Commons Sitting of 16 February 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the chair]
Oral Answers to Questions
  Trade

    Aircraft Noise
    Mr. Jesse1asked the Secretary of State for Trade what action he intends to take this year to reduce the nuisance from aircraft noise to people living and working near Heathrow.
    The Under Secretary of State for Trade (Mr. Reginald Eyre): There is no short-term solution to this problem, but we shall continue to encourage the progressive introduction of quieter, noise-certificated aircraft and to maintain the wide range of operational controls which are designed to minimise the disturbance caused by aircraft noise.
    Mr. Jessel: Does my hon. Friend accept that it should be Government policy to try to bring about a clear and definite cut in this pestilential nuisance which still causes great distress to large numbers of people? Will he make sure, in particular, that summer night time restrictions are increased from the present seven hours, which are not enough for a normal full night's sleep, and that within those hours no increase is allowed in the numbers of flights?
    Mr. Eyre: Over the years, my hon. Friend has vigorously and effectively represented the interests of his constituents in these matters. I assure him that the Government understand his views and will do everything possible to take them into account commensurate with the proper use of important national assets.
    Mr. Colvin: Is my hon. Friend aware of the enormous contribution by the civil aviation industry to the economy of this country, particularly in invisible exports? Does he appreciate that in the current world recession civil aviation needs further regulations like it needs a hole in the head, especially at a time when aircraft are getting bigger, engines quieter and movements therefore fewer? Will he give an undertaking to discuss these matters carefully with the civil aviation industry before proceeding with any regulations?
    Mr. Eyre: It is necessary that airport authorities and the airlines should be able to make effective use of important assets in the interests of the national economy, but decisions will always be taken against a background of concern for those adversly affected.

    European Community
    Mr. Knoxasked the Secretary of State for Trade what was the surplus or deficit on visible trade with the European Economic Community in January; and how this compared with the position in January 1980.
    The Minister for Trade (Mr. Cecil Parkinson): The figures for January of this year will be published at 3.30 pm today. Since the beginning of 1980, our trade with the European Community has moved from deficit into surplus.
    Mr. Knox: Will my hon. Friend confirm that he expects a healthy improvement in the figures for January 1981 compared with those for January 1980? Will he say by how much exports to our EEC partners have risen since we joined the Community in 1973?
    Mr. Parkinson: I cannot anticipate what the figures to be announced at 3.30 pm will reveal. I can, however,

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    confirm, as my hon. Friend states, that since 1970 our trade with the Community has grown from only 30 per cent. to 40 per cent. of our total trade.
    Mr. Leighton: Is not this rise explained my the increase in our oil exports last year from £1·6 billion to £2·7 billion? Is it not also the case that, due to the recession, we are not importing so much—in other words, that unemployment is working as an effective import control, and that the underlying imbalance in our trade in manufactures has not been affected?
    Mr. Parkinson: The imbalance in our trade in manufactures has been affected. It has been reduced considerably. Last year our exports accounted for 90 per cent. of our imports, as opposed to only 84 per cent. a year previously. Our trade in oil has increased. I hope that the hon. Gentleman will not try to pretend that we should exclude this figure from our balance of payments figures. We are constantly told the hardening of the pound, based on oil, has affected our exports of other items. I hope that, if the hon. Gentleman wishes to make on adjustment for oil, he will also try to make an adjustment to reflect that fact.
    Mr. Teddy Taylor: Does the Minister recall telling me recently that our deficit in manufactures trade with the EEC in 1980 was about £5 million a day? Is he willing to enter into consultations and to undertake a study with his right hon. Friend the Secretary of State for Employment to find out the impact on jobs of a deficit of £5 million a day in manufactures trade?
    Mr. Parkinson: My hon. Friend is right about that figure. However, he should accept, as I am sure that he does, that it represents a reduction of about £2 million a day on the figures of the year before. He should be careful about arguing that if we have a surplus with an area or country that is proof that something is wrong. There are a substantial number of areas in which we run surpluses.
    Mr. John Fraser: If oil exports to the EEC are now running at about £3,000 million a year, does not that cause the Minister of State some concern about the imbalance of manufactures? To what extent is the present value of the pound responsible for this imbalance?
    Mr. Parkinson: The hon. Gentleman probably was not listening. I explained to him that in 1979 our exports of manufactures, excluding oil, were about 84 per cent. of our imports. Last year that figure was 90 per cent. There is an improvement in our exports of manufactures excluding oil.

    Newly Industrialising Countries
    Mr. Chapmanasked the Secretary of State for Trade what is the current state of trade between the United Kingdom and the non-OPEC industrialising countries; and if he is satisfied with the trend in recent years.
    Mr. Kenneth Carlisleasked the Secretary of State for Trade what was the United Kingdom's balance of trade with the newly industrialising countries in 1980.
    The Secretary of State for Trade (Mr. John Biffen): The balance of trade with the new industrialising countries in 1980 resulted in a crude surplus of £396 million. The crude surplus with non-OPEC members within this group
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    was £110 million. In both cases, there was a considerable surplus in trade in manufactured goods, and a deficit in other goods, primarily food and raw materials.
    Mr. Chapman: First, may I welcome my right hon. Friend to his new post? I welcome the figures that he has announced, but do they not again underline the fact that, if we felt minded to try to restrict imports of certain goods from these countries, the retaliatory measures that could be taken against our exports would be more damaging to the United Kingdom than any net benefit from restricting imports?
    Mr. Biffen: I thank my hon. Friend for his kind initial remarks. It is true that this is a substantial and valued market for the United Kingdom. These countries account for about 11 per cent. of our exports and 10 per cent. of our imports. It is advantageous that the trade should proceed by mutually satisfactory arrangements.
    Mr. Carlisle: We welcome the growth of our trade with NICs and the healthy balance of trade that we enjoy with them. Does my right hon. Friend agree that we should do everything possible to encourage this trade not only because it helps to create jobs in Britain but because, by providing a market for goods in Britain, it therefore helps to put into effect the best overseas aid programme possible?
    Mr. Biffen: Yes. I very much accept that argument.
    Mr. Edwin Wainwright: Does this mean that the right hon. Gentleman is happy about the present balance of exports and imports? Will he compare the present position with what was happening years ago? Does he not realise, in spite of his complacency, that we are importing far too many goods while being unable to sell similar goods manufactured in Britain?
    Mr. Biffen: There is a sensitive relationship between what we buy from these countries and what we sell to them. I suspect that the hon. Gentleman has manufactured goods in mind. In that sector we have a substantial surplus. The balance is made up by food and raw materials that we import from them. Surely this is trade that commends itself to all parts of the House.
    Mr. Marlow: Perhaps my right hon. Friend will tell us what effect on trade with the newly industrialised or industrialising countries will follow from restricting our source of agricultural supplies, such as that which has caused the closure of the Tate and Lyle sugar refinery in Liverpool?
    Mr. Biffen: I require notice of such a detailed and fast googly.

    Unsolicited Advertising Material
    Mr. Dubsasked the Secretary of State for Trade what representations he has received about the distribution of unsolicited advertising material through the post.
    The Minister for Consumer Affairs (Mrs. Sally Oppenheim): We receive a number of complaints about such material.
    Mr. Dubs: Does the right hon. Lady accept that there is concern about the way that organisations such as the Reader's Digest manage to assemble lists of names and addresses and combine the right to buy goods with free

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    entry to prize competitions? Is she aware that people are unhappy about such stuff coming through the post? Will she consider responding to the Lindop committee by way of an impartial answer to this problem?
    Mrs. Oppenheim: I must tell the hon. Gentleman that the majority of complaints that we receive about such material are concerned, not about the fact that it has been sent unsolicited, but about the advertising content. Prominent among the complaints that we have received are those about the Reader's Digest. We have received complaints about Leisure Arts, which gave the mistaken impression that the recipients had won something substantial. We have also received complaints about a company called "The Joy of Knowledge", which gave a mistaken impression about education in Britain. It implied that it was giving a £50 voucher. I have referred a number of these complaints to the Advertising Standards Authority. The Lindop committee was not conclusive that unsolicitied mail was disadvantageous and not wanted by the majority. It reached the opposite conclusion. However, we need carefully to watch the advertising content.
    Sir Ronald Bell: Is my right hon. Friend aware that the London office of the EEC Commission is pursuing an intensive advertising compaign to spread the joy of knowledge to many people who do not want to have it?
    Mrs. Oppenheim: I must tell my hon. and learned Friend that so far I have received no complaints about that enterprise.
    Mr. Jessel: Would not it be simplest if the public were to follow the example of Members of Parliament and put quantities of printed material that they do not want into the wastepaper basket?
    Mrs. Oppenheim: That is true of most people. It is where the content of such unsolicited communications is misleading in advertising terms that there is cause for concern.
    Mr. Russell Kerr: Is the right hon. Lady aware that she is being much less forward looking than a previous Conservative Postmaster-General, who threw this concept out of the window and refused to countenance the idea of having unsolicited mail?
    Mrs. Oppenheim: I thank the hon. Gentleman for reminding me of that. However, he will know that a number of committees have considered the issue since the time to which he is referring. We have the Unsolicited Goods and Services Act 1971. I am satisfied that the balance that is struck at present is not unsatisfactory, but we must keep an eye on the content of these communications.

    Monopolies and Mergers Commission
    Mr. Sheermanasked the Secretary of State for Trade what plans he has to improve and strengthen the Monopolies and Mergers Commission.
    Mr. Biffen: The Monopolies and Mergers Commission has been strengthened to perform its new functions under the Competition Act, and I have just appointed an additional deputy chairman. In consultation with the chairman, we shall keep its resources and procedures under review.
    Mr. Sheerman: Is not the right hon. Gentleman concerned that in the recent takeover of Times Newspapers
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    Ltd the commission could not respond in less than 10 to 12 weeks? Murdoch has taken over The Times, and perhaps that will be a lasting and fitting tribute to the new Secretary of State for Trade. Does he not agree that the time scales will have to be improved in future if this body is to be any use?
    Mr. Biffen: The speed with which the commission can work is affected quite substantially by the amount of evidence that it has to consider and the speed with which that evidence is made available. The commission said that it thought that it might take as long as eight weeks to consider the representations put before it in the case of Times Newspapers Ltd. I have no reason to doubt its judgment.
    Mr. Henderson: Will my right hon. Friend consider bringing shipping cartels within the ambit of the antimonopoly legislation, especially in view of recent evidence that British exporters are suffering positive disadvantage compared with their German competitors?
    Mr. Biffen: I take note of my hon. Friend's suggestion. I am sure that he does not expect me to give an immediate answer.
    Mr. Christopher Price: Will the right hon. Gentleman consider the monopoly position of the Press Association, which is a monopoly owned by local monopolies? It has occupied that position since the demise of Extel. Is he aware that I have recently discussed this matter with the Director General of Fair Trading? Will he make urgent inquiries to ascertain whether the Director General is willing to pursue an inquiry so that we can have a free flow of news in this country?
    Mr. Biffen: I shall certainly inquire of the Director General of Fair Trading about the consequences of the correspondence to which the hon. Gentleman refers.
    Mr. Mellor: Is my right hon. Friend aware that there was much support inside and outside the House for his decision not to refer The Times takeover to the Monopolies and Mergers Commission? Does he agree that it is extraordinary that Mr. Murdoch should be subjected to such abuse from the Opposition for protecting hundreds of jobs by taking over a business which currently is losing £13 million a year?
    Mr. Biffen: I recognise that my decision was controversial. I do not complain for one moment about that. I take note of what my hon. Friend so encouragingly says.
    Mr. John Smith: Is the Secretary of State aware that the view just expressed to him is a minority view and that most hon. Members believe that he should have referred the matter to the Commission? Since he substituted for a reference to the Monopolies and Mergers Commission a set of conditions upon the new proprietor of The Times and The Sunday Times, what sanction can he apply to the new proprietor if he breaks those conditions?
    Mr. Biffen: Question No. 16 addresses itself specifically to that matter and I shall deal with it then.

    Air Transport Services (London-Hong Kong)
    Mr. Allan Stewartasked the Secretary of State for Trade what assessment he has made of the effect of the Government's decision to permit the new air transport services on the London-Hong Kong route.
    Mr. Biffen: The travelling public have the benefit of a wider varity of services offered by three airlines and of significantly reduced fares as a consequence of the competition. In the first five months of these services, the number of passengers on the route increased by over 50 per cent. compared with the corresponding period in 1979.
    Mr. Stewart: I am grateful for that information. Does it not prove that the customer has benefited greatly from competition on the route? Would not it be an additional benefit if that competition were created on internal, European routes?
    Mr. Biffen: I am grateful to my hon. Friend for the support he expressed in the first part of his observation. I shall take note of what he says.
    Mr. Carter-Jones: If three airlines provide good competition, why not have four, five, six, seven or eight?
    Mr. Biffen: Laker Airways have been given a licence by the Civil Aviation Authority, but they are frustrated by not being able to get a corresponding licence in Hong Kong.
    Mr. McCrindle: In order to keep a balanced view, will the Secretary of State say whether British Airways, British Caledonian and Cathay Pacific made a profit in the first six months of the open skies policy to Hong Kong? Does the 50 per cent. increase in passengers extend to first class and full economy fare passengers, without a full load of whom no airline can continue to fly at a profit?
    Mr. Biffin: I am grateful to my hon. Friend for suggesting that one should take a balanced view. None of the three airlines operating in intensive competitive conditions has given any indication that it wishes to withdraw from the business.
    Mr. Clinton Davis: Does the Secretary of State agree that originally the independents which sought licences to operate on this route did not seek stop-over rights and that that situation has changed? Will he venture an opinion about why that is so? Does he agree that the only organisation that will suffer as a result is British Airways because they will be required to give something up, whereas the others cannot be expected to do so?
    Mr. Biffen: The hon. Gentleman will appreciate that the stop-over arrangements sought by British Caledonian are subject to an appeal by myself and I cannot make a comment until the appeal has been resolved.
    Mr. Emery: Will my right hon. Friend remember that in the success of increasing the number of passengers to Hong Kong some persons are using the cheaper fares for onward transportation to Australia? Will he bear that in mind when applications are made for increased services to Australia?

    Secretary of State (Visits)
    Mr. Bowen Wellsasked the Secretary of State for Trade whether he will list the countries he has visited since May 1979, the costs of the visits and his estimate of the effects on British trade with with those countries.
    Mr. Biffen: With permission, I will circulate the list of the countries visited and the costs incurred in the Official Report. It is not possible to estimate the precise effects on our trade of most of the visits undertaken since the benefits are likely to be long term.
    Mr. Wells: I thank my right hon. Friend for that answer and look forward to reading the list in the Official Report. Is it true that the Minister for Trade has visited a large number of countries in company with British business men? Has he not thus generated an enormous amount of public interest in British exports, enabled British business men to contact Government people in those countries and so given British exporters a greater opportunity to export British goods?
    Mr. Biffen: My hon. Friend is right. I pay tribute to my hon. Friend the Minister of State, who has been involved in a programme of visits covering practically all the leading 25 export markets with only two or three exceptions.
    Mr. Deakins: Do not such visits help the Minister and his colleagues to appreciate the difficulties facing British exporters? If they serve that useful purpose, will he use his influence with his colleagues to achieve an appropriate change in policies which are hindering British business men overseas?
    Mr. Biffen: I do not have to leave our shores to be made aware of the difficulties experienced by British industry. It is true that such visits give politicians a closer idea of the problems confronting the commercial and trading communities.
    Mr. Waller: Does my right hon. Friend agree that great credit is due to companies which have not sat back in the face of the current recession but which have gone abroad to find new export markets and thereby overcome the recession? Does he agree that the high value of the pound has the advantage, which not all companies have appreciated, of enabling them to keep a marketing presence abroad and to find new markets?
    Mr. Biffen: I agree with the first part of my hon. Friends comment. I agree that the high level of British exports bears testimony to the commercial expertise of companies engaged in exporting. The level of sterling clearly has its advantages and disadvantages to people engaged in exports, depending largely upon the domestic cost structure.
    Following is the list of countries:

    SOS (Trade)—Overseas Visits from May 1979 to Date

    Date

    Countries Visited

    Cost

    John Nott

    Non EEC

    USA, Fiji, Australia,

    13 September–4 October 1979

    New Zealand

    £12,811

    23–28 November 1979

    Iraq, Saudi Arabia

    £6,018

    Japan, Korea,

    18–31 January 1980

    Hong Kong

    £11,945

    7–9 February 1980

    Switzerland

    £573

    20–22 March 1980

    USA

    £3,658

    5–13 May 1980

    Brazil

    £10,808

    7–11 July 1980

    Nigeria

    £5,115

    18–19 September 1980

    France

    £993

    12–15 October 1980

    Greece, Austria

    £2,538

    14–16 December 1980

    Spain

    £1,570*

    5–10 January 1981

    Indonesia

    £4,506*

    EEC

    10 July 1979

    Brussels

    £378

    20 November 1979

    Brussels

    £970

    4 February 1980

    Brussels

    £1,097

    11 June 1979

    Luxembourg

    £1,062

    25 November 1980

    Brussels

    £431*

    Date

    Countries Visited

    Cost

    John Biffen

    Non EEC

    16–23 January 1981

    India

    £8,161*

    * travel costs only available

    Bristol Evening Post and Western Daily Press
    Mr. Palmerasked the Secretary of State for Trade if he will refer the proposal of Associated Newspapers to obtain full control of the Bristol Evening Post and the Western Daily Press to the Monopolies and Mergers Commission.
    Mrs. Sally Oppenheim: The proposed takeover does not require my right hon. Friend's consent under the newspaper merger provisions of the Fair Trading Act 1973, and the question of a reference under those provisions does not arise. The Director General of Fair Trading is, however, making the usual investigations to see if the takeover qualifies for reference under the general merger provisions of the Act. If he finds that it does, he will make his recommendation to my right hon. Friend in the normal way, and my right hon. Friend will announce his decision as soon as possible.
    Mr. Palmer: Does the right hon. Lady appreciate the consternation that her answer will cause to the readers of the papers in Bristol and to the workers in the enterprises? Will she explain why her right hon. Friend has forgotten so soon his once-vaunted belief in free competition?
    Mrs. Oppenheim: I have received no expressions of consternation from any members of the public, so far as I am aware. The law as it stands is the law and this is not a referable reference under the newspaper merger provisions of the Fair Trading Act. If it were, obviously my right hon. Friend would consider it as such. What the hon. Gentleman is asking for is a contravention of the law.
    Mr. Paul Dean: Will my right hon. Friend bear in mind that many people who come from the area served by the two excellent local newspapers value greatly the strong element of local control and management?
    Mrs. Oppenheim: I also come from the area which is covered by the newspapers. I have noted carefully my hon. Friend's view.
    Mr. Christopher Price: Is not a whole new look at the statutory provisions governing newspaper mergers necessary? Does the right hon. Lady agree that in the spirit of the 1973 Act newspapers are special cases and that the House and the Monopolies and Mergers Commission should look carefully at each case? If each case goes through without scrutiny the public will feel that we do not care about the concentration of a monopoly press in Britain.
    Mrs. Oppenheim: Consumer and competition legislation comes under review from time to time in my Department. The matter is one of many that may be looked at when the legislation is reviewed.
    Mr. John Fraser: Why is there not a mandatory reference under section 58, when clearly the newspapers
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    are economically going concerns and they are not controlled by Associated Newspapers, which has only three directors out of eight on the board, and also when on the face of it the combined circulation would fall to be referred under section 58? If the right hon. Lady can convince the House that they are not referable, will she give support to a reference under the general merger provisions of the Fair Trading Act?
    Mrs. Oppenheim: Within the meaning of the Act, Associated Newspapers is a newspaper proprietor in relation to the Bristol Evening Post group, which includes the Western Daily Press. No reference is possible under the Act: where an existing proprietor simply increases his control, although, as I have said, that may be a matter for a general reference by the Director General of Fair Trading under the normal as opposed to the newspaper merger sections of the Act.
    Mr. Fraser: May I tell the right hon. Lady that we take serious objection—
    Mr. Speaker: Order. A supplementary question is not a vehicle for passing information. The hon. Gentleman may ask a question.
    Mr. Fraser: Will the right hon. Lady re-examine the conclusions that she has come to about control in the light of the facts? Does she agree that there is no mathematical rule about whether someone controls a company?
    Mrs. Oppenheim: Associated Newspapers already owns 60 per cent. of the shares of the parent company. The hon. Gentleman will agree that that is tantamount to being in control.

    General Agreement on Tariffs and Trade (Subsidies Code)
    Mr. Hannamasked the Secretary of State for Trade what action he is taking to maximise the effectiveness of the new general agreement on trade subsidies code, especially with regard to loans at belowmarket rates of interest.
    Mr. Parkinson: The Government fully support the GATT agreement on subsidies and countervailing duties. My Department is very ready to look into prima facie cases brought forward by United Kingdom industry regarding subsidies from which its competitors are benefiting and to invoke the mechanisms established in the agreement where appropriate.
    Mr. Hannam: Is my hon. Friend aware that, although it is difficult to produce prima facie evidence, there is increasing evidence of low-interest Government loans in other countries, especially France? Now that the consensus agreement on export credit subsidies has collapsed, will he press GATT to recall the committee responsible for export subsidies to examine the matter urgently?
    Mr. Parkinson: My hon. Friend raises an important matter. I will correct him on one small point of detail. The consensus has not collapsed. The negotiations about changing the basis of the consensus are faltering, but the consensus, as previously agreed, is firmly in place. The Government take the view that a credit race in which the developed countries compete with each other for the right to give away products is in no one's interest. We are pressing hard to get the negotiations under way again.
    Mr. Cryer: Is the Minister aware that it is difficult for industry to produce prima facie evidence, for example, of dumping? Is he further aware of the massive demonstration being staged here today of textile, clothing and footwear workers, who are worried sick about the loss of their jobs under this Government? What do the Government intend to do? Will they merely tell the workers to go back North and to join the ever-lengthening dole queues?
    Mr. Parkinson: The Minister will answer the first part of the hon. Gentleman's question about the GATT. I repeat what I said, with the added proviso that the Department stands ready to help industry to put together a case if evidence of any kind can be produced to show that there are grounds for further investigation. The Government are prepared to work with industry to assemble a case and to help industry to put it.

    Textiles and Clothing
    Mr. Woolmerasked the Secretary of State for Trade what recent assessment he has made of formal and informal trade barriers erected by other countries which are encountered by United Kingdom exporters of textiles and clothing.
    Mr. Biffen: The Government keep all barriers to our textile and clothing exports constantly under review and pursue every appropriate opportunity to get them reduced.
    Mr. Woolmer: Is the Secretary of State aware of the massive demonstration of textile and clothing workers in London and around Westminster today to show their grave concern at the loss of 100,000 jobs in the past 12 months? What response does he expect to give to the report of the Select Committee on Industry and Trade, which drew attention to the huge barriers that our wool textile exports face? What hopes can he give that that barrier will be reduced?
    Mr. Biffen: I am aware of the demonstration. The great anxiety in the wool textile trade is recognised in all parts of the House. The recommendations of the Select Committee covered many matters outside the responsibility of the Department of Trade. In due course, I shall publish our response to the recommendations.
    Mr. Anthony Grant: Will my right hon. Friend confirm that the Government's policy has been to operate under the multi-fibre arrangement negotiated by the previous Government and to improve on it and rectify its defects? Is it therefore not the height of cynicism for the Opposition to complain about that policy?
    Mr. BiffenThat is a trenchant and valid comment. The MFA is bound to be the framework within which we operate, to reconcile not only the interests of textile producers but also those of United Kingdom customers and our wider trade relationships. The agreement is for renegotiation, and we shall take into account all the representations that are likely to be made.
    Mr. Barry Jones: Is the right hon. Gentleman aware that partly because of the barriers a £12 million investment project by Courtaulds, in my constituency has been shelved? Is he also aware that among the many textile workers from my constituency here today there is bitterness about the bad effects on the textile industry, and man-made fibres in particular, of the over-valued pound and high interest rates.
    Mr. Biffen: I am politically a sufficiently near neighbour of the hon. Gentleman to appreciate the serious unemployment problems that he has to contend with. I hope that he will take some comfort from the fact that the United States Adminstration are deregulating their oil prices. I hope that that move will be extended to natural gas to bring about a more equitable relationship in the competitive nature of the respective economies.
    Sir Charles Fletcher-Cooke: Has my right hon. Friend any up-to-date information about the response of the United States to the EEC representations about feedstock and fuel prices, since the Minister of State, Department of Industry, said that he expected it to be sent to Washington early in February?
    Mr. Biffen: I understand that the negotiations are almost at the point of fruition and that, indeed, we may have information tomorrow. I shall make it my responsibility to see that my hon. and learned Friend is informed as soon as I am.
    Mr. John Smith: Is the Secretary of State aware that the effect of feedstock prices has been to increase import penetration in the United Kingdom of polyester filament yarn from 7 per cent. to well over 25 per cent. and that a serious imbalance and disruption is occurring in trade relations in textiles and man-made fibres between the United States and the United Kingdom? Is he further aware that the EEC is a past master at putting such matters aside month after month, and that we have been dealt with in that manner? Will he come back to the House at an early stage with a definite report on what the EEC or the Government intend to do to stop unfair trading by the United States?
    Mr. Biffen: I am well aware of the degree of penetration of the United Kingdom. I am therefore delighted that the United States Administration have deregulated oil prices. As I said, I hope that that will be followed by deregulation of natural gas prices.

    Shipping (River Thames Collision)
    Mr. Guy Barnettasked the Secretary of State for Trade if he will make a statement about the collision which occurred on the River Thames on the evening of Friday 30 January in the vicinity of Greenwich.
    Mr. Eyre: At 1918 hours on Friday 30 January the United Kingdom registered vessel "Blackthorn" and the Panamanian registered vessel "Frederika I" were in collision on the river Thames in dense fog. The "Blackthorn" remained afloat and was subsequently secured, but the "Frederika I" sank shortly after the collision. I am pleased to say that no lives were lost and all crew members survived the experience without injury.
    My Department is carrying out a preliminary inquiry into this casualty, which will be completed as soon as possible.
    Mr. Barnett: May I pay tribute to Mr. Graham Barnard who, as a result of the courage that he showed, was to a large degree responsible for rescuing three of the people who were in the river after the collision? May I also mention the speedy way in which Greenwich district hospital accepted those affected as patients? May I ask that the inquiry be a thorough one to ensure that incidents of

    13
    this kind do not happen again on the river Thames, particularly in that area of the river, where the currents are exceedingly dangerous?
    Mr. Eyre: I should like to associate myself with the hon. Gentleman's tribute to the staff of Greenwich district hospital and to join him in praising the gentleman to whom he referred. I believe that great credit was due to a waterman and a tug skipper who acted with initiative and skill in bad conditions in assisting the crew of the sunken vessel. The hon. Gentleman emphasised the importance of the inquiry, and I agree. When we have had the opportunity to consider the terms of the preliminary inquiry, we shall consider whether a formal investigation should take place.

    Southern Africa Development Co-ordination Conference
    Mr. Hooleyasked the Secretary of State for Trade what are the main exports from the United Kingdom to the countries comprising the Southern Africa Development Co-ordination Conference (SADCC); and what steps are being taken to increase trade with them.
    Mr. Parkinson: Machinery and transport equipment account for more than half the value of our exports to the SADCC countries. Manufactured goods and chemical products are also important. All the British Overseas Trade Board's export services and the resources of our posts are available in support of our trade with these countries.
    Mr. Hooley: Is the Minister aware that those countries between them comprise enormous natural, mineral and agricultural resources and are likely, over the next 10 or 15 years, to become immensely important markets for Britain both in terms of exports and imports? Would it not be a healthy trend as far as possible to move our trade away from South Africa and towards this area?
    Mr. Parkinson: I agree with the first part of the hon. Gentleman's question. These are important markets. They account for £300 million worth of exports at the moment. I believe that the hon. Gentleman's thinking is wrong in the second part of his question. If, as he puts it, our trade was moved away from South Africa, a number of those countries would be adversely affected. What we wish to see is an expansion of our trade with both areas.
    Mr. Robert Taylor: What percentage of our current trade with those countries is directly financed by our own aid programme?
    Mr. Parkinson: If my hon. Friend cares to table a question on that subject, I shall give him the answer. I am afraid that I. cannot give it off the top of my head.

    Trade Trends
    Mr. Deakinsasked the Secretary of State for Trade if he is satisfied with the trend since 1970 for the United Kingdom to have a greater share of its total trade with the European Economic Community and a lesser share with the rest of the world.
    Mr. Parkinson: Such a trend has been evident for some 30 years. However, our membership of the Community, with a market of some 270 million people, has, not surprisingly, led to a quickening in this trend. We welcome an increase in our trade wherever it occurs.
    Mr. Deakins: As the community consists of industrial countries, and the prospect for industrial countries in the foreseeable future is one of much slower growth than in the past, is not this trend to say the least a little unfortunate? Should not our exporters be devoting much more attention to the great potential markets in the rest of the world, particularly in the developing countries where the prospects fro long-term economic growth are much better than in the industrialised countries?
    Mr. Parkinson: I do not think that this is an either-or situation. We are now naturally inside a market of 270 million people with no external tariffs against us. That is a good opportunity for us, operating within a very large home base, to build up our trade. But I see no signs that British industry is neglecting the rest of the world. Indeed, wherever I go in the world, I find British industry extremely active in seeking out business in new markets, and I encourage it in every way that I can.
    Mr. Stokes: Is not one of the side effects of our increasing trade with the EEC that there is more European investment in this country? Is not that in itself a good thing?
    Mr. Parkinson: My hon. Friend is correct.
    Mr. Cryer: Is not the reality that we shifted power away from the United Kingdom Parliament, and that the EEC is lethargic about measures such as anti-dumping legislation, so that implementation of anti-dumping legislation and the multi-fibre arrangement has now moved to the EEC and the Government cannot take independent action? Is not the textile and clothing industries lobby here today a measure of the anxiety about that because of the continued job loss taking place in those industries?
    Mr. Parkinson: I know that the hon. Gentleman is extremely concerned about the state of the textile industry, as are the Government. But it does no good at all to identify the wrong causes of the industry's problems. I must tell the hon. Gentleman frankly that the MFA is administered here. We administer and monitor the quotas, and we ensure that they are enforced. Since we came to office we have strengthened the arrangement in a varity of ways. I therefore do not accept that our membership of the EEC is a source of the textile industry's problems. The MFA, as negotiated by the Government of whom the right hon. Member for Lanarkshire, North (Mr. Smith) was a member, is in place and is doing its job.
    Mr. Squire: Does my hon. Friend accept that, as he has already been criticised by an anti-European for not exporting enough to the EEC and is now being criticised for exporting too much, the chances are that he has it about right?
    Mr. Parkinson: Modesty forbids me from agreeing with my hon. Friend.

    United States of America "Buy American" Policy
    Mr. Shersbyasked the Secretary of State for Trade to what extent the various measures imposed by the United States of America to protect domestic industry known as the Buy American Act constitute an effective non-tariff barrier to British exports; and if he will make a statement.
    Mr. Biffen: The effect of the Buy American Act 1933 on British exports is difficult to quantify because of the wide coverage of the Act. There have been numerous individual complaints from British firms, and successive Governments have made representations to the United States authorities on their behalf.
    Under the GATT Government procurement code, which came into operation on 1 January 1981, the United States have waived "Buy American" provisions for products covered by the code.
    Mr. Shersby: Is my right hon. Friend aware that many British firms, particularly our computer firms, are having difficulty in penetrating the United States market, due to the existence of this statutory code? Will he therefore ensure that when my right hon. Friend the Prime Minister meets President Reagan shortly this item will be on the agenda so that the curious situation which has persisted since the 1930s is reviewed and, one hopes, brought to an end?
    Mr. Biffen: I cannot write the agenda, but I will certainly make sure that my hon. Friend's views are given wider coverage on this matter.
    Mr. Colvin: Will my right hon. Friend confirm that the Buy American Act does not apply to the trade in defence hardware? Will he therefore use his influence to persuade the Americans that the two-way street of reciprocal sales and purchases of defence hardware between the United States and the United Kingdom becomes indeed a two-way street and does not remain very much a one-way street in favour of the United States as it is at present?
    Mr. Biffen: I think that my hon. Friend makes a very pertinent observation.

    Union of Soviet Socialist Republics
    Mr. Neil Thorneasked the Secretary of State for Trade if he is satisfied the United Kingdom trade with the Union of Soviet Socialist Republics does not include components produced by either forced or slave labour.
    Mr. Bendallasked the Secretary of Trade what representations he has received about British products being undercut in price by imported Soviet goods made in part or in whole by forced prison labour.
    Mr. Parkinson: One Member of the House has corresponded with me on this subject. The Government, and I have no doubt all Members of the House, would deplore the sale in this country of products manufactured in forced labour camps. My powers to prohibit imports are limited, but, where justified, anti-dumping action can and will be taken under established procedures, and my Department is ready to advise on those procedures.
    Mr. Thorne: As my hon. Friend agrees with me that it is quite wrong for the West to benefit from the very unfortunate situation of the dissidents—largely Jews and other religious minority groups—in Soviet Russia, does he think that there is anything that the Government could do to lead either Europe or the rest of the world into some system of inspections whereby countries receiving goods from overseas have a right to ensure that the manufacture of those goods is not at the expense of native labour which is grossly underpaid?
    Mr. Parkinson: My hon. Friend shares my distaste for trade in these items. I intend to discuss with my EEC colleagues, informally at first, the possibilities of taking action against this type of trade.

  Overseas Development

    Commonwealth Development Corporation
    Mr. Bowen Wellsasked the Lord Privy Seal whether he has yet received the report on the Commonwealth Development Corporation; and when he will make a statement.
    The Minister for Overseas Development (Mr. Neil Marten): I have now received the report of the group of officials which, with representatives of the CDC, has been reviewing the work of the Commonwealth Development Corporation. I am considering the report. The Government's conclusions on it will be made known to the House as soon as possible.
    Mr. Wells: Will my hon. Friend confirm article which appeared in The Sunday Times on the Commonwealth Development Corporation, which indicated that one of the causes of the report's delay was a foolish and footling argument about whether CDC borrowings in the City and, indeed, overseas—which do not affect this economy—are counted as part of the public sector borrowing requirement? If the CDC cannot borrow from that source because the Treasury's view is upheld, will my hon. Friend consider making additional commitments from the bilateral programme of the ODA?
    Mr. Marten: I will not confirm the report which appeared in The Sunday Times. As to the second part of my hon. Friend's question, we shall consider anything. Many of these factors have already been raised by the chairman of the CDC, Lord Kindersley, but I am afraid that at this stage there is little that I can add to the answer which I have given. The same applies to the Adjournment debate tomorrow night, when I doubt that I shall be able to say more than I have today.
    Mr. Hooley: Is the Minister aware that the CDC has been outstandingly successful not only in development terms but also in commercial terms? Will he use all his influence to expand and not contract its activities?
    Mr. Marten: I entirely agree with the first part of the hon. Gentleman's remarks. I shall certainly bear in mind the question of expanding the CDC's activities as best we can.

    Clean Water and Sanitation (Special United Nations Campaign)
    Mr. Welshasked the Lord Privy Seal what special contribution Her Majesty's Government have made towards the Special United Nations Campaign to bring clean water and sanitation to poor countries.
    Mr. Neil Marten: No special contribution has been made, but we shall continue to finance from the aid programme a wide range of water and sanitation projects, and to provide training and advice.
    Mr. Welsh: Is the Minister aware that Britain would not have achieved the greatness that it has had it not been

    17
    for Chadwick's report last century on clean water and sanitation? However, in the Third world 10 million people and more are dying each year because of lack of clean water and sanitation, and the World Health Organisation points out that more than 80 per cent. of all known diseases in those countries are due to lack of clean water and sanitation. Given those figures will not the Minister give an assurance that he will again try to get some money from the Treasury to help this very good venture in the Third world?
    Mr. Marten: We have already tried, and we are currently engaged on 44 drinking water and sanitation projects in 28 countries. Development aid for current water-related projects amounts to more than £80 million.
    Mr. Cormack: Bearing in mind that this is the centenary of Disraeli's death and that he attached great and real importance to sanitation, will my hon. Friend think again and do something special in this regard to commemorate that great Conservative statesman?
    Mr. Marten: I think of sanitation every morning.
    Mr. Pavitt: Has the Minister taken note of the voluntary efforts by the Women's Co-operative Guild and many other voluntary organisations in respect of the "Buy a bucket of water campaign"? Does not that put to shame the reactions of the Government to the North-South Brandt report, because while voluntary organisations are prepared to take action the Government seem to be lagging behind?
    Mr. Marten: The Brandt report in its North-South approach is, I think, directed both to Governments and people. I commend what the hon. Gentleman said about the women's organisation.
    Mr. Budgen: Will my hon. Friend remember what Peel used to say about the advantages of abolishing the corn laws? Perhaps he will comment upon the proposition that it would be better if we did not dump all this expensively produced food so as to undercut Third world producers, thus preventing them from providing their own sanitation and clean water.
    Mr. Marten: I shall study the analogy contained in that remark.

    India
    Mr. Deakinsasked the Lord Privy Seal why there has been a one-third reduction in United Kingdom bilateral aid to India.
    Mr. Neil Marten: Bilateral aid to India has not been reduced by one-third. Net disbursements in financial years 1978–79 and 1979–80 were £113 million and £98 million respectively, and we hope to provide at least the same amount in 1980–81 as in 1979–80.
    Mr. Deakins: Nevertheless, does not the Minister agree that this was a substantial cut? Before agreeing to it, did he consider the effects of a cut of such a magnitude on the most populous Commenwealth country? If so, why did he allow such a serious cut—albeit, not one-third—to go ahead?
    Mr. Marten: Cuts affected many countries throughout the world, and particular attention was paid to India to which we give a great amount of aid. Britain provides more aid to India than any other bilateral donor and on
    18
    softer terms than most. According to World Bank figures, British aid amounted to 34 per cent. of net bilateral disbursements by a member of the Aid India Consortium in 1979–80, which is a pretty good record, and I know that India appreciates it.
    Mr. Jessel: Is not India, like other Asiatic countries in the Commonwealth, treated less favourably for development aid purposes than Commonwealth countries and others in Africa because under the Common Market Lomé convention, under French influence, a disproportionate amount of aid tends to be steered to Africa to the detriment of Asiatic countries? What can be done to rectify that?
    Mr. Marten: That is not so with regard to our bilateral aid. However, if my hon. Friend is referring to aid under the Community, it is perfectly true that the original Lomé agreement is directed more towards the African countries than towards the Asian countries. That is something that we are constantly trying to massage rather more evenly.
    Mr. Guy Barnett: Do the Government still adhere to the principle laid down by the previous Government of aid to the poorest people in the poorest countries? If so, why did my hon. Friend the Member for Waltham Forest (Mr. Deakins) not receive a more favourable answer on the question on aid to India?
    Mr. Marten: The policy is the same—aid to the poorest. If the hon. Gentleman examines the answer, he will find that it is not so bad as he thinks.

    Overseas Aid
    Mr. Canavanasked the Lord Privy Seal when he expects to meet the United Nations target of 0.7 per cent. gross national product for overseas aid.
    Mr. Neil Marten: As I explained to the hon. Member for Kingston upon Hull, West (Mr. Johnson) on 1 December, we accept in principle the target of 0.7 per cent., but we are not committed to a target date for achieving it. Preliminary estimates suggest that our 1980 oda/GNP ratio will be substantially below the level recorded in 1979. Technical factors, including for example the fact that no promissory notes in respect of the International Development Association were deposited before the end of the calendar year because of a failure by the previous United States Congress to ratify, played an important part in this.
    Mr. Canavan: As the Government plan a reduction of more than 14 per cent. in the overseas aid programme which they inherited from the previous Labour Government, will the Minister at least have the honesty to admit that the Government have now abandoned any intention of meeting the United Nations' target, yet the same Government have such a distorted sense of priorities that they propose to spend possibly up to 10 times the annual overseas aid budget on a replacement for the Polaris missile?
    Mr. Marten: Absolutely not. Our policy of achieving 0.7 per cent. is the same policy as that of the Opposition when they were in Government.
    Mr. Farr: When my hon. Friend is considering what economies he will have to make, will he give the House an undertaking that no economies will be made in aid to

    19
    Zimbabwe, a newly-emergent Commonwealth country that has a great future and which is badly in need of overseas help?
    Mr. Marten: I recognise what lay behind that question, and, while the Government would like to do what they can, it would be risky to give an assurance of that nature. However, I shall bear in mind my hon. Friend's remarks.
    Mr. McElhone: If the Government cannot reach the target of 0.7 per cent. of gross national product, will the Minister reconsider the paltry amount of £75 million that we give in aid to Zimbabwe, in view of the critical situation there and the urgent problem of resettlement?
    Mr. Marten: We constantly think of the problems of that country. A donors' conference will take place towards the end of March. We must wait and see what happens then, particularly in regard to aid from the United Kingdom and other countries.

Times Newspapers
The following questions stood upon the Order Paper:
Mr. Robert Adley: To ask the Secretary of State for Trade, what representations he has received about his decision not to refer to the Monopolies and Mergers Commission the proposed purchase of The Times.
Mr. loan Evans: To ask the Secretary of State for Trade, what representations he has received regarding his decision not to refer the change of ownership of the Sunday Times to the Monopolies Commission; and if he will make a statement.
Mr. Speaker: The Secretary of State has asked my permission to answer questions 16 and 24, and I have given my permission.
The Secretary of State for Trade (Mr. John Biffen): I have received a number of representations on my decision to consent to transfer of the two newspapers without a reference to the Monopolies and Mergers Commission. In view of the continuing interest in this matter, I am today placing in the Library of the House a memorandum setting out the material on which I reached my decision.
Mr. John Smith: Is the Secretary of State aware that the responsibility rests very much on his shoulders, and on the so-called guarantees given by the new proprietor of the organisation with regard to editorial independence and integrity? What sanctions does the Secretary of State have in mind to ensure that the guarantees are observed in the future?
Mr. Biffen: Two of the conditions require changes in the articles of association of the companies concerned in order to safeguard the position of independent national directors and to preserve editorial independence. The enforcement of those conditions will lie essentially with the B shareholders of The Times and independent directors. Any breach of the remaining conditions would be subject to criminal sanctions under the Fair Trading Act 1973.
Mr. Jonathan Aitken: Whatever our past disagreements on the sale of The Times, we are now dealing with a fait accompli. Does not my right hon. Friend agree that we should all wish Mr. Rupert Murdoch and the new management good luck, because they will certainly need it?
Mr. Biffen: That was underhand bowling up to the best Australian standards. I realise that the decision that I took was controversial. By the nature of it, it could not have been otherwise. I am reinforced by the observation of the deputy editor of The Times, who said that these are stronger guarantees than we have ever had. I do not think that any other newspaper in the world has such guarantees.
Mr. Geoffrey Robinson: The right hon. Gentleman will not expect us to welcome the confirmation of his decision, but would it be possible for him to make available detailed financial information, so that the general public unease about the grounds on which he took the decision on The Sunday Times could be dispelled? That would do a great deal to give the sort of
22
start that we would all like to see, in the best of spirits, to this buccaneering piece of entrepreneurship between the press and the Government, in the great tradition of those two organisations, the Tory press barons and Tory Governments? I am sure that if the right hon. Gentleman took it in that spirit and made available the information, it would be welcome in all parts of the House.
Mr. Biffen: The hon. Gentleman made clear his views when we debated this matter, and in that context I appreciate his remarks. There is now available to the House, in the Library, the data that was made available to me and on which I took the decision.
Mr. Peter Emery: Does my right hon. Friend realise that the House will be grateful to him for taking the unusual step of asking permission to answer these questions and for having given an assurance to the Opposition Front Bench?
Is my right hon. Friend aware that he has assisted in open government in allowing the information that was made available to him to be placed in the Library? Is he further aware that that will assist many hon. Members?
Mr. Biffin: I am grateful to my hon. Friend for his comments.
Mr. Peter Bottomley: Will my right hon. Friend take the opportunity, now or at a convenient time in the future, to deal with one of the basic issues concerning would-be buyers and would-be sellers—the fact that the Monopolies and Mergers Commission should be given a reasonable time to report?
Mr. Biffen: My hon. Friend properly identifies a disturbing aspect of the episode. I do not know whether we can adjust our legislation to overcome that problem. I do not wish to make any encouraging comments at this stage, but I take note of my hon. Friend's remarks.
Mr. Hooley: On a point of order, Mr. Speaker. Would it be possible to inquire whether hon. Members who tabled the questions that have just been answered were notified that they would be answered at the end of Question Time?
Mr. Speaker: I expect the Minister thought that those hon. Members assumed that their questions would be answered during Question Time.

STATUTORY INSTRUMENTS, &C.
Ordered,
That the Abortion (Amendment) Regulations 1980 (S.I., 1980, No. 1724) be referred to a Standing Committee on Statutory Instruments.—[Mr. Boscawen.]

BILL PRESENTED
  MOTOR CYCLE CRASH HELMETS (SECULAR PRINCIPLES OBJECTION)
  Sir Ronald Bell, supported by Sir Charles Fletcher-Cooke, Mr. Nick Budgen and Mr. Michael Shersby, presented a Bill to exempt certain persons having objections of principle to compulsion in the matter of wearing motor cycle crash helmets from the provisions of section 32 of the Road Traffic Act 1972: And the same was read the first time; and ordered to be read a Second time upon Friday 6 March, and to be printed. [Bill 69.]

  Adult Education
  3.38 pm
  Mr. Robin Squire: I beg to move,
  That this House, having regard to the importance of adult education in providing opportunities for re-entry into the education system, urges local authorities to make appropriate provision in planning the allocation of resources.
  Anyone who is fortunate enough to top the private Members' ballot is well aware of his good fortune, and he is also aware of the muttered threats about what may befall him if his good fortune is repeated. I hope that I have selected a subject which my hon. Friends will agree has been under-exposed in parliamentary terms and which deserves greater attention, and that many hon. Members will feel able to contribute to this debate.
  On a personal note, I welcome the Under-Secretary of State for Education and Science, who I believe will reply to the debate. He was my Member of Parliament, and I am sure that the lines on his face will disappear by the hour now that I no longer live in his constituency.
  In answer to a short debate on the subject in December, my hon. Friend's predecessor said that the facilities for adult education are part of civilised society. But many aspects of that civilisation are showing signs of strain, and in some cases they are near to collapse.
  The numbers of students involved are impressive. Seventeen per cent, growth in 1978 brought the figures up to more than 2 million. Although there was a decline in 1979 and a further drop in 1980, that can be shown to be almost exclusively the result of a policy that has led to the most prodigious percentage increases in fees for many adult classes throughout the country.
  The Institute of Adult Education published a survey in November 1980 which attracted answers from 98 out of 104 local education authorities. They showed conclusively that where there is a substantial increase in fees there is a corresponding major reduction in enrolments.
  The question of fees is a matter for local education authorities, and quite rightly so. I do not suggest that the matter should be arranged in any other way. But many anomalies are involved. Indeed, the same survey highlighted the fact that no fewer than eight local education authorities were charging higher fees for O-level courses than for non-vocational courses, so there is an obvious area that should be examined by a number of local authorities.
  I recognise that many education authorities make reductions for those in receipt of supplementary benefit, those who are unemployed, and those who are handicapped. But this, with respect, cannot change the position, which is growing, that a considerable number of people who seek adult education are now in danger of being priced out of achieving that aim.
  Fees are not considered in isolation; they follow decisions taken on national expenditure. Here the figures are very illuminating and very depressing. At 1979 prices in England and Wales, we have gone from a position where £52 million was provided in 1975–76 to a position in which, in the current year, £39 million is planned, and there will be a further cut back of £5 million in the following year.
  The Under-Secretary of State for Education and Science, my hon. Friend the Member for Brent, North (Dr. Boyson), put it the other way round:
  24
  "In 1980–81, the amount included in the rate support grant for adult education"—
  he recognised, of course, that that money is not necessarily spent on adult education—
  "was cut by 25 per cent. Over the next three years, the cut will average out at about 33 per cent."—[Official Report, 19 December 1980; Vol. 996, c. 1103.]
  All this is taking place but a few years after the Russell committee reported in 1973. That committee was set up by my right hon. Friend the Prime Minister when she was Secretary of State for Education and Science. It was the first report since the 1919 Smith report on adult education. At that stage, only 1 per cent, of the total educational budget was being devoted to adult education, and it was suggested that in order to meet the demand that figure should be doubled.
  A report that will be coming out in the near future from the Advisory Council for Adult and Continuing Education will show that not only had that figure fallen to 0·6 per cent, of the total budget by 1975–76 but that for the current year it is likely to be down to 0·4 per cent. So much for the report of the Russell committee. Not only has the figure not been doubled; it has been more than halved. That is perhaps not so surprising when I am also advised that the Russell report highlighted several areas that had been mentioned in the 1919 report as still not having had action taken on them.
  I turn from the general to the specific. In a survey on education in Leicestershire—a county with a very good record in education, including adult education—Dr. Hutchinson took the comparison of the expenses between 1974–75, and in particular part-time tutor salaries and fee targets, and compared them with 1979–80, having set off the percentage of such expenditure that was recovered through fees. He showed that whereas in 1974–75 the balance chargeable to rates in that year was £216,000, in 1979–80 it was £26,000. During that time pay rates for part-time teachers had approximately doubled, and the amount required in 1979–80 to maintain a provision equivalent to that in 1974–75 would have been £720,000. That is a measure of the fall—from £720,000 to £26,000. I stress that this is a good education authority.
  Mr. David Mellor: I was intending to mention Leicestershire in my speech. I am glad that my hon. Friend is raising this issue with the Government, because Leicestershire last winter cut its cash grants in half, as well as its funds for the adult literacy scheme. That came within only a week of the Under-Secretary of State for Education and Science, my hon. Friend the Member for Brent, North (Dr. Boyson), stating that
  It is essential that local authorities do not cut so near the bone that we cannot get the situation going again once we put more flesh on."—[Official Report, 16 January 1980; Vol. 976, c. 1840.]
  Mr. Squire: I am very grateful to my hon. Friend for supporting what I am saying. The problem—I suspect that this will come up during the debate—is that whatever we say in this Chamber, and whatever Front Bench spokesmen say, the responsibility still lies with the local authorities. But I do not believe that it is fair to blame them totally, because ultimately they must have the ammunition, the money and the funding to meet the demands made on them.
  Nobody in this House can be unaware of economic restraints, and it is only proper that we should see education paying its share. But in adult education we are

  25
  dealing in figures which perhaps need even more underlining. Graham Mee, in his book "Organisation for Adult Education", spelt it out very succinctly. He said:
  "Taking £100,000 out of the schools budget might mean delaying a building project or cutting back sharply on new textbooks and equipment—the overall result is a marginally less effective service. Take the same amount from adult education budget and you are likely to cripple or even destroy the service."
  We have had increasing evidence that in different parts of the country the spectre of that destruction is apparent. In Nottinghamshire—another county with by no means a poor record—it is estimated that at least 80 per cent, of the adult education services have recently been cut. These figures have not been dreamt up. This is the reality behind the cold statistics of adult education that I gave a moment ago.
  This self-same crisis is also reflected in residential adult colleges. I know that this subject has been raised before by my hon. Friend the Member for Ealing, North (Mr. Greenway), who has taken such a strong and continuing interest in adult education. At the time of the Russell report there were about 33 colleges, which were described then as being insufficient for the needs of the population. Seven of them have been closed in the last 18 months, and I am advised that up to five more are threatened with closure. They are in a peculiarly difficult position in that they are serving a region while being financially accountable to a local authority. It is perhaps inevitable that, relative lack of political thrust which adult education still carries, it is among the first areas to suffer at moments of restraint.
  Standards of teaching must also be regarded as being under threat. The adult education service relies heavily on part-time staff, even more so now, for since 1973 approximately 2,000—or 25 per cent, of the then full-time staff—have been lost from the service. It is harder to train part-time tutors because of the cutbacks and that must inevitably raise in our minds the fears of a further drop in quality.
  It is difficult for part-time tutors to look more than one year ahead in regard to their employment, and any suggestion to full-time staff in adult education that they have a proper career structure would at the present time be greeted with more than an element of derision.
  This has happened, first, as I said a moment ago, because there is an obvious lack of political muscle in adult education. It does not carry the same punch as primary, secondary, university and further education. Secondly, there is obviously no national system. There appear to be about 104 separate authorities which are in many ways operating along their own lines, with a rather restricted amount of co-operation and no central organising or co-ordinating body to handle them. I am sure that this in turn is reflected in the lack of push.
  The public image of adult education is a very distorted one. Most people have heard of the Open University. They may not know that much of the preparatory work for the Open University is carried out at adult education centres. I do not intend to spend a lot of time now in discussing the Open University beyond reaffirming my belief in its value, because I recognise that it has somewhat stronger political clout than the other areas that I am discussing. [Interruption.] If we think that the Open University does not have political clout, we should think back on some recent publicity. I am concerned to emphasise the areas which have not been covered so strongly.
  Mr. Ted Graham: I am grateful to the hon. Member for mentioning the Open University. Is he aware of this contradiction? If it depends on anything the Open University depends upon the ethic of self-help and self-reliance. One would have thought that the Government which he supports would support that. However, graduates and students of that university are now badly off because of the Government's recent insistence that the Open University should take into account an increase of fees this year from £64 to £98 per course.
  Mr. Squire: I respect the hon. Member, who is one of the Open University graduates. He therefore speaks with a particular knowledge of the subject. I shall try not to follow him down that course, which introduces—albeit unwittingly—elements of a party political nature, which I am strongly endeavouring to avoid.
  When we are considering the public image, the other problem is the feeling that adult education deals with cake decorating, bridge classes, basket weaving, and so on. Of course it goes much wider than that. That image overlooks the critically important message, which is the need to bring back into learning those who have lost the art of learning or who have never had that ability. Many people can be brought back only with such classes. We are doing ourselves and adult education a disservice when we try to make facile comparisons between vocational and non-vocational courses, when the prime purpose should be to educate as many people as possible to the limits of their abilities and to encourage them to reach out in whichever way they can. That is the justification for causes which might otherwise seem frivolous.
  Only those who gain from mandatory education—primary and secondary education—can move smoothly into further education. If we do so little for adult education, we find that the people who suffer the first time round are being penalised twice over, as they are not helped back through the only way open to them.
  The overall system is best summed up in an article by John Wilson, the principal of Gravesham adult education centre. He wrote in The Times Higher Education Supplement of 1978:
  "The 'overall picture' shows quite clearly the disturbing direction of adult education today as dictated by elected authorities: that financial returns are increasingly the criterion of viability rather than that of educational need; that the service is increasingly being regarded as a luxury privilege for the better off and that the poorer sections of the population are dropping out except those who are let in freely or at reduced rate as a charitable gesture towards their illiteracy or other disadvantage; that there is little or no commitment by many local authorities or by the Department of Education and Science to the concept of continuing education for all, irrespective of their ability to pay."
  However, while that is taking place we see a changing world in which there is perhaps an even greater need for adult education than ever before, not just because we may face higher structural unemployment but as a result of the advantages and disadvantages of the microchip revolution and all that it entails. However one sets the scene, potentially more people will came back into the adult education system and seek assistance. It is only in further education that one can find not only much greater flexibility but, by any standards, relatively low cost. Some might argue that the cost is scandalously low.
  I challenge any other form of education to be as flexible as adult education. There are many examples, of which I

  27
  shall quote one. The London borough of Barking was approached when a number of Vietnamese refugees came to this country. One month after their arrival in Barking they were taking English classes. That is an impressive speed. Ironically the cost of the classes had to be met by cutting other classes. The Government could give no assistance. However, it was an example of the flexibility that adult education enjoys.
  Last year it was said that the average cost to the State per student was £22. By any standards, that must be the education bargain of the century. In reality, is it not hopelessly disproportionate when it is set against the many hundreds of pounds which we properly accept should be incurred on behalf of a student in almost any other form of education? Adult education effectively enables a big growth in our national skills to be undertaken voluntarily, at minimal cost to the taxpayer.
  There is a growing question in our society of meeting the education needs of women. I am aware that, whilst I may not be challenged on that statement in the Chamber today, I may receive letters in a week's time from those who peruse Hansard. They may say that I am suggesting that there is a inherent difference between men and women, and that that has to stop. There is a difference.
  Mr. J. F. Pawsey: Hear, hear. Vive la différence.
  Mr. Squire: I was not referring merely to that difference.
  The essential difference in education is that most men have access to training, either through their job or, if they are made redundant, through one of the arms of Government or local government, the MSC, and so on. Most women are still working part time, or they are at home as housewives and mothers. Those options are not open to them. If they seek training, retraining or further education, only adult education can meet their needs.
  It has been estimated that by the late 1980s about 25 per cent, of the population will be retired. There may be a massive area of assembled skills waiting to be tapped. Adult education provides an opportunity for those people to be able to use those skills and spread that knowledge, if they so wish. There is a growing necessity for adult education to pick up the tab of educating those who have failed to be properly educated in primary and secondary education. It is depressing but true that the numbers of people requiring education who are wholly or partially illiterate is rising.
  It is right that I should pay tribute to Government policy in this area in providing funds for local education authorities. I wish that I were not appearing to suggest that it was like a beacon on what was otherwise a fairly gloomy, grey picture.
  There is a need for a form of threshold service to set out what adult education needs. That should begin with a statutory definition for adult and continuing education to replace the much-abused, outmoded phraseology of section 41 of the Education Act 1944. It might be modelled on aspects of the Youth and Community Bill. I was one of the sponsors of that ill-fated Bill. My hon. Friend for Sutton and Cheam (Mr. Macfarlane) may remember the Government tabling a clause calling for a comprehensive
  28
  range of facilities to be made available. That would seem an ideal way to adapt and present a similar Bill and a similar clause for adult education. That is what is needed.
  An improved counselling service from the Department of Education and Science is needed. The Secretary of State, addressing the Advisory Council for Adult and Continuing Education in July 1980, said:
  "If a healthy stock of adult and continuing education is to be preserved, from which future developments can grow, authorities need help and advice on how best to deploy their resources."
  That is exactly the point, and I could not put it any better. Adult education currently receives a mere fraction of the advice and information that is passed out to the other sectors of education from the centre. Moreover, at least three different bodies are working in adult education—the National Institute of Adult and Continuing Education and the others that I have mentioned—and no comprehensive picture is emerging. Each is doing good work. Each in its own right is doing what it can with its resources. There is a need to bring them together, and surely the Department of Education and Science is best placed to do that.
  There is a need to reassess the impact of Her Majesty's Inspectorate, which, while covering adult education, could be excused for at present regarding it very much as a junior element of its overall responsibilities.
  To say that there must be much greater use of community buildings is almost to use a catch-phrase, and perhaps in a sense I should apologise for saying it. However, over the next 10 years, with a big growth in the number of buildings that will not be needed for primary and secondary education, and which could previously be considered only in terms of shared use, premises will become available with potentially exclusive use for adult education. It would be wrong—even criminal—to let slip an opportunity here which may not recur for many years.
  I have mentioned the need for training for both part-time and adequate full-time staff. We must pay attention to a fuller implementation of the ILO convention 140 on paid educational leave, which currently is restricted, by and large, to industrial relations courses. I am sure, as happens in other countries, such as France and Germany, that there is greater scope for us to implement this convention.
  We need to end the isolation of adult education from the rest of the education service. It is no matter that the rest of education may have assisted adult education in the past. Perhaps adult education wished to have its isolation. However, there can be little doubt, as we see the effects in financial terms, that it is regarded as a soft option by politicians locally and nationally, and it pays the appropriate price. It must come back into the education system in toto.
  It is not a question of suggesting that a fixed percentage of the budget should be set aside for adult education. In broad terms, the amount of money needed is the amount necessary to secure what I have just described. By these steps we shall emphasise that education is a life-long process—not one that ends at 16 or 18, or after university—and that we have responsibility so to arrange education in this country that those wishing to may slot in at any time in their lives,
  "as easily in the autumn of their years as it was in the spring."
  In 1953 Sir Winston Churchill, addressing the TUC, said:
  "There is perhaps no branch of our vast educational system which should more attract within its particular sphere the aid and encouragement of the State than adult education. I have no doubt

  29
  myself that a man or woman earnestly seeking in grown up life to be guided to wide and suggestive knowledge in its largest and most uplifted sphere will make the best of all pupils."
  In conclusion, I wish to lean to a slightly more romantic quotation, which is from the final sentence of Andre Maurois's biography of Disraeli, when he was described as
  "a symbol of what can be accomplished in a cold and hostile universe by a long youthfulness of heart".
  If we can combine that "long youthfulness of heart" with the thirst for knowledge that adult education can satisfy we shall bring the richest of legacies to all our people.
  4.4 pm
  Mr. A. J. Beith: The hon. Member for Hornchurch (Mr. Squire) has done the House a double service, first, by introducing for debate the subject of adult education. Many educational subjects cry out for debate, and this is one of them. There are others, such as the creation of a national body for higher education, that should be brought before the House. The hon. Member is right to have presented adult education today.
  The hon. Member's second service, in an excellent contribution, was to give a full account of the needs of adult education. I hope that he will accept it as a compliment when I say that he could have made his speech from the Liberal Bench with, I hope, greater approval than may be forthcoming from other parts of the House. His comments clearly commanded assent on both sides. I hope that those of his hon. Friends who are inclined to be more scornful of adult education will read his speech in Hansard tomorrow—since they have not been here this afternoon to hear it—and recognise its worth.
  We on the Liberal Bench have a particular concern for adult education and for continuing education, because we see it as essential to a society in which people ought to be given the opportunity to make decisions, whether through the democratic processes in the community or, in their places of work, through wider democratic participation. The process of widening the scope of decision-taking clearly requires wider education. We have that concern also because we want to enhance the opportunities available to people, and that cannot be done without widening the education that is available to them.
  We believe in adult and continuing education because it is manifest that people often discover how great is their need of education when they have had some experience of work. People who may well not have got the best from their school years can often get a great deal out of later educational opportunities. As someone who taught in university and in adult education, my experience was that the highest motivation was often to be found in those who had been at work and had recognised what they needed. They would put to shame many of those who came into higher education at the age of 18 simply because that was where the escalator led them and who had no great commitment to the educational course upon which they were embarked.
  We also believe that adult and continuing education is vital because of the nature of change in society—particularly technological change, which calls constantly for new skills in work, for the updating of skills, for changes of job and, therefore, for complete changes of educational need, and which will create a great deal more leisure time and time in retirement.
  30
  One of the problems facing our society is how to distribute that time so that it does not result in one section of the community having no gainful employment and no feeling of serving the community while the other section seems to have the opportunity to work as hard as it likes, with as much overtime as possible. That is a problem that we have yet to solve. Clearly, the nature of technological change is likely to lead to more free time being available to people, and we want to see that time used in adult education. That clearly requires access for adults to the education system.
  A number of points worry me about that access and the current limitations on it. Increases in adult education fees are clearly having a severe impact. I am not one of those who argue that all adult education courses must have rock-bottom fees, and I recognise that it is appropriate that students should make a reasonable contribution to many kinds of courses. However, in the past year or so, with local authority cuts, many authorities, while increasing fees heavily, have ceased to provide remission of fees for those on low incomes or for the handicapped. Clearly the rise in Open University fees, much higher than the current rate of inflation, will place a barrier at the gates of the Open University to many people who would otherwise have benefited from it.
  Mr. Graham: Will the hon. Gentleman take on board that at the last meeting of the council of the Open University it was reported that 2,000 students who were expected to have enrolled and who would have taken courses in 1981 had decided, because of the increase in fees, not to take them? That is the situation this year, and it will get worse.
  Mr. Beith: That is confirmation of the fears of many of us about the barrier erected by the new fees.
  On the question that goes wider than money, I am worried about the rigidity of a system that makes it relatively easy for people of 18 to get higher education, while making it extremely difficult to get it later in life. There have been many occasions when I should have liked to say to an 18-year-old "Do not worry. You do not need to go to university if you do not feel ready for it. Get a job, and later you can take the opportunity, through adult education and greater access to university, to get what you then find you need." I would not, however, say that to an 18-year-old person. It would be dishonest to do so, because his chance of getting what he wants at 18 is so much greater than it would be later in life. The possibility of his re-entering the education system is reduced later in life, when the financial barriers are so much greater. That is clearly something that we have to change.
  Adult education has a notable history in Britain, and many pioneers are associated with it. That has brought about a wide disparity of bodies providing it. Those involved include local authority provision in colleges and local schools and community centres, university extramural departments, and the regular departments of universities which provide part-time courses for adults. There are institutions, such as Birkbeck college, through which many have obtained degrees after part-time study over many years, the Open University, the WEA and many other voluntary agencies, which receive public support. Adult education is provided through the Armed Services, industrial training, special Government programmes, such as those of the Manpower Services Commission and the

  31
  adult literacy programme, the broadcasting authorities, and private institutions such as correspondence colleges and language schools, which play a larger part than is often recognised.
  Because the range of bodies is so wide there is a diverse interlocking of factors, such as grants and finance, which affect students. There are grants to institutions and voluntary bodies. There are grants to students, assistance such as paid leave, day release, fees and the remission of fees, recoupment between one local authority and another, and rate support grant. All these different financial provisions interlock. There is a danger that at a time of general cuts the whole edifice could crumble away. It is a fairly delicately balanced system, in which the items that I have mentioned, such as remission of fees and recoupment between authorities through the rate support grant and grants made to voluntary bodies, are related one to another. If one starts removing or reducing substantially one or another of those items, the whole house of cards can come down.
  Inevitably, in present circumstances we must lay particular emphasis on the role of the central Government and local authorities and their financial responsibilities. But perhaps we should consider the position of local authorities. The impact of cuts is clearly heavy in the schools. The report of the findings of the inspectors of education, published last week, before the latest round of cuts, is severely critical of what is happening in schools because of the cuts.
  The reaction of local authorities will necessarily be to concentrate efforts further in schools, for three reasons. First, their statutory obligations towards the schools are more precisely set out, are more familiar, and are more often repeated than the limited statutory obligations that they have towards adult education in the 1944 Education Act, which cannot be ignored—as I hope those few local authorities that attempted to wipe out adult education altogether have now found. There is no doubt that the nature to the obligations in the schools is such that in present circumstances local authorities will concentrate on them.
  Secondly, there is greater public pressure towards maintaining standards in the schools than in higher education. Parental pressure, rightly, is concentrated on achieving higher standards in schools.
  Thirdly, it is clearly easier to make rapid cuts in adult education than it is in the school system. In many cases courses are organised on a year-to-year basis, the tutors are often part-time, as has been pointed out, and a local authority trying to cut its budget finds it all too easy to drop a whole range of adult courses rather than to make further cuts in the programme, which it is anxious not to do.
  Mr. Mellor: I agree with the point made by the hon. Member for Berwick-upon-Tweed (Mr. Beith), but I wonder why he accepts so readily the argument that standards in schools depend and rise according to the amount of money spent. He has quoted one inspectorate report. I shall quote another on the ILEA which, if anything, proves the contrary.
  Mr. Beith: I do not think that I shall enter into the argument about what has happened within the ILEA, except to say that although it is possible to waste money it is also possible to face, as the Inner London Education
  32
  Authority does, very severe problems in some of its inner city areas. There is no doubt from both the report of the inspectors of education and the comments of the chief inspector of education, when she appeared before a Select Committee, that the impact of present cuts on authorities that have no record of being profligate or of over-spending is to reduce educational standards. The Government can no longer deny that that is the effect. I am not seeking to enter a debate upon that, except to say that it can be demonstrated quite objectively that in response to that situation most local authorities will concentrate their efforts on holding together their commitment to the schools and that adult education will therefore tend to suffer.
  Mr. Phillip Whitehead: As the hon. Member for Berwick-upon-Tweed (Mr. Beith) has referred to the inspectorate's report published on Friday, no doubt he will go on to say that it was not only critical of the standards in schools—with the possible effects that he has mentioned—but that it said specifically that adult education remained the area most seriously affected by expenditure cuts. The criticism is there already.
  Mr. Beith: I intended to mention that reference, although I, like many hon. Members, have seen only the newspaper reports and extracts of some of these comments. They are clearly comments of inspectors deeply worried about what will happen. The comment that is quoted in the press is that positive changes of policy will be required if the tendencies that they see are not to become very serious. They call for positive commitments. Adult education is obviously one of the areas in which those positive commitments must be made.
  The Government have rested much of their case for education cuts on two grounds. The first is falling rolls. I remain of the view that falling rolls, in so far as they enable some savings in expenditure, present an opportunity, which we must not miss, for education standards to be improved. That opportunity will not be presented again. Education Ministers must resist the desire of other Departments to prosper at the expense of falling rolls in education. So much needs doing in education, which they should know.
  The second part of the Government's case for education cuts concerns the economic needs of the nation. The adult education case cries out for investment on behalf of the economic needs of the nation. The country cannot prosper unless we develop an adaptability to changes of work and skills, and an ability to come to terms with change. None of those can be secured unless we have an adult education system that is readily accessible to people and from which they can gain. At the moment, we do not have that, although we have much of the basis. It requires a commitment on the part of the Government if we are to have it.
  4.8 pm
  Mr. William Shelton: So far I am in general agreement with both the hon. Member for Berwick-upon-Tweed (Mr. Beith) and my hon. Friend the Member for Hornchurch (Mr. Squire). I was interested in a phrase that the hon. Member for Berwick-upon-Tweed used, namely, that education gives widening decisions. I entirely agree with that. Choice must depend upon knowledge. I raise an extraneous point because it is for that

  33
  reason that I have always supported the publication of examination results, because unless parents know as much as possible about a school there must be a limitation upon the choice that they can make. There must otherwise be a lottery. I agree with some other remarks that the hon. Member made, to which I shall return.
  First, I congratulate my hon. Friend the Member for Hornchurch on having raised this subject. I was taken aback by some of the figures that he quoted. I noted that at the time of the Russell report about 1 per cent, of the total education budget was spent on adult education. In 1975–76 it was about 0·6 per cent, and now it is probably less, about 0·4 per cent. Over the last 30 years the percentage of the gross national product spent on education in total has doubled, and the amount spent in real terms has probably doubled. The drop in percentage figures in real terms is therefore probably not as dramatic as these percentages might indicate. Nevertheless, it is dramatic.
  I know that my hon. Friend the Under-Secretary of State and the Government are under cost pressure. We know from the recent report from Her Majesty's Inspectorate that education is under cost pressure. But, as in all these matters in politics—indeed, in businesses and in life—it is a matter of striking the right balance. I am sure that my hon. Friend the Member for Hornchurch is asking for the needle to go not from 0 to 10, but, more probably, from 4 to 5 or from 5 to 6 or whatever it might be. I think that the balance should be looked at. I know about the problems of buying enough books for schools. I think that if we had to choose between books and adult education, we should should choose books. However, there are other ways of slightly moving the needle.
  I appreciated the suggestion put forward by my hon. Friend the Member for Hornchurch that there should be a statutory definition of adult education. It never occurred to me before that there was not one. But, reflecting on it, there is no statutory definition. This leads to a degree of ambiguity among people when discussing adult education.
  I think that adult education can be separated into three categories: first, leisure; secondly, literacy and numeracy; and, thirdly, what might be described as work-orientated adult education.
  On the leisure side I must declare a certain family interest. My wife attends a sewing class. I asked how much the course cost her. It is costing her much less than I suspect it costs the country. I would find it difficult, in this time of world recession, to complain bitterly that the country is not subsidising my wife's sewing class to a greater extent. I know that the wives of other hon. Members are similarly being subsidised. After reading the most recent HMI report on education I would find it difficult to make an impassioned plea that the leisure side of adult education should be further subsidised by the taxpayer.
  Mr. Clive Soley: If people are already paying via rates and taxes and we put up the direct price, we cut out the poorer sections of the community who make use of adult education and they end up subsidising the richer people who continue to attend these classes. Is not that the problem?
  Mr. Shelton: Yes, I accept that point. However, most councils make special help available for old-age pensioners and the less well-off members of the
  34
  community. That is only right. To some extent, that meets the hon. Gentleman's point. In London old-age pensioners pay a lower fee than others for adult education classes.
  Mr. Gwilym Roberts: Does the hon. Gentleman accept that his wife's sewing class is providing a useful leisure activity also for old-age pensioners and other groups? As class numbers fall, classes will be abandoned. Therefore, everyone's opportunity to attend sewing classes will be removed.
  Mr. Shelton: Yes. I am not sure how productive my wife is. I think that she has made a skirt in the last year. However, she enjoys attending the class, where she meets and makes friends. I do not wish to poke fun at or to cast aspersions on the leisure aspects of adult education. I know that they give a great deal of happiness to many people.
  This is a matter of balance. I do not suggest that fees should be increased. However, I should find it difficult to make a strong case for greater subsidies or lower fees for that aspect which I have arbitrarily called the leisure side of adult education.
  Mr. Harry Greenway: My hon. Friend implied that his wife's productivity was very low. Of course, he is the judge of that. However, does he agree that for some people the production of a skirt in two years would be a superb achievement? Does he agree that such people gain enormously from adult education?
  Mr. Shelton: I entirely agree with my hon. Friend. I referred to my wife. I hope that she does not read at least this issue of Hansard.
  Mr. Greenway: I do not want to get my hon. Friend into trouble.
  Mr. Shelton: I have no wish to denigrate what many people are doing on the leisure side. Because of the economic pressures which are resting so heavily upon our education service—I have read only newspaper comments on the HMI report—I make a distinction in my mind between what I have arbitrarily called leisure activities and literacy and numeracy and the more work-orientated side of adult education.
  Mr. Derek Foster: The hon. Gentleman's argument, taken by itself, is valid, but does he not consider that his wife's sewing class or someone else's macrame or embroidery class is part of the whole programme? Within the location, whether it be a skillcentre or an adult education centre, there is an element of cross-subsidisation. If we remove those elements of the programme which the hon. Gentleman is suggesting may be of the least value, the whole infrastructure of adult education may be in danger of crumbling. Is that not the argument?
  Mr. Shelton: I understand what the hon. Gentleman is saying. I confess that I do not know the answer. I do not know to what extent the different courses or classes stand or fall by themselves in terms of cost and income or to what extent there is cross-subsidisation. Perhaps the Minister will mention this aspect when he replies to the debate. I accept that there must be some cross-subsidisation, but it does not move me from my principal argument that there is a distinction between these three types of enterprise in adult education.
  Literacy is a subject about which I feel most passionately. I am sure that all hon. Members who have

  35
  had the opportunity of talking to someone who is illiterate and innumerate will agree with me on this matter. Some time ago I visited some adult education classes. I chatted to a man who was studying reading and writing because he was illiterate and innumerate. I asked him "Why are you doing this? Why do you wish to learn to read and write?" I suppose he was in his thirties. He replied "I want to get a job with my cousin who has a cafe. I want to work in the cafe. My cousin told me that if I could read and write, I could work in the cafe." I said "If he owns the caf·, why cannot he employ you, even though you cannot read and write?" He looked at me and said "I cannot read the menu and I cannot add up the bill".
  It came home to me then that a person who is illiterate and innumerate suffers from the kind of handicap from which one might suffer if one were blind, deaf or dumb. He lives in a different world from the world of those of us who have all our senses. Literacy and numeracy are almost a fifth—or perhaps sixth—sense. It is a crime to allow any child who has the mental ability to read or write to leave school illiterate or innumerate. I feel very strongly about this. Therefore, I abhor any reduction in money spent on teaching people to read and write who wish and have the capability to learn to do so.
  It is more than what we usually mean by deprivation; it is almost a deprivation of one of the senses. A distinction must be made between funds that are allocated for what I call leisure activities and what I call the literacy and numeracy activities of adult education. I am sure that there is general agreement in that regard. If there were a statutory definition of adult education, it might become clear that there should be levels of priority. Perhaps this is what I am asking for.
  The third area is what I shall call work-orientated leisure, and here I agree with the hon. Member for Berwick-upon-Tweed. It has become apparent during the last 100 or 200 years since the beginning of the Industrial Revolution that those who say that new technology destroys jobs are profoundly wrong, in the large sense. Yet that is what people say. The ostlers who were put out of business in the last century by the invention and development of the steam engine were in a very small minority compared with those who found jobs in building the new railroads, building the new steam engines, digging the coal for them and running the system. Technology creates far more jobs than it destroys.
  New technology will not necessarily create more leisure. There may be more choice of leisure if, during the remainder of this decade and the first part of the next, the standard of living rises to such an extent—I hope that it does—that people can choose voluntarily to forgo a certain increased standard of living because they have sufficient already and spend more on leisure. In that case, of course, there will be more leisure. However, I do not believe that people will be forced to do that because of lack of job opportunities. One has only to look at the unfulfilled demand that already exists in the world. At Question Time, aid to India was mentioned, and nearer home is the unfulfilled demand in this country. It is highly improbable that in the next 100 years we shall have fulfilled all demand without technology and that people will be obliged to accept more leisure than they require. If that does happen, it will be because of bad organisation, or a fault in the system.
  36
  I see an increasing galaxy of jobs springing from the new technology. It started only in the last decade. Look how far it has taken us already. By the end of the century and the first quarter of the next century there will be jobs as undreamt of today as the job of a television technician was 50 years ago. I am profoundly optimistic about the future of jobs in this country springing from the new technology.
  I recently read a report about what is happening in the United States. It said that the average working man there has three different trades in his lifetime. I do not know what the situation is here, but I should be very surprised if the average Englishman had more than 1·2, 1·3 or 1·4 different trades in his lifetime. In the States it is already three, and we shall have to move in that direction. This is the burden of what I am saying.
  On the eastern seaboard of the United States—a traditionally declining area of American manufacturing industry, although States such as Maine and New Hampshire are attracting as much new technology as they can—between 20 per cent, and 30 per cent, of the companies go out of business either through inefficiency or because their products have been made redundant in the lifetimes of their working force. More jobs are recreated in different spheres of activity by the products that made the earlier products redundant.
  If we are moving in that direction—and whether we like it or not we must do so, because we are a country of high labour costs—it is inevitable that over the next 20, 30 or 40 years we shall lose a great many manual jobs. People who have no skills will, unhappily, find themselves with involuntary leisure thrust upon them. However, the gate will be open to the people with skills.
  That brings me back to work-orientated types of adult education. I am not talking about skill training. Here I must congratulate the Government on the funds and organisations that they have put into retraining facilities. If there is one word that will open the door to the new technological future, it must be retraining. People will lose their jobs two or three times in a working lifetime in this country, as in the United States, and they will need and want to be retrained for the new jobs that develop. Any Government who do not take action in this regard will fail in their duty towards their citizens who, through no fault of their own, will find themselves in redundant manual jobs or working in companies whose products have been made obsolete by the new products that are coming along. Retraining is, therefore, vital. More is being done now than previously, but still more needs to be done.
  I do not suggest that adult education should be a form of retraining for the technological age, but a lack of education is a barrier to retraining in skills, at least to some extent. I am sure that it is more difficult for a person who lacks education to be offered and to accept retraining than it is for someone who has reached a reasonable and acceptable standard of education. Many of our citizens are tethered in areas of high unemployment by the fact that they live in council houses and are therefore sacrificial victims of the council house regulations. People who have not achieved a certain level of education, sometimes through no fault of their own, are equally hindered in moving towards training in new jobs and new skills. As much as anything else, it is almost an attitude of mind. It is a matter of wider choice and knowledge.
  Mr. Sydney Bidwell: Can British private enterprise be trusted to engage in the volume of new training that will be necessary according to the vision that the hon. Gentleman has sketched?
  Mr. Shelton: I wish that I could answer that question with confidence. I honestly do not know. I am not sure to what extent what we are talking about, and what I have been saying—which is common and accepted knowledge to hon. Members present—is generally recognised. If one is running a business, and especially if one is experiencing hard times and it is not a very big business, it is very difficult to lift one's eyes and look to the future. One finds it much easier to get on with raising enough money for the payroll at the end of the month. I hope that British business will rise to the challenge, and I hope, too, that any British Government will encourage it, because this matter is so important.
  Therefore, on the three areas of adult education on which I have touched—leisure, literacy and work training—I draw a distinction between them. Of immediate and profound concern is training for literacy and numeracy. Also of profound importance for the future of this country is the need to look to adult education, which will enable people to grasp the opportunities for retraining when they are presented to them.
  4.41 pm
  Mr. Gwilym Roberts: I congratulate the hon. Member for Hornchurch (Mr. Squire) on bringing this extremely important matter before the House. As he said, until the late 1970s there was continual growth in adult education. That growth in supply was in response to a growing demand for it. As I see it, that was perhaps a reflection of the increasing complexity of our lives.
  The hon. Gentleman will forgive me if some of my later remarks seem slightly political. I accept that the problems did not start with the present Government. In the latter years of the Labour Government problems were already cropping up in adult education. Course fees were already increasing to what I would regard as unacceptable levels. Numbers on some courses were already falling. One or two courses had been eliminated because of falling numbers.
  However, whatever problems existed then have been dwarfed by the vicious attacks of the present Government on the whole education sector. There is little doubt that when the whole of education is being besieged, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) put it so eloquently, it is always held that the mandatory sector must come first, and the non-mandatory sector tends to suffer.
  The present attack on adult education is particularly unfortunate, because, for various reasons, there is a need for a vast increase in this area. There is increasing complexity in both work and leisure. In spite of what the hon. Member for Streatham (Mr. Shelton) said about technology, there is no doubt that in the foreseeable future—all hon. Members must agree about this if they are honest—the average number of hours of work per individual will fall. Thus, there must be increased leisure. One of the great problems will be to make better use of that leisure. We have problems with early retirements and training for retirement, all these things call for adult education.
  In addition to that, there is the need to retrain people several times during their lifetime. It has been said that
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  adult education today is a life process and that that is becoming truer as the years pass. For all these reasons, it is particularly unfortunate that we face a devastating attack on the structure of adult education.
  I should like to quote one or two figures. The Government's expenditure White Paper of March 1980 included a planned reduction of £15 million in expenditure on adult education. That is more than 30 per cent, of the total expenditure on it. In addition, we have had the rate support grant settlement and, again, further impacts on the educational sector. Even on the question of school transport there is talk of clawing back some of the money in some way. All these things must have their impact on the non-mandatory sector.
  Mr. Mellor: I am sad that the hon. Gentleman is bringing party politics into this matter. Did he vote against his Government when, between 1976–77 and 1977–78, they cut education spending by £351 million in one year? That cut was larger than anything that the present Government have done in one year, and it had a considerable effect on adult education, as on everything else. If he did not vote so, should he not confine himself to making the point that some of us are making—namely, that too much is being done in adult education—without being just a little hypocritical about the Government?
  Mr. Roberts: I do not think that it is a matter of hypocrisy at all. I was critical of my Government during that period. On many occasions, although I am not sure about this issue, I voted against my Government on various issues.
  We must be realistic about this matter. At present, for doctrinaire reasons, we have from the present Government a global attack on public expenditure and a devastating attack on adult education in particular. The situation is such that a number of education authorities are cutting out adult education completely or are pruning it down to a very small rump. There are communities, particularly rural ones, that have been deprived of any possibility of adult education. About 85 per cent, of adult education is still in the hands of LEAs, and these are subject to the impact of the Government's expenditure policies.
  As many hon. Members know, this attack is leading to considerable difficulties for those employed in adult education. Large numbers of part-time staff, and quite a number of full-time staff too, have already been made redundant. I am told that Leicestershire has declared redundant all its adult education staff and that a number of other local authorities, predominantly Tory-controlled have wiped out their adult education provision.
  It will be difficult for adult education to recover from the damage that the Government's policies are doing to its whole structure. Some of the fundamentals of adult education are in danger of being destroyed. There is need for a change of heart by the Government. Ministers must fight for the education corner, and particularly the post-16 corner of education. They have to face the budget policies being imposed on them.
  We need also to look beyond the present difficulties. I agree entirely with the hon. Member for Hornchurch that the greatest need is to begin with some statutory definition of adult education. Section 41(b) of the 1944 Act is pretty airy-fairy and means very little. I suggest the type of definition that is supported by those who have expertise in this sphere. It is suggested that the Act should be amended

  39
  in such a way that it would be the duty of every local education authority to secure out of public funds provision for its area of adequate facilities for further adult and continuing education, full-time and part-time, for people over compulsory school age, including provision of facilities for vocational, general, cultural, recreational, social and political education for all those who are willing and able to profit by such education, and to meet the needs of individuals and the community.
  There is a need for a much wider statement of the role of adult education. Everything depends, in the end, on the will not only of the present Government, but of their successors. This means the will to ensure that adult education plays a vital role in the community. I ask the Minister to stand firm in the present difficulties and to examine the need to define adult education in the manner that I have proposed. There must be the will by the Government and their successors to ensure that adult education has a worthwhile share of national expenditure. There has been reference to the use of buildings and resources. All these matters come into the reckoning. The great need is the will of the Government and of local education authorities to provide what is necessary.
  4.53 pm
  Mr. Robert Rhodes James: I am glad that the hon. Member for Cannock (Mr. Roberts) emphasised the fact that the problems we are debating did not begin in May 1979. I take the point further. The dilemma in which we find ourselves—it is not confined to adult education—lies in the fact that a succession of Governments since 1944 have failed to understand, or begun to think, what is the strategy of the educational system as a whole.
  Although welcoming, in many respects, the debate proposed by my hon. Friend the Member for Hornchurch (Mr. Squire), I must say that in some respects I regret it. One of the deep-seated problems in education is that competition for priorities has reached the point where people become obsessed by one area or another. I am my party's liaison officer for higher and further education. I endeavoured to make clear, in a recent speech at Coventry to the National Union of Students, that I look at further and higher education in the context of the system as a whole and not as a specialised and privileged part of the system.
  I welcome the debate in another sense. I hope that hon. Members will try to take the subject wider than merely that of adult education. We have 3 million adult illiterates in this country, which is a fairly sombre commentary on the system as a whole. I recognise that not all of them have been through the British education system. It is, neverthless, an alarming and disturbing statistic. The figure for innumerates is, of course, unknown. From my experience, I suspect that it is very large.
  We are faced in adult education with the remedial task of trying to rectify the inadequacies of certain schools and certain areas. One danger, of which all hon. Members are aware, is to make too wild generalisations about the education system as a whole. We know certain schools in our constituencies that are particularly good and those that are inadequate. In the country as a whole the problem becomes magnified.
  We must accept the increasingly important remedial role for adult education. It is, however, only a short-term
  40
  measure. It is not the solution to the real problem. The real problem lies in the uneven quality of standards within the State education system. Concern about cuts in education, however inescapable and necessary, is not confined to one side of the House.
  My hon. Friend the Member for Hornchurch referred to retraining and the Government's important contribution towards that aim. Another aspect of adult education lies much more in the area of voluntary retraining. This would involve people who, recognising their own inadequacies or the future of their particular speciality and industry, would wish voluntarily to take up a new skill before a situation developed that could lead to their becoming redundant.
  Voluntary retraining would also include increased specialisation for those who wished to become more specialised in the work in which they were already engaged. Those are exactly the people whom the Government and the State should be assisting as much as possible. I recognise that this proposal goes beyond existing retraining schemes. I believe, however, that it gives adult education particular significance at a time of recession and profound social problems.
  A category which, slightly to my surprise, has not been mentioned is disabled people. It tends often to be thought that disabled people are disabled from birth until death. The vast majority of disabled people are disabled during their lifetime or during their working life either through illness or accident. It is in this area, during the International Year of Disabled People, that adult education becomes especially important both as remedial education and for retraining.
  With certain glittering exceptions, higher education and further education appear relatively low in local education authorities' priorities. Far fewer people are involved. They are less politically popular. The money, it is often felt, could be used in other areas. Cambridge is a university city. It also possesses, however, a college of further education and the Cambridge technical college. I spend more time and effort on those two than on the university, which does not face problems of similar magnitude. My hon. Friend the Under-Secretary of State knows these problems only too well.
  It is absurd that there should be such a difference between the amount of grant given to a student at one institution compared with another, the degree of financial support, the overlapping that occurs increasingly between polytechnics and universities and the increasing confusion about the roles of the three separate parts of the further education system.
  Like the hon. Member for Berwick-upon-Tweed (Mr. Beith), I am one of the few in this place who has served in higher education. After the sad death of John Mackintosh, I think that I am the only hon. Member entitled to call himself "professor", although I do not do so. I wish to emphasise strongly what the hon. Gentleman said about mature students. I have had responsibility for a number of them, but I shall not refer to individuals. If we regard mature students as a whole, their motivation is intense and the number who fail to complete a course is virtually nil. The standard that they reach is very high. For teachers, they make a refreshing contrast to certain other categories of student who take the whole thing for granted and regard it as a sort of birthright. We should encourage the mature student as much as is humanly possible.

  41
  I agree with what has been said about the Open University. I was honoured to be its guest at the recent degree ceremony. I support the Government's initiative for the Open tech.
  In the debate there has been no reference to Northern Ireland. If any area in Britain is in profound need of further adult education and mature education and retraining, it is Northern Ireland. It often surprises me that when the House debates subjects of this sort Northern Ireland Members do not attend and Northern Ireland is not mentioned. It seems as if Northern Ireland has only its problems and that we have only ours. Northern Ireland higher education is linked closely with higher education in the rest of the United Kingdom, and any differences are matters only of degree.
  I am worried increasingly by the difference in opportunity available to individuals who happen to live in different counties when it comes to the award of discretionary grants. There are certain counties—I am sorry to say that Cambridgeshire is one of them—where it is becoming almost impossible to get a discretionary grant.
  There is a serious anomaly about law degrees. One can obtain a grant for three years but not for the fourth year. That seems absurd. If we are investing public money in a course we are not investing in only three-quarters of it.
  As the House knows, I am strongly opposed to any proposal to replace first-degree grants with loans. However, there is an area in which supplemental loans could be introduced for certain categories of adult education and subsequent courses. In my experience, the amount of money involved in many instances would not be very great. There would be no considerable problem about repayment, Such a scheme would remove part of the dilemma but the principal part would remain, namely, discretionary grants.
  A subject that is close to my heart is the need to bring industry business and commerce much closer to higher education. In Cambridge I am doing all that I can to initiate serious discussions and links, which have been developing and which will develop further. It is an initiative that could be a model for a much wider involvement of industry and commerce in higher education.
  At present industry regards the education system merely as a provider of finished products which it can take and look after. It should be much more concerned with and involved in the system instead of merely complaining when the results are not entirely to its satisfaction.
  I warmly commend the motion.
  5.4 pm
  Mr. Derek Foster: I am glad to take up the remarks of the hon. Member for Cambridge (Mr. Rhodes James). I, too, wish to congratulate the hon. Member for Hornchurch (Mr. Squire) on introducing this topic and on his great understanding of the problems of adult education. My hon. Friends and, for all I know, many Conservative members, are interested in the topic because of the need to spread education opportunity very much further.
  It seems that if there is to be a great leap forward in the spread of education opportunity, it is likely to come in the education of 16 to 19-year-olds. That is one reason why I have of late been pressing the Under-Secretary of State to take a much greater interest in the youth opportunities programme. It seems that his Department is seriously
  42
  neglecting the great opportunities that are there for it to play a full part in developing curricula. If the great leap forward is not to be in the 16 to 19 group, it will be in adult and continuing education.
  It has been said by many hon. Members that there are many who do not discover their abilities and the possibilities for themselves until later in life when they have begun to work or when they assume the responsibilities of a family. Sometimes at that stage a career suddenly begins to open up to them. The tragedy for so many is that when that occurs the doors to further adult and higher education are effectively closed. We must realise that the concept of higher education beginning, inevitably, at 18 is outdated. We should consider a much more varied pattern of entry into further and higher education. We should make it much easier to pass through the doors of adult and further education at whatever age is most convenient and useful to the individual.
  It is important that people have the correct motivation to enable them to benefit greatly from their educational experience. There are many who would dearly love to spend just one year removed from their place of work—provided that they did not lose any income—so that they would be enabled to pursue their own interests or to further their careers. When they returned to their jobs they would be able to undertake them much more efficiently and to much greater benefit to themselves, their families and the community.
  I have been delighted to hear many of the comments that have been made about adult education. However, it strikes me forcefully that we cannot mouth beautiful sentiments about adult education and at the same time vote for a severe reduction in the resources to be made available for it. It is impossible to leave party politics out of this issue just as it is impossible to do so when discussing other issues where resources are necessary.
  Before I entered this place I had a measure of responsibility for administering adult education. I learnt only too painfully that perhaps nowhere in the country did an education authority devote more than 1 per cent. of its resources to adult education. In many instances it was considerably less. Primary and secondary education and further education had a much greater share of the resources, and much greater political clout.
  When it comes to deciding upon an education budget, especially in an atmosphere of retrenchment, there is a good deal of hassle. That applies to local education authorities as well as to the Government. At such times the areas that are most vulnerable suffer the most. It is a fact that most adult education courses are staffed by part-time workers, and for that reason alone they are much more vulnerable. It is easier to make part-time staff redundant than it is to make full-time staff redundant.
  Adult education takes place in community centres, school complexes on colleges of further education. I am in favour of a more intensive use of school buildings. It makes sense when community buildings are restricted. However, it is expensive to use school buildings more intensively. Does anybody think of the extra caretaking costs or the extra cleaning costs, the extra heating and lighting costs, or the extra staffing costs? About five or six years ago I discovered that in my area it was costing about £150,000 a year just to use our school buildings more intensively. Let us not imagine that school buildings can be used more extensively without substantial extra cost,

  43
  which has to be borne by a local education authority. Let us not imagine that we can achieve an extended provision on the cheap.
  I agree that we must consider our priorities in adult education. Who can deny that basic adult education—by which I mean adult literacy and numeracy—must be given the greatest priority? In the past few years I have been delighted to see the greater resources being devoted to literacy and numeracy. I am particularly pleased that volunteers have been used to good effect. I am not the type of Socialist who believes that there can be a spread of public services only by full-time staffing. There is a place for volunteers in the extension of such services. However, let it not be thought that volunteers can be used without cost.
  Volunteers have to be properly supervised and trained and brought within a solid framework. Let it not be thought that it is possible to extend adult literacy and numeracy teaching much further entirely by the use of volunteers. They have a role, but a cost is involved in the use of properly trained staff to train and supervise volunteers.
  The education of the disadvantaged, particularly of the disabled, must be given greater priority. Do we ever consider the extra cost of providing access to education buildings? When we surveyed the access to buildings for the disabled in my authority's area I was appalled at how much it would cost to enable equipment and premises to be used by the disabled in schools and colleges of further education. Let us not fool ourselves that we can make progress on the cheap.
  I turn to the question of paid educational leave. This is the only way to expand adult education in the foreseeable future. There is a proliferation of agencies, even though local education authorities account for 85 per cent. of provision. We need a strong underlying structure, involving an advisory service and a means of access and entry for large numbers of people. Without those three improvements we cannot make the necessary leap forward in adult education.
  When somebody considers embarking upon a course he encounters a proliferation of agencies and an even greater proliferation of courses. People who would not be seen dead in an education institution find the problems formidable. People in the priority groups must be encouraged to gain access to the system.
  There is a need for an advisory service such as that provided by some forward-looking authorities, often in cooperation with the Open University, in some parts of the country. Until people are guided through the multitude of agencies and courses and given good sound advice about the best course for them, we shall not make much progress. Until there is easier entry, and until we can ensure that people are not prevented from taking a course that is just right for them because they do not have the requisite number of A-levels or other qualifications, we shall create hurdles that are insuperable for many people.
  We should make it possible for people to go from agency to agency and from one module of a course to another, gathering credits, in a similar way to that used by the Open University, but within a wider framework. People feel that a qualification at the end of a course is well worth working for. It enables them to take the next step and to progress further in the course of instruction. Some
  44
  such system of accreditation should be considered. It will be difficult, but it is necessary if we are to create a firm structure.
  I turn to the question of the community college or school. This idea has fallen out of favour lately. There is a strong feeling that the comprehensive school, college of further education, or both, can provide an important educational resource for the whole community. It is possible to give people of all ages within that school or college the whole range of educational, leisure and recreational experience. That is particularly important for working-class communities when the cost of public transport is important.
  In many areas the cost of public transport is becoming prohibitive. Leisure activities are often concentrated in town centres a long way from centres of population. It is possible to devise a system that is properly supervised. It is important to have proper supervision, otherwise costly equipment and premises will not be available. Without responsible supervision it is ludicrous to expect that the doors of schools will be thrown open and that the population will be invited in to take part in leisure or educational activities. With proper supervision and staffing, and by ensuring that caretaking, cleaning and so on are taken care of, we can use our valuable educational resources in schools and colleges much more intensively and productively for the benefit of the whole community—but I repeat the warning that it will cost money.
  I am delighted to have been able to participate in the debate. I repeat that we need more resources. I hope that the Minister will take my lecture to heart. We cannot make progress without an initiative from his Department. I do not mean only that it should issue guidance fo local education authorities, which are working under great difficulties. Progress cannot be made without some extra resources.
  5.20 pm
  Mr. David Mellor: The debate is bringing forth a chorus of praise for my hon. Friend the Member for Hornchurch (Mr. Squire). Had it not been for his good fortune in being drawn first in the ballot and his good sense in choosing this subject, we should not have had the opportunity to debate adult education. I welcome the way in which my hon. Friend introduced the motion. Before coming to the House my hon. Friend was leader of the London borough of Sutton council and played his part in administering an education service. He speaks with authority on the topic, which involves the powers of Government and local authorities. The House is fortunate that in the recent intake there was someone as experienced in the ways of local government as he is.
  Adult education is a Cinderella subject. That is surprising. With the numbers involved in adult education, one would think that it should have more political clout. My constituency lies within the Inner London Education Authority area. In 1979, in the area there were 347,500 children of school age—that is, from 5 years to 16 years—and 254,000 adults involved in adult education. The numbers are similar. There are not many hon. Members in the Chamber for this debate. For a debate on secondary education, two or three times as many would attend.
  The lack of interest is one reason why adult education is being unnecessarily singled out for cuts. That fact

  45
  emerges crisply from the debate. Coming from Wandsworth, I am well aware of the difficulties of local authorities in making ends meet. The Opposition could not resist the temptation to blame the situation on Government cuts. We are in the House to be realistic. Until our economy revives, we must work within the constraints of falling expenditure. Under the previous Government there was a dramatic fall in expenditure of £351 million between 1976–77 and 1977–78. Under this Government there has been a steady fall and it is projected to continue through to 1984. Underlying the remarks of the hon. Member for Bishop Auckland (Mr. Foster) appeared to be the assumption that the situation could be changed by a change of Government. That is nonsense. Any Government will be bound by the constraints.
  The message of the debate is that if the will exists there is room even within a falling budget for better provision to be made for adult education. Where increasing aid is beneficial it can be found even from a declining budget. The Government have decided to increase the money available to the adult literacy unit by £200,000 in real terms. That is a sign of the Government's continuing interest in that crucial problem.
  It is sad that the Russell report of 1973 is yet another report from a Royal Commission set up by Government that lies mouldering on the shelves for ever and a day. It recommended that 2 per cent. of local authority educational expenditure should be on adult education. I know of only one local authority where that is so. Most started the present round of savings on the assumption of spending only 1 per cent. on adult education.
  People should pay realistic charges for the classes that they attend. Much as I admire the hon. Member for Edmonton (Mr. Graham), I do not agree that after several years without any increase the increase in Open University fees is discreditable. It is perfectly reasonable. However, there is a limit. Some local authorities have gone far too far in increasing the charges that they seek to levy. I believe that Cambridgeshire has even required some of its courses to make a 25 per cent. profit. That is utterly wrong. The latest statistics indicate that 20 per cent. of local authorities—and the number is growing—are seeking to make the costs of all their adult education classes balance. On the face of it, that is attractive, but it fails to recognise that many of those who most need adult education are least able to pay for it.
  I do not understand why balancing costs in that respect is so popular. To their shame, three local authorities suspended adult education in 1979–80, but they would not have dreamt of cutting public libraries. What is the difference between going to a public library to improve one's education and seeking to enrol in a course for the same purpose? A reasonable contribution to the price of the course should be made by those who participate in adult education, but the cost should not reflect the belief that the only basis on which the course can be run is if it is self-financing adult education courses should have an element of community financing, in the same way as libraries. I am sad that that obvious distinction has passed unrecognised by many otherwise sensible local authorities.
  Another reason why adult education has been a popular area for local authority saving is that there appears to be no statutory obligation to provide it. The Education Act 1944, because of the length of time that it has lasted, is held in high esteem. However, the closer that a lawyer
  46
  looks at what it says about adult education, the more confused he is when seeking to see what obligation it places on the local authority.
  Section 1 of the Act provides that the Minister has a
  "duty … to promote the education of the people of England and Wales … and to secure the effective execution by local authorities, under his control and direction, of the national policy for providing a varied and comprehensive educational service in every area"
  That is further defined in other sections. Section 7 describes "three progressive stages" of primary, secondary and further education. It also imposes a general duty, this time on local education authorities, by providing that
  "it shall be the duty of the local education authority for every area, so far as their powers extend, to contribute towards the spiritual, moral, mental and physical development of the community by securing that efficient education throughout those stages shall be available to meet the needs of the population of their area."
  The use of the words "the community" and
  "the population of their area"
  might lead one to suppose that the draftsmen of that Act had in mind education in the broadest sense. But that is not how it appears to have been understood. It is a source of sadness to me that there has been no definitive court case to determine precisely what the duties of a local authority are, particularly having regard to some of the actions that have been taken recently.
  Mr. Whitehead: I am following the hon. Gentleman's argument with great attention. I think that he is taking the interpretation of section 7 contained in the Russell report. As a lawyer, would he say that Humberside, for example, was in breach of the Act?
  Mr. Mellor: The hon. Gentleman is quite right to say that I have used as my starting point paragraphs 156 to 158 of the Russell report. Having cast my eye over that—I shall not weary the House with the details—I had intended to go on to consider section 41 of the Act, and how far section 42(2) detracts from the provisions of section 41. I believe that it is an open question, but I cannot imagine that it was ever the intention that it should be left as open as it is. I believe that it is genuinely what the sports commentators would call a "fifty-fifty ball".
  There was a good deal of sabre-rattling last year about this, and one would have liked to see some attempt to have the matter properly examined. I agree, however, with paragraph 158 of the Russell report which, as the hon. Gentleman knows, indicated that the committee was surprised, but nevertheless had to accept, that it might not be unlawful for local authorities
  "to suspend their adult education altogether."
  The committee had in mind the occasion when this happened in 1968. I recommend that year to those who believe that there is a party aspect to this, because we all know who was in power in 1968. It came back to haunt us in 1979–80.
  I believe that it would be useful, perhaps imperative, for the Government to look again at the provisions of the 1944 Act to see whether there should be a wider definition of education than is provided in that Act and an obligation upon local authorities to provide adult education.
  I say that for the following reason. The Under-Secretary of State for Education and Science—my hon. Friend the Member for Brent, North (Dr. Boyson)—who is now present, has spoken with great eloquence on this subject in the House. He knows the high regard in which I hold him. Before taking on his present burdens of office, he

  47
  spoke on many occasions of the crucial importance of people being able to come back into education. A large number of people either fail to recognise the importance of education at the time when it is made available to them, or feel the imperative need to broaden their education even if they took up what was on offer at the time when they were within the education system.
  In the latter category, I think particularly of language studies. As recently as 15 years ago, when I was still at school, the British grammar school did not bother too much about languages: foreigners always spoke English, so why should we worry? One of the great advantages of the increase in Continental travel has been that people have suddenly become aware of the need to speak at least one other language. In my view, one of the great triumphs of adult education is that it has met that need, not necessarily by academic teaching of languages, but by teaching based upon the need to be comprehended when one goes abroad.
  My hon. Friend the Under-Secretary of State has spoken on this subject in at least two Adjournment debates. In one of them, he said something with which I think we should all agree:
  "It is essential that local authorities do not cut so near the bone that we cannot get the situation going again once we put more flesh on."—[Official Report, 16 January 1980; Vol. 976, c. 1840.]
  The tragedy is that within a few days of his saying that Leicestershire halved its cash grants as well as its funds for the adult literacy scheme, and other local authorities followed suit, taking decisions which I believe went far further than the situation warranted. In my view, even with the shrinking budget, there is no need for such dramatic savings to be made in adult education.
  In view of the clear indication given by my hon. Friend the Under-Secretary of State—which I hope my hon. Friend the Member for Sutton and Cheam (Mr. Macfarlane), the other Under-Secretary of State for Education and Science, will also give—that the Government also believe that it is not necessary for savings to be made on such a scale, one must ask the Government whether it is time to look again at the amount of control that the Government exercise over what local authorities do in adult education.
  One appreciates, of course, that local authorities must be left with some power to decide certain things locally. One also appreciates that they are answerable to their electors in the same way as we are. But is there not a terrible gap in our educational law as a result of the identifiable gap in the 1944 Act; and is not that the real reason why adult education is always the first thing that a local authority wishing to save money easily will cut? If this debate serves no other purpose, the fact that that has been brought home in my view justifies the very wise decision that my hon. Friend the Member for Hornchurch has made.
  5.37 pm
  Mr. Clive Soley: A month or two ago a group of London Labour Members discussed the possibility of raising in the House the question of adult education. The hon. Member for Hornchurch (Mr. Squire) has beaten us to the draw, and I congratulate him. He has tabled the motion in terms that I find attractive, although I hope that he will not consider it nitpicking if I say that
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  I share the view of my hon. Friend the Member for Bishop Aukland (Mr. Foster) that we need a structure that must come from the Government and not just from the local authorities. Nevertheless, this debate is necessary and long overdue, and I am glad to participate in it.
  It has been said several times today that education is a lifelong process. That has become something of a cliché but it is an important one, which we need to consider in more detail. One of the reasons why it is a cliche' is that, having said it, we go on to think about education as taking place between the ages of 5 and 16 or, alternatively, between the age of 5 and the early twenties, when a person goes to university. We must get away from that and think far more about the periods on either side. The under-fives constitute another area of concern, which should be debated on another occasion. On this occasion we are thinking of those who left school before university or who have failed the system in one way or another.
  Having said that, I should perhaps declare an interest. I am a product of adult education. I hope that that will not put the Government off making a generous response today. I suspect that a number of hon. Members on both sides of the House—certainly I know of a number of Opposition Members—left school early and wandered through a wide variety of experiences wondering what those places called universities really were, and what happened when one went to them. I left school at the age of 15, from the lowest form possible in a secondary modern school.
  This is important, because it gives an indication of how people feel on this subject and how they struggle later on. I continued going to night school simply because I had been told that education was a good thing. Until the age of 21 or 22, I failed every examination bar one. After that, I passed every examination bar one or two. My education included an honours degree and a diploma at another university. That may say something about our examination system, about the problems of late development, or about the structure of our education institutions. I am not sure.
  I remember receiving the little cards telling me of my O-level failures. This was about 25 years ago. A little form came back, marking the result from 1 to 10—I being absolutely marvellous and the best possible result, and 10 meaning total failure. I always got 10, particularly for history, although on one or two notable occasions I rose to 9. I then discovered that the examiners did not really want to know the names of the kings and queens of England, or of the battleship that went to Agadir in 1911. I remember agonising, in one examination, over the question whether it was HMS "Leopard" or HMS "Tiger".
  I suddenly discovered that more subtle things were required in examinations. Having discovered that key, I suddenly found that passing examinations was not so difficult after all, and that it was something that could be achieved. However, it indicates the difficulty of doing so, particularly if one is working at the same time, and even more so if one is working, as I was at the time, in casual employment that requires working long hours into the evening and at weekends. As a result, one's opportunity to study is greatly reduced.
  The question of access to adult education is vital. As well as that, there is a great deal of variation in the form of education. In recent years I have had contact with people from the TOPS course on adult literacy, and even with those who I believe are called outreach workers, who

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  go into the community and set up their classes in specific areas. The people involved in those schemes are doing good work. The Open University is another example.
  I want to refer to a few courses that struck me as particularly important. I was struck by the importance of "drop-in numeracy", as I believe it is called, which is often provided for people who need to brush up their mathematics for the TOPS course. These classes are provided in my area by the Addison institute and the Hammersmith college. They are useful for people who need basic training before they can undertake other education. It goes without saying that literacy and English as a second language are also vital.
  Another course that is increasingly important—I believe that it is run by the Lambeth adult education institute—teaches job-finding skills. I remember that when I worked as a probation officer, many young people were totally unaware how to present themselves at an interview. Quite often they were unable to use the telephone effectively in order to set up the interview in the first instance. We are fundamentally wrong to dismiss these as academic or unimportant classes, because they are important and basic to a large percentage of the community.
  Another course, increasingly important in the light of the current economic situation, is concerned with becoming self-employed. The course is run by the Addison institute. It is not easy to become self-employed. It is full of pitfalls and traps for the unwary. If one is unsuccessful, one gets into considerable financial difficulty with the tax authorities, social security people, and a whole range of other people. Here again, some skill is necessary, and it can be taught.
  Courses in leisure activities are also important. Some people say that these are not necessary, but people now live much longer than they used to and they are often much fitter. When one considers their problems in adjusting to retirement, one appreciates that it is not easy for them. One often finds such people becoming a charge on the State, whereas if the money were put into education in the first place—particularly into courses on leisure activities and on how to use one's retirement—we could head off many of the problems that elderly people face. At present, retirement is often accompanied by a feeling of being thrown on the scrap heap, and that one's working life is over. It should not be like that. It is not necessary for it to be like that. Adult education has an important part to play in that respect.
  There are also fresh start courses, which are offered in a couple of places in London and elsewhere. After years of work, a person may need to reacquire basic study skills. They can be taught, and are taught. Those are some of the areas that I think of as being particularly important.
  The hon. Member for Putney (Mr. Mellor) spoke about subsidising and payment. I must emphasise the fact that we all pay for education out of rates and taxes. The problem of putting up the price is that we deter entry, particularly for people on low incomes, even through the people who are deterred continue to subsidise those on high incomes who continue to take the courses. Obviously, a balance must be struck. In respect of many of the courses for the less skilled and less able people in our community, my view is that the entry bar and cost should be minimal. Such people should not be asked to
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  indulge in the worst form of subsidising known to us—the poor subsidising the rich, which is what often happens at present.
  I turn to the problem of unemployment. It is my view and the view of many others that a great part of our present unemployment problem is due to the Government's economic policies. The Government would no doubt dispute that. However, I leave that argument to one side, because I accept that another large part of the unemployment problem would exist regardless of who now governed the country. We now have an unemployment problem precisely because we do not have control of our economic structure, and to some extent our economic future is out of our hands. Therefore, there would be an unemployment problem regardless of the economic polcies that are pursued.
  The crucial question is what we do to soak up that unemployment. It is not just a matter of creating new industries, although that is important. It is also about education. When I consider our economic problems 1 am struck by the comparison with West Germany and Japan. Indeed, the comaparison can go much deeper. Both those countries have spent more on education in the past than we have done. That is particularly important in view of their development as great economic Powers.
  A number of Conservative Members have argued that we cannot afford to put the money into education. That is not strictly true. As always in politics, there is a question of choice. I do not wish to go too far into the argument, if we compare education and defence, the Government would say that we must spend the money on defence in order to safeguard the country. On that argument, they would justify the spending of £5,000 million on the Trident missile. I do not agree. I happen to believe that the Trident missile will endanger peace rather than preserve it. But that is another question. What is not at question is the fact that that money could be used for other purposes.
  I suggest that education is almost as crucial as defence; indeed, it may be more crucial. If we do not guarantee continuing rising education standards, sooner of later we shall decline as a relatively powerful nation State. There are no "ifs" or "buts" about that, especially if we do not catch up with other countries that are spending more on education than we are. We must ask whether we can afford not to spend more on education. My answer is "No, we cannot". It is one of those areas, like housing, which has a hidden-opportunity cost. If we do not spend money on it there is a cost of not doing so, and although we cannot measure it we should never underestimate it. It is vital.
  In the long run, we must set our sights rather higher than our current economic difficulties. We must set our sights on the day when people are able easily to leave a job and go into full-time paid education for a number of years. I believe that we are entering the age when it will be fatal to assume that a person will leave school, sooner or later get a job, and stay in it for the rest of his life. We must put those days behind us. That means that there must be access to adult education at a variety of times during one's life.
  We should make that very much easier to achieve, and that requires an economic input. I am not saying that it can be done tomorrow morning, but we ought to start planning for it. There will always be declining industries. It will be far easier to deal with people who lose their jobs if we are able to offer something more than redundancy payments and the prospect of the dole queue. One of the things that

  51
  we should be able to offer is education, which should be paid for at a rate that is not significantly lower than what the family has come to expect.
  It may be argued that that dream is a long way off, but my counter is that it must not be a long way off, because if we are really moving into an age in which high technology results in this sort of turnover, there will be areas in which industry is declining and in which no alternative jobs are popping up quickly enough, as a result of which there will be large pockets of unemployment.
  The Government and the Conservative Party must face the social disturbance, stress and, eventually, the social breakdown that unemployment causes. They have always said that inflation is Enemy No. 1 because it destroys society. I agree that inflation can destroy society, but so can unemployment. If the present rate of unemployment continues, and if it is combined with other factors such as relatively high inflation, the Government will be in serious trouble very soon.
  In the longer term we can soak up some of the problems by adult education. As my hon Friend the Member for Bishop Auckland said, Government action is required and not simply requests to local authorities to do more, particularly when they are being told to cut back generally. I ask for a structured response to these problems from the Government, and preferably a section within the Department that recognises the importance of adult education and gives it the power, weight and clout that it needs.
  People must have the freedom to choose courses. That is particularly important, because it is difficult to justify telling people what courses they can or cannot take. It was said earlier that sewing classes were a luxury. What is a luxury depends very much on a person's situation. They may not be such a luxury to a person who is handicapped or isolated in the home. Adult education for the handicapped is important.
  I ask the Government to make a full and positive response to the report of the Advisory Council for Adult and Continuing Education. If we can get the structure right we can build on it, our dreams will become reality, and we can move to different types of education throughout our lives. The college that enable me to get out of the trap of not having an education was the new Battle Abbey college, in Midlothian, Scotland. During the early 1960s it took students at the ages of 65 and 70. I do not know whether it still does so, but that was a positive step, and something that should be more widely and readily available.
  5.53 pm
  Mr. Harry Greenway: There is an unfortunate tendency—at times it has been observable in this debate—to equate adult education almost exclusively with remedial or basic education for those who did not attain a satisfactory grasp of the basic subjects at school. Such a view is false to the true philosophy of adult education, and diminishes its value.
  The true philosophy of adult education is that education is most valuable when it is sought voluntarily by men and women who have attained adult status, who are living independently and making an adult contribution to society, but who choose to devote effort in their free time to study or to the pursuit of a skill. That study or skill may be
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  practised at a very high level. For instance, in London, where for many years I have been both a teacher and student in the splendid ILEA adult education organisation, with its 300,000 adult students, the literary institutes specialise in study at an advanced level. It is particularly fitting that I should mention in this Palace of Westminster that the new stained glass windows in the Lord Chancellor's State Room were designed and made by the students in the stained glass class of the City literary institute in Drury Lane, working under their tutor, Amal Ghosh.
  On 25 February students from the music classes at the same City literary institute will give the evening concert in the Purcell Room on the South Bank. Their performance will be judged by the criteria that are used to judge any performance in that distinguished concert hall.
  Morley college, in Westminster Bridge Road, is an adult education literary institute, and I need not speak of its reputation as one of the great centres of English music. Its work in the arts and humanities is serious and important enough to attract tutors of the calibre of Margaret Drabble, the novelist, and Maggi Hambling, the resident artist in the National Gallery. The ceramics circle of Morley college, formed of students from the ceramic classes, is one of the leading learned societies in that area, attracting experts from all over the world to its seminars.
  The Mary Ward centre in Bloomsbury is another adult literary institute, which distinguishes itself by a high level of involvement in its local community. For example, it conducts a legal advice centre which employs three solicitors full-time, assisted by the advice of 20 barristers. On the basis of the experience gained in the centre, seminars and courses are conducted which are invaluable to people working in the community. But one can get more than legal advice from the Mary Ward centre. One can learn to play the pipes, learn Sanskrit or study a whole range of skills and subjects.
  We must not make the mistake of imagining that the student bodies of the literary institutes are composed of the educational elite. Students range over the whole socio-economic spectrum. There may be many students in the institute who left school at 14 or 12, just as—it may be surprising to learn—there may be an occasional company director in the literacy class or the occasional graduate in the spelling class.
  In case some people still have a prejudice at the backs of their minds that adult education should concentrate solely on the plight of the educationally disadvantaged, I should like to point out two facts. First, the special approaches to the teaching of adults learned in the "mainstream" of education have been the basis of recent successes in the development of techniques of adult remedial or basic education. Secondly, it is more dignified for adults in need of basic education to attend for study in adult centres where busy crowds of adults throng to study the whole range of adult interests.
  A major problem in providing continuing education, particularly if it is directed towards a national audience and involves distance learning techniques, is the provision of the working capital to finance the preparatory work.
  I commend the proposed series of nationwide training programmes on health and productivity for livestock producers and other animal owners, in which the professional expertise of the Royal Veterinary College, in collaboration with two other university veterinary schools, veterinary and agricultural organisations and local

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  agricultural institutions is to be combined with the educational technology pioneered by the Open University. Substantial basic support has been provided by trusts, the veterinary profession and industry, and overall the series is expected to be self-supporting. This venture is a classic example of initiative and of collaboration between institutions and organisations to meet a national economic need. However, it is costly and each programme has to be prepared over a period of one and a half to two years before the extent of enrolment is known or any fee income is received. A pump-priming grant to provide some of that working capital is therefore essential.
  In this House we have an all-party committee on adult education, of which I have the honour to be chairman. Since its inception about 14 months ago our committee has dealt with all areas of adult education. We have been particulary impressed by the need to provide adult education across the community, to look after the needs of pensioners and to make provision for the unemployed. I speak personally and strongly in saying that school buildings that become disused because of falling rolls could become centres for adult education and learning, either basic or advanced. I should like to see that.
  I repeat a suggestion that I have made, that vouchers should be available through the Exchequer, via the Post Office, to the unemployed so that, at no cost to themselves they may go to adult education classes. For the long-term unemployed in particular, surely their one hope could be to get into an adult education class where they could be motivated to work, to study, to enjoy their lives, and to regain that self-dignity which can so easily go with unemployment.
  Aids to illiterates and innumerates are essential. I have in mind the example of a man who was an assistant schoolkeeper at my school before I came to this House. He was a very fine man and worked well but he was refused long-term employment because he could not read and write and therefore cope with the desk work that went with the job of being an assistant schoolkeeper. In mentioning that very sad case, I call for a greater understanding of illiterates on the part of employers. They should not expect of illiterates work that they cannot do, and thus deprive them of their livelihood.
  It has been in many ways a tragic year for adult education, with fees going up on average by 33 per cent. Enrolments this year are 10 to 12 per cent. down on last year. Some authorities have put up fees by as much as 68 per cent. In other cases, fees have gone up by only 10 per cent. But the average has been 33 per cent and it has been a severe factor in the curtailment of the numbers of people attending adult education classes. The numbers have fallen by 11 per cent. this year. They fell by 10 per cent. In the previous year. The fall is likely to continue, to the detriment of the adult population of this country.
  It is essential to keep open, if possible, residential adult education centres, which provide for people across the whole country. They are centres of excellence and of hope in the lives of people. Without such centres, many lives would be severely diminished.
  The rate support grant provided £32 million for adult education this year, as against £45 million last year. That is a severe cut. The average expenditure by local authorities on adult education at the beginning of the year was 0·66 per cent. It is now down to 0·40 per cent. That is a statistic that speaks for itself.
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  Like many other hon. Members who have spoken in the debate, I have a deep and sincere determination to see adult education survive and go forward to meet the broad needs of the community. I should like to complete the quotation that was so rightly brought before the House by my hon. Friend the Member for Hornchurch (Mr. Squire) from Sir Winston Churchill. The quotation ends:
  "The appetite of adults to be shown the foundation and processes of thought will never be denied by a British Administration cherishing the continuity of our island life."
  No Administration cherishes our island life more deeply and dearly than the present one, and I commend to the Government those words of Sir Winston Churchill.
  6.3 pm
  Mr. J. F. Pawsey: I commence by adding my congratulations to those already heaped upon the head of my hon. Friend the Member for Hornchurch (Mr. Squire). He has selected a particularly important issue and has covered all the broad headings.
  I see adult education as possessing three main strands: first, remedial; secondly, liberal studies; thirdly, retraining—that is, retraining for industry and commerce.
  With regard to the remedial side, there are in Britain today, according to the Advisory Council for Adult and Continuing Education, about 3 million adults in need of basic educaional skills—that is, 3 million of our fellow countrymen requiring additional education. The social isolation of any man or woman who cannot read or write to any real degree is difficult for us in this Chamber to comprehend, but it is a problem that is all too real for those who teach in the adult literacy classes.
  The second strand, liberal studies, leads perhaps to greater misconception than is found in almost any othe area, but it is a fundamental mistake to imagine that liberal studies are always or necessarily frivolous. They are nor. all of the corn-dolly-making or help-improve-your-bridge-playing type. Very often these courses provide a real lifeline for the old. They genuinely improve the quality of life. They provide new horizons and broaden the mind. Indeed, the variety and depth of the courses are equalled only by the variety of those who participate in them.
  All these courses help to develop individual and latent skills. The courses come into their own particularly for those who have just retired, those who have become unemployed or those who, for whatever reason, are taking forced leisure.
  With regard to the third strand—retraining—I believe that further and higher education should be responsible for producing the new survival techniques for Britain—the new techniques OSC which can take over where the old left off. It should be the job of the colleges, of the polytechnics and of the universities to apply part of their minds and part of their resources to the problems that are encountered by local industry.
  I have spent all my life in industry. I have worked on the shop floor, and I work in the boardroom. I can say with absolute conviction that over recent years education has moved away from the needs of industry. The bond that used to exist between education and industry has been severed. If education and industry are worlds apart, I accept that there are faults on each side. The educators should remember that they are responsible for services that are financed out of local rates and out of local taxation. They have a clear duty to see that the public get value for money.

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  This does not stop at producing students who are experts, for example, in the latest industrial design. Educators are in an ideal position to carry out consultancy work for local companies. They should attract contracts and use their specialist skills to solve industrial problems and develop new ideas. Industry should tell local education authorities what exactly it feels is wrong with the present system, and above all what it requires. If local companies want new schools for their employees, they should ensure that the local college or the local polytechnic has the understanding or the means to provide the courses.
  Here I mention a Rugby proverb which has recently been invented. I shall acknowledge the author in due course. If industry makes a profit it must sponsor the profit makers. That is almost like one of the sayings of Chairman Mao. But the Department of Education and Science's consultative paper on adult and continuing education somewhat delicately refers to this as a "retention of fee income" I hope that when my hon. Friend replies to the debate he will perhaps not be quite so mealy-mouthed and will not be afraid to use that magic word "profit".
  What is needed is a better input from industry into education. Here I speak as a director of several companies ranging across engineering, marketing and finance. We should set out to train people for the world as it is and as it will be, and not for how it was or how we should like it to be.
  A new sense of realism is required, and that new sense of realism should reflect our present straitened circumstances. We must surely appreciate, on each side of the Chamber, that finance is becoming extremely tight. Most Members will agree that education does not reach down deeply enough into industry. Fortunately, attitudes are changing, and here I refer briefly to an exciiting development that is taking place within my own constituency.
  Warwickshire county council, in conjunction with local industry—which has funded the experiment by £24,000 over two years—has formed a schools-industry liaison group. The group has a full-time director whose job it is to bring schools and industry together in order to promote a better and a closer understanding of each other's point of view.
  However, I ask my hon. Friend to consider a different perspective on the whole subject of the debate. Is it not rigidity in education that causes us to look for opportunities for re-entry? Does it not strike my hon. Friend as unwise that we have closed and locked the door so firmly behind those who have completed their initial studies in universities, polytechnics and so on? Education should be a process of evolution that should continue throughout life, and the problem should not be how to enter education, but how to leave it. Those who leave our educational establishments should have guidance on how colleges can continue to help them throughout their working lives.
  If my hon. Friend requires a slogan for his campaign, perhaps I may suggest one—Education is for life and life is for education.
  6.11 pm
  Dr. Keith Hampson: Several hon. Members have talked about the way in which local authorities have cut back, sadly, on their adult provision. However, adult
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  provision does not rest only in the hands of local education authorites. As some of my hon. Friends have mentioned, there is a murkiness about the statutory requirements for adult and higher education and the relationship between adult, higher and further education.
  Local authorities cut back early on adult education in difficult times largely because of the image of adult education—the flower-arranging sort of image. Today the vital importance of adult and continuing education for the economic future of this country has emerged. It is education for those who missed the opportunities at school or who were ill-motivated. It is their second chance. Because of rapidly changing skills, we also need more opportunities for people to retrain.
  In all Western economies, including the Australian economy, there is a falling off of the take-up of higher education at sixth form level, partly no doubt because of the economic difficulties in getting a job. That means that later on those people build up an increasing demand for courses, and to learn the skills, which they missed by not going to university. Those who are locked into jobs—possibly disappearing jobs—but who did not have the advantage of higher education, are under increasing pressure to gain qualifications to compete with the new generations coming through the educational system with higher qualifications. Therefore, there are powerful pressures on potential demand. It is vital to the economic prospects of this country that we see in adult and continuing education the means of tapping the potential of our citizens and developing the skills and qualifications that we need.
  In our secondary schools there is now a bulge in the birth rate which will feed through the system. It is pertinent that the year 2000 is the year when that bulge comes through to middle age. The 40–45 age group will be at its peak in the year 2000. At its most productive time of life, that group will find there is a shortage of jobs. They will need to be retrained to gain the necessary skills.
  However, at the same time the birth rate will have tailed off dramatically—by a quarter in a decade. It will leave the capacity in higher education to meet that demand, provided that we now set about producing a strategy. It must be a strategy of flexibility and of a co-ordinated joint approach—for example, co-ordination with the Department of Employment, which, in the TOPS programme, has one of the most pragmatic and useful ways of extending adult educational opportunities.
  The universities have not been effectively considered today. They have the most resources in the system. It is important that the "poor neighbour" element of the university extra-mural departments, or adult and continuing education departments—is brought into greater prominence. When there is pressure on the universities because of a shortage of resources, there is an opportunity to offer a carrot: that if they adapt themselves and direct their attention to this key work, resources will be provided for them if necessary. The universities are vital to the area of adult and continuing education. We must give more weight in our allocation of resources to them at the expense—if necessary of our school system and the mainstream higher education system.
  As the extra-mural adult departments are direct-grant funded—the only direct-grant DES-funded part of our autonomous higher education system—the Department can funnel some of its allocation to the universities not through the University Grants Committee, but direct into

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  these departments so that they become "brokers". They can be used within the university to draw on the talents of all other departments and their staff, so that the appropriate courses are put on for the adults and firms in the community.
  The essence of adult continuing education is that it is primarily vocational. In the United States and Australia, for example, in the 1970s there was a surge of adult and mature students. That was the key to the growth of their system and has no equivalent in this country. Older people have wanted occupationally geared courses.
  Adult courses must be vocational, locally geared and in many cases part-time. We have lacked a strategy on all those fronts in this country.
  The model is the Open University, where, for relatively small sums of money, the tutors have been prepared to go out to teach in other colleges, schools, church halls and a variety of other places. We should use that model for the entire adult area. We shall also face a rundown in the demand for the existing colleges of higher education. Their capacity, their buildings and facilities could be used for adult learning, possibly drawing on the staff from nearby universities, polytechnics and colleges, for they all tend to coincide in belts across the country. There must be a flexibility and a joint use of resources on a scale that we have not seen before.
  I hope that the Under-Secretary will give an assurance that, because of the urgency of this task and the looming importance of the year 2000, his planning unit in the DES will concentrate on how to develop a proper strategy to use existing resources. It is not a matter calling for huge dollops of extra cash from the Treasury. The Government should channel the resources and energies already in our higher and further education system to the needs of adult and continuing education.
  6.18 pm
  Mr. Phillip Whitehead: Like the hon. Member for Ripon (Dr. Hampson) and most other hon. Members who have spoken, I support the argument for giving a greater priority for continuing and adult education. I heed the warnings of the hon. Member for Cambridge (Mr. Rhodes James) and other hon. Members who have warned against beating the drum for this priority to the disadvantage of other sections of the education system.
  We are indebted to the hon. Member for Hornchurch (Mr. Squire) for the way in which he introduced the motion, his exposition, and the tenor of the debate. It has not been a particularly partisan debate, but in every contribution it has been thoughtful.
  In the past we have had some Adjournment debates on the subject, many of them initiated by the hon. Member for Ealing, North (Mr. Greenway) and replied to by the hon. Member for Brent, North (Dr. Boyson), who then had ministerial responsibility for this matter. They did not get us very far—about as far as the distance from Ealing, North to Brent, North. That is probably not the fault of either the hon. Gentleman or the Minister. It is a fact—this has been central to many of the complaints raised—that exhortation from the DES has often been ignored by local authorities, which, because of the financial and political pressures under which they have been placed have seen a soft option in the cutting of adult education. It is to that sad story that I must turn.
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  No one should be in any doubt that when we talk about continuing adult education, the emphasis is on the word "education". One or two hon. Members have suggested that it was a leisure activity, which was a kind of frill, which should be snipped away, together with the sewing classes that an hon. Member's wife attended, but I believe that we are talking about the emphasis on education for life, and throughout life. I declare my interest and bias in that direction, as my wife has just graduated from the Open University, as my secretary was retrained by TOPs, and as I have the background of lecturer for the Workers' Educational Association. I would not need persuasion in that element of continuing training and retraining.
  Everyone has been agreed on the extent to which literacy and programmes for the disabled should be given priority in adult education. What is more at issue is the crisis of morale in the whole education service as a result of the cuts. As has been mentioned in Adjournment debates, the effects start near the base line. The cuts have been made not from a position of relative affluence but from Britain's position within the EEC, much nearer the bottom than the top of the scale. This has happened in a society in which comparatively few people have access to higher education and the relatively privileged circumstances that higher education brings and that have in some ways increased the inequalities in our society.
  Adult education and, most profoundly, the Open University have in recent years made a gallant attempt, against the odds, to rectify the situation. Many hon. Members have mentioned the anatomical exercise in metaphor by the hon. Member for Brent, North about cutting too near the bone. The Government are cracking open the marrow bones in the part of the world that I represent. Adult education is in a serious position, and an over-emphasis on cuts or on privatisation within the financing of the system can only make matters worse.
  Last Friday the report of Her Majesty's Inspectorate for 1980-81 was published. It does not seem to be available to hon. Members in the Vote Office. It was published at 3 o'clock on Friday afternoon, after we had left for the weekend. At that time it was not so easy to comment upon it. However, I have since been able to secure a copy. I refer the Minister to paragraph 70, which states, of further education:
  "Adult education remains the area most seriously affected by expenditure reductions. Forty-nine authorities have further reduced their allocations for general adult education. Of these authorities nine are in the lower level baseline group. No examples of increase have been recorded. There continue to be overall reductions and concentrations of programme throughout the country".
  One point that particularly concerned me and I found elsewhere in the report—it is a matter to which I shall return on the question of Open University applications, which we should also be considering—was the degree to which that fall-off in part-time courses in particular came from
  "those areas traditionally associated with heavy industry"—
  and traditionally associated also, at the moment, with the industrial recession.
  When the Minister appeared before the Select Committee before Christmas—I was there to listen to him—he talked about that reduction being demand-led. He spoke about people coming forward for non-advanced further education courses. I am not so sure. If we examine the statements that the Government made last March, in

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  reply to various protestations from both sides of the House, we see that the Secretary of State's expectations that the expenditure reductions
  "can be achieved by an increase in fees rather than a reduction in the number of adults benefiting from provision"—[Official Report, 10 June 1980; Vol. 986 c. 117.]
  has not been fulfilled in the event.
  It seems to me—and figures are emerging that will demonstrate this beyond peradventure—that there is now a major fall-off in provision and, therefore, also in applications, leading to a fall-off in fulfilment, also. This is happening in a society in which employment is reaching 2·5 million—a society that is facing the probability of deeply rooted, structural unemployment for many years to come, irrespective of which party is in power. That seems to me to indicate that we should, as a matter of priority, consider continuing education as a way of rectifying what will be a dramatic problem for our society, whatever happens.
  The reductions that were made last March—some of them in rather a panic—have cut a swathe through further education. Humberside announced the suspension of all non-vocational classes. West Glamorgan cut its provision by 60 per cent. Hampshire suspended all evening classes for three months. The examples of Cambridgeshire, Norfolk and East Sussex have already been mentioned. All of those examples have decimated the service in many parts of the country. Like the hon. Member for Putney (Mr. Mellor), I seriously query whether the action of an authority such as Humberside was legal in the terms of sections 7,41 and 42 of the 1944 Act.
  The latest figures from the National Institute of Adult Education, derived from its fees survey, carried out last October and November, although showing an enormous variation in the range of movement of those fees from an increase of 225 per cent. to a decrease of 36 per cent., indicated a mean increase of 51 per cent. The change in the number of students also varied, but the mean figure was a decrease of 11 per cent. Those figures have become available to us only during the past few days, but they indicate the way in which we are now moving as a consequence of the cuts. I am not yet used to speaking from the Opposition Front Bench. My experience is as a constituency Member of the Back Benches, and in that context I should remark that the East Midlands figures are particularly devastating to me, since I was involved with the WEA in that area.
  Mr. Gwilym Roberts: My hon. Friend mentioned the 11 per cent. fall in one year. Does he agree that the process is self-generating and that it is likely that in the current year the fall-off will be very much larger?
  Mr. Whitehead: My hon. Friend makes my point for me. The process is cumulative and the position will become worse over the next year. The figures are already showing that. In Nottinghamshire an area close to my heart, courses are down by 70 per cent. on the 1975
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  figures. Lincolnshire has halved its residential accommodation and cut its teacher training centres, and enrolment is now down by almost 25 per cent. In Derbyshire, where I live, there has been the early retirement of five full-time teachers and a heavy increase in the fees for old-age pensioners, as well as for other people. Leicestershire has already been referred to. There the community colleges, to which hon. Members have tonight rightly paid tribute, are now under threat.
  There is no saying how matters will move in the immediate future. We are not considering merely the inevitable consequences of the expenditure White Paper of March 1980, as they have worked through; we are talking about a further reduction in education expenditure, which the Secretary of State has conceded will take place over the coming year, with the assumed savings in school transport having to be found elsewhere in the education budget. Everyone fears that these cuts will also filter through into the standard of services in adult education.
  Mr. Greenway: Will the hon. Gentleman give way?
  Mr. Whitehead: I will not give way. I delayed the start of my speech to allow three Conservative Members and the hon. Gentleman to speak, and I must press ahead.
  I have mentioned my WEA antecedents. That leads me on to the question of the position of the responsible bodies—the university extra-mural departments and the association itself. In many areas the LEA funding of those bodies has suffered heavy cuts. The recent report from the WEA showed the deficits were looming in the areas most affected by the recession. Those areas are Scotland, the North-West, North Yorkshire and the West Midlands. That indicates that a North-South divide is beginning to be created in this subject.
  I turn next to the Open University. I have seen in the life of my family and of my wife the enormous increase in confidence and, therefore, in job potential, that results from a successful Open University course for people who failed the 11-plus and previously regarded themselves as educational drop-outs. The latest survey by Professor Naomi McIntosh and others at the Open University suggests that four out of five graduates believe that they have benefited from their courses personally and in terms of their jobs.
  The problem with Open University is that the increase in fees of 46 per cent. over the past year will seriously affect the number of applications and admissions. The hon. Member for Putney was rather too complacent, in an otherwise good speech, when he suggested that the Open University should take such increases of fees in its stride. The fact is that those increases are being levied upon people having to pay for their own education. Unlike other students, they are not in the position where they are made to carry up to only 20 per cent. of the total cost of expenditure, which I believe is the figure that the Department of Education and Science is looking for. With the latest increases that figure has been raised from about 10 per cent. to 12½ per cent. I do not think that we should move down that road when we consider the damage that is being done to the intake of the Open University.
  Last Wednesday I visited Milton Keynes and talked about its problems with a number of those responsible for admissions. Taking this week with the equivalent week in 1980, applications for the Open University are 2,400 down. There has been an 18 per cent. drop in applications

  61
  from the North of England. There has been a 9 per cent. increase in applications from the South. But this is the North-South divide; the declining northern industry against the still relatively affluent southlands, to which I have referred.
  It would be extremely serious if there were now to be a disincentive for those from the declining northern areas, where retraining is particularly necessary should the opportunities presented by, for example, the Open University courses be taken from them because the fees increase has forced the numbers down. It is also true that more people from the South than from the North are taking up the places offered.
  We should have a better basis for funding the Open University. I do not have time now to go into that, but I mention it in shorthand terms to the Minister. The whole House is still waiting for a proper response from the Department about the criticisms of the present funding of the Open University that were made in the report of the Select Committee on Education, Science and Arts. It would seem to be almost impossible for the Open University to budget for the sort of programmes needed for the next few years, particularly in building up courses in science and technology, if it is being given a grant only on an annual basis and is being told only some way into the financial year what money it can have and how it may use it.
  All that is damaging the adult education system. The Secretary of State has time and again said that:
  "cuts can be achieved without affecting the standard of education in our classrooms."
  I do not believe that that is so in adult education.
  We have now seen a devastation of the services available. Taking the three distinctions made by the hon. Member for Rugby (Mr. Pawsey), I see that as applying equally to the three categories he mentioned. Training for leisure, which has been somewhat disparagingly referred to in the debate, is now as important as more strictly vocational training, or the training of particularly disadvantaged groups who may now be singled out for favoured treatment in the overall depression and gloom. In the near future we shall have to face a society in which many peoply will be asked to accept early retirement and redundancy, with the implications of retraining and all the pressures involved in that, knowing that unless they can gain access to further education their lives, and not just their prospects, will wither on the vine. All hon. Members have a responsibility to see that that does not happen.
  The questions that I should like to put to the Minister are essentially related to the problems that I have tried to outline and the failure of successive Administrations to make sufficiently firm provision by updating the 1944 Act to put further education on a statutory basis. That would mean an amendment of the misleading phraseology of section 41(b), with its references to leisure time, organised cultural training, and so on. We should have a comprehensive definition of adult and continuing education.
  My hon. Friend the Member for Cannock (Mr. Roberts) referred to the possible new amendment that the National Association of Teachers in Further and Higher Education, among others, is discussing. Although it is not for us to consider what the precise form of the amendment should be, it is clear that the exhortation from well-intentioned Ministers has counted for very little with many of the local education authorities when cuts have been made.
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  During the Adjournment debate to which I listened before Christmas, the hon. Member for Brent, North assured his hon. Friend the Member for Ealing, North that his remarks about old-age pensioners would be taken seriously. Numbers of local education authorities and further education bodies are still charging full rates for old-age pensioners. There are many, such as mine in Derbyshire, which have put up the rates for old-age pensioners from one-third to one-half of the full fee. The full fee has also greatly increased. That sort of thing can happen. More importantly, we can see a whole range of cuts being made in services by various organisations where the Department is unable to do much about it. It was unable to raise a finger, had it wished to do so, in the case of Humberside. There should be a better definition in the legislation. Baroness Young was asked about this matter.
  In another place, in a recent debate on education, She said;
  "Section 41 of the Education Act 1944 gives every local authority the duty of securing, in accordance with the schemes of further education or at county colleges, the provision for its area and adequate facilities for further education".
  She went on:
  "It does not seem to me that in the present position any local authority can be said to be breaking their statutory obligations".— [Official Report, House of Lords, Vol. 405, c. 1156.]
  I could give her the names of three or four. The conclusion that I draw is either that she does not understand the statutory obligations or that the statutory obligations need to be changed. I do not mind which interpretation we take, but I would settle for the latter.
  The first question that I want to put to the Minister is whether, as his hon. Friends and many Labour Members have suggested, he sees a need to tighten up those sections of the 1944 Act.
  Secondly, in the light of the recent cuts in rate support grants, does he propose to announce as a general principle that there will be an exemption, in DES funding at least, of the adult education system from further cuts in the financial year 1981–82.
  As the hon. Member for Ripon suggested, it is possible for the Department through the direction that it applies to the funds under its control, to make an impact upon further education which, thus far, it has not done. I should like an undertaking on that basis.
  Further, I should like to ask about the funding of the Open University in the middle term, and whether further increases in Open University fees are proposed for the next financial year. It is the Open University's feeling, as it is mine, that the second round of cuts hurts much more than the first and will increase and aggravate the trends to which I have referred.
  Lastly, there are the institutions. I have mentioned the WEA. What will happen to the growing financial crisis in the WEA? The WEA deficits are growing to the point where in many areas they are equivalent to the funds in hand and the resources. What will happen to the organisation thereafter? Since the 1960s the proportion of support that the WEA has received from local education authorities has steadily and consistently fallen. In the present climate of attrition, the WEA is in an extremely serious financial plight. I should like to hear the Minister's suggestions.
  In a few minutes I have tried to indicate that we face a double divide in adult education. In one sense the divide has been coming upon us for some time. It was identified

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  in a book by Mee and Wiltshire some years ago, during the Labour Government, when they referred to a threat to the adult education system which they put thus:
  "There is a real danger that adult education may be split into two segments: a heavily subsidised compensatory service for the conspicuously disadvantaged and an unsubsidised, and therefore highly priced, leisure service for the well off."
  We have moved a few steps towards that division.
  I have tried to indicate two other divisions. The first is the division between those who can pay and those who cannot. That should not be the principle of access to adult education. The second is the division between the North and the South, which in this way, as in so many other ways under this Government, is dividing us into two nations today.
  6.40 pm
  The Under-Secretary of State for Education and Science (Mr. Neil Macfarlane): I congratulate the hon. Member for Derby, North (Mr. Whitehead) on what I think I am right in saying is his maiden speech at the Opposition Dispatch Box. The hon. Gentleman brings a degree of sincerity and understanding to these affairs, particularly the post-16 aspect, and the whole House will be grateful for his comments.
  I echo the hon. Gentleman's sentiments to my hon. Friend the Member for Hornchurch (Mr. Squire). If I may introduce a degree of parochial interest, I am sorry that he is moving out of my constituency. However, I am happy that he will be staying as a councillor and that he will be returned as the Member for Hornchurch at the next election.
  I hope that hon. Members on both sides will understand fully if I am unable to respond to all the points that have been made today, but I undertake to go through the debate tomorrow, or the day after, with my staff to ensure that some of those points are answered.
  This, as many hon. Members have said, has been a constructive debate. Generally, surprisingly, it has been remarkably free of partisan feeling, and I am grateful for that. I think that there is genuine all-party concern about the infrastructure that we have created for ourselves in adult and continuing education. Indeed, those of us who have been closely associated with these matters in recent years might consider that the whole of the education world has created for itself a difficult infrastructure of bodies and organisations.
  The hon. Member for Derby, North referred to Her Majesty's Inspector's report. I should like to clear up a misunderstanding. Some hon. Members referred to the report on the effects on education services in England of local authority expenditure policies in 1980–81. The draft of the document was sent to the ESGE at the end of last week for its comments and at the same time, consistent with the undertaking given by my right hon. and learned Friend, copies were made available to the Select Committee on Education, Science and Arts. I have also asked that a number of copies be placed in the Library of the House, in view of the interest expressed by those who have spoken in the debate. The final version of the report will be published next week after there has been an opportunity for comments by the ESGE to be considered by the inspectorate. Copies of the final version will be made available through the Vote Office as soon as the report is published.
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  We have had a wide-ranging debate. Adult education, in general, covers an enormous range. It is difficult to be too specific. However, I am pleased that the subject has been raised on previous occasions by my hon. Friends the Members for Loughborough (Mr. Dorrell) and for Ealing, North (Mr. Greenway). I should like to pick out some of the points made today by hon. Members on both sides.
  My hon. Friend the Member for Cambridge (Mr. Rhodes James) mentioned that it is a sad fact that a proportion—far too high a proportion—of this country's adult population lack even the most basic educational skills which we would normally expect pupils to have acquired before they leave school. What is worse, despite our best efforts, this group, which may have missed, or been unable to take full advantage of, educational opportunities at an earlier stage, is constantly being augmented by current school leavers. The hon. Member for Hammersmith, North (Mr. Soley) touched on his experience in this area.
  Of these skills, the one first identified was illiteracy. One of the success stories of adult education in recent years—it has been referred to by hon. Members on both sides—has been the drive to remedy this lack of skill. About 70,000 people each year have re-entered education to receive help to enable them to attain this skill. I hope that this will acknowledge one point mentioned by my hon. Friend the Member for Hornchurch. It has certainly enabled people to attain the most basic skills without which they could not function adequately in our society and would have difficulty in even stepping on to, let alone proceeding up, the educational ladder.
  If there is an element of gloom among some Opposition Members, we must acknowledge the tremendous work done by the adult education service throughout the country, whatever the financial problems facing the United Kingdom, and indeed most Western countries, at the moment. Work with adult illiterates uncovered a wide range of other basic educational skills which needed to be developed not only to provide a springboard for entry to further education, but to enable people to cope with everyday life, and particularly to apply for or remain in employment. The Advisory Council for Adult and Continuing Education drew attention to these points in its report "A Strategy for the Basic Education for Adults".
  A number of hon. Members have referred to the cuts in expenditure. It is worth putting on record that some authorities have proposed very stringent measures. However, so far as I am aware, no authority has ceased completely to provide for adult education, nor made all staff redundant. The pressure of public opinion has caused authorities to revise their plans and to retain some base. It is certainly right for me to repeat words which my hon. Friend has quoted on previous occasions in Adjournment debates. Local authorities have to plan in a consistent way. They have to look at every responsibility within the education service and not take the scalpel immediately without looking at the all-important adult education.
  The opportunities for re-entry into the education system provided by adult education at basic levels and for vocational purposes do not represent the complete picture. Much of adult education is concerned with personal fulfilment, and it provides opportunities at all levels for people to take up education again, to pursue interests started at school or to develop new ones, whether in the

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  creative arts, practical hobbies, intellectual or physical pursuits. The range offered by adult education is immense in terms of both subjects and level.
  A number of hon. Members referred to open and distance learning and to the Open University. I want briefly to refer to those aspects. I suppose it is inevitable that more use can be made of broadcasting and distance learning techniques. I should think that the hon. Member for Derby, North, with his experience before he entered the House, would be able to bring some experience to bear on this subject.
  I believe that the fourth television channel offers a golden opportunity for many people to be drawn into further adult education in the home. An independent fourth channel should offer opportunities to expand the provision of education to a very wide audience. I hope that it will exploit the possibilities as fully as possible, co-ordinating carefully, where appropriate, with employers, local voluntary organisations, and so on, so that the most effective use is made of broadcast material, and that students, teachers and employers will be prepared to exploit these additional opportunities.
  My hon. Friend the Member for Ealing, North referred to the role of the voluntary sector. Voluntary bodies, such as community associations, women's institutes and the Workers Educational Association—I shall come to that later—and a myriad of other associations and clubs have much to offer in adult education. Their flexibility and responsiveness to need can be very valuable, and their work can help many that the local education authority cannot easily reach or afford to cater for. While they are not a cheap alternative to local education authority provision, I believe that the work of the voluntary bodies needs to be effectively co-ordinated. They often rely on local education authorities for accommodation and other facilities, for essential training of staff and for financial support.
  Several hon. Members referred to the statutory basis and whether we envisage any amendment to the 1944 Act. The Act refers only in general terms to the provision of adequate facilities, but there is no generally accepted minimum standard for adult education provision. It is for local authorities, in the light of their own detailed knowledge, to determine that level of provision.
  The whole legal basis for further education was mentioned by a number of hon. Members—in particular, the hon. Member for Cannock (Mr. Roberts) and my hon. Friend the Member for Ripon (Dr. Hampson). Following the Government's response to the Warnock report, an integral part of my Department's functions is to review the role and legal basis for further education, which includes adult education. I hope that that will answer one of the questions that have been posed today.
  I must issue a word of caution. There are dangers in attempting to provide too exhaustive a list of aspects of adult education. It is developing at such a rate that such a list could become rigid, inflexible and limiting. Hon. Gentlemen should understand that the definition of a minimum could give rise to reduced rather than to increased provision. We are prepared to consider in detail the whole legal basis of further education, including adult education, but it is too early for me to indicate today what the likely outcome will be.
  I want to say a word about the Government's role. My right hon. and learned Friend and my hon Friend have indicated in speeches in this Chamber and elsewhere some
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  of the resources on which LEAs can draw in providing adult education. They have pointed to the need to co-ordinate those resources effectively to provide a healthy base, capable of growth to meet the many educational needs, known and still being identified, of adults in this country.
  We are continuing to fund the Advisory Council for Adult and Continuing Education for a further three years in order to complete the important twin remits of comsidering the most effective deployment of resources available for this area and of developing policies for its future development. If we are to progress, we shall have to adopt priorities. That does not mean that we ignore other areas; we are simply trying to be practical. However desirable many aspects of adult and continuing education may be, priority in allocating resources at a time when the country is in urgent need of economic recovery is bound to be given to those areas of adult education that are particularly relevant to employment. I hope that what I am saying will strike a chord with the many hon. Gentlemen who have mentioned the matter today.
  Priority must be given to acquiring literacy and basic skills, and we have indicated that clearly by our continued support and stimulus for developments through a Government-financed central agency. The Government have already funded the important work of the Adult Literacy Resource Agency and the Adult Literacy Unit. The Adult Literacy Unit ceased to operate in March 1980. Excellent work has been done by both bodies, but it is clear that they and the work that they have stimulated have by no means cleared the problem.
  A conservative estimate suggests that there are about 2 million adult illiterates, and this number is fuelled continuously by illiterate school leavers. Up to 70,000 a year now receive tuition, but many drop in and out of class over a period of years, so it is impossible to calculate a cumulative total of people who have been helped to overcome the problem.
  There is much still to do. Therefore, we are continuing to give some central support. The work in this respect has helped to identify a wide range of basic education which stemmed from it and needed to be developed. Illiterates need further help after learning to read and write to enable them plug into further educational opportunities and to cope with the complexities of our society. Otherwise, they are left dangling without further support.
  The report of the Advisory Council for Adult and Continuing Education identified a wide range of different groups—ethnic minorities, the handicapped, prisoners, ex-offenders—for different stages of life when faced with particular problems—adolescence, new parenthood, preretirement—and for different skills and purposes—mathematical and number and life skills, including domestic management, work-related knowledge and knowledge of the main governmental and social agencies. There is a need to continue work in literacy and to expand it into related areas. At least 3 million are in need of help in these areas.
  The Adult Literacy and Basic Skills Unit builds on the foundations and expertise of the Adult Literacy Unit. I am happy to say that we have set up that unit. It provides a central focus for work in literacy, numeracy and related basic skills. It sponsors basic development projects in collaboration with both voluntary and statutory bodies and helps innovation by providing new methods, materials, approaches and clients, and so on. It helps to develop

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  teaching materials. It provides a consultancy and advice service. It helps to develop publicity and recruitment methods to attract students in need. It also stimulates and. provides teacher training in this field. That is an important requirement. Finally, it publishes information, handbooks, news letters to assist in training, and it raises the quality of provision and keeps individual workers in touch with developments.
  The importance that we attach to this unit indicates the support that we seek to give to adult education generally. We propose to maintain in real terms the present level of funding for the responsible bodies—WEA districts and the university extra-mural departments. The work done is comparatively small, but it is an integral part of the provision for adult education locally. We hope also to maintain in real terms the level of funding for national associations, such as the National Institute for Adult Education, and to continue with support for bodies such as the National Federation of Townswomen's Guilds and the National Federation of Women's Institutes, both of which contribute in this area.
  Many matters were raised during the debate. I apologise if I have not dealt with some of them, but time is the problem. I undertake to write to those hon. Gentlemen who raised important matters.
  I believe that we have recognised the potential contribution of distance learning that I mentioned earlier. Many hon. Members referred to the role of the Open University. Clearly, the Open University makes an important contribution to continuing education, and it still receives funding of about 87–5 per cent. from Government funds. It is important in three ways. First, it is a second chance institution of higher education. There were nearly 61,000 registered undergraduate students in 1979, and 5,400 graduated in 1979, bringing the grand total of graduates since its inception to about 39,000. Out of more than 58,000 students following undergraduate courses in 1979, about 74 per cent. had no formal academic qualifications, 13 per. had completed their full-time education at the age 15 or under, and 18 per cent. at 16.
  The second importance of the Open University is as a provider of vocational post-experience courses, both on its own and in collaboration with others. Its third importance is as an innovator of educational technology and as a centre of expertise in multi-media distance learning and teaching techniques.
  The hon. Member for Derby, North asked about future funding of the Open University. I undertake to write to him on this and the related questions that he asked. Certainly, I can give no commitment now.
  On the subject of the rate support grant for 1981–82, the hon. Gentleman would not expect me to give him a reply from the Dispatch Box this evening and say what we might speculate about. However, I have taken note of what he said, and I shall make sure that he receives a form of acknowledgement. He may not be very happy with the acknowledgement, but I shall ensure that he receives some information from my Department.
  Mr. Whitehead: One thing should be put on record today, and that is whether or not the Minister was shaken by the figure that I gave of the falling off in applications for the Open University.
  Mr. Macfarlane: We had a recent Adjournment debate on that matter, and I do not want to go over old ground. I take the point that the hon. Gentleman makes. Our policy is to ensure that the heavy continuing public investment in the Open University—about £45½ million in 1980—is fully utilised in the national interest. Its post-experience course programme is regarded as the major growth area for exploitation by all concerned with vocational updating and retraining.
  Another matter that was dealt with by hon. Members on both sides was our paper on "Continuing Education: post-experience vocational provision for those in employment". It is a matter about which many hon. Gentlemen feel deeply, and I share their anxiety about the need to develop and design vocational provision. That paper put forward for discussion a course of action designed to facilitate a more widespread response to the needs of industry. My hon. Friend the Member for Rugby (Mr. Pawsey) mentioned this, and I am grateful to him for what he said. That paper put forward a widespread response to the needs of industry and commerce for updating and refresher work, and for the acquisition of new skills—whether technical, technological or managerial—that are needed to cope with different responsibilities in a company or firm.
  Despite all the problems, the Government have been accused of not doing enough for adult education. But neither we nor the local education authorities can succeed alone in securing the future of adult education. It requires a change of attitude among all potential students, employers, providers and teachers if any significant progress is to be achieved. I acknowledge the important role that all employers have to play. The role of industry, business and commerce must wake up to the fast-changing pattern of need for retraining, perhaps once, twice or three times in the lifetime of people who left school and education 15 years ago.
  I am convinced that there is much that has been successful in recent years, but I urge the House to understand the complex infrastructure through which the Department of Education and Science has, understandably, to work. The 1944 Act devolved powers to the 105 local education authorities. Somehow, my Department, working with all those interested bodies, must come to some detailed arrangement whereby we can work together. It is too important a subject to be left to one group. It is, however, the most complex and diverse of all sectors of education. I think that Opposition Members will understand that. There is no one solution, and there is no panacea. We are faced with the need to expand, strengthen and improve the service at a time of severe economic constraint—
  It being Seven o'clock, the debate stood adjourned.

Orders of the Day

  Gas Levy Bill
  Order for Second Reading read.
  7 pm
  The Secretary of State for Energy (Mr. David Howell): I beg to move. That the Bill be now read a Second time.
  The House will recall that on 8 May last year I announced that the Government had decided in principle to impose a levy on the British Gas Corporation in respect of gas purchased from the United Kingdom continental shelf and sold to the corporation under contracts which were not subject to petroleum revenue tax. I should like to explain the background to that decision.
  Natural gas was first discovered under the North Sea in 1965. The Gas Council and its successor, the British Gas Corporation, contracted to buy gas from the newly discovered fields, first in the southern basin, off the coast of East Anglia, and later from more northerly waters. Virtually all the gas that at present comes ashore from the United Kingdom continental shelf is supplied to the British Gas Corporation by the producers under long-term contracts signed before the oil price explosion of 1973–74, let alone the oil price explosion of 1979–80. In consequence, the prices currently paid for gas from these fields reflect the prices and the escalation clauses agreed upon in a quite different era of cheap energy which no longer exists and which I do not believe will return.
  In fact, the average basic cost to British Gas of all its gas purchases in the current financial year will be about 8p a therm. That is a figure which includes the much more expensive northern basin gas and Norwegian imports. Eight pence a therm as the average cost of gas has to be compared with prices more, and in some cases considerably more, than double this figure now being not merely sought but achieved by producers for new supplies or renegotiated contracts in recent international deals. That these much higher prices are being charged, together with provisions that they should be raised substantially further in line with subsequent oil price increases, is a reflection of the massive demand for gas supplies by the European utilities that are scrambling to acquire them from the North Sea and are prepared to pay these very much higher prices.
  So cheap gas is a rapidly declining asset. New supplies from the more distant northern waters will cost anything up to 10 times—1,000 per cent.— the prices originally paid for gas under the old contracts from the southern basin of the North Sea. Prices must reflect the costs of supply on a continuing basis. Any company which ignored that principle would go out of business. If we do not follow that principle for pricing our gas, we run a number of very serious risks, details of which I should like to share with the House.
  Mr. Frank Haynes: On the question of the clawback over the three-year period, as stated in the Bill, will the Secretary of State indicate clearly where the money will go? Bearing in mind the amount of money that the consumer is expected to pay and that that money will not be left for the industry to expand to provide the proper
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  service, where will the £1,300 million mentioned in the Bill be going? What will the Government be doing with this money which is to be clawed back from consumers?
  Mr. Howell: Perhaps it was a mistake to give way at that point, because I shall be covering in great detail the whole position posed by the Bill and meeting some of the hon. Gentleman's questions.
  Unless we follow this principle for pricing our gas, we run very serious risks. The first risk is that demand will grow more rapidly than supply, so that industry could again find itself short of gas, as it did two winters ago.
  Mr. Haynes: On a point of order, Mr. Deputy Speaker.[Interruption.] What is all the bawling for?
  I asked a specific question of the Secretary of State, Mr. Deputy Speaker. I am entitled to ask a question. I accept the reaction from the Conservative Benches, but surely I should be told, for the benefit of the people of this nation, where the money is going. They are entitled to know that.
  Mr. Deputy Speaker (Mr. Richard Crawshaw): The hon. Gentleman is obviously entitled to intervene and to ask a question, but the Minister has hardly started his speech on the Bill. He has not really started to explain the Bill.
  Mr. Howell: The hon. Member is also entitled to an answer. Perhaps he will show a little patience and courtesy.
  Secondly, consumers will switch to gas, based on a thoroughly misleading belief about price, only to find—this is the danger—that in the following years the price of gas will jump by percentages that make anything that we have experienced so far look small—difficult though that may be. Thirdly, meanwhile, new gas supplies will obviously not be forthcoming, because the price will not be there to attract the new reservoirs to be opened and invested in. Finally, we run the risk of wasting what is available because the price does not reflect the gas's true value.
  That final point was put very clearly, and rather well, in the Labour Government's Green Paper on energy prices, in which they set out clearly the obvious proposition that the gas industry's prices
  "need to be related to the expected cost of future supplies, rather than to its historic costs."
  They went on to say that this could give rise to large surpluses—as indeed it is doing—and that decisions would be needed on the use to which these surpluses should be put, although they were not able to get around to making those decisions.
  It was considerations of this kind which lay behind the Government's decision a year ago to set the British Gas Corporation a new three-year financial target. The target was based on the corporation's and the Government's belief in charging prices based on sensible economic principles—or, at least, moving towards them. For domestic gas the plan was, and is, to move towards the economic level at the rate of 10 per cent. a year, over and above the rate of inflation. For industrial gas the target is founded on the corporation's own policy of selling gas to industrial consumers at prices broadly related to those of the competing oil products.
  As I have indicated from the Green Paper as well as in what I have said today, it was always recognised that the effect of this policy of economic pricing was bound to result in a period of big windfall profits accruing to British

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  Gas. This is because it continues to benefit from supplies of gas from the southern basin on contracts negotiated on terms and at prices agreed many years ago. Last year the corporation's pre-tax profits were £425 million. Within a year or two, they would be, without the approval of the House for this Bill, over £1,000 million—well in excess of the corporation's current needs, even given the very substantial capital investment programme now under way.
  The purpose of the proposed gas levy is to transfer this windfall profit from the corporation to the Exchequer so that the Government and this House are then free to debate and decide where the benefits should go. In a similar way, our oil taxation regime is intended to remove the windfall gain resulting from rising international oil prices from the producers for the benefit of the community generally. By removal of the unearned windfall, the corporation will be left in a more normal commercial situation. This will help to encourage it to maintain standards of efficiency which would otherwise have been at risk.
  Mr. T. H. H. Skeet: I have been following my right hon. Friend's argument. He wants a transfer from the British Gas Corporation to the Treasury. Why does he not do it in the Finance Bill? We could then have killed two birds with one stone. Why have two Bills?
  Mr. Howell: I shall explain later, when discussing the impact on the British Gas Cororation, that this is not a tax on profits. It is a levy on costs. I shall explain the pattern by which that is achieved.
  The Bill proposes a levy on the British Gas Corporation's purchases of gas that are at present exempt from petroleum revenue tax. This tax was introduced under the Oil Taxation Act 1975. Section 10 of that Act exempted from PRT gas sold to the corporation under contracts made before the end of June 1975. The reason for this exemption was, in essence, that the price and escalation provisions of those contracts prevented any substantial windfall gain accruing to the producers. Instead, the windfall resulting from rising energy prices in respect of exempt gas has accrued, and is accruing, to the British Gas Corporation. It is clearly appropriate for the levy to be restricted to the corporation's purchases of gas from reservoirs in the United Kingdom continental shelf under contracts not subject to PRT.
  By imposing the levy on the corporation in respect of gas taken under old contracts, we avoid both introducing a new tax regime on the producers and disturbing existing contractual relationships.
  I have indicated, in responding to my hon. Friend's intervention, that the gas levy is not a crude profits tax. Taxing profits at a high rate could act as a disincentive to efficiency and could encourage extravagance in expenditure. The levy is a charge on the corporation's gas purchases, fixed for three years ahead to cover the period of the current financial target and limited to PRT-exempt gas. Such gas at present comprises the bulk of the corporation's supplies, but by the early years of the next decade this proportion will have fallen very considerably. So the impact of the levy on PRT-exempt gas will decline as this cheap gas runs out.
  Let me make it clear, too, that the levy will make no difference to what happens to prices. The rates of the levy specified in the Bill have been set to be consistent with the pricing policy that I outlined earlier. Although, as the
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  preamble indicates, the Bill takes the form of a Ways and Means measure, intended to make an addition to the public revenue, in reality neither the purpose nor the effect of the Bill would be to draw additional moneys into the public sector, only into the Exchequer. In the absence of the gas levy, the corporation's surplus cash would continue to be deposited with the national loans fund and would continue to bear interest. For the reasons I have already indicated, it would be wrong to allow such surpluses to continue to accumulate. I think that that was recognised in the Green Paper to which I have referred. The effect of the Bill will be to transfer these cash surpluses from the corporation permanently to the Exchequer.
  Mr. Dick Douglas: In view of the length of time that the Secretary of State proposes that the levy should run—three years—what is his estimate of the length of life of the contracts which might be applicable to the levy in future years? How long will they have to run?
  Mr. Howell: They will run down at different speeds. If it helps the hon. Gentleman, we would move from about two-thirds of our gas from the tax-exempt contracts down to less than 40 per cent. in the next eight or nine years.
  I should now like to turn to the Bill itself. Clause 1 provides, in effect that for the current year, 1980–81, and subsequent years a levy shall be payable in respect of gas purchased by the corporation from gas fields or reservoirs on the United Kingdom continental shelf under contracts which are at present not subject to PRT.
  Clause 2 specifies the rate of the levy for the three financial years 1980–81 to 1982–83. This is specified at lp, 3p and 5p per therm for each of those three years. A rising rate of levy is consistent with the movement towards economic prices in the domestic sector and with likely movements in oil prices. On the basis of the most recent financial forecasts of the BGC, the amounts of levy payable are expected to be about £130 million in 1980–81, £420 million in 1981–82 and £750 million in 1982–83. Post-levy profits in the current year are forecast to be in the region of £300 million with expectation of similar outturns in the following years.
  The precise rate of the levy inevitably contains an element of judgment. The rates proposed in the Bill represent a sensible balance, reflecting the need both to remove windfall gains from British Gas while enabling the corporation to operate viably in a commercial context.
  Clause 2 enables me, with the approval of the Treasury, to vary by order, subject to affirmative resolution of this House, the rates of levy set out in the Bill. This power is a precaution against unexpected changes in circumstances, while recognising the merits of leaving the levy unchanged so far as possible so that British Gas can have a settled financial framework within which to work. This framework comprises the financial target and the levy, both currently proposed for the three-year period 1980–81 to 1982–83.
  For subsequent years, the intention is that the rate of levy should be specified by order, again subject to affirmative resolution. No decisions have been taken in respect of the rate of levy appropriate for subsequent periods.
  Clause 3 deals with the manner and timing of payments of the levy. We intend that quarterly instalments should be paid in arrears.

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  Clause 4 covers the situation where gas is extracted and charged for levy or for PRT, and then stored in a PRT-exempt reservoir. The aim here is to ensure that no stored gas should be "double-charged".
  Clause 5 deals with measuring and testing equipment. The intention in general is that, where British Gas is purchasing gas at arm's length from producers, the levy will be based on the corporation's audited returns. But where the corporation or one of its own subsidiaries is responsible for producing gas liable to the levy, it may be necessary to specify and examine the metering equipment used to measure the number of therms of gas taken. Clause 5 provides the necessary powers.
  Clause 6 specifies that the sums received by the Secretary of State in respect of the levy shall be paid into the Consolidated Fund. An account, certified by the Comptroller and Auditor General, shall be laid before Parliament each year.
  That is the detail of the clause. I turn now to the effect of the levy on the financial position of the British Gas Corporation. This is obviously important. When I announced our intention to impose the levy, I said that the corporation's three-year financial target would be modified to compensate for it so that there would be no effect on gas prices. As I announced last week, in a written reply to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), I have agreed with British Gas a revised finacial target, expressed as an average annual rate of return to be achieved over the period April 1980 to March 1983, of 3½ percent. on net assets valued at current cost. This target is related to current cost operating profit after taking account of depreciation but before interest and tax. This revised target, which is subject to passage of this Bill, reflects the forecast effects of the proposed rates of levy and of the new current cost accounting standard on the target of 9 per cent. that was set on 16 January 1980.
  A return of 3½ per cent. on revalued assets would be appropriate, in the Government's view, for an industry such as British Gas, taking into account the nature of the business and the sort of return made by industry generally, both in the past and at present.
  The corporation's post-levy profits over the three-year period, together with the provision for depreciation, should be sufficient to finance its current major capital investment programme which is currently under way, aimed at improving gas supplies to industrial and domestic consumers and providing secure supplies to more of those seeking them.
  To conclude, let me state again the main elements of the policy behind the Bill. First, the Government believe, as does the industry, as do those outside who have examined the matter, and as did the Labour Government, that the aim should be for prices to be economic. That means that prices must reflect: the costs of bringing forward new supplies, not the costs of old supplies under historically cheap contracts. Only in this way will supply and demand be kept in reasonable balance and sensible investment and consumption decisions be made. Cheap gas is no use if there is no gas to be cheap and if industry and jobs go begging.
  Second, this approach, incidentally, results in big windfall gains accruing to the British Gas Corporation. It makes no sense that these gains should be held in reserve solely for the ultimate use of the corporation. It makes every sense that they should be at the disposal of the Exchequer.
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  Third, the proposed gas levy on PRT-exempted gas is a simple, efficient and appropriate means for removing the windfall gain for the benefit of the nation as a whole and without affecting gas prices.
  7.20 pm
  Mr. Merlyn Rees: We are grateful to the Secretary of State for explaining the technical clauses.. It is only in the past two or three months that I have moved into an economic-industrial sector. I have visited and listened but talked very little to those involved in the energy industry outside the House. I must report a sense of frustration. Energy matters are discussed in symposia throughout Britain, but rarely on the Floor of the House. For example, everyone except the House is talking about the problems of the coal industry.
  I shall relate some general matters to what arises from the Bill. The right hon. Gentleman talked about investment. He said that the money within the charge of the British Gas Corporation was for the purpose of investment, but we have heard little about investment. It has been mentioned purely in Gladstonian revenue terms. The right hon. Gentleman talked about the Green Paper of the Labour Government, which observed that there would be surpluses. That paper discussed the uses to which the money would be put. The right hon. Gentleman said that the House would be free to debate the uses to which the money should be put. That is an issue that should be discussed during the debate.
  I take up the procedural matter that was raised by the hon. Member for Bedford (Mr. Skeet). A Ways and Means motion was resolved on 3–4 February. I presume that that was done because of the Budget-taxation nature of the proposals. The moneys went into the Consolidated Fund with all the other moneys that go into that fund. I understood that the resolution was unamendable, by its very nature. I hope that that procedure will not prevent us from discussing and trying to amend the nature of the levy and the amount of the money.
  The gas industry is most successful. It has transformed itself. It is highly productive. In the short time that I have been involved in energy matters there have been great changes. Those involved in the corporation are proud of their industry, as people always are when they are in a successful industry. However, it is an industry that will have to be ready to find alternative supplies and alternative sources of gas in future.
  If the corporation were a joint stock limited liability company, having to look forward five, 10, 15 or 20 years in determining its financial policy, it would have to put aside money for the long-term future. It is a nationalised monopoly and it has to adopt the same approach. We say that it will be about 20 years—I do not know whether the estimate is right—before the gas industry will have to find alternative supplies in the United Kingdom. It is necessary to engage in research now. Are there sufficient moneys in the corporation to enable the necessary fundamental research and development to take place, when account is taken of the moneys that will be taken from it by the levy?
  Mr. Tim Eggar: Does the right hon. Gentleman use the same argument when he discusses PRT on oil companies?
  Mr. Rees: I do not. I understand the hon. Gentleman's argument. When an oil company is arguing with the

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  Government about the rate of PRT, I, for one, would consider more sympathetically its representations if they were based on ploughing back profits for the future rather than distributed profits. It is perfectly proper for a company to think of the long-term future.
  The annual report refers to that. It refers to coal gasification and a development centre on the North-East Coast and another at Killingholme, on Humberside. Are there enough resources for the corporation to do its job properly? The money for future projects will have to come from profits, namely, the surplus within industry. Whatever else economic history shows, it shows that industrial capital is its own progenitor. I want to be sure that the corporation has sufficient reserves to undertake the task that it has to meet in the next decade. If the levy makes it more difficult for the corporation to do that, we should all be concerned.
  In another place on 22 October we were reminded by Lord Strathcona that the profits of the corporation are needed
  "to finance the very substantial British Gas capital programme which is around £4,000 million over the next four years."
  Has the levy taken that into account, despite the fact that it is an equation that uses the former cash limit? Lord Strathcona observed that the programme
  "is aimed at strengthening the gas transmission, distribution and storage system and bringing ashore some of the expensive additional supplies."—[Official Report, House of Lords, 22 October 1981; Vol. 413, c. 2034.]
  I read the report of the Select Committee on European Matters—the Select Committee of another place—that was printed on 16 December. I was interested to read that Lord Kearton argued that not enough drilling was being done to determine the extent of gas reserves, which he thought were being underestimated. If the reserves of money capital are not available to the corporation because they have been taken by the Governmentc the corporation will have to return to borrowing. At present it is earning such surpluses that the Government consider that it is proper to take part of them. What will happen when it needs to borrow? When that happens it will be said, on a political level, "Here is another industry asking for money". What will be said if it asks for subsidies?
  Mr. Skeet: It will be self-financing.
  Mr. Rees: If that is so, and the money is raised elsewhere, that is one thing, but I am entitled to ask whether the levy that is placed on the corporation will have an effect on future financing. The 1979–80 accounts show quite clearly that the corporation's total profit was £466·3 million. The accounts explain that the corporation met its financial target, and refer to the Secretary of State's words about future cash limits.
  One part of the financial and economic framework within which the corporation operates, as with other nationalised industries, is the external financial limit. All outstanding financial advances were repaid early in 1980. It is said in the accounts that the Government required the corporation to repay a further £190 million, thereby increasing the external financial limit for 1979–80 to minus £499 million. It is explained that two-thirds of the £190 million originated from internal sources and that some areas of planned expenditure had to be deferred. Was that necessary capital investment that had to be deferred, and does it affect the long-term position of the corporation?
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  The price increases a year or two ago were investigated by the Price Commission. The corporation's proposals were approved. What about Government policy? In general, the Government say that they are non-interventionist, but with the corporation they are interventionist. The report states:
  "While details of the tariff changes necessary to achieve the financial target for the three years April 1980 to March 1983 are a matter for British Gas, the Government has informed the Corporation that it had in mind the importance of correcting the underpricing of domestic gas and of narrowing the gap between the price to the domestic consumer and that to industry. The Secretary of State stated, in connection with his announcement of the new financial target, that the Government expected domestic gas prices to increase in 1980–81 by 10 per cent. over and above the rate of inflation, followed by comparable real increases in the following two years."
  The report spells out the increases that follow.
  Soon, by Government fiat the price of gas will go up again. In The Times on Saturday the Government announced that April's increase will be the third in 12 months, and that domestic prices will rise by about 15 per cent. from April, with a further 10 percent. increase from October.
  The total 25 per cent. increase is a Government decision. It must be justified at a time of recession. What is done in the upturn from the slump or in the normal boom and slump which seems to have disappeared, is one matter. If prices are increased in a classical slump, less money is available to the community for the necessary reflation. In the context of the Bill, profits will rise, and that is Government policy. I listened to the Prime Minister on the Brian Walden show on 1 February, talking about monopolies. She said that even the nationalised industries could not continue to put up prices. In this instance the Government are putting up prices.
  The moneys for the levy are to be paid into the Consolidated Fund. It is incredible that moneys paid to the Government from productive industry should be treated as pure revenue, in the old-fashioned sense of the term. It works both ways. It is also incredible that loans to industry should come from the Consolidated Fund. It is not the vehicle for the judgments involved. The source is suspect in that respect.
  Government Members talk often of the judgments that have to be made about whether money in the private sector should be used. I understand their thoughts. They talk about the return on capital and its relationship to the rate of interest and the minimum lending rate. When money comes out of the Consolidated Fund, or goes into it, it is not a source of revenue, nor is it where the money should go when right judgments have to be made.
  That is relevant to the Bill, because of the nature of the legislative process. The money is to go into the Consolidated Fund, with everything else. At least the Consolidated Fund should be divided into two, so that the division is clear. It should be clear in the Budget which money has come from industry and which has gone to industry. The money received from industry, including North Sea oil, should be paid into an investment account. We can argue at some other time whether that should involve an investment bank. The name matters, because judgments have to be made about the use of the money and about the benefit that it brings to the nation in the long term.
  There is concern about the treatment of nationalised industries' money, whether the payments are in or out.

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  There is talk of subsidisation, which is the wrong approach to investment industries, which, by their nature, cannot be treated as though they are normal types of company.
  I turn to the question of cash limits. The money that is to go into the Consolidated Fund is taken out of the cash limit—the external finance limit. It has to be adjusted to take the levy into account. Sir Leslie Murphy, amongst others, has talked recently about the problem and the effect of cash limits on nationalised industries. He said that there had been a catastrophic effect on capital formation in the public sector, and that the justification was to reduce the public sector borrowing requirement.
  Time and again in recent weeks, people that I have met in industry—people not of my political persuasion—have questioned the public sector borrowing requirement and the treating of investment in industry as if it were normal expenditure by the Government. In an article in The Guardian, Sir Leslie said:
  "In fact, all nationalised industries are in need of huge capital expenditure. The argument for the cuts is, of course, to reduce the Public Sector Borrowing Requirement; but it seems nonsensical to lump together revenue items, such as social security payments, and capital expenditure on wealth producing assets for purposes of arriving at PSBR.
  Mr. Peter Rost: I am in sympathy with the right hon. Gentleman's argument, but does he agree that there is a difficulty in drawing the line between revenue expenditure and capital expenditure in relation to spending Government money? For example, how would he categorise the support that the Government have given to the British Steel Corporation and British Leyland? Is that capital expenditure, social security, or subsidy?
  Mr. Rees: It is right to question what proportion of Government money is investment, in the classical sense, to keep the motor car industry going. Investment in the British Steel Corporation is almost entirely in order to maintain an investment industry. There is a need for investment in such industries. I do not pretend to be an accountant, but to put the levies in the Consolidated Fund is the wrong approach.
  In the short debate that we had recently the Minister said of the levy:
  "It will not affect the pricing policy of the corporation."— [Official Report, 3 February 1981, Vol. 998, col. 261.]
  That appears not to be the view of the corporation. In its view the implementation of the levy will lead to an increase after five years. I hesitate to say that it will be 5p, although that figure goes round in my mind. What I am sure is that the chairman in his report to the employees said
  "It is inevitable that this new tax will lead to higher gas prices within the next few years."
  The Minister the other night and the Secretary of State today said that it will not increase prices, but the chairman of the Gas Corporation thought differently in the document sent to workers.
  In June 1980 the cash limit was 9 per cent. and prices were to go up. The cash limit has changed twice since then. It was announced on 4 February that from April 1980 to March 1983 the revised financial target was 3½ percent. on net assets valued on the new current cost basis, which was introduced since the first cash limit was set. The revision reflects the forecast effects of the proposed rates of levy and of the new current cost occounting. What happens if, after three years, the levy is still there? Surely it is a cost to the corporation that will affect prices.
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  I did not understand the Secretary of State's reply about the length of contracts. The question referred to a period of three years. The Secretary of State mentioned seven, eight or nine years. We must be clear. The Government say one thing and the British Gas Corporation another.
  The Bill is about the financing of the corporation. It is a tax measure that affects the amount of money available for all the purposes for which an industrial concern needs money. It also, therefore, affects prices. On Friday I met representatives of the chamber of commerce for Yorkshire and Humberside. They brought to my notice a document called "Utility Newsbriefs", with the headline:
  "British firms still pay top world prices for natural gas."
  The Government and the CBI take different views of gas prices in different parts of the world. A task force is to report on the matter just before or just after the Budget. It may make a recommendation on energy prices. By this measure we are taking over£l billion from the British Gas Corporation over the next three years, which will leave it precious little room for freedom of action.
  The levy can be paid only because the corporation raises charges. The representatives of the chambers of commerce also state that it is common ground not only that our industry pays more for its energy supplies than our overseas competitors but that the corporation is secretly negotiating large gas contracts. A user will negotiate a contract believing that he has done well. Months later he may discover that someone else in the area has paid a good deal less. They argue that contract prices in such nationalised industries should be generally known.
  The money from the corporation will go to the Consolidated Fund. What about the finance for the £700 million pipeline? A consortium is involved. The corporation recently stated that onshore and offshore work was proceeding according to schedule. The aim is to have the first gas ashore by 1983–84. It has been put to me that if the matter had been left to the corporation to handle out of its own pocket the system would have been in operation much sooner, and time would not have been wasted on negotiations with the Scottish banks.
  Finally, Northern Ireland, which is part of the United Kingdom, has a fragmented gas industry. It had not been associated with the nationalised corporations for 40 years or more. Who will pay for a gas system to be developed in Northern Ireland, whether it comes from Kinsale in the South or across St. George's channel or the Irish sea? I presume that the money will come from the Consolidated Fund and will be a direct charge on the Exchequer. I do not believe that such a development in Northern Ireland would be undertaken by an entrepreneur. What is the Government's view on financing the new gas industry in Northern Ireland?
  On paper the Bill is a simple transaction, but it is not so simple when it comes to pricing. The British Gas Corporation says one thing and the Government another. I have raised wider issues, such as the pricing policy of nationalised industries. The time has come to reconsider the policy. The Government have given no convincing answers to justify putting the money into the Consolidated Fund. Capital investment in the corporation is far too low, which adds to the general industrial depression. The nationalised industries should take the lead in pulling us out of the depression.
  The technicalities of the Bill are impeccable, but during the later stages of the Bill we must probe the Government's actions. We should use the Bill as a vehicle for wider

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  discussion about the financial organisation of the nationalised industries, particularly as it affects the PSBR and the Consolidated Fund. We should not vote against the Bill on its technicalities. It is a small technical Bill, but it enables us to probe the Government's views on much more important matters. In the past 10 or 15 years, under both Governments, we have not got the policy right. We should use this Bill to get it right. The money should not be paid into the Consolidated Fund. It is not merely revenue; it is money for investment that may have to be used in a wide variety of industries in the months and years to come.
  Mr. Albert Roberts: Does my right hon. Friend agree that some of the money could be used to electrify British Railways, which would stimulate industry and mean that over the next 20 years our railway system could become dependent on electricity from coal?
  Mr. Rees: That would be a reasonable and sensible investment policy. However, I should be much happier if we had an investment account, so that when such judgments were made the money would be available.
  Mr. Skeet: The right hon. Gentleman made a very good point about a separate investment fund. I have been pursuing that argument for a long time. The right hon. Gentleman will recollect that his own Government talked about this but never got around to establishing the fund. The Treasury was in control and would not allow them to do so. Is the right hon. Gentleman suggesting, as part of the policy of the current Labour Party—the one to which he belongs—the establishment of a separate investment fund for North Sea assets?
  Mr. Rees: I think that that is the sensible thing to do. I believe that it is what will be done, and that changes will be made towards it long before there is a change of Government. The fact that a Government went in a certain direction, whether because of the Treasury or for whatever reason, does not matter very much. I think that this is a change that ought to be made. It is in that sense, and not on the technicalities, that, on behalf of the Opposition, I put it forward tonight as one of the major reasons why I believe that we should vote against the Bill.
  7.51 pm
  Sir Hugh Fraser: My hon. Friend the Under-Secretary will have to respond to a number of questions when he replies to the debate. The first is why the Bill was not brought forward as part of the Budget, since it is essentially a taxation Bill on an industry. I, personally, am opposed to all windfall or retroactive taxes. I believe that they are bad for investment, set up a bad relationship between the investor and the Government and can cause breaches of trust.
  I know that the powers of my right hon. Friend the Secretary of State are not dissimilar to those of Mr. Rockefeller at the height of Standard Oil. He controls all that he sees. He controls the North Sea. He controls the coal mines. He is the czar of energy. Yet he has feet of clay, because the props are always being chipped away from under him by the Treasury, and by the trade unions as well. This is a serious point. The Treasury is here intervening wrongfully, I believe, because there are far more serious energy problems to be faced.
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  The Minister referred to the future. It is only fair to refer to two matters which need to be more properly developed than they have been so far. One is North Sea oil. Last year saw the lowest number of drillings for oil since 1973. The other is the North Sea gas pipeline. I believe that those are the two most important investments that this country can make. My right hon. Friend is the mastermind of these affairs. But what happens? Only two months ago the Treasury, because it gets its sums wrong by an average of 50 per cent., rushed at the oil companies asking for £1,000 million more. That does not exactly encourage the oil companies to go ahead with the necessary drilling programmes.
  Will the Bill be helpful in the major investment that British Gas and the British nation must make in establishing the North Sea gas pipeline, which will prevent hundreds of millions of cubic feet of gas from being burnt off to nothing? That is the biggest and most important investment that my right hon. Friend should undertake—in addition, of course, to the gas pipeline to Northern Ireland. These are matters of great importance and I question very much whether the correct way of dealing with the energy industries is for my right hon. Friend to allow himself to be treated as a footstool and to be trampled upon by the Treasury. Unfortunately, we see this again and again. When the Treasury makes mistakes, it lashes out in all directions trying to scoop in everything that it can. This is where my right hon. Friend must really fight a proper action.
  I agree with the right hon. Member for Leeds, South (Mr. Rees) in drawing attention to the views of the Gas Corporation. That is a very able body, which has done a wonderful technical job. The corporation makes it quite clear that in its view the proposed levy of £1,300 million over three years will eventually put up the price of gas to the consumer. That is my first main objection. As I have said, I am opposed to windfall and retroactive taxes.
  Another aspect must be questioned. I am proud to have in my constituency both Wedgwood and Comings, which is an important glass manufacturer. I must question whether, at a time when unemployment is rising faster in the West Midlands than anywhere else, it is proper to impose a burden on the gas industry, especially when in most instances our prices are considerably higher than those in competitive countries. I therefore question very much the policies put forward by my right hon. Friend in relation to gas.
  I believe that it is perfectly proper, although it has never popular, to bring domestic prices more into line with industrial prices. One of the great problems of this country over the past 40 or 50 years since I have been in the House is that the consumer has been subsidised by industry, whether in relation to electricity, gas or coal. Unpalatable though it may be, and faced with mounting unemployment and export problems, and with unfair competition from the United States where chemical processing is infinitely cheaper because of its cheaper gas, I am sure that the time has come for the Government to consider using these windfall profits and this unearned income to get the furnaces of British industry going again.
  I do not wish to see the 1,300 million put into reducing the domestic tariff. We can all switch on, and we can be encouraged to switch off unnecessary gas. That is not so for industry. The potteries, the glass manufacturers and the

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  steel industry need a continuous supply. In my view, that supply is too expensive here compared with that of our rivals.
  There has been an investigation by a powerful, rather secretive committee. If one rings up, one is told that it cannot give the information. The information has been given to this great Government committee. I believe it is called a task force. Perhaps it has hats and helmets and assault troops. More likely, perhaps, it is a lot of dreary old men stuck in an office. If one rings up this great assault force and asks for the figures, one finds that they cannot be given.
  Fortunately, however, I have one or two figures that are worth giving to the House in relation to the competitive situation. First, in the glasshouse industry, which some of my hon. Friends know about, the Dutch are giving a 40 per cent. subsidy. Indeed, our growers are dragging them before the great justices of the European Court. The glass industry has a variety of processes, but I know that in respect of identical processes such as heavy melting of glass, the price of energy for Cornings is 24·7p per therm in Staffordshire. In France it is 19·3p per therm for precisely the same activity. That is a difference of about 20 to 25 per cent.
  I now take the figures from the British Pottery Manufacturing Association. German potters have gas costs that are 10 per cent. cheaper than the price at which British companies must purchase it. Those are serious figures. If the Government want to pump prime a recovery in certain industries, to bring these international costs into line is surely the way in which it should be done.
  Gas costs in the glass industry are about 6 per cent. of total costs. The cost in pottery manufacture is rather higher. In the sanitary and tile sectors of the industry, gas supplies amount to 13 percent. of their costs. The average for the pottery industry as a whole is about 9 per cent. Potteries use between £15 million and £18 million worth of gas each year. A price reduction of 10 per cent. would make a tremendous difference to jobs, profitability and competition overseas. That is where some of this money should go, instead of flowing into the maw of the Treasury.
  I hope that what should have happened on the previous Budget day will happen on the next one, namely, that the Government will make some concessions. They should make concessions on their calculation of the price of oil—£8 which is not put into European prices—and above all make concessions so that gas prices for industry and heavy users are reduced and brought into line with those in Europe. Unless that happens, I must warn the Government that I shall be forced to vote against the Bill when it comes back to the House.
  8.2 pm
  Mr. J. Enoch Powell: As I indicated when the House considered the Ways and Means resolution on which this Bill is founded, my hon. Friends and I could not possibly support a measure which raises from the gas industry sums hugely greater than would be necessary to embody Northern Ireland integrally into the gas and energy economy of the United Kingdom.
  Before I turn to that more domestic matter, I should like to make some general comments on the Bill, which in this sense I find to be a jewel of a Bill, in that like a cut
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  diamond, as one moves it around in the light, new and ever newer financial facets present themselves to our contemplation.
  At the outset, I must say that I could not share the enthusiasm of the right hon. Member for Leeds, South (Mr. Rees) for reversing the principle of the Consolidated Fund, which we owe to the Younger Pitt. I do not believe that there can result anything but confusion in national finance from dismantling or sub-dividing the Consolidated Fund. There was a moment when the right hon. Gentleman was perilously near hitting the trail towards a road fund, thereby entering that financial quagmire known as an assigned revenue, and sure enough, as he trembled upon the brink, Nemesis appeared in the person of his hon. Friend the Member for Normanton (Mr. Roberts), who, hearing that there was to be a fund for investment, said "Well, we could do with that on the railways as well".
  There simply is no reason why the application of a particular revenue should be related to the source from which that revenue is raised. At this end of the century, I should have hoped we would not need to go through the old, long and bitter adventure of the road fund, from which that lesson at least should have been learnt.
  The Secretary of State was anxious to say that this was not a taxation measure. Indeed, said he, the Government would have been just as well off without this measure. That was a remarkable and significant admission. He said that if these funds are not raised by the levy, they would go to the national loans fund; in other words, the British Gas Corporation would lend them to the Government. Therefore, the Government are no better or worse off in total as a result of this levy than they would be had the Bill not been introduced.
  There is an interesting facet to that which I should be surprised accounting to find was absent from the mind of the Treasury. After a bit, one learns the way in which the Treasury mind moves. The Treasury mind is much directed towards the size of the PSBR. If one can convert an item from borrowing into revenue, one will of course reduce the PSBR—hooray, hooray—and that among other things is a device whereby that daunting total can be lessened.
  The Under-Secretary of State for Energy (Mr. Norman Lamont)indicated dissent.
  Mr. Powell: The Minister shakes his head, but that is what the Secretary of State said. He said that this sum, if not raised and attributed to revenue by this levy, would have been lent to the Government and so have gone to meet the PSBR.
  Mr. Skeet: I am obliged to the right hon. Gentleman for giving way. How is it possible, if it goes to the national loans fund, that it can only be by agreement with the industry in question? This is not an industry which can be given a specific direction. If it were, the chairman could be directed, but he cannot be so directed.
  Mr. Powell: I follow the hon. Gentleman's point. Indeed, it was exactly what I was coming to. The Government's conviction that these huge sums would in any case have had to be loaned to the national loans commissioners was based upon their conviction that the British Gas Corporation would not wish to spend them, or would not be allowed to spend them, upon capital investment. Thus, the whole proposition depends upon a

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  foregone decision as to the investment programme of the corporation, an assumption that the British Gas Corporation will not invest more than can be covered by the £300 million per annum which it is estimated it will retain. This is merely financial hocus-pocus and the shift of a huge sum of money over three years from one superscription in the national accounts to another superscription.
  I turn to consider that underlying assumption regarding the £300 million per annum which will remain to the corporation for use, among other things, for or towards its new investment. Turn the Bill through another angle and it becomes a study in monopoly. This huge sum, of which the House is partially disposing tonight in the Bill, is a producer surplus which has accrued, and could only accrue, because of the monopoly character of the British Gas Corporation.
  It is instructive for a moment to consider what the position would have been in the absence of that monopoly. In that case, the fact that the raw material of the gas industry was so much more cheaply available than other raw materials would have produced intense competition in the promotion and expansion of this form of energy at the expense of others. It would also have produced intense competition in the exploitation of the sources of gas. Indeed, as was said at an earlier stage of the debate, there would have been more drilling in those different circumstances.
  Mr. Eggar: Would it not also have led to the Government of the day imposing very heavy taxes on the people producing the gas and developing it from the North Sea?
  Mr. Powell: No, because that makes an assumption about what those producing the gas would have done with the surplus. If they had reinvested that surplus in the course of the more intense competition that I have posed, only a fraction of the additional surplus would have gone to revenue.
  Mr. Eggar: While the right hon. Gentleman may be right, will he point to the instances in the North Sea with regard to the oil industry where that has happened? Will he also point to other areas where what he said would happen has happened?
  Mr. Douglas: Prices.
  Mr. Powell: I shall come to the question of prices in a moment; I had anticipated the intervention of the hon. Gentleman.
  To the hon. Member for Enfield, North (Mr. Eggar) I say that we are comparing the size of a producer surplus in one set of circumstances with that in another. If there had been a monopoly in the supply of oil, as there is in the supply of gas, there would have a been a much larger producer surplus to be disposed of by the oil industry.
  So, in effect, we are seeing the consequences of monopoly in the distortion that it has imposed upon what otherwise would have been the pattern both of investment and consumption. The Government say—I have on the record an epistolary debate with the Secretary of State on this subject—that they have engaged in economic pricing of the gas industry and that gas prices have been drawn up towards the level at which they approach the marginal cost
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  of alternative sources of energy. Even there, a fallacy is fed into the consideration; for the marginal unit cost of a particular form of energy varies with the volume of production and consumption of that type of energy. The nationalised status of the energy industries has resulted in a complete distortion and unreality in the marginal costs that fall to be compared, so that an inescapable argument in a circle underlies the pricing policy that the Government are imposing on the gas industry—a consequence, in turn, of the monopoly in most of the energy industries, and particularly in this one, the gas industry.
  There is thus a great deal to be learnt from study of the implications that lie behind this apparently innocent and, as the right hon. Member for Leeds, South said, technically impeccable Bill.
  I turn now to more domestic matters. There has not yet been a proper open public debate and discussion, either inside or outside the House, on the comparative economics of bringing Northern Ireland into the gas economy of the United Kingdom or liquidating the gas industry of the Province—which is the Government's present policy—or alternatively linking Northern Ireland to the energy economy of the Irish Republic. Obviously there are political aspects; but the economic aspects have not been properly displayed or argued either inside or outside the House. No doubt that is why the Economic Council for Northern Ireland and Coopers and Lybrand are in profound disagreement with the conclusions upon which the Government based their decision to write off the gas industry in Northern Ireland and abjure the prospect of linking it with the mainland.
  Against that background, a background in which nothing would do more to maintain and revive employment and economic activity within the Province than a reduction in the real cost of energy, we are presented with a Bill by means of which there will be transferred to the general purposes of the State annual sums of money rising over three years from £130 million to £750 million. The figure that we are talking about in deliberating upon a gas link with Northern Ireland is about £100 million. That is the approximate capital investment, little more than peanuts in comparison with the accrued surplus of the gas industry of Great Britain that the Government have decided will not be required for investment purposes.
  The right hon. Member for Leeds, South is right in saying that we are taking an economic decision—an investment decision—by omission. My hon. Friends and I believe that if that decision is to be taken, it should be taken openly, upon the basis of the full facts and debated; and that contention is strengthened in our minds by a Bill of this sort, illustrating the huge surpluses with which, particularly in the context of gas, the nation is dealing.
  My hon. Friends and I would deserve not to be allowed to go home if, having registered the case and the complaint of the Province, we did not vote against the Bill tonight.
  8.17 pm
  Mr. Peter Rost: It is with some humility and trepidation that I follow the right hon. Member for Down, South (Mr. Powell). I support his argument that the State gas monopoly has distorted the market and the marginal cost. The State monopoly has distorted the market by holding down the price of gas to a level where the exploration and development of new resources have been made uneconomic and so far below

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  the free market price that could now be obtained if producers were in a position to obtain the best market price—which is much higher, particularly in Europe. For that reason, I support the Bill.
  My constituents ask angrily why the Government should have to tax gas. Whatever fineness we put on it, this is a tax, a royalty. My constituents do not understand. They may accept, reluctantly, that we have to tax gambling, drink, tobacco and even dog licences, but they wonder why such an essential commodity as heat should be subjected to a tax by a Conservative Government, of all Governments. We can reply—as some hon. Members perhaps do—by saying that we need the tax because we must have the revenue. We can say "Why should we not tax gas when we tax almost everything else, including the essentials of living, such as earnings, and when we impose VAT on most commodities? We even tax employment, petrol and North Sea oil, so why should we not tax gas?"
  Such a simplistic answer is not reassuring to my annoyed constituents, particularly those who cannot afford adequate levels of heating at these prices, let alone those that they will undoubtedly have to pay in the years to come. In view of the existing profits of British Gas and the forecast of higher profits, they find it difficult to understand why a tax, royalty or levy shoud be imposed. They also believe that we are taxed highly enough already.
  I understand those complaints and sympathise with them, but despite that I have no reservations about wholeheartedly supporting the Bill. I congratulate the Government on tackling courageously policies that will lead to realistic energy pricing. Indeed, I shall try to present an argument that it is the failure of previous Governments to tackle this unpopular policy that has acted against the best interests of consumers in this country. Industrial as well as domestic consumers feel angry because misguided politicians have in the past deliberately led us to believe that gas would be cheap and plentiful, as if tomorrow would never come. Now, having realised that tomorrow is on its way, politicians are too gutless—or have been until the present Government took office—to warn the nation that realistic energy pricing in an increasing area of finite gas resources has to come.
  It is quite understandable, therefore, that the gas consumer should now feel cheated, just as the electricity consumer has felt conned by politicians who in the 1960s deliberately subsidised electricity prices by subsidising coal, by subsidising the construction of power stations, and by persuading the consumer to install all-electric central heating and off-peak storage heating because at that time it appeared to be the cheapest form of fuel. Those consumers feel cheated because thay can no longer afford to switch on their electric heating appliances now that the world price of energy has had to assert itself in electricity prices.
  I believe that gas consumers will feel just as aggrieved as, for example, the American public feel aggrieved now because politicians in America have deliberately tried to hold down domestic oil and gas prices below world prices, pretending that the rest of the world did not exist. The holding down of those prices has encouraged the importation of more oil because it has discouraged conservation and discouraged the development of indigenous oil and gas, and alternative energy policies.
  The result of that disastrous policy can be seen in the declining value of the dollar over the past two years, the importation of inflation, and a recession that has
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  rebounded on the rest of the world. Moreover, because the Americans have become increasingly dependent upon imported oil, and because they have held down the indigenous price of the product they have contributed to the world rise in oil prices by underwriting and supporting the OPEC price, simply because they are dependent upon importing so much from the OPEC countries.
  I have used that as an example—just as I have used the example of our subsidisation of electricity prices in the 1960s—to illustrate my case that we are in danger of making the same mistake over North Sea gas unless we now do as the Government are courageously proposing to do.
  We must get across to the public that the gas from which we are at present benefiting as consumers comes from the early contracts that were obtained because British Gas was given a State monopoly as a sole buyer. The early contracts in the southern North Sea basin were obtained at screwed down prices which are now so unrealistic that there has been practically no development of new gas resources. The result of that low-pricing long-term contract was that British Gas could not fail to make huge profits and could not fail to over-exploit its marker. Anyone who was not an absolute idiot sought to join the scramble for North Sea gas.
  The market has now become over-developed, as any market will if the product is sold at half the price of alternative products. The ludicrous position has arisen that we have now so over-developed the market and so discouraged the development of new gas reserves that we are having to import our gas from Norway at five times the price that we are paying our suppliers in the southern North Sea basin, and we are even scrambling to buy more from Norway to meet the growing demand.
  These southern North Sea basin fields will soon be exhausted, and as more expensive reserves have to be brought in the gas price must rise very much more steeply than it is rising now—unless we are to do without it or to have rationing. I am sure that that would not appeal to those of us who believe in a free market economy. Therefore, we must warn the consumer now that he will have to pay the long-run marginal cost of gas if he is to have that gas. If we do not warn the consumer now and start charging a price that is related to the expected cost of future supplies, the consumer will not simply feel real hardship, but will feel just as cheated as did those consumers who installed all-electric central heating in the 1960s.
  I therefore maintain that it must be in the consumers' interest that we tax the present exceptional profits that British Gas is still making from those cheap contracts, and regard them as windfall profits, in order to smooth out the inevitable price rises that will come as the more expensive gas becomes an increasingly large proportion of the gas consumed. This is the only way in which we can fairly distribute the benefits of that North Sea windfall gas to the nation as a whole.
  I argue further that the holding down of the gas price because of the artificial monopoly position has already harmed the nation and the consumer. It has, for example. undermined the development of more efficient energy systems. I refer, as one example, to the development of combined heat and power and district heating in this country. It is because the electricity industry was subsidised in the 1960s and because gas has been under-priced in the 1970s that any scheme that might have been

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  economically viable for the use of hot water from our existing power stations has not proved economic. Feasibility studies that have been done over the years have shown that there is not much point in using that hot water. We might just as well go on throwing it away into the rivers, simply because gas has been under-priced and electricity has been subsidised.
  Compare that position with what has happened on the Continent, where, increasingly, a heat grid has been developed and where whole cities are heated by hot water, relatively cheaply. That is the sort of energy that we throw away. We have an example of how well-meaning and well-intentioned but muddle-minded politicians have so meddled in the energy market that they have worked against the consumers' best interests, Whereas consumers in other countries are benefiting from cheap heat in their homes, we have virtually no district heating and no combined heat and power in this country.
  This is the direct result of the distortion of energy pricing. The countries on the Continent have had to pay the world price for oil and gas, and therefore it has proved to be economic to use the hot water from power stations—hot water that we throw away—and channel it into cities and use it for heating. We have not gone along that road because of our do-gooding politicians and their feeble attitude to doing what might prove unpopular. In pursuing that policy they have harmed the consumer and deprived millions of the heat that they could have had, which is now available to consumers on the Continent. In doing that we have also wasted vast amounts of precious energy and capital resources.
  That brings me to my second argument in support of the Bill and why I believe that it is a disservice to the consumer to continue the present artificial pricing of gas under the State monopoly. Underpricing of fuel or any other commodity in a free market discourages the efficient use of it.
  Like most hon. Members, I have two homes. One is in my constituency and is heated by gas. The other is nearer London and is heated by solid fuel. I have spent much money in insulating the home heated by solid fuel, because the fuel bills are twice those for heating the home with natural gas. I have worked out that it has not yet paid me to insulate the latter home. That may be all right for me, but if that experience is multiplied millions of times, one sees the disincentive that there has been for investment in energy conservation.
  What applies to the domestic consumer applies more to industry. In the past year or so relatively cheap gas has not been made available to industry, which has subsidised the domestic consumer. Nevertheless, in earlier years gas to industry was supplied on relatively low-price contracts. As a result, industry did not have the incentive to invest in more energy-efficient processes.
  The energy-intensive industries are suffering because of the increased cost of fuel, but many of those problems could have been avoided. If we had phased the price to world levels earlier, industry would have been provided with that incentive for investment in more efficient fuel consumption. Not only would that have reduced the fuel bills for industry, which is struggling to survive, but it would have increased productivity. As a result, we might have had less unemployment because more of our industry would have been able to remain competitive. We have
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  paid a high price for policies of holding down energy prices. It has been a short-term delusion for the consumer and a mortgage on the future. That is a further example of the fact that it is not in the consumer's best interests to hold down the price of energy, but that it is very much in the consumer's and the nation's interest to price it at a realistic market level.
  A more courageous, even-handed taxation system between gas and oil, if applied a few years earlier, would have allowed the North Sea gas-gathering pipeline to have been built long ago. The question was raised as to why we had not built that pipeline. The associated gas is being flared in vast quantities because it has not paid before to build the pipeline. The price that British Gas has been prepared to pay as a monopoly buyer has not been high enough to justify the capital investment. If the gas price had risen sooner to a European market level the gas pipeline would have been built and we would now be enjoying the benefit of that associated gas. Industry would be benefiting from it. The petrochemical industry would be more flourishing and more competitive. The consumer would have that extra supply of gas.
  That has not happened because politicians have meddled in order to create the monopoly that has held down the price. I therefore argue that more competition might have made more gas available. Although the price would have risen earlier, it would not necessarily be higher today than it will be in any case—on the contrary. As the right hon. Member for Down, South (Mr. Powell) said, with more competition, more gas would have been marketed and therefore the price in earlier years would have been higher and might not be rising so fast as it will during the next two or three years. Our associated gas and new gas fields would have been developed because that would have been cost effective, instead of the development being held back by the reluctance of British Gas to pay a market price for our gas, while it was eager to pay a higher price for the gas from Norway.
  I therefore maintain that the evidence supports the case that the more well-meaning but misguided Governments have intervened in energy pricing by creating monopolies that have held down the price, competition and the development of gas resources, the more we have taxed oil, the worse the consumer has been hit, and the worse the nation has suffered, with its wealth-creating processes held in check. Such policies have undermined the economic viability of alternative and more cost-effective fuel saving schemes such as combined heat and power and district heating. Such policies have distorted the energy market and hit the coal industry. The demand for coal has slackened because industry switched to gas at a time when it was half the price of coal.
  Such policies have failed to provide incentives for investment in conservation. They have deprived the economy of desperately needed revenue and have wasted valuable resources of energy and public expenditure. Therefore they have hit not just the consumer but the economic progress of the nation as a whole.
  Unpopular decisions are hard to take, but often it is more beneficial to take them than to duck them. I congratulate the Government on being prepared to take the unpopular decisions instead of ducking them. It is only this course that will see us on to a more realistic energy policy.
  8.36 pm
  Mr. Robert C. Brown: I declare a dual interest. First, I am a Member sponsored by the General and Municipal Workers Union, which represents 50,000 employees of the British Gas Corporation. Secondly, and more personally, I spent the first 30 years of my working life in the gas industry before being elected to Parliament. Some may say that I am still in the gas industry.
  The gas industry commands great loyalty from its staff, and that has. enabled it to become one of the most efficent in the country. It was largely through the efforts of the staff that the industry organised a fourfold expansion on time. In addition, 14 million consumers were converted to natural gas on time in the biggest conversion operation in the world. The gas transmission system was modernised, again on time. All that was largely achieved by the efficiency of the workers utilising worthwhile public investment.
  Those people, with whom I worked for so many years, are disgusted that their efficiency and loyalty are being rewarded with the penalties being imposed on their industry by the Bill. It is those workers who bear the brunt of consumers' disgust about the even higher prices which seem only to generate massive paper profits. The members of my union are at the sharp end, as I was for 30 years, on the consumer service side, and they get the complaints when prices go up to a level which bears no relation to the value of the end product.
  A leading article in the News of the World yesterday was headed "The State dead-beats". I wonder which dead-beat wrote it. It stated:
  "Two gas price rises this year, bigger bills ahead for electricity and telephones are only part of the dismal fare to be offered us by public services.
  These undertakings, which face no competition, have raised their prices by an average of 27 per cent. over 12 months. Clearly they are playing no part in the efforts to bring down living costs.
  Hard-pressed families and firms striving desperately to survive should not be dragged down by protected dead-beats."
  I do not know who the editor of that rag is, but I imagine that he saw the Prime Minister's broadcast on the Brian Walden show a fortnight ago making the quite unworthy statement that the nationalised industries cannot be allowed to push up prices in the way that they have in the past. It was palpably dishonest of the Prime Minister to make that statement on television. Either the editor of the News of the World is valiantly seeking a knighthood, like the editor of the sister paper, or he is a prejudiced idiot.
  Mr. Merlyn Rees: He could be both.
  Mr. Brown: As my right hon. Friend says, he could be both.
  There is no doubt that that type of leading article conveys less than the truth. It creates a great deal of "aggro" on the doorstep among colleagues of mine with whom I used to work. It is they who are blamed while, on the Government's own admission—that is, the more honest members of the Government—price rises would have been significantly less if the British Gas corporation had had a free hand in fixing domestic tariffs.
  The members of my union deeply resent their role as tax collectors. That is what they have become, particularly at a time when pressure on domestic budgets is increasing from other directions. The levy is seen by them as a direct tax on their efficiency. Resentment aside, the levy will be
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  extremely damaging to the industry—an effect which is of extreme concern to all employees. Unlike the Secretary of State, I have not noticed great joy among employees of the British Gas Corporation, including the chairman.
  The gas industry has an enviable record of investment. Investment is necessary if the industry is to maintain its record of success. By creaming off the top of the industry's profits the levy will reduce the amount of money left for investment. It is estimated that the corporation will make a pre-tax profit of £ 1,500 million in 1983. From that about £800 million will be paid in corporation tax. Under the Bill, a further £750 million will be taken off by direct taxation, turning a profitable industry into a loss maker. There will be no money left for this major energy industry to invest in the future. That is a direct contradiction of any sensible plan for energy supply.
  In addition, there will be little left for major mains renewal programmes which, apart from the public safety aspects, will have appalling implications for jobs not only in the gas industry but in those industries which supply the corporation.
  Is it really the Minister's intention to force a profitable nationalised industry to declare a loss after tax? How does that square with the Minister's statement to the House on Second Reading that the levy will not affect the pricing policy of the British Gas Corporation? Of course it will.
  The proposed gas levy will affect different income groups disproportionately. By levying a flat rate for each therm, the lower income groups, who already spend a higher proportion of their incomes on fuel, will suffer most. Those at the top end of the scale will hardly notice the extra tax, but for the low-paid households with children, pensioners, those on supplementary benefit and one-parent families in the first year alone, the tax will increase their expenditure on fuel by 5 per cent. By 1983, the poorest households will be spending nearly 15 per cent. of their disposable income on fuel compared with only 6 per cent. for those earning £250 a week or more.
  The levy is yet another aspect of the Government's excuse for a conservation policy ensuring that those who need fuel the most do the most conserving for the rest of the community. This is simply an extension of the Government's policy of penalising those who cannot avoid using more energy because of their domestic circumstances. Pricing will be geared to consumption rather than to any sensible use of the appropriate fuel. This rationing by price or, more aptly, by the purse. When a person does not have a very full purse, the choice is stark indeed—"Do I eat, or do I freeze?" I am afraid that with the onset of winter we shall have many more old people and the very young dying from hypothermia.
  Another aspect of the levy which must be touched upon is the effect on industry. What is the use of setting up NEDO task forces to examine the cost of energy to industry in one month when in the very next month the Government impose on the industry a direct tax which is bound to increase the price of gas to the industries which are already crying out for tax relief?
  The right hon. Member for Stafford and Stone (Sir H. Fraser) spoke about Cornings and its problems. I have much sympathy with him. Leamington glassworks is situated in my constituency. The work force of more than 1,000 has been decimated to about 200, with the latest redundancies only last week.
  In the interests of conservation, we ought to be thinking of using the right fuels for the right jobs. In my opinion,

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  gas should be used for small-scale central heating and small-scale industry. It certainly should not be used for large-scale industry. That is the job for coal.
  The Secretary of State said that the levy would be a form of windfall profits tax. That makes it appear that British Gas is responsible for its excess profits. But it has already been admitted that the Government forced the corporation to make such profits so that afterwards they could take their slice.
  The Prime Minister prides herself on being consistent—sticking dogmatically and rigidly to her policies. Where is the consistency here? If the Government are interested in hiving off the windfall profits of British Gas, why not the clearing banks as well? I understand that last year the four clearing banks made profits of £1·5 billion. But we do not hear anything from the Government about hiving off those profits.
  It is interesting to note that in the third year of the levy the tax on gas will be 15 per cent.—equivalent to value added tax, which successive Governments have said will not be put on energy. Will the Government's next step be to put VAT on food—another item about which promises have been made?
  In 1983 the levy will raise £750 million direct for the Exchequer. What will it be used for? Will it enable the Government, in a bonanza pre-election year Budget, to cut l·5p off the standard rate of income tax, forgetting to mention, of course, that they have clawed this out of people's fuel bills already? Forgive me, Mr. Deputy Speaker, for having a suspicious mind, but I suspect that this is the type of thing for which the Government will use the money.
  8.49 pm
  Mr. T. H. H. Skeet: The hon. Member for Newcastle upon Tyne, West (Mr. Brown) was in the gas industry for many years. He will remember the co-partnership schemes which unfortunately were demolished when the industry was nationalised. Of course, time has passed.
  The hon. Gentleman referred to domestic tariffs being unreasonably high. The United Kingdom has the cheapest domestic gas in Western Europe, and this is likely to continue even after the increases come through.
  The levy will not add to price. The hon. Gentleman should bear in mind that value added tax on gas in Belgium is more than 20 per cent.; in Denmark it is 17·6 per cent.; and in France it is 13 per cent., whereas in the United Kingdom it is zero rated. Therefore, we have certain advantages.
  In his speech, my right hon. Friend referred to profits being made of £425 million which are likely to approach £1,000 million over the course of years. Then he talked about a new tax regime. That sounds to me like a tax. Whatever verbiage Ministers use, it is a tax in substance and we have to recognise it as such.
  I fail to understand why the Bill has not been merged in the Finance Bill which will be forthcoming on 10 March. It could form five or six clauses in that Bill. We could have dealt with the matter in the Budget debate and got the whole thing out of the way without a separate Second Reading, Committee stage and Third Reading.
  I was surprised that my right hon. Friend the Minister took 11 days to answer a parliamentary question that I
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  tabled on those very lines. That would have been a much more convenient way of dealing with the subject. After all, clause 3(1) provides that payments are to be made to the Secretary of State and, ultimately, in clause 6(1), paid into the Consolidated Fund. So why not pay it directly to the Treasury and be done with it?
  I have tried to discover when we had a similar levy. The only one that I found was the once-and-for-all levy laid down by Sir Stafford Cripps on 6 April 1948. It was not a specific measure. It was contained in part V of the Finance (No. 2) Act 1948.
  I wonder whether it has been done in this way because the Government are foreshadowing a tax on banks in the Budget? This may be an initial shot across their bows. I hope that I am wrong. Had the matter been deferred until the Budget it would have been a clear indication that there was to be tax on the banks, and we should have had only one measure to deal with.
  In the 1978 Green Paper, paragraph 8.16, page 43, there was a levy which enabled the Government of the day to reduce the public sector borrowing requirement, and a 10 per cent. contribution was made in that instance by the gas industry. On 16 January 1980, my right hon. Friend indicated that domestic prices would have to go up by an average of 10 per cent. over three years, over and above inflation, in order to bring the pricing more in line.
  That is all very well, but now we are faced with a separate Bill. It starts off with three years. It will probably go on for many subsequent years at a rate that we do not know. Moreover, there is no upward terminal to which it may be limited. That is something that should be written in the Bill.
  Let me give one or two reasons for the levy. The British Gas Corporation has made windfall profits through paying the oil companies, the suppliers of natural gas, too little and much below the market rates on contracts made prior to July 1975, pursuant to section 9 of the Continental Shelf Act 1964 and section 8 of the Energy Act 1976. If the input or supply of gas was at 8p per therm, and the gas is sold at between 20p and 30p per therm, only a fool could not make a profit. In the circumstances, the Government are quite right to take this measure. If they were paying realistic prices to the suppliers, the companies operating in the North Sea, this would never have happened. The companies would have got the money and in due course they would have paid taxes. Thus, the money would have gone back to the Treasury.
  Let us examine how the matter developed. Payments were made initially on the United Kingdom side of the United Kingdom median line at 1.87 old pence per therm, and the initial contracts carried escalation clauses to bring it up to, in my judgment, between 6p and 7p per therm.
  Mr. Eggar: It is much lower than that.
  Mr. Skeet: I am trying to be fair. For Frigg the prices were roughly between 12p and 15p per therm. For Statfjord gas the offer was not enough. I understand that the British Gas Corporation made a payment of over 18p a therm.
  On one side of the median line the prices were kept as low as possible. But what are the Norwegians paid, on the other side of the median line? They are offered over 20p a therm—and more. When the British Gas Corporation recently had negotiations with Sonatrach of Algeria, it offered that company $4.60 per million BTU for LNG,

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  which is about 26p a therm. The price continues to rise, but more money is coming in due to the very low input price from the southern North Sea.
  Mr. Rost: A monopoly buyer.
  Mr. Skeet: Of course it is a monopoly situation, which is governed by two Acts of Parliament—the Continental Shelf Act 1964 and the Energy Act 1976. Of course the British Gas Corporation could afford to pay a higher price.
  I now refer to the report to the Select Committee on the European Communties "Harmonisation of energy prices and taxes." Some of the evidence which was given by Mr. C. W. Brierley and others was this:
  "do the best we can to get gas for Britain at a good price for Britain. I do not think that that policy is actually leading people to take a different attitude about exploration."
  On an earlier page, I found something very interesting:
  "It is very important in this situation to remember that there is—this may be a slightly dramatic way of expressing it—only one organisation here which is looking for gas and that is British Gas. Everbody else is looking for oil."
  Obviously they are looking for oil, because they are not paid a sufficient economic for price to look gas. That is why no more gas was found, and that is why the different fields in the southern part of the North Sea were not fully exploited at the time.
  Mr. Eggar: Does my hon. Friend agree that because of this absurd pricing policy and monopoly position of British Gas there are a number of gas reservoirs in the southern basin of the North Sea which could very easily be developed if British Gas were prepared to pay a reasonable price?
  Mr. Skeet: I fully agree with that. My hon. Friend sums it up rather neatly. But in the old days the cost of gas purchased from the suppliers was on a cost-plus basis. So it is cost-plus purchase for the gas, but when one is pricing gas to industry and customers generally it is not on a cost-plus basis; first, it is related to the competing oil product, and, secondly, it is partly determined by the external financing limits and, of course, a return on the net assets, which has now been reduced to 3 ½ per cent. We find that Governments of the day since 1964 are entirely responsible for the accumulation, which would never have occurred if an economic price had been paid for supplies.
  I support the Government on imposing this tax. It became inevitable. It is after the event. The horse has bolted from the stable, but we shall be able to pick him up on the course and see that some of the moneys are drafted over to the public purse. I am very concerned about the use of moneys. I agree with the right hon. Member for Leeds, South (Mr. Rees), who indicated that a separate fund should be established. I know that the right hon. Member for Down, South (Mr. Powell) indicated that he would not accept a concept which has been thrown around for many years, and he had in mind the road fund. However, if one has a specific fund allocated, when one is taking moneys out of it one can see that the funds are properly used for selected purposes. These moneys should not simply go into the Consolidated Fund to be spent on the payment of salaries, however good that purpose. They should be spent on research and development, for the development of alternative energy strategies and to reduce the burden on energy intensive industries. I have mentioned previously those which I consider should be selected, such as iron and steel, where fuel costs amount to at least I8½ per cent. of total costs, and bricks, pottery,
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  glass and cement where fuel costs amount to 18 per cent. of total costs. I should also mention the chemical industry. Enormous costs are involved.
  I would not be opposed to money being utilised for specific advanced projects, through the British Gas Corporation or the energy field generally, for example, on secondary and tertiary recovery from oilfields. I hope that the Under-Secretary will bear in mind that we have embarked on a dangerous course. Sir Stafford Cripps was the last man to introduce a levy, in the true form, in this House. There are difficulties. Where do we draw the line? Is a levy to be imposed on one company simply because it makes a substantial profit? Will such a policy be extended to all commodities in the course of time? Will it be extended from oil to copper and to others? All have reached their own heights on the market. We should draw the line distinctly to avoid a regular recurrence of such taxes.
  I should like to mention clause 2, which is the centre of the Bill. The legislation is unfortunately backdated to 1 April 1980. I should like to see directions relating to how payments are to be made. I dare say that this will be done on a quarterly rather than on an annual basis. I should like information on the cash limits adjustment, not for the first three years, which is already known, but for ensuing years. If the Secretary of State were prepared to advise an annual or periodic revision, that would be an understandable move.
  Clause 2(2) gives power to increase the levy. It is totally open-ended. I would have thought that this power should be debatable by both Houses of Parliament and not simply by the House of Commons. As there is no extended definition of gas in the Gas Act 1972, it should be included in this Bill.
  If there is time tonight, I should like to hear some assumptions on which clause 2 is based. The levy will rise with the steady movement towards economic pricing of domestic gas. I understand that. Therefore, as prices rise, more money will accrue but initial contract prices remain low. There will also be an anticipated increase in oil prices.
  Can the House be given a sample of open government? I should like to be told what the Government consider will be the price of oil by 1985 and 1990. After all, they have worked on certain assumptions. Why cannot the House have them? It might be a good idea if the Under-Secretary scatched his head and gave the information. It has been indicated that the amount of gas to be drawn from the southern fields will drop to about 40 per cent. in the next decade. This is significant.
  The oil and gas industries are making a substantial contribution to the revenue of the State. These revenues will amount to about £4 billion from the North Sea in 1980–81. I work that out at about 35 per cent. of the total public sector borrowing requirement assessed at £11·5 billion. This will be expected to rise later to between 40 and 44 per cent. If one considers all the payments made, including those from gasoline and various taxes on fuel oil, one industry carries a large part of the public sector borrowing requirement. This should not be forgotten. The bigger the imposition, the more difficult it becomes for competition to operate in the United Kingdom.
  We must have the levy on this occasion. The House, however, must understand how it was caused in the first instance. Hon. Members should be guided in the future by learning some of the reasons for it. If we are rapaciously

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  to pursue one industry after another because it makes a substantial profit, we should be pursuing the course of Diocletian. We should be looking for more taxation. We should regrettably become more greedy and rape the economy for the taxes that it will produce.
  9.5 pm
  Mr. Stephen Ross: It was reported in one of the Sunday newspapers that Cabinet colleagues of the Secretary of State did not understand the Government's energy policy. I am not an expert on energy matters. I shall merely refer to one or two issues that concern industry but having listened to the contributions of those whom I know to be knowledgeable on energy—I recognise that the hon. Member for Bedford (Mr. Skeet) specialises in energy—I must confess that I am as confused as I was when I entered the Chamber.
  The right hon. Member for Stafford and Stone (Sir H. Fraser) indicated that Corning Glass was paying more for its gas in the Potteries than it was paying on the Continent. That view was expressed to me a fortnight ago by a trade consul in America, who had encouraged and helped firms to come to Britain to set up a European base. He told me that these firms were reporting back that energy costs in Britain were so high that they were having to think of moving out and transferring their base to the Continent.
  I support the idea of the levy. If a tax is being imposed on the oil companies, it seems only logical that one should be imposed on the British Gas Corporation. However, some Conservative Members are saying that a great deal more research needs to be done and that there are fields that should be exploited. It can therefore be argued that the corporation is not being allowed to retain the money to do it, because it is to be taken by this tax.
  One can understand that British Gas is feeling aggrieved that the levy is being imposed at a time when it should be doing a great deal more research. I know that it is spending vast sums just off my constituency and within it. Only a year ago it was doing some boring in my constituency.
  Mr. Rost: Additional gas has been found in the North Sea, but it has not been developed. It has been found by private enterprise oil companies. The discoveries have not been made by British Gas entirely. These finds have not been developed, because the corporation has not been prepared to pay a realistic price. When it is prepared to do that the development will take place.
  Mr. Ross: The hon. Gentleman has answered my point. We are now talking about taking quite sizeable sums from the corporation. Presumably it will argue that it no longer has the money in the kitty to pay a realistic price to extract gas. The Guardian reported last week:
  "The Corporation does, however, grudgingly accept the Government's view that British Gas will still be able to self-finance its £4 billion investment programme up to 1985."
  The article went on to confirm the argument of the right hon. Member for Leeds, South (Mr. Rees), namely:
  "British Gas participation—of around 30 per cent.—in the proposed North Sea gas-gathering system is outside the programme and will be financed through a subsidiary company to keep the cost outside the public sector borrowing requirement."
  It is logical, to my mind, that gas should face the same tax burden as oil, which is subject to petroleum revenue
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  tax. I wish to question the Government on the way in which the money raised by the levy will be spent. It is on this issue that I think that we shall part company. The hon. Member for Newcastle upon Tyne, West (Mr. Brown) spoke of the effect of increased gas prices on domestic consumers. We know that domestic tariffs will be increased by another 15 per cent. in April. It may be true that we have had gas on the cheap, but I am sure that hon. Members will have had their constituents writing to them about present charges. We have been fortunate this winter, because it has been quite mild, but I am receiving letters from constituents who tell me that they cannot meet their electricity and gas bills, and especially their water bills.
  We must set up a comprehensive heating allowance to enable those who are retired and who are not entitled to supplementary benefit to have something on which they can fall back. I fear that as these charges continue increasing we shall have people dying of hypothermia. I hope that some of the money that is directed to the Consolidated Fund will be used to set up a sensible and fair heating allowance overall.
  I agree entirely with the hon. Member for Bedford that the levy should be dedicated to conservation projects, further research and development in alternative energy sources, and aid to certain industries to enable them to convert to more fuel-efficient plant.
  Large glasshouse growers have operated in my constituency for about 15 years. They are efficient. Expensive houses and modern plant have been built. However, they do not have the advantages of their Continental competitors. The Dutch growers receive gas on the cheap. The Germans receive a £12½ million subsidy and the French and Irish also receive subsidies. The growers in my constituency are closing their plants. One of the biggest companies, A. B. Stevens, has just closed its doors. It spent a great deal of money installing gas. It is a tragedy. The industry should benefit from help, even if it is only temporary.
  Everybody knows that small firms are one of the great hopes for our future and that we must try to encourage them. However, a firm in my constituency is moving from a starter factory to slightly larger premises. It used gas in the original factory and gas is available on the new premises. The quote for being connected to gas was £448.64. That is high enough, but I was shaken when the firm said that it was told that it would be required to pay
  "a security deposit of £352 against the future gas consumption. This deposit will be held by Southern Gas and revised after a period of two years. During retention, interest at a rate of 7 per cent. will be applied at the end of each six month period."
  That company has paid its bills on the dot. How can small firms survive when such impositions are applied and when they are clobbered by high interest rates and an overvalued pound? So many problems face industry that I believe that the money should not go into the Consolidated Fund but to help companies which deserve it most.
  I trust that my words will not fall on deaf ears. I hope that the Secretary of State will stand up and fight in the Cabinet on this issue. If he does not, many modern and efficient firms will go to the wall because they cannot meet their energy costs.
  9.12 pm
  Mr. Tim Eggar: It gives me pleasure to speak after the hon. Member for Isle of Wight (Mr. Ross) who, on this occasion, is the energy spokesman for

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  the Liberal Party. His knowledge of the gas industry is certainly comparable to that of his hon. Friend, who always begins arguments on the nuclear industry on the basis that if it is nuclear he disagrees with it.
  I hope that the oil companies will pick up the advocacy of the right hon. Member for Leeds, South (Mr. Rees) on behalf of the BGC and press him into service when they make representations to the Treasury about the level of PRT and the supplementary petroleum tax. His arguments about the need for sufficient funds for future investment and the need for research and development were wholly admirable. I am sure that they will find sympathy in the oil industry. There could be an interesting alliance between the Opposition Front Bench and the oil majors.
  I welcome the Bill wholeheartedly, not only because it contains one of the 10 recommendations that my hon. Friend the Member for Birmingham, Northfield (Mr. Cadbury) and I made in a pamphlet published last year on the future of the BGC, but because we are talking of the most efficient tax, from the point of view of Government income and the cost of collecting it, that this country or any other has known.
  I hope that the Bill marks the first perhaps rather tentative step by the Government towards a far-reaching reform of the British Gas Corporation. The majority of hon. Members on the Conservative Benches hope that the Government will rapidly decide to sell off certain of its peripheral activities, such as the showrooms, which it has been hanging on to over the years. We should like to see the monopoly right of purchase of gas from the United Kingdom domestic continental shelf taken away from the corporation. It has led to the problems that have given rise to the Bill. I go further. I should like to see the corporation's distribution monopoly broken. I trust that before the next election the Conservative Party will make a clear pledge that we are looking to introduce private capital to the corporation. However, that lies in the future.
  The British Gas Corporation deserves at least some support from the House for its success not only in the massive programme of conversion from town to North Sea gas but for being the first corporation world-wide to opt for the development of LNG from Algeria, which was a far-seeing move. It was personally managed and superintended by Sir Denis Rooke, and was a remarkable achievement in 1964.
  However, we may praise the management, but we cannot say that the corporation is effecient. We have no yardstick by which to measure efficiency. We cannot take profits as the only yardstick. Why is the corporation so profitable? It is taking the economic rent from the southern basin North Sea that rightly belongs to the nation. Just as the country has rightly said that we will take away the economic rent that naturally accrues to those who are developing North Sea oil, so should the Government take away the economic rent that accrues from the development of our gas reserves. The corporation's profits are based not on efficiency but on the fact that it has access to the cheapest gas in the Western world. That should be emphasised.
  Why has the feedstock been so cheap? This point was mentioned by my hon. Friends the Members for Bedford (Mr. Skeet) and Derbyshire, South-East (Mr. Rost). When the gas was first discovered, no tax was imposed on the producers by the Government. The abscence of competition to purchase the gas in the southern basin meant that the Government could screw down the oil
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  companies that made the discoveries. The matter went to arbitration. The oil companies stated that they were losing money under the contract that the Government had extracted from them. They could not continue to produce gas from the southern basin at the price that the Government were paying. After a long arbitration, an agreement was apparently reached between the corporation and the oil companies which led to a small increase in world terms in the price paid for southern North Sea gas in return for the companies installing compressor equipment and increasing recoverability.
  Unfortunately, the attitude that has developed at the BGC as a result of its monopoly right of purchase in the United Kingdom has led, or at least has been a major contributory factor in leading, to the Norwegians' decision not to put Statfjord and Heimdal gas through to the United Kingdom. They had had experience of the negotiations for Frigg. They had seen what had happened in the southern North sea. It was so appalling that they decided that if there were any alternative they would not be prepared to put their gas at the mercy of a monopoly nationalised British Gas Corporation.
  Mr. Douglas: That is what Statoil is.
  Mr. Eggar: I recognise the position held by Statoil in Norway, but the problem is the exploitation and, I might say, the lack of foresight of the BGC. I am convinced that if it had got away from its normal attitude it could have teamed up with Ruhrgas and Gaz de France and agreed to purchase gas from the Norwegian sector of the North sea. It could have made an offer to the Norwegians that was competitive with the price that the Germans could make from Emden to bring that gas through the United Kingdom and through cross-Channel pipeline from the southern coast to France. That gas could have been routed through the United Kingdom and would have created jobs and opportunities for United Kingdom industry—things that we could well have done with.
  But I digress. The fact is that the BGC has been making super profits. It has been taking the economic rent from the southern basin of the North sea, and it is right that the Government should take that away from the BGC.
  I go along to a certain extent with the argument of the right hon. Member for Leeds, South and the hon. Member for Isle of Wight, the Liberal spokesman. I hope that in its negotiations with the Treasury, the Department of Energy will point to the considerable revenues both from the levy and the additional tax on the oil companies and say that the presentation of our energy package and policy to the country represents a significant source of income coming in.
  We need additional money as part of that strategy for the purpose of energy conservation, particularly to assist funding to local authorities. There is a strong argument for a specific sum to be put aside for insulation of lofts, and so on, in local authority buildings. I go along a certain way, though not the whole way, with the argument of the hon. Member for Isle of Wight that we should edge towards some form of fuel energy assistance scheme for the elderly and others who need it.
  The Department should therefore use the argument of the vast sums that it is delivering to the Treasury to say that it must have something back to help to market its energy policy. I accept the points that were forcefully put by the

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  right hon. Member for Down, South (Mr. Powell). I agree that one cannot have funds earmarked in or earmarked out. That is not a sensible way to proceed.
  I wish to put a few questions, to which I hope the Minister will be able to address himself. First, can he state what percentage of the BGC's profits will actually be paid over to the Treasury once the monopoly levy is in place? We know that at present the oil companies pay between 80 per cent. and 87 per cent. of their profits to the Treasury. What will be the equivalent figure for the BGC after the levy? Can we now assume that the corporation will actually start paying corporation tax, or are all the projections based upon the assumption that no corporation tax will be payable in the future?
  It is important that the BGC should be allowed some form of forward planning. Will we see a three-year forward rolling programme for the levy? In other words, next year will we have an announcement of what the levy will be in 1983–84 and 1984–85? It is only fair that the BGC should know three yearas in advance what the levy is likely to be. However, I accept that the Secretary of State must have a right to alter the levy if pricing changes on relatively short-term grounds, because nationalised industries should be given the benefit of an ability to plan forward as far as possible.
  I have an additional question. What tax regime will apply to the fields in the southern basin, which are probably marginal gas fields and for which PRT as presently constructed is not suitable? Will we have pre-1975 levy taxes paid under the terms of the Bill—in other words, no tax paid by the producer but a tax paid by the BGC—or will amendments be made to the existing PRT laws? I should like clarification on that point.
  I do not wish to develop my arguments any further, except in respect of pricing. Both sides of the House must accept responsibility for the difficult position in which we find ourselves with regard to gas pricing. The fact is that Governments of both parties have said "We are worried about the RPI impact of an increase in domestic gas prices". Of course the BGC has welcomed that. It has wanted to keep domestic gas prices down, because it has given it some political power as against the Department of Energy.
  It is quite clear that it has suited the BGC and the Department of Energy, under whatever Government, to make their profits from industry. Many of the problems that we now face have arisen from that basic political approach. I wish that the new Opposition spokesmen would seriously consider whether or not it is possible to develop a co-ordinated approach to domestic gas pricing policy, because the BGC must be allowed to make profits.
  The economic rent should rightly accrue to the Government, and we should not go in for subsidised energy policies. It cannot be right for the BGC's profits to come from industry. Cannot we move towards some form of informal agreement on domestic pricing?
  If, as a Government or a country, we get into a position of artificially low energy pricing, we shall be on a slippery slope from which there is no recovery. We are then in an artificial world, which will eventually come to an end, be it in 20 or 30 years' time.
  I listened carefully to my right hon. Friend the Member for Stafford and Stone (Sir H. Fraser) There is strong evidence that our industry is paying more for gas in
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  particular instances than industry in France. I have a case in my own constituency. It relates to a company called E and E Kaye, which is a subsidiary of a French company. It has compared directly similar processes in the plant in Enfield and the plant in France. I am assured and convinced that there is a difference of around 20 per cent. I realise that this is shifting the whole time, but in present economic circumstances we must move towards at least comparable industrial energy pricing, although I do not think that it should be subsidised industrial energy pricing. I am afraid that the profit must come from the domestic gas consumers, with all that that involves. I commend the Bill to the House.
  9.30 pm
  Mr. Dick Douglas: I am a little tempted to follow the hon. Member for Enfield, North (Mr. Eggar) in his argument. One of the strange things about the Tories in relation to public corporations is that they despise them when they are failures, and they hate them when they are successes. There has been no analysis in this debate of why these windfall profits—if we can call them that—have fallen to the Gas Corporation.
  In the whole energy debate, in this House and elsewhere, I resent the underlying supposition that we have to curtail and manage our industry at the behest of a pricing policy that is laid down not by the long-run marginal costs of our indigenous sources but by the pricing policy of OPEC. When we talk about reflecting "world market" prices for energy, we are talking about reflecting the prices that are managed by the OPEC cartel. There may or may not be an argument for doing that, but there is an argument on this side of the House—I hope that we shall carry Conservative Members with us—that we should not decimate our industry by doing so. Of course, if we have an OPEC cartel we have to try to come to terms with it, and we have to shape our policy towards it.
  We are in a favoured position in comparison with other Western industrialised nations. I shall not go into the historic reasons for that, because time is not available. The Japanese will not necessarily tailor their industry to the OPEC structure. They will protect their industry. The Americans will not tailor their industry overnight to reflect world economic pricing. They will resist it and phase in managed prices. Of all nations, we slavishly follow OPEC prices.
  The Bill illustrates clearly the Government's confusion in economic policy. They have managed to screen their activities by adopting a dual image. While the Prime Minister gives the impression that everything is on course, other perhaps more truthful, members of the Administration realise that a rigid monetarist stance has been and is damaging to our industry. They have sought piecemeal to obtain changes, which sometimes have been costly. The Secretary of State for Energy does not know whether he is a hard or soft monetarist. This Bill illustrates that confusion.
  There has been no dispute—except by the hon. Member for Enfield, North—that British Gas is a success story. In an aside, he illustrated the innovative capability of British Gas in experimenting with LNG. If it had not experimented with LNG, it is possible that there would not have been an expansion in the southern sector. In the northern sector British Gas does not have a monopolistic position in regard to gases from the gas gathering system.

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  It has a monopolistic position in relation to methane only. Conservative Members should know that when they make their criticisms.
  Few would deny that British Gas is a success story. It has 20 per cent. of the United Kingdom energy market at present, and, in this case, the public sector has transformed a backward industry into one that leads in technological terms. The oil companies do not like it, not because it has been a failure but because it has been a success.
  Mr. Eggar: Has it been successful in keeping gas in the ground in the southern basin of the North Sea?
  Mr. Douglas: I hope that the hon. Member, in his studies of the question, spent some time reading the report of the Public Accounts Committee that was published in May 1973. If he did, he will know what the oil companies were up to at that time. We are talking in terms of windfall profits. If the regime had continued, the oil companies would not have paid one penny of tax into the United Kingdom. What is happening now arises from a position that was developing in the North Sea. The reason why the oil companies do not like British Gas and have certain reservations—[Interruption.] In terms of the southern gas field, the oil companies had an assured market and were in a bargaining position. What the hon. Member has said is partly true, but we have moved on from that stage.
  I admit that because of the current bargaining position it is possible—indeed, probable—that there is gas in certain areas in the southern sector that is not being exploited. I concede that, and also that one has to have an energy regime that does not leave one drop of oil or gas in one's sector of the North Sea that can be exploited. But that is a managed market; it is not a free market.
  Mr. Skeet: But surely it is a managed price. If, under section 8 of the Energy Act 1976, the British Gas Corporation negotiates with the campanies, it can lay down the price. It is the sole buyer and therefore it dictates it. Is that right and reasonable?
  Mr. Douglas: Whether or not it is right and reasonable, the position is that the people of this country through this House have given the British Gas Corporation these powers. The powers have to be viewed as beneficial or detrimental in the national interest. Looking at the question over the period, I would argue that the powers have been beneficial in the national interest.
  If hon. Members want to jack up the prices of gas and other fuels in order to meet the long-run marginal cost, which is the replacement cost—we are talking about the cost of replacement fuel in X years' time—there is an argument for that, but we have to face the economic implications of doing that. There is no point in hon. Members saying that they are in favour of that policy and at the same time crying wolf about key industries which have been tied to gas, and which have been priced out of the world market for their export products and suffered job losses. The right hon. Member for Stafford and Stone (Sir. H. Fraser) referred to those industries.
  Mr. Skeet Mr. Skeet rose—
  Mr. Douglas: I shall not give way again, because I want to deal with an essential point about the Bill.
  British Gas has been a commercial success, and the Government want to cream back some of the present windfall profits and some of the future windfall profits by
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  means of a levy. Whether or not the Government accept it, that levy will be reflected, albeit indirectly, in the gas industry's pricing policy.
  Let us consider for a moment the nature of the levy. The hon. Member for Enfield, North tried to compare it in some ways with the petroleum revenue tax. One of the reasons why the Government are building in what might be called a new excess profits tax on the oil industry is that the oil industry, rightly or wrongly, is being good and is avoiding PRT. But there is no way in which the gas industry can avoid the levy, because it is a quantity tax. equivalent to a barrelage tax. If hon. Members want to impose a quantity tax on oil, the people in the oil industry will die with their feet up. That is what we recommended in the Public Accounts Committee in 1973, and that tax cannot be avoided and evaded. I am willing to look at that case and argue it. I was very attracted by the idea of a quantity tax—I do not speak for the Labour Party—that could be varied. So the position is not on all fours with that in the gas industry. The levy is a detrimental burden imposed on our gas industry. The NEDC paper states:
  "Industrial gas users on the Continent have a cost advantage over the United Kingdom users of up to 20 per cent. for firm supplies and up to about 10 pet cent. for interruptable supplies."
  That applies to Continental users. No reference is made to users in the United States.
  The slavish pursuit of world market prices for fuel is extremely damaging to industry. When it is related to overvalued sterling and high interest rates, major sectors of our industry are severly penalised. The Government say that they will collect £1·3 billion, from 1980 to 1983, from the implications of the Bill. Whether we like it or not, it is directly related to the public sector borrowing requirement. It will create more unemployment, which will in turn increase the PSBR. That is bad enough.
  As the hon. Member for Stafford and Stone said, we are concerned about the need to stop the flaring of gas in the North Sea. That is why we all welcomed the arguments to promote the gas gathering system, or at least its southern leg. Daily, press reports state that there could be delays in creating that structure, which is an important piece of capital investment in the North Sea. Why? It is because the banks are standing back and viewing it in risk terms. If they are doing so, that is related to the rate at which they will lend capital. If they lend capital to the project at a higher rate than the rate at which the Government and the public sector can borrow it, that is detrimental to the public interest. Perhaps I am wrong, but I believe that any transmission company formed for the gases in the North Sea would have what would be tantamount to a Government guarantee. The cost of borrowing should reflect the Government's own costs.
  The PAC report No. 32, said in paragraph 8:
  "In our view there can be no doubt that the nationalised industries and other statutory public corporations are fully backed by the Exchequer—and if they borrow money in their own name they are effectively doing so on an Exchequer credit, irrespective of their actual or prospective profitability. We, therefore, assume that the rates of interest which they pay for fixed interest money from the private capital market should reflect this credit standing. There would in our view be no justification in principle for paying more."
  That is the utter confusion of Government policy. They are penalising British Gas on the one hand, and putting the money into the Consolidated Fund on the other, to reduce the PSRB, and endangering—I hope that I am wrong—a valuable piece of capital development in the North Sea, because the banks will want the nation to pay more than

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  the public corporation would pay if the Government were the borrower. That is a direct reflection of the Government's doctrinaire approach.
  I should like to raise one or two tangential items. What is the new role of the British Gas Corporation in the gas gathering system when the gas comes ashore? Is it true, as has been reported in the press, that it will be the dispenser of the ethane? That is important to my constituents and other constituents in Kirkcaldy and in Central Fife. It is important in analysing what will happen at Moss Morran and Braefoot Bay.
  I oppose the Bill, not because there is not an argument for creaming off windfall profits but because it is a piecemeal, ill-thought-out development and proposal by the Government.
  9.45 pm
  Mr. Martin Stevens: I am a consultant to the British Gas Corporation, but that does not mean that it has put out a brief on this subject. I certainly have not seen one. It is a bit unfair to talk about windfall profits as even the hon. Member for Dunfermline (Mr. Douglas), who, like me, supports the industry, did. As the Price Commission pointed out barely a year ago, but for the increases last year British Gas would have made a loss on the domestic side of the business. On the industrial side there has been an effort to relate prices to the market, and to some extent that has been achieved. It is misleading to suggest, however, that the British Gas Corporation has been or is enjoying an unearned increment or bonanza.
  The biggest investment in the corporation is in the pipelines, which are its greatest single asset. That investment would be wasted if in years to come it could not use the pipelines that it is developing and expanding for the transmission of gas. In other words, it would be wasteful if, five or 10 years from now, the supply of North Sea gas, the more readily, easily and cheaply obtainable natural gas, were no longer available or were reduced in quantity, and if there were inadequate funds either to develop other forms of gas perhaps through coal, or to import gas.
  The levy is a discriminatory tax on gas customers because no one else pays a levy of this kind. It was the Government, not the corporation, who asked for the gas price to be raised to the inflation level plus 10 per cent. The key anxiety expressed by hon. Members on both sides of the House is this. The corporation will clearly have to invest much more extensively in about five years from now when the present supply of gas from the continental shelf begins to dry up.
  Profits not required for immediate investment go to the Government as loans, and they show up in the public sector borrowing requirement. But it is only right that we should put down markers tonight lest five or six years from now the corporation needs money that it does not then have in order to embark on investment in new ways of producing gas and new forms of gas. People may then know, when that moment comes and the corporation has to ask the Government for financial help, that this is the case not of a nationalised industry with a begging bowl but of an industry which had its loans to the Government converted into a levy, which meant that it was unable,
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  without recourse to the Government, to invest further in order to derive the benefit of the current investment in pipelines
  I do not think that one can oppose what the Government are suggesting but we should pass the Bill with greater regard than has been shown for the problems of the industry and, wht is more important, the likely investment requirements in future years.
  9.50 pm
  Mr. Frank Haynes: I welcome the opportunity to contribute to the debate. In the interests of time, I shall be brief.
  The speeches that we have heard from Conservative Members do not surprise me in the least. All the speeches except one were flashy, and not really to the point. They constituted a cover-up and a smokescreen for what the Government are doing. The public sector borrowing requirement has been mentioned time and again. That is what the debate is all about.
  The Government Front Bench is full of financial wizards, but they get their figures wrong all the time. That means that they have to change policy and switch direction to find the money to cover up the mistakes that they have made. It is an appalling situation when the elderly, the lower-income groups and people with children have to finance the mistakes of the Government. That is a shocking state of affairs. It is high time that it was said in the House. I hope that it will be said in future.
  This is a highwayman's Bill. It is robbing the consumer. I regularly have industrialists at the door of my surgery. When I visit factories I am told about the crippling energy costs that have been imposed by the Government. Such costs will continue to be imposed because of the three-year policy in the Bill. These provisions will continue to cripple industry. The whole essence of the Bill is to try to draw in moneys that the Government have lost. The public sector borrowing requirement is a mire compared with what it was in May 1979.
  The Government are trying to stoke up finance to cover their mistakes. They are making consumers pay. By God, they are making them pay. The Government say that they are concerned about the elderly. In reality they could not care less. We have pressed the Government to do something about heating allowances for the elderly, but that is nowhere near enough. In addition, the children's allowance was cut. That is part of the policy to draw in money that the Government have lost because of their mistakes. The two-week delay in increasing pensions was another way to draw in money to cover up mistakes. It is a pure smokescreen.
  Before I came to the House I used to work in the pits. From time to time there were deaths at the pits. The mining industry is a benevolent society, and a notice would be pinned to the wall. It would tell the men that next Friday, when they drew their pay-packets, there would be a levy to enable some kind of grant to be paid to the widows. When the men came out of the pit on the day on which the notice was posted they would say "God, Levi's here again". We have much the same situation with the Bill.
  It is high time that the Government changed direction. From time to time, particularly in the last few days, we have been told that perhaps a change of direction is coming. By God, we need a change of direction here.

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  One could list a number of things, affecting the ordinary folk, that have been introduced to cover up the Government's mistakes—prescription charges, social security benefits, and child allowances. The Government will not get away with it. People now realise what is going on. The people of this nation will react strongly to the Government because of the wicked policies that they are imposing on the nation.
  9.55 pm
  The Under-Seeretary of State for Energy (Mr. Norman Lainont): The speech of the hon. Member for Ashfield (Mr. Haynes) was not typical of the debate. I make no complaint about his contribution. However, I am glad to say that this has not been a partisan debate, and I welcome the spirit in which the right hon. Member for Leeds, South (Mr. Rees) spoke.
  One of the recurring questions in the debate was: why was the levy not included in the Finance Bill? It is normal for a wholly new income-gathering measure to be introduced in a separate Bill. That is what happened with the Oil Taxation Act 1975 and the levy on the television companies. It is also a convention that receipts and payments are a matter for the Consolidated Fund.
  The hon. Member for Ashfield asked what the money would be used for. I think that he received a good reply from the right hon. Member for Down, South (Mr. Powell), who drew attention to the fact that it is not the habit in the House to hypothecate revenue. I am grateful to the right hon. Gentleman for finding a new word to substitute for hypothecation. "Assignment" is a much less ugly word. But as the right hon. Gentleman pointed out, what is being argued very much leads down the trail of the road tax fund.
  However, I felt that the right hon. Gentleman came near to the hypothecation argument when he talked about £100 million being reserved for a Northern Ireland gas pipeline. That would be an assignment of revenue. As the right hon. Gentleman knows, investments in new gas supply need to be justified by themselves and they have to satisfy a rate of return irrespective of the source of the money or whether the British Gas Corporation is generating sufficient profits to finance such a pipeline.
  The right hon. Gentleman dwelt at some length, as he did in the debate on the Ways and Means resolution, on the question of gas for Northern Ireland. The gas industry in Northern Ireland is a matter for my right hon. Friend the Secretary of State for Northern Ireland, and it would not be right for me to trespass on his territory. However, I am well aware of the arguments for making a supply of natural gas available to the Province. Recently, however, there have been indications that the Government of the Republic of Ireland may be prepared to supply natural gas from their own resources to Northern Ireland. The Northern Ireland Office has asked the Dublin Government to provide detailed information so that a full evaluation of the proposal can take place. It is expected that this will be completed shortly.
  The right hon. Member for Down, South referred to this measure as a diamond of a Bill. I think that his speech was something of a jewel which illuminated certain parts of the Bill. However, on one point—the effect of the Bill on the public sector borrowing requirement—the right hon. Gentleman was not quite correct. The PSBR covers the whole of the public sector, and transactions within the
  106
  public sector have no effect on it. The BGC's surpluses reduce the PSBR whether they are lent to the national loans fund or whether BGC holds on to them.
  My hon. Friend the Member for Enfield, North (Mr. Eggar) supported the Bill and the levy. That is hardly surprising, because only a few months ago he wrote a pamphlet advocating a levy on the British Gas Corporation. So in a way he can claim to be one of the authors and inspirers of this measure.
  My hon. Friend asked a number of questions. First, he asked what would be the percentage of profits comparable to the percentage of profits taken by PRT from the oil companies. I should point out that the levy is not a profits tax. As the hon. Member for Dunfermline (Mr. Douglas) said, it is put on the costs of the corporation. It is a tax on costs. The revenues are set out in the explanatory and financial memorandum. The profits of the BGC that will remain after the levy are approximately £300 million a year.
  My hon. Friend also asked about corporation tax liability. At present, the corporation is incurring liability for corporation tax, though I cannot give an exact figure of what it is likely to pay either this year or next year. It is just beginning to build up.
  My hon. Friend also asked whether we would roll forward the levy. We expect to set the levy and the three-year financial target at the same time. Thus, the BGC will have an opportunity to plan ahead.
  My hon. Friend's last question related to the tax regime on the southern basin. There is no reason why PRT should not apply to new gas in the southern basin. The levy will not apply to gas in such a situation.
  The hon. Member for Dunfermline asked about the position of ethane in the gas-gathering system. That matter does not fall strictly within the Bill, but I can tell him that the BGC has reached agreement with the BNOC about the handling of the ethane. The BGC will handle the ethane and the BNOC will handle the liquids. If I can find any other information to amplify what I have said I shall write to the hon. Gentleman.
  The right hon. Member for Leeds, South and others wondered whether the levy would leave the BGC with enough funds for future investment and whether, at a time when the BGC was to invest some £4,000 million over four years, the levy would cause difficulties. The BGC will have available for investment not just its profits but its depreciation and the money loaned by it to the national loans fund. In 1981–82, we are expecting profits in excess of £300 million, and depreciation in excess of £600 million, and the NLF deposits will be on top of that.
  It is, of course, precisely how much should be left with the corporation for its investment programme that is a matter of judgment. But that is the judgment that the Government have had to make in deciding on the precise level at which the levy should be fixed. It goes without saying that each investment project has to justify itself and has to meet a required rate of return. We do not believe that the levy will so deprive BGC of money that it will be unable to finance its own investment. It is our intention that the corporation should be able to do that.
  Inevitably, much of the debate has been about prices. The right hon. Member for Leeds, South mentioned both domestic and industrial prices. He said that insufficient justificaton had been given for the domestic price increases that had already taken place and those that were in the pipeline. However, my right hon. Friend the Member for

  107
  Stafford and Stone (Sir H. Fraser) gave one of the best justifications, namely, the imbalance between domestic and industrial prices in this country. It is a fact that in this country, in contrast to the situation on the Continent, the domestic consumer pays less than does the average industrial consumer. In this country the British Gas Corporation is barely breaking even on its sales of domestic gas. The price of domestic gas in Britain is only about half of that paid by householders in Germany or France, for the very same gas from the North Sea.
  It is also a fact that the new supplies of gas from the North Sea are costing up to 10 times as much as the original gas from the North Sea. That is why many industrialists are saying, as my right hon. Friend the Member for Stafford and Stone did so forcefully, that there has to be a very considerable rise in domestic prices after a period in which they have been falling sharply in real terms.
  Another part of the speech of my right hon. Friend the Member for Stafford and Stone related to industrial prices. It is not the Government's intention that British industry should be placed at a disadvantage by energy prices. It is our view that our industrial energy prices, while not out of line generally acorss the board, may pose a problem for certain energy-intensive sectors, certain of the larger users. That is precisely the question being looked at by the NEDO task force. My right hon. Friend will also recall that the Secretary of State has asked the British Gas Corporation to look at discounts for bulk users and at a number of different ways of helping the large users of gas.
  My right hon. Friend quoted a number of figures for comparative gas costs. I do not want to go into those in detail, although he will bear in mind that some part of the difference may be explained by the very recent movement in the exchange rate. It is quite difficult to argue that the BGC ought to price its gas in anticipation of movements in the exchange rate.
  Mr. Robert C. Brown: Surely the Minister must take on board the point about energy conservation. Natural gas has a projected life of 20 of 30 years. Coal has one of hundreds of years. It is completely wrong for the Minister to be talking in terms of encouraging industry to use natural gas. Hes should be dicouraging it rather than encouraging it.
  Mr. Lamont: I do not agree with that entirely. There are certain usages in industry for which gas is appropiate. Certainly we ought to have a pricing regime which ensures that gas is used only for premium purposes, for the pruposes for which it is most appropriate.
  A number of hon. Members have questioned the Government's assertion that the levy does not affect prices. But the reason why the levy does not affect prices is that the pricing regime has already been determined. The financial target has already been set on the assumption that the BGC will be charging market rates and the long-run marginal cost for its gas, and the purpose of the levy is to make sure that the proceeds in the BGC are recouped for the benefit of the community as a whole.
  My right hon. Friend the Member for Stafford and Stone said that he was against all windfall profits taxes of any kind. But it seems right that when one is dealing with a natural resource and when the price of that rises and is of benefit to companies, that windfall element should not accrue just to the company but should accure to the Government and the
  108
  community more generally. That is the principle behind the petroleum revenue tax. One of the purposes of the gas levy is to see that there is a tax on those gas fields that were exempt from the petroleum revenue tax because contracts were signed before PRT was introduced.
  That seems to me a right principle. As my hon. Friends the Members for Derbyshire, South-East (Mr. Rost), for Enfield, North and for Bedford (Mr. Skeet), and also the right hon. Member for Down, South, pointed out, that principle seems even more right when one is talking of a monopoly industry with near monopoly rights in the North Sea. In that case, it seems even more right that the profits should accrue not just to the corporation but to the community more generally.
  The right hon. Member for Down, South, in a fascinating part of his speech, speculated on what would be the effect if there were no gas monopoly and if there were competing gas companies and utilities. I do not want to follow him too far down that road. One effect would follow. The prices paid for gas in the North Sea would have been very much higher than in the past.
  I note what some of my hon. Friends, including my hon. Friend the Member for Bedford, said about the regime in the North Sea and the near-monopoly position of the corporation. It was President Carter who said that the energy crisis was the moral equivalent of war. The energy crisis—how we are to use scarce, precious and finite resources—is one of the most important issues that faces this generation and generations to come. The period when oil is running out and gas begins to run out is not far off. There is no way that we in this country can be immune from the pressures that are taking place all over the world where energy prices are rising generally. There is no industrialised country where energy prices are not rising more quickly than prices in general. There is no way that we in this country can be immune from that development.
  The principles behind the Bill were largely supported by the Labour Party when in Government, the Green Paper put forward by the Labour Government advocated market pricing of North Sea oil and added that the nation's participation in the surplus thereby yielded should be secured by taxation and other policies rather than by artificially low prices to the consumer. If that applies to oil, why does it not equally apply to gas? The former right hon. Member for Birkenhead, Mr. Dell, the then Paymaster General, went on to amplify the point when he said:
  "the gas supplied from the North Sea … really should be as liable to PRT as oil".—[Official Report, Standing Committee D, 6 February 1975, c. 703.]
  That was how the Labour Party saw things when in Government.
  Mr. Douglas: Finish the quote.
  Mr. Lamont: Of course, everything seems different in Opposition. Things are better seen in perspective standing on one's head.
  We cannot expect the Labour Party, which is falling apart at the seams, to do anything except grub for votes. We cannot expect it to do other than oppose the Bill. The Government have taken a difficult and courageous decision. They, unlike the Opposition, are prepared to look to the longer term. The Bill seeks to convert the temporary and transient advantages of the North Sea into permanent advantage for this country. I commend it to my right hon. and hon. Friends.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 153, Noes 104.

  Division No. 71]

  [10.14 pm

  AYES

  Aitken, Jonathan

  Lawson, Rt Hon Nigel

  Alexander, Richard

  LeMarchant, Spencer

  Banks, Robert

  Lloyd, Peter (Fareham)

  Beaumont-Dark, Anthony

  Loveridge, John

  Benyon, Thomas(A'don)

  Lyell, Nicholas

  Berry, HonAnthony

  McCrindle, Robert

  Biggs-Davison, John

  Macfarlane, Neil

  Blackburn, John

  MacGregor, John

  Boyson, Dr Rhodes

  McNair-Wilson, M. (N'bury)

  Braine, SirBernard

  Madel, David

  Brinton, Tim

  Major, John

  Brooke, Hon Peter

  Marlow, Tony

  Brotherton, Michael

  MarshallMichael(Arundel)

  Brown,M,(BriggandScun)

  Mawby, Ray

  Bruce-Gardyne, John

  Maxwell-Hyslop, Robin

  Bryan, Sir Paul

  Miller, Hal(B'grove)

  Buchanan-Smith, Hon Alick

  Mills lain(Meriden)

  Buck, Antony

  Mills, Peter (West Devon)

  Budgen, Nick

  Moate, Roger

  Bulmer, Esmond

  Moore, John

  Carlisle, John (Luton West)

  Mudd, David

  Carlisle, Kenneth (Lincoln)

  Murphy, Christopher

  Chalker, Mrs. Lynda

  Needham, Richard

  Chapman, Sydney

  Nelson, Anthony

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

  Neubert, Michael

  Cockeram, Eric

  Newton, Tony

  Colvin, Michael

  Normanton, Tom

  Cope, John

  Page, John (Harrow, West)

  Costain, SirAlbert

  Page, Rt Hon SirG. (Crosby)

  Cranborne, Viscount

  Page, Richard (SW Herts)

  Crouch, David

  Parris, Matthew

  Dean, Paul (North Somerset)

  Pattie, Geoffrey

  Douglas-Hamilton, LordJ.

  Pawsey, James

  Dover, Denshora

  Percival, Sirlan

  Dunn, Robert(Dartford)

  Pink, R. Bonner

  Dykes, Hugh

  Pollock, Alexander

  Eggar, Tim

  Porter, Barry

  Faith, Mrs Sheila

  Proctor, K. Harvey

  Fisher, SirNigel

  Renton, Tim

  Fletcher-Cooke, SirCharles

  RhodesJames, Robert

  Fowler, Rt Hon Norman

  Rhys Williams, Sir Brandon

  Gardiner, George (Reigate)

  Ridley, Hon Nicholas

  Garel-Jones, Tristan

  Roberts, M. (Cardiff NW)

  Glyn, Dr Alan

  Rossi, Hugh

  Goodlad, Alastair

  Rost, Peter

  Gorst, John

  Sainsbury, Hon Timothy

  Gow, Ian

  Shepherd,Colin(Hereford)

  Gray, Hamish

  Sims, Roger

  Greenway, Harry

  Skeet, T. H. H.

  Griffiths, Peter Portsm'thN)

  Speed, Keith

  Grist, Ian

  Spicer, Jim (West Dorset)

  Grylls, Michael

  Spicer, Michael (S Worcs)

  Hamilton, Michael (Salisbury)

  Stainton, Keith

  Hawksley, Warren

  Stanbrook, lvor

  Heddle, John

  Steen, Anthony

  Henderson, Barry

  Stewart, Ian (Hitchin)

  Higgins, Rt Hon Terence L.

  Stradling Thomas, J.

  Hill, James

  Taylor, Teddy (S' end E)

  Hogg, Hon Douglas (Gr'th'm)

  Tebbit, Norman

  Holland, Philip (Carlton)

  Temple-Morris, Peter

  Hooson, Tom

  Thatcher, Rt Hon Mrs M.

  Hordern, Peter

  Thomas, Rt Hon Peter

  Howell, Rt Hon D. (G'ldf'd)

  Thompson, Donald

  Hunt, David (Wirral)

  Townend, John (Bridlington)

  Hunt, John (Ravensbourne)

  Townsend, Cyril D,(B'heath)

  Jessel, Toby

  Trippier, David

  Jopling, RtHonMichael

  van Straubenzee, W. R.

  Joseph, Rt Hon Sir Keith

  Viggers, Peter

  Knight, MrsJill

  Waddington, David

  Knox, David

  Wakeham, John

  Lamont, Norman

  Waller, Gary

  Lang, Ian

  Ward, John

  Langford-Holt, SirJohn

  Warren, Kenneth

  Lawrence, Ivan

  Watson, John

  110

  Wells, John(Maidstone)

  Wells, Bowen

  Tellers for the Ayes:

  Wheeler, John

  Mr. Carol Mather and

  Wickenden, Keith

  Mr. Robert Boscawen.

  Wolfson, Mark

  NOES

  Allaun, Frank

  Lofthouse, Geoffrey

  Alton, David

  Lyon, Alexander(York)

  Atkinson, N.(H'gey,)

  McCartney, Hugh

  Bagier, Gordon A.T.

  McDonald, DrOonagh

  Beith, A. J.

  McGuire, Michael(Ince)

  Booth, Rt Hon Albert

  McKay, Allen(Penistone)

  Bradford, Rev R.

  McKelvey, William

  Bray, Dr Jeremy

  McWilliam, John

  Brown, Hugh D.(Provan)

  Marks, Kenneth

  Brown, R. C. (N'castle W)

  Mason, Rt Hon Roy

  Buchan, Norman

  Maynard, MissJoan

  Callaghan, Jim (Midd't n&P)

  Mitchell,Austin(Grimsby)

  Campbell-Savours, Dale

  Mitchell, R.C.(Sotonltchen)

  Carter-Jones, Lewis

  Molyneaux, James

  Clark, Dr David (S Shields)

  Morris, Rt Hon J. (Aberavon)

  Cocks, Rt Hon M. (B'stolS)

  O'Neill,Martin

  Concannon, Rt Hon J. D.

  Palmer, Arthur

  Conlan, Bernard

  Park, George

  Cowans, Harry

  Parry, Robert

  Cryer, Bob

  Powell, RtHon J.E. (S Down)

  Cunliffe, Lawrence

  Powell, Baymond(Ogmore)

  Cunningham, DrJ.(W'h'n)

  Prescott, John

  Davidson, Arthur

  Rees, Rt Hon M (Leeds S)

  Davis, T. (B'ham, Stechf'd)

  Roberts,Albert(Normanton)

  Deakins, Eric

  Roberts, Ernest (Hackney N)

  Dixon, Donald

  Robertson, George

  Dormand, Jack

  Rooker, J. W.

  Douglas, Dick

  Ross, Ernest (Dundee West)

  Dubs, Alfred

  Ross, Stephen (Isle of Wight)

  Dunlop, john

  Ross, Wm.(Londonderry)

  Dunwoody, Hon MrsG.

  Rowlands, Ted

  Eadie, Alex

  Sandelson, Neville

  Eastham, Ken

  Sever, John

  Ellis, Tom (Wrexham)

  Silkin, Rt HonJ. (Deptford)

  Evans, John(Newton)

  Silverman, Julius

  Flannery, Martin

  Skinner, Dennis

  Fletcher, Ted (Darlington)

  Snape, Peter

  Foster, Derek

  Spriggs, Leslie

  Freud, Clement

  Stallard, A. W.

  George, Bruce

  Steel, Rt Hon David

  Gourlay, Harry

  Wainwright, E.(DearneV)

  Hamilton, James(Bothwell)

  Wainwright, R.(ColneV)

  Hamilton, W.W.(C'tral Fife)

  Welsh, Michael

  Harrison, Rt Hon Walter

  Whitehead, Phillip

  Haynes, Frank

  Whitlock, William

  Janner, Hon Greville

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

  Johnston, Russell(Inverness)

  Williams, Sir T.(W'ton)

  Kilfedder, James A.

  Wilson, William (C'trySE)

  Lambie, David

  Winnick, David

  Lamborn, Harry

  Woodall, Alec

  Lamond,James

  Leadbitter, Ted

  Tellers for the Noes:

  Leighton, Ronald

  Mr. Joseph Dean and

  Litherland, Robert

  Mr. George Morton.

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Committee of the whole House.— [Mr. Goodlad.]
  Committee tomorrow.

  REDUNDANCY FUND BILL
  Ordered,
  That, in respect of the Redundancy Fund 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. Goodlad]

  HOUSE OF COMMONS MEMBERS' FUND AND PARLIAMENTARY PENSIONS BILL
  Ordered,
  That, in respect of the House of Commons Members' Fund and Parliamentary Pensions 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. Goodlad.]

  Fish Imports
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Goodlad.]
  10.25 pm
  Mr. Austin Mitchell: There could not be a more important debate for the fishing industry at the moment than this brief Adjournment debate on fish imports and their effect on prices. Nor could there be a more graphic demonstration of the level to which the industry has been reduced by the imports and their effect on prices and the importance of the problem than last week's collective refusal by British fishing vessels to put to sea. The refusal is still being maintained in Scotland. It ended in Grimsby only last Friday, with an undertaking that if the Government had taken no action in eight weeks it would be resumed.
  The situation is desperate. The industry is staggering towards bankruptcy. The reason is not that its catches are down in a major way over the past couple of years but that its receipts are down. It is therefore not able to pay the increased costs, particularly for fuel, and interest rates. Every issue of Fishing News reports that receipts are down. In 1980, Peterhead's two top trawlers dropped £100,000 each. The average earnings of the majority of vessels there dropped 20 per cent. in 1980. I have a host of settling sheets for Grimsby vessels that show similar results. Even the receipts for quite good trips are down.
  If the crew share the profit of the catch, they also share the loss, and at the end of the trip they are in debt. The debts range from £10 to £200. The picture is one of accumulating debt in the industry. The debt falls on the skipper who has borrowed to pay for his boat, the crew who are struggling to pay the debts accumulated on various trips, and the agent who carries the debts of the crew. The industry is moving rapidly into debt.
  I am pleased that the fish market is a free market. Sometimes it moves in a mysterious way. At a time of low landings vessels that come in late can get surprisingly good prices for their fish. To some extent, the market is inevitably a lottery. The basic point is simple. A skipper yesterday told me that last year his receipts were up £1 a kit. However, even when receipts are up, they are not sufficiently large to cover increasing costs—and fuel costs rose 20 per cent. last year—and in most cases receipts are substantially down. The fishermen are in serious difficulties.
  I have here receipts for two typical Grimsby vessels for various parts of the season. In December 1978, the "Betty Anne" pair trawler was making, on average, 51p per kilo. By last November that was down to 37p. The "Mary Ronn", a seine netter, in November 1978 was making 58p per kilo. By November last year, that was down to 38p per kilo. Out of that people are expected to pay the steadily increasing charges on the industry, the interest charges and all the other costs which have been rising.
  It is because the fall in prices has been associated with a long-term surge of imports rising steadily each year—even last year, although they did not rise much, they held their own in a depressed market—that the industry blames imports for its present predicament. In particular, it blames the surge of imports occurring in the early part of each year and bringing down prices.
  If the Government are committed, as apparently they are, to work within the EEC, it is essential that the

  113
  Common Market, which has done so well for agriculture and in maintaining the standard of living of agricultural producers, should extend the same service and the same rule to the fish producers and the fishermen, whose standard of living is steadily being squeezed and steadily suffering. If the Common Market is so adept at providing orderly marketing of agricultural products, it should guarantee the standard of living of the fish producers by providing the same kind of orderly marketing for fish products, so that the industry will no longer be in its present situation of going steadily bankrupt because its receipts are down.
  The first requirement is orderly marketing. The Scottish fishermen preferred to go about this by means of a minimum price scheme. But this broke down in Scotland last year, just as it broke down in Grimsby last year.
  Apart from not being in the interests of Grimsby, I believe that such a minimum price scheme has three serious disadvantages. First, it can work only when there are local minimum prices. It does not work very well on a open market such as Grimsby's. Secondly, it is payable to imports as well as to domestic landings, whereas the whole aim of such a procedure should be to help the domestic producer rather than the importer. Thirdly, it tends to lead to fishing for compensation, so that vessels are out catching small fish—what the industry calls "rubbish fish", although it is put more graphically than that—just to get the income from the minimum price scheme.
  It is far better to go for a deficiency payments scheme in which there is a Government guaranteed minimum price which is set on the actual costs of fishing. When the market price falls below that Government guaranteed price, a deficiency payment is made to the producer. The deficiency payment is made only to the local producer, the British fishermen, not to imports, and is differentiated according to size and quality. There is thus no incentive to go on remorselessly catching small fish and dumping them on the market just to get a return.
  The industry's best interests are therefore served by a deficiency payments scheme backed by the Government which brings the guaranteed price into line with the actual cost of fishing, because if the prices obtained by the industry do not reflect costs, in any marketing system in which the minimum prices, whatever they are, do not reflect costs, everything else is purely cosmetic.
  A guaranteed deficiency payments scheme has the advantage of bringing up the price. That is the crucial factor, because it edges up the whole structure of prices. It edges up the guide price. If that is brought into line with the actual cost of catching the fish, we can bring up the reference prices and the withdrawal prices so that all will come into line with the cost of catching the fish.
  The second need, apart from a deficiency payments scheme, is to restrict the flow of imports, particularly frozen imports. The present situation is potentially disastrous, in that those countries which have had the good sense to take 200-mile limits and to build up their stocks with conservation measures behind those limits are likely, within the next few years, to be in a position to swamp our market with their growing export of fish.
  The market must be protected from that threat, which is building up. There is already talk of Canada sending us 30,000 tonnes per year for the next three years. Such an
  114
  influx would be a disaster for the domestic industry. It is vital, therefore, that we have some regulation of imports, if that will not ruin our industry.
  There is no doubt also that, as well as third party imports, a good proportion of the problem is now caused by the EEC itself, specifically Holland and Belgium. Dutch and Belgian fish—fish apparently caught beyond the quotas that those countries are permitted, and not counted towards those quotas—is coming into this country, some of it detoured from the Market, and ruining our prices. It is encouraged by the high pound and it is helping to ruin our industry.
  There is a problem with the pound and with the cheap transport costs, but the basic problem is the flow of cheap imports and the effect on prices. Something is drastically wrong with the fact that fish from the Netherlands can be sold at up to £1 a stone less than the EEC minimum on the Grimsby market.
  We seem to be moving towards a fish merry-go-round, just as we have a merry-go-round with pigs and butter. We have reports of Polish fish caught in the Baltic and going into Denmark and Holland before coming on to the British market in containers from those countries. There are also reports of British fish being sent to Norway and then coming back from Norway. I gather that some of it is due to arrive on the Grimbsby market this week, presumably collecting an import-export subsidy from somewhere, either from Norway or from the Common Market. There must be some incentive to send the fish on its merry-go-round way.
  This kind of Common Market folly, and the over-fishing that it helps to encourage and to maintain, will ruin the industry if it is allowed to carry on. It is no use the Government saying "Give us the examples and we shall follow them up". The industry cannot keep track of all that is going on, and it is vital that the help of Government Departments—particularly the Ministry of Agriculture, Fisheries and Food and the Customs and Excise—should be invoked in producing examples.
  In order to solve problems of this kind it is right for the industry to ask for an emergency levy on all fish imports, from the EEC or anywhere else, to help give us what is so essential in the industry—a managed market, an orderly marketing system, in which the British producer is not forced into bankruptcy by the remorseless flow of imports.
  It is no use simply saying that we have problems with the EEC. Of course we have problems with the EEC. But the EEC has failed to act. It has failed to put up the official withdrawal prices on the Continent to a realistic level. It has failed to enforce proper quotas. It has failed to bring about orderly marketing. Indeed, the EEC has the provision in the basic marketing regulation, 100/76, and in article 22, that if a crisis develops the Commission "shall", at the request of a member, take the necessary measures in 24 hours. Why has not a request gone from our Government for the Commission to take what measures it can to deal with the position?
  Mr. Albert McQuarrie: I am following the hon. Gentleman's case very carefully because, as he rightly says, the position is urgent. He will agree that one of the biggest problems is not only the quantity of fish that is imported from the EEC but that which comes from other countries. From the EEC in 1980 there were 109,486 tonnes, and from countries outside the EEC there were 132,211 tonnes, making a gross total of

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  241,687 tonnes, at an approximate value of £18 million. This, as the hon. Gentleman rightly says, is the problem with which the fishermen have been confronted. There has been this mass of imports. I am not saying that there should not be any imports, because obviously the processors must have some, but somebody will have to get to grips with the present position if the fishing industry is to be saved.
  Mr. Mitchell: I am grateful to the hon. Gentleman for those figures, because it is important to have them. The scale of the problem is as he has described it. Although the interests of the processor have to be safeguarded, it is important that we have the market more managed than it now is, because the scale and flow of the imports is proving unpredictable, particularly in the first few months of each year, and because it is unpredictable the effect on the prices is disastrous.
  There is an urgent need for an aid package for the industry. In this mounting crisis of debt, aid is necessary to show that the Government still have confidence in the industry. At present the fishermen are in debt to the agents, the agents are in debt to the banks and the skippers are in debt to the banks. They are all pressed by the mounting burden of interest, and they are all in danger of closure if the situation continues or becomes worse.
  I emphasise that we accept that the Minister has the interests of the industry very much at heart and has worked hard in its interest. I also accept that there is a need for the type of inquiry that the Minister has initiated into the marketing of fish and the advertising and promotion of fish. It is important for the long-term future of the market that we put fish into people's heads as well as into their stomachs in order to regenerate the demand for fish, which has been deficient in the last few years. It is clear that the industry is now facing a serious crisis. It is struggling against bankruptcy because its receipts are down and because the price of fish is depressed by imports as a result of the strong pound and a lack of orderly EEC marketing, which are outside the control of the fishing industry.
  The industry is facing a crisis not only this year. The crisis has prevailed for two years running, so the basic facts about what is happening and why are now well known.
  The industry desperately needs Government action, orderly marketing and management of imports and aid to keep it going and to help it survive through the crisis. If it does not get that aid, the explosion of hostility and anger that took place last week, not only in Scotland but in Grimsby—the bitterness, arrests and desperation—is certain to recur. The Government must take some action to show that they are as concerned about the crisis as is the industry. If the crisis continues, and if there is another explosion of anger, there will be a breakdown in the control that the fishermen's organisations have been able to exercise over their members, and there will be a breakdown of order that will be far worse than anything we have seen up to now. The industry is going bankrupt and the fishermen are coming back from trips in dept. These people have so little to lose, and they are desperate for action from the Government to deal with the problem.
  10.43 pm
  The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith): I am
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  glad that the hon. Member for Grimsby (Mr. Mitchell) has had the opportunity to raise this important subject. I know how difficult it is, because of competition, to obtain an Adjournment debate, and I congratulate the hon. Gentleman on obtaining one on this topical subject.
  Because of my contacts with the fishing industry I need no persuading about how seriously the industry views the current events. Anyone who has followed the events of recent days—the blockading of ports, and so on—must be conscious of the deep anxieties and concern amongst many sections of the fishing industry.
  Without in any way trying to play down or underestimate the intensity and strength of feeling about the matter, I must say that it was significant that the hon. Gentleman said that this is the second year running in which there has been a crisis. It would be fairer to say that it is one of many years in succession when there has been a problem of imports during the early stages of the calendar year. During the last two years the intensity of the problem, particularly in the face of rising costs in the industry, as in other industries, has become more serious. We must remind ourselves that the phenomenon of increased imports at this time of the year is not unusual. As the hon. Gentleman knows, this is the time of the year when traditionally there is less fish available from our sources of fishing, because of bad weather that affects our grounds more than others.
  There is reaction to that in that this is the month when our processors, for fear of disruption of supplies, tend to look overseas for supplies more than they do at other times of the year. At the same time, countries like the Netherlands, who fish in the southern North Sea, where large quantities of fish are available, take greater quantities than they can absorb. In no sense, therefore, of trying to belittle the problems facing the industry, it is worth reflecting that what we are seeing this year and what we saw last year is an intensification of a trend that has taken place for a number of reasons.
  I appreciate and understand the difficulties, but the hon. Member for Grimsby might do better if he did not try to talk in headlines about some of the problems facing the industry. Comments such as "staggering towards bankruptcy", "drastically wrong" and "merry-go-round for fish" are good for headlines, but in many ways they do not help to resolve the problems facing the industry. Let me pick up the last of those phrases. The hon. Member said hastily, and swiftly moved on, that this is what the industry says, and that it is up to the Government to discover what is happening. The Government do try to find out what is happening. If there are complaints, it helps the Government, in trying to trace whether the complaints are well-founded, if the evidence, gossip or whatever the allegations are based on can be given to me or my officials. I assure the House that we shall follow them up. But many of them are simply rumours, allegations and gossip.
  I remind the hon. Gentleman that Mr. Nigel Atkins, the chief executive of the NFFO, was quoted in The Times of 5 February as saying that in many cases the allegations about fish coming from Holland at below EEC withdrawal prices were "purely anecdotal, nothing else". Mr. Atkins was correct. It does the industry no good if its case is built on allegations or gossip which cannot be substantiated.
  It is significant to note what we have read—I am sure that this goes for my hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie), who has shown his interest by attending the debate tonight—of two skippers

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  from Peterhead who visited a port in Holland. I have not spoken to the two skippers, and therefore I am careful in what I say, but the report was in Fishing News, which normally reports with considerable accuracy. They said that there was no indication of any fish failing to reach minimum prices. That was the evidence of two Scottish skippers who had taken the trouble, with the support of their fellow skippers, to visit Holland to learn at first hand what is happening there.
  Mr. Austin Mitchell: I accept what the Minister said about the anecdotal nature of the evidence. However, evidence has been put across on television about the Dutch fiddling of the quotas in one specific port, and about the French failure to observe the herring ban. What else can the industry produce but anecdotal evidence? Surely it is the responsibility of officials, particularly in the Customs and Excise department, to keep an organised and controlled watch on this matter—something the industry is incapable of doing. The evidence is bound to be anecdotal. It comes from fishermen, lorry drivers and isolated incidents. The industry just does not have the organisation necessary to maintain the kind of watch that the Government should operate.
  Mr. Buchanan-Smith: I understood that the subject of the debate, and of the hon. Gentleman's allegations, was imports of fish. That is what I was asking for evidence about. Overfishing of quotas or illegal fishing has taken place. We have been given evidence to substantiate allegations and the result has been that prosecutions have taken place in France. Indeed, the Commission has taken action against the French Government in relation to that matter. That bears out what I said. When we are given evidence to substantiate allegations, we have taken action, and we shall do the same with regard to imports.
  I am dealing with imports—the subject of the debate. That is why, if there is evidence of illegal imports, I want to deal with it every bit as much as does the hon. Gentleman. I do not want the industry to suffer problems as a result of illegalities any more than the hon. Gentleman does. The industry has enough problems to contend with which are not based on illegalities, but if there are illegalities let us get to the root of them and deal with them. Therefore, if the hon. Gentleman has evidence and believes that there is any truth in the allegations, I ask him to let me have that evidence. In the same way as we have had evidence of breaches of conservation measures and taken action, so we will take action on illegal imports if there is evidence to support such action.
  The problems on imports are twofold. As my hon. Friend the Member for Aberdeenshire, East pointed out, we have the problem of third country imports. As half our imports come from third countries, obviously we must take very great care. Last year, through the Commission, we succeeded in getting certain tariffs restored to proper levels and we also raised certain reference prices.
  We are still not happy about the way that the Commission has enforced the reference price system. Obviously a great deal can be done if we have a new
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  marketing regulation in consequence of a renegotiated common fisheries policy, but I do not believe that the Commission is adequately enforcing the powers that it already has. Our industry has therefore suffered from imports coming in at below the proper reference price.
  We have made a number of specific reports and asked the Commission to take action. In January, we sent 22 reports to the Commission and asked for action to be taken. I have raised this matter in the Council of Ministers in the past week, and the Commissioner has given me a personal undertaking that these cases will be investigated. Our complaints have been based on evidence, not on allegations. I assure the House that I shall continue to take action, where possible, in those areas.
  However, as the hon. Gentleman said, the real problem is not quite so much imports from third countries as imports from Europe. The main problem is the strong pound. I have taken this matter up with the Dutch Minister of Agriculture and Fisheries. The pound has strengthened 27 per cent. in relation to the guilder from a year ago. Therefore, as the evidence of Scottish skippers appeared to show, even adding on transport costs, fish can come into this country at below the level of minimum withdrawal prices here expressed in sterling. That is the basic problem faced not only by the fishing industry but by other industries in this country.
  What should we do? The hon. Gentleman put forward a number of suggestions. There are four areas in which we have taken action. First, as I said, we have taken action in relation to third countries directly with the Commissioner in Brussels. I shall certainly keep the House informed of the outcome in relation to that matter.
  Secondly, we have had discussions with the Dutch Government, and they have undertaken to watch the situation to make sure that there are no marketing illegalities.
  Thirdly, my right hon. Friend has asked two of his marketing advisers to look into the whole question of fish marketing here. That should help to get at the truth of marketing problems.
  Fourthly, as my right hon. Friend announced last week, we have asked the industry to co-operate with us in a specific investigation into what is going on about imports. Tomorrow afternoon my right hon. Friends the Minister and the Secretary of State for Scotland will be meeting representatives of the fishing organisations to discuss precisely how that investigation should be carried out.
  In those four ways we have taken action. The results of these actions are still to be seen, and I understand that. But, on top of that, we have brought forward the review of the financial state of the industry, which again we shall be discussing with members of the fishing organisations tomorrow, because we believe that the state of the industry and the financial problems that it is now facing are such that we must bring forward this review and discuss with the industry what must be done to meet what is admittedly a very serious situation.
  Question put and agreed to.
  Adjourned accordingly at six minutes to Eleven o'clock.