the Polish Government, including their representatives here. I shall, of course, draw the attention of the Polish Government to what the hon. Gentleman has said.
Mr. Churchill: Recalling that it was in defence of the freedom of Poland that Great Britain drew the sword against Nazi Germany in 1939, will the Government send a warm message of support and solidarity to the Polish people in their hour of trial? Does my right hon. Friend agree that it is a moral outrage that 36 years after the end of the Second World War Soviet troops remain in occupation of Poland? Finally, will the Government look again at the number of hours currently being broadcast by the BBC to Poland in the Polish language and see that this is stepped up?
Mr. Atkins: I do not believe that the Polish people are in any doubt about the feelings of both the Government and everyone in Britain because of their contribution 40 years ago, as well as our admiration for the Polish people. I shall study the amount of time made available for BBC broadcasts in Polish and discuss with the BBC whether it could or should be profitably extended.
Mr. David Winnick: Is the right hon. Gentleman aware that those of us who believe in genuine trade unionism everywhere, be it in Chile, Britain or Poland, must be deeply disturbed by the action that has been taken by the Polish authorities? Is he also aware that
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the message from the British labour movement is now one of complete solidarity with the Polish people in their time of crisis?
Mr. Atkins: I believe that all the people in Britain, be they trade unionists, members of the Labour Party or whatever, have followed events in Poland over recent months with the greatest of interest and admiration for the activities of the Polish people. I do not know whether it would be appropriate for me to send messages on behalf of the Labour Party, but I take note of what the hon. Gentleman has said.
Dr. Alan Glyn: My right hon. Friend has stressed the importance of nonintervention by other nations. Does that include the use of Soviet troops that are garrisoned in Poland?
Mr. Atkins: In our view, non-intervention by other nations means every other nation. We believe that this is a matter primarily for the Polish people themselves. They ought to be allowed to organise their own affairs and settle their own differences without intervention by anyone else.
Mr. Greville Janner: Is the right hon. Gentleman aware that the only hope of preventing the sort of intervention referred to by the hon. Member for Windsor and Maidenhead (Dr. Glym) is by enabling the Polish people to survive? I have just returned from Poland, where everyone is agreed that survival is the key. What is being done to move mountains of food—not just food parcels—so that people can eat? Why is it sensible for British citizens to stay at home, when the Minister should know that they will have nothing at all to eat if they do so?
Mr. Atkins: I have already been asked about food parcels and voluntary organisations. The Government have made large quantities of food available over the last few months. We have contributed nearly 500, 000 tonnes of barley, 10,000 tonnes of butter and 3,000 tonnes of beef. That was part of an effort by ourselves and our European partners to alleviate shortages of the kind to which the hon. and learned Gentleman referred. It is essential that the Polish people are enabled to survive the winter, and the Government will continue to help in the way that I have described.
Mr. Michael Morris: Will my right hon. Friend give an undertaking to review within the next 24 hours Polish language broadcasts? If the resources are insufficient, will some means be found to ensure that those broadcasts are performed in such a way that the Polish people can understand what is happening?
Mr. Atkins: I assure my hon. Friend that I shall review this matter not within the next 24 hours but within the next six.
Mr. Peter Bottomley: Will my right hon. Friend be prepared to make another statement if there is intervention by an outside Power? Will he make it plain to the Polish authorities that international cooperation on debts and aid to Poland will to a large extent be contingent on there being no interference by an outside Power?
Mr. Atkins: I note what my hon. Friend said in the second part of his question. I am always ready to make a statement about any matter that affects us all.
Mr. Tony Marlow: Will my right hon. Friend comment on the possibility that Russian

25
troops are already in action in Poland, only in Polish uniform? Will he comment also on the possibility that there is some connection between Israel's smash-and-grab raid in the Golan and problems in Central Europe?
Mr. Atkins: I have no evidence to suggest that either of those matters is happening.
Mr. Healey: Does the right hon. Gentleman agree that Britain has a moral obligation towards Poland as a result of the decisions taken by Sir Winston Churchill, as Prime Minister, to put Poland in the Soviet sphere of influence after the Second World War, and that inflammatory speeches at this time by persons who object to that policy will not be helpful to anyone? The important thing is that we should all do our best to assist the Polish people to achieve a peaceful solution of their problems and to ease the economic background to a peaceful solution in every way that we can, including the provision of aid, financial assistance and food, as the Community has already agreed to do.
Mr. Atkins: I am very much in agreement with the right hon. Gentleman. Everyone in the House is conscious of the service rendered by Poland to the Allied cause during the last war. We are conscious of the efforts that have recently been made to re-establish democracy in Poland. The last thing that anyone wants to do is to hinder those efforts. We want to help as much as we can. If at present we can be most useful by providing food and other essentials to enable the Polish people to survive what, unfortunately, is likely to be a severe winter, that is what we should concentrate on.
Mr. Churchill rose—
Mr. Speaker: I will call the hon. Member for Stretford (Mr. Churchill). [HON. MEMBERS: "No."] Order. The hon. Gentleman was referred almost by name—[Interruption.] Well, I felt that he was. Mr. Churchill.
Mr. Churchill: I am much obliged, Mr. Speaker—
Mr. Healey: On a point of order, Mr. Speaker. I was referring to the hon. Gentleman's grandfather, not to him—
Mr. Speaker: Order. I heard what was said.
Mr. Churchill: On a point of order, Mr. Speaker. I am obliged to you for calling me. Is it in order for the right hon. Member for Leeds, East (Mr. Healey)—who just cast aspersions on the memory of my grandfather, particularly with regard to the fate of the Polish people at the end of the war—to be reminded that under the terms of the Yalta agreement, Marshal Stalin agreed—
Mr. Speaker: Order. We cannot pursue that now.

Steel Industry
3.56 pm
The Secretary of State for Industry (Mr. Patrick Jenkin): With permission, Mr. Speaker, I should like to make a statement about the private sector of the steel industry.
When the 14 major companies in the United Kingdom steel industry were nationalised in 1967, it was recognised by the Government of the day that special measures were needed to ensure fair competition between the public sector, which was expected to represent well over two-thirds of the industry, and the private sector, which would consist of about 100 firms covering the remainder of the industry. Accordingly, the 1967 Iron and Steel Act contained provisions to this end.
When Britain joined the European Community on 1 January 1973 the steel industry in this country came under the regime of the Treaty of Paris—the European Coal and Steel Community—and, in so far as products fell outside that treaty, within the industrial articles of the Treaty of Rome.
Since the competition provisions of the 1967 Act were inconsistent with those treaties, they were repealed by the European Communities Act 1972. Accordingly, since then competition between the BSC and the private sector has been governed by the provisions of those treaties.
As the House well knows, the period since 1974 has been one of continuing, indeed, intensifying, decline for the whole European steel industry. Production in Europe, which in 1974 was 156 million tonnes of liquid steel, had fallen by 1980 to 128 million tonnes, leaving substantial spare capacity.
Price competition became increasingly intense. Prices today are lower in money terms than they were two years ago. At the same time, costs—particularly energy costs—have continued to increase. By mid-1980 there was hardly a steel company in Europe operating profitably.
Those difficulties were so great that, although the Treaty of Paris prohibits State subsidies to the steel industry, the Council gave its assent to a decision of February 1980 which allowed the Commission to give temporary approval to State aids linked with restructuring.
Towards the end of 1980 mandatory production quotas were introduced by the Commission, with the approval of the Council. Despite these measures, by mid-1981 the Community steel industry faced crisis conditions. Prices were well below any possible break-even point for the industry and severe disruption through massive overcapacity and unrestricted competition threatened.
Accordingly, a further crisis package of measures was agreed comprising the extension of mandatory production quotas for some products, voluntary industry restraint agreements, monitored by the Commission, for others, and strict enforcement of the ECSC rules on pricing transparency by both producers and the larger distributors. It is against that background that the position of the private sector in the United Kingdom falls to be considered.
The measures to stabilise prices and to increase them so that firms may once again move into profitability will, of course, help the private sector along with the rest, but, by itself, this will not be enough. In other Community countries various forms of aid are available from Governments, both to public and privately owned companies. In Britain help has been confined to the British

27
Steel Corporation. The private sector has received no assistance apart from regional aids, which are also available to the BSC.
Since 1975 successive Governments have made available to the British Steel Corporation a total sum approaching £5,000 million partly to fund operating losses, partly to finance investment in the modernisation of plant, and partly to meet the costs of closures and rationalisation, mainly redundancy and resettlement costs.
The British Independent Steel Producers Association has for some time been making representations to the Government about the extreme unfairness of the system under which it is expected to operate. The association has pointed out that steel is unique in that it has its own regime under the Treaty of Paris, something that is not applicable to any other industry.
The association has pointed out that in no other European country have massive sums of aid been given to the public sector while nothing has been given to the private sector. It has pointed out that the effect of this is that even where Community aid is available it has gone exclusively to the BSC. I have been giving urgent consideration to this powerful case.
I am pleased to tell the House that I have decided to introduce a scheme under section 8 of the Industry Act 1972 to help the private sector steel companies in Britain with rationalisation and restructuring projects and with the costs of redundancies.
The scheme will offer up to £22 million of assistance to the industry by the end of 1984. Eligible projects will attract grant at the rate of 25 per cent. The scheme will also guarantee 85 per cent. of the cost of statutory redundancy payments, and in addition provide a maximum contribution of £500 per person to the employer's costs of any ex gratia or severance payments.
This scheme is intended to cover steel products as defined by the Treaty of Paris, with the addition of the drawing, cold rolling and cold forming of steel, but excluding the drawing and manufacture of steel wire and wire products. I will publish details of the eligible sectors of the industry in the Official Report, and they are available in the Vote Office. Full details of the scheme will be available very shortly from my Department.
The scheme has, of course, to conform with the obligations that we undertook when we agreed to the ECSC decision on state aids, promulgated in August of this year. As such, it has to be confined to assisting restructuring, rationalisation and redundancies. Applications for help with restructuring projects must be made by September 1982. No payments can be made after 31 December 1984.
As required by the treaty, the scheme is being notified to the Commission for approval, but I do not anticipate difficulties in this regard.
Quite separately, the steel casting sector has drawn up a scheme to allow the rationalisation of that part of the industry whereby firms reducing capacity will be compensated by a voluntary levy paid by companies remaining in production. To work, the scheme requires front end loading and I am giving urgent consideration to making a grant under section 8 of the Industry Act 1972.
Any payment would be conditional on a substantial majority of this industry agreeing to fund a significant
28
reduction in capacity, thus fulfilling the requirements of section 406 of the Income and Corporation Taxes Act 1970.
The Government are determined to secure the survival of a healthy, profitable and, hopefully, expanding private sector in steel. I believe that the measures I have announced are fair and responsible. They can be accommodated without any increase in the allocations to my Department. I commend them to the House.
Mr. Stanley Orme: The Opposition have supported both the private and the public sectors of the steel industry, and will continue to do so, because such support saves jobs and assists our basic industries and our economy. The Secretary of State's proposals are modest by any criteria. We want to maintain jobs and sustain capacity. We do not want to see redundancies increased and capacity reduced even further. The reduction in both the private and public sectors has already gone much too far. I hope that the Secretary of State will be able to say that his statement is not just a redundancy package, but is something far more significant.
The statement raises the crucial question of Government intervention in the whole of the private sector. While the proposals amount to modest redundancy payments of £500 to any person made redundant, they will raise a few questions and cause eyebrows to be raised in the rest of the private sector. However the statement is phrased, it amounts to Government intervention in the private sector.
The statement says nothing about imports into the European Community, which are causing great difficulty. The right hon. Gentleman's hon. Friend the Under-Secretary of State referred to this matter only last week. What steps are being taken to see that these imports are controlled in a way that is beneficial to our industry?
The Secretary of State briefly mentioned energy costs. Again, we look, apparently without hope to Government intervention in regard to energy prices, which represent one of the major costs faced by the steel industry in both the private and public sectors.
What discussions has the Secretary of State undertaken with the United States about the American market and the effect of proposed restrictions on the British steel industry, not least the private sector, which exports considerable quantities of steel to the United States?
The key paragraph of the right hon. Gentleman's statement says:
"Any payment will be conditional on a substantial majority of this industry agreeing to fund a significant reduction in capacity",
and it goes on to refer to section 406 of the Income and Corporation Taxes Act 1970. Can the right hon. Gentleman give the House more information?
Finally—[Interruption]—this is an extremely important statement, following which I am sure my hon. Friends, at least, want to hear questions put to the Secretary of State on issues where men's jobs are at stake—the Opposition will want to study the statement in more detail. I give notice to the Secretary of State that the Opposition may ask for a fuller debate on the proposals.
Mr. Jenkin: I am grateful to the right hon. Gentleman for this general welcome for my statement. I assure him that this is not just a redundancy package. On the contrary, we would secure the approval of the Community for this package of aids only if it involved measures for the

29
restructuring of the capacity of the industry. Like the right hon. Gentleman, I hope that the steel industry, both the public and the private sectors, will, as I indicated in the statement, eventually be able, when the market turns up, to meet increased demand by increased production. I told the Select Committee last week that the British Steel Corporation could increase its output by up to 20 per cent. without any increase in capacity.
On the question of a general policy of intervention in the private sector, I must point out to the right hon. Gentleman that this case is unique. No other industry has had to face a combination of a substantial regime from the Community, under the Treaty of Paris, coupled with a massive subsidisation of a major public sector competitor in its own country. That is what makes the private sector of steel unique. I thought it right, as an exception to the Government's general policy of non-intervention, to come forward with this scheme.
The question of imports to the EEC from outside was the subject of a decision by the Foreign Affairs Council last week, when a negotiating mandate was agreed for the renewal of voluntary restraint agreements with overseas countries. These negotiations must now take place. We, of course, were party to that mandate.
The Government are acutely aware of the specific problem that electricity costs cause to major high-load factor users. That is a matter for my right hon. Friend the Secretary of State for Energy. The Government are considering the serious difficulty caused to parts of industry by energy costs.
The right hon. Gentleman asked about the American market. I had meetings last week with Senator Brock, the President's special trade negotiator. We discussed the difficulties that have emerged in America as a result of the suits for anti-dumping and countervailing duties. Section 406 of the Income and Corporation Taxes Act provides for a special tax relief in cases that fall within the restrictive conditions of the steel casting sector. The levy is relevant only to that separate scheme for the casting sector. We have not yet had a firm proposal, but I am considering whether it has a case for aid.
Whether there should be a debate is a matter for my right hon. Friend the Leader of the House.
Mr. Richard Page (Hertfordshire, South-West): I thank my right hon. Friend for his practical statement. When one bears in mind the fact that the BSC has received about £5,000 million of taxpayers' money, £22 million to help the private sector to reorganise is not excessive. I hope that this will not be the start of a continual drip feed. What steps will my right hon. Friend take to ensure that the rest of the EEC steel producers cut their production, as we have done in the United Kingdom, to allow our steel producers, both private and public, to move into profit?
Mr. Jenkin: I am grateful to my hon. Friend for his welcome of the measures that I have announced. A large part of the £5,000 million given to the BSC was to fund the losses and to provide for investment. Only a part went towards restructuring. I accept that substantial sums were involved. I accept also that if the European Community's regime is to be effective it must be applied fairly and firmly by the Commission to all members.
I am sorry to say that the weather disrupted the meeting of EEC Industry Ministers that I convened last week. Only one Minister managed to survive the snowstorms and
30
reach London. It is for the Belgian Presidency to reconvene that meeting, I hope early in the new year. The purpose of the meeting will be to review progress under the June agreement and to call upon the Commission to carry out its terms in respect of all members of the Community without fear or favour so that all are treated equally.
Several Hon. Members rose—
Mr. SpeakerOrder. I believe that these questions should finish at 4.30 pm at the latest, to be fair to those who wish to take part in the Private Members' business. I hope, therefore, that questions will be brief.
Mr. John Morris: Does the Secretary of State understand that some Opposition Members think that his statement represents, if not a U-turn, a U-swerve in the Government's realisation that intervention is necessary? There are shades of 1972 about it.
As £22 million is a modest sum, how many firms will benefit, what will be the scale of job losses and how will the miserable sum of £500 and the 85 per cent. guarantee compare with the sums that BSC workers receive?
Mr. Jenkin: I cannot reply to the right hon. and learned Gentleman's questions about how many firms and redundancies will be involved until the industry comes forward with schemes for restructuring and the consequences of them. The sum of £22 million is considered reasonable in the light of the likely development, but we cannot be certain about that.
Redundancy payments to be funded by the Government under the scheme amount to 85 per cent. of the statutory redundancy, plus 85 per cent. of anything above that up to a maximum of £500. If one assumes an average statutory payment of £1,500, which is right for the industry, that is an average of £800 extra and amounts to an average payment of about 63 per cent. that is funded by the Government. That is less than steel corporation workers receive, but it is fair to say that the British Steel Corporation conducted a massive investment campaign, which resulted in huge over-capacity in steel and a correspondingly large restructuring and rationalising job. In those circumstances, it was right that where there were large numbers of redundancies, sometimes in extremely painful circumstances, the sums paid to BSC workers should have been larger than the funds available to the private sector. We are talking now of a smaller scheme, and more modest sums are appropriate.
Mr. Speaker: Order. If questions and answers are as long as that, many hon. Members will be disappointed.
Mr. David Alton: I welcome the Secretary of State's statement, but does he accept that if more money had been made available earlier for restructuring there would not be the need now to spend money on redundancies? May I press the right hon. Gentleman further on how many redundancies are likely to occur? Has he any idea of what proportion of the money will go on restructuring and what proportion on redundancies? How many people made redundant by the BSC were re-employed?
Mr. Jenkin: My reply to the hon. Gentleman's first question is that I cannot add to what I said to the right hon. and learned Member for Aberavon (Mr. Morris). BSC (Industry) Ltd has been successful in placing many of its redundant steel workers. I pay tribute to the work of Sir

31
Charles Villiers and his staff. If the hon. Gentleman tables a question about the numbers involved, I shall do my best to answer it.
Mr. Hal Miller: I congratulate my right hon. Friend on moving so quickly to make up the deficiency in the treatment of the steel industry by the Government and the ECSC. I thank him warmly for remedying an injustice about which many of my hon. Friends felt strongly, and about which I felt very strongly, to the point of resignation. May we have an assurance that the money is not intended to include further Phoenix-type deals between the private and public sectors, but that they will be considered separately?
Mr. Jenkin: I am grateful for my hon. Friend's generous comments. In fairness to my predecessor it is right to point out that he instituted a system to ensure fair competition between the public and private sectors, which proved valuable and helpful until the recent collapse of steel prices in Europe. That gave rise to the serious problems that confront the private sector. I assure my hon. Friend that the money is not intended primarily for the so-called Phoenix schemes. The funding for Phoenix 1 came out of the BSC's external financing limits.
Mr. D. N. Campbell-Savours: As such a large amount of public money is involved for use on a global basis throughout the private sector, which we support, and because we cannot expect a corporate plan for the private sector, may we have a general plan for reconstruction in the private sector?
Mr. Jenkin: I would not regard myself or my Department as in the least competent to try to draw up a structural plan for an industry that is as complex, as technological and as rapidly changing as the steel industry. That must be left to the management of the industry. If it comes up with a plan that involves a measure of restructuring, we shall help with the cost.
Mr. Sydney Chapman: I welcome my right hon. Friend's statement, which I understand lessens the discrimination that has been practised by successive Governments against the private sector of the steel industry. Will my right hon. Friend bear in mind the question asked by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) and recognise that the £22 million to be made available by the end of 1984 has to be put in the context of the £6,000 million or more of public subsidy to the British Steel Corporation? Does my right hon. Friend agree that the best way to avoid discrimination between the private and public sectors is by significantly reducing the public sector subsidy? What hope can he give the House of that?
Mr. Jenkin: The sum of £5,000 million to which I referred relates to the period since 1975. In evidence to the Select Committee last week I said that the British Steel Corporation was on target to halve its loss this year over last year and to breaking even next year. That, of course, will lead to substantially reduced funding from the Exchequer for the corporation. We are discussing what may happen in the future in the context of the BSC's corporate plan, and certainly an element of privatisation through Phoenix schemes will form part of the Government's plan.
Mr. Roy Hughes: Does the right hon. Gentleman appreciate that, although his package will be welcome to many private steel manufacturers, not least the Alpha steel works in Newport, the real job of a Secretary of State for Industry is to announce an end to cuts in our manufacturing capacity? Is he aware that what we need now is an expansionist package?
Mr. Jenkin: I hope that the hon. Gentleman will have noted the announcement that the underlying rate of growth in manufacturing output is reported by my statisticians to be 2 per cent. per quarter. That is a helpful and hopeful sign. Of course, that is over a short period and we must hope that it will continue.
In the steel industry throughout Europe, in previous decades there was a substantial investment in new capacity. This is now far in excess of the market demand for steel, so rationalisation and withdrawal of capacity had to be the order of the day. What I have announced, will help the private sector to some extent instead of concentrating the help solely on the British Steel Corporation.
Mr. Kenneth Carlisle: Will my right hon. Friend accept that many of us welcome and understand the justness of the move, but does he agree that we must aim for a return to profitability of the whole private sector, and will he bear in mind that public sector costs have borne heavily on the private sector in the last two years? Will he use his position in the Government to fight to control public sector costs in the coming year?
Mr. Jenkin: I understand and greatly sympathise with what my hon. Friend has said. I firmly believe that competition is the most effective way to get any organisation to keep its cost, and therefore its prices, under control. I know that my hon. Friend cheers as loudly as I do when I point out that the Government have done more to introduce competition into State industry in the last two and a half years than their predecessors did in the last 30 years.
Mr. Peter Hardy: The Minister said that he was hoping for advance, but does he accept that there can be little advance for £22 million, which could be described as too little too late? The Minister said that there had been a 28 million tonne contraction in steel capacity in Europe in the past six years, but does he acknowledge that Britain has supplied the greater part of that, and that if other countries had operated EEC policy as scrupulously and as diligently as Britain has done we might not have been facing the current level of industrial decline in steel areas?
Mr. Jenkin: The figure that I gave was not for a reduction in capacity, but for a reduction in output of liquid steel. The hon. Gentleman's point is perfectly fair. Under the European regime and the arrangements agreed over the last two years within the ECSC, it is essential that all countries with excess capacity should be as forthright and firm in complying with restrictions as the British Steel Corporation has been. It is the intention of the meeting of Industry Ministers—which, unhappily, had to be postponed last week because of the weather—to bring that fact home to the Commission as forcefully as we can. The Commission fully accepts its remit in this regard.
Mr. Anthony Beaumont-Dark: I, too, welcome my right hon. Friend's initiative,

33
but, in the £22 million rationalisation and restructuring, is it not just as important for private sector companies, which have borne so much of the heat of the day, to feel that the BSC deals with them in an open-handed and fair manner over the sacrifices that have to be made in restructuring? Does my right hon. Friend agree that private companies fear that in talking to the BSC they go into a big den and are only mice?
Mr. Jenkin: My hon. Friend is right.That was one complaint by BISPA. If private-sector companies are confined to seeking help via the Phoenix schemes, inevitably they have to turn to the corporation for help. What I have announced this afternoon will give them another door to go through for sensible rationalisation and restructuring schemes.
Mr. Frank Hooley: What does the Minister mean by "a significant reduction in capacity?" Is he talking about 20 per cent., 30 per cent., 50 per cent., or what? Is he aware that massive imports have seriously threatened the Sheffield special steels industry? Is he further aware that if he cuts capacity further it will be a green light to our competitors inside and outside the EEC? Will any of the money be conditional on merging with any segment of the BSC?
Mr. Jenkin: It is a separate exercise from the Phoenix arrangements, which are under discussion between elements in the private sector and the BSC. We have had Phoenix 1 involving Allied Steel and Wire Ltd. Talks are going on about the areas of engineering steels and heavy forgings. On the hon. Gentleman's first point, imports would threaten were it not for the voluntary restraint agreements, which it is hoped to renew early next year, and for which a mandate was given by the Foreign Affairs Council at the meeting last week.
Mr. Orme: May I press the Secretary of State on the question of restructuring? Does he accept, as my hon. Friend's have said, that we welcome that aspect of the announcement, although we hope that the majority of the public money going to the private sector will be used for restructuring and not redundancies? Therefore, should there not be public accountability, and will the Department monitor developments?
Mr. Jenkin: My Department has to agree a scheme before the money becomes payable. I made it clear that the
34
scheme is under section 8 of the Industry Act, and there will be all the normal parliamentary and other checks on the money.
Following are the eligible activities:
Assistance will be considered only in respect of establishments on the private sector primarily engaged in the following activities:
SIC Activity
ex 2210 Manufacture of the following products, described in annex 1 of the ECSC Treaty, from ordinary or special steel:

(i) Crude and semi-finished products, including products for re-use and re-rolling—liquid steel for castings; ingots for remelting and forging; semi-finished products such as blooms, billets, slabs and bars; and hot-rolled wide coils other than finished products;

(ii) hot-finished products such as rails, sleepers, soleplates, joists, heavy sections of 80mm and over, sheet piling, bars and sections of less than 80mm and flats of less than 150mm, wire rod, tube rounds and squares, hot-rolled hoop and strip hot-rolled sheets under 3mm, plates and sheets of 3mm thickness and over, and universal plates of 150mm and over; and

(iii) certain steel sheets and strip; namely, tinplate, terneplate, blackplate, galvinized sheets and other coated sheets; cold-rolled sheets under 3mm; electrical sheets; and strip and wire for tinplate.

2235 Drawing, cold rolling and cold forming of steel—excluding the drawing and manufacture of steel wire products. This covers units engaged in cold rolling steel hoop, strip or sheet—over 3mm—from purchased or transferred hot rolled sheet; cold drawing steel bars and shapes from purchased or transferred hot rolled steel bars; and the manufacture of other cold finished products—except wire and wire products—not specified in the ECSC Treaty.
Assistance will not be considered in respect of establishments primarily engaged in the manufacture of raw materials for iron and steel production, pig iron and ferro-alloys, iron products, or steel products other than those listed above.

STATUTORY INSTRUMENTS, &C.
Mr. Speaker: By leave of the House, I will put together the questions on the two motions relating to draft statutory instruments.
Ordered,
That the draft Employment Protection (Variation of Limits) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Unfair Dismissal (Increase of Compensation Limit) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Goodlad.]

Employment Prospects in Wales
4.27 pm
Mr. Ray Powell: I beg to move,
That this House deplores the policies of Her Majesty's Government as they affect employment in Wales, in particular those that have decimated the greater part of Welsh industry, resulting in the highest rate of unemployment in the Principality since the 1930's; calls upon the Government to increase investment to create new jobs and to sustain existing ones and believes that finance should immediately be made available to the National Coal Board for developments that include the New (Deep) Mine at Margam, thus ensuring that the South Wales coalfield shares in the expansion and modernisation in this traditional industry Which is so essential to the nation.
I hope that my good fortune in drawing the first place in the ballot for today will be shared by others who may benefit from it.
For the major part of two and a half years I have listened to and participated in debates deploring the Government's economic policies I have attended numerous debates on unemployment. I am absolutely convinced that the arguments and warnings from the Labour Benches are accurate and acceptable to most clear-headed Members. Unfortunately, Members on the Government Benches have taken a little longer to accept them, although I am pleased to see that at last we are getting through and that there are signs of revolt and a breakthrough to more reasonable, acceptable and moderate thinking. A loss of solid, safe Tory seats might be one reason and threats to the seats of existing Conservative Members might be a further cause, but, whatever the explanation, let us hope that it will mean changes to help the people of Wales, to reduce the cancer of unemployment and to bring hope for the young and the middle-aged who are desperate for a chance of a job, for security and to be independent.
We could do no better than to ask all right hon. and hon. Members to read or re-read the excellent first report of the Select Committee on Welsh Affairs. That more than adequately and comprehensively covers all the arguments for developing opportunities in Wales. All the members of the Committee deserve our sincere thanks, especially my hon. Friend the Member for Pontypool (Mr. Abse), who ably presided. None the less, it is interesting to note that since July 1980 very few, if any, of the recommendations have been acted upon. It is even more interesting to note that the preparation of such an excellent document necessitated only one visit away from the House.
Without wasting a great deal of time repeating what has already been said many times, it is necessary to mention the effect of the Government's economic policies on employment prospects in the Principality. Within months of their election to office and without the necessary time lapse, the Government slashed the personnel of British Steel by 25,000. There is little hope of recovery from that action. The consequential repercussions were redundancies, factory closures and bankruptcies on an unprecedented scale. The Government also increased bank rate, doubled VAT and started the slaughter of local government services. The consequential repercussions were higher mortgages, higher taxes, higher interest rates, higher rents and rates and fewer and fewer services for the old, the sick, the disabled and children. There have been cuts in the meals on wheels service, medical treatment has been reduced, and there have been cuts in school meals,
36
school milk, school places and, in some areas, even schools. There are many more consequencies, too numerous to mention.
We all know the extent of this vicious rape of our industry and services. We know, too, of the serious consequences of the Government's policies—in particular, the tremendous escalation of unemployment. Hardly a skilled or unskilled industry or profession has escaped this malicious monetarist madness. Doctors, dentists, dockers, dairy workers, nurses, firemen, shopworkers, woodworkers, transport workers and all workers in the steel and construction industry have suffered and are still suffering. Many more could be added to the list. There are 170,221 people registered as unemployed, but there are thousands more who are not registered but are without work. The vast numbers of our people who are suffering this indignity, frustration and impoverishment in a so-called civilised society must be given hope.
It is not my purpose to make any political capital out of the plight and misery of those unemployed people. I see that happening every week. It is so easy for us to bandy the figures about in the House, whether socially, regionally or nationally, but how many of us really appreciate what unemployment means to our people in terms of human misery and suffering? How many of us realise the degradation, demoralisation and total despair that it creates? How many of us fully appreciate why it drives people to desperate action and to suicidal thoughts and, in some instances, acts? That misery, humiliation, suffering and degradation of the 170,221 unemployed people in Wales is more than a reminder of the 1930s. More and more we see men standing around the streets; more and more we see young people aimlessly walking around; and more and more we see poverty creeping back into our valleys. The young have soured and becomed sickened with life on the dole. They are depressed, dejected and prone to drug addiction. That has been brought about by a Government who have engendered more hate in two and a half years and destroyed more of our commercial and industrial undertakings in Wales than did the last world war.
What has happened over that period? The gap between the unemployment rate in Wales and that of Great Britain as a whole tended to narrow between 1965 and 1974. Since then, however, especially in the last two years, the gap has widened as unemployment has risen. Wales now has a higher percentage of unemployed people than any region in England. Wales is approaching the unenviable status of the worst-hit industrial nation in Europe. Official projections suggest that a further 13,500 people per year will enter the labour market in Wales between now and 1985. It has been estimated that regional policy created about 6,000 new jobs per year, at best, between 1960 and 1972. There is no evidence that that pace of new additions to the stock of jobs has been sustained in recent years.
Let us put on record and let us all clearly understand the present position. I refer to the replies given to me by the Secretary of State on 7 December 1981. He said that in Wales there was an 8 per cent. drop in the number of people in work compared with a 5·5 per cent. drop in the United Kingdom as a whole. In 1979, the number of unfilled vacancies in Wales was 619; in 1980 the figure was 171, but in 1981 it was only 129. Yet 170,221 people are registered as unemployed. If the unemployed workers accept the advice of the Prime Minister to look for work, where should they move to in Wales? If they have a bike,

37
where should they ride to? The number of 16- to 18-year olds unemployed in Wales in October 1979 was 14,171. In October 1980 the figure was 21,649. However, in October 1981 it was 24,924—an increase of 10,800 young people unemployed in two years.
Further to the replies that were given to me by the Secretary of State, up to 8 October 1981, 33,835 young people under the age of 20 were registered as unemployed and 17,290 were in youth opportunities programme schemes. In 1979, the number of unemployed school leavers under the age of 18 was 5,694; in 1980 the figure was 9,995, and in October 1981 it was 11,884. So, between October 1979 and October 1981, there has been a 110 per cent. increase in unemployed school leavers under the age of 18. The rate of unemployment in Wales is 15 per cent., whereas the lowest rate in England is 9 per cent.
What action will the Government take to remedy this problem? Promises are not enough. We need positive action, and we need it desperately. Instead, the Secretary of State for Employment is determined to add further insult to the injury of the young unemployed. The right hon. Gentleman should heed the warning that there is already wide opposition to the present inadequate youth opportunities programme, which offers the miserly sum of £23·50 a week. He wants to impose a training programme for young people at £16 a week and to withdraw supplementary benefit from anyone who refuses a place. That is quite obnoxious and could have been suggested only by a person with a twisted mind. Already our young people are deprived of what they need most—a job with an income. The right hon. Gentleman's proposals will unite and anger all those involved with the young unemployed.
Before the Secretary of State introduces such foolhardy proposals, I advise him to get on his bike and talk to the CBI, the TUC, the MSC, and especially the young unemployed, and, for a change, to listen to what those directly involved have to say.
With this shameful record, having created all this unemployment and industrial havoc, the Government suggest that if people in work are having their living standards reduced, those out of work must be expected to shoulder their share of the burden. But these people, put out of work deliberately and calculatedly by the Government, already bear more than their fair share of the national burden. Cutting their benefits by 2 per cent. in real terms will be an act of criminal irresponsibility.
The right hon. Member for Sidcup (Mr. Heath) summed it all up admirably in last Tuesday's debate when he described the ideas as fallacious and unacceptable, and as having no philosophical backing.
It is not my intention to speak at length about my constituency of Ogmore, but I suggest that what has happened recently is typical of most constituencies in Wales.
This weekend, the Ogmore constituency received an announcement from Bridgend Paper Mills that 70 jobs would be lost by the end of the year. Only 12 months ago, the workers agreed to the loss of 70 jobs and a cut in their pay packets. In Bridgend Paper Mills there is an excellent industrial relationship between management and workers. The manager claims unfair competition from European firms which receive heavy subsidies on their fuel costs, and that that is the main cause of the redundancies. There has been substantial investment to ensure long-term
38
security there, with £6½ million being spent on a coal-fired electricity generator to cut fuel bills. But Government policies, creating recession and lack of consumer demand, are the main cause of jobs being lost.
Again last weekend, 100 redundancies were announced at the Borg Warner factory, and we heard of a further 20 redundancies at Tensia Limited on the Bridgend industrial estate, with the managing director stating that the recession, costing problems and a lack of adequate premises were forcing him to close.
In only one weekend we have had these announcements of redundancies, closures and intended closures. At Bridgend, an electrical factory which has not had a strike in 45 years threatens closure if its workers will not accept the 2 per cent. increase that they have been offered. If the work force goes on strike, 96 jobs will be lost. The average earnings of those workers, most of them women, are about £55 a week. The 2 per cent. offer would mean an increase of £1·10 a week. The recent mini-Budget will take away the £1·10 a week from those 96 workers if they each have nothing more than a colour television set. It is no wonder that after 45 years the workers are talking of strike action.
The Secretary of State for Wales accepts that Ogmore has suffered as a result of Government policies and redundancies. On the last occasion that the right hon. Gentleman answered Welsh questions, he suggested that because Sony at Bridgend was receiving the first-ever EEC grant to a foreign company for extensions to its factory, with the eventual employment of 120 persons, Ogmore 's difficulties would be reduced substantially. We try continually to explain to the Secretary of State that, although we accept the good news of jobs coming to areas, the job losses, factory closures and redundancies that I have outlined are at least 400 per cent. to 500 per cent. more than the new jobs, and the position is getting worse week by week and month by month.
In the same week that we had the good news of the Sony development, with 120 jobs, we had the bad news of the Coegnant colliery closure, with the loss of 400 jobs. That is one of my reasons for initiating this debate. The outlook for jobs and the job market in Wales is very bleak.
Government agencies have warned that unemployment in Pembroke dock could soar to 30 per cent. next year. One in four persons in Tenby is out of work. Is it not ironic that £80,000 is being spent building advance factories in Tenby when the district as a whole has 150,000 sq ft of empty space which cannot be filled—and this in the constituency of the Secretary of State for Wales?
The latest issue of The Economist says:
"Nissan's giant Datsun car plant will be built in Wales if the Japanese firm decide to take the plunge in Britain."
I wonder whether the Secretary of State is having talks with Mr. Takashi Ishihara, the president of the company, to clinch the decision. I hope that the right hon. Gentleman will make a statement to the House as soon as possible.
I want now to discuss the coal industry and the changes in it that we have seen during the past 20 years. I have a vested interest because my father was a miner and, like Mr. Speaker, whose father was also a miner, I sere a Welsh constituency.
Over the past 20 years we have seen changes brought about by cheap oil prices which caused contraction, closures and continuous trouble in the mines. When that era ended at the close of the 1960s, the climate changed. We could still have had the right hon. Member for Sidcup as Prime Minister and avoided the embarrassment of the

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present Prime Minister's climb-down over pit closures. Rising oil prices changed the negotiating climate. Some have argued that Sheikh Yamani should be congratulated on saving the miners and sending them to the top of the wages table where they rightly belong.
Recently I signed an early-day motion congratulating Arthur Scargill on his outstanding victory to the important and responsible post of president of the NUM. His election will ensure that the miners receive just rewards for the dangerous and extremely hazardous work they do. We all want a satisfactory outcome to the pay offer.
Having visited the St. Johns colliery during the recess, my support is solidly behind the NUM and all those who work in the coal industry for less than £200 a week. The miners are asking for a necessary increase to keep pace with the cost of living, especially after the mini-Budget and other recent attacks on their living standards.
The latest colliery closure in my constituency is Coegnant Maesteg and it was that which prompted me to initiate the debate. Most miners there will be absorbed in another colliery, but the closure means a loss of job opportunities in an area that has already suffered at the Government's hands. The unemployment rate in the Maesteg area is over two and a half times greater than when the Government came to power. It is approximately 20 per cent. and getting worse. The men believe that they have not been given a fair chance, that there are valuable reserves of coking coal and that investment to open new seams would enable the pit to continue the extraction of coal which is in demand.
The National Coal Board estimated that the investment would cost £4 million and decided against that because of geological difficulties; there was no certainty that any new seams would be workable and profitable. The men had no alternative, apart from strike action, but to accept the decision, which they did on 7 November.
The lack of investment is putting other collieries in South Wales at risk. Although pits are producing large amounts of coal at the coal face, the lack of mechanisation is cutting the overall output figures. For example, output at the coal face in the Trelewis drift is 17·5 tonnes per man-shift, but overall production is 2 tonnes per man-shift. At the Marine colliery, production is 12·5 tonnes at the coal face, but only 2·5 tonnes overall. The production and profitability of many collieries—some in danger of closure—can be improved if the NCB is able to invest in developing new seams, improving mechanisation at the coal face and bringing coal to the surface.
On the brighter side, today's announcement of the £2·3 million spending to open up estimated reserves of 20 million tonnes of coal at the St. Johns colliery will be welcomed by all concerned. Indeed, that might help to alleviate the fears expressed by lodge secretaries in the area that miners in Maesteg are being referred to as "caravan colliers", because of the continued moves from one pit to another. I am sure that the House will place on record its welcome and express its hopes for the success of the new enterprise with grateful thanks to the management and union representatives for the continuation of excellent industrial relations.
The NCB manpower in South Wales coalfields is 25,000–950 fewer than a year ago. In one year there have been 473 early retirements and 300 men have left voluntarily. A total of 600 men, about half of whom were
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juveniles, have been recruited. The NUM complained that men were finishing on early retirement and not being replaced. There is a shortage of men on the coal face, the development of new coal faces is being held up, and often men are taken from the coal face to help in opening new faces. That means a substantial loss in output. Therefore, pits will become uneconomic and soon face closure threats. Serious trouble can arise unless more men are recruited to meet these needs.
From 1979 to 1980, the Government were spending £35·6 million on capital investment in the South Wales coalfields, in 1980–81 £35 million and in 1981–82 £30 million. The Government are spending £5 million less this year than last year and £5·6 million less than in 1979–80—a drop of approximately one-fifth in total investment in South Wales in the past three years. The Secretary of State for Wales said:
"The Government are committed to … Plan for Coal and are making available … £800 million for the industry in the current year."—[Official Report, 2 February 1981; Vol. 998, c. 9.]
Investment in the South Wales coalfield is substantially less in real terms than it was from 1977 to 1980.
At the end of November 1980, coal stocks in Wales were substantially reduced to 2·9 million tonnes of deep-mined coal—mainly steam raising coal—which is 1 million tonnes less than a year ago. In the 13 weeks up to the end of November 1981 900,000 tonnes were taken from stock. The reasons for that were the good performance at the Aberthaw power station, success of the export drive and higher sales to steel works. The NCB expects to clear stocks by mid 1983. The output of South Wales pits increased by 6·4 per cent. in the past 12 months. If British Steel wanted to buy more South Wales coking coal for Port Talbot and the Llanwern works next year, the NCB could not supply it because of its export commitments.
We are glad to hear of the extent of the NCB development and its success over the past year. British coalfields produce the cheapest and the best-mined coal in Europe. The cost of coal in nationalised British pits is £35 a tonne and in the private pits of West Germany £44 a tonne, France £45 and Belgium £61. The NCB find it difficult to compete with European countries because of the high subsidies they give to their coal industries. The subsidies paid to the Belgian coal industry are £27 a tonne, France £15, West Germany £12 and the French Government are increasing their subsidy substantially.
The NCB is heavily shackled by high interest charges on borrowed capital, currently totalling £185 million. Exports could be increased if the Government increased the NCB's subsidy and took over the burden of the high interest charges which are inflicted on it by the Government's policies.
While the demand for and supply of anthracite does not directly concern my constituency, I am sure that my right hon. and hon. Friend's will wish to mention it. It is claimed that there is a need for capital investment in anthracite, and that is an urgent matter. The western part of the South Wales coalfield is the only area in Britain that has anthracite reserves. It is the best anthracite coal in the world.
Anthracite coal of an inferior quality is being imported from Tunisia, the Soviet Union and Vietnam. Anthracite, especially that of the quality extracted in Wales, is in great

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demand and a feasibility study is taking place on the development of anthracite reserves. It is essential for Britain that they be made available urgently.
About seven years ago, the NCB considered investing in a new deep mine at Margam. The estimated cost at the time was £80 million and it was expected that the project would employ about 150 men immediately, but nothing was done about it. Since then, pressure for the project has built up, mainly because it would release huge reserves of first-grade coking coal which will be in demand in the near future.
The current scheme envisages an investment of almost £200 million. It would take nearly 10 years to reach full production and would employ nearly 1,000 men. The mine would produce enough coal for the needs of the BSC and for export. It would be virtually on top of the huge Port Talbot steelworks and near to Llanwern, thus reducing transport costs to a minimum, and there is excellent access to ports and railways.
When the new mine was first agreed, it was hoped that it would be ready to absorb the men in the Maesteg area when the reserves at collieries there became exhausted. Since then, Caerau and the Coegnant colleries have closed and the Garw and Wyndham—Western Colliers have reserves for about 12 years. If the Margam project is commenced soon, the men from those colleries could be employed in the new pit. What will happen to those men, and others, if Margam is not opened? There will be even fewer jobs, still less coal being produced and more miners on the dole and perhaps lost to the mining industry for ever.
The work force at Wyndham-Western colliery in Nant-y-Moel holds the top position in the NCB's improved safety standards league, and that is attributable to the skills of that work force. The men work under very difficult conditions, calling for expertise, knowledge and skill. They should not continually and constantly be under the threat of closure.
The chairman of the NCB, Sir Derek Ezra, said that Margam is still a live project, but, because of the considerable depth, it appears that the costings are above the norm. Why is he not prepared to say to the Government that the project should be classified as different? It should have independent investment in addition to the overall "Plan for Coal". It should be started immediately to show the Welsh miners that the NCB has a duty to the Welsh coalfield. The only way that it can survive is by such a commitment. Margam, with its reserves of 20 million tonnes or more, would be the injection of confidence that Welsh miners need.
The young need to know that they have a future in the industry and the NUM needs to know that promises are kept. If South Wales is to be dismissed as a declining and decaying coalfield, the fight back must start now. The people of South Wales have been dominated by coal. Their whole environment has been destroyed by it, and now that things have changed they have earned the right to new hopes of a bright future—or of a least some future—and Margam should be the start.
I urge that the Government discuss the issue with the NCB and the NUM as a matter of urgency so that progress can be made at the earliest moment. It is a matter of national importance in which the Government must give a lead to preserve jobs, to create jobs and to safeguard Britain's energy resources.
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I know that a number of my right hon. and hon. Friends wish to take part in the debate. I have taken long enough, but, given the problems besetting my constituency and the Welsh coalfield, I could have gone on for much longer.
Several hon. Members rose—
Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. Before I call the next speaker, I remind the House that 14 right hon. end hon. Members have indicated their wish to take part in this important debate. It must end at 7 pm, and I hope that the House will understand if I do not give preference to those who are official Front Bench spokesmen and, therefore, have other opportunities to speak.
5.5 pm
Sir Raymond Gower: I compliment the hon. Member for Ogmore (Mr. Powell) on his choice of subject. I understand why he dwelt on the difficulties of his constituency and the coal mining industry. I found his speech a trifle imaginative only when he appeared to suggest that all the problems of British industry, including unemployment, started after the Government's arrival in office. I certainly share the hon. Gentleman's profound concern and anxiety about unemployment in Wales. Anyone who, like me, has represented a Welsh constituency for many years would take the same view.
Even when I was first elected to the House in the 1950s, unemployment was a lively issue in the Principality. We Conservatives were blamed, wrongly in my view, for having been responsible for all the pre-war industrial problems and difficulties, including unemployment, even though, for the most part, they had been of a world-wide character.
In my first 12 years in the House, I saw three successive Conservative Governments conducting with great skill policies that led to economic growth and what could be fairly described as full employment. Therefore, it must be obvious that, apart from humane considerations, the Government have every incentive to seek to reduce unemployment. There are many reasons why that is so, and I shall give just a few.
First, excessive prolonged unemployment suggests a degree of failure, and most Governments prefer success. Secondly, in our third year of office, the persistence of unemployment must be electorally disastrous. In addition, the industrial problems and failures that create unemployment must surely alienate our supporters. I could also point out that unemployment has been shown to be extremely expensive. Not only does it cost huge sums in the payment of benefits, but it involves heavy losses to the Exchequer through the loss of corporation tax from companies that have failed and the loss of income tax and national insurance contributions from those who are put out of work. When unemployment affects areas such as Wales that have been dependent on a few industries for too long the problems are compounded.
However, we must surely acknowledge the achievements of successive Governments, assisted by the Welsh Development Agency, the Development Board for Rural Wales and ancillary organisations, in promoting new industrial undertakings. The answer given to me by my right hon. Friend the Secretary of State for Wales last week that 108 advance factories, promising nearly 4,000 jobs, have been occupied in the past year shows the size of the

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achievement. The fact that 251 factory units, totalling 1·4 million sq ft, were allocated between January and November this year shows that the momentum is being sustained.
I appreciate the natural concern for the building of new factories and the creation of schemes for the young unemployed and I understand Ministers' preoccupation with the problems of the younger unemployed, but I suggest that sometimes the problems of middle-aged men and women who are put out of work can be even more intractable. I hope that Ministers will look carefully at those problems.
I am deeply concerned about whether we are doing as much for existing industries and firms that have been established for several years as we appear to be doing for new entrants into industry. I have in mind a company that is sited near my constituency and employs many of my constituents. It has been managed by a friend of mine and his family since before the Second World War.
Morfed Ltd. gave employment to a considerable number and over 100 jobs existed when the company ceased operations. I know of the tremendous exertions of the management and work force in seeking to keep the company in operation. I am aware of the magnificent efforts of the managing director, who travelled throughout the world seeking orders. He was indefatigable in his personal efforts. I supported the efforts of the hon. Member for Caerphilly (Mr. Hudson Davies) when we jointly tried to persuade the Welsh Development Agency and other agencies to give some financial help to the company. The company might have been saved if it had been offered a grant or loan. An excessively large amount would not have been needed.
I turn to another tragic problem in my constituency. After 24 years of fruitful association Geest Holdings Ltd. has decided to pull out of Barry docks. Its reason for doing so, so it has told me and declared publicly, is that its newest ships cannot safely enter and leave the docks in bad weather conditions. Experienced pilots—some of them with many years' association with the trade of the docks—assure me that the dock entrance is eminently safe for the newest Geest ships even in bad weather conditions.
The loss of Geest Holdings Ltd. is not due to economic decline. The company plans to transfer its valuable business to Bristol. There are some suspicions that the financial package that has been offered by Bristol is better than that offered by the British Transport Docks Board in South Wales. I ask my right hon. Friend: are large organisations such as the board unable to offer a package comparable to that offered by a single port such as Bristol? It seems inconceivable that it is unable to do so. It must be an expensive operation for Geest to transfer its business.
It is a fact that Barry has been able to offer many special advantages. It has a deep-water entrance that permits entry for more hours of the day than most of its rivals. It is advantageous that a dock should have a deep-water entrance if it is to be used by a company dealing in perishables such as bananas, which is the main commodity conveyed by the Geest ships.
Generally, industrial relations in the docks at Barry have been excellent during the 24 years that Geest has been there. The work force has shown itself to be competent and adaptable. Moreover, at this very moment road
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communications with Barry docks are being improved. Following the extension of the M4 the link road to connect the motorway with the docks is in the process of construction. Any help that the Welsh Office can give in retaining the valuable Geest business for the Barry docks will be greatly appreciated throughout my constituency.
It may be said that if Geest decides to stay at Barry it will continue to enjoy the support and good will of the entire community in the town and around it. As a major user of the docks, the company would continue to have paramount importance at Barry. In our anxiety to meet its needs it would be recognised as one of the chief users, which might not be recognised in a much larger dock such as Bristol.
The Geest business is a considerable proportion of the trade that passes in and out of the Barry docks. It would be serious if that trade were lost permanently to Barry. In some respects those in the Barry area have not suffered as much as those in the constituency of the hon. Member for Ogmore. Yet all Wales has special needs that have been recognised to some extent. Its dependence on a few industries has been partly rectified. Newer and more modern industries have arrived. I take pleasure from the fact that Wales has been getting some of the most modern industries over the past few years. But we must be vigilant.
I compliment the hon. Member for introducing for debate such an important subject. We must reduce unemployment. It is one of the most challenging issues to face any Government. I hope that we shall make significant progress during the months ahead.
5.16 pm
Mr. Roy Hughes: First, I congratulate my hon. Friend the Member for Ogmore (Mr. Powell) on securing the debate. The fact that he has done so is typical of the zeal with which he pursues his constituency's problems.
My hon. Friend rightly drew attention to the coal industry, which is basic to the Welsh economy. I support his call for more investment in the coal industry, especally for a new mine at Margam. I know that in this endeavour he will receive the support of the new president-elect of the National Union of Mineworkers, Mr. Arthur Scargill.
I wish to draw attention to another traditional sector of the Welsh economy, the Welsh ports. The ports have faced many difficulties. They were originally coal-exporting ports. They have survived over the years, albeit in reduced form. They have certainly suffered a reduced volume of trade and a much reduced labour force. It appears that once again they have cause for concern about their future.
It seems that the threat to the Welsh ports is coming from the new port development at Bristol, which to date has been nothing more than a white elephant and a waste of public investment. Nearly 16 years ago, when I first entered the House, there was a controversy raging over whether the port of Bristol should be allowed to build new docks. The then Labour Government firmly vetoed the proposal on both social and economic grounds.
At that time the ports in the Severn estuary were considerably under-utilised. It was felt, too, that if development were required for social reasons, South Wales had a far better claim, especially with the rundown of its traditional industries and the heavy unemployment from which it is still suffering.
On economic grounds it was felt that the money could be better spent on a new iron ore terminal to serve the

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Llanwern steel works. The Labour Government vetoed the proposal for expansion at Bristol. The controversy was raging during the run-up to the 1970 general election. The Conservative Party said "If a Conservative Government are elected, that Government will give the port of Bristol the go-ahead." The widely held belief at that time was that the intention was to win two marginal seats in the Bristol area for the Conservatives. In the event, the Conservatives won the general election and Bristol was given the go-ahead. It is worth pointing out that Bristol is a local authority port.
Sir Raymond Gower: I think that the hon. Gentleman will admit that his facts are slightly inaccurate. Surely the Bristol port was established as a result of a Private Bill that was supported by a majority of both parties, and the hon. Gentleman and I were among the few Members who voted against it.
Mr. Hughes: That is a complete distortion of the facts. It was a Conservative Government who gave the go-ahead and the proposal was firmly vetoed at all times by the Labour Party and by successive Labour Governments.
The new port development was subsequently opened by Her Majesty the Queen and for some years trade there has been negligible. Bristol's ratepayers have faced an enormous burden and my latest information is that the port is costing them 17p in the pound. It now appears that the port of Bristol is asking for further Government support for its investment. I wish to register the strongest possible protest because such assistance would be highly detrimental to the ports in South Wales and to employment prospects in our area. I hope that the Secretary of State will make that point of view felt in the Cabinet and that he will fight for Welsh interests in that respect. Such support from both local authorities and the Government would be a negation of fair competition.
We should consider what has already happened. The hon. Member for Barry (Sir R. Gower) referred to Geest Bananas and the excuse given by that company. The channel pilots have also been to see me. They point out that the excuse given by Geest that there are navigational problems is rubbish, and they should know about such problems. The real reason is that Bristol is undercutting and is able to do because of these unfair subsidies.
The port of Bristol has other aims as well. For example, it hopes to secure the timber trade from both Cardiff and Newport. That type of trade is basic to the survival of the ports at Cardiff and Newport.
There is the further example of what is known as the Egyptian potato trade. The contract is apparently awarded on an annual basis and last year Cardiff won it. Now the port of Bristol has made an offer that is lower than the price at which Cardiff obtained the contract last year. This undercutting is due to the subsidies which the port of Bristol is receiving.
I appreciate that Liverpool and London have already received financial support to cut the number of employees in their docks. But I maintain, as I did in the debate on that issue, that if there is to be Government support, it should be of a general character to British ports as a whole. It would be a scandal if Bristol were to receive both rate support and Government support. Some straight answers are called for from the Government Front Bench, particularly as I understand that the Under-Secretary is to reply and he, of course, is a Cardiff Member.
Mr. Ian Grist: While decrying these subsidies with which Bristol is, apparently, luring business away from Cardiff and other ports, does the lion. Gentleman agree that subsidies themselves are damaging, dangerous and always result in lost jobs in areas other than the areas which directly benefit from them, and that, therefore, they should, in general, be widely avoided?
Mr. Hughes: Yes, but it was the hon. Gentleman's Government who created this difficult situation, and that is the basic point I am making.
I have one final brief point to make which concerns the projected Datsun investment in this country. There was a very optimistic article about it in The Economist last week. It spoke of a $600 million development project. It said that it would almost certainly be in South Wales. That is why I say that it was optimistic. Up till now the content of the cars has been a controversial matter, but apparently that has been ironed out. The British content would he no less than that of British Leyland cars at present and probably more than that of the cars of Ford, Talbot and Vauxhall. It is also interesting that one of the reasons given in the article by the Japanese is Britain's stable Government. I should think that that repudiates the drivel talked in some quarters about proportional representation.
More specifically, however, South Wales has at present so much to offer, with an adaptable labour force and excellent sites. The interest that I declare is a particularly good one. From the Llanwern steelworks, steel could almost be thrown over the wall for the manufacture of cars. A number of Japanese firms have already been happily established in South Wales.
As it happens, I speak with a bit of experience of the motor industry. I appreciate that some people have misgivings about the Japanese as a result of the war. have some interest in the matter because I am the proud holder of the Burma Star. The Japanese can at least bring a new dimension to the British car industry with new technology and they can do much to revitalise this extremely important sector of our economy.
Mr. Tom Ellis: Another very important factor in persuading Datsun to come to the United Kingdom and, in particular, to South Wales is that Britain remains a member of the EEC.
Mr. Hughes: I am 100 per cent. in favour of Britain leaving the Common Market. The Western European car manufacturers have raped the British market, and it is time to call a halt to that. The vast majority of imported cars on British roads do not come from Japan; they are Volkswagens, Renaults, Fiats, and so on. That is the foreign competition with which we have to contend.
What is the latest position on the Datsun project? Perhaps the Minister can give hope to the people of South Wales. Some hope is needed after two and a half years of this Government.
5.28 pm
Mr. Tom Hooson: There is no more important subject on the Welsh agenda than the creation of more jobs. For that reason, we must welcome the debate initiated by the hon. Member for Ogmore (Mr. Powell) today.
I am struck by the amazing assumption that underlines the hon. Member's motion, which is that unemployment in Wales is overwhelmingly the product of the

47
Government's policies. One might imagine that unemployment was an unknown phenomenon prior to the last general election. The implication is that Labour Party policies would reverse the present tragic trend of unemployment, even though this is a problem that must be grappled with in many countries. It is a Socialist President who presides over unemployment of 1½ million in France. It is a Socialist Chancellor who presides over unemployment of 2 million in Germany. That is apart from the 2 million guest workers who have left Germany in the last two or three years.
Mr. D. E. Thomas: Is the hon. Member aware that the policies now being devised and put into effect by the French President, both on regional autonomy and economic regeneration, are markedly different from the monetarist policies being pursued by the Conservative Government? How does he explain that?
Mr. Hooson: It is remarkable that President Mitterrand has already, after three months, had to reverse his course. An important result was the considerable loss of confidence in the French economy. However, we are not here to debate the French economy; we are here to debate Wales. I am merely pointing out that we are dealing with a world-wide phenomenon.
Before Labour Members roar with laughter, let me remind them of the figures of Welsh unemployment for which they were responsible. In 1974 the Labour Government took over an unemployment figure of 38,000 in Wales. When they left office that figure was 84,000, yet there has been no basic change in Labour thinking and we have not had from them any plans for the creation of employment. Therefore, we can only assume that the ideas that a Labour Government would implement would be the same as those that led to the doubling of unemployment in the last period of office.
The great message of the Labour Party is that a Labour Government would promote reflation, which is another word for inflation. No one has spoken more lucidly about the fallacies of the Labour Governments policies than the former Labour Prime Minister, the right hon. Member for Cardiff, South-East (Mr. Callaghan). Labour Members would do well to refresh their memories by consulting his speech to the Labour Party conference in 1976. He said that there was a whole range of options which had once appeared to be solutions for unemployment, but which had been demonstrated not to have any permanent effect, and which very soon tended to destroy rather than create jobs. However, we still have that tired thinking from the Labour Benches, and we have heard no constructive suggestion from the official Opposition at any point in the life of this Parliament.
Mr. Tom Ellis: I remind the hon. Gentleman that more male jobs were lost in Wales between 1960 and 1970 than were lost between 1970 and 1981.
Mr. Hooson: I thank the hon. Member for his contribution.
There is something that is much more important than any measure taken by the Government. There is a great challenge facing our factories and services to increase productivity. There is much hope in the current developments in the economy in Britain as a whole.
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My right hon. Friend the Secretary of State for Industry referred last week to the spectacular improvement of 10 per cent. in the relative performance of Britain vis-á-vis the rest of the world in terms of output per man over the past year. This is the first time that Britain has improved, after many years of slipping behind our competitors in the international league. Of that 10 per cent. improvement, 7 per cent. was in output per man and the rest was accounted for by the fall in the value of the pound.
Sir Raymond Pennock, the president of the CBI, said one of the shrewdest things I have heard when he pointed out that halving the level of pay increases would have a far greater effect on the competitiveness of industry than any conceivable changes that could be brought about by Government policies, whether on taxes or interest rates, or in other directions.
Let us review the 1970s presided over by both Labour and Conservative Governments. Britain managed to come out of that decade having increased wages in real terms by 300 per cent., at a time when the increase in output over the whole 10 years was a pathetic 15 per cent. In the last five years of the period, 1975 to 1980, our unit labour costs rose by 88 per cent. In the same period the French increase was 45 per cent., the American 36 per cent., and the German 17 per cent. The most spectacular of industrial performers, the Japanese, did not increase their unit labour costs at all.
That is a lesson that is far more relevant to the needs of Britain than anything that can be done by way of Government policies, even though I am in favour of a number of ways in which the Government can helpfully intervene. The Conservative Government are doing all that they can in that direction. I am trying to inject a note of realism, which has been sadly missing in the debate. We must recognise that the greater part of the progress in fighting the blight of unemployment will not come from Government policies. At the end of the day, we can only hope that jobs will not be destroyed by an incompetent Labour Government. The best thing that we can hope for is that the talents of people and industry will be deployed properly. That is where trade unions can make a great contribution.
The hon. Member for Ogmore referred to the new president of the National Union of Mineworkers. I hope that, despite the hon. Gentleman's remarks, he will use whatever influence he has with Mr. Arthur Scargill to urge on him the value of making sure that if there is to be investment—say in the new mine at Margam—the mineworkers will be aware that the degree of investment will be closely related to the prospective return on investment. The most suicidal course is that being followed by Mr. Scargill, who advocates wage increases which bear no relationship to possible increases in productivity.
Mr. Ray Powell: The hon. Gentleman asked whether I supported the newly elected president of the NUM. I am convinced that he will, as his predecessors did, act in a rational and responsible manner because he represents the miners. I said that I thought that miners deserved £200 a week for working in such conditions. I believe that when miners look at the economics of mines they will act responsibly. However, if their production increases by 6·8 per cent., they expect to receive a 6·8 per cent. wage increase, but if inflation goes to 12 per cent. because of

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Government policies, they expect to have at least a reasonable amount to meet the cost of inflation imposed on them by the Government.
Mr. Hooson: If the hon. Gentleman uses his influence with Mr. Scargill to obtain a reasonable settlement, he will have the sympathy of Conservative Members. There is no question but that one of the most evil results of strong trade unions has been that men have been priced out of jobs. There is a lemming-like zeal for self-destruction that seems to appeal to the members of some uni ns.
I remind the hon. Member for Ogmore of the record of his own party over the coal industry in South Wales. During the lifetime of the Labour Government from 1964 to 1970, 39 pits were closed in South Wales, eliminating 30,000 jobs. That reduced employment in South Wales in the coal industry from 77,000 to 47,000. I have never heard the hon. Member tell us about the 30,000 jobs destroyed during that time.
Mr. Ray Powell: While your figures might be correct, and I do not wish to doubt them in any way, you have not mentioned that in the period from 1951 to 1964 the Conservative Government—
Mr. Deputy Speaker: Order. The hon. Gentleman must not bring me into the debate.
Mr. Hooson: I am astonished to hear that Mr. Deputy Speaker was up to such mischief in those years, but I remind the hon. Member for Ogmore that the same phenomenon was experienced under the most recent Labour Government, from 1974 to 1979, when again 14 pits were closed, reducing the number of pits in Wales to 36.
I have emphasised the limitations on what can be achieved by Government action. This is the realistic context in which we have to look at the problem. Within that realistic context, is it not impressive that half of all the new factory building taking place in Britain is in Wales? A new factory is being opened every day in Wales. At the depth of the world recession, the number of new lettings, in terms of space, is double that of a year ago.
The Government are to be congratulated also on the very high priority that the Secretary of State has given to maintaining the major road programme in Wales. This is extremely important, to ensure that the Welsh economy will be competive in the years to come.
I remind the House of the great importance of our participation in the European Community as the basis for attracting the foreign companies that have been drawn into Britain. We have already been told of the possibility of a Japanese car company arriving here. Car companies can also depart if they do not have access to the European market. I remind Labour Members that Mr. Ivor Richard is one person who has recently given a public warning, in an address on BBC Wales, that 50,000 jobs could be destroyed in Wales alone if official policies of the Labour Party were to be adopted.
I follow my hon. Friend the Member for Barry (Sir R. Gower) in underlining the great importance, as we seek to shift gradually the mix of industries in Wales, of a greater diversification of industries. I congratulate my right hon. Friend in particular on his progress in bringing a certain number of the most thriving electronic companies to Wales. It is very much the new industries that will be the basis of our prosperity. That in no way detracts from the
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reliance that we have on the old, traditional industries. I am sure that if the National Coal Board can justify an investment in a coal mine in Margam, helped to a degree by reasonable wage settlements, it will eventually have the money for that project.
Those of us who were members of the Select Committee that studied employment prospects in Wales were struck constantly by the complexity of the institutional arrangements and by the large number of bodies, all worth while in themselves, that are seeking to promote Welsh industry and to provide information. Our conclusion was that there was a particular onus on the Welsh Office, on the Secretary of State and on the Department of Industry to be the ultimate guiding voice to ensure that people understand the provisions that are available. In my constituency, I receive this lesson constantly by having business men telling me that they are bewildered by some of the provisions that are available. The take-up is limited, and a great deal of education is needed in this context.
I was delighted to see that one initiative by my tight hon. Friend was the recent establishment of business opportunities conferences in Wales. I was most favourably impressed by the large numbers of people who were attracted to the first two or three of these events. It is a very worthwhile step forward.
5.44 pm
Mr. D. E. Thomas: I shall not try to follow the negative, strident and predictable speech from the hon. Member for Brecon and Radnor (Mr. Hooson). It was a rehearsal of negative attacks on the Labour Government. It does neither the hon. Gentleman nor the Labour Party any credit to have that catalogue rehearsed. We need to have a positive analysis of the economic plight of Wales. It is not enough for the hon. Gentleman to say that, if working class people in Wales were prepared to tolerate a further drop in their living standards, suddenly all the problems would be solved.
The structural problems of the Welsh economy go deep and have been with us for a long time. They are the same problems as those that bedevil other regions—in England and in parts of the continent of Europe. They are problems that we experience with the decline of capitalism in Britain and in other European countries. It does this House no credit to give a simplistic analysis which would make us the laughing stock of any O-level economics student.
I do not want to look at the structural problems of capitalism as they affect Wales today. I want to look at the individual problems that face those who are made unemployed. I do so deliberately, because it is a dimension that is often neglected in our debates. We can now look at that dimension because the Welsh Office and the directors of social services in Wales have recently produced a working party report that ought to be read by all hon. Members and ought to have a wide circulation outside the House.
It was Beveridge who said, nearly 60 years ago, that the most important practical question with regard to an unemployed man was not how he came to lose his last job but how it came about that he could not get a fresh job. That is the question that has to be faced and answered by each unemployed man and woman, and by each young person leaving school in Wales and unable to find a job.
There is a growing body of research, to which the joint working party of the directors of social services and the

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Welsh Office has drawn attention, linking unemployment with a range of factors—mental illness, deviance and family violence—all of which point to the real cost of unemployment, in individual and family terms. The Government are supposed to believe in the nuclear family but families have been put under increasing stress as a result of the deliberate policies of the Government.
Unemployment does not fall evenly across the working population. The fit and the skilled are more likely to escape unemployment. The unemployed are more concentrated among the youngest and the oldest sectors of the community. We are still hearing what increasingly appears to be the empty rhetoric of the International Year of Disabled People—a year in which a higher proportion of the sick and disabled are now having to suffer from unemployment. In Wales and in other regions, the semiskilled and unskilled manual workers are far more likely to be unemployed than those in the more skilled or the so-called professional jobs.
The first problems that face unemployed people and their families are money problems. In all the studies of unemployment, over 70 per cent. of those made unemployed were found to be deeply concerned about their financial position. Nearly 60 per cent. of those interviewed in the surveys have mentioned the social or pychological costs of unemployment.
The usual financial difficulties are those relating to gas, electricity and heating bills. Those difficulties have affected many families during the recent cold spell. There are the problems of having to pay higher rents inflicted on people by the Conservative Government. There are the high costs of mortgages and the difficulties in ensuring that those costs are met.
The economic and financial burdens of unemployment are only the direct costs. There are also the hidden costs, or the costs that follow later, within the shorter time scale, up to five years, and within the longer time scale.
The Secretary of State for Education some years ago peddled a new social theory concerning some kind of cycle of disadvantage. The Conservative Government are deliberately perpetuating disadvantage, social and economic, in Wales and in the rest of Britain. Not only is there immediate disadvantage from the financial causes that I have mentioned. There are indicators linking mortality rates as well as levels of deviance and mental illness with the extent of unemployment. The House will be familiar with the work of Professor Harvey Brenner of Johns Hopkins university in the United States, who recently visited Cardiff, where the social, individual and family costs of unemployment were outlined at a major conference, to which a close friend of mine gave a paper outlining the psychiatric effects of unemployment.
On the basis of the work of Brenner and others the joint working party of the Welsh Office and directors of social services estimated in March this year, when considering a level of only 150,000 unemployed, that over the next five years there would be 2,500 extra deaths, 3,195 extra admissions to psychiatric hospitals and 695 extra prison sentences in Wales as a result of unemployment. If the Government are really concerned about the prison population, they should reverse their economic policy rather than pretending that the problems can be solved by shortening or cutting the number of sentences.
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Not only mental illness but actual physical illness arises from unemployment. Studies screening workers expecting redundancy in Europe, Britain and the United States show clear physiological effects of unemployment stress on men, women and children in such households. There are both physical and mental effects on individuals facing the failure to readjust to inability to find work. There is, first, the shock and grief at initial unemployment. There is then very often over-optimism about the possibility of finding a job, followed by prolonged depression, anxiety and deepening pessimism. The result of that pessimism and of the pressures on the unemployed now affect more than 170,000 of our population.
Last year, the NSPCC pointed to the link between unemployment and non-accidental injury to children. Yet the Government pretend that by keeping registers and trying to ensure that the National Health Service informs personal social services departments of such injuries the problem may be alleviated. If the Government are serious about solving the problem of non-accidental injury to children in Wales and indeed throughout Britain, they should reverse their economic policy and not pretend that the problem can be reduced by means of registers.
Women's Aid and other women's aid organisations in Wales have pointed to the link between unemployment and domestic violence. Again, rather than giving occasional grants to such organisations, welcome though such grants are, the Government should face the fact that their policies are increasing the amount of domestic violence in Wales and in other parts of the United Kingdom.
Finally, the Welsh Office and the directors of social services estimate that the actual cost of unemployment for the personal social services alone—with which, as the House knows, I have personal and family links—will amount to £2·7 million over the next five years to keep pace with the predicted levels of mental and physical illness and deviance arising out of the effects of unemployment in Wales. They state:
"At November 1980 prices…by the fifth year following a sustained increase of 1 per cent. in the unemployment rate, an additional £520,000 would be needed to maintain these services. For instance, in 1982–83 an extra £410,000 would be required…Over the following three or four years, if the further 5·2 per cent. increase in the unemployment rate which has taken place since March 1978 were to be sustained, then an extra £2·7 million would be needed".
Those are the costs shown in the Welsh Office's own document.
Will the Minister tell us, now or at a later stage, whether he accepts those figures and what he intends to do about the problem? Does he accept that the Government's economic policies are placing an additional burden not only on the personal social services in Wales but on the clients of those services? They are creating a generation of youngsters brought up in a culture of unemployment. Those of us who are concerned about social policy have delivered this warning over the years in all situations of high unemployment. I have referred to Beveridge, whose views were repeated by many people in the 1930s. Following that period, there was a new initiative associated with Keynesian economic management. We are now beyond the solutions that were then open. The Government must realise that the strident repetition of the virtues of lowering living standards and wage claims that we have heard from Conservative Members are no answer to the reality of the structural economic problems that Wales faces. The Government—and, indeed, the Labour

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Government—have presided over the continuing decline of the Welsh economy and they will reap the harvest of that decline in the deepening social malaise of Wales and in the sad and depressed lives of so many of our young people.
5.56 pm
Mr. Ian Grist: The hon. Member for Merioneth (Mr. Thomas) said that he did not intend to base his speech on the failure of capitalism, which we know to be his favoured form of address. Nevertheless, he managed to instil into it some of the acid that those in his area of the political spectrum always throw around. I think that I speak for all my colleagues when I say that we feel most strongly at being charged with "deliberately perpetuating disadvantage." We understand full well the problems of the unemployed, the sick and the disabled, the break-up of family life and all the other aspects of social disadvantage to which he has referred.
Regrettably, however, the difficulties faced by this and other Western countries are the result of years of neglect, failure to pay attention to basic economic realities and, more immediately, the cut in living standards imposed on Western industrial nations by the enormous rise in oil prices—not only in 1973–74, but even more in 1979–80 when purchasing power was sucked out of the Western economies by the oil-producing nations, dislocating all of us. Most Western industrial nations should at that point have reduced their standard of living temporarily in order to win back their position, just as a family which finds itself overspending must cut back in order, later, to recover its position. Some did this sensibly, but others did it too slowly. Britain certainly did it too slowly and has paid the penalty.
In addition, unfortunately, we had reached the end of the road in terms of the long-standing inefficiency of so many of our industries. I think that every hon. Member here today was aware of the overmanning in the South Wales steelworks. It was blatant and well known. I had step-in-laws at Port Talbot. Everyone connected with it knew of the scandal of the low productivity of our works. When the crash came, nobody should have thrown bricks or accused anybody else of being inhumane. We had got away with it for far too long.
In calling for an enormous subsidy for the Margam pit, the hon. Member for Ogmore (Mr. Powell) is going some way down the same tempting path. There is nothing politicians like more than giving away money, particularly when it is not their own fairly small contribution but that of the other 30 million taxpayers. They can therefore be irresponsible. The costings of the Margam pit that I have seen would be wholly uneconomic and could be achieved only by taking jobs away from other areas of the economy or other parts of the coalfield. Indeed, one of the grave difficulties facing the National Coal Board at present is to find money for investment because so much is sucked out in wage costs. I understand that, of the more than £102 million on offer in the current pay round, £40 mullion is covered by the planned productivity increases next year. Therefore, of the current offer, £60 million is covered by non-productive work. That is a serious point.
When talking about youth unemployment, I hope that Opposition Members will welcome the young workers scheme that is about to come into operation. That is a sensible and realistic attempt to try to price our young workers on the same basis as those in West Germany.
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There a young worker is recognised as someone who does not produce as much, or work as much, as an older worker. There is, therefore, a case for employing them at lower rates of pay. This is not a wicked way of introducing youth slave labour. The alternative of high pay for youngsters simply means that they will not get jobs, not least at a time of recession and at a time when a record number of youngsters have come on to the market. It is sad that the recession and this enormous number of youngsters coming on to the market should have coincided, but that is a fact of life and could not be avoided.
The hon. Member for Ogmore talked about the increased amount of coal going to Aberthaw power station. Those of us who have visited the power stations know of the CEGB's complaints about the quality of the coal that it receives—for example, the amount of stone and rubble that the coal contains. Everyone knows that many British coal importers and merchants can and would buy cheaper abroad but for the fact that successive Governments have erected a protective wall to help our mining industry. That is a socio-political decision., but it does not necessarily mean that our coal is competitive. Even if we mined Margam and got at the coking coal there, who would buy it? I recall that a number of hon. Members from North-East steel constituencies were not that keen on British coking coal at the time.
The hon. Member for Newport (Mr. Hughes) gave an extraordinary answer to an intervention from the hon. Member for Wrexham (Mr. Ellis). The hon. Member for Newport spoke of the possibility of Datsun establishing a plant in Britain, particularly in Wales. When challenged that this was because Britain and Wales were in the. EEC, the hon. Gentleman baldly stated outright opposition to our membership as though somehow or other that explained Nissan's decision.
The hon. Member for Ogmore did not refer to our membership of the EEC or to his party's position on it. He said that the major Sony plant at Bridgend had received a loan of £2·3 million from the EEC to take on 120 former redundant steelworkers from Port Talbot. Sony would not have gone to Bridgend in the first place but for our membership of the EEC. By the same token, it is highly unlikely that the Ford engine plant at Bridgend would have been established but for our EEC membership.
National Panasonic would not have its European headquarters in Cardiff unless we were in the EEC. Time and again, surveys have shown that Japanese inward investment has come to Britain not least because we happen to be English speaking and they wanted a foothold inside the EEC before any protective barriers were erected against their exports. They have come to us because we are in the Community.
More than 50 per cent. of American inward investment to South Wales has occurred since we have been members of the Community. Just as obviously, how many British people would invest in British export companies inside a Britain that was excluded from the European Community rather than investing directly inside a major market? Indeed, many European firms think it wise to invest inside the giant American market so that they are inside any protective barriers that are imposed.
I hope that the kind words that have been said about the newly-elected president of the NUM will come true, but I was alarmed to read in the newspapers this morning that

55
he had attended a celebratory function for Mr. Willie Gallacher, the late Communist Member of this House. Apparently, Mr. Scargill said:
"I can think of no more appropriate way to celebrate the centenary than that each and every one of us will take part in that campaign of mass opposition".
He was referring to opposition against the Government, and the mass campaign is a means of using the NUM's strike weapon to try to bring them down. Mr. Scargill believes that he managed to do so in 1974. He should remember that the present Government have a couple of years to run rather than a few months; that we are under a determined leadership; that we support the coal industry, but not at any price; and that we appreciate the necessity to build nuclear power stations in Britain that would make us as competitive in energy as the French. The French are now beginning to undercut the Germans on energy pricing because the Germans have a lunatic environmental lobby that will not allow them to build what they should. Unfortunately, they must import enormous amounts of oil to balance their accounts.
I hope that Mr. Scargill will recognise that Conservative Members are realistic and will accept that pits must be closed. For example, of the 23 pits that were allowed to remain open at the beginning of the year, five have already closed. As The Economist said on 17 October:
"So long as the board is stuck with the old mines it cannot open new mines and put in the new investment necessary to make new or better jobs".
At present, South Wales is making greater losses than the trading profit of the NCB.
At a time of stagnant or low growth, Britain also faces the extraordinary difficulty of having indexed much of our social spending. Since the mid-1950s, the number of pensioners has tripled. Has our production and wealth done so? Regrettably, the answer is "Not quite". Health spending has been maintained, despite what the hon. Member for Ogmore said. It has been increased in real terms. Most of that spending goes on increased pay. If such money is pre-empted because of pay, it cannot be used for equipment and the various labour-saving and lifesaving machines that are so often paid for by appeals that are launched, not least in Wales.
Mr. D. E. Thomas: Will the hon. Gentleman confirm that the Government are now arguing that working people, pensioners, those on fixed incomes, supplementary beneficiaries and the unemployed should all take their fair share of a reduction in living standards?
Mr. Grist: The hon. Gentleman could not have been paying attention. Pensioners will not take a cut. Pensions will be fully indexed. Pensioners—that huge engine of growth—will be paid a pension that will keep pace with the rise in the cost of living, at a rate which, frankly, the economy cannot bear. If the economy were growing, we could all bear it, but the Government are already preempting a higher proportion of our wealth in order to honour those commitments. So be it; that is our decision.
The hon. Gentleman referred to Keynes. He never anticipated that a Government would try to spend their way out of a recession, certainly one faced with the plateau of expenditure with which the present Government have had to deal. The Government have increased expenditure. So much for the accusations that they have been cutting
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all over the place. In fact, we have never spent more. If anything, the Government could be accused of overspending.
As my hon. Friend the Member for Brecon and Radnor (Mr. Hooson) said, Britain is part of Europe and the wider world, and there is a stoppage on economic growth virtually throughout Europe and in the United States. That fact should alarm us. Of all the countries with which we compete and compare ourselves, we depend more than any other on our exports and international trade. Together with West Germany, we export more of our production than any of our competitors, in many cases by a substantial margin. Any slump in world trade is particularly damaging to this country, to jobs and to our people. However, there is now less short-time working while overtime has been increasing.
Although growth is static in the world, our manufacturing output is up. With a bit of luck, we can expect a considerable increase in manufacturing output next year provided that pay settlements can be kept moderate. Output per head is expected to be 10 per cent. higher by the end of this year. GDP rose by 0·25 per cent. in the third quarter, the first rise in almost two years. Manufacturing output increased by 3 per cent. in the period from May to September. Industrial output was up by 0·5 per cent. in the third quarter. The hon. Member for Merthyr Tydfil (Mr. Rowlands) makes noises when he hears facts that he does not like. He sits and chatters in a high voice. It is a well known habit of his. Engineering output—
Mr. Edward Rowlands (Merthyr Tydful): Will the hon. Gentleman give way?
Mr. Grist: No, I shall not give way.
Mr. Rowlands rose—
Mr. Deputy Speaker: Order. I know that the hon. Gentleman was provoked. I do not want to get provoked.
Mr. Grist: The hon. Gentleman seemed to be attacking me without rising to his feet, so he has already had a good crack. Gross trading profits were up 4 per cent. in the second quarter. Pay is dropping. Average earnings are beginning to go down. Why did we ever get into the habit of thinking that we get an annual pay rise regardless of what we do, the skills we have, how hard we work and how profitable is the company for which we work? Where did we get this crazy idea that, come hell or high water, one is always paid more? Why and how did it start? If we can moderate or even stop this approach, our country would be in a fabulously strong position. One has only to contemplate what the Germans and the Japanese would give for our coal and our oil in order to be self-sufficient in energy. Those two countries would be out of the stratosphere if they possessed our advantages. What a mess we have made of things for so many years.
Hon. Members would perform better as representatives of the people of Wales if they indulged in some plain, straight and honest talking. It is necessary to recognise that the only firm and true jobs—those which can be taken by our children and grandchildren and in which they can feel pride—are jobs that can be paid for and supported by a profitable and productive industry. We need productivity that increases steadily year by year. Unless that position is achieved, we shall have these debates year in, year out. All too often, in the view of the people of Wales, we have engaged in such debates over the last 30 years or more.
6.13 pm
Mr. Donald Anderson: The hon. Member for Cardiff, North (Mr. Grist) has referred to what he describes as small but encouraging signs of improvement. Many economists say that a short, restocking period is inevitable because of the present low level of stocks but that this process is likely to peter out towards the spring or summer of next year. The hon. Gentleman talked about the bonus provided by oil. What is happening, sadly, is that the possible bonanza of oil is being used by the Government to pay for the long queues of unemployed.
There has been reference to the human cost of unemployment. The situation is a world away from the glossy picture presented in May 1979. I recall during the election campaign seeing a vast advertisement near High Street station, Swansea, with the words "Labour isn't working". Anyone reading that poster would have imagined that the Conservative Party at the time had the answers and intended to take action. The picture now, two and a half years later, is that unemployment has increased in Wales by 95 per cent. Although the figures for the United Kingdom as a whole have declined marginally over the last two months, those for Wales have continued to rise, month after month. It is a picture of massive failure in spite of the promises made at the time of the 1979 election.
The extent of the unemployment was clearly not foreseen by the Government. When the Secretary of State's then permanent under-secretary came before the Select Committee in March 1980 he said that the assumption of the Welsh. Office—I do not know whether he was carpeted for this remark—was that unemployment would rise to 125,000 at its peak. The figure is now 170,000 and rising. This shows the extent to which the Government were not prepared for the increase in unemployment. The Select Committee, in its report in July 1980, pointed to the job chasm that was arising as a result of the Government giving priority to tackling inflation through monetarist policies.
There was a certain inevitability about the increase in unemployment in Wales. It is true that unemployment has increased throughout Western Europe. However, the figure in West Germany, with a larger labour force, is 1·6 million—a far cry from the figure in this country. The inevitability arose partly because of a fall in the numbers ' employed in steel production and partly as a result of Government policies in the public sector, which affect Wales especially because of its dependence on the coal and steel industries and local government expenditure. Another factor was the dismantling by the Government of the regional development structure inherited from the Labour Government.
Mr. Alan Williams: Is there not a statistical fact underlying the remarks of the hon. Member for Cardiff, North (Mr. Grist) which indicates that unemployment in manufacturing in Wales must rise considerably in the next few months? I should welcome my hon. Friend's views. If productivity is rising, as claimed, by 7 per cent., but if the Government are holding back the level of increase in manufacturing to 3 per cent., this means that there is a 4 per cent. shortfall and that unemployment must therefore rise considerably in Wales in the next few months.
Mr. Anderson: I accept my right hon. Friend's economic expertise. It would appear even to me that as night follows day—as Treasury Ministers would say—the shortfall of 4 per cent. will mean increased unemployment.
The regional development structure is being weakened considerably. There was a reduction in July 1979 jai the areas and the amounts spent on regional funds. Last week, there was the abolition of the IDCs which, however small their effect, were a symbolic commitment of Governments in the past.
Mr. Hooson: As the hon. Gentleman is apparently in favour of very unselective identification of areas for development, does he resent the fact that Swansea was chosen as the very first enterprise zone created in Great Britain?
Mr. Anderson: That is a different point. In principle, I do not approve of enterprise zones but if one is to come to South Wales, I would want it in my area. I shall come to the point that the hon. Gentleman makes.
The IDCs have been abolished. This affects the regional development structure. All that the Government provided in response to the steel cutback was an investment of £48 million. On the basis that £30,000 of Exchequer subsidy is needed to create one job—this updates Dr. Marquand' s figures in a report for the Department of Industry—there are likely to be created only 1,600 new jobs, very small in terms of the need in Wales.
I turn to the position in West Wales. In the Swansea travel-to-work area male unemployment is now over 19 per cent. We are still not part of a development area, let alone a special development area. There is no evidence of any new technological ventures coming to our area. Some people talk about the golden triangle of South-East Wales, Inmos and Mitel and so on. Nothing of that nature has come to the area. There has been no Japanese investment further west than Bridgend. That is the picture that faces West Wales.
If the Government will not make the U-turn that the Opposition propose, even on the Government's criteria various aspects of selective investment may have a disproportionate job effect in the public sector. We know, for example, that the Government changed the rule with regard to rail electrification after the joint Department of Transport and British Railways Board report was published earlier this year. Under the new criteria involving not an 11 per cent. return but apparently a 7 per cent. return, perhaps only one main line, and that not in South Wales, will be electrified in spite of the energy-saving and job creation effects that would follow.
By changing the rules the Government are ensuring, by their own induced recession, that perhaps no more than one line will meet the new criteria. If rail electrification went ahead there would be an immediate effect on a number of companies in South Wales in both the public and private sectors. The steel industry at Llanwern and Port Talbot and companies such as South Wales Switchgear would benefit. The small companies that would benefit from electrification seem to be concentrated on the Bridgend area. There would be an immediate effect on a number of important Welsh companies from electrification.
The same applies to housing. The degree of unemployment had a certain amount of inevitability about

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it. The Welsh Office predicted that over the period 1980–84 there would be a 46 per cent. reduction in public investment in housing. The job effects were bound to follow. Yet, in terms of the proportion of unfit housing in the housing stock and the proportion of pre-1919 houses, Wales is in a worse position than any other part of the country. The Government should give more funds for improvement grants. In the past the Conservatives have espoused that policy to ensure that the housing stock does not slip further into obsolescence.
Such a move would have little if any import content. It would have an immediate effect on construction workers, who make up about 25 per cent., of the total unemployed in Wales. It would have immediate human and economic effects. Yet in many parts of Wales the district housing authorities have virtually cut out discretionary grants. In my authority they are restricted to the disabled and to people in housing action and general improvement areas. A comparatively small investment in housing could create many more jobs.
The hon. Member for Brecon and Radnor (Mr. Hooson) referred to enterprise zones. My local authority has unearthed a fact in relation to small firms in the enterprise zone. It is that although the annual rate concession is an enormous bonus to the firms, more important to the small companies in that area and outside would be a reduction in social security taxes and in particular in the national insurance surcharge.
For one small enterprise, for example, the value of the annual rate concession is about £1,900 per annum. The estimated annual national insurance employment surcharge in respect of the same small enterprise is over £4,000. I hope that the Government will examine that matter carefully when they consider the second half of the Budget in April next year. I hope that they will consider introducing some alleviation of the national insurance surcharge for small firms, because that could have a major effect on job creation.
I hope that the Government will consider my ideas sympathetically and accept the need for change if the yawning job chasm referred to by the Select Committee and by my hon. Friend the Member for Ogmore (Mr. Powell) is not to be increased. If there is no change the prospect for Wales will be one of continuing decline and increasing human misery, as described by the hon. Member for Merioneth (Mr. Thomas).
6.25 pm
Mr. Anthony Meyer: I agree with the hon. Member for Swansea, East (Mr. Anderson) that the expenditure of a relatively small sum on home improvement would be an effective way of increasing employment. I also agree that the removal of the national insurance surcharge should be given high priority by the Government.
I have only a short time, and I wish to speak about the importance of training. I am convinced that tomorrow the Secretary of State will unveil an ambitious training programme. It will probably include allowances for training that are lower than the unions wish and more comparable with those available in Germany.
I am on record as saying that under no circumstances would I be prepared to support a cut in unemployment
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benefit. I stick to that, but I certainly would support a cut in the allowances to people who are training, even though that would intensify the poverty trap.
We must ask what we are training young people for. If we achieve a training system that is as effective as that which operates in the Federal Republic of Germany, will the trained people find jobs? There is still a shortage of skilled personnel. Why has unemployment fallen so cruelly on the young? We must face the answer fair and square. It is because for years we have faced every crisis in every firm with a policy of no redundancies but of natural wastage.
The appalling level of youth unemployment is a tribute to the strength of the unions in defending the jobs of their existing members. We had better face that fact if we are to make any sense of it. Training is fine, but what are we training young people for? We must recognise that industry has not yet completed the process of slimming down. There must be further slimming down if industry is to be competitive. Without that industry will not provide the hundreds of thousands of jobs that are so desperately needed.
Small businesses can offer a lot in terms of extra employment. I spent some time the other day seeing what was being done at the site of the old East Moors steelworks. British Steel Corporation (Industry) Ltd is doing splendid work there. We could do more to train and encourage young people to set up as entrepreneurs. In one small workshop after another we were told of people who, having discovered what people wanted, were prepared to work all hours to provide them with exactly what they needed. One person said "Recession, what recession?" I do not suggest that that is a generally true story, but it is true of those who are prepared to be elastic in meeting public need.
However, let us face it; the great majority of jobs will not come either from small businesses or industry. It is time to stop looking at industry as the provider of jobs. We should look at it as primarily the creator of wealth that can be used to finance public and private services, which are necessarily labour-intensive, and to finance much earlier retirement. With the present product of industry we could not conceivably afford early retirement on a decent pension on a scale big enough to make an impact on unemployment. If industry could produce the wealth that it is capable of producing the product of that wealth could be used to finance earlier retirement.
One thing worries me about the attitude into which the Conservative Party has settled. It constantly fosters the idea that, because they are more expensive than we can afford at present, in themselves public services are bad and we must cut them down, as an end in itself. I accept that at present even the current inadequate level of services is beyond our capacity to pay for, but the Conservative Party must never lose sight of the fact that a civilised society must have expanding and improving social services. Our policy must be to create the wealth to pay for them. The party to which I belong fundamentally believes that. The Labour Party would cheerfully inflate the public services with extravagant wage claims until they burst. Therefore, I feel secure in my allegiance.
The EEC has been mentioned. I shall not go into the moneys that come in and go out, but the much vaunted adverse trade balances with Western Germany and other

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member States are, as a proportion of our total trade, minuscule. As a proportion of the whole, our trade imbalance with Japan is 13 times what it is with the EEC.
As we are creating so little wealth, there is little chance in our lifetime of being able to set aside enough to finance the new jobs that we desperately need, so they must come from inward investment. Speaker after speaker pointed out that they will come only from other countries using Britain as a base to trade into the Common Market. Let me give one statistic. Before the Common Market was formed, Britain got 50 per cent. of all United States overseas investment. When the Common Market was formed with us outside it, American investment in Britain sank to 10 per cent. of its total overseas investment. Now that we are in the EEC, it has risen to 40 per cent., which represents a great many jobs.
6.33 pm
Mr. Donald Coleman: We are indebted to my hon. Friend the Member for Ogmore (Mr. Powell) for initiating the debate, which has ranged widely over the problems that confront our people in Wales and that arise from the unfortunate unemployment situation.
Many issues have been raised. The hon. Member for Merioneth (Mr. Thomas) is right to remind us of the social and mental stresses that have arisen from the recent massive unemployment. Only when one has been in a family afflicted by unemployment can one really understand the hardships.
My hon. Friend the Member for Ogmore spoke with passion and understanding of the problems that confront the part of Wales that we are both proud to represent. Those problems are a curse on the whole of Wales, as well as the rest of the United Kingdom. My hon. Friend was knowledgeable about the difficulties that have arisen from the closure of the Coegnant colliery, which has caused substantial job losses.
The hon. Members for Brecon and Radnor (Mr. Hooson) and for Cardiff, North (Mr. Grist) attributed a Luddite attitude to miners. No one understands better than the miner that one day the coal in his pit will run out and the pit will close. That is a fact of his life, but he cannot accept that he will then have no job.
We welcome my hon. Friend's comments about the possibilities of redeployment in the St. John's colliery, and I stress the need for the proposed development at Margam. The Government should give the go-ahead and make the money available to the National Coal Board. It is an investment in Britain's energy resources and will ease problems, such as those at Coegnant, which may arise in other parts of the South Wales coalfield.
The latest unemployment count shows the need to debate the problem today. At the last count, 12,948 people were registered as unemployed in the constituencies of my hon. Friend the Member for Ogmore and my right hon. and learned Friend the Member for Aberavon (Mr. Morris). If we add to that 4,638 in my constituency and 16,805 in the Swansea employment office area, we see starkly the mess of unemployment over which the Secretary of State for Wales presides.
Mr. Delwyn Williams: Does the hon. Gentleman recall a Labour sub-committee in 1976, presided over by the right hon. Member for Lanark (Dame Judith Hart) and of which the right hon. Member for Leeds, East (Mr. Healey) was a member—whose report
62
was so secret that it was published in The Observer —which forecast 2½ million unemployed by 1980? The reason given was the baby boom of 1960.
Mr. Coleman: In my constituency at that time unemployment stood at under 6 per cent. but today it is 18 per cent.
The figures that I have given for unemployment in West Glamorgan and Mid-Glamorgan are not the end of the story. Over the weekend we learnt of more workers being made unemployed. Ninety-six workers at the Kenfig plant of Borg-Warner are to be made redundant, and 120 workers have joined the dole queue as a result of the Mitel closures. On Christmas Eve, further redundancies will occur at the Port Talbot steelworks, which has already taken considerable steps to improve productivity.
References were made to the militancy of Welsh workers. It is right to nail that myth in this debate, because there is no truth in it. Evidence of it being a myth can be pointed to by the success of Japanese investment in Wales. The co-operation of Welsh workers and the quality of their work is further testimony of that.
Let me make it clear today, as I did at the time of the announcement of a possible investment in Britain by Nissan-Datsun, that a welcome awaits such an investment, especially in Wales. I hope that in his reply the Minister will tell us something about the progress of the Nissan-Datsun development.
I conclude by quoting some words that should be familiar to Conservative Members because they were written as a means of returning them here at the last election:
"There is one task that is even more urgent in Wales than elsewhere: the need to establish an economic climate in which wealth and jobs can be created."
Two and a half years have passed since those words were written and in that time thousands of Welsh jobs have been destroyed, not created. My hon. Friend's motion demands for the Welsh people an end to the destruction and a little more creation.
6.42 pm
The Under-Secretary of State for Wales (Mr. Michael Roberts): I am sure that the House is grateful to the hon. Member for Ogmore (Mr. Powell) for raising the subject of employment in Wales. I am particularly grateful to him because he couched his motion in positive terms and talked about employment. I recognise that the reason was the background of unemployment generally and unemployment in his constituency particularly. Apart from Members of the Liberal Party who have not been present during the debate, and Members of the SDP, who made a fleeting visit, Members of all the major parties in Wales have made serious contributions to the debate.
No one can dispute the fact that Wales, along with the rest of the United Kingdom, is facing a major economic difficulty. Wales has been particularly badly hit by the rundown of its more traditional industries—coal and steel. Both have been contracting, and the decline in steel making in particular has been marked. I do not underestimate or understate the problems. No one can minimise the personal hardships that go hand in hand with unemployment. Hon. Members referred to them today. Anyone who recognises the importance of work in the fulfilment of character and personality will at least have some appreciation of the frustration of unemployment,

63
particularly of young people unemployed for a long time. That appreciation and understanding is not confined to one side or part of one side of the House of Commons.
I also stress, because I have to respond to the theme of the debate—employment—that there are some grounds for optimism. The problem of training was not one that arose last week. It did not become a national interest just after we won the election in 1979. The problem has been with us for a long time. My hon. Friend the Member for Flint, West (Sir A. Meyer) referred to the need for training. I have no doubt that we all recognise the problems of the young. Over 44,200 people are currently being helped by special employment and training measures. In November 1981, about 17,300 youngsters were participating in YOP schemes in Wales—one-third higher than in November 1980. A substantial package of special measures for the next year was announced by my right hon. Friend the Prime Minister in July, and my right hon. Friend the Secretary of State for Employment will make an announcement soon about further measures in the form of a comprehensive training scheme for the young.
We are all agreed on the important role that effective training can play, both in the development of individual potential and in the strengthening of the economy for the creation of a better-trained work force. The Government have fully endorsed the objectives of the MSC's new training initiative and we shall make a statement later in the Session about the role that the Government and others can play.
Mr. Rowlands rose—
Mr. Roberts: Before I come to the specific question of Margam, I should like to draw attention to the developments in industry and commerce that hold out the promise of employment in Wales in the future.
Mr. Rowlands rose—
Mr. Roberts: I genuinely apologise to the hon. Gentleman for not giving way. I do not have much time, so I hope that he will forgive me. He knows that I normally give way—even though I have a bad reputation with the right hon. and learned Member for Aberavon (Mr. Morris). I apologise to him for that.
With regard to factory allocations, we have been particularly concerned to provide the infrastructure needed to encourage new industrial developments. In Wales, we have undertaken a major programme of Government-financed factory building and site preparation, and new factory units are being completed at a fast rate. At the end of October, 211 Welsh Development Agency factories were under construction covering 1·4 million sq ft, and a further 249 are planned covering another 1·1 million sq ft. However, the important and immensely encouraging point is that we are not just providing the buildings—we are getting them occupied. I emphasise again what the Secretary of State said during the last Welsh Question Time—that is a truly remarkable achievement providing much more than the previous Administration and during a period of recession, too.
This year, the number of Government factories formally allocated total 270 and carry the promise of just over 6,000 new jobs. We see little ground for pessimism that the level of interest in Wales will fall away and this
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successful bubble burst. Industrialists continue to be attracted by what we have to offer in Wales. So far this year, we have received almost 500 inquiries, which have resulted in nearly 200 visits.
Inward investment was referred to by the hon. Member for Newport (Mr. Hughes) and by my hon. Friends the Members for Brecon and Radnor (Mr. Hooson), Cardiff, North (Mr. Grist) and Flint, West. We have continued to make a special effort to attract inward investment. In the last 18 months, the Secretary of State has led two inward investment missions to the United States and one to Japan. They found immense interest in what we had to offer and a great awareness of the advantage of setting up manufacturing units in the United Kingdom. The hon. Member for Newport referred to the possibility of a major company coming into that area. The inward investment of so many companies depends on our continued membership of the EEC. It is no good his replying that he has always been opposed to membership of the EEC. He is not on the board of the companies that will be making the inward investment. Every time they will make the decision in favour of a member of the EEC.
I was recently in Gorseinon, opening an extension by the Minnesota Mining and Manufacturing company that will involve about 180 extra jobs. The company made it clear that it is in Gorseinon because Gorseinon is in the EEC. It recognises other advantages, too—the considerable advantages of the work force in that area and the good industrial relations. However, it made clear that its reason for expansion is that Britain is a member of the EEC. That is the only way in which we shall attract major companies to come to give the people of Wales the jobs that they require.
I turn to the subject of high technology. Among the types of firms that we need to attract are those which relate to new technology. We are all agreed about the crucial importance of new technology both in the development of a competitive industry and in the way that it will affect all our lives. We must continue to look to industrialists and innovators for their ideas and initiatives, but there will be a place for the Government to add their support and help, especially in research, and we must all have regard to this British development, especially in our purchasing programme.
On the more specific front, the Government are committed fully to promoting information technology. I need mention only a few schemes. In education, two schemes are directly relevant. The first is the microcomputers-in-schools scheme, which aims to have a microcomputer in every secondary school by the end of 1982. The more generous-minded Opposition Members will grant that this is an initiative which came from this Government, but that the need for microcomputers has existed for a considerable time. It might well have been taken up by the previous Secretary of State for Education and Science, who is now a member of the SDP.
The Department of Industry, with the MSC, is setting up information technology training centres under the YOP scheme, and training places are also provided under the training opportunities scheme and through the support of the Engineering Industrial Training Board. But if we are to develop this new technology to its highest extent, we must make sure that everyone is involved fully to train people and keep up to date. Next year is Information

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Technology Year, and we hope that Wales will make a considerable mark in that year. I know that Swansea is launching it in January.
I turn to what the Government are doing for small firms. Although I have placed most emphasis up till now on large firms, small firms are tremendously important to Wales, and the present Administration have been especially active in this area. The Welsh Office has been eager to help. We have set up a number of small firm clinics at various locations throughout Wales. The entrepreneurial spirit is very much alive in Wales. Two business opportunity conferences were held only last week in Cardiff and Llandudno at which 500 people turned up. There were 900 applications. These are people eager to start new jobs.
When we talk in the House about firms closing and about redundancies, sometimes we paint the gloomy picture that is there. But how many times do we record the small firms which are starting up? An enormous number of small firms are starting up in Wales and from these small beginnings can come economic and commercial success, bringing more jobs.
I draw attention to the importance of our urban programme. I am able to announce for the first time that the programme for Wales is to be increased in size from a planned £11·6 million to £15·3 million. That is a significant improvement. It is much in excess of 30 per cent. I hope that the House will welcome that announcement because it will be translated into new opportunities jobs and into social activity which will help the Welsh people and those who are especially deprived and burdened. Therefore I assume that it will be widely welcomed by the whole House.
Time is moving on, and I run the risk of not being able to deal with the specific subject of Margam. That being so, I shall not comment on the steel industry. Instead, I shall move straight to the subject of coal.
Here is an industry which in the 1950s provided directly more than 100,000 jobs in South Wales. Over the decade since then, the figures have reduced from 80,000 in 1960, to 61,000 in 1965, to 32,000 in 1975 and now to 25,000. Hon. Members will remember the difficulties of the 1960s. Since 1979, the National Coal Board has found it necessary to close six collieries which at the time of closure employed more than 1,800 men. These were closures of pits where the geology made it impossible to envisage any longer an effective life.
There will still be cases of that kind, which the board and the unions will have to consider. But there are also pits which are doing well and which give encouragement for the future. They will justify further investment. The hon. Member for Ogmore pressed the case for completely fresh investment in a new deep mine at Margam, and this was echoed by other hon. Members, including the hon. Member for Neath (Mr. Coleman).
I understand the attractiveness and importance of the proposal and the local interest in it for the hon. Member for Ogmore. But this would be a major project and has to be considered within the national context. The South Wales coalfield is part of the national coal scene, and decisions on investment and production have to be taken in that light.
Let us be clear that there is no difference between the two sides of the House about the need to maintain an
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effective and viable industry. This Administration believe that the coal industry has an important future, and we hold to the aim that it should return to financial viability as soon as that can be achieved.
I am pleased to acknowledge the real improvements in performance achieved by both sides of the industry in Wales and in other parts of the United Kingdom. Productivity and output per man-shift have seen significant improvements. The news that the South Wales coalfield recently achieved the lowest ever absentee rate for the area is welcome. The losses in South Wales would be greater were it not for the closure of some of the heaviest loss-making collieries such as Coegnant. But these losses remain very high. The South Wales coalfield loses more per tonne of coal produced than any other coalfield in the United Kingdom. A great deal still needs to he done to reduce these losses.
Let there be no misunderstanding. We believe that the industry has a vital part to play in our current and future energy requirements, but that future and the good Longterm employment opportunities that go with it rest squarely on attaining the efficient and competitive production of coal.
My right hon. Friend the Secretary of State has discussed the Margam project with the chairman of the NCB on a number of occasions, and most recently last month. The enthusiasm for this project of the hon. Member for Ogmore is such that, when he addressed the nation on radio last Friday morning, he rather overstated the facts in saying that the NCB had already spent vast sums of money on survey work, and he quoted a figure of £20 million. He may like to know that the NCB puts the cost of surveying at nearer £2·5 million. But I do not quarrel with the hon. Gentleman. At least we can agree that a full survey has been carried out. It shows that Margam would inevitably be a high-cost operation. It is a very deep mine. The geology is difficult. The seams are relatively costly to mine. If the project is to have a future, it is important that these costs should be reduced as far as possible.
The NCB also wants to assess very carefully the expected market and price for the high quality coking coal reserves in Margam. United Kingdom usage of coal for coke production has fallen substantially in recent years. In 1977, 17·41 million tonnes of coal was used for coke. By 1980 that was down to 11·61 million tonnes. The contraction of the steel industry during the past decade, which I should have mentioned earlier, obviously contributed significantly to the decline in the market, but so, too, has the reduction in foundry coke usage.
Because of recessionary influences and technological improvements, the number of companies using foundry coke fell from 745 in 1975 to 590 by the end of 1980. Therefore, the NCB could proceed with the Margam project only if the costs were right, if the market were right and if it made sense within its overall investment plans. It is misleading to think otherwise and thereby encourage expectations that may be too great.
It being Seven o'clock, the Proceedings on the Motion lapsed, pursuant to Standing Order No. 6 (Precedence of Government Business).

Orders of the Day

  Civil Aviation (Amendment) Bill
  As amended (in the Standing Committee), considered.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): No amendments have been selected.
  Mr. George Foulkes: On a point of order, Mr. Deputy Speaker. I am concerned about Mr. Speaker's provisional selection of amendments and the fact that he has selected no amendments, particularly with regard to amendment No. 2, which is in, the name of myself and my hon. Friend the Member for Central Ayrshire (Mr. Lambie).
  The amendment deals with a matter that was not raised in Committee and relates specifically to the Scottish airports division of the British Airports Authority. I ask for further consideration to be given to the possibility of the amendment being considered, because the topic has not been properly considered at any stage during discussion of the Bill. No detailed consideration has been given to any amendment that would require the British Airports Authority to spend a part—
  Mr. Deputy Speaker: Order. The amendments that were submitted have been considered very carefully. Mr. Speaker is not required to give reasons for any decision and no amendment has been selected.
  7.1 pm
  The Under-Secretary of State for Trade (Mr. Iain Sproat): I beg to move, That the Bill be now read the Third time.
  I can move the Third Reading fairly briefly, since the Bill was given a fairly good going over not only on Second Reading, but in Committee. When my right hon. Friend the Secretary of State introduced the Second Reading debate, he remarked that it was a straightforward Bill that contained only five clauses. It is exactly that—brief and straightforward—and it aims simply to increase the borrowing power of the British Airports Authority and British Airways to cover their investments and other needs for at least the next five years. It also enacts some overdue preconsolidation amendments.
  The urgency behind the Bill arises because British Airways has come close to its limit, mainly as a result of exchange rate movements affecting the value of its foreign borrowings, which the Bill will stop. Otherwise, the Bill does not diminish parliamentary scrutiny or governmental control over the borrowings of British Airways or the British Airports Authority. It does not reduce the Government's determination to ensure that both bodies operate in the most efficient and commercial manner. Therefore, the implications of the Bill are no wider than the straightforward but necessary provisions that it contains.
  Nevertheless, on Second Reading and in Committee there were rightly several wide-ranging debates that covered many topics of general interest in civil aviation. That was useful and refreshing and provided the Government with a welcome opportunity to hear and note the many views expressed on both sides of the House towards maintaining and improving a healthy civil
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  aviation sector in the United Kingdom. The Government will continue to work towards that end and I therefore commend the Bill to the House.
  7.3 pm
  Mr. K. J. Woolmer: The Opposition recognise the urgency behind the Bill, as the Government have sought to increase with particular dispatch the British Airways' borrowing limits. For that reason, the Committee stage took only three sittings. However, that resulted in a less than satisfactory discussion on many issues concerning the British Airports Authority and British Airways and left the Opposition unhappy with many aspects of the Government's policies in those important areas.
  A feature in Committee was the long time taken up by Conservative Members developing their views of the state of the civil aviation industry. Currently, in Conservative circles, "developing their views" is the parliamentary term for disagreeing deeply. The Under-Secretary was often as lonely as is the Chancellor of the Exchequer when he stands at the Dispatch Box defending his economic policies.
  Hearing the hon. Member for Brentwood and Ongar (Mr. McCrindle)—who I do not see in the Chamber—developing the finer points of civil aviation economics and airline policy was similar to seeing the Minister being stabbed by a telegraph post. An unsatisfactory aspect of the debates was the Minister's unwillingness to respond to many important issues because of the current litigation about the British Airports Authority's landing charges and the recent discussions about air fares across the Atlantic. I understand the Minister's difficulties, but the House will feel that a Bill that lays down the legislative framework for an increase of £775 million worth of borrowing limits by two major nationalised businesses should have had the closest scrutiny of policy in financial terms.
  The Secretary of State opened the Second Reading debate on 16 November by saying that the Bill
  "is not a legislative earthquake, but a straightforward Bill with only five clauses which should not be the subject of major controversy." [Official Report, 16 November 1981; Vol. 13, c. 41.]
  With £775 million of borrowing being involved, the Secretary of State has clearly changed his style since his days on the Treasury Bench.
  Although there are many points that the Opposition are unhappy about concerning the British Airports Authority's increased borrowing limits—by up to £175 million in due course—I shall deal with only two. The first concerns the Government's financial policy towards the British Airports Authority and its effects on landing charges. As I understand it, the Government have set the BAA the target of a real rate of return on its assets in current cost accounting terms of 6 per cent. per year to be achieved on average over a three-year period. The twentieth report of the Public Accounts Committee in July 1980 said in paragraph 5:
  "These changes were responsible for the substantial increases in the authority's charges effective from 1 April 1980".
  Does the Minister still accept that that was the case? This is a classic case of the manner in which the Government have dealt with nationalised industries. The gas industry is another good example of the same trick.
  First, the Government insist that the charges or prices are raised as a means of cutting the PSBR. The idea was

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  that we would all pay lower taxes, but pay higher prices instead. However, all except the wealthiest now pay both higher taxes and prices. That more fundamental failing of the Government's strategy is now so well recognised that I suspect that even the Minister will not try to defend it.
  Having forced the British Airports Authority to raise its charges sharply to its customers, the Government have found their own Back Benchers blaming the nationalised business for being a monopoly and charging what it—or rather the Government—sees fit. Therefore, the nationalised industry gets the blame for the Tory Government policy. Tory backwoodsmen come out of their woods calling for privatisation, which is the new "in" word for denationalisation, or rather, as I suspect is more often the case, calling for the creation of a private monopoly that will benefit private individuals rather than the nation.
  Mr. Robert Atkins: What objections do the Opposition have to the freedom and the choice that is given to employees of the British Airports Authority to buy shares in the industry in which they work, which has proved successful in British Aerospace? I do not think that any trade union leader or any Opposition Member can be opposed to that policy. If there is such opposition, I should like to know why.
  Mr. Deputy Speaker: Order. I decided to allow the hon. Member for Preston, North (Mr. Atkins) to complete his intervention, but I remind hon. Members that we are confined to discussing the contents of the Bill. We must not widen the discussion.
  Mr. Woolmer: I well understand that, Mr. Deputy Speaker. I shall deal only briefly with the intervention. If the important bodies to which the hon. Gentleman has referred were to be denationalised, employees would have as much right as anyone else to have a share in the undertakings. However, even if 50,000 put £1,000 each in an organisation of the sort that we are discussing, that would provide only a tiny fraction of the capital that would be required to buy it. The Government are attempting to line the pockets of individuals in the City with the cheap sale of a profitable nationalised industry. Their purpose is not to assist the workers in the industry.
  The pressures upon the BAA and its charges to the users of its services are increased by the target of a 6 per cent. real rate of return and by the pressure to have a large part of its capital investment programme financed from internally generated revenues. In broad terms, the larger the proportion of external borrowing to internally generated revenues, the lower can be the charges to present consumers. There is considerable logic in that proposition because present consumers might reasonably be expected not to have to pay for future benefits. Almost every owner occupier has bought his or her house on that principle. They have borrowed to buy the asset that will provide benefits over the years ahead.
  The BAA investment programme is expected to be over £700 million over the next six or seven years. We are being asked to approve an increase in borrowing limits of about £175 million or about 25 per cent.—that is an external financing ratio of about 25 per cent. That means that 75 per cent. of a large investment programme has to be financed by raising charges to consumers to a level that is higher than is necessary to run the present services. These considerations are always determined by applying the test
  70
  of balance, but the Minister has been completely unforthcoming about his reasons for striking the balance that we are being asked to accept as an implication of the Bill.
  There appears to be no' doubt about the ability of the BAA to finance its investment by external borrowing. It has a low debt-to-assets ratio, a good profits record and good profits prospects. If the Government want to hold down unnecessary price increases, there appears to be a sufficiently good case for them to find some room for manoeuvre.
  The second unsatisfactory feature is the Minister's response to the Public Accounts Committee's twentieth report of July 1980, which called for the development of more clearly measurable performance criteria. I always treat allegedly precise and quantified measurements of non-financial performance with the greatest care. In my experience, a careful selection of criteria together with a judicious choice of the means of measurement and definition can usually produce whatever answer one wants. However, measures of performance there are, and the PAC specifically drew attention to them.
  The Minister is responsible ultimately for the performance of the BAA and for the justification of the borrowing limits that we are being asked to approve. No doubt the Minister has studied the present measurements carefully and has considered what further aids to assessment he feels are necessary. We want to know ultimately whether he is satisfied with the performance of the BAA as it is revealed to him through his measurements, or where he considers any improvements are necessary on the part of the authority. When the Minister replies I hope that he will give the House his current assessment of the performance of the authority and what improvements, if any, he is still seeking.
  I turn to the part of the Bill that deals with British Airways. We recognise the urgency of increasing British Airways' financial powers, and it is primarily for that reason that we have accepted the haste that has accompanied the Bill's progress. However, the Minister has failed to satisfy us on a number of issues. In Committee Conservative Members treated us to a display of mental gymnastics as they sought to decide among themselves whether the airline industry had too little or too much competition. Whether too little or too much, they then argued whether that was good, bad, inconvenient or contradictory or otherwise to their political aims.
  When the discarded or disillusioned free enterprise economic advisers to the Government finally returned to their academic offices to play with their models and theories instead of inflicting them upon us, they could do much worse than turning up the speech of the hon. Member for Brentwood and Ongar in Committee. He mused on whether competition between airlines is always a good thing for all, for some, sometimes for some or for all. His advice to the Minister was as follows:
  "Either we"—
  that is the Government—
  "build up British Airways ready for the sale that surely is preeminent in Government policy or we encourage maximum competition from independent airlines. The Minister must turn his attention again to whether we can continue with both sides simultaneously in the way that we have been trying to do since the passage of the Civil Aviation Act 1980."
  Worse was still to come, because after pointing out in his view that none of the three major British associated carriers on the Hong Kong route is making much, if any,

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  profit, the hon. Gentleman uttered what sounded like a text from a Yorkshire manufacturer's business philosophy or part of a first-year university examination paper in economics. He said:
  "Competition is grand, but we must be realistic about it"— [Official Report, Standing Committee A; 10 December 1981, c. 77–8.]
  That sums up the view of many Conservative Members about the problems that are facing the airline industry. The truth is that the Government do not know what they want. In any event, they do not know how to reconcile conflicting policies. The result is a real danger that British Airways may be made further to suffer in their own business and profitability as a result of the Government's pursuit of unfettered competition and conflicting aims.
  Of course, we want low fares across the Atlantic, to the Far East, within Europe and within the United Kingdom, but in an industry in which overhead costs and lead times on investment decisions are high and long care is required to develop policies that can be sustained to the lasting benefit of consumers and to the country.
  Many would say that too many risks have been taken in using British Airways as something of a moveable giant pawn as the Government have fumbled their way through an aviation policy. We could reasonably ask the Minister tonight for a firm assurance that he will condone no further significant change of routes that would adversely affect British Airways. This is a crucial period of recovery from the recession facing the world airline industry.
  In Committee we touched upon the International Air Transport Association conference in Geneva dealing with the question of North Atlantic air fares. Now that the conference has apparently made some progress in the matter, could the Minister give the House his assessment of the position reached so far and its effects upon the finances of British Airways and other major British carriers? If he cannot go into detail tonight—the House will understand if he cannot—will he give an assurance that he will publish his views on this important matter when he has had time to appraise the position?
  I come to the question of the pensions of British Airways employees. When this matter was raised in Committee the Under-Secretary said that the matter was currently under discussion—that is, between British Airways and the employees—but that it had nothing to do with the Government. I think that that strikes strangely against the kind of assurances given at the time of the Civil Aviation Bill Committee stage in 1980. At that time my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) put it this way to the present Secretary of State for Employment who was then the Minister taking the Bill through Committee:
  "can the Government assure the employees of British Airways that as a result of this operation their pensions will not be adversely affected?"
  The present Secretary of State for Employment replied then that
  "possibly what would be most likely to damage industrial relations and the prospects of profitable operations of the company would be to interfere in some arbitrary manner to worsen the conditions of the pension fund."—[Official Report, Standing Committee B; 31 January 1980, c. 259–260.]
  We have come a long way in just a few months. When further pressed at that time in Committee by myself and by my right hon. Friend the then Minister concerned gave repeated assurances that this was not under threat. He went
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  so far as to say that the fund was in sound condition and he could see no reason why there should be any change in the pension scheme.
  I raise this matter because the financial limits and the financing of British Airways are one reason why, apparently, British Airways have seen fit now to seek to change drastically the conditions of the pension scheme of their employees. It is no part of our policy, I well recognise, to get involved in details of negotiations between employer and employee, but equally it is our duty to bring matters to the attention of the House when assurances are given to Committees of the House that turn out not to be worth the paper on which they are written. When employees are given to believe that their pension rights are not under threat but in due course they turn out to be under threat, the Minister owes the House an explanation of what has changed in the meantime.
  I ask again that the Minister give an assurance that there is no connection between the Government's wish to privatise British Airways and the moves of British Airways adversely to affect the working conditions of their employees.
  Similar dissatisfaction was aired in Committee with the explanation given by the Minister on the financing of the redundancy and severance pay scheme, which is currently being implemented by British Airways. I pay credit, as I am sure will hon. Members on both sides of the House, to the way in which the trade unions have responded to the grave difficulties facing their members in the massive rundown of the work force at British Airways in recent months and which will face them in the coming months. About 15,000 jobs will have gone in well under three years.
  We must ask tonight, however, as we did in Committee, what this scheme will cost and how it is to be financed. Is it £70 million or £100 million? Surely the Minister has asked about figures of this magnitude and will know the answer. How is the scheme to be financed? Will some part of the financial loan limit that we are being asked to approve go towards paying for this severance and redundancy pay scheme?
  I come finally to the financial position of British Airways. During the passage of the Civil Aviation Act last year, we warned that the Government's wish to privatise British Airways was doomed to failure in the light of the severe problems facing the airline industry. Nevertheless, despite the fact that the Government had no mandate and it was no part of their election manifesto, they pressed ahead in a foolhardy fashion, trying to put British Airways into a postion where they could be denationalised.
  Does the Minister agree with Sir John King, the chairman of British Airways, that he still expects British Airways to be making a profit at the end of the financial year 1982–83? If the answer is "Yes", can he tell us what is meant by "profit"? Is it an operating profit, or profit after offsetting interest payments and the like?
  British Airways have a very substantial amount of external debt. At the moment they are seeking, along with many other airlines, to recover from a truly deep recession in the airline business. Is it credible that British Airways can or should be forced into a position of being sold off at what can only be a dangerously low price before the next general election?
  In the journal Aviation Week and Space Technology of 19 October, Sir John King made clear that the Government have had—as one of their primary goals—turning British

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  Airways into a private enterprise company before the next general election. Is it still the Government's intention to do that and, if so, how do they intend to overcome the financial problems of British Airways? What do the Government intend to do as regards the profit track record that would be required for going to the market? What do the Government intend to do, if anything, about the capital reconstruction of British Airways? If we are being asked to approve new high borrowing limits only to find in a few months' time that, in order to sell off British Airways cheaply, the Government come to the House yet again to seek a capital reconstruction programme, that would, in effect, give public money to private individuals, this House would have every right to be gravely concerned.
  Mr. Michael Colvin: I detect an inconsistency between what the hon. Member is saying now and what he said in Committee. I was not a member of the Committee, but I have read the Official Report. In Committee the hon. Member said that he was in large measure in agreement with what was proposed in the Bill. He has already said that obviously part of what is proposed is to get British Airways over a very severe hump and bring it into a fit state to privatise. Would it not be appropriate for the hon. Member to state the Opposition's policy towards privatisation and say whether they would, if perchance they became a future Government of Britain, do what they have said they would do with regard to British Aerospace, which is to return it to the public sector without any fair compensation to the shareholders?
  Mr. Deputy Speaker: Order. Interventions should be short and relevant, and confined to the contents of the Bill.
  Mr. Woolmer: Thank you, Mr. Deputy Speaker. I am happy to respond to that part of the intervention which was relevant to the contents of the Bill, which seeks to increase the borrowing of British Airways by about £600 million. The Labour Party believes that if such large sums are to be put into a nationalised industry by the taxpayer, the taxpayer has every right to see the benefit and return on that investment in due course. We object to hundreds of millions of pounds of public money being put into industries, only to see them flogged off at cut-price terms because of political ideology rather than in the true interests of the nation or the taxpayer.
  Although the official Opposition do not oppose the Bill, we regard the Government's policies in relation to the British Airports Authority and British Airways as an increasing shambles. The Government are trying to point in several directions at once, and in the end they face the grave danger of satisfying no one.
  If the Government attempt to privatise British Airways—although I do not expect that to happen—they will face opposition. Tonight, I do not ask my hon. Friends to oppose the Bill, but the Labour Party will oppose the Government vigorously if they try to sell off a national asset—British Airways.
  7.32 pm
  Mr. John Wilkinson (Ruislip-Northwood): I congratulate my hon. Friend the Under-Secretary of State on an exemplary first solo. He has piloted the Bill with great skill through to Third Reading, and he showed sympathy and understanding in dealing with the points raised in Committee and on the Floor of the House. I hope that it is the last Civil Aviation (Amendment) Bill that we
  74
  shall have to debate in this Parliament. If we have to debate another Bill, I hope that it will be to enact the denationalisation of the British Airports Authority.
  I say "denationalisation" advisedly, because the hon. Member for Batley and Morely (Mr. Woolmer) suggested that the Conservative Party had advocated the privatisation of the British Airports Authority. I did not do so, either in Committee or the Second Reading of the Bill. I have always advocated the break-up of the British Airports Authority into constituent profit centres. That would be attractive to investors and prove the best means of bringing landing charges down and improving the service to customers and airlines.
  The borrowing of the British Airports Authority will constitute about 30 per cent. of its finances for development, whereas 70 per cent. will come from charges, and that worries us. I know that we cannot go into the matter raised by the Transworld Airlines legal action. Nevertheless, we have learnt enough from this measure to realise that it is wrong for a nationalised industry such as the British Airports Authority to have to come to the House to increase its borrowing powers to fund its capital development programme. That is particularly so if the industry is one that could be denationalised and raise its capital on the market.
  Mr. FoulkesDoes the hon. Gentleman agree that, while his proposal could fairly be described as denationalisation, there was an alternative suggestion from Conservative Members in Committee that could more properly be described as privatisation?
  Mr. Wilkinson: The hon. Member is right, but, as was mentioned earlier, it would be a matter of substituting one kind of monopoly—albeit a monopoly with private equity participation—for what is at present a pure State monopoly. That would not necessarily be a great improvement for the travelling public or the airline.
  With regard to the proposed increase in the borrowing powers of British Airways, I have advocated that if Her Majesty's Government are in doubt, as they must inevitably be, about the timing of the flotation of the stock of British Airways on the market in order to achieve privatisation, they should float earlier rather than later, because the political considerations and the benefits to the corporation inherent in an earlier flotation outweigh the possibility—it must be a judgment—of raising more money by postponing the sale of the equity.
  I am aware of the great sacrifices that have been made by the employees of British Airways in their valiant attempt to turn the corporation round to profitability—not least in my own constituency, where three major office complexes are to close. The hon. Member for Batley and Morley referred to the loss of jobs. It is interesting to note that a high proportion of the people who opted for voluntary redundancy under the scheme proposed by British Airways have been able to find other gainful employment.
  Nevertheless, unless British Airways are able to restructure themselves and get their debt—equity ratio better balanced, they will require more capital, and it would be wrong, in the current economic climate, for there to be more public dividend capital. There should be flotation and the raising of capital through the market.

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  This is a useful Bill. It has enabled us to air one or two important civil aviation and air transport issues, and I shall support it. I particularly congratulate my hon. Friend the Under-Secretary of State on his part in it.
  7.38 pm
  Mr. Ken Eastham: I thought the Minister was rather casual in his opening remarks when he said that it would be a brief and straightforward debate. Labour Members do not feel that the Bill is as straightforward as the Minister seems to be suggesting to the House. On Second Reading and in Committee, we said that we would not oppose the Bill, but that does not mean that we have no reservations about it. We are not entirely confident about the Government's intentions.
  The Minister will agree that on numerous occasions reference has been made to selling off. That is a very strange way in which to administer taxpayers' funds. There have been big handouts to make the operations profitable, but then the Government seem to be hell-bent on giving away the assets to the private sector. I cannot imagine any private business in which the owners of the shares and those enjoying the profit would suddenly decide to give everything away to strangers.
  I have a great deal of sympathy with the British Airports Authority, because it is constantly being harassed to make more profits. The emphasis seems always to be on more profits rather than a better service. Pressure is constantly being exerted to reduce the labour force, but if, one day, there were to be a huge mishap, suddenly everyone would be running for cover and saying that he was not to blame because it was an act of God. There may be all kinds of consequences when there is extensive demanning.
  The hon. Member for Preston, North (Mr. Atkins) said on Second Reading that if the London airports did not expand the business would go to Europe. I take issue with him on that. I realise that hundreds of millions of pounds are being pumped into the southern airports and that an inquiry is taking place. I feel compelled to draw special attention in this context to Manchester international airport, which has great potential and is indeed a money-spinner for the nation. I wish to add some flesh to the bones of this matter, as the Minister seems to believe that hundreds of millions still have to be spent down south.
  In a letter to me the chief executive of Manchester airport, Mr. Gil Thompson, stated in relation to profits at Manchester airport:
  "you will note that in every year except one since 1959, a surplus has been achieved. In the early years the Airport was supported by rate contributions, but in recent years there has been substantial contributions to the City and County rates."
  In relation to the capital programme, Mr. Thompson says:
  "In the current financial year £8·472 million will be financed from loan. Borrowing powers are available for this amount because it was the main part of the expenditure required for three major schemes which were designated by the Government as being of National/Regional importance. However, in 1982–83, the borrowing powers granted are only £4·7 million (at outturn prices) for the same three schemes, as no new schemes have been approved. This is only a small part of the total capital programme of £12·5 million and most of the remainder of the programme will have to be financed directly from revenue resources. This puts a severe strain on the revenue budget and pushes up charges to the airlines more than would otherwise be necessary."
  In relation to Manchester international airport, I also briefly draw the Minister's attention to a document
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  published in November this year on behalf of the North-West Development Association, referring to the economic problems of the North-West of England, in the form of a memorandum to the Prime Minister. With regard to airports and investment, the following statement is highly significant:
  "Moreover, the British Airports Authority's proposals to expand Stansted as London's third international airport would, if implemented, add substantially to the imbalance of investment already evident between the South East and North West England and pose a substantial threat to the future of Manchester International Airport, one of the key growth points of the North West economy, yet still awaiting a direct rail link."
  The Minister will recall that I said in Committee that we should be most grateful if he would consider sympathetically this very small link to the main line railway system, which would bring greater profitability not just to Manchester but to the whole North-West region extending as far as the Scottish coast.
  I sincerely hope that the Government have no sinister intentions with regard to Manchester international airport. I give notice at once, so that the Minister understands clearly, that we say "Hands off Manchester airport". What the ratepayers have paid for, the ratepayers intend to keep. I assure the Minister that I should certainly find support among his Back Benchers if the Government had any ideas about capitalising upon something that has been so dearly paid for and nurtured over the years.
  The Government are trying to give a respectable face to privatisation, but it seems to us to mean that taxpayers can keep the loss while private investors join in the looting.
  Mr. Robert Atkins: What about the employees?
  Mr. Eastham: I trust and hope that the employees will receive security and a decent wage, as in other industries. I do not necessarily believe that the employees of the British Airports Authority or British Airways are different from those of any other company such as ICI or GEC. One trusts that they are entitled to the best conditions, wages and prospects, but I do not believe that we need some kind of gimmick to keep them sweet by offering them assets being taken from taxpayers. Not all taxpayers can work for the British Airports Authority or British Airways, so that must be taken into account when considering the justice or injustice of the idea. The hon. Member for Preston, North constantly puts that forward as a solution, but I understand that the trade unions are very uneasy about the position. Nowadays there is less concern about buying interest in companies and more interest in keeping jobs.
  The Government would gain greater credibility if they applied themselves to the task of keeping workers rather than killing them off in their thousands. They are managing the entire industry in a brutal and unwise fashion, and it will be no better for their interference. The Opposition are suspicious—and I believe that in due course we shall be proved right—that that is not in the interests of the industry or the airports, but only in the interests of Conservative Members' friends who hope to make some quick profits that they have not necessarily paid for. We believe that the taxpayers should reap the benefits of their investments, just as the ratepayers of the Greater Manchester area should reap the benefits of their investment. That is why we give notice that the Government should not get any sinister ideas about taking over Manchester international airport. If they do, there will be a real showdown in the House.
  7.49 pm
  Mr. Robert Atkins: I do not wish to delay the House, because I know that that would not be popular. I join by hon. Friend for Ruislip-Northwood (Mr. Wilkinson) in congratulating the Minister, who, to use a phrase close to both our hearts, opened the batting extremely well. At the other wicket the hon. Member for Batley and Morley (Mr. Woolmer) made his maiden appearance in Committee as spokesman on these matters. Those of us who are interested in aviation matters were thus able to discuss this subject in a way that we had not done for some time and to have an informed debate that was unique in my experience of these matters.
  It also brought out some differences in attitude to the matter referred to by the hon. Member for Manchester, Blackley (Mr. Eastham) and by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), which is how we should continue to fund the British Airports Authority, and also British Airways. Hon. Members were united in their concern about the charges levied by the BAA, not necessarily in a critical or hostile fashion, but rather because the airlines, including British Airways, were experiencing great difficulties in a recession. It was felt that increased charges would not help.
  As a result of that concern, two responses were made. Conservative Members expressed an interest in the provision of some sort of altered position for the BAA, based on our experience of British Aerospace—in other words, 54,000 people subscribing to the gimmick referred to earlier. The same can be said of other companies, such as British Telecom and the National Freight Company. There are examples of how we can provide an alternative financial structure for the BAA.
  I strongly believe in the excellence of the people working within the BAA, from the chairman downwards, and am confident that they are well suited to meet this challenge. Such a challenge would create a new area of activity, and I am satisfied—
  Mr. Eastham: We heard the same arguments when parts of ICL were sold off, and we now know what a disaster that was. Will the hon. Gentleman reflect on some of the sentiments now being expressed by thousands of ICL workers who suddenly find themselves with no jobs?
  Mr. Atkins: I suspect that I should be ruled out of order if I were to take up that challenge. Perhaps we can discuss this matter outside the Chamber at some other time. Much as I should like to accept the challenge, I am sure that the Chair would rule me out of order.
  There have been some misunderstandings about what Conservative Members have suggested, and the debate has provided an opportunity to spell out our interests. I hope that the Minister will consider the representations from Conservative Members about the privatisation of the BAA. As I said earlier this afternoon, I believe that the BAA is well run, and I am sure that the challenge laid down by Conservative Members will be met.
  Finally, I believe that the difficulties experienced by British Airways as a result of the recession and overmanning have come about because of the pressure imposed on them by Conservative Members, who have invited them to submit a prospectus to the general public to buy shares, both within and without the company. To that extent I congratulate the management of British
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  Airways on what it is doing and on the skilled and compassionate way in which it has appreciated the problems of its staff, not to mention the way in which it has got to grips with the managerial problems experienced by the airline.
  In conclusion, although I referred to Schiphol and the loss to Europe if British airports were not expanded, like the hon. Member for Blackley I support the development of Manchester international airport. It has great potential and ought to be expanded in whatever way possible. I should not like the hon. Gentleman to be under any misapprehension in that regard.
  Finally, I support the Bill, but, as my hon. Friend the Member for Ruislip-Northwood said, our wish is that it was not needed. Having said that, it has enabled us to discuss these matters, which we do all too rarely. I congratulate the Minister on the manner in which he has piloted the Bill through Committee and the House, and I ask him to consider urgently the suggestions made by my hon. Friends about privatisation. With those remarks, I wish the Bill a fair passage.
  7.54 pm
  Mr. David Ginsburg: Like the hon. Member for Preston, North (Mr. Atkins), I do not propose to detain the House for too long. The Bill is necessary because the Government are both the banker and owner of British Airways and the BAA. We are dealing with large sums of money—£175 million in the case of the BAA and £600 million in the case of British Airways.
  As has already been said, British Airways face major financial, economic and social problems, but if we are to have an adequate presence in the North of England, the financial infrastructure must be satisfactory. Nevertheless, when looking at nationalised industries as a whole, one must conclude that some of the arrangements for parliamentary accountability are far from satisfactory.
  Much of our legislation, although not necessarily this Bill, goes into too much managerial detail and does not give enough thought to financial priorities. Therefore, while I support the Bill because it is financially necessary, I hope that the Government will think about interposing a State holding company into which many of the nationalised industries could be absorbed so that our debates can concentrate on the major priorities.
  I think in particular of financial matters. We should view this in the round, not merely in terms of the financial involvement of British Airways or the BAA, but the financial problems of the other industries as well. As it is, our piecemeal debates often interfere with the managerial discretion of the industries concerned. Having said that, I have no doubt that British Airways in particular now face a major financial crisis. It would, therefore, be wrong and churlish of the House to deny the Bill its passage.
  7.58 pm
  Mr. George Foulkes: I underline what my hon. Friend the Member for Batley and Morley (Mr. Woolmer) said about the Government rushing the Bill through the House. We did not have much time to deal with many of the important issues in Committee. The third sitting was truncated, and my hon. Friend did not have an opportunity to make many of his points in criticism of the Government's policies. It is a pity that we have not had a greater opportunity to do so this evening.

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  It has been a pleasure to listen to a brief intervention from one of these new-fangled Social Democrat chappies. They seem just about able to creep in and interpose a few thoughtful words at this stage of a Bill. However, they do not seem all that enthusiastic about undertaking the hard grind in Committee. I understand from my hon. Friends that the SDP was recently offered places on several Committees but refused to accept them. It ought to be made clear that the SDP is not that enthusiastic about undertaking the day-to-day work carried out by other hon. Members.
  Mr. John Roper: The hon. Gentleman has made some rather general accusations. It would be more helpful if he would make particular ones.
  Mr. Foulkes: I understand that they were offered—
  Mr. Deputy Speaker: Order. The hon. Gentleman must confine himself to the Bill rather than comment on interventions that go wider than its Third Reading.
  Mr. Foulkes: Thank you, Mr. Deputy Speaker. I assure the hon. Gentleman that later outside the Chamber I shall give him a specific example.
  One of the matters discussed in Committee—my hon. Friend the Member for Manchester, Blackley (Mr. Eastham) touched upon it today—was the question of the imbalance of British Airports Authority expenditure. There is an amazing amount of expenditure in the South-East of England but only a relatively small amount in Scotland. Reference to Manchester and other provincial airports, in terms of general Government spending, is valid but those airports are not directly affected by British Airports Authority expenditure because they are not controlled by the authority. It is the case, however, that the authority owns and controls four Scottish airports.
  Over the next five years, the authority plans to spend only £11 million in Scotland, compared to £600 million in the South-East of England. It is not as though projects and plans for Scottish airports did not exist. I put a number of specific suggestions to the Minister in Committee. To his credit, the Under-Secretary of State took them on board and asked the British Airports Authority to investigate. I suggested a major link between Prestwick airport and Prestwick town station to enable passengers and their baggage to move easily from one to the other. It will be found, however, that money is not available to spend on Prestwick airport because so much has been allocated to the South-East of England.
  I should also like to mention the imbalance that exists between the South-East of England and Scotland in relation to landing charges. I asked the Minister if he would give a positive boost to Prestwick airport. Such a boost could be provided if the British Airports Authority gave priority to lower charges at Prestwick to encourage flights to switch to Prestwick from the South-East of England. I had not realised the extent of the imbalance. I had the opportunity on Friday to visit Prestwick and to talk to Mr. Gilbert Gray, manager of the airport, and Mr. Graham Wylie, chairman of the airport consultative committee. I ask the Minister to investigate the information they gave me that landing charges at Prestwick airport are five times as great as the charges for an equivalent aircraft at Gatwick. This is quite the opposite
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  to a policy of giving positive discrimination in favour of Prestwick. It discriminates against Prestwick and encourages more airlines to use Gatwick.
  I was chided by the Minister and warned against being unrealistic about the possibilities for Prestwick airport. I agree that suggestions should not be unrealistic. I hope, however, that the Minister will be able to enter into discussions with the airlines and British Airports Authority to break the dangerous downward spiral in which landing charges lead to decreased use of the airport only to be followed by a further increase in charges and a still greater decrease in use of the airport. This vicious downward spiral needs to be broken.
  As fewer airlines use the airport and the airlines that are using it do so to a lesser extent, the effect, combined with the break-even policy imposed on individual airports by the Government and the British Airports Authority is that charges can only go up. The spiral might be broken if the Government were able to reach some agreement with the airlines and the British Airports Authority leading to a commitment by airlines to use the airport for a new series of flights in return for reduced charges. I hope that the Minister will consider this a positive suggestion.
  I should like to turn now to the issue of denationalisation or privatisation. This began to sound in Committee like an orchestrated chorus from the Conservative Benches. Time and again, there was the clarion cry from Conservative Members about privatisation or denationalisation. This causes great difficulties in relation to morale. Indeed, it leads to lowering of morale in all nationalised industries. The industries feel that they cannot win. If they make a loss, they are criticised by Conservative Members for being inefficient. Hon. Members throw back their arms and say that nationalised industries cannot make a profit.
  When the screws are applied or, perhaps more importantly, when nationalised industries themselves see ways to improve efficiency, whether through demanning or other means, and make a profit in one sector or another, then the greedy eyes of Conservative Members and their friends are cast upon the nationalised industry concerned or a sector of it. The industry is immediately seen as ripe for plucking. It is suggested that it should be hived off, privatised or denationalised so that some person—some friend, in general terms, of Conservative Members—will make a profit out of it instead of that profit going to the taxpayer, who made the investment.
  The Under-Secretary of State is an author of some repute. That brought a chorus of "Hear, hear" from the Government Front Bench that I would like put on record. The hon. Gentleman should go into the field of writing television thrillers like "Dallas" where, at the end of one episode, Sue Ellen is left with her lips quivering or J.R. is left in a state of absolute shock about what is to happen to him and his assets in the next episode. The same situation was seen in the Civil Aviation (Amendment) Bill Standing Committee. Believe it or not, drama does take place in Committees of the House of Commons. At the end of the first sitting, the Under-Secretary of State said:
  "I shall leave the Committee on a cliffhanger. When we return to our deliberations on Tuesday, I shall reveal the Government's attitude to the very important question of the privatisation of the British Airports Authority".—[Official Report, Standing Committee A, 3 December 1981; c. 36.]
  The hon. Gentleman built up this amazing tension. Until the next Tuesday morning, I could hardly bear the

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  excitement. I am afraid that, like many cliffhangers, it turned out to be a disappointment. Whether, like the new Under-Secretary of State for Scotland responsible for health matters, whom I see on the Government Front Bench, officials told him that he should not say what he had intended to say or what he had said he should not have said, I am not sure. When hon. Members returned on Tuesday the Under-Secretary of State said:
  "I am strictly constrained in what I can say".
  The hon. Gentleman then referred to what his right hon. Friend had said on Second Reading, which, by that time, was old news. The only new development was the hon. Gentleman's remark:
  "I shall study with the greatest attention the novel, important and constructive proposals put forward in Committee by my hon. Friends on that subject".—[Official Report, Standing Committee A, 8 December 1981; c. 37.]
  When my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) used to say that to me in my local government days, I knew that I had had it. That was it—finished. I hope that that is what it means to the Under-Secretary of State. I make light of the matter but it is important.
  The suggestion, which has been made again today by Government Members, is that each airport should be packaged, wrapped and sold to private enterprise. The hon. Member for Ruislip-Northwood (Mr. Wilkinson) made that suggestion today. He was talking about Heathrow Ltd. competing against Gatwick Ltd. and perhaps Stansted Ltd. I reject the concept of privatisation, but in the context of the South-East of England, and bearing in mind the philosophy of Government Members, that suggestion has some logic. For Scotland privatisation would be disaster. It is inconceivable that Aberdeen competes with any other airport. Stornoway cannot compete with Sumburgh. There is no alternative to Sumburgh if one wants to fly to the Shetlands.
  In Committee it was said that Prestwick would compete with Glasgow. That is the danger. The Under-Secretary of State was equivocal in the extreme in Committee. I ask him to give an unequivocal statement today. If he does not, the Secretary of State, who should have a greater interest in Prestwick than I have—although sometimes I doubt whether he has—will be worried about the implications. I hope that we shall have an unequivocal declaration from the Under-Secretary, if not today, soon.
  I hesitate to say this, but the example used by Government Members in favour of privatisation was the John F. Kennedy airport in the United States. Government Members have suggested that airlines should be able to run their own terminals, as they do at John F. Kennedy airport. I recently arrived at the British Airways terminal there and had to transfer to Eastern Airlines. The Eastern Airlines terminal was next to the British Airways terminal, but in an anti-clockwise direction. Unfortunately the buses operated in a clockwise direction so I had to go to Trans World Airlines, Pan-Am and Western Airlines terminals. It took an hour. When I returned to Heathrow I experienced a new-found appreciation, sympathy and feeling of commendation for Heathrow.
  It is appalling and sometimes sinister when hon. Members praise the British Airports Authority and its management and then say "Although it might be doing a good job we, for our doctrine and dogma, will sell it off and let someone make a private profit out of it".
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  A recent incident at Prestwick causes the grave concern and I urge the Under-Secretary to look into it. Many of us have, for a number of reasons, expressed doubts about British Airways' borrowing consent. For some time we have been concerned about the negative attitude that British Airways adopts towards Scotland, and, in particular, towards Prestwick airport. Last night a British Airways jumbo jet from North America was diverted because it could not land in the South-East of England. It was due to land at Prestwick after permission had been requested for that. The British Airports Authority and air traffic controllers said that it was possible and, indeed, desirable for it to land at Prestwick. It did nor land at Prestwick but was diverted to Glasgow airport, causing annoyance to people in Glasgow. It was diverted to an airport—one which is unsuitable for jumbo jets—away from Prestwick which could have handled it properly. The reason was that British Airways staff were having an office party. The Under-Secretary draws a sharp intake of breath. For those of us who day in and day out, night in and night out are pushing for Prestwick and trying to provide a positive incentive for people to use the airport to be undermined by British Airways and its staff is a galling experience. The Under-Secretary has been very good. I have said that before and I have to swallow hard when I say it, but he has always taken up our points in Committee and I hope that he will take that up.
  Finally—and I shall say that only once, unlike the hon. Member for Preston, North (Mr. Atkins) who said it on three occasions—I underline what my hon. Friend the Member for Batley and Morley said about the Government's aviation policy. I mean no disrespect to the Under-Secretary who took over only recently. I hope that he is able to sort out what ray hon. Friend described as a shambles. We do not know what is happening to British Airways and it does not know. In spite of requests by hon. Members, there is no information about the intended date of privatisation, what form it will take or about any other aspect. That we are considering this Bill shows that the Government have no immediate plans. Whatever hopes we had, I am sure that there will be another Civil Aviation (Amendment) Bill because British Airways is not ready for privatisation and will stumble through another year of uncertainty.
  The Government are in a muddle over their airports policy. Two nationalised bodies, British Airways and the British Airports Authority, are locked in mortal combat about whether there should be a new airport at Stansted or a fifth terminal. That will cost thousands of pounds of taxpayers' money in addition to the cost of the inquiry. The Government have no clear policy.
  The Government have a policy of laissez-faire, of free enterprise and of allowing the airlines to do exactly what they want, instead of the policy suggested by my hon. Friends the Members for Blackley, Central Ayshire (Mr. Lambie)—in Committee—and others of encouraging the maximum use of existing airports, some of which are underused. The Government prefer to spend millions of pounds on building in the South-East of England an extra airport which is unnecessary. When airports in the provinces and Scotland are underused the Government should positively encourage their use.
  The Government's airports policy is in a shambles. I hope that we shall have the opportunity in the near future

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  to return a Government with a more sensible, direct, positive and planned policy. In case there is any doubt, I refer to a Labour Government.
  8.18 pm
  Mr. Sproat: I congratulate the hon. Member for Batley and Morley (Mr. Woolmer) on his first appearance at the Dispatch Box. He and I have faced each other in Committee for a number of weeks. I said that I was astounded at how quickly he had grasped the intricate details of this business. I am now astounded at the apparent confidence with which he delivers himself. On this occasion I wish that I could feel that confidence, or at least masquerade in it.
  We are grateful to the hon. Gentleman for the manner and the speed with which he dealt with the Bill in Committee. As he said, the matter is urgent, at least for British Airways. It is vital to get the Bill through because otherwise British Airways would be in breach of the law by exceeding their statutory borrowing limits. We are under no misapprehensions about the fact that there are parts of our policies of which the Opposition do not approve. Nevertheless, we are extremely grateful for the general attitude and manner that the Opposition have displayed.
  The hon. Member for Batley and Morley raised the vexed question—it should not be a vexed question—of the 6 per cent. CCA return. It has not been imposed on the British Airports Authority; the British Airports Authority has agreed to it. For some reason, hon. Members on the Opposition Benches seem to object to the whole concept of the British Airports Authority making a proper return. What is so extraordinary is that they enunciated it first. The 1978 Labour White Paper referred to:
  "the principle that air transport facilities should not in general be subsidised by the taxpayer or ratepayer."
  The official Opposition having enunciated the principle, the Government have gone a little further by putting flesh on the bones and saying that the taxpayer should not subsidise the ordinary airline or air traveller. We have said that a 6 per cent. CCA rate of return is the proper way to go about it. I would go further and defend that step in gross and in detail, but, unfortunately, as the House knows, I am constrained because the matter is currently before the courts. Otherwise, I assure the Opposition that we would explain in the tiniest of detail exactly why the policy is necessary and why it conforms exactly with the principles enunciated in the 1978 Labour White Paper.
  My hon. Friend the Member for Hertfordshire, South-West (Mr. Page) and I heard time and again in Committee complaints from the Opposition about the BAA not being allowed to borrow more. We became weary of listening to them. However, the only Government ever to put a zero cash limit on the BAA's borrowing were the previous Government, when in 1979 the right hon. Member for Lanarkshire, North (Mr. Smith), who is now the Shadow Secretary of State for Trade, refused to allow it to borrow a single penny. It comes ill from the Opposition to say that we should be criticised because we have an EFL of only £14 million. That matter should be placed on the record.
  The hon. Member for Batley and Morley has a good point about the performance criteria, and we agree 100 per cent. It is not necessary merely to give a nationalized
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  industry a rate of return to achieve. It is necessary to have other performance criteria. We have imposed certain performance criteria that have been agreed by the British Airports Authority—for example, the ratio of employees to passengers and the ratio of operating costs to passengers. There are various other standards, which I explained in Committee. The question of the speed at which baggage is reclaimed and the volume of customer complaints are closely monitored by the BAA.
  The hon. Gentleman switched his attention from the British Airports Authority to British Airways. Having lavished compliments on him earlier, I cannot continue in that happy vein. The first thing that he said was that the Government did not know what they were doing about competition policy. If there is one direction that the Government know 100 per cent. where they are going it is on competition policy. We are in favour of it. We removed specific guidelines currently imposed on the CAA. We are doing everything that we can to see that fair and free competition for our airlines is the order of the day.
  The hon. Gentleman chose an unfortunate example in Hong Kong. In Committee I believed that I had made it clear that, although we had introduced competition on the Hong Kong route, the two airlines—Cathay Pacific and British Caledonian—are making profits on the route. Not only does the customer benefit by lower fares and an increased number of flights, but airlines benefit in their profits.
  The hon. Gentleman asked for an assurance that we would not allow more competition that might adversely affect British Airways, but I can give him no such assurance. If necessary, through the good offices of the CAA, the Government are certainly prepared to grant further competitive routes.
  The hon. Gentleman fairly made the point about pensions. It is not a matter for the House but for the management of British Airways. I give him the specific assurance for which he asks. Any changes that may be made in the pensions plan have absolutely nothing to do with our plans for the privatisation of British Airways.
  Mr. Woolmer: In Committee on 31 January 1980 the then Minister stated:
  "The investments have been well made and wisely placed, and if the Board had thought that there was any inadequacy in the fund I am sure that it would have brought it to the attention of Ministers."—[Official Report, Standing Committee B, 31 January 1980; c. 267.]
  Was that done before British Airways started to reduce the scheme for its employees?
  Mr. Sproat: The management told the Government exactly what it was fitting for the Government to know about the detail of the plan. It said that it was going to retrench, and retrench it certainly has. It is only fair to compliment Sir John King and Mr. Roy Watts on their successful retrenchment.
  My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) made another powerful speech in favour of privatisation and/or denationalisation. He courteously told me that he would not be able to stay for the debate but I pay tribute to the part that he played in Committee. I shall take careful note of the arguments that he and my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) put forward, although there might be a slight nuance of difference in the speed at which our privatisation goes ahead. [Interruption.] The hon. Member for

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  Glasgow, Garscadden (Mr. Dewar) need not laugh. He will be laughing on the other side of his face when we begin to privatise British Airways. I hope that he will find it as amusing then as we shall.
  Mr. Woolmer: Bearing in mind that the hon. Gentleman pressed not for privatisation but for denationalisation, will the Minister assure us that if he proceeds with the folly it will be to sell off only a minority of the shareholding and not 100 per cent.?
  Mr. Sproat: I am not sure whether the hon. Gentleman is talking about British Airways, but my mind is entirely open. I certainly do not rule out the chance of selling off more than a minority shareholding. As my hon. Friend said on 16 November 1981 at column 42, we are entirely open-minded about the British Airports Authority. That open-mindedness extends over all Conservative policy. We are extremely open-minded over all these matters.
  The hon. Member for Manchester, Blackley (Mr. Eastham) made a valuable contribution in Committee, but I wish to take him up on a little semantic slip this evening. He said that he could not be confident of the Government. He can be absolutely confident that we shall privatise and/ or denationalise British Airways. There is no question about it. He can rest his confidence on us in that matter.
  I go along with the hon. Gentleman in saying that Manchester is an excellent airport. Unfortunately, it is not a BAA airport, so I feel constrained from saying other than that I have taken note of what he says. As I said in Committee, I shall do all that I can to allow Manchester to develop as an extremely important and valuable international gateway for this country.
  The hon. Member for Dewsbury (Mr. Ginsburg) welcomed the Bill on behalf of the Social Democratic Party—with the party's usual broad brush as opposed to a pointillist technique. The hon. Gentleman has now left the Chamber but I suppose that we should be grateful for the broad brush approval that the Social Democrats give to the Bill. Finally—
  Mr. Donald Dewar: Finally?
  Mr. Sproat: For the hon. Gentleman to say "Finally" like that is like being accused of lying by the former United States President, Richard Nixon. The hon. Gentleman probably speaks longer on almost every subject than any hon. Member.
  The hon. Member for South Ayrshire (Mr. Foulkes) spoke a little unfairly about the imbalance of the British Airports Authority's spending between Prestwick and the London airports. He knows that I am anxious to do everything that is reasonably possible to promote the prosperity of Prestwick airport, but it is no use burldng the fact that Prestwick has about 360,000 passengers a year whereas the London airports have 36 million passengers a year. To ignore the sheer weight of passenger traffic and to say that the expenditure should not be related to it is to do little service to Prestwick. However, we have been over that ground fairly frequently in the past and I hope that the hon. Gentleman will accept that I am determined to do everything that can reasonably be done for Prestwick.
  I commend the Bill to the House.
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

  Housing (Amendment) (Scotland) Bill
  Not amended (in the Standing Committee), considered.
  8.32 pm
  The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): I beg to move, That the Bill be now read the Third time.
  As the House will be aware, this is a small, two-clause Bill and has only one basic provision—to raise the borrowing limits of the Scottish Special Housing Association from the present maximum of £500 million to £600 million, with provision for a further increase of £150 million by order of the Secretary of State.
  It is expected that the Scottish Special Housing Association will reach its present limit by early next year, and it is therefore desirable to allow this increased borrowing facility to enable it to continue its work. The Opposition have approached the Bill in a constructive spirit, both on Second Reading and in Committee, for which I congratulate and thank them. On that basis, am confident that the House will be anxious to give the Bill its Third Reading.
  8.33 pm
  Mr. Donald Dewar: I thank the Under-Secretary of State for his congratulations. I know that he means them. I assure him that I shall not live up to the reputation that was a little unkindly foisted upon me by the Under-Secretary of State for Trade. Obviously taking his own words seriously, he fled the Chamber as I rose.
  I accept that this is a non-controversial Bill, in one strict sense. No opposition Member objects to the raising of the financial limits for the Scottish Special Housing Association.
  It is common ground that housing finance is never noncontroversial in a political sense. We in Scotland are rightly worried about the effect of the Government's policies on housing. Local authorities and the SSHA are starved of the funds that we believe should be available to them. The Minister will be aware of the fundamental difference between a nominal borrowing limit and the consent and authorisation to borrow or to spend, which the SSHA, like any other public service agency, needs from Government. The fact that we are raising the financial limits from £500 million to £600 million, with a possible further £150 million, is of little consolation if the Government are to cut the resources that are in reality available to the SSHA.
  In this week of very severe weather it is not a bad time to consider the state of housing in Scotland and the condition of the SSHA's own stock. Nothing affects the quality of life so fundamentally as the houses in which people live. In the 92,000 houses owned by the SSHA—and the same applies to local authority housing stock—we have seen under this Government's financial policies a steady and lamentable deterioration in the quality and choice of housing available.
  I look at the SSHA's record, bearing in mind that it will be affected by the Bill, and I see that it is one of steady decline, not in the competence of the organisation, but in the range of activities that it has been able to undertake because of the financial limitations imposed upon it by the Government. It is a tragedy that we see a new build programme for the SSHA that is less than one-third of

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  what it was in the mid-1970s. We see the necessity to update and upgrade the facilities available. According to the last annual report of the SSHA, it was possible to improve only half the number that was managed in 1979 and barely one-quarter of the number managed in 1977.
  The Minister claimed credit, rather coyly, for not suggesting that there had been an increase in real terms of the finance available to the SSHA. If that is a matter for congratulation, it is one for very modest congratulation. In real terms the finance made available to the SSHA has been declining dramatically, and if the Minister came clean he would have to say that the real resources available to the SSHA would decline further at a time when the needs were as great as ever.
  I feel very strongly about many of the Government's actions in their housing policy. The SSHA itself perhaps has not been in the eye of the storm. It has not been involved in the argument about the shabby manoeuvres of the Government in linking housing capital allowances to rent levels, where, for the first time, we see an allocation on the basis of need cut back in a form of administrative blackmail to force local authorities to push up their rents to levels that are seen to be acceptable by the Secretary of State but which have no reality in terms of the social hardship and the difficulties that many tenants experience.
  Directly relevant to the financial limits is the fact that the Secretary of State has forced the SSHA—because its rent levels are a matter for the right hon. Gentleman's diktat—to increase average rents to £9·12 a week. That may sound modest, but in Scottish terms it is a substantial rise of 26·5 per cent. in the last financial year, and of almost 50 per cent. in the last two years.
  If people are to be subjected to ever-increasing rents with a decrease in the service provided and with modernisation and new build programmes grinding to a halt, tenants and electors will be entitled to say that they are getting a very bad deal from the Government. During the last Scottish Question Time the Under-Secretary of State remarked that he had
  "recently announced that an extra £38 million would be available to housing authorities in Scotland for house building and improvement in the current year."—[Official Report, 9 December 1981; Vol. 14, c. 853.]
  I confess that I was surprised by that figure, because I had heard a number of others—£22 million and £23 million—and £38 million was a new figure to me. Perhaps the Minister will say what proportion of that will go to the SSHA, or whether it is included and will be part of the new financial ceilings being considered in the Bill.
  It is clear—the Minister said this—that we do not yet know what the capital allocation will be for 1982. However, he stated clearly on Second Reading that the sale of council houses would have a considerable impact on the finances of the SSHA and on local authorities. For example, the Under-Secretary suggested that in the current year he expected about £17 million to come in through the sale of SSHA houses. As 55 per cent. of that figure would be financed by private resources or building societies, he expected that
  "there will be a net revenue to the SSHA of about £9 million or £10 million. That reduces the SSHA's borrowing requirement from the national loans fund and is beneficial to the association. Next year and in future years, if the revenue from sales is greater than the figure estimated, increased power will thus be given to the SSHA to incur extra expenditure in a way that will be perfectly acceptable to the Government."
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  I want to be clear about what that statement means. The Minister stated that the figures for the capital expenditure programme for the current year would be £45 million. Let us suppose that the SSHA borrows £35 million and the rest comes in from the net revenue and proceeds of housing sales. If that sales figure increases, the association will clearly have lower interest charges to meet. However, the suggestion that seems to be coming from the Minister is that it is rather more than that. He used the phrase
  "if the revenue from sales is greater than the figure estimated, increased power will thus be given to the SSHA to incur extra expenditure".—[Official Report, Scottish Grand Committee, 24 November 1981; c. 31.]
  Does that mean that the ceiling that may be agreed for the current year—whether it be £45 million or another figure—can be exceeded if the sales are more extensive than the Minister expects? I wish to know that, because it will be of interest to the House when considering what the future holds.
  It is an important point because, as the Minister appreciates, if he is still saying what he appeared to say on Second Reading, the areas where sales will be more frequent will benefit financially. We will be in a rather strange position. We all know, and it is self-evidently true from our experiences in Scotland, that the areas where sales are more common are those of higher amenity, more attractive socially and where the financial situation is a little easier.
  If that is a way of ecaping from the stringent housing financial dictates of the Government, the areas without serious problems will benefit. The Minister shakes his head in an adamant way and I am glad to see that, because the consequence that I have suggested is not one which I would approve of or desire, but it is something that could be read into the words that he has used on many occasions. It would be useful if the Minister took this opportunity of explaining exactly where he stands on that matter.
  If the Under-Secretary is right when he says that a high concentration of council house sales will bring financial advantages to the local authority concerned, he is self-evidently saying that the areas that do not have serious housing problems—or less serious housing problems—are those that will be advantaged by the new policy, while deprived areas that have multiple problems will be disadvantaged. That almost inevitably flows from the first proposition that the Minister has so proudly proclaimed in housing debate after housing debate.
  I promised that I would not delay the House and I know that many of my hon. Friends want to contribute at least briefly to the debate. However, let me conclude by repeating the bold point—the real crux of the matter—that no one objects to raising the financial limits of the SSHA, but that is only a preliminary to the real decision about the resources that will be made available and the borrowing limits that will be allowed to the authority in the coming year.
  We will want to hear from the Minister—perhaps not today, because I accept that there is a time table—that he is prepared to allow the SSHA and its staff to get on with the job that we know they can do. They have had an admirable record over the years, but they have been caught in the financial holocaust started by the Treasury.
  The ability of the association to build and improve has been reduced, and that can be seen in its employment figures. There was, rightly, adverse comment on Second Reading about the fact that the last annual report of the

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  SSHA stated that the association had not taken on one apprentice in the previous two years. A major public agency that ought to have a direct interest in producing training opportunities for young people has had to opt out because of what the Government have done to its financial parameters. That is the sort of sad message that comes through.
  Even more important, the SSHA has not been able to carry out improvements and modemisations and to upgrade services for its tenants. That general decline has been part of the housing picture in Scotland. Under the Government the new build totals in the private sector are the lowest for a decade, and in the public sector they are the lowest since the war. That is a record of which the Under-Secretary should be thoroughly ashamed. To do him credit, he probably worries about it in private, however bravely he tries to dissimulate in public.
  We should make a start on putting things right, and a generous allocation to the SSHA would be one part of a much-needed attack on housing deprivation in Scotland.
  8.46 pm
  Mr. George Robertson: We have the opportunity to assess again the work and role of the SSHA, especially in relation to the new borrowing limits proposed in the Bill.
  Eighteen months ago, when I occupied the Front Bench post now held by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), I warned the Government that this form of primary legislation should be considered well before we reached the brink of the borrowing limits being achieved. I said that if there were a need for increased limits the Government should take quick action rather than delay the legislation.
  It is important to underline the Opposition's support for the work that has been done and is being done by the SSHA, even in the difficult circumstances laid down by the Government—especially the financial arrangements provided for the association.
  In Opposition, Conservative Members were loud in their praise of the interventionist role of the SSHA. Indeed, the hon. Member for Southend, East (Mr. Taylor), who was the principal spokesman on Scottish affairs at that time, and who is a notable absentee from our deliberations, said in the Committee considering the statutory instrument on this subject:
  "The Minister will be well aware that the Conservative Party has always given great support to the Scottish Special Housing Association and regards it as an organisation making a useful contribution to Scottish housing, which we fully support."—[Official Report, Second Standing Committee on Statutory Instruments &c., 22 February 1978; c. 6–7.]
  The Conservatives' record since they came to power, which was so well catalogued by my hon. Friend the Member for Garscadden, shows that their words in Opposition gave no flavour of the message given to the SSHA since they came to power.
  In paying tribute to the association, I should like to deal with one of its activities in my constituency. Like many people in Scotland, the Minister will be aware of the association's work in the Laighstonehall area of Hamilton. The Laighstonehall project is one of the major projects undertaken by the SSHA in an area of multiple deprivation in the West of Scotland, and an area which has more than the average number of characteristics of decline. The association took on the problems of the area in an
  90
  imaginative and hard-headed manner. The record of the Laighstonehall project has been one of which those responsible can be justly proud.
  The only fly in the ointment is that the conclusion of the project has been delayed by the overall cutback in resources that has been experienced by the SSHA. It is a matter for profound regret that the success of the project has been placed in the balance because the association, despite its good intentions, does not have the resources to conclude the work that was so ambitiously started only a few years ago. If we are ever to get to the root of some of the serious problems that confront inner urban areas in Scotland, England and Wales, the type of project that was embarked upon at Laighstonehall must be seen through to success.
  I read with care the debate on the Scarman report, which was confined to the problems and difficulties that arose in the summer in England. Happily, Scotland was spared the problems that were experienced in some parts of the inner cities of England. That was due in no small part to the work that has been done over the years by agencies such as the SSHA. The problems which have been experienced in some parts of Scotland, which were being tackled imaginatively, have been the subjects of experiments that we dare not allow to fail. If the experiments are allowed to go into decline, Scotland will experience some of the problems that have afflicted other parts of the United Kingdom.
  I plead with the Minister to look afresh at the background to the Laighstonehall experiment. I ask him again to consider those areas where there is still a continuing demand for funds. The last phase of the modernisation project, which is so crucial to the overall completion of Laighstonehall, requires funds. We must find the extra funds that will enable the project to be completed.
  I repeat the invitation that has been extended by the Laighstonehall tenants' association, by councillor Peter Grenfell, who is responsible for the area, by regional councillor Jim Irvine, by the regional council for the area and by myself as the local Member of Parliament, to come to see the successes of the Laighstonehall project, the achievements in the area, and the areas in which completion is being prejudiced by the continuing uncertainty about the timetable for the last phase of modernisation. I believe that the Minister will be impressed by the success of the project so far and may be convinced about the need to complete the experiment so that we may see the real success of an attempt at revitalising an area of multiple deprivation.
  Another issue that needs to be considered on Third Reading is that of rents, which was taken up by my hon. Friend the Member for, Garscadden. We are seeing serious problems experienced in areas in which there is a mix of SSHA houses and local authority houses. Different approaches and attitudes are being taken by the two areas of the public sector. There is a growing disparity between the rent levels imposed by the SSHA on the immediate and direct diktat of the Government and rent levels in other parts of the public sector. That is causing dismay and distress, especially because in the SSHA area—this is for reasons totally outwith the association's control but for reasons that lie in the Government's lap—repairs and modernisation programmes are being delayed and tenants are being asked to pay greater and greater rents while they suffer real reductions in their standard of living. They are

  91
  not getting the concomitant returns that they would normally except in the way of a natural repair programme and the natural progress in the modernisation programme that was promised in many areas. That is in an area that the Government should look at. The Bill fails to take it into account.
  As has been said, the Bill is a fairly uncontroversial measure. It adds to the borrowing limits of an agency that most hon. Members regard as having a fine record. It still has a substantial job to do. If we have any reservation, it is about the amount of money that the Government are allocating. If the SSHA is to do its job properly in the future there is a need for even more primary legislation. The SSHA deserves commendation for the job that it is doing, but it is also a job that requires future resources if it is to be done as the people of Scotland expect.
  8.56 pm
  Mr. Norman Buchan: It is rare for me to take part in a housing debate, as hon. Members know, but I felt that I had to use this opportunity to congratulate the SSHA on the work that it has done and, above all, congratulate it on the way that it handled its relationship with elected representatives and on the help that it has given. I refer to two areas—there are others in my area and that of Renfrew district council—Linwood and Erskine. I hope that the Minister is aware of the careful and deep report that has just been prepared by Renfrew district council on the high incidence of lead tanks and lead pipes in that area. The report has been described as alarming, and certainly it is very serious. Renfrew district council takes the report seriously. The problem it faces, given the medical consequences of the high incidence of lead pipes and tanks, is that if it is to do the job that is required it will need all the assistance it can get in housing, housing support grant, capital allocation and, for that matter, rate support grant.
  The district council has had the problem of the new town at Erskine without normal new town financing. Given the figures that we see here, we must ask whether that assistance is sufficient. Perhaps, as my hon. Friend says, the Bill is not controversial, but any increase from this Government, whether' or not it keeps pace with inflation, must be welcome. It is doubtful, however, whether it is anywhere near enough to meet the sort of problem with which we are faced. Therefore, I must ask the Minister to say whether he is to seek methods of assistance for the SSHA, or for Renfrew district council, which has taken on many of the tenancy allocations of the SSHA buildings in places such as Erskine, and whether the money necessary to implement the recommendations in that serious report will be forthcoming. Renfrew district council will be seeking that assistance. It will be right to do so, and I shall support it in its endeavours.
  It will be useful, therefore, if the Minister, in talking of housing finance, even if it is limited to the SSHA, will say that he will treat the report seriously and give all possible assistance to Renfrew district council in its efforts to deal with the serious medical problem of lead pollution that the report has highlighted.
  8.59 pm
  Mr. Neil Carmichael: I am pleased that we have this opportunity of debating the Scottish Special Housing Association and the work it has done and, we hope, will do in future.
  Like most hon. Members, I have a fair representation of Scottish Special Housing Association type houses in my area and we are very grateful for them. I am worried that the balance of the finance for the SSHA has, perhaps, not been used as I would like. For example, while in my area we want new houses to be built, we also want the existing houses maintained at a level and at a standard that will allow them to continue as dwellings for the people in them for many years to come.
  I find a niggling attitude towards repairs, particularly in some of the blocks that have flat roofs. We have never been able to conquer their problems in any part of Britain. We have never been able to build a flat roof that does not let in dampness, no matter what techniques the architects use.
  In my area the tenants of some perfectly good houses are put to great inconvenience. In some cases they are decanted and moved because of repairs being delayed, or not carried out properly when they are done. That is largely due to the fact that inadequate money has been available for repairs.
  In one part of my constituency, Fortrose Street, a model block was built many years ago. It was a good idea, although it turned out to be far too expensive. The general idea was that the SSHA, the local authority and the Scottish Office would get together and build a special block that would be easily adaptable for sites all over the country. It was seven or eight storeys high. It was thoroughly studied while it was being built. It was basically a well designed and well built block. However, it turned out that the standard was just too high for it to be profitable or practical to build such blocks all over the country.
  It is a very good block. The people living there are concerned about penny-pinching in some of the repairs. Perhaps the Minister will tell the SSHA that there seems to be an inadequacy of supervision. There is provision for a caretaker in the block, but none is available because of shortage of money.
  I can understand that the SSHA has a decision to make. If it is a choice of spending money on housing or on caretakers, obviously most people would want it spent on housing. But the difference in cost is not so very great. It would be a great pity if the homes in that block deteriorated for want of a proper caretaker to look after the building full time.
  That leads me to the other thing that worries me about the way in which the SSHA has been squeezed for money. There have been criticisms throughout SSHA's existence, partly because of the point raised by my hon. Friend the Member for Hamilton (Mr. Robertson) about the disparity in rents between local authorities and the SSHA. I have experienced both sides of this matter, and no doubt my hon. Friend has done so. For a period the SSHA rents are much higher than council rents, and some people grumble, and then there is a change and the other tenants grumble.
  One thing for which the SSHA had a good reputation was apprentice training. I understand that, partly because of the cuts in money to the SSHA, training has fallen to almost nil. That is dreadful. When I heard about this Bill

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  for the first time, I hoped that it would be the beginning of a U-turn and that we would be starting something in the building industry. That is obviously the place to start—building sucks in very little in the way of imports. It is a place to start a U-turn or a capital advance in building. The Scottish Building Federation is desperate for a start to be made. Many more firms will go under if it is not made.
  Will the Minister use his influence to persuade the SSHA to have a look at its apprenticeship schemes? The SSHA has produced many good apprentices of a very high standard, who have already taken jobs in the building industry when it was on the up. They were invaluable in building houses in Scotland. Will the Minister ask the SSHA to earmark at least a part of the £100 million and, later, the £250 million for this very valuable work?
  The order is well worth while. We should like to have a great deal more, but with the help that the Minister is getting from the Opposition Benches, I hope that he will have some ideas to take to the SSHA the next time he meets its representatives to discuss finances.
  9.5 pm
  Mr. John Maxton: I, too, welcome the opportunity to say a few words about the Scottish Special Housing Association, partly because some of the points that I made in the Scottish Grand Committee were not answered by the Minister, and partly because the SSHA plays an important, and good, role in housing in Scotland.
  My hon. Friends the Members for Hamilton (Mr. Robertson), for Renfrewshire, West (Mr. Buchan) and for Glasgow, Kelvingrove (Mr. Carmichael) all have SSHA houses in their constituencies. I have not, but I have the new chairman of the SSHA as a constituent. I could not say that he voted for me; in fact, he is far more likely to have campaigned actively against me. However, he is a constituent, and that gives me some interest.
  My hon. Friend the Member for Hamilton reminded the House of what the hon. Member for Southend, East (Mr. Taylor) said when he was the shadow spokesman for Scotland and was demanding extra money for the SSHA. I hope that his close personal friend, Mr. Derek Mason, who is the chairman of the SSHA, will follow that up and demand from the Government the sort of money that the hon. Member was asking the Labour Government to provide. That is the role that the new chairman should play, and he should not accept all the Conservative Government policies.
  The hon. Member for Hamilton also raised the matter of the Laighstonehall scheme, which is very worth while. Over the past three years there has been a decrease in the incidence of vandalism—which was a serious problem—because of the environmental improvements in that area. However, if improvements are not continued and the environment once more begins to decline, the money required to put right the vandalism will probably be greater than the money that could now be spent to ensure that the scheme is properly carried out. The Government should bear that in mind.
  As the Minister said, this is a two-clause Bill, although on Second Reading he said that it was a one-clause Bill. I accept the Minister's correction, and I agree that the Bill is not controversial. However, somehow or other, the impression is being given that the Government are giving
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  extra money to the SSHA. They are not doing so—there is not one extra penny in teens of what the SSHA will be able to do next year or the following year.
  All that the Government are doing is increasing the SSHA's borrowing power. However, it has to come to the Government for permission to use the borrowing power and to spend the extra money if it so wishes. The Government have not shown that they intend to allow that increase in SSHA spending. Over the past two years while the Government have been in power the amount of money available to the SSHA and the amount of money that it has been able to spend on such things as repairs and improvements, and the rehabilitation of housing stock, has declined dramatically.
  The figure for repairs and maintenance expenditure in 1979–1980, which was not a particularly good year, was £14,966,000. Between 1980 and 1981 the figure dropped to £12,846,000. There is a clear reduction in the amount of money being made available for repairs and maintenance of housing. Over the 12 months the tenants have faced a 50 per cent. increase in their rents. Those who happen to be old-age pensioners, or to be unemployed or on supplementary benefit, have not been allowed increases even to the level of inflation. yet they are having to face rent increases that are way above the rate of inflation.
  The Government seem to be hoping that if the rents continue to increase more people will be forced to buy their houses rather than continue to pay higher and higher rents. The hon. Member for Edinburgh, South (Mr. Ancram) shakes his head. It is very interesting that on this occasion not even the hon. Member for Argyll (Mr. MacKay) has contributed to the debate. He is usually the one Conservative Member who has some sort of conscience about the part played by Conservative Back Benchers, and often makes a speech—
  Mr. Rifkind: Do not tempt him.
  Mr. Maxton: I apologise. I shall not tempt the hon. Gentleman too far, because I know that there are hon. Members who wish to speak on other matters later this evening.
  Conservative Members seemed to be dissenting from what I was saying about high rents, but many tenants in local authority and SSHA housing believe that rents are being forced up by the Government to persuade them to purchase their houses.
  On Second Reading the Minister made great play of the number of houses that the SSHA had sold. It has carried out a much more active selling policy than have many local authorities. Even so, it has managed to sell only about 4 per cent. of the total housing stock, although the Minister will probably say that this year the figures will rise to 6 or 7 per cent.
  Our concern is for those—well over 90 per cent.—who will remain tenants of the SSHA and of local authority housing, and who will not purchase their houses. They are facing lower standards in regard to the time betwen repairs being reported and the work being done. Repairs considered not to be essential are not being done and modernisation programmes are being cut back, yet SSHA rents are rising by over 50 per cent. It is these tenants who are the concern of Labour Members, not the very small percentage who are purchasing their properties. The Government ought to be concerned with the people who are remaining tenants of local authority and SSHA, properties.

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  I hope that the Minister will say what extra money is to be spent by the SSHA, rather than simply giving it borrowing power. Let us be told there is to be an expansion of the SSHA programme to give the tenants a better deal and to increase the prospects of employment in the building industry, which is so desperately needed in Scotland.
  Mr. Gordon Wilson: I am impressed by the sudden interest that the official Opposition are taking in the Bill. In the debate it has been possible to go over some of the territory that should have been covered in Committee. The Bill is an important one, because it gives an opportunity for the Government to expand the resources available to the SSHA.
  Mr. Maxton: Some Labour Members spoke on Second Reading and our interest is not at all sudden.
  Mr. Wilson: I, too, spoke on Second Reading, but I do not think that it is necessary to go into that. There was a stage in between that does not seem to have been canvassed with the same degree of intensity.
  The Government should look at the position of the SSHA because, despite what I have said, there is a real interest in the amount of work that it could and should be able to carry out. One of the prime functions of the SSHA was to build houses in areas of economic growth. It is sad indeed that one can now scan the country, with the possible exception of the Aberdeen area, and have great difficulty finding any economic growth requiring building for that purpose.
  I wish to concentrate the Minister's attention on the role of the SSHA with regard to modernisation. Many of its tenants have been disappointed with the way in which modernisation schemes planned for two, three or four years ago have become more and more elongated and seem to be receding into the distance. I know of cases in which phase 1 has been carried out and plans laid for phase 2, when phase 2 seemed suddenly to disappear and phase 3 to vanish completely into outer space. Perhaps the Under-Secretary will tell the House how he sees the role of the SSHA in relation to modernisation.
  The House should realise that a substantial number of SSHA houses suffer from very poor standards of insulation. I received a reply from the Minister today concerning the number of public sector houses falling below accepted standards of insulation, in which he stated:
  "Approximately 400,000 public sector houses with loft spaces have less loft insulation than the current Building Standards (Scotland) Regulations requirement of 50 mm (2 inches). The average cost of providing loft insulation in a typical four-apartment house is about £100."
  In another reply, he stated that some 236,000 public sector houses had been insulated since April 1978. Buried among the 400,000, there must be a good number of houses built by the SSHA that have deficient standards. It takes only some general surveillance of the work carried out by the SSHA to realise the improvement in living conditions that could be given to the tenants of those houses.
  In view of the recent savage weather, many people—particularly the elderly—must find it difficult to live in comfort in unmodernised SSHA houses due to the inability of those houses to retain heat. The severe weather conditions should prompt the Minister to reconsider his attitude towards providing funds for the SSHA to go ahead
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  with such modernisation. If he were prepared to live up to the expansion limit provided for in the Bill and to grant the wherewithal for the SSHA to carry out that work, substantially improved living conditions could be offered to many long-standing SSHA tenants who badly need a better deal.
  9.18 pm
  Mr. Dennis Canavan: Like other hon. Members, I briefly pay tribute to the Scottish Special Housing Association and the work that it has done in Scotland since its inception in 1937. It is no exaggeration to say that it has probably been one of the most successful examples of public enterprise in Scotland. The fact that, through the growth of public sector housing in Scotland, we have managed to solve some of Scotland's housing problems over the years has been due not only to the efforts of local authorities but to the excellent work of the SSHA.
  Unfortunately, for the first time in the history of public sector housing in Scotland, we are now in danger of seeing not just the end of expansion in public sector housing but a reduction in the number of houses in the public sector. That reduction will be the result of Government policy on two fronts. The first is the dictatorial powers taken by the Secretary of State to instruct local authorities and the SSHA to sell off their houses, irrespective of the needs of the local community and the demand for public sector housing in particular areas. The Secretary of State thinks that he knows best, and has given a general command to the local authorities and the SSHA to sell off their housing stock.
  At the same time, he is not giving them enough money to replace the housing stock with new build. Despite the Bill's title and the explanatory and financial memorandum, the truth is that the Secretary of State is not giving the SSHA nearly enough money to do the job that it should be doing—in other words, to build more public sector housing in Scotland to cater for the needs of the thousands of people, including many young newly married couples, whose only chance of getting a house lies in obtaining one in the public sector.
  The Government have jacked up the mortgage rate and will throw these young couples into the hands of the money lenders. Many of them have no chance at all of getting a house unless they get some form of Government help, but the Government are selling off houses and not giving the local authorities or the SSHA enough money to replace them with new stock.
  My constituency is virtually unique, in that it contains five different housing authorities—Stirling district council, Falkirk district council, Cumbernauld and Kilsyth district council, Strathkelvin district council and the SSHA. The advantage of district councils as housing authorities compared with the SSHA is that if somthing goes wrong administratively or bureaucratically—be it house allocation, housing repairs or whatever—there are elected district councillors to whom the tenants can turn.
  It is a pity that in this legislation the Government are losing a tremendous opportunity to bring about a greater degree of accountability on the part of the SSHA. I am not saying that we should dismantle the SSHA completely, but perhaps its role has changed. It may be that its role should be concentrated within the dynamics of housing construction, especially in areas of need or areas of economic growth—if there are any such areas left in Scotland. We should be looking at areas where there is

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  demand for public sector housing. If the local authorities are not getting the resources because of Government cuts, perhaps the SSHA should be the appropriate authority to work in liaison with the local authority to achieve development in the house building programme.
  In the longer term, after the houses have been constructed, there may well come a time when they should be handed over to the local authorities. In other words, we should be thinking of a more decentralised and democractic style of management. I would not stop there, because I believe that there should be greater decentralisation and devolution through tenant control. I should like to hear the Government's views on how that can be achieved, either by encouraging tenants' cooperatives or other forms of communal housing management.
  The SSHA has grown over the years until it has become a little too over-centralised, bureaucratic and non-accountable. An SSHA tenant looking for an elected representative to try to sort out a mess in which he finds himself may decide that the only answer is to turn to his Member of Parliament. A council tenant, who has a complaint about housing repairs, management or allocation, has his own elected district councillor at grass roots level to whom he can turn to try to solve the problem.
  I should like to see the SSHA given a vastly increased budget as opposed to the paltry increase proposed in this legislation. It should be given the task of tackling the problems of housing and the lack of public sector housing. If the SSHA were decentralised through the district councils that already have statutory powers, as local authorities, this would produce a more democratic system of housing management that was in the best interests of SSHA tenants and council tenants.
  9.26 pm
  The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): A number of excellent speeches have been made by Opposition Back Benchers. It is most unfortunate that none of those Members happened to be selected for the Committee that considered the Bill. There would have been opportunity to consider these matters in greater detail, with a greater amount of time available. It is unfortunate that those hon. Members selected for the Committee not only failed to turn up but have also not even thought it proper, with the honourable exception of the Opposition Front Bench spokesman, the hon. Member for Glasgow Garscadden (Mr. Dewar), to turn up for the Report and Third Reading stages.
  The hon. Member for Glasgow, Cathcart (Mr. Maxton) suggested that pensioners, the unemployed and others on supplementary benefit would suffer hardship as a result of the SSHA rent levels that were proposed or might be proposed. The hon. Gentleman is clearly unaware that almost all those receiving supplementary benefit pay no rent at all. They are not affected by 1p of any increase in rents of whatever level. The hon. Gentleman might have checked his facts before making serious allegations.
  Mr. Maxton: The hon. Gentleman did not include old-age pensioners, many of whom do not take up rent and rate rebates which they are allowed and who, as a result, will suffer hardship, because they are often too proud to take rebates.
  Mr. Rifkind: The hon. Gentleman cannot legitimately put forward that explanation. If successive Governments
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  have rightly provided a rent rebate scheme to deal with people who cannot afford rent levels, whatever those levels are, the hon. Gentleman cannot argue that the Government must keep down rent levels because certain people entitled to rebates do not apply for them. I hope that the hon. Gentleman, like everyone else, would urge that everyone entitled to a rent rebate should apply for it. The vast majority do apply. It is desirable that the small minority who, for whatever reason, do not apply should do so. The hon. Gentleman suggests that rent levels cause hardship for pensioners and those receiving supplementary benefit. That is untrue, as I think he now recognises.
  The hon. Member for Dundee, East (Mr. Wilson) made an interesting comment about the need for home insulation in houses owned by the SSHA and other organisations. It is a curious feature of Scottish housing over the last few years that the home insulation resources have not been fully taken up. While there has been no difficulty over the resources being utilised in England and Wales, there has not been sufficient interest in Scotland, although there is a need for insulation and many people would benefit if they used the grants available.
  Mr. Gordon Wilson: Is it not possible that the installation of insulation could be kept back through the inability of the SSHA to go ahead with general modernisation? If the Under-Secretary cannot guarantee that the modernisation work will go ahead, will he give an assurance that ample funds will be available to the SSHA to insulate all its houses?
  Mr. Rifkind: We give a general allocation to the SSHA but we do not dictate how it should use it. If it wishes to use part of its resources for that purpose, that is for its discretion.
  The hon. Member for West Stirlingshire (Mr. Canavan) made three curious remarks. He said that for the first time under this Government we were seeing a reduction in expenditure on housing. That is wrong. The reduction 3n housing expenditure began under the Labour Government. The hon. Gentleman suggested that the SSHA might have an exciting new role in dealing with areas of economic growth and liaising with local authorities. The SSHA already has that role and has had it for a number of years.
  Mr. Canavan: Where is the economic growth?
  Mr. Rifkind: I shall come to that later. The hon. Gentleman is right to say that that is a desirable role for the SSHA. It has that role in Aberdeenshire, the city of Aberdeen and in other areas. Areas of economic expansion are the main priorities for the SSHA. It has a good record of providing assistance to individual local authorities in that respect.
  The hon. Member also made a passionate call for decentralisation of control of SSHA houses to tenants. We are all in favour of that. For some reason, the hon. Gentleman wishes to stop that decentralisation to groups of tenants. We wish to take decentralisation further so that it reaches the individual tenant and gives him control over the house in which he lives by giving him the opportunity to buy his home. Why the hon. Gentleman should seek to prevent, prohibit or limit that form of tenant control is a mystery to most of us.
  Mr. Canavan: There is a big difference. Even the Minister is capable of appreciating the difference between decentralisation of management and privatisation of

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  ownership. The latter would mean that the future occupation of that house would for ever depend upon free market forces rather than need. That is why I am against privatisation of houses that are already in public ownership.
  Mr. Rifkind: It remains the case that if one wants to give people the maximum control over their environment, for the vast majority of the human race the opportunity to own the homes in which they live is a satisfactory way of achieving that. The hon. Gentleman may not share that view but in that respect he is in the minority among those who support his party as well as of those who have other political views.
  The hon. Member for Renfrewshire, West (Mr. Buchan) referred to problems caused in Renfrewshire by lead in water. We have received the report submitted by the district council and we shall examine it. Lead in water is a serious matter. It is a health problem and therefore it is right and desirable that the maximum assistance is given to local authorities throughout Scotland. It is also a matter for local authorities, which must judge whether to give it priority in their expenditure. We accept that we have a responsibility. We shall examine the issue in relation to capital allocations to local authorities in the weeks to come.
  The hon. Member for Glasgow, Kelvingrove (Mr. Carmichael) referred to the SSHA being able to take on apprenticeship schemes. I shall refer the hon. Gentleman's remarks to the SSHA. It is a matter for its discretion but I shall ensure that it is made aware of the hon. Gentleman's comments.
  The hon. Member for Hamilton (Mr. Robertson) referred to the discrepancy between rent levels of SSHA houses and some local authority houses adjacent to SSHA houses. He must appreciate that the main difference between the two groups, as applied under successive Governments, is that, because SSHA rents have always been under central Government control, rent increases have been reasonable over the years. That is not always so in the case of individual local authorities. Some local authorities have deliberately pursued a policy of unreasonably low rents. The discrepancy between their rent levels and SSHA rents is most obvious and wide in such areas. No one could seriously argue that in United Kingdom terms SSHA rent levels are unduly high. The hon. Gentleman should recognise that.
  Mr. George Robertson: I hope that the Minister will deal with the major issue that I raised with him. The SSHA is having directly imposed on it the full swingeing rent increases that the Government would like all local authorities to implement, but they are also making sure that the SSHA is starved of the resources to allow it to undertake the modernisation programmes that it has in many cases promised its tenants and the repairs that they should expect for the rent that the Government dictate that it should force them to pay.
  Mr. Rifkind: The hon. Gentleman is wrong. I may be one or two pence out, but in the current year the Government reccommended to local authorities average rent increases of £2·33. Because in the previous year the SSHA had made reasonable rent increases, unlike the vast majority of local authorities, the figure for the SSHA was
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  £1·90, which is close to the rent increases ultimately imposed by local authorities, on average, throughout Scotland. In this year, at the end of the day, the SSHA tenants' rent increase will not be significantly different from that of local authority tenants as a whole, although it may be different from certain increases in individual localities.
  Mr. Dewar: The Minister will be well aware of the fact that over the past two years SSHA rents have increased by a total of 50 per cent. Does he consider that that is reasonable?
  Mr. Rifkind: The hon. Gentleman must appreciate that the rent base from which the increases were made was extraordinarily low, and that is so even at present. For example, local authority average rents in Scotland are £7·40, which is dramatically small. That fact must be taken into account. Even the SSHA rent level, although higher than that, is not particularly high by the standards of many other parts of the country. The hon. Gentleman should take account of that factor.
  The hon. Member for Hamilton asked about Laighstonehall. He will be aware that of the original 518 houses in the scheme 75 have been rebuilt and the conversion of 32 large flats into 64 smaller flats has also been completed. The modernisation of 188 houses has been completed. I am aware of the concern of the hon. Gentleman and some of his constituents at the delay in the modernisation of the remainder of the stock, but he will appreciate that the Government's responsibilty is to give the overall allocation to the SSHA, and we do not tell it how it must use the allocation, so representations on the priority that should be given to the project should be directed to the SSHA. No doubt the hon. Gentleman has made such representations, but he must appreciate that it is a matter of the SSHA's detailed responsibility and it is not something on which the Government, either in respect of this or any other individual project, take a particular position.
  In his usual helpful and constructive fashion the hon. Member for Garscadden raised two basic points. He expressed great concern at the level of capital allocations for the SSHA. It is true that they have declined over the past couple of years, but the hon. Gentleman has a tendency to exaggerate these matters.
  Mr. George Foulkes: Rubbish. Not at all.
  Mr. Rifkind: Compared with the hon. Member for South Ayrshire (Mr. Foulkes), the hon. Gentleman does not exaggerate these matters. Nevertheless, viewed in isolation, there is an element of exaggeration from which I cannot entirely exempt the hon. Gentleman.
  In the current year the SSHA's allocation is £45 million, which is a substantial sum and which in cash terms is close to previous years, although I appreciate that it is a difference in real terms.
  The hon. Member for Garscadden also expressed confusion about the effect of the net allocations system so far as the sale of houses is concerned. His interpretation is that, because the Government would be making an estimate of sales of SSHA houses, in practice the system would be of benefit to areas with high amenity housing and against the interests of those with low amenity housing

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  which might be expected to sell less houses. The hon. Gentleman seemed to misunderstand the scheme both in respect of the SSHA and the local authorities.
  In each case—let us look at any individual local authority—we shall be looking at a reasonable estimate, given the number of applications that authorities have received from their tenants, as to what their expected income from the sale of houses should be in a given year. That estimate will obviously be a lot less in an area where, for whatever reason, there have been fewer applications than in an area where, for whatever reason, the applications have been far greater. In both cases—having made a reasonable estimate—if at the end of the day a local authority or the Scottish Special Housing Association has sold more houses than estimated, it will have the free use of the extra receipts from the sales. Therefore, it will be in its interests to maximise sales.
  Mr. Dewar: The Minister's statements are open to many interpretations. Is he saying that if we take a capital allocation of, say, £45 million for the local authority or the SSHA and it is assumed that included in that figure is a sum of £10 million, which will be found from the net proceeds of sales, and if, by means of sales drives, caravans and so on, the local authorities or the SSHA persuade more people to buy their homes so that the £10 million becomes £13 million, the resources available for new build will be £48 million rather than £45 million?
  Mr. Rifkind: The difference between what we have estimated and the net receipts will be available to the local authorities or the SSHA to use as an extra capital allocation for whatever purpose they consider appropriate. It will be in their control, since the estimate will not be a vague figure plucked out of the air, but will be based on the number of applications received. We are now in a position to know the number of applications that a local authority or the SSHA has before it and we know the normal time that the processing of an application should take until the ultimate completion of the sale. Therefore, barring the unexpected, we are in a reasonably good position to be
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  able to predict the likely minimum income that the local authority or the SSHA will receive from sales. If, in order to boost its resources it is able to encourage more of its tenants to purchase, it will benefit from that, and it is right and proper that it should do so. It is precisely because, in the current year, the estimates were much lower than had been expected that we were able to boost the allocations by the figure to which the hon. Gentleman referred.
  Mr. Dewar: I do not wish to detain the Minister, but it should be put on record that we challenge his statement that it should be "right and proper" for local authorities or the SSHA to encourage more tenants to purchase. We do not accept that it is "right and proper" that there should be a built-in incentive to sell council houses in order to obtain more resources on the capital side. We believe that the inadequate capital resources that are available should be allocated on the basis of the need of the people who live in the area.
  Mr. Rifkind: Those comments could be described as good Committee points, which, unfortunately, the Committee did not have the benefit of hearing. They could have been expanded in greater detail in Committee. If the hon. Gentleman were to speak with the local authorities and the SSHA he would find that they realise that this is an opportunity from which they can benefit, and it is right and proper that they should be able to do so.
  The Bill has had a fair passage throughout its stages, although this stage has been slightly longer than the others. Nevertheless, it has been equally constructive.
  Mr. Foulkes: The Under-Secretary is lucky. I was not on the Committee.
  Mr. Rifkind: The hon. Gentleman could at least have turned up.
  The debate today, although slightly longer than previous stages, has been just as constructive, and I therefore commend the Bill to the House.
  Question put and agreed to.
  Bill accordingly read the Third time and passed.

  Welsh Water Supply
  9.43 pm
  The Secretary of State for Wales (Mr. Nicholas Edwards): I beg to move,
  That the draft Welsh Water Authority (Constitution) (Variation) Order 1981, which was laid before this House on 1st December, be approved.
  The order gives effect to the proposals for varying the constitution of the Welsh water authority, which I announced to the House on 30 November. The draft is laid for Parliament in exercise of the powers conferred by sections 2(4), 3(10) and 36(2) of the Water Act 1973.
  The House already has a good deal of information about my reasons for laying the order. I set them out in the consultative document published in July. I explained them in my statement to the House on 30 November, and my hon. Friend the Under-Secretary of State, the hon. Member for Conway (Mr. Roberts), discussed them with the Welsh Select Committee on Wednesday 2 December. Paragraph 8 of the consultative document explained the drawbacks of the present large and cumbersome structure.
  The Monopolies and Mergers Commission report on the Severn-Trent authority explained the unsuitability of the local government committee system for the administration of the water industry. It said:
  "The size of the authority has resulted in a complex committee structure requiring extensive administrative and other support services … despite its historical origins the authority is not an instrument of local government and does not therefore have to be controlled by a body which is largely composed of people who derive their membership from the electoral process of local government. Its policies and activities are in no way dependent on political issues within its particular boundaries. It is one of ten similar bodies which are virtually nationalised industries organised on a regional basis, responsible to Ministers and co-ordinated by the NWC. We recommend that the size of the authority should be substantially reduced and that its membership should not be based predominantly on local government representation".
  Those comments apply as much to the Welsh water authority as they do to Severn-Trent.
  I have to tell the House that in addition I had become increasingly concerned by the views expressed to me by those serving on the authority and by those whom I had invited to serve in the past. It was becoming very clear that we should find it increasingly difficult to recruit people of the calibre that we needed if they felt that their time was being wasted and their performance limited by a structure unsuitable for managing any kind of industrial enterprise.
  Nor were consumer interests being properly represented under this system. Few people were aware that this was supposed to be the role of the local authority representatives, fewer still knew which local authority members from their own areas served on the authority, and the members themselves, not directly answerable to the electorate, even in their own parts of the country, were often placed in an unenviable position as they sought to act as consumer watchdogs, while at the same time they participated collectively in the decisions of the authority as a whole, and often in connection with local issues which were far outside their own immediate area of knowledge.
  Dr. Roger Thomas: Does the Minister agree that it is a case not of a lack of expertise among local authority representatives but of a rapid turnover among those representatives? If the rapid turnover could be coped with, we could still have a fair local authority representation even on the new body.
  Mr. Edwards: I did not suggest that there was any lack of expertise among the local authority representatives. I am sure that they were all expert in their respective areas. They had great knowledge of the areas which they directly represented in their own local authorities. But that is not the position in which they found themselves in the Welsh water authority, where there were a handful from each part of the country, where their responsibilities were not related directly to those who immediately elected them, and where they were having to act as consumer representatives in connection with proposals, plans and suggestions from different parts of the country. It was not about their lack of expertise in their own areas that I was speaking, but they were placed and still are placed in an extremely difficult position if they are to carry out an effective watchdog role on behalf of the consumer.
  I am sure that the hon. Member for Carmarthen (Dr. Thomas) will agree that very few of his constituents know that local authority representatives are members of the authority, and even fewer can identify the local authority representatives serving on the Welsh water authority.
  Mr. Ioan Evans: Is the right hon. Gentleman making a valid point? On the old boards there were 10 representatives from the counties and 10 from the districts. Those figures will now be reduced to two from the districts and two from the counties. The 20 representatives, who constituted the majority on the old boards, had contact with all the local authorities of which they were members, and all the councillors on those authorities knew who were their representatives on the Welsh water authority. Therefore, there was a contact with the whole of the local authority organisation in Wales.
  Mr. Edwards: They may have had contact with the whole of the local authority organisation in Wales, but that is not contact with the consumers. If anyone believes that it is, he must have an odd view of events both in local government and in the water authority. However, I shall deal later with my proposals for increasing the local authority involvement in the decisions that most affect their own constituents and those taken in their immediate localities.
  My original proposals contained in the consultation document were that county and district councils should no longer appoint members to the Welsh water authority and that the size of the authority should be reduced to about 10 members, including the chairman and land drainage and fisheries members, all to be appointed by the Secretary of State. I set out three options for alternative and more effective representation of consumer interests.
  Taking account of the responses to that document and especially the points put to me at a meeting I had with the local authority organisations involved in October, I concluded that the new authority should be increased in size to 13 members including the chairman and land drainage and fisheries members with four members being appointed by me to represent the interests of county and district councils. The remaining six members would provide the widest possible management and business expertise. I decided also that the consumer interest should be catered for by five local consumer advisory committees approximating to the various Welsh water authority divisions or combinations of them, but with their boundaries coinciding with the district council boundaries.
  As I told the House on 30 November, the six general members will provide the widest possible expertise,

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  including expertise in management, finance, business—including agriculture—industrial relations and personnel matters. After listening to the local authorities, I was convinced that their interest should be directly represented, and that by having four members there was scope for adequately covering both county and district interests and the geographical interests of the whole area covered by the Welsh water authority, including the English districts. I emphasise that I will be consulting the appropriate local government associations before making these appointments and that I fully recognise that the interest of the English authorities has to be taken into account.
  In my statement, I said that the chief executive would normally attend meetings of the board. Under existing legislation, he cannot serve as a board member and no payment can be made to the board other than to the chairman and to the member who is the chairman of the land drainage committee.
  Some have seen that as a halfway house and have argued that if we want to move we should go the whole way to a fully paid board meeting in private. That may well be sensible in the longer term, but it would require primary legislation and, in the meantime, I think it right to move as swiftly as possible to a streamlined and more effective organisation that does not require a large number of headquarters committees—many of them consisting of about 25 people and costing in total, quite unnecessarily, about £130,000 a year to run.
  I believe that the need for an improved organisation is urgent and that is why I felt right to lay the order on 1 December despite the fact that the Select Committee on Welsh Affairs had decided to include consideration of my proposals within the terms of reference of its current investigation of water in Wales. I have already explained that I want the new constitution to take effect in readiness for the appointment of a new chairman when the present chairman of the authority retires at the end of May. The two months between 1 April, when the new constitution is to become operative, and 1 June will provide an opportunity for the existing chairman, who knows the authority well and who has done very valuable public service since he succeeded Lord Brecon, to hand over to the new chairman and assist in smoothing the passage of the new arrangements.
  Having come to those conclusions, and having completed the consultative process, it would have been extraordinary and wrong to have kept my decision from the Select Committee. Having a clear view of what I was to do, it would have been a gross discourtesy not to have told the Committee what that view was at the earliest possible opportunity. That was another factor that I took into account.
  Mr. Ioan Evans: I ask the Secretary of State to recall the occasion when the Select Committee decided to investigate the fourth channel for Wales. He will remember that within a week the Government changed their policy. They said that there was not to be a fourth channel. As the right hon. Gentleman had issued a consultative document, the Select Committee decided to consider the reorganisation of the Welsh water authority. It has asked various organisations to submit evidence to it. At the same time, the right hon. Gentleman has acted in haste and brought forward the proposals that are now before us. If this reorganisation is being introduced
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  because the chairmanship is ending in May, why cannot the right hon. Gentleman extend the chairmanship for 12 months and enable proper consultation to take place?
  Mr. Edwards: We are not discussing the Welsh fourth channel today. I published the consultative document in July and I made clear my intentions and the timetable for the consultation. It was not until 28 October that the Select Committee decided that it would include this issue as a subject for investigation. Once the Government have announced a proposal, have entered a consultative process for which they have set a time limit, and when they believe that the proposals are urgent and important, affecting as in this instance many people in Wales, surely they should not be obliged to delay the proposals for an indefinite and indeterminate period because subsequently the Select Committee says that it would like to examine the proposals and take evidence.
  If the Select Committee has some suggestions to make on behalf of consumers, I shall welcome them because we are in the middle of a consultative process, but it has always been the system and the convention—this must be right—that the Government, having decided on their programme and priorities, must be free to seek the approval of the House and not necessarily delay until a Select Committee has investigated, especially if they believe that the priorities are urgent.
  Mr. Tom Hooson: Will my right hon. Friend confirm that a Select Committee has no executive responsibilities and that the process of government cannot always wait for opinions to be expressed by a Select Committee?
  Mr. Edwards: I agree. I have executive responsibilities, and if I believe that urgent action is needed to improve arrangements it is my responsibility to present proposals to the House at the earliest possible moment., and that is what I have done.
  I come to the arrangements for ensuring that consumers in the area of the authority are given full opportunity to express their views about the services and charges of the authority in an effective manner. These arrangements do not form part of the constitution order, because I am advised that the powers of section 3(10) of the Water Act 1973 do not extend to enable me to provide constitutionally for consumer advisory committees.
  The position is that the water authority has power under section 68 of the 1973 Act to appoint committees to advise on any matter relating to the discharge of its functions, and after taking account of the views that have been expressed to me I have decided that the most effective way in which consumers' rights may be heard effectively is to establish five local consumer advisory committees based on local authority districts approximating to the areas covered by the Welsh water authority divisions.
  I have decided that it should not be necessary to establish as many as seven divisions, having regard to the fact that the three Glamorgaris make up a concise area and that the boundary between the Wye and Usk divisions cannot be reconciled with local authority boundaries. I have decided to establish a single committee for Glamorgan and another single committee for Wye and Usk. The other three committees would cover the Dee and Clwyd, Gwynedd and the West Wales divisions.
  I am preparing draft guidelines to the Welsh water authority relating to the constitution, functions and

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  operation of the five committees and I am consulting about these guidelines. I have written to Welsh Members and those English Members with a direct interest, explaining that because I am engaged in that consultation process I can make available at present only the basic framework for the guidelines. A copy of that letter is in the Library.
  Among the principal points that I make in it are these. First, I would welcome comments on the draft guidelines from hon. Members and, as I have said to the hon. Member for Aberdare (Mr. Evans), from the Select Committee on Welsh Affairs, and I shall take their comments into account. [Interruption.] Yes, I shall even take the comments of the hon. Member for Merthyr Tydfil (Mr. Rowlands) into account if he cares to make them in a more constructive and helpful fashion than sitting in his usual noisy, ill-mannered way, mouthing imprecations from the Opposition Benches. If he wants to say anything, I shall give way to him.
  Mr. Edward Rowlands: The whole of this order is irrelevant nonsense given the fact that the vast majority of the people of Wales are interested in Welsh water charges. When will the right hon. Gentleman come to the issue of Welsh water charges?
  Mr. Edwards: If the hon. Gentleman believes that the efficient organisation and management of an industry has no relevance to charges, it is hardly any surprise—
  Mr. Rowlands: Marginal.
  Mr. Edwards: —that the Government of which he was a member proved such a disaster.
  Mr. Rowlands: No, it is marginal.
  Mr. Edwards: I return—
  Mr. Rowlands rose—
  Mr. Edwards: I think that we have heard enough from the hon. Member. Clearly he does not have much to say.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. Perhaps I might help. The order has nothing to do with charges.
  Mr. Edwards: Far be it from me to argue with you, Mr. Deputy Speaker.
  I went on in the letter to make it clear that every district or county local authority would be represented on the consultative bodies. It is desirable that the committees should not be too large, but the numbers will be dictated by the number of local authority representatives, to which I have referred, and the need for consumer, agricultural, industrial, commercial and amenity interests to be represented.
  The numbers represented on community health councils vary between 16 and 32, with the majority between 18 and 25. I see no difficulty in following a similar pattern for the consumer advisory committees, which would mean having a majority of local authority representatives in some cases.
  Another point that I bring out in my letter is that the guidelines will make provision for the appointment of members and the election of chairmen, together with the essential practical arrangements such as travel and subsistence allowance and the provisions of secretarial support.
  In these guidelines, clear advice will be given on the arrangements for access to the water authority and for
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  liaison between the chairmen of committees and the authority, including the frequency and timing of their meetings. It would seem right for the five chairmen of the committees to meet together with the Welsh water authority, say, twice a year, or as frequently as they may think appropriate. There could also be provision for the five chairmen to meet together and for them to meet the chairman of the Welsh water authority, if that were thought desirable. These, again, are all points about which I shall welcome comments during the consultation process.
  In laying the order, which deals only with the board appointments, I am not seeking to criticise the existing members. On the contrary, I should like to take this opportunity to thank the chairman, Mr. Haydn Rees, and all his colleagues for the immense amount of work that they have done. That should be on the record.
  Mr. Rowlands: Sheer pomposity.
  Mr. Edwards: At the moment when I thank the chairman and the members for their hard work and their contribution to running the authority, the hon. Member for Merthyr Tydfil shouts "Sheer pomposity". I hope that the chairman and the members will note that the only constructive contribution that the hon. Member has made to the debate is to deride the people who have given so much by way of public service to the authority in Wales.
  When the Welsh water authority was set up in 1974 it took over functions which for many years had been exercised by local authorities. It is understandable that the decision was taken to draw on the experience of local authority members and that the new management arrangements, particularly the committee structure, should have been based on the conventional local authority practice. As time has passed, this structure has increasingly come to be a handicap rather than a help. It is that handicap that the order seeks to remove, and I commend it to the House.
  10.7 pm
  Mr. Alec Jones: The first question that the House ought to consider is whether there is any case for reorganisation. The second question is whether this is the right sort of reorganisation.
  Paragraph 8 of the consultative document stated that it was the Secretary of State's view that there was a strong case for reorganisation, but neither in his consultative document nor in his speech this evening has he made out a case, let alone a strong case.
  Mr. Rowlands: Pomposity.
  Mr. Jones: The Secretary of State makes a series of assertions about the weaknesses—or apparent weaknesses, in his eyes—of the present structure. He talks in the consultative document of management having difficulty about exercising tight financial control. There is no mention of that tonight. He does not talk about the present structure not enabling local government to play an effective part, yet he now proposes that local government should play a less effective part.
  In the consultative document the right hon. Gentleman referred to the present structure as inhibiting quick decision-making and blurring the responsibility of officials and board members. It is no good his making those assertions unless they are backed up by facts, and those

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  facts have been singularly lacking, not only in the consultative document but in the right hon. Gentleman's speech tonight.
  There may be some evidence of the need for reorganisation, but so far the Secretary of State has completely failed to produce it to the House. He mentioned some matters concerning the Severn-Trent water authority and added "I think they apply as much to the Welsh water authority as to Severn-Trent". Everything he said tonight started with the word "I". It was all "I", "I", "I". The right hon. Gentleman might be God's gift to the Conservative Party, but he is certainly not God's gift to the people of Wales.
  I refer the right hon. Gentleman to the speeches made by him and by his hon. Friends smiling so smugly behind him. When the Welsh Grand Committee discussed the matter, the hon. Member for Anglesey (Mr. Best) said:
  "I think that the Welsh Water Authority is, in general, doing a very good job."
  Yet today he will vote to reorganise it. The hon. Member for Brecon and Radnor (Mr. Hooson) said:
  "There is no question but that the authority is doing a great deal of worthwhile work".
  Mr. Hooson: Is the right hon. Gentleman maintaining that because people say that an authority is working on the whole in a reasonable way it is impossible to improve its workings?
  Mr. Jones: Not at all, but the Secretary of State has given not one reason for reorganisation except his determination to weaken local authority representation.
  Mr. Keith Best: The right hon. Gentleman should read the rest of my speech.
  Mr. Jones: The hon. Gentleman need not worry. I shall come back to him later. There are more beautiful quotations to come.
  In the same debate, the Secretary of State said of the Welsh water authority:
  "In short, it has completed an immense job of reorganisation and rationalisation and is now in a position to exploit to the full the advantages of the water reorganisation which the previous Conservative Government promoted in 1973."—[Official Report, Welsh Grand Committee, 18 July 1979, c. 13–23.]
  If the 1973 Act was so wonderful, why do we now need this reorganisation without any explanation?
  Not only is the case not made out. The Secretary of State is bulldozing his proposals through the House not with almost indecent haste but with genuinely indecent haste. The consultative period lasted 46 days, including the whole month of August when anyone in his right senses knows that most organisations are involved in holidays.
  Mr. Ioan Evans: That applies especially to local authorities which, as is generally known, do not meet in August. The document was sent out on 28 July. Originally, replies had to be back by 11 September. Most local authorities in Wales would not have met during that time.
  Mr. Jones: My hon. Friend emphasises my point. When this was raised in the House the Secretary of State said that the period had been extended for a large number of organisations and that late representations were taken into account, but organisations intimately concerned with the water authority in Wales were rushed into making their observations by 11 September and did not even know that late observations would be taken into account.
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  When the Secretary of State made his statement to the House on 30 November, he said:
  "There will be a further opportunity for consideration before we debate the proposals."—[Official Report, 30 November 1981; Vol. 13, c. 32.]
  Yet less than two weeks later we are asked to approve, without amendment, this major reorganisation of the water authority in Wales.
  When I asked the Secretary of State on that occasion about the guidelines, he said that for the help and guidance of the House he would seek to publish the guidelines regarding the membership and function of the local consumer advisory committees.
  It is not reasonable that hon. Members should have received notes on the guidelines today when the matter is being debated this evening. The Government are considering reorganisation of other water authorities, but I see no reason why we should rush into the reorganisation of the water authority in Wales when everyone knows that the fundamental principle of the 1973 Act was that the water industry was a United Kingdom industry and the two matters should therefore be intimately linked.
  Be that as it may, the major change proposed by the right hon. Gentleman is a considerable reduction in local authority representation on the water authority. If the Secretary of State's original views had prevailed, that representation would have been eliminated. Instead of that, the order cuts their membership from 20 to four. On that basis, I suppose that it is slightly better than the original proposals, but those proposals regarding local authority representation were completely inadequate and do not meet the traditional and necessary involvement in the administration of water services that local authorities ought to have.
  I agree with the Under-Secretary of State, who in the Welsh Grand Committee debate said that local authority members on the Welsh authority should have a knowledge and experience gained on either the water authority or the council likely to be of benefit to the other.
  The hon. Member for Anglesey advocated that all district councils should have representation on the water authority. The Under-Secretary referred to
  "membership of the authority—
  not of any sub-committee—
  "and the participation of local authority members".
  He urged his hon. Friend the Member for Anglesey
  "to consider their value as being indirectly elected people on the authority, and also the fact that they are familiar, as councillors, with local problems."—[Official Report, Welsh Grand Committee, 18 July 1979; c. 35.]
  If local councils had that importance when this matter was discussed in the Welsh Grand Committee, they have that importance today.
  The 1973 Act, which the Secretary of State extolled, specifically required certain criteria for membership of that committee. Members were required to have experience of fisheries, land drainage and agriculture. The order reserves the position on fisheries and land drainage but makes no mention of agriculture.
  The Secretary of State's statement used the word "business" and added in brackets "including agriculture" as one of the qualifications necessary for membership, but there is no reference to agriculture in the order. Will agriculture have any sort of reserve position in the water authority? If not, why not? If it will, why on earth do the Government not say so? Now that we have a change in

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  local authority representation, there is a significant shift towards centralisation at the expense of any form of local democracy.
  Whatever our differences over the size of the water authority and the specialised interests that ought to be represented on it, I cannot believe that anyone can justify the proposal that every appointment shall be solely at the disposal of the Secretary of State for Wales.
  I shall quote the hon. Member for Anglesey again so that he will have good value for money.
  Mr. Rowlands: Ask him to intervene.
  Mr. Jones: He said—
  Mr. Best: That is very naughty.
  Mr. Jones: I know that it is naughty. The trouble is that your words are taken down and used in evidence against you—
  Mr. Deputy Speaker: Order.
  Mr. Jones: I apologise, Mr. Deputy Speaker. The hon. Member for Anglesey said that the Welsh water authority was a quango which did not have the degree of direct accountability which people want to see. The order will make the water authority the biggest quango of all time. Why not reserve specific places on the water authority for a range of people? Why not reserve places for the CBI and the Welsh TUC? Why not allow, above all, the local authority associations to nominate their members? If necessary, the Secretary of State could select his chosen four from, say, eight that the associations would nominate. This was the pattern laid down in the Land Authority for Wales which has worked, so far as I am aware, extremely well. This would make some move towards the restoration of a degree of accountability.
  When the Secretary of State was in opposition he gave the impression on numerous occasions that he was opposed 'to the idea of quangos whose appointment should be at the discretion of the Secretary of State. Now, in government, he is the strongest supporter of a quango and making it even tougher than before.
  Consumer interests are the major issue in relation to the order. We are asked to pass the order without seeing the guidelines relating to local consumer bodies. All we have heard is the Secretary of State's thinking on the matter. I accept that individual complaints or complaints affecting one or two Welsh water authority divisions can be dealt with by the proposed five local consumer advisory committees that the Secretary of State proposes.
  I would like the Secretary of State to show some evidence that he will save £130,000 as a consequence. The right hon. Gentleman is to set up five new consumer organisations. He is to give them secretarial assistance, which is right, but he believes that he will save £130,000. Irrespective of that argument, I believe that there are, and will be, consumer problems that affect all water consumers in the area of the Welsh water authority. There will not simply be localised problems. The major problem will be the pricing policy. I do not believe that local committees, five in number, will adequately express the view of consumers in Wales and those parts of England covered by the authority in relation to pricing. This is an issue that affects all consumers throughout the area covered by the water authority.
  Mr. Rowlands: Apart from pricing policy the issue of direct billing will also arise. The method of collection is increasingly the issue that will affect consumers. It is vital to the whole argument on water charges.
  Mr. Jones: I agree with my hon. Friend. I used pricing policy as my first example. My second is direct billing. I know from experience in my own constituency and from what I have heard in many parts of Wales that this has become a major issue with consumers. There are also sewerage charges and recreational problems that are not purely localised.
  There is clear need for a strong consumer council able to play an effective role on these major issues that affect not simply small localities—for instance, Mid-Glamorgan or Glamorgan—but the whole of the water industry in Wales. It should be formally recognised that representatives of local consumer advisory councils can be indentified as a water consumer council with the duty—not the option or choice—to raise with the chairman and the water authority those consumer problems which are matters greater than those of local concern.
  The hon. Member for Anglesey has moved further to the back of the Chamber where he is probably scanning as quickly as possible what he said in the speech to which I have referred. I can tell him that what he said is what I read out. In that debate the Secretary of State said that there was no question but that water charges were an issue of major current importance in Wales.
  If that was true in 1979, it is even more true today. In 1979 at least the non-meter domestic consumer had the benefit of the Water Charges Equalisation Act which was passed when we were in government. Between 1975–76 and 1978–79 the average domestic water bill in Wales rose by 35·6 per cent. In the same period the average domestic water bill in England rose by 54·7 per cent. That shows that the Bill was having the effect of narrowing the gap. We had difficulty in passing that Bill because of the Conservatives' opposition to it.
  Sir Anthony Meyer: Will the right hon. Gentleman give way?
  Mr. Jones: When I have finished this argument the hon. Member for Flint, West (Sir A. Meyer) can read to me something given to him by the Minister's PPS because he cannot read it out himself.
  In 1979 the hon. Member for Conway (Mr. Roberts) said:
  "in principle we recognise that a system of equalisation is the right way to achieve a balance between water authorities, and the Government will be giving their consideration to the best way in which this can continue to be achieved."—[Official Report, Welsh Grand Committee, 18 July 1981, c. 23.]
  When the hon. Member for Conway said that, I thought that he had been to Damascus. I thought that he had seen the light. We have had no recognition from the Government since then. The principle of equalisation which the hon. Member for Conway thought so essential in 1979 is of no consequence now that 1981 is here.
  Sir Anthony Meyer: The right hon. Gentleman knows of the high esteem in which I hold him, and always have. He will therefore be aware of the feeling of disappointment and dismay with which I heard him attack my hon. Friend the Member for Anglesey (Mr. Best). The right hon. Gentleman knows, because he has had experience of a PPS sitting behind him, that my hon. Friend, whose

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  championship of his constituents is the envy of us all, cannot possibly reply. I have checked what my hon. Friend said in those debates. I am satisfied that the right hon. Gentleman has grossly misrepresented what my hon. Friend said. I am sure that with his reputation he would not wish to mislead the House. I am sure that the right hon. Gentleman will wish to withdraw his misleading allegations.
  Mr. Jones: If the hon. Member for Flint, West can say that I have misquoted what the hon. Member for Anglesey said, I should be willing to withdraw my remarks, but I read from Hansard. I believe that in general the Welsh water authority is doing a good job. The hon. Member for Anglesey advocated that all district councils should be represented. The hon. Member for Conway had to deal with the problem. In dealing with it the hon. Gentleman said how important it was that the expertise of local councillors should be used, and was being used, for the
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  benefit of the water authority in Wales. That is why I am surprised that the hon. Member for Anglesey, who was such a great advocate of the principle of equalisation, should be willing to rush to the Lobbies to get the order through.
  In 1979 the Conservatives were keen on equalisation. I remind the House that the annual report of the Welsh water authority for the year ending March 1981 states:
  "The termination by the Government of payment of our £3 million a year under the Water Charges Equalisation Act and the absence of any long-term substitute for it adds 5 per cent. to the water service charges of our domestic customers."
  If the order attempted to tackle the major problem of the charges and the unfair burden that we bear in Wales it would be of greater significance and value. However, it does not. Nor have the Government made out a case for the order. They will use it to move towards more centralised control of water and ignore local democracy, so I ask my hon. Friends to vote against it.
  10.30 pm
  Mr. Tom Hooson: We have heard much ado about very little. One might have expected the right hon. Member for Rhondda (Mr. Jones) to study the facts on which my right hon. Friend has brought the proposal forward.
  The Monopolies and Mergers Commission undertook an extensive study of the Severn-Trent authority and reached a conclusion which last week in the Welsh Select Committee we heard commended by the chairman of the National Water Council for its excellence. The only dissent from that distinguished spokesman of the water industry was in challenging whether there was a case for local authority representation.
  We also know of the experience of Mr. Haydn Rees, to whom a tribute is due for his excellent service on the authority. I am sorry that my right hon. Friend's tribute to him should have been cheapened by seated interjections from the Labour Benches. Mr. Rees has a distinguished record in Welsh local government. With his knowledge of the Welsh water authority and local government, it is particularly impressive that he commends the proposal.
  The Minister has circulated a document which gives considerably more information on the situation than is acknowledged by the right hon. Gentleman. For all those reasons, I am astonished by the sheer ignorance of his attack on my right hon. Friend.
  The right hon. Gentleman also seemed to believe that direct billing should be attacked. Is he aware that the Welsh water authority makes a clear saving of over £1 million by direct billing instead of making payments to the local authorities?
  Mr. Alec Jones: I did not attack direct billing. I merely said that it was of concern not only to small local groups of consumers but across the whole range.
  Mr. Hooson: I accept the right hon. Gentleman's explanation.
  It is clear that there is considerable resentment at the sheer cost of water bills. A responsible Government should take every possible step to achieve greater efficiency. We hear of savings in the administration of the authority, but a much more difficult benefit to measure is that which comes from getting people of managerial quality to serve on the authority.
  That is basic to the concept of this slimmed-down authority. There is no question in my mind but that the people of Wales and the areas touching on Wales that are served by the Welsh water authority are more interested in securing efficiency in the operation of the authority than they are in whether they are theoretically represented by people who are virtually unknown to them and of whose names and identities they are probably unaware.
  Inefficiency invariably starts at the top in any large organisation, and the best way to start slimming down the Welsh water authority is at the director level of the members of the authority. To bring the number down from three dozen to a little over a dozen is a sensible step, which, in the words of the chairman,
  "will lead to much more incisive discussion in the authority".
  It is astonishing that such an obvious improvement in efficiency is opposed by the Opposition.
  Mr. D. E. Thomas: Would the hon. Gentleman apply the same principle to the House?
  Mr. Hooson: I have often thought that there would be a considerable gain in quality in the House if the number of Members was halved. I find that a highly seductive subject to pursue. However, it is not the subject that we are debating tonight.
  Whatever one assumes on the absolute value of the local government representatives, the question then arises "Are they cut off from giving helpful advice to the authority?" The answer is that they are not. They are organised in five groups that include representatives of every district and county. For that reason, I am astonished that such an obvious step in improving efficiency should be opposed with a great deal of sound and fury, but very little sense.
  10.37 pm
  Mr. Ioan Evans: My right hon. Friend the Member for Rhondda (Mr. Jones) has demolished the argument put forward by the Government. When I tried earlier to illicit from the Minister an explanation of why the Government were reorganising the water authority in Wales, he said that it was because the chairman was to retire in May. Not only is the content of the order deplorable but its presentation is bad. The way in which the Secretary of State is treating the Select Committee on Welsh Affairs—a Select Committee of the House of Commons—is also deplorable.
  My right hon. Friend referred to the fact that a consultative document was sent out to local authorities on 28 July and they were asked to respond by 11 September. Local authorities meet often every month, but they do not meet in August. The Secretary of State had the political impertinence to ask them to return their representations by 11 September. He extended the deadline later because he realised the stupidity of his action. What did the local authorities tell the Secretary of State? We should know their comments before this order is placed on the statute book.
  I am surprised at some of the Conservative Members who served on the Select Committee. They have a Jekyll and Hyde attitude to politics in the House. Upstairs they seek to represent the people of Wales, but downstairs they are like puppets behind the Minister. On every occasion they fall in line with what the Minister says.
  It was one of those who felt that perhaps we should not look at the water industry because the Secretary of State might be on the verge of taking a decision. But so informed are Conservative hon. Members in Wales that they have not a clue about what the Secretary of State will do next. They agreed to set up an inquiry into the reorganisation of the water industry and, of course, they are in the majority on the Select Committee, so we set about looking into the reorganisation.
  Once the news got out that the Select Committee was to embark on that task, it received a flood of information. Every local authority in Wales wrote telling the Committee how bad it thought the consultative document was. But I want to be fair to the Secretary of State. One local authority said that he had at least made provision for four representatives, making the local authorities better off than they were. But they still—the Welsh counties, the Council for the Principality, the Association of District Councils and a wide range of organisations—deplore the action taken by the Secretary of State.
  Sir Anthony Meyer: It would not be appropriate to enter into the discussions that preceded the decision of the

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  Select Committee to embark on this inquiry, especially in view of the absence of the former Chairman of the Committee, but it is only natural, when an inquiry such as this is announced, that every local authority will write clamouring that it has been done out of its rights. The hon. Member for Aberdare (Mr. Evans) is carrying out his duty of representing the views of the local authorities, but do not let him pretend that he is giving a balanced view. He is merely echoing the views of one group of interests.
  Mr. Evans: I was referring to the local authorities in Wales, and only to those local authorities. The way that the Government dismiss local democracy—
  Mr. D. E. Thomas: An interest group.
  Mr. Evans: These are the democratically elected representatives of the districts and counties in the whole of Wales. I shall be happy to give way to the hon. Member for Flint, West (Sir A. Meyer) again if he can say what organisation has written to the Select Committee praising the Secretary of State. Can the hon. Gentleman name one body?
  Mr. Hooson rose—
  Mr. Evans: No. The hon. Gentleman has made his speech. I am prepared to give way to the hon. Member for Flint, West.
  Sir Anthony Meyer: The National Water Council is all in favour.
  Mr. Evans: I must concede that the hon. Gentleman has named one organisation which supports the Secretary of State out of 40 which have written to the Committee.
  This debate is about the creation of a quango. In fact, it is an aqua-quango. But it is a quango with a difference. It is a quango with a quirk, and the quirk is that the Government cannot reorganise the regional water authorities in England unless we have legislation. It is a quirk—it is almost queer—that the Secretary of State is able to do this by means of a statutory instrument, because some time ago we were talking about the reorganisation of government in Wales and certain powers were taken by the Welsh Office to deal with the Welsh water authority. The Secretary of State has seized upon that device, and he is bringing about the reorganisation of the water industry in Wales.
  When things get bad and Tory Governments find that their policies are not working, they turn to reorganisation. The previous Tory Government reorganised local government and the NHS, and they made a botch of both. The present Government have introduced a Bill to deal with local government. They are having another go at making a mess of it, but they have already had to withdraw the Bill before it has had a Second Reading.
  The previous Tory Government also reorganised the water industry in 1973 and made a mess of the job. Why are the present Government acting so hastily, when English water authorities are not being dealt with in the same way?
  The Select Committee is taking evidence and examining the question of reorganisation, but as soon as the Committee decided to consider the matter the Secretary of State prejudged the issue and decided to go ahead with his reorganisation. Why is Wales being treated differently from the rest of the United Kingdom? Why are
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  we being treated as a guinea pig while the Government experiment to see whether they can hit on a method that can be adopted for the rest of the United Kingdom?
  It is proposed that the new authority should have 13 members—all appointed by the Secretary of State. Even the two representatives of the 37 districts and the two for the eight counties will not be elected by those councils. There is to be a substantial reduction in the number of members from local authorities.
  I do not say that the authority is perfect or that we cannot make changes, but we must ensure that we do not get the sort of reorganisation of the water industry that we got in 1973. The present authority has 10 representatives of county councils and 10 members from district councils, with the other 14 members and the chairman being appointed by the Secretary of State. It has 15 members appointed by the Secretary of State, but 20 from local authorities. That is better than having the authority under the control of the Secretary of State.
  When we consider the future of the industry, why do we not introduce an element of industrial democracy, as the Labour Government did in some industries, so that the workers have an opportunity to be represented on the new authority?
  There has been inadequate consultation. Conservative Members accuse me of referring constantly to local authorities, but they are not the only bodies that feel aggrieved. The Wales TUC says that it
  "has been unable to properly consult with its affiliated membership and we would argue that the issuing of such a document with an extremely limited consultation period effectively undermines the consultative process and causes us to doubt whether the Government is truly interested in receiving the considered views of those within the principality."
  What an indictment from the trade union movement in Wales! The local authorities would have difficulty in assembling their opinions between the end of July and early September. The trade union movement would also have difficulty in ensuring that all its various affiliated organisations had a "feed-in" to a consultative document during August and be in a position to present its considered views on what the Government were doing by the beginning of September.
  I return to the local authorities. The Association of District Councils—the 37 councils in Wales—said:
  "The association is opposed to the order, which very substantially reduces local authority representation on the Welsh Water Authority."
  It has issued a memorandum, which the Select Committee will discuss, although the die will be cast on the Floor of the House if the Government proceed with the order and put it on the statute book. As my right hon. Friend the Member for Rhondda said, we shall vote against it. But let us give the Government the opportunity to withdraw it. Let them take it back and not commit the folly of presenting it to the House for it to turn down. I hope that Conservative Members will not troop into the Lobby for the Ayes and vote for the order when no case had been made out for it.
  The Secretary of State is empowered to act to alter the membership of the Welsh water authority by order. That applies only to the Welsh authority. English water authorities' membership can be altered only by legislation. This is a quirk of legislation. There is no factor that makes Wales unique. The Association of District Councils

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  believes that the proper course is to proceed on an England-Wales basis as the membership issue is equally applicable in England. Instead, the Secretary of State has chosen to proceed unilaterally and in haste.
  We talk about unilateral action, and sometimes Conservative Members condemn it, but on this occasion their Government are taking it. The Secretary of State is saying "We are going to do this". The Minister for Local Government and Environmental Services has received a report from the Monopolies and Mergers Commission on the Severn-Trent authority, which contains certain criticisms of the authority. The right hon. Gentleman's reaction is to say "We shall not rush into taking precipitate action. We must have a consultative process. Discussions will take place throughout England to find the best remedy." But for Wales the Secretary of State intends to go his own way. When the consultative process has come to an end in England, we may find that it is wished to increase local representation.
  We must await the findings of the Select Committee. There is no urgency, save for tackling the problem of water charges. Ministers talk about administration, but they know that they will not deal with the serious problem in Wales, which is equalisation. The Labour Government introduced that concept, and this Government have abandoned it. They have imposed a water bill on the Welsh people that is much higher than they have had before. The Government propose to move the chairs around in the belief that they are making a radical change.
  We should not take a decision until the Select Committee has deliberated. The Department of the Environment, which is responsible for local government in England, is issuing a consultative paper and we should know what that contains before we go ahead.
  What do the Welsh counties have to say? Sometimes the districts go one way and the counties go another. That is not so on this occasion. There is unanimity among the districts and the counties. The counties have been "utterly dismayed" by what the Tory Government are doing. Local authority associations in Wales have expressed their unanimous opposition to the Government's proposals. One does not always get unanimity among local authorities, but—almost in the words of St. Francis of Assisi—the Government have united the people of Wales against the order. We did not have from the Secretary of State a mention of what the local authorities are saying.
  Mr. Hooson: The hon. Gentleman speaks about the unanimity of the people of Wales. Would he care to add that, apart from the local authorities, the majority of representations to the Secretary of State have been in favour of these proposals?
  Mr. Evans: That is not my reading of a flood of correspondence. I challenge the hon. Member to name any responsible organisation in Wales that has given evidence that supports the Secretary of State. Why did the Secretary of State not mention it if there is such tremendous support for these measures? There is unanimity on the part of the local authorities.
  The Welsh counties committee summarises matters thus:
  "The Government's proposal represents a retrograde step of considerable significance to local government. It is an erosion of local democracy and accountability, and the creation of a
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  nominated body along the lines proposed is deeply resented. There is no evidence that the consumer interest will be better served under the new proposal."
  We were issued with a document containing guidelines for consumer representation. We knew that the debate was to take place today. The document was sent out by the Welsh Office on Friday. The Secretary of State undertook to send us the information. It is only today that we have received it. It is dated 11 December. It is now 14 December. There has been no consultation, although the document talks about consultation.
  The Welsh counties committee does not say that the present arrangements are perfect. It welcomes the opportunity to participate in an examination. Some of the people who have served on these bodies have had long links with them. One can argue whether there should be quangos. I believe that there is a place for the quasi-autonomous non-governmental organisation in our governmental structure. The weakness arises when these nominated bodies are nominated entirely by the Secretary of State. Bodies to which local authorities nominate members represent a democratic expression.
  The Welsh counties committee was strongly opposed to the chief executive becoming a board member, because that goes against the whole basis of local government and the way in which matters are handled, yet the Government are to give the chief executive a place on the board. The committee is dismayed that the Government are pressing ahead with their proposals, which are closely in line with those in the consultative document. That has been put to the people of Wales. There may not have been an initial reaction to that document, because people did not have time to consider it, but the more that they consider it, the more they dislike it.
  The Secretary of State is in a peculiar position, because other Ministers can claim that they represent the people. We had a general election and the people elected a Conservative Government, but the people of Wales did not elect a Conservative Government. The people of Wales would never have elected the Secretary of State. Therefore, before he takes action he should realise that the majority of hon. Members in Wales are not of his party. He has put himself in the position of determining who is to serve on the new body.
  We must seek a more democratic form of accountability in determining who serves on the various bodies in Wales. It could be done by bringing district councillors, county councillors and Members of Parliament together in Wales and determining the matter together, rather than having merely people who are appointed by the Secretary of State.
  The Secretary of State has made no case for bringing the order before the House, and I shall vote against it this evening. The Government may win the vote tonight, but they will not win the argument. The argument will not end here tonight. Local government representatives of all political persuasions in Wales will oppose the order, and the time will soon come when we shall reverse what the Government are doing this evening.
  11 pm
  Mr. Colin Shepherd: I feel something of an interloper on a peculiarly Welsh occasion, but the subject of hydrographics knows no boundaries. My constituency—and, indeed, most of Herefordshire and much of Cheshire—falls within the area covered by the Welsh water authority, and tonight's proceedings are very important to the citizens in my part of the country.

  121
  I am very grateful for the presence this evening of my hon. Friend the Member fo Pudsey (Mr. Shaw), the Under-Secretary of State for the Environment who has responsibility for English water affairs. It is important that English water should be looked after. In Hereford we fall within the aegis of the Department of the Environment for most things except water, although we fall under it partially for water.
  The question of the structure of the water industry has been occupying the minds of hon. Members during the debate. The hon. Member for Aberdare (Mr. Evans) has been waxing lyrical about the status quo. I do not think that his eloquence and ecstasy will be matched by my constituents when they get their water rate demands. My mail is seasonally burdened by water rate correspondence, and there are expressions of anguish from all over my constituency at the steady increase in the demands.
  I look upon the reorganisation of the Welsh water authority as an attempt to come to terms with the type of structure that is necessary to provide a more economical and efficient service. To a large extent, it will have to be judged by result and not by prejudice.
  Dr. Roger Thomas: I remind the hon. Member that Herefordshire may not have the water falling on the county, even though it has to pay the bills.
  Mr. Shepherd: If the hon. Gentleman can find some other way of storing the water we shall not charge him for transporting it to the sea.
  It is absolutely right that we should look upon water as an industry and not as a service. It provides a basic utility, in the same way as the coal industry, the electricity industry and the steel industry. That is how we should look at water, and that should be our objective in considering how best to organise the water industry.
  Hitherto in Herefordshire we have had some very good representatives on the water authority, and I should like to pay tribute briefly to their work. They have not necessarily been in political agreement with me, but we have together produced some good results from time to time for our constituents. We have not perpetually had good results. Nevertheless, we have in the tradition of Herefordians stood our corner over the generations and often done quite well.
  I have one small complaint to make to my right hon. Friend concerning the manner in which the statement was made to the House on 30 November. He very kindly arranged for English Members with interests to be sent a letter saying that there was to be a statement. It was date-timed 2.15 pm for a statement at 3.30. It is not normally my practice to participate in Welsh questions, because that is a peculiarly Welsh affair, and, although I live only a mile outside Wales, I do not interfere too much in Welsh affairs or in Welsh questions. At that time, I had an important, long-standing constituency engagement which I would have had a chance of rescheduling if I had known the previous week that a statement was likely. I make that complaint, as it is somewhat galling to arrive at 4.15 to find a statement just winding up.
  I wish to make some basic points about the way in which I must consider the cost of water and the way in which water is organised in Hereford. First, the average domestic rateable value is disproportionately higher in Herefordshire that that in Welsh districts. Consequently, average water charges are at least one-third higher. We pay more for water in relation to equivalent property.
  122
  The rate support grant domestic element for England is 18p in the pound, compared with 36p in Wales. When the difference was made by the former right hon. Member for Grimsby, the late Mr. Anthony Crosland, it was said that there was an element of rough justice in it. In Herefordshire, we felt that it was very rough justice. It was designed at that time to reflect the differences in the cost of providing water, and we do not benefit. It has been denied ever since, but that was said in the House. it is very difficult to get the point across.
  In Herefordshire, there is a marked absence of the various industrial grants available in many parts of Wales.
  Finally, every bit of trade effluent in Herefordshire must be treated in the sewage works. Most trade effluents in Wales go to sea outlets, producing a marked difference in industrial costs related to the cost of handling industrial trade effluents.
  Those four points make Herefordshire very different from the West of England. I therefore ask my right hon. Friend to bear those points in mind when considering the structure of the board. I wonder, first, why he reserves the right to appoint the local authority members concerned. [HON. MEMBERS: "Hear, hear."] I am somewhat disappointed to hear cries of "Hear, hear" from the Opposition, but it is a fair question. Will there be a specifically English presence on the board to reflect the difference in requirements of England compared with Wales?
  The draft order states in article 3(2):
  "In appointing the members of the Welsh authority the Secretary of State shall have regard to the desirability of members of the authority being familiar with the requirements and circumstances of the authority's area."
  The very big difference between England and Wales makes it important that there should be an English presence on the board.
  In his consultations concerning appointments, will the Secretary of State reiterate loudly his assurance that English-based organisations and authorities will be consulted when local authority representatives for the board are being sought? It is also important that he take steps to ensure that, local authority members having been appointed to the board, the ordinary consumer may with the greatest possible ease and the minimum possible inquiry find out who is his representative on the authority? The Association of District Councils' submission, which most hon. Members will have received, states in subparagraph (e) on page 4 that the association wishes to
  "Ensure that the name of the local district representative on the Water Authority is known to the district councils, parish and community councils, citizens advice bureaux, consumer advice centres, chambers of trade and commerce and libraries",
  and so on. That is very important.
  The community health councils have provided a valuable input into the operation of the health services in Hereford. If that kind of input can be translated to the water industry, I welcome the setting up of consumer advisory committees. It would be nicer if we called them consumer water councils, but I appreciate the point in the legislation.
  Once again, the English differences must be taken into account. The requirements of Herefordshire and Cheshire are different from those of Wales. Although the hydrographical basin takes in the Wye and the one next door the Usk, it may be convenient from the Welsh point of view to run the Wye and Usk divisions together. On the other hand, it might be for the convenience of consumers

  123
  in Herefordshire and Cheshire if there was a CAC based upon the English districts represented. That would recognise the difference between England and Wales in the provision of water.
  Does my right hon. Friend's anticipated £100,000 saving on this organisation allow for the costs of the CACs? I was not certain whether it did.
  Mr. Nicholas Edwards indicated assent.
  Mr. Shepherd: That is good to know. We now have the firm knowledge that at least there will be a £100,000 saving if this reorganisation goes ahead. That is welcome.
  I have tried to outline the points that make Herefordshire different from Wales. There is no doubt that it is different. I hope that the Minister will assure me that my fears about the proper representation of England on the new organisation are groundless.
  I am confident that in the longer term the function of the Welsh water authority in relation to English consumers will be one of understanding.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. Before I call the next hon. Member, I remind the House that the debate finishes at half-past eleven and I understand that the Minister would like 10 minutes in which to reply.
  11.12 pm
  Mr. D. E. Thomas: I assure the hon. Member for Hereford (Mr. Shepherd) that he has the full support of Plaid Cymru Members in arguing the case for English minority on the Welsh water authority. Perhaps that is some consolation to him.
  I am not so sure that I agree with the rest of the hon. Gentleman's analysis, in particular his emphasis on water as an industry rather than a service. In a sense, the order represents the final, logical conclusion of the 1973 Act, because the Welsh water industry is removed from any semblance of democratic accountability and becomes another piece of corporate centralist management.
  There is no time to go through the whole history of the development of water as a public utility in the United Kingdom, but it is a significant history. The development of the water service, its place in public health and housing policy, and their close integration with local government is finally destroyed. Water is now seen as a saleable commodity, with no democratic accountability and with little or no consumer consultation.
  The whole exercise is cosmetic so as not to tackle the basic issue of the cost of water and where the burden of that increased cost falls. This exercise increases the charge on the consumer. Under the previous system, water charges were rebatable, but under this system the low income consumer bears a relatively higher burden, particularly the low income consumer in Wales.
  The order does not quite take us back to the days prior to the Public Health Act 1875, when water was purchased from private water company stand-pipes at a cost of a farthing for every five gallons. The stand-pipe supply was available only at times convenient to the company. We are, however, going back to increasing privatisation in Government thinking as it relates to water as a basic utility.
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  Water supply and sewage disposal are essentials of life. In this sphere, as in so many, the Government are ensuring that the essential things of life are more expensive for the majority of working people. The 1973 Act and this logical conclusion of it are typical of the manner in which the Government now operate. I was saying to the right hon. Member for Cardiff, South-East (Mr. Callaghan), if I may quote a private conversation without going out of order, that, had his devolution proposals been successful, hon. Members would not have been wasting the time of the House tonight.
  The 1973 Act, as put into effect, provided for a regional structure for the water industry in England and a national structure for Wales. It took the water service out of local government, turned it into an industry and under-funded it. I am sure that the social consumption expenditure by the State on the water service was reduced. This is confirmed by the withdrawal of rate support grant and the new capital investment ceilings introduced for the water service.
  Within two years of the new water structure introduced in 1974, there were massive increases in water charges—as high as 56 per cent. for water supply and a staggering 90 per cent. for the general service charge in Wales. This has been the real cost of reorganisation. Whatever the Secretary of State says about the savings that he will make in the administration of the water service, this is nothing as compared with the loss borne by the consumers of Wales through his decision not to continue the equalisation policy of the previous Government. That is what concerns the people of Wales—not the cosmetic exercise of producing a new corporate structure for the water industry.
  The order must be opposed. A serious point arises that the Secretary of State shrugs aside the manner in which the order has been introduced. As a member of another Select Committee, it is not for me to defend the Select Committee on Welsh Affairs. In my view, however, it demonstrates a contempt for Select Committee procedure if Governments take executive decisions when they know that a Select Committee is deliberating in that same area. If the Secretary of State is so sold on consultation, he should at least consult hon. Members as well as local authorities before coming to a decision.
  I turn to the structure that the right hon. Gentleman proposes for his consultative committees. I ask him to spell out, by letter, if not in reply to the debate—provided that time is allowed to study the letter—what the consumer advisory committees will do. They strike me as similar to the consumer advisory committees in other nationalised industries and public utilities that are not among the most effective organs to defend consumers.
  The right hon. Gentleman says in his guidelines or his thoughts about possible guidelines—the thoughts of our Chairman Secretary of State—that the consumer advisory committees will be able to consider various issues in their area including the variation of charges. Will he spell out whether the CACs will be able to make specific recommendations to the water authority in Wales about the charge it makes internally and any charge that it will make for water that is extracted from reservours such as Llyn Lelyn in my constituency and used outside the Welsh Water Authority area?
  In the Secretary of State's thoughts about guidelines he tells us that

  125
  "the Committees are provided with technical and professional advice required for consideration of the matters in hand."
  Can the Secretary of State spell that out in greater detail? If the advisory committees are to be effective they need to have expertise to respond and analyse proposals by the water authority. If they are to scrutinise the work of the authority on behalf of the consumer, they will need effective and technical advice.
  The Secretary of State adds that it would be sensible for
  " the guidelines to clarify the scope for Committees to be given information about the Authority's plans."
  What type of information is involved? In what sense will it be an exercise in open government and in what sense will it be a cosmetic effort?
  The order is typical of the conservative Government in Wales. It it the unacceptable face of corporatism yet again. It avoids the real issue—the cost of water to a country which over-produces water.
  11.21 pm
  The Secretary of State for Wales (Mr. Nicholas Edwards): I hope that when the hon. Member for Aberdare (Mr. Evans) listened to the speech of the hon. Member for Merioneth (Mr. Thomas) he was comforted by the reminder that if he had not helped to win a famous victory on devolution the issue might have been transferred elsewhere and he could not have made his valuable contribution to our affairs tonight or made his comments in this place about the proposals.
  The hon. Member for Merioneth and the right hon. Member for Rhondda (Mr. Jones) spoke about water charges being the major issue and about the water equalisation measure. The trouble with the water equalisation measure that we inherited was that it was eccentric in its consequences and indefensible in its result. A Bill that takes resources from authorities that most need them and hands them to authorities that need them least cannot stand up for long. It was not possible for the previous Government, nor is it for us, to produce an equalisation Bill that does not have those unfortunate and eccentric consequences.
  Mr. Alec Jones: Will the right hon. Gentleman give way?
  Mr. Edwards: No. I want to respond to the debate. I wish to deal with the uncharacteristic, monstrously unfair attack by the right hon. Member for Rhondda on my hon. Friend the Member for Anglesey (Mr. Best), who is not in a position to defend himself.
  My hon. Friend, in drawing attention to the possible representation of district authority interests, said that he hoped that some consideration would be given to trying to enable district councils to have a degree of representation, other than direct representation.
  Mr. Alec Jones: Will the right hon. Gentleman give way?
  Mr. Edwards: No. I have much more to say. Our proposals for consumer bodies enable district councils to have a degree of representation other than direct representation. It has been pointed out that it is difficult for councillors to discharge their functions efficiently and effectively on both local authorities and on the Welsh water authority.
  My hon. Friend the Member for Hereford (Mr. Shepherd) spoke about the interests of the English authorities. I apologise to my hon. Friend for the late
  126
  arrival of the notice of the statement. I can only say that the letter to him went out at the same time as those to all the other hon. Members to whom notice was given, and I am sorry if those letters arrived later than was desirable.
  Mr. Ray Powell: Why is the right hon. Gentleman apologising to his hon. Friend when we on this side were in the same position of not having received the document?
  Mr. Edwards: I gave notice to my hon. Friend—and I did so because he would not necessarily have been in the House for Welsh questions or have known that we were dealing with this Welsh matter—at the same time as I gave that notice to the right hon. Member for Rhondda and to the representatives of Plaid Cymru and the other parties in the House.
  My hon. Friend spoke of the need—and he was right—to provide a more economical and efficient service, and that is the object of these proposals. He spoke of the need for the English authorities to be represented. I am not sure whether he was here for my opening speech. I emphasised particularly the fact that I would consult all the relevant local authorities to ensure that English interests were properly taken into account. He asked why I should make the appointments. By asking the question he identified one of the reasons for my doing so.
  There are a number of local authority associations. Indeed, there is a split in the local authority association in Wales—
  Mr. Rowlands: They are all against the order.
  Mr. Edwards: —which makes it extremely difficult to get a direct nomination from those authorities, and particularly to take account of the interests of the authorities. That is one of the reasons why I want to consult fully—
  Mr. Alec Jones: Will the right hon. Gentleman give way?
  Mr. Edwards: —with the authorities before dealing with this point.
  Mr. Alec Jones: I want to ask the right hon. Gentleman about that.
  Mr. Edwards: I want to move on to the other points raised by the right hon. Member for Rhondda. He said that no case had been made for reorganisation. A large majority of those, other than the local authorities, who responded made it clear that they generally favoured the moves that we are proposing. Of course, so did the Monopolies and Mergers Commission in its detailed study, to which my hon. Friend the Member for Brecon and Radnor (Mr. Hooson) drew attention—
  Mr. Rowlands: It had nothing to do with the Welsh water authority.
  Mr. Ioan Evans: Severn-Trent.
  Mr. Edwards: —and the chairman of the National Water Council in his recent evidence to the Select Committee. There is no doubt about the serious concern among users about the need for more efficient organisation.
  The right hon. Member for Rhondda spoke about what he called my indecent haste. We gave the local authority organisations the opportunity to make representations. We responded to those representations and we altered our proposals so that their interests should be defended—
  Mr. Alec Jones: Will the right hon. Gentleman now give way?
  Mr. Edwards: As I listened to the hon. Member for Aberdare describing why it was impossible for local authority representatives to make any contribution during two and a half months of the summer—
  Mr. Rowlands: August.
  Mr. Edwards: —it seemed to me that the two and a half months that they had—
  Mr. Ioan Evans: It was August.
  Mr. Edwards: It seemed to me—
  Mr. Alec Jones rose—
  Hon. Members: Give way.
  Mr. Deputy Speaker: Order. The right hon. Member for Rhondda (Mr. Jones) knows that if the Minister does not give way he must resume his seat.
  Hon. Members: Give way.
  Mr. Alec Jones: Withdraw.
  Mr. Edwards: Between July and the end of October I continued to listen to representations. The right hon. Gentleman might well have judged that perhaps it was not a terribly good idea to have them dominating the organisation of a major industry of this kind.
  Mr. Ioan Evans: Oh, no.
  Mr. Alec Jones: Scandalous.
  Mr. Rowlands: That is scandalous.
  Mr. Edwards: Then we had the right hon. Member for Rhondda pleading that agriculture was not properly represented, and that a number of other bodies did not have direct representation. The object of this reorganisation is to create a board that does not directly represent individual interests but provides the best possible service for water users as a whole; and it is on that basis that I commend the order to the House.
  Question put:—
  The House divided: Ayes 104, Noes 46.

  [Division No. 24]

  [11.30pm

  AYES

  Alexander,Richard

  Clark, Hon A. (Plym'th, S'n)

  Ancram,Michael

  Cockeram.Eric

  Beaumont-Dark.Anthony

  Cope,John

  Beith.A. J.

  Cranborne, Viscount

  Bendall,Vivian

  Dean, Paul (North Somerset)

  Benyon.Thomas (A'don,)

  Dover,Denshore

  Benyon.W. (Buckingham)

  Dunn.Robert(Darfford)

  Berry, Hon Anthony

  Edwards, Rt Hon N. (P'broke)

  Best, Keith

  Ellis, Tom (Wrexham)

  Biggs-Davison,SirJohn

  Faith, MrsSheila

  Blackburn,John

  Fenner, Mrs Peggy

  Bottomley, Peter (W'wichW)

  Fletcher-Cooke.SirCharles

  Brinton.Tim

  Garel-Jones,Tristan

  Brittan.Rt. Hon. Leon

  Goodhew.Victor

  Brooke, Hon Peter

  Goodlad,Alastair

  Brotherton,Michael

  Griffiths,Peter Portsm'thN)

  Brown,Michael(Brigg&Sc'n)

  Grist, Ian

  Buck.Antony

  Gummer.JohnSelwyn

  Budgen,Nick

  Hawkins, Paul

  Butcher,John

  Higgins, RtHon Terence L.

  Cadbury,Jocelyn

  Hogg, HonDouglas(Gr'th'm)

  Carlisle, John (Luton West)

  Hooson,Tom

  Carlisle,Kenneth (Lincoln)

  Hunt,John (Ravensbourne)

  Carlisle, Rt Hon M. (R'c'n)

  Jopling, RtHon Michael

  128

  Kershaw,SirAnthony

  Rossi, Hugh

  Lang, Ian

  Sainsbury.HonTimothy

  Lawrence, Ivan

  Shaw, Giles (Pudsey)

  Lennox-Boyd.HonMark

  Shepherd,Colin(Hereford)

  Lester, Jim (Beeston)

  Skeet, T. H. H.

  Lloyd, Peter (Fareham)

  Speed, Keith

  Lyell, Nicholas

  Speller.Tony

  MacGregor,John

  Stanbrook.lvor

  Major,John

  Steel, Rt Hon David

  Marland,Paul

  Stevens, Martin

  Marlow,Antony

  Stewart, A. (ERenfrewshire)

  Marten, Rt Hon Neil

  Stradling Thomas.J.

  Mather.Carol

  Taylor, Teddy (S'end E)

  Mellor, David

  Tebbit, Rt Hon Norman

  Meyer.SirAnthony

  Thompson,Donald

  Moate, Roger

  Thorne,Neil(IlfordSouth)

  Morgan,Geraint

  Trippier, David

  Murphy,Christopher

  Waddington,David

  Neale.Gerrard

  Waldegrave.HonWilliam

  Needham,Richard

  Waller, Gary

  Nelson,Anthony

  Ward,John

  Neubert.Michael

  Watson,John

  Newton,Tony

  Wells, Bowen

  Onslow,Cranley

  Wells.John(Maidstone)

  Osborn,John

  Williams.D.(Montgomery)

  Page, Richard (SW Herts)

  Wolfson.Mark

  Patten,Christopher(Bath)

  Percival. Sir Ian

  Tellers for the Ayes:

  Roberts, M. (Cardiff NW)

  Mr. David Hunt and Mr. Robert Boscawen.

  Roberts, Wyn (Conway)

  NOES

  Anderson,Donald

  John,Brynmor

  Atkinson, N.(H'gey,)

  Jones, Rt Hon Alec (Rh 'dda)

  Bennett.Andrew(St'kp'tN)

  Kerr, Russell

  Booth, RtHon Albert

  Lamond, James

  Bray, Dr Jeremy

  Leighton,Ronald

  Callaghan, Rt Hon J.

  McCartney.Hugh

  Callaghan, Jim (Midd't 'n& P)

  McNamara,Kevin

  Campbell-Savours, Dale

  Miller, Dr M. S. (E Kilbride)

  Canavan,Dennis

  Morris, Rt Hon J. (Aberavon)

  Cocks, Rt Hon M. (B'stol S)

  Powell, Raymond(Ogmore)

  Coleman,Donald

  Rowlands,Ted

  Cowans, Harry

  Skinner.Dennis

  Cryer,Bob

  Snape, Peter

  Cunliffe,Lawrence

  Spearing,Nigel

  Davidson,Arthur

  Thomas.Dafydd(Merioneth)

  Davies, Rt Hon Denzil (L'lli)

  Thomas, DrR.(Carmarthen)

  Dixon,Donald

  Tinn,James

  Dormand.Jack

  Wainwright,E. (DearneV)

  Eastham.Ken

  Welsh,Michael

  Evans, Ioan (Aberdare)

  White, Frank R.

  Foulkes, George

  Williams, Rt Hon A.(S'sea W)

  G rant, George (Morpeth)

  Hardy, Peter

  Tellers for the Noes:

  Haynes, Frank

  Mr. George Morton and Mr. Allen McKay.

  Hogg, N. (EDunb't'nshire)

  Question accordingly agreed to.
  Resolved,
  That the draft Welsh Water Authority (Constitution) (Variation) Order 1981, which was laid before this House on 1st December, be approved.

  EUROPEAN COMMUNITY DOCUMENT
  Motion made, and Question put forthwith pursuant to Standing Order No. 73B (Standing Committees on European Community documents).

  STOCK EXCHANGE LISTING: INTERIM REPORTS
  That this House takes note of European Community Documents Nos. 4356/79 and 8286/80: Draft Directive on Information to be published on a regular basis by companies whose shares are admitted to official stock exchange listing, together with Department of Trade explanatory memoranda of 16th February 1979, 16th July 1980, 23rd February 1981 and 4th

  129
  December 1981; and notes with approval the Government's policy of broadly maintaining the existing role and requirements of the Stock Exchange.—[Mr. Budgen.]
  Question agreed to.

  SOCIAL SECURITY (CONTRIBUTIONS) BILL
  Ordered,
  That, in respect of the Social Security (Contributions) Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—[Mr. Budgen.]

  Industrial Deafness
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bud gen.]
  11.40 pm
  Mr. Michael Welsh: I do not think that there is a great difference of opinion between the Minister and I on this important issue. The matter has been debated before, and I have raised it again to see whether more can be done for these unfortunate people.
  This is the International Year of Disabled People, and deafness is a soul-destroying disability. Many individuals have been made deaf because of the conditions in which they work, but if they are not in the occupations laid down by the Industrial Injuries Advisory Council they cannot claim disablement benefit. Those poor individuals do not even come under starter's orders. They cannot be considered for disablement, due to that anomaly.
  In the Industrial Diseases Review, Cmnd. 8393, October 1981, the Industrial Injuries Advisory Council states:
  "We recommend that the council also regularly review the terms of prescription of diseases already on the schedule so that restrictive conditions can be removed and the terms simplified as soon as there is justification of evidence".
  There are many restrictive conditions covering deafness and I hope that they will be removed. If some are removed, many more people will be able to claim disablement benefit, which is to be welcomed.
  The case of one of my constituents was brought before the Commissioners before 1975. If the case had been brought after 1975 it would have made no difference because the disability was not on the prescribed list. I shall not mention the name of my constituent, but the Commissioners' report stated:
  "In the light of the medical evidence, I see no reason to doubt that the claimant's ear condition and his subsequent deafness and also the operation which he underwent are a tribute to his work. Accordingly, I have every sympathy with his claim to benefit".
  Nevertheless, the claim could not be allowed because the disability was not on the prescribed list. The list should be reviewed and more industries and disabilities should be included in the schedule. My constituent's deafness was caused by his work; and that was accepted by the Commissioner, but because of the rules of the game he was not allowed to claim industrial disablement benefit.
  I do not wish to deal with cases of industrial deafness that are before the courts. The Minister will agree that this is not the time or place. I am interested only in the disablement benefit that comes from the State.
  I desire to bring to the notice of the Minister the shortcomings of the present scheme of disablement benefit for occupational deafness. The scheme came into being in 1975, when occupational deafness was added to the list of prescribed industrial diseases. The shortcomings are that many restrictions were made at the same time.
  There are a number of restrictions, but I intend to confine myself to two of them, because it is necessary to make a start somewhere.
  The outstanding restriction is the one known as the 20-year rule. It provides that a person must have worked for a period of no less than 20 years in one or more of the prescribed occupations. I want to spell out the bad effect that this 20-year rule has on workers.
  No other country has this restriction of 20 years. Most other countries have schemes which have no requirement

  131
  of specified minimum periods of work in a noisy occupation. There are a few exceptions which provide for 90 days, and there is a further country which has a longer period of two years. But we are the only country with a 20-year rule, and the result is terrible for the individuals suffering from industrial deafness. These men will be deaf for the remainder of their lives, but, because they have not worked for 20 years in that occupation, there is no way that they can claim benefit.
  We live in an age when we are told by politicians of all political complexions that people may have to change jobs three, four, five and six times in their working lives. Progress and new technology means that that will be necessary. Yet the rule governing benefit for industrial deafness provides that a claimant must have worked in the same occupation for 20 years. There is something radically wrong about that. In a country that prides itself on fair play it cannot be right, and I ask the Minister to do away with this unjustifiable 20-year rule.
  There have been 10,511 claims for industrial deafness benefit in the 25 months up to 29 September 1981. Only 1,850 have been allowed. It means that there were 8,661 cases disallowed. I assume that some of them were affected by the infamous 20-year rule. The number of disappointed claimants suffering from industrial deafness cannot be equalled by the numbers suffering from any other industrial injury. The magnitude is too great.
  If a person is sent to a noisy occupation by his local jobcentre and he is, say, 50 years of age, no matter how deaf he becomes through his working conditions, there is no way that he will be able to claim industrial benefit. This injustice must be ended. If we believe in fair play and social justice, the 20-year rule must go, and I am sure that the Minister is sympathetic to my view.
  There is also another rule that is unacceptable to those who wish to see justice done. It is the rule that a person must claim within 12 months of having developed a disability. It was introduced to limit the number of claims, and of course it did so. I appreciate the difficulties that existed at the time, but why should an individual who suffers the same disability as another not receive the same benefit? Is it not justice that two individuals who work together and suffer the same disability should get the same disablement benefit? I do not believe that any hon. Member would disagree with that.
  Can the 12-month rule be brought into line with the 36-month rule that applies to other benefits? That would be a move in the right direction and it would help many people. It might mean more claims being allowed, but is it not better that people see that justice is done, even if it costs more?
  It may be said that such a move would increase the demands on the aurological service. I concede that, but if we are to treat people with equity that will have to be done. Equity is involved in many issues and, if we will the end, we must will the means.
  We could reach the terrible position of a person having worked in noisy employment for 18 years but not getting disablement benefit because he had not completed 20 years' service. If he has to finish that work because of his disability and is transferred to another job in the same undertaking, where he completes the 20 years, the 12-month rule would then prevent him from claiming. Such people are in a Catch—22 situation, they cannot win. There
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  is something immoral about that. I do not blame any particular Government, but methods of working out benefits may have to be altered in the light of progress, and it is the duty of the Government of the day to help those who are affected.
  I am sure that the Minister is as concerned as I am about the two rules. I now that the Industrial Injuries Advisory Council is keeping the scheme under review, but in its latest report in October this year, it did not go into the question of industrial deafness—I appreciate that it had to deal with a number of other issues related to the Common Market—and I should be grateful if the Minister would request the council to look into the various aspects of industrial deafness.
  There are many shortcomings in this area, but it would be a start in the right direction if the Minister would request the council to consider the two vital issues that I have raised. I am sure that, like me, the Minister wishes to help the unfortunate individuals concerned and if he will meet my request and ask the council to report back in good time I shall be satisfied.
  11.53 pm
  The Minister for Social Security (Mr. Hugh Rossi): I am grateful to the hon. Member for Don Valley (Mr. Welsh) for raising this subject and for the manner in which he has done so. His interest on behalf of those suffering from occupational diseases is well known to the House and there is little, if any, difference between us on the subject.
  Because the loss of hearing is not fatal and does not cause physical disfigurement, the disability that it produces has not received as much attention as other causes of disablement. Noise at work, resulting in partial or total loss of hearing, has been a problem since the earliest days of the Industrial Revolution. Despite this, it was not until 1975 that occupational deafness became a prescribed disease attracting preferential benefits under the industrial injuries scheme. This is partly because the research that demonstrated clear connections between high noise levels at work and irreversible hearing loss is of comparatively recent date.
  An important piece of research was Commissioned by the Industrial Injuries Advisory Council, after a preliminary investigation in 1961. It was carried out jointly by the Medical Research Council and the National Physical Laboratory and a report based on its findings was published by the council in 1969. It concluded that
  "it is now possible to estimate the hearing loss that can be expected to result from exposure to a known noise level for a given length of time".
  Working from that base, the council went on to consider in greater detail how an occupational deafness scheme might work. The result was its report, published in 1973, recommending the prescription of occupational deafness, and in consequence disablement benefit became available for occupational deafness from 3 February 1975.
  The terms under which the disease was prescribed covered a comparatively small number of noisy processes—principally in the metal-working and shipbuilding industries and involving the use of pneumatic tools on metal or work in the vicinity of drop-forging machines. In 1979, following a review of the scheme by the Industrial Injuries Advisory Council, published in 1978, occupational cover was extended to workers using pneumatic percussive tools on coal or rock as well as metal, and to those supervising or assisting in the use of

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  pneumatic percussive tools. In addition, those working in weaving sheds, in some parts of nail manufacture and those using plasma guns in metal spraying were newly covered.
  As the hon. Gentleman knows, and as he has mentioned, entitlement to benefit is subject to three further conditions: first, employment in one of these occupations for at least 20 years; secondly, a claim for benefit to be made within 12 months of leaving the occupation; and, thirdly, a minimum hearing loss of at least 50 dB in each ear, being due to occupational noise in at least one ear. The complete terms of prescription, which I have attempted to summarise, can be found at item 48 in part I of schedule 1 to the Social Security (Industrial Injuries) (Prescribed Diseases) Regulations 1980, a copy of which is in the Library.
  The hon. Gentleman has set out some of the difficulties and resentment that these conditions cause in practice. In particular, he has cited the two time limits. As I ant sure he knows, he is not alone in his concern. My Department has received criticism of the harshness of these limitations from a number of quarters. Indeed, it has always been recognised—and the Government fully accept—that the coverage provided falls far short of the ideal—that everyone whose hearing has been significantly damaged by his job should be eligible for compensation.
  But, in order to set these criticisms in context, I should like to explain why the Industrial Injuries Advisory Council recommended the initial imposition of restrictions in 1973 and the retention of most of them following its review of the scheme in 1978. I shall then go on to look at the prospects for improvements in the scheme.
  As regards the 12-months rule, part of the difficulty arises from the nature of occupational deafness and its diagnosis. To have to deal with claims from people who had worked in prescribed occupations and subsequently left them as long ago, perhaps, as 1948 when the industrial injuries scheme started, would clearly cause considerable administrative problems. There would also be problems of diagnosis, in relation to people who had retired for many years, especially since it would be very difficult to distinguish occupationally caused hearing loss from that which occurs naturally because of the ageing process.
  As I am sure the hon. Gentleman knows, the diagnosis and assessment of deafness requires specialist skills—those of a consultant otologist and, in most cases, of a technician to carry out hearing tests. Unfortunately, such skills are in short supply. The council's main purpose in recommending restrictions on the scheme was therefore to limit its impact on the NHS audiological services which were, and are, under considerable pressure.
  The council wished to produce a scheme that was workable and would not be too disruptive to the main functions of those services—the diagnosis and treatment of all hearing impaired people. To quote from the 1973 report,
  "it became clear to us that, if noise deafness was prescribed for all noisy processes, the necessary technical, and medical resources to deal with the number of claims which could be expected at the outset would not be available now and could not be made available in the forseeable future. To get a compensation scheme off the ground it would therefore be necessary to impose severe limitations initially."
  The council, on the advice of those in the Department of Health and Social Security concerned with the audiological services and of the major professional body involved, the British Association of Otolaryngologists,
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  made an estimate of the available capacity. From the evidence, it was reckoned that it would be possible to carry out about 10,000 examinations annually in connection with the occupational deafness claims without diverting the audiological services from their primary task. The restrictions recommended—and accepted by the then Government in introducing the scheme—were designed to keep the number of examinations within that limit.
  In practice, however, as the hon. Member knows the number of examinations carried out in connection with the occupational deafness scheme never exceeded a third of that figure in the early years. But I should stress that in practical terms the shortfall was not as large as it might appear, because claims tend to show a very uneven geographical distribution. Indeed, about 85 per cent. of all examinations are carried out in five of my Department's social security regions. As is only to be expected, they are those where heavy industry is concentrated, as it is in the area represented by the hon. Member.
  Nevertheless, the striking difference between the actual number of claims and those expected was a major factor that led the Industrial Injuries Advisory Council to propose extensions to the scheme in 1978. The council, however, concluded that the maximum possible number of audiological examinations for occupational deafness purposes should remain at about 10,000 a year, and added
  "it seems unlikely to increase significantly for a number of years to come."
  It therefore recommended a fairly cautious extension, leaving the 20 years and 12 months rules untouched. But it said that it should be possible to make further extensions at
  "regular and fairly frequent intervals"
  and recommended that it should keep the scheme under continuous review.
  The latest figures in relation to occupational deafness claims show that in the year ending 1 September 1981, 4,931 claims were received and 3,468 claimants were referred for examination. This figure compromises those new claimants who had met the occupational tests and a number of reassessment cases.
  I accept that these figures show that the scheme is still not giving rise to as many examinations as was originally estimated and that this must give added weight to the criticisms of the present restrictions, such as those the hon. Member has very forcefully put to us tonight. As I hope I have made clear, I have considerable sympathy with his views, although I hope I have also made clear the reasons why these restrictions were imposed.
  I understand especially the resentment caused by the fact that the specified period is as short as 12 months. I accept that its effect is particularly harsh when it bars claims from people who have been made redundant or have been retired for many years before their occupation became prescribed, and I have made this known to the Industrial Injuries Advisory Council. I have said that the council recommended in 1978 that it should keep the operation of the occupational deafness scheme under continuous review. This suggestion was accepted by the then Government and a year was allowed to elapse to give time for the extensions made in 1979 to take effect. The council then began to collect and consider evidence for its future review. I understand that it will be submitting a report to my right hon. Friend next year.
  The council is, as the hon. Gentleman knows, an entirely independent body and he will understand that I

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  cannot predict what recommendations it will make. However, I know that the sub-committee undertaking the review has sought evidence from a wide range of interested bodies and individuals, and that it has set up a working party, with expert advice from the technical inspectorate of the Health and Safety Executive, specifically to look into various noisy occupations which have been proposed as suitable for addition to those prescribed. It has also taken evidence on the present capacity of the audiological services.
  The sub-committee is, I understand, also looking at the 20 years and 12 months restrictions. I shall be very glad to pass on to it the comments the hon. Member has made this evening, and I know that it will give them the most careful and sympathetic consideration.
  I should like to take this opportunity to express my gratitude to the council for the patient and painstaking way it has carried out its duties. It has an endless task. It involves not only the regular examination of new processes and substances but the constant need to go back over old ground as new evidence of risks to health becomes available.
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  The Government and their predecessors have been fortunate indeed in being able to secure as members of the council distinguished medical and legal experts, as well as representatives of both sides of industry, who approach their work on the council in a non-partisan and constructive spirit. I am sure that I speak for the whole House in wishing the council well in its future endeavours.
  I assure the hon. Gentleman that the recommendations that the council makes when its review is completed will be looked at with care and sympathy by the Government. As he, I hope, recognises, while it is not at present likely to be possible to remove or relax all the restrictions on the scheme, I share his concern about those who, in contributing to the nation's wealth—whether in the mines, in heavy industry or elsewhere—have paid the terrible price of losing their hearing. As this International Year of Disabled People draws to its close, I am glad that we have been so vividly reminded this evening of the plight of disabled persons.
  Question put and agreed to.
  Adjourned accordingly at six minutes past Twelve o' clock.