Commons Sitting of 24 March 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS

    GREATER MANCHESTER BILL [Lords]
    Order for consideration read.
    To be considered upon Thursday next.

Oral Answers to Questions
  EMPLOYMENT

    Trade Union Education
    Mr. Kenneth Lewisasked the Secretary of State for Employment whether his Department and the Department of Education and Science have completed their consideration of the application by the Trades Union Congress for support for trade unions' education and training in 1981–82.
    The Under-Secretary of State for Employment (Mr. David Waddington): Our consideration has nearly been concluded, and my right hon. Friend hopes to write to the TUC shortly.
    Mr. Lewis: If my hon. and learned Friend cannot give me the figures for next year, will he give me the correct figure for 1980–81, which I understand was over £1 million? The TUC distributes the money downwards to various affiliated unions, including the WEA. Is my hon. and learned Friend satisfied that State support is not going to unions which are acting militantly against the State—for example, the Civil Service unions? Would not it be proper for my hon. and learned Friend to consider this year's distribution in that light?
    Mr. Waddington: A total of £1.67 million was involved in 1980–81. I can assure my hon. Friend that the money is used for the education and training of shop stewards and workplace representatives. Proper training in that area is of great importance in industrial relations. Her Majesty's inspectorate has the opportunity to examine the way in which the money is spent. To the best of our knowledge, it is being spent properly and to the benefit of unions and managements.
    Mr. Arthur Lewis: How much money has been spent in educating the various Soviet knights, such as Sir Anthony Blunt and Sir Roger Hollis, who seem to have received good educations and been given good knighthoods? How much money do they get?
    Mr. Speaker: Order. The hon. Gentleman's supplementary question does not arise from the main question.
    Mr. Arthur Lewis: It does.
    Mr. Speaker: Mr. Morris——
    Mr. Arthur Lewis: On a point of order, Mr. Speaker——
    Mr. Speaker: Order. I will take the hon. Gentleman's point of order at the end of Question Time as I wish to give other hon. Members the opportunity to participate in questions.

    Youth Opportunities Programme
    Mr. Michael Morrisasked the Secretary of State for Employment what is the latest figure for the number of people being helped under the youth opportunities programme.
    The Under-Secretary of State for Employment (Mr. Peter Morrison): At the end of January 1981, there were about 136,000 young people taking part in the youth opportunities programme. The programme has been expanded to help 440,000 young people in 1981–82.
    Mr. Morris: Is my hon. Friend aware how encouraging those figures are? Does he accept that there appears to be a problem of co-ordination in further education between the Department of Education and Science and the Department of Employment? Can he assure me that there is some co-ordination between these two arms of the youth programme?
    Mr. Morrison: I am delighted that my hon. Friend thinks that the figures are encouraging. I can assure him that the co-ordination between the Departments of Education and Science and of Employment is as close as it can be. If there is any problem that he would like me to consider, I shall be delighted to do so.
    Mr. John Evans: When does the Minister expect to be able to provide real jobs, including skilled apprenticeships, for the many hundreds of thousands of young people who cannot find real jobs?
    Mr. Morrison: The hon. Gentleman will be aware that many real jobs are being created thanks to the economic climate of realism that now exists. He will know that the provision of apprenticeships is a matter of great concern both to my right hon. Friend the Secretary of State and to the Prime Minister.
    Mr. Bulmer: Will my hon. Friend confirm that he expects significant numbers of skill shortages next year? Is he satisfied that everything possible is being done to ensure that training for young people relates as closely as possible to real job opportunities?
    Mr. Morrison: I assure my hon. Friend that where skill shortages appear to exist in future the Department and my right hon. Friend will take notice and will do what they can to help.
    Mr. John Grant: Does the Minister accept that the youth unemployment problem is crucial, but that the Opposition remain fully committed to the youth opportunities programme? Having said that, however, may I express our deep concern at the increasing strain on the programme as a result of the huge numbers of young people who have to resort to it? In particular, will he comment on the difficulties being experienced in job substitution and the abuse of the scheme by some

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    employers through the Government's failure to raise the allowance to the level that the Manpower Services Commission wanted and the increasing difficulty of maintaining the scheme's credibility when young people passing through it can no longer be placed in employment? Will he further tell the House when the Secretary of State will implement his pledge of vocational training of quality for all young people. If that was only a pious hope, it was a cruel deception at the expense of young people?
    Mr. Speaker: Order. The Minister need feel obliged to answer one supplementary question only.
    Mr. Morrison: Thank you, Mr. Speaker. I shall attempt to answer two. As the hon. Gentleman is aware, there is still a substantial difference between the YOP allowance and what a school leaver would receive if he were unemployed. I assure the hon. Gentleman that, if and when substitution occurs, the Manpower Services Commission immediately withdraws the scheme. Finally, I am delighted that the Opposition support the youth opportunities programme.
    Mr. Marlow: Will my hon. Friend consider the differential between the YOP allowance and the amount that young people receive in supplementary benefit? Within the total amount paid, will he investigate the possibility of increasing the allowance, with perhaps a slight reduction in supplementary benefit?
    Mr. Morrison: I believe that the difference is about £8·25. This is being looked at. One has to see exactly how the market forces, as it were, work in this context. But I am sure that my hon. Friend will agree that the difference is substantial.

    Trade Union Immunities
    Mr. Rentonasked the Secretary of State for Employment how many representations he has received on the Green Paper on trade union immunities.
    Mr. Waddington: So far, I have received representations from about 30 organisations and individuals. However, consultations are due to last until 30 June. In view of the importance and complexity of the issues raised in the Green Paper, I do not expect to receive comments from the major organisations in industry until later in the consultative period.
    Mr. Renton: Bearing in mind the strong wish of many trade unionists for further action to limit the closed shop and for compulsory secret ballots before some strikes, do my hon. and learned Friend and his Front Bench colleagues intend to introduce further legislation on trade union immunities in the life of this Parliament?
    Mr. Waddington: I know how concerned people are about the closed shop, which may have come into prominence particularly as a result of what has happened at Sandwell, and about secret ballots. We are not committed to legislate during the course of this Parliament, but neither are we committed not to legislate. This is genuine consultation. We shall consider arguments and representations during this period and then decide in the light of all the evidence what it is correct to do.
    Mr. Cryer: Does the Minister agree that the legal position of trade unions barely allows them to function and that their allegedly powerful position has apparently not
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    stopped unemployment rising to 2 ½ million? Does he further agree that this is eroding the position of the trade unions, and that that is part of the Tory Government's policy? Is it not true that the Tory Government wish to see free trade unions operating only in Poland, and not here in the United Kingdom?
    Mr. Waddington: It is bizarre to assert that the present law barely allows trade unions to operate. Trade unions in this country have privileges which are not granted to trade unions in almost any other country in the world. We are glad that they can operate effectively to look after the interests of their members, but we do not consider that they should have carte blanche to inconvenience and damage the community as a whole.
    Mr. Madel: Is my hon. and learned Friend aware that many industrial managers are very satisfied with the Employment Act 1980 as it affects trade union immunities, and that, in view of the employment difficulties and the need for co-operation with the trade unions, such managers are very cautious about whether the Government need to take any further action for the time being?
    Mr. Waddington: My hon. Friend is entirely right if he is saying that we must carefully assess the practical effect of further measures before introducing them. It is no use putting new laws on to the statute book if they do not advance industrial relations or the liberty of the individual trade unionist. But that does not mean that we should just sit and do nothing. We must listen to the representations, hear all the arguments and then decide what is right.
    Mr. Skinner: Does the Minister recall that, before the introduction of the recent picketing laws, Tory spokesmen were saying that those laws would enable them to curb any actions in industrial disputes? Does he now accept that, arising out of the unofficial miners' strike, particularly in Wales, the picketing laws then on the statute book were swept away in respect of both secondary and tertiary picketing? Would it not be sensible to drop any proposals to introduce further laws and to get rid of those already on the statute book?
    Mr. Waddington: My right hon. Friends said nothing of the sort. They said that there were abuses which had to be dealt with, that it was outrageous that masses of people should be picketing outside workplaces other than their own. We came to power, and we have dealt with that abuse, as with other abuses. That is what we set out to do, and that is what we have achieved.

    Unemployed (Concessionary Fares)
    Mr. Freesonasked the Secretary of State for Employment if he will make a statement on the progress in his Department's consideration of the granting of concessionary fares to the unemployed.
    Mr. Peter Morrison: As the right hon. Member may know, the hon. Member for Swansea, East (Mr. Anderson) and myself have been involved in this question. I am pleased to say that, following discussions with my department and the National Bus Company, a trial scheme is currently operating in South Wales. I hope that it will be a success.
    Mr. Freeson: Does the Minister consider a trial scheme to be satisfactory when millions of people are in

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    continuing unemployment? Should not action be taken to increase mobility to assist the unemployed and to reduce their tremendous burden of expenditure in seeking alternative employment, in travelling not only long distances around the country but even within striking distance of their own homes?
    Mr. Morrison: I am somewhat surprised at the right hon. Gentleman's reaction. I should have thought that he would welcome the trial scheme. If he were to propose a scheme for his own area, we should be prepared to consider it, provided that no additional staff costs were involved. I do not recall his having done so.
    Mr. Farr: As this is the International Year of Disabled People, will my hon. Friend consider approaching our right hon. Friend the Secretary of State for Social Services to see whether disabled persons may be allowed concessionary travel on public transport?
    Mr. Morrison: As my hon. Friend knows, my right hon. Friends the Secretaries of State for Employment and for Social Services are always talking about such matters. Now that my hon. Friend has raised this point, I am sure that they will talk about it in future.
    Mr. Anderson: Is the Minister aware that, since he personally authorised the trial scheme less than a month ago, more than 600 "job seeker" tickets have been issued in the South Wales transport area and I am assured by the company that no administrative problems have arisen? In the light of that monitoring process, will he consider extending the scheme to other appropriate areas?
    Mr. Morrison: Perhaps I may first say how grateful I am to the hon. Member for bringing the matter to my attention originally. As he knows, he and I worked on this and we hope that we have reached a satisfactory conclusion in his area. I have already said that if other hon. Members, from whatever part of the House, wish to approach me on the matter, provided that no additional staff costs are involved, we are prepared to look at other schemes.

    Unemployment Statistics
    Mr. Winnickasked the Secretary of State for Employment what is the latest number of registered unemployed in the United Kingdom.
    Mr. Jim Marshallasked the Secretary of State for Employment if he will make a statement on the current level of unemployment.
    The Secretary of State for Employment (Mr. James Prior): At 12 March, the provisional number of people registered as unemployed in the United Kingdom was 2,484,712. The seasonally adjusted rise of 77,000, announced today, confirms that the rate of increase in recent months is slower than it was at the end of the last year. Despite this better trend, we remain deeply concerned at the rapid increase and high level.
    Mr. Winnick: Is the right hon. Gentleman aware that those figures are an appalling indictment of the bankrupt Government of which he remains a member? Is it true that the Treasury has forecast that unemployment will rise to more than 3½ million in 1983? How long does the right hon. Gentleman intend to go along with such disastrous policies?
    Mr. Prior: It is not true that the Treasury has forecast 3 ½ million unemployed by 1982 or 1983. The figures are still serious, but whether or not we get out of our problems quickly depends very much on the state of the world recession.
    Mr. Jim Marshall: How many further jobs will be destroyed as a consequence of the Budget?
    Mr. Prior: It is not necessary for any further jobs to be destroyed as a result of the Budget. In fact, the reductions in interest rates which have already taken place, together with further reductions which may take place in line with our policy, could result in more jobs being available than would otherwise be the case.
    Mr. Ancram: Many of us welcome today's news that the overall unemployment figure in Scotland has fallen this month. While not wishing to read too much into one month's figures, does my right hon. Friend not agree that yet again that emphasises the underlying resilience of the Scottish economy and that it bodes well for the future?
    Mr. Prior: One is pleased that the increase in unemployment in Scotland over recent months has not been as severe as in other parts of the United Kingdom. Of course, Scotland has the advantage of extra jobs created by North Sea oil. It is a good sign that at last Scotland is beginning to see some benefit from past investment.
    Mr. Ashley: As many women workers in industries such as the pottery industry do not register when they become unemployed, does the Secretary of State agree that the real level of unemployment is now more than 3 million? If so, should not any responsible Minister either fight in Cabinet to reverse the Government's economic policies or resign?
    Mr. Prior: I do not accept that the right hon. Gentleman has got the figures right. It is always the case that a number of people do not register when they lose their jobs. Similarly, a number of people who register are not available for work. The Government are now supporting about 1,214,000 people in jobs through various schemes, such as temporary short-time working and so on. That clearly shows that the Government care about the level of unemployment.
    Mr. Whitney: Does my right hon. Friend agree that trade union practices have contributed massively to the present level of unemployment? Should the review of the Green Paper on trade union immunities show that further legislation is necessary to improve those practices, will he confirm that it will be possible to introduce such legislation in the next Queen's Speech?
    Mr. Prior: Unemployment is caused not only by trade union practices but by many other practices as well, for which Government and management over 20 years or more must take their share of responsibility.
    There is no doubt that if we continue to pay ourselves more money for very little extra work, we shall run ourselves into an even greater problem of uncompetitive-ness. In the last 10 years, output has increased by 1 per cent. a year—10 per cent. in 10 years—but during that period we have paid ourselves 320 per cent. more money. That is the way to ruin and high unemployment.
    Mr. Cyril Smith: Is the right hon. Gentleman aware that an additional contributry factor to the scandalous level of unemployment to which he has just referred is the

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    buying policy of Government Departments and huge industries such as British Leyland which are being financed by taxpayers' capital? For example, the Ministry of Defence establishment at Bath is purchasing goods from abroad which have previously been purchased from a British textile company. Even in the last seven days, British Leyland has placed an order in France, whereas up to this year that order was placed with a British textile company. What are the Government doing about their buying policy?
    Mr. Prior: Government Departments are instructed to buy British goods wherever possible. If any hon. Member believes that goods are being bought abroad by a Government concern which could buy those goods at home, I hope that he will let me know and I shall see that the necessary action is taken.
    Mr. Forman: Is my right hon. Friend convinced that during this deep and tragic recession the Manpower Services Commission in particular can do enough to train and retrain many of the unemployed? Is he aware that at present, according to my figures, the total number of people trained and retrained by the MSC is 92,000, which represents one-third of 1 per cent. of the working population? Can we not do more in that regard?
    Mr. Prior: Most training needs to be done by employers on their own premises. Where employers cannot carry out that training, it must be subsidised and aided by training by the MSC. I am not satisfied that we are doing enough training, but I am well satisfied that, rather than the Government providing money, employers should recognise that unless they maintain their training we shall suffer from a further shortage of skills when we come out of the recession.
    Mr. Varley: When does the right hon. Gentleman expect unemployment to fall in the remainder of this Parliament to the level which he inherited when he was appointed to his present job?
    Mr. Prior: I cannot give such an answer, any more than the Labour Government could say when they thought unemployment would fall to the level which they inherited.
    Mr. Varley: Is it not more accurate to say that the Government's economic policy is now in ruins and that it is more likely that the Secretary of State will preside over unemployment of 3 million or more before this Parliament finishes?
    Mr. Prior: It is totally incorrect to say that Government policy is not succeeding. Labour Members should recognise and understand that the present level of unemployment is due just as much to a failure to pursue the right policies over a number of years when they were in office as it is to anything which has happened in the last two years.

    Industry (Noise Levels)
    Mr. Chapmanasked the Secretary of State for Employment when he plans to meet the chairman of the Health and Safety Commission to discuss noise levels in industry.
    Mr. Waddington: I meet the chairman frequently, but have no plans at present to discuss this particular matter.
    Mr. Chapman: Will my hon. and learned friend bear in mind the fact that keeping within reasonable noise levels in factories is important not only to the health of employees but also to residents who live nearby, especially at night if factories work a shift system? Will he consult other appropriate Ministers as well as the chairman of the Health and Safety Commission? does he accept that a wider environmental dimension is increasingly important?
    Mr. Waddington: The Health and Safety Commission will shortly publish a consultative document on the protection of the hearing of people at work. Clearly, in certain circumstances, noise reductions at work for the protection of employees may also benefit the general public. The prime responsibility for combating nuisance to the public as a result of noise rests not with my Department but with my right hon. Friend the Secretary of State for the Environment, as well as with local authorities, which were given new powers in the Control of Pollution Act 1974. I shall certainly pass on my hon. Friend's remarks to the Secretary of State for the Environment. I can assure him that we all treat seriously the pollution of the environment by noise.
    Mr. Pavitt: In the International Year of Disabled People. is the Minister aware that, unless the noise threshold is reduced to 80 decibels within a short time, thousands of people will become deaf? Will he hold an urgent meeting with the chairman of the Health and Safety Commission and the CBI about taking preventive measures, such as those operated by Heinz in my constituency?
    Mr. Waddington: The hon. Gentleman will be pleased to know that the consultative document will be published before long. I understand that it will contain draft regulations dealing with noise levels at work and a draft code of practice. He will be able to state his views, as the matter will no doubt be thoroughly discussed and debated.

    Youth Service Scheme
    Mr. Dykesasked the Secretary of State for Employment whether he has received any representations with a view to the foundation of a European Community youth service scheme; and what is the Government's policy towards the project.
    Mr. Peter Morrison: My noble Friend the Minister of State, Department of Employment, has been in correspondence with the Young European Democrats' Organisation about a proposed European youth service scheme. The Government recognise the value of youth exchanges of this kind but are primarily concerned to develop schemes that already exist to encourage voluntary work by young people, including the unemployed, in this country.
    Mr. Dykes: I thank my hon. Friend for that reply. As the Department has been progressive and forward-looking about the extension of schemes for the young unemployed, does not my hon. Friend accept that this is a logical extension? Does he not agree that the EEC budget funds could do a great deal to help, if only member States held a common view?
    Mr. Morrison: There is a lot in what my hon. Friend has said. However, I hope that he agrees that some difficulties would be raised by increasing the number of foreign volunteers coming into this country.

    Industrial Relations
    Mr. Knoxasked the Secretary of State for Employment when he plans to meet the director-general of the Confederation of British Industry to discuss the long-term improvement of industrial relations.
    Mr. Prior: I have had a number of discussions with representatives of the Confederation of British Industry about the long-term improvement of industrial relations. I shall be addressing a CBI conference on the Green Paper on trade union immunities tomorrow.
    Mr. Knox: When my right hon. Friend next meets the director-general, will he impress on him the importance of greater employee participation in the long-term improvement of industrial relations? Will he also impress upon him the danger of doing nothing?
    Mr. Prior: Yes, Sir. The CBI and the director-general are well aware of the importance of bigger and better schemes for communication, information and involvement in matters that concern work forces in their places of work. I hope that the code of practice that the CBI has issued in conjunction with the Industrial Society and other organisations will be followed.
    Mr. Maclennan: Although I recognise the importance of a long-term policy, may I ask whether the right hon. Gentleman accepts that the immediate need is to help industry? When he says that unemployment can best be solved by tackling the problem of over-payments, is he saying that he favours an incomes policy rather than the massive deflation that the Budget offers?
    Mr. Prior: I do not think that that question has any relevance to the original question.
    Mr. Haselhurst: Would it be helpful to have a system of monitoring voluntary progress towards the creation of satisfactory schemes for employee participation? Might not that encourage those companies that move rather slowly?
    Mr. Prior: The CBI has a monitoring scheme. My Department is carrying out a survey, which I hope will be available later in the spring. I cannot stress too strongly that the maximum amount of importance should be attached to further schemes for involvement. When we come out of the recession, we shall need, above all, to communicate better with employees than we have done in recent years.
    Mr. John Evans: Is it not time that the Secretary of State accepted that industrial relations involve both sides of industry and that they cannot be improved by repressive anti-trade union legislation?
    Mr. Prior: No one is suggesting that industrial relations can be improved by repressive anti-trade union legislation. Nor is anyone suggesting that the law does not have an important part to play in the conduct of industrial relations. Those hon. Members who seem to think that the law should be concerned entirely with giving trade unions advantages that are not available to ordinary people need only consider what has happened in recent years to realise that the working people have done badly.

    Engineering Industry (Training)
    Mr. Scottasked the Secretary of State for Employment when last he met the chairman of the Engineering Industry Training Board to discuss training in the engineering industry.
    Mr. Peter Morrison: My right hon. Friend last met Lord Scanlon, chairman of the Engineering Industry Training Board, on 19 March. My right hon. Friend's last full discussion with him on training in the engineering industry took place on 22 October 1980.
    Mr. Scott: Will my hon. Friend confirm that Ministers were impressed by the account that Lord Scanlon gave them of the work done by the Engineering Industry Training Board in supporting training schemes—particularly apprenticeship schemes—at a time of recession when employers are cutting such schemes? When he makes up his mind about a more efficient and streamlined training system, will he bear that in mind?
    Mr. Morrison: The Department applauds the Engineering Industry Training Board's attitude towards apprenticeships, which is one of moving towards the setting of standards rather than time serving. As my hon. Friend probably knows, the MSC has already offered the Engineering Industry Training Board funds this year for 2,000 additional craft and technican trainees.
    Mr. Flannery: Is it not a fact that even in the depths of the recession in the 1930s we did not have enough engineering apprentices? Is it not disgraceful that all engineering training centres feel that they are in danger? The centre in Sheffield has had to be helped by South Yorkshire county council to maintain its training facilities. Does not the Minister accept that we need more cash if we are to train apprentices? Is he aware that if we do not get that cash we shall not be able to produce goods for the world market when the upswing comes?
    Mr. Morrison: The hon. Gentleman may know that my right hon. Friend has not made any decision about the future of any of the training boards, and least of all about the future of the Engineering Industry Training Board. He will not make any decision until the MSC has made its recommendations. As I have said, an extra 2,000 trainees have been helped through the MSC. Therefore, we are aware of the problem.
    Mr. Needham: Does my hon. Friend accept that some employers use the Government-backed schemes run through the MSC or industrial training boards to provide substitute labour? Will he give an assurance that the worries and concerns of many people on this matter are being properly looked after?
    Mr. Morrison: I have already spoken about substitution. The MSC and the Government are keeping that under close scrutiny. I cannot say more than that.
    Mr. Harold Walker: Will the hon. Gentleman confirm that by 1984 the Government will have imposed a further cut of £77·5 million in public support for industrial training? Does the Minister recall that on Second Reading of the Employment and Training Bill on 9 February he promised to consider carefully the extension of the period for Government withdrawal of financial support for the operating costs of training boards after 1983? Why is it now proposed that financial support should come to an end by 31 December 1981?
    Mr. Morrison: As the hon. Gentleman knows, on Second Reading my right hon. Friend and I said that we were aware of the difficulties facing industry as a result of the transfer of operating costs to the remaining statutory boards. That remains our position.

    Young Persons (Training Opportunities)
    Mr. Frank Allaunasked the Secretary of State for Employment, further to his reply of 24 February, Official Report, col.315–6, what proposals have now been discussed between the Manpower Services Commission and the Ministry of Defence involving unemployed young people.
    Mr. Prior: The Manpower Services Commission is currently considering proposals for a pilot scheme under which 1,000 unemployed young people would receive training in the Army for periods of up to six months. I expect to receive the views of the commission shortly.
    Mr. Allaun: Do not school leavers need industrial rather than military training? Do they not need training for life rather than training for killing? What type of Government or system is it that offers 17-year-olds a choice of unemployment or entrance into the Army?
    Mr. Prior: The hon. Gentleman should not allow his prejudices to run away with him. Such a scheme would be entirely voluntary. Many young people would like to have the opportunity of spending a bit of time with Her Majesty's Forces. It would be entirely voluntary. I am by no means certain that the Manpower Services Commission will recommend it. Speaking from my own experience, I know that many young people would like to take part.
    Mr. Stokes: Is my right hon. Friend aware that there is no better experience for young people than a period of time spent serving the Queen, when they will learn loyalty, self-discipline, self-respect and esprit de corps?
    Mr. Prior: Apart from all those estimable qualities, which my hon. Friend has to the full, and about which I fully agree, the fact is that young people could have training for a whole range of skills which they are more likely to get through this scheme than through many other schemes.
    Mr. Douglas: Will the Secretary of State treat the matter more seriously? Does he recognise that there would be a great objection if the aura of the scheme is surrounded by what we might loosely call square bashing? Does he agree that we should consider the facilities available in the Royal dockyards, such as Rosyth, for apprentice training? Is he aware that the facilities are already there, so that no new facilities would be created? They could be much more intensively used and the essential ingredient of giving young people a skill would be foremost in mind and not secondary.
    Mr. Prior: I hope that no one in the House will think that I am not taking the matter seriously. I believe emphatically that this is the type of scheme that we should consider carefully. There are some difficulties about the recruitment of apprentices into Royal Naval Dockyards and other defence establishments, but generally we need to encourage as many apprenticeships as we can afford.
    Mr. Varley: Does the Secretary of State realise that what he has said has many serious implications? We shall
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    want to know a lot more about the proposed scheme before the Opposition give it their approval. Will he give the undertaking that if the Manpower Services Commission goes ahead and approves the scheme he will make a statement so that we can discuss the matter thoroughly before committing our young people to it? Is he aware that a record number of young people want not necessarily military experience but proper long-term jobs?
    Mr. Prior: As I said in my original answer, I expect to receive the views of the Manpower Services Commission before long. I do not know what those views will be but if the commission suggests that we can go ahead with a scheme of that nature I shall report to the House.
    Mr. Frank Allaun: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment. This is the thin end of the wedge.

    European Community (Employment)
    Mr. Teddy Taylorasked the Secretary of State for Employment if he will initiate an inquiry into the impact on employment in the United Kingdom of membership of the EEC.
    Mr. Waddington: No, Sir. Such a study would hold value only if it were possible to quantify with certainty the separate effects of the many different factors influencing employment levels. We can, however, be certain that withdrawal from the Community, into which at present we sell over 40 per cent. of our exports, would generally have a most adverse effect on employment.
    Mr. Taylor: As Britain's performance on employment and growth under Governments of both parties since 1973 has, on the Minister's own figures, been a lot worse than that of our EEC partners, and considerably worse than those European countries which did not join the EEC, would it not be wise to have such a study to enable us to identify the changes we need to make to promote employment and growth?
    Mr. Waddington: If my hon. Friend considers the matter, I am sure that he will recognise the changing patterns of trade that have taken place, not just since we joined the Community but for many years before that. Not so many years ago, 40 per cent. or more of our trade was with the Commonwealth and America. Today, only 20 per cent. of our trade is there and 40 per cent. is with Europe. How can we contemplate cutting ourselves off from that market?
    Mr. Roy Hughes: Does the Minister appreciate that the loss of cheap food to the British housewife has had the effect of driving up wages in this country, which in turn has made our products less competitive in the markets of the world? In addition, we have had to get rid of our small tariff barriers which were effective. Is he aware that their loss has driven many industries to the wall? As regards trade with the Common Market, will he bear in mind that many of our imports are being paid for by North Sea oil?
    Mr. Waddington: I do not accept for one moment that the abolition of tariff barriers against imports from European countries has led to the present unemployment. The truth is that we have free access to the most rapidly expanding consumer market in the world, into which at present we sell well over 40 per cent. of our exports.

  PRIME MINISTER

    Engagement
    Mr. Canavanasked the Prime Minister what are her official engagements for 24 March.
    The Secretary of State for the Home Department (Mr. William Whitelaw): I have been asked to reply.
    My right hon. Friend is taking part in the meeting of the European Council at Maastricht in the Netherlands.
    Mr. Canavan: Is it sheer coincidence that when, for the first time in the lifetime of this Parliament, I have landed question No. 1 to the Prime Minister, she has hopped off to Holland for a Common Market meeting? As the Prime Minister is primarily responsible for today's announcement of yet another appalling record unemployment total, will the Home Secretary send an urgent message to the Prime Minister telling her not to bother to come back because we shall all be better off without her?
    Mr. Whitelaw: I will do my best.—[Interruption.] I will do my best to hear the hon. Gentleman. If he wishes to refer to the unemployment figures, my right hon. Friend the Secretary of State for Employment has made the position clear. If the policies that his party proposes were to be followed, the situation would be a great deal worse and he and his party know that.
    Mr. John Townend: Will my right hon. Friend take time today to remind the public sector unions that, if their policy of obstructing the collection of revenue is successful, it could well lead to increasing pressure on the Government to suspend the inflation-proofing of public sector pensions?
    Mr. Whitelaw: I hope that all those taking part in this unfortunate dispute will realise their great responsibilities to the public.
    Mr. Beith: Has the Home Secretary seen the reports of what the Prime Minister has said today in Holland about the fisheries dispute? While he may welcome, as most of us will, an attempt to resolve that dispute, will he assure the Prime Minister that there will be great anger in the fishing community if she gives way on access in order to secure a settlement?
    Mr. Whitelaw: It is clear from the reports from Maastricht that my right hon. Friend has made the position of this country's fishing industry very clear. She will make a statement when she returns.
    Mr. Peter Bottomley: Will my right hon. Friend take time today to spell out to those who want to share equally in the country's wealth that they have another 10 days in which to apply to buy their homes at the prices set in August last year?
    Mr. Whitelaw: I agree with my hon. Friend. No doubt some of those Labour councils which have been trying to obstruct the development will realise how stupid they have been.
    Mr. Winnick: Bearing in mind the remarks of the hon. Member for Reigate (Mr. Gardiner) to the effect that a number of his Conservative colleagues are trying to replace the Prime Minister as leader, will the right hon. Gentleman say whether such plotting has minority or, by now, majority support in the Cabinet?
    Mr. Whitelaw: If any people are taking that view, they are very stupid indeed.
    Mr. Marlowasked the Prime Minister if she will list her official engagements for 24 March.
    Mr. Whitelaw: I have been asked to reply.
    I refer my hon. Friend to the reply which I gave earlier.
    Mr. Marlow: Is my right hon. Friend aware that BSC at Stanton and Staveley is setting up a Companies Act company with a separate board of directors? Will my right hon. Friend confirm that that is the beginning of a massive programme of denationalisation and that, as that takes place, workers and employees in the nationalised industries will be able to buy a stake in their companies and participate? Does he agree that they will then have a stake in their workplace and that the nationalised industries will have a rather lower stake in the taxpayers' pocket?
    Mr. Whitelaw: As my hon. Friend the Minister of State, Department of Industry, said on 19 March, the proposals made in that case will pave the way For privatisation.
    Mrs. Renée Short: Is the right hon. Gentleman aware of the serious situation facing many of London's postgraduate medical institutions? Is he aware that the Royal postgraduate school at Hammersmith lost £941,000 this year and that the London School of Hygiene and Tropical Medicine lost about £750,000 because of the decline in the number of overseas doctors coming here as a result of the increase in students' fees?
    Will the right hon. Gentleman ask the Prime Minister to take that on board urgently and ensure that the Secretary of State for Education and Science, who is due to meet Lord Annan shortly, gives a reprieve to the postgraduate schools?
    Mr. Whitelaw: This matter has been argued exhaustively. The Government position has been made clear. I shall draw my right hon. Friend's attention to what the hon. Lady has said.
    Mr. John MacKay: Would it not have been better if the hon. Member for West Stirlingshire (Mr. Canavan) had acknowledged that the unemployment figures for Scotland this month show a slight but nonetheless welcome decline?
    Mr. Whitelaw: It would indeed have been better, but it would not have been reasonable to expect him to do so.
    Mr. Pavitt: Will the right hon. Gentleman exercise his well-known chivalry on behalf of the fair sex following the insensitivity of the Prime Minister in reply to questions about private medicine and the National Health Service? Is he aware that the Prime Minister's answer last week indicated her lack of understanding that women at the change of life are penalised unless they have the power of the purse to relieve them of their pain and misery? Will the right hon. Gentleman persuade the Prime Minister to take a different attitude?
    Mr. Whitelaw: I shall speak to my right hon. Friend and tell her what the hon. Gentleman has said.
    Mr. Best: With reference to his earlier reply, will my right hon. Friend welcome the fact that in the 18 months since the Government took office 120,000 council and new town houses have been sold to their tenants? Is he aware that since 3 October, when the right to buy arose,

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    and 31 December, another 100,000 tenants have applied to buy their own homes? Does he agree that that represents a complete endorsement of the Government's policy to sell council houses and is in line with the desire of the people? Does he agree that the measure will be heralded by future generations as being one of the major social advances of this century?
    Mr. Whitelaw: I entirely agree with my hon. Friend. I find it extraordinary that some Labour councils are apparently against something which so many people in their areas want. Why are they against it? Nobody can explain except them.
    O3. Mr. Fosterasked the Prime Minister if she will list her official engagements for Tuesday 24 March.
    Mr. Whitelaw: I have been asked to reply.
    I refer the hon. Gentleman to the reply which I gave earlier.
    Mr. Foster: It is assumed that unemployment will rise to 3 million and stay there for two years. Is the right hon. Gentleman aware that that implies that there will be 700,000 long-term unemployed? What is the Government's policy for the long-term unemployed, apart from reducing their benefits and hounding them with the DHSS fraud squad? What message of hope can we give to the long-term unemployed in the Northern region?
    Mr. Whitelaw: I shall not indulge in forecasting nor will I accept some of the forecasts that have been made. I represent a constituency in the North and I take the Northern region's position very seriously indeed. The most important factor that will help the long-term unemployed in the Northern region and elsewhere is a reduction in inflation, which the Government are determined to achieve.
    Mr. Moate: Will my right hon. Friend try to explain the practical purpose of the proposed new Common Market format burgundy passport?
    Mr. Whitelaw: The proposed passport has been under discussion for a considerable time. The discussions were initiated by the right hon. Member for Huyton (Sir H. Wilson) when he was Prime Minister. Discussions are still continuing. We shall have to see how we get on and how eventually we plan the passport.
    Mr. Greville Jannerasked the Prime Minister whether she will list her official engagements for Tuesday 24 March.
    Mr. Whitelaw: I have been asked to reply.
    I refer the hon. and learned Gentleman to the reply which I gave earlier.
    Mr. Janner: Will the right hon. Gentleman draw the Prime Minister's attention to the very high unemployment level in areas such as Leicester, which were until recently prosperous, but where over 10 per cent. are now unemployed and where over 15 per cent. of the workers are on short time? Is he aware that in one school in Leicester parental unemployment is over 40 per cent.? What will he do to help areas which were prosperous but which are now sinking fast under his Administration?
    Mr. Whitelaw: I certainly accept the serious position of Leicester, which I visited recently. I say to the hon. and learned Gentleman what my right hon. Friends and I have said consistently—that the policy of bringing down inflation is the best means of finding jobs for such people.
    Mr. Brotherton: What is the purpose of the burgundy-coloured Common Market passport?
    Mr. Whitelaw: The purpose, as originally proposed when discussions were first undertaken, was to have a common passport throughout the European Community.
    Mr. David Steel: Is the right hon. Gentleman aware that on the radio at lunchtime the Secretary of State for Employmnent said that he was constantly raising the unemployment situation within the Cabinet. In the absence of the Prime Minister, will the Home Secretary arrange for the Secretary of State for Employment to have a more sympathetic hearing?
    Mr. Whitelaw: My right hon. Friend the Secretary of State for Employment has always had a sympathetic hearing. What people do or do not raise in the Cabinet is a matter for members of the Cabinet and nobody else.
    Sir Derek Walker-Smith: Can my right hon. Friend say whether it is a fact that the burgundy-coloured passport was the brainchild of that noted "vinophile" Mr. Roy Jenkins?
    Mr. Whitelaw: I do not wish to comment on its parentage. Let us see how the child gets on.
    Mr. Foot: Since the right hon. Gentleman has been so reticent about what takes place in the Cabinet, can he give us his view, or that of the Prime Minister, on the speeches at the weekend by the Minister of Agriculture, Fisheries and Food? Without revealing any Cabinet secrets, can he say whether he belongs to that half of the Cabinet that agrees with the Minister of Agriculture, Fisheries and Food?
    Mr. Whitelaw: I note that my right hon. Friend said in his speech at Worcester that the Conservative Party will be the governing party of Britain for the next half century. I entirely agree. I only wish that I could be there to see it.
    Mr. Foot: I invite the right hon. Gentleman to stick around for a little longer. Did he also read those sections of the speech attributed to the Minister of Agriculture, Fisheries and Food in which he said that if it had not been for public expenditure over a whole range of Government policies unemployment would be very much higher than it is? Does the right hon. Gentleman agree with all that public expenditure? Does he wholeheartedly approve the whole of that speech?
    Mr. Whitelaw: Certainly I agree with my right hon. Friend's remarks about expenditure on different industries. If it had not been for our support for British Leyland, not only would many jobs have been lost at British Leyland but many more jobs would have been lost in component industries throughout the West Midlands. If it had not been for public expenditure on the youth unemployment and training programmes the situation would have been very much worse. Everybody in the House will agree with those two examples.
    Mr. Nicholas Winterton: Will my right hon. Friend get a message to the Prime Minister while she is in Holland indicating that harmonisation of Excise duties on beer and wine are putting many brewery workers in this country out of work? We are merely soaking up the wine lake of Europe. Will the Government slow down the harmonisation so that we do not drink so much wine but drink more beer?
    Mr. Whitelaw: I do not think that I would seek to comment on the relative merits of drinking more wine as opposed to drinking more beer. I shall refer the remarks of my hon. Friend to my right hon. Friend the Prime Minister when she returns.
    Miss Joan Lestor: If the right hon. Gentleman gets time today to read my local paper he will see a report of the death of a youth who committed suicide because he was unable to find a job. In view of the seriousness of
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    unemployment among young people, may I ask the right hon. Gentleman to say to what level inflation has to fall before a decrease in unemployment can be expected?
    Mr. Whitelaw: The hon. Lady has referred to a most tragic case reported in her local paper. I recognise the seriousness of that matter. I can only repeat what I believe to be the absolutely fundamental truth, that if we get inflation down we shall provide real and sensible jobs for our people in the future. There is no other way. The policies of the Opposition would make the situation a great deal worse.

Canvey Island (Planning Inquiry)
The Secretary of State for the Environment (Mr. Michael Heseltine): With permission, I shall make a statement about Canvey Island.
An exploratory local inquiry was held in 1975 to consider whether to revoke outline planning permission that had been granted to United Refineries Limited for an oil refinery. At the inquiry an assessor recommended study of the inter-related risks of the Canvey area. This study was then carried out by the Health and Safety Executive, which concluded that the risks did not justify closure of any of the existing installations at Canvey provided that certain improvements were carried out. The local inquiry was reopened in 1980 to take account of its findings and the inspector was asked to consider the safety aspects of the proposed refinery, having regard to existing uses in the vicinity.
I am publishing the inspector's report today. Copies have been placed in the Library.
On the matters under consideration before the inquiry, the inspector found no real disagreement with the Health and Safety Executive's findings on the order of risks involved, and he concluded that the additional risk from the proposed refinery would in itself be comparatively small.
However, notwithstanding improvements initiated following the HSE study, the inspector was concerned about the possible consequences of any incident at the nearby British Gas methane terminal, and judged that it would be wrong for that terminal to remain sited so close to the resident population unless a foolproof device for the protection of the public could be installed.
I must stress that the methane terminal was not itself the subject of the inquiry. The inspector did not consider, and was not asked to consider, all the issues involved in the safety of this plant, but in the light of his very serious remarks I consider that it is essential for these issues to be properly and urgently subjected to a full inquiry, at which all the facts and opinions can be evaluated and considered.
I am therefore today contacting the Castle Point district council with a view to arranging a full inquiry under planning powers, to be arranged as soon as possible. The inspector, with specialist assessors, will be asked whether it would be right to begin discontinuance procedures or whether, in the light of the evidence given to the inquiry, such a step would be inappropriate.
As the terminal is operational land of a statutory undertaker the report will be made to my right hon. Friend the Secretary of State for Energy as well as to me. Meanwhile, I propose to defer further a decision on whether the United Refineries Limited permission should be revoked. I shall also defer deciding a planning appeal by London and Coastal Oil Wharves Limited for development at its site near the methane terminal.
I am sure that the House will agree that we must reach properly informed decisions on these issues, which concern both the safety of people living in the area and the public interest in maintaining the gas supply.
Mr. Gerald Kaufman: I thank the Secretary of State for making the statement. I thank him, in particular, for deciding to publish the report. That is a most helpful action. I am sure that he will agree that there will be a great deal of concern in the Canvey, Thurrock area, which is in any case a high-risk area, as a
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result of his announcement, not because anyone would quarrel with it or challenge it but because the very fact that the right hon. Gentleman has called for an inquiry will, of itself, heighten anxiety about the situation in this area.
Will the right hon. Gentleman give the House an assurance that the inquiry will be as speedy as possible and that the outcome and the findings will be published as quickly as possible? Will he also assure the House that whatever the findings and recommendations of the inquiry, and whatever interest they may damage, if they are helpful to the environment of the people living in the area he will not flinch from carrying them out?
Mr. Heseltine: I am grateful for the right hon. Gentleman's comments. I think that I can help. I would want to proceed as quickly as possible, compatible with the thorough nature of the job to be done and the preparation of the necessary work and evidence. The inspector's report that follows from the inquiry would have to be published. I take the point put to me by the right hon. Gentleman that there is bound to be public concern and public interest in the matter. It has been a characteristic of this situation for a considerable time. In one sense, I believe that the holding of a major public inquiry of this sort will reassure people of the Government's determination to see that all the issues are properly ventilated as quickly and as effectively as possible.
Sir Bernard Braine: Is my right hon. Friend aware that having fought for years for a full investigation of the huge concentration of risk from gas, chemical and oil storage to which my constituents have been exposed, I am delighted, as they will be, to hear that this is now conceded and that, in the meantime, the development of other hazardous activities is to be frozen? That is a victory for common sense.
My right hon. Friend will appreciate that when I have studied the inspector's report there will no doubt be many questions that I shall wish to ask. There are, however, three that occur to me now. First, will my right hon. Friend be good enough to explain why it is necessary to have an exploratory inquiry—that is, an inquiry into an inquiry—into the feasibility of removing the British Gas terminal, which accounts for one-third of the total potential risk to my constituents? Surely, if he is to allay public anxiety about a major hazard that has already had three enforcement notices served on it by the Health and Safety Executive for neglect of elementary safety precautions, he should set up his main inquiry forthwith.
Secondly, my right hon. Friend will know that British Gas is already decommissioning its below-ground storage of liquefied natural gas. Can he tell the House how long this welcome process will take?
Finally, can my right hon. Friend give me an assurance that in the meantime the British Gas Corporation will not be permitted to reactivate its liquefied petroleum gas pipeline, as it is seeking to do, which would give it an excuse for permanent above-ground LPG storage on the island?
Mr. Heseltine: I believe that the whole House is aware of the assiduous manner in which my hon. Friend has sought to represent the interests of his constituents as he saw them. I am grateful for his remarks. I shall try to deal with the questions that he has put.
The inspector's report arose not from an inquiry into the methane terminal but from an inquiry into another

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planning matter. In that sense, it would be wrong for me to make a final judgment about whether I have the evidence upon which to move for discontinuance and, therefore, to that extent, to put the Government's opinion behind such a step.
I fully understand the validity of my hon. Friend's question, but in the circumstances it is right to establish the facts in respect of the British Gas terminal before we decide whether it is right to discontinue it.
My hon. Friend's second question concerned the time taken to decommission the underground storage. I understand that the time is expected to be about two years, but of course it will depend on the availability of alternative storage, principally in the Isle of Grain.
The third question concerned the reactivation of the liquid gas pipeline. The Health and Safety Executive would need to approve any such proposals, but I understand that at present it is not proposed to increase overground storage in connection with the reactivation of any underground pipeline. If that were to happen it would again be within the purview of the Health and Safety Executive.
Mr. Speaker: I propose to call the three hon. Members who have been rising.
Dr. Oonagh McDonald: Does the hon. Gentleman accept that his statement will be very welcome to the people of Thurrock? Will he assure the House that, in the additional inquiry that is about to commence, Thurrock borough council will be consulted, since a major incident in the Canvey Island area would affect Stanford-le-Hope and Corringham in my consituency? Will the right hon. Gentleman further accept that, to ensure public safety, further public spending may be involved or that assistance may need to be given to the companies that are already present in the area? Will he ensure that public expenditure of that nature will be forthcoming if the results of the inquiry show that it is necessary.
Mr. Heseltine: We shall, of course, keep the Thurrock borough council fully involved. It will be fully aware of
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the procedures and will have an opportunity to make its views known to the inquiry, should it wish to do so. At the moment, it is premature to try to judge what may emerge from the inquiry and to make commitments about public expenditure. The cost of accommodation would fall to Castle Point district council and the cost of the inquiry itself would fall to my Department. However, we shall have to judge the recommendations and findings of any report and then decide on the expenditure that may be necessary. If the Government decided that it was in the interests of the safety of the people to take certain steps, I cannot believe that public expenditure constraints would prove an overriding barrier
Sir Albert Costain: Is my right hon. Friend aware that Trinity House pilots are extremely concerned about the Merchant Shipping Act which could result in a relaxation of pilotage in this part of the River Thames? Will my right hon. Friend arrange for them to give evidence in any inquiry?
Mr. Heseltine: I am sure that they would have a right to give evidence to the inquiry. Clearly, they would regard that as important.
Mr. Sydney Chapman: I congratulate my right hon. Friend on the care and consideration that he has given to what is, by any standards, a vital safety and planning matter, and which, if he takes a certain decision, may be without precedent. Will he confirm that the planning permission was given by the Secretary of State and not by a local planning authority? Will he say what compensation is likely in the event of a revocation taking place?
Mr. Heseltine: I thank my hon. Friend for what he says, but I think that the procedures should be allowed to take their course before the House makes judgments about how the bills are to be apportioned between public bodies. Clearly, issues of public safety would have to prevail, and the allocation of costs would need to be discussed in those circumstances.

Lloyd's Bill (Members' Interests)
Mr. Jack Straw: On a point of order, Mr. Speaker. I raise a point of order relating to voting on the Lloyd's Bill, of which I gave notice to you and to the right hon. Member for Crosby (Sir G. Page), who is steering the Bill through the House. I seek your guidance whether Members of the House who are members of Lloyd's have a direct pecuniary interest that is immediate and personal such as to require them not to vote on the Bill, whether for or against it.
On 9 December last year, the Chairman of Ways and Means said that as he was a member of Lloyd's, a fact that is recorded in the Register of Members' Interests,
"it would be undesirable for me to discharge, in relation to the Lloyd's Bill, the various duties which the House imposed upon the Chairman of Ways and Means".
Although I accept that his position is somewhat different from that of ordinary Members, I believe that the principle is the same, and that other Members of the House who are members of Lloyd's should act in a similar way and not vote. However, I read in today's Financial Times that the right hon. Member for Crosby has issued a statement saying that he does not think that a member of Lloyd's need refrain from voting for fear of a challenge that his vote would be disqualified.
At page 407 of "Erskine May" we are told:
"it is a rule that no Member who has a direct pecuniary interest in a question shall be allowed to vote upon it: but, in order to operate as a disqualification, this interest must be immediate and personal, and not merely of a general or remote character".
There are 53 Members of the House who are members of Lloyd's, including 13 Government Members. Some of them are brokers or underwriting members, but most of them are names who put their total personal wealth at risk and have to show that they have £100,000 at least in unencumbered assets, and the whole of that amount is put at risk by their membership of Lloyd's. It is self-evident that their interest in Lloyd's is direct, pecuniary and, above all, immediate and personal. Indeed, nothing could be more immediate and personal than having the whole of one's personal wealth at risk.
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The Lloyd's Bill goes to the heart of the operations of the Society of Lloyd's. It not only provides for the disciplining of members by which they may lose their livelihood, but, in clause 8, it defines the liability of members of Lloyd's.
The noble Lord Salmon in the Royal Commission on Standards of Conduct in Public Life said at page 37:
"the prime purpose of rules and laws requiring the declaration of interests is to enable him to separate his legitimate private interests from his official duties. The existence of such rules and laws is also a reassurance of the public that those engaged in the work of public bodies do indeed separate their private interests and public duties in the way that is expected of them".
Whatever the strict legal position, there are the strongest ethical reasons for members of Lloyd's not to vote in the debate today. It would be inconsistent with the standards of public life that one expects. However, it is a case that falls fairly and squarely within the rules, and members of Lloyd's should be advised that they are likely to be disqualified if they vote for or against the Bill.
Sir Graham Page: Further to that point of order, Mr. Speaker. Having studied "Erskine May", and having seen cases where the shareholders in a company have promoted a Bill and had their votes allowed—and not disallowed—in such cases, I took it upon myself, having been asked by the presenter of the Bill to move the Second Reading, to tell Members that I did not believe that their vote could be challenged.
If there is any doubt about the matter, I am happy to advise those Members who are members of Lloyd's to refrain from voting, because I am quite satisfied that the Bill will achieve its objects and will be accepted by the House on its merits.
Mr. Speaker: I am deeply grateful to the right hon. Gentleman for his remarks. On the question of a pecuniary interest, I am of the opinion that if any right hon. or hon. Member has the slightest doubt about the matter he should not vote. If he votes, he takes the risk that the House itself could disallow the vote afterwards. However, I am much obliged to the right hon. Gentleman for his statement, which has saved me adding anything to what he has said.

House of Commons Disqualification Act 1975 (Amendment)
3.50 pm
Mr. Dennis Canavan: I beg to move,
That leave be given to bring in a Bill to amend the House of Commons Disqualification Act 1975 by inserting among the persons disqualified for membership of the House of Commons any person who, having been described on the ballot paper at the time of his election to the House of Commons as a candidate for any political party, thereafter resigns his membership of that party.
You are unique in many respects, but especially because you are the only Member of the House who was not elected to Parliament on a party political description—at least, not at the latest general election. All other hon. Members stood as party political candidates and were elected because the majority of voters voted for their political allegiances. The majority of people voting in a general election are voting not simply on the merits or demerits of candidates as individuals; they are voting Labour, Tory or Liberal, as the case may be. It is sheer arrogance on the part of any hon. Member to pretend otherwise.
Since the 1970 general election a space has been reserved on the ballot paper for a description of the candidate. Most candidates have used that space to describe their party political affiliations. I do not know of any hon. Member who, at the 1979 general election, described himself as a Social Democrat, yet there are 13 Social Democrats sitting in the House who, in 1979, stood as Labour candidates, and one who stood as a Tory candidate. They have the brass neck to sit here having resigned from their parties. They call themselves Social Democrats.
There is nothing new in all this. The history of the Parliamentary Labour Party is littered with the political corpses of people who thought that they could break away and go it alone—for example, Oswald Mosley, Desmond Donnelly, Dick Taverne, Jim Sillars, and the right hon. Member for Daventry (Mr. Prentice), who was elected to the House as the Labour Member for Newham, North-East and who crossed the Floor of the House to join the most reactionary Right-wing Government ever.
I accept that anybody is entitled to change his mind, especially a politician. Even St. Paul had his road to Damascus, but he had the slight advantage that he finished facing in the correct direction. If elected representatives of the people—elected because thousands voted for the general philosophy and policies of the party for which they stood—resign membership of their parties it is incumbent upon them to resubmit themselves to the electorate who put them in the House. Otherwise, they can rightly be accused by their electorate of hanging on to their seats and parliamentary salaries under false pretences.
Even Dick Taverne, for whose policies I had no great respect, at least had the decency and guts to resubmit himself to the people of Lincoln. The members of this latest bunch of so-called Social Democrats seem to be following the bad example of the right hon. Member for Daventry by refusing to test their new colours before their constituents. These people are phoney democrats. They are anti-social and anti-democratic. They are taking a massive swipe at representative democracy as we know it. They pose as the guardians of parliamentary democracy,
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but the truth is that at the 1979 general election 255,558 Labour voters in 13 constituencies who successfully voted for the return of a Labour Member of Parliament now find themselves deprived of their Labour representatives and are instead being represented by so-called Social Democrats.
To prove that I have no party political bias, I can tell the House that 33,796 Tory voters in one Tory constituency who successfully voted for the return of a Tory Member to Parliament now find themselves represented by a so-called Social Democrat.
The whole business is bringing Parliament into disrepute and is being exacerbated by the influence of certain extra-parliamentary non-elected unrepresentative forces which are trying to engineer it all. I refer, for example, to Shirley Williams. At the last general election she achieved the remarkable feat of turning a safe Labour majority of almost 10,000 into a Tory majority of more than 1,000. Roy Jenkins is another enemy of parliamentary democracy. That is clearly demonstrated by his fanatical devotion to the bureaucracy of the Common Market. I understand his fanaticism, because he made £250,000 during the past four years as head of the Commission. He returned home and found that his £30,000 a year severance pay was not enough pocket money. He has become a merchant banker. He bought a half-page advertisement in The Guardian to recruit more subversive elements.
The only honourable and decent course for the Jenkinsites is to resign. If they wish, they can stand in the subsequent by-election under their new colours. If any of them have the decency and guts to stand in a by-election they will get their come-uppance. The majority of voters, especially in Labour constituencies, do not have much time for defectors, turncoats and traitors. Those enemies of democracy will be exposed in any by-election and thrown out on their necks.
My Bill will do a public service. I appeal to all moderate Members such as myself who are interested in the preservation of parliamentary democracy to support it.
Several Hon. Members rose——
Mr. Speaker: Order I have received notice that the hon. Member for Thornaby (Mr. Wrigglesworth) seeks to oppose the motion.
3.59 pm
Mr. Ian Wrigglesworth: I pay tribute to the hon. Member for West Stirlingshire (Mr. Canavan) for his wit—both intended and unintended—but not for his interpretation of parliamentary democracy. As he said, there is nothing new in all this. It is the sort of action that has been taken in the representative system of parliamentary democracy in Britain for many centuries. The hon. Gentleman is proposing a matter of the utmost importance to Parliament—not only to the Social Democrats, but to the whole House. He raised the question of who should have the right to disqualify or remove an hon. Member from the House.
I ask the House to oppose the introduction of the Bill because it is a fundamental attack on the principles of representative parliamentary democracy. The House should uphold the established view that only constituents have the right to remove Members. It is a further move—and the source of the Bill is significant—in the

815
direction of extending the authority of the party label over Members of the House, because it would undermine the principle of representative parliamentary democracy.
The House has a duty to uphold the view that constituents are the only people who should have the right to remove a representative. The relationship with constituents is the most important relationship that hon. Members have. It is wrong to seek to make an hon. Member responsible to anyone other than the electorate. That is what the Bill proposes to do. It seeks to extend the authority of the party over the Member of Parliament. It seeks to remove people who have reneged not on a party manifesto but simply on a party label, irrespective of what that party decides to do and whether that party changes its constitution, personality and policies. The Bill seeks to tie the Member of Parliament to the party label.
In those circumstances, inevitably the question is raised as to who controls the party label. Parties change their policies, personalities and constitution from time to time. By implication, the Bill is saying that an hon. Member must accept that it is his party, right or wrong, irrespective of the conscience and attitude of the individual hon. Member.
The Bill is only one step removed from the time when the withdrawal of the party whip would mean expulsion from the House of the hon. Member concerned. The Bill does not do that, but it is only one short step from it.
The most fundamental aspect of the matter is that the Bill undermines the principle of representative parliamentary democracy. In his speech in Bristol, which has been quoted many times in debates in the Labour Party in recent years, Burke laid out the principles upon which hon. Members sit in this place. There is nothing inevitable about the way in which the parties have begun to encroach more and more upon hon. Members and upon the House in recent years. My colleagues and I would like to see that process reversed. There has been pressure, particularly in the Labour Party in recent times, to turn hon. Members into delegates. Other hon. Members and I resisted that pressure strongly, and the House should resist it strongly today.
Many hon. Members will be watched by their constituents today to see whether they vote for the extension of the sort of campaign that has been run by the Campaign for Labour Party Democracy to seek to shackle hon. Members to their party and its policies and constitution, irrespective of their own views.
I hope that the House will bear in mind the implications of the Bill and will not be swayed by short-term political advantage. I hope that it will consider the profound constitutional implications of writing into a statute a means of disqualifying hon. Members from the House.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):
The House divided: Ayes 142, Noes 166.

Division No. 120]

[4.00 pm

AYES

Abse, Leo

Bennett, Andrew (St'kp'tN)

Adams, Allen

Bidwell, Sydney

Allaun, Frank

Booth, Rt Hon Albert

Archer, Rt Hon Peter

Bottomley, Rt Hon A, (M'b'ro)

Ashton, Joe

Brown, Michael (Brigg&Sc'n)

Atkinson, N. (H'gey,)

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

Barnett, Guy (Greenwich)

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

816

Campbell-Savours, Dale

Lyon, Alexander (York)

Canavan, Dennis

McCartney, Hugh

Carmichael, Neil

McKay, Allen(Penistone)

Carter-Jones, Lewis

McKelvey, William

Clark, Dr David (S Shields)

McNamara, Kevin

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

McTaggart, Robert

Coleman, Donald

McWilliam, John

Concannon, Rt Hon J. D.

Marlow, Tony

Cook, Robin F.

Marshall, D (G'gowS'ton)

Cowans, Harry

Marshall, DrEdmund (Goole)

Crowther, J. S.

Marshall, Jim (Leicester S)

Cryer, Bob

Martin, M (G'gow S'burn)

Dalyell, Tam

Maxton,John

Davidson, Arthur

Maynard, Miss Joan

Davies, Rt Hon Denzil (L'lli)

Meacher, Michael

Davis, Clinton (Hackney C)

Mikardo, Ian

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

Millan, Rt Hon Bruce

Deakins, Eric

Morris, Rt Hon A. (W'shawe)

Dean, Joseph (Leeds West)

Morris, Rt Hon J. (Aberavon)

Dixon, Donald

Morton, George

Dobson, Frank

Newens, Stanley

Dormand, Jack

O'Neill, Martin

Dubs, Alfred

Orme, Rt Hon Stanley

Duffy, A. E. P.

Pavitt, Laurie

Dunwoody, Hon Mrs G.

Powell, Raymond (Ogmore)

Eadie, Alex

Prescott, John

Eastham, Ken

Price, C. (Lewisham W)

Edwards, R. (W'hampt'n S E)

Richardson, Jo

Ellis, R, (NE D'bysh're)

Robert s, Albert (Normanton)

English, Michael

Robert s, Allan (Bootle)

Ennals, Rt Hon David

Robert s, Ernest (Hackney N)

Evans, Ioan (Aberdare)

Rooker, J. W.

Evans, John (Newton)

Ross, Ernest (Dundee West)

Fletcher, Ted (Darlington)

Rowlands, Ted

Foot, Rt Hon Michael

Ryman, John

Foster, Derek

Sever, John

Foulkes, George

Sheerman, Barry

Freeson, Rt Hon Reginald

Sheldon, Rt Hon R.

Garrett, John (Norwich S)

Short, Mrs Renée

Garrett, W, E. (Wallsend)

Silkin, Rt Hon J. (Deptford)

Golding, John

Silverman, Julius

Graham, Ted

Skinner, Dennis

Grant, George(Morpeth)

Smith, Cyril(Rochdale)

Hamilton, James (Bothwell)

Smith, Rt Hon J. (N Lanark)

Harrison, Rt Hon Walter

Soley, Clive

Hattersley, Rt Hon Roy

Stallard, A. W.

Haynes, Frank

Stott, Roger

Heffer, Eric S.

Strang, Gavin

Hogg, N. (E Dunb't'nshire)

Straw, Jack

Homewood, William

Taylor, Mrs Ann (Bolton W)

Hughes, Mark (Durham)

Thorne, Stan (Preston South)

Hughes, Robert (Aberdeen N)

Tilley, John

Jay, Rt Hon Douglas

Tinn, James

Johnson, James (Hull West)

Torney, Tom

Jones, Barry (East Flint)

Urwin, Rt Hon Tom

Jones, Dan (Burnley)

Watkins, David

Kilroy-Silk, Robert

Welsh, Michael

Lambie, David

White, Frank R.

Lamond, James

Williams, Rt Hon K(S'sea W)

Leadbitter, Ted

Winnick, David

Leighton, Ronald

Woolmer, Kenneth

Lestor, Miss Joan

Young, David (Bolton E.)

Lewis, Arthur (N'ham N W)

Lewis, Ron (Carlisle)

Tellers for the Ayes:

Litherland, Robert

Mr. Mart in Flannery and Mr. Russell Kerr.

Lofthouse, Geoffrey

NOES

Adley, Robert

Bonsor, Sir Nicholas

Alexander, Richard

Boscawen, Hon Robert

Ancram, Michael

Bottomley, Peter (W'wich W)

Atkinson, David (B'm'th, E)

Bowden, Andrew

Baker, Nicholas (N Dorset)

Braine, Sir Bernard

Beaumont-Dark, Anthony

Bright, Graham

Beith, A, J.

Brinton, Tim

Bell, Sir Ronald

Brooke, Hon Peter

Bendall, Vivian

Browne, John (Winchester)

Berry, Hon Anthony

Bruce-Gardyne, John

Biggs-Davison, John

Buchanan-Smith, Alick

Blackburn, John

Buck, Antony

817

Chalker, Mrs. Lynda

Howells, Geraint

Chapman, Sydney

Hunt, John (Ravensbourne)

Churchill, W, S.

JohnsonSmith, Geoffrey

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

Johnston, Russell(Inverness)

Clark, Sir W. (Croydon S)

Jopling, Rt Hon Michael

Clarke, Kenneth (Rushcliffe)

Kaberry, Sir Donald

Cope, John

Kimball, Marcus

Corrie, John

Knight, MrsJill

Cranborne, Viscount

Knox, David

Cunningham, G. (Islington S)

Latham, Michael

Dean, Paul (North Somerset)

Lawrence, Ivan

Dorrell, Stephen

LeMarchant, Spencer

Douglas-Hamilton, LordJ.

Lester Jim (Beeston)

Dunn, Robert (Dartford)

Lewis, Kenneth (Rutland)

Durant, Tony

Lloyd, Ian (Havant & W'loo)

Dykes, Hugh

Mabon, Rt Hon Dr J. Dickson

Eggar, Tim

McCrindle, Robert

Elliott, Sir William

MacKay, John (Argyll)

Emery, Peter

McQuarrie, Albert

Fairgrieve, Russell

Major, John

Farr, John

Marland, Paul

Fell, Anthony

Marten, Neil (Banbury)

Fisher, Sir Nigel

Mather, Carol

Fitch, Alan

Mawby, Ray

Fletcher, A. (Ed'nb'gh N)

Mawhinney, Dr Brian

Fletcher-Cooke, Sir Charles

Maxwell-Hyslop, Robin

Forman, Nigel

Meyer, Sir Anthony

Forrester, John

Miller, Hal (B'grove)

Fowler, Rt Hon Norman

Mills, Peter (West Devon)

Freud, Clement

Montgomery, Fergus

Garel-Jones, Tristan

Morgan, Geraint

Gilmour, Rt Hon Sir Ian

Murphy, Christopher

Glyn, Dr Alan

Needham, Richard

Goodlad, Alastair

Newton, Tony

Gow, Ian

Page, Rt Hon Sir G. (Crosby)

Greenway, Harry

Parkinson, Cecil

Grimond, Rt Hon J.

Parris, Matthew

Gummer,JohnSelwyn

Patten, Christopher (Bath)

Hamilton, Michael (Salisbury)

Pawsey, James

Hampson, Dr Keith

Pollock, Alexander

Haselhurst, Alan

Porter, Barry

Hawkins, Paul

Powell, Rt Hon J, E. (S Down)

Hayhoe, Barney

Price, Sir David (Eastleigh)

Heddle, John

Prior, Rt Hon James

Higgins, Rt Hon Terence L

Proctor, K. Harvey

Holland, Philip (Carlton)

Pym, Rt Hon Francis

Howell, Ralph (N Norfolk)

Rathbone, Tim

818

Rees-Davies, W. R.

Thompson, Donald

Rhodes James, Robert

Thornton, Malcolm

Ridley, Hon Nicholas

Townend, John(Bridlington)

Rifkind, Malcolm

Trippier, David

Rost, Peter

Trotter, Neville

Sainsbury, Hon Timothy

Vaughan, Dr Gerard

St. John-Stevas, Rt Hon N.

Viggers, Peter

Scott, Nicholas

Wainwright, R (Colne V)

Shaw, Michael (Scarborough)

Wakeham, John

Shelton, William (Streatham)

Walker, B. (Perth)

Shepherd, Colin(Hereford)

Walker-Smith, Rt Hon Sir D.

Shepherd, Richard

Ward, John

Silvester, Fred

Wells, Bowen

Sims, Roger

Wheeler, John

Skeet, T. H. H.

Whitehead, Phillip

Smith, Dudley

Whitney, Raymond

Speller, Tony

Wiggin, Jerry

Squire, Robin

Wigley, Dafydd

Steel, Rt Hon David

Wilkinson, John

Stevens, Martin

Williams, D (Montgomery)

Stewart, Ian (Hitchin)

Winterton, Nicholas

Stewart, A. (E Renfrewshire)

Younger, Rt Hon George

Stokes, John

Stradling Thomas, J.

Tellers for the Noes:

Temple-Morris, Peter

Mr. Patrick Cormack and Mr. Michael Brotherton.

Thomas, Rt Hon Peter

Question accordingly negatived.
Mr. Tristan Garel-Jones: On a point of order, Mr. Speaker. The hon. Member for Thornaby (Mr. Wrigglesworth) spoke against the Bill on which the House has just voted and, as a result, the House was forced into a Division. Many of my hon. Friends voted for the survival of the new group, whereas the members of that group, on the first occasion on which it has divided the House on its own initiative, decided to abstain. Will you give the House guidance, Mr. Speaker, on how we are to deal with this question in the future?
Dr. David Owen: On a point of order, Mr. Speaker. My right hon. and hon. Friends and I did not vote in the Division Lobbies because we felt that if we did it might be construed that we had an interest.

Orders of the Day
  SUPPLY
  [13th ALLOTTED DAY]—considered

  Overseas Aid
  Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
  4.16 pm
  Mr. Guy Barnett: I beg to move.
  That this House deplores the damaging cuts in the United Kingdom's official aid programme which contributed to the fall in 1980 in official development assistance as a percentage of gross national product to about half the United Nations target figure; deplores the hostility to official overseas aid which some Government statements have revealed, including the Prime Minister's description of overseas aid as a 'hand out'; and calls on the Government to reverse its policy of cutting aid, and especially to restore the disproportionate cuts in official aid to the poorest countries, recognising, as does the Brandt Commission Report, the critical needs of these countries.
  The House has given a great deal of attention to overseas development during the past year, and there can be no doubt of the importance of the subject in the eyes of many hon. Members on both sides of the Chamber. The publication of the Brandt report has been partly responsible for that. The challenge that the report presents was recognised by most hon. Members who spoke in the three debates we have had on the report over the past year.
  That attention in the House has been a reflection of the widespread interest and pressure which will is evident in most constituencies. I am certain that it will also be reflected in the size and the sense of seriousness which characterise the lobby on aid that will take place on 5 May.
  Another reason why a growing number of people recognise the seriousness of the subject is that they have understood that we are no longer talking about charity to unfortunate people living far away. It is no longer relevant, if it ever was, to the massive problems the world is facing to talk about "handouts", as the Prime Minister did. The experience of the 1970s as it affected this country under Conservative and Labour Governments is that we can no longer hope to prosper in isolation from mankind as a whole.
  World population is growing at an alarming rate; there is a crisis in energy, in food and in raw materials. At the same time there is much under-used productive capacity in the world. Some of it exists in the poorest countries of all and will not be developed without assistance from the rich.
  In this short debate, I shall not attempt to rehearse at length the frightening facts which affect huge regions of the world. Much of that information is set out in the report, and I will quote three points from it. First, 800 million people live in conditions of poverty described by the president of the World Bank as below any rational definition of human decency. Secondly, between 20 million and 25 million children below the age of 5 die every year in developing countries, and one-third of those deaths are from diarrhoea caused by polluted water. Thirdly, while the world's military spending is approaching $450 billion a year, annual spending on official development aid is only $20 billion.
  820
  Merely to recite those facts is to state an obscenity. It is a moral outrage, which borders on political and economic lunacy. At crowded meetings that I have addressed throughout the country, people have asked "What can we do?" I reply "Put pressure on the Government and on Parliament; put pressure on the Government to increase their aid and development programme". One reason why I say that is that I believe that anything we say in the EEC, in the Commonwealth, at the United Nations or at the Mexico summit will lack authority and credibility unless our contribution to overseas development is something of which we can be proud. That is one reason why we have called for this debate today.
  I want to analyse the Government's record to date, but, before I do so, I place on record my admiration for the quality of British aid and pay a tribute to the dedication and effectiveness of the many hundreds of people from this country who work in technical assistance in the developing world and to recognise the care with which projects are evaluated and also the high quality of the contribution by our universities and other educational institutions.
  However, one aspect of the quality of our aid gives grounds for concern. Since the Minister for Overseas Development made his statement on the review of overseas development policy in February 1980, there has been a significant shift of emphasis away from more help for the poorest—the title of the 1975 White Paper. I know that the hon. Gentleman protests that he still observes developmental criteria and the Government amendment refers again to this, but there is not more money but less, so increasing emphasis on commercial, industrial or strategic factors is bound to mean that projects are chosen because they fit those criteria rather than the developmental criteria. The figure of £15 million for Turkey, for instance, must mean less for countries which are poorer than Turkey, as I shall try to show later.
  I said that there was less money and there is a sorry tale to tell of the quantity of British aid. What look like leaks suggest that the Government are deeply embarrassed, and so they should be. The global figures—published by ODA on 5 March—show a cut of 18 per cent. in 1980 compared with 1979. The figure for 1979 was £787 million—a figure which I think the hon. Gentleman has taken pride in from time to time-while that for 1980 was £643 million, and those are both figures at 1979 prices.
  The public expenditure White Paper has more bad news. The percentage change between 1980–81 and 1982–83 is, according to my calculations, minus 15·3 per cent. I notice that in the Government's amendment reference is made to £1,000 million as the aid figure for 1981–82 and I want to ask the hon. Gentleman if I am correct in believing that that figure is in fact the gross figure for aid—that is, before account is taken of repayments on loans. If I am correct, the net figure for aid in 1981–82 is £972 million. That surely is the realistic figure; it is the figure which this House is asked to vote on and to approve as the total of overseas aid for development.
  The Government are apt to plead whenever these criticisms are made that all programmes must take their share of the cuts, but two things, in my view, deserve comment.
  The first is that the cut in total Government expenditure works out at 1·7 per cent., whereas, as I have said, the overseas development figure is 15·3 per cent.—that is,

  821
  nine times as much. The only other public expenditure programme that has come off worse, according to my calculations, than the overseas development programme is that on housing, about which the Opposition have already made the strongest protests.
  The motion is also and especially concerned with the level of aid to what the Overseas Development Administration itself calls the poorest countries. Whereas the drop in aid from 1979 to 1980 was 18 per cent. for the programme as a whole, for the poorest countries it was 26 per cent.
  The House, I think, will expect a full statement from the Minister about what precisely has happened to the bilateral aid programme to India, which fell between 1979 and 1980 by a massive 57 per cent. Quarterly figures for India show that during the last three quarters of 1980 the net figures are, respectively, £1 million for the second quarter, £8 million for the third quarter and nothing at all for the fourth quarter. The reason for the final figure being nothing is that gross expenditure was £9·6 million, while repayments made by India on loans amounted to £9·9 million.
  The Prime Minister is going to India in May and will clearly have some explaining to do to Mrs Gandhi. Indeed, the Minister has some explaining to do to the House this afternoon. This will be a matter of deep concern to many hon. Members and we shall expect a full statement as to what has gone wrong and why it has gone wrong.
  Lastly, on the general picture, will the Minister confirm, as his hon. Friend the Minister of State, Foreign and Commonwealth Office was not prepared to do on 4 March, that aid as a percentage of the gross national product for 1980 has fallen from 0·51 to 0·34?
  The Minister protests from time to time that the Government's objective is to achieve the 0·7 per cent. United Nations target figure, but the Government's policies move in precisely the opposite direction. An objective assessment of that is given in a press release, dated 5 February, from the OECD development assistance committee on its examination and review of the British aid programme:
  " … the Committee expressed serious concern about the considerable cuts in ODA volume in future years. The Government had announced in 1980 that budgetary allocations for aid were to be cut by some 16 per cent. in real terms between 1979/80 and 1983/84 as part of a general retrenchment of public expenditure. While appreciating the economic difficulties faced by the United Kingdom, the Committee regretted that aid had been reduced and that, by comparison with other public expenditure categories, it had borne a disproportionately large part of the overall cuts. In view of the urgent needs of the developing countries which are receiving British aid, it urged the United Kingdom Government at least to keep the volume of its ODA stable in real terms and to resume progress as soon as possible. The Committee expressed concern that cuts in the aid programme of this proportion would have wider implications for the North-South dialogue."
  Speeches and statements by Government spokesmen often reveal a disturbing lack of concern about the deterioration in our aid programme. I except the Minister from that. He has a long-term commitment to the Commonwealth and a knowledge of development problems. But, alas, what he has to spend comes from on high and, although he understands, it is clear from the Prime Minister's Freudian slip about handouts that she does not. Over 150 hon. Members have signed the early-day motion protesting at her use of that insulting term.
  822
  Indeed, the dominance of the right hon. Lady over the policies of this Government has resulted in an aid policy characterised by ignorance, meanness and selfishness. There have been too many tales of visits to No. 10 Downing Street and elsewhere at which the response to statesmen and high commissioners from the developing world has been, "You have your problems and we have ours."
  An article in The Guardian on 21 January illustrated poignantly the sheer ignorance of anyone who could respond like that. Mr. Andrew Porter, a consultant paediatrician, said:
  "When I know that perinatal mortality in rural India approaches 200 per thousand live births, can I feel deeply about whether that in my district is 12 or 15?"
  One illustration of meanness is the recent decision by the Department of Health and Social Security to make overseas students pay for medical treatment in this country. The United Kingdom Council for Overseas Student Affairs described that cut as petty and vindictive. I hope that considerable exceptions will be made for students studying in this country, because I cannot overstate the damage that this will do, for so small a saving, to our reputation overseas.
  I have mentioned downright selfishness. The trouble with selfishness is that it is the Scrooge who often suffers most in the end. John Madeley, who writes regularly on aid, has estimated that the cut of £100 million in our aid programme will cost the country 15,000 jobs. I do not know whether his calculations are right. I am not qualified to judge. The irony is that despite the Government's desire to use aid in support of Britain's commercial interests, it is bilateral aid that is being cut, and bilateral aid is tied to products produced by British firms and made by British workers. Small firms in Britain often do particularly well out of British bilateral aid.
  To quote an example, two researchers, May and Dobson, state that a London firm told them that if there had been no aid orders employment would have declined from 120 to 70. If the Chancellor of the Exchequer wants to help small firms, he should remember that.
  A fundamental change in our aid programme is urgently needed. Without it, the Prime Minister's presence in Mexico in October will not carry much conviction. The postponement of the summit meeting gives us six months for the preparations which I know are taking place at official level in the Department.
  It also gives the Government three political opportunities to make a vital contribution to the success of the conference. First, there will be a chance to bring pressure to bear on other EEC members, beginning perhaps at the Development Council next month. Secondly, there is the Ottawa conference in July, where the heads of the rich nations will meet. Their contribution at Mexico will be vital. Thirdly, the Commonwealth Heads of Government are meeting in Melbourne at the end of September. From that meeting the Heads of Governments of Nigeria, Britain, India, Canada and Tanzania will go to the Mexico summit. If they go united, they could prove a powerful force.
  Those opportunities will be lost or will be worth little if the Government persist in cutting aid and demonstrate by their public stance and statements that their aid policies do not measure up to the grave situation facing the world.
  4.32 pm
  The Minister for Overseas Development (Mr. Neil Marten): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  'this House notes that the aid programme for 1981–82 will be in excess of £1,000 million and welcomes the Government's intention to continue to give priority to the poorest countries in allocating bilateral aid'.
  The timing of the debate is most appropriate, following as it does the Government's Budget proposals and the publication of the 1981 public expenditure White Paper. It enables me first to underline the importance for this country of doing all that we can to bring inflation under control. A reduction in public spending to the level that the country can afford is the most effective contribution that the Government can make.
  At the expense of boring the House, let me state that since I was made Minister in May 1979 I have visited Barbados, St. Vincent, the Virgin Islands, Dominica, Antigua, Kenya, Uganda, Tanzania, Malawi, Mozambique, Ghana, Zambia, Zimbabwe, India, Pakistan, Nepal, Sri Lanka, Fiji and the Solomon Islands. I talked to the Governments of each country and explained why we are in some cases cutting our aid programme, although not by very much—we have to bring down the rate of inflation. Each country accepts that that is a thoroughly good aim. They do not want us to export inflation to them. They understand the problem when it is explained to them properly. I hope that when Opposition Members go abroad, even if they do not agree with the proposition and say so, they will at least explain why there have been cuts in the aid programme.
  I need hardly say that, especially in these circum-stances, the determination of priorities in public spending is no easy job and that no single public expenditure programme can be looked at in isolation. However, contrary to what a number of observers have assumed, the hon. Member for Greenwich (Mr. Barnett) included, aid was not the hardest hit among public expenditure programmes. Other programmes—agriculture, energy, industry and housing, for example—have suffered more.
  Let us not forget that, when faced with economic difficulties, the Labour Government did not hesitate to cut overseas aid. In December 1976, reductions of £50 million in each of the years 1977 and 1978 were announced by the then Chancellor of the Exchequer. These cuts, I may add, were greater proportionately than those that we have made this year and last year. That is a fact that the Opposition should remember when putting down such motions.
  The second reason why I welcome the debate is that it gives me the opportunity of demonstrating the importance that we continue to attach to the aid programme. As hon. Members will have seen from the recently published White Paper, the gross programme in cash terms—that is, the amount available for spending in the 1981–82 financal year—will be £1,037 million, compared with about £960 million in the financial year that is just ending. The hon. Gentleman is right in saying that the net figure is £972 million.
  Over £1 billion spending money—almost $2·4 billion-is hardly an unsympathetic response to the problems of the Third world. It is a highly creditable performance and one of which we as a nation should be proud. As the hon. Gentleman said, the quality of our aid
  824
  is very good, a fact that is recognised everywhere one goes. If I may say so without causing offence, it is much better than some aid from other countries.
  We are thus maintaining a substantial aid programme, and this will be of great benefit to the developing countries. We hope that by helping the development process and ultimately improving living standards in the countries which we aid, stability and progress will be promoted—political objectives that everyone will acknowledge as sound.
  The aid programme will also bring orders to British industry and thus help to sustain employment in a number of key sectors of our economy. Commercial and employment advantages arise in particular from the operation of the aid and trade provision, which, by combining aid with commercial credit, brings benefits several times greater than those deriving from the aid element alone.
  On the geographical distribution of the bilateral aid programme, we have consistently acknowledged that the greatest need is in the poorest countries, and, therefore, we aim to concentrate a substantial proportion of our aid on them. They are the countries which find it most difficult to generate an adequate volume of domestic savings for investment or to attract private finance and investment from overseas, and, of course, were severely afflicted by the rise in oil prices.
  We have stated on many occasions that the poorest countries will remain major beneficiaries of our aid.
  Mr. Brocklebank-Fowler: If that is so, why is the cut in aid to the poorest countries so much larger in percentage terms than the overall cut in aid?
  Mr. Marten: I do not believe that that is true. If it is, the explanation is that our commitments to the multilateral organisations are such that we cannot reduce them, so a large proportion of cuts must fall on bilateral aid. However, I believe that the hon. Gentleman has got it wrong.
  The poorest countries received some 62 per cent. of our bilateral aid in 1980. Our record in this respect is well above the average for OECD countries as a whole.
  I should like to emphasise, since the charge has been specifically levelled in today's motion, that there has been no policy decision to cut aid to the poorest countries disproportionately. Opposition Members should not draw erroneous conclusions on the basis of a limited series of statistics, great though the temptation is. As I told the House on 16 March, the United Kingdom plans its aid programme on a financial year basis. Drawings by some of our major recipients, notably India, were lower than anticipated in the first three-quarters of the present financial year in relation to the resources available. As our aid is planned on a financial year basis, the pattern of drawings can fluctuate sharply between quarters, and we are working to ensure that the resources available in the financial year as a whole are fully drawn down.
  Factors such as the slow drawings naturally have an impact on our aid performance in a particular time period measured, in accordance with international convention, as a proportion of GNP. The Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Mid-Oxon (Mr. Hurd), explained to the House on 4 March—I regret that I was in the Solomon Islands at the time and could not do it myself—a more significant factor

  825
  affecting our aid performance in 1980, namely, the fact that no promissory note in respect of IDA V1 was made before the end of the calendar year.
  The poorest countries are, of course, major beneficiaries of the substantial funds that we provide to the multilateral agencies, in particular the International Development Association. Of course, the Commonwealth and our remaining dependencies have a high priority in the allocation of our funds—and almost three-quarters of our expenditure goes there—and this is consistent with our emphasis on the poorest, for there are many of the latter within the Commonwealth.
  Dr. Jeremy Bray: The hon. Gentleman said earlier that the cuts made by the Labour Government in 1975–76 were larger than those proposed by this Government. In fact, the actual cut was 3·8 per cent. between 1975 and 1976; they recovered in the following year above the 1975 level. So that is a 3·8 per cent. cut in one year which was more than made good the following year, compared with the proposed cuts of 7·7 per cent. this year and 8·2 per cent. next year. Will the hon. Gentleman withdraw his figures?
  Mr. Marten: I shall not withdraw the statement. If the hon. Gentleman reads Hansard tomorrow, he will recognise that I said "proportionately". Also, I said that the cuts were proposed in the Budget, but I did not say that the cuts in the second year amounted to that.
  Dr. Bray rose——
  Mr. Marten: I must get on. Perhaps the hon. Member will make his own speech on this point. This is a very short debate and many hon. Members want to speak.
  I was about to refer to Zimbabwe, which is referred to frequently in this House at Question Time. I should like to take this opportunity to deal with two specific aspects of our bilateral programme that are of current interest. The Zimbabwe conference is now in progress. We wish it every success in attracting the greatest possible international support, and we have been active in lobbying all friendly Governments and international organisations to this end. My right hon. and noble Friend the Lord President of the Council is leading the British delegation.
  The British aid programme to Zimbabwe is generous in spite of what some critics may write. At the time of independence in 1980 we pledged £75 million of new aid to be committed over three years. In addition, we are spending £14 million on training awards approved before independence and £7 million on railway electrification under the aid-trade provision. So our total aid is already £96 million. In addition, we have written off £22 million of debt and rescheduled £33 million more on favourable terms.
  Outside the aid programme we are providing assistance for the amalgamation of military forces in Zimbabwe. This vital assistance is costing us £6 million over this financial year and next. But, of course, this is not coming out of the ODA budget. Our aid is concentrated on the areas of greatest priority to the Zimbabwe Government, particularly reconstruction and resettlement. The biggest single allocation is £20 million for resettlement. We recognise the great need for land resettlement but, as my right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs made absolutely clear at Lancaster House, the overall needs are beyond the
  826
  capacity of Britain alone or any other single donor. That is something which we must remember when we are looking at the Zimbabwe question. We hope that other donors will join in this essential programme. I understand that America has made a very generous offer.
  Nevertheless, in recognition of the special needs which have been put before the donors' conference, we have decided that some further assistance is justified. I am happy to say that, as my right hon. and noble Friend is telling the conference today, if he has not already done so, we have been able to ollocate a further £10 million for resettlement and a further £5 million for higher-level awards for the training of Zimbabwean students who will be finishing this summer intermediate level courses supported under our pre-independence training programme. That is something which the Zimbabwe Government needed very much.
  With these additions, our basic aid pledge to Zimbabwe will be £111 million. In addition, we shall be providing £10 million for regional transportation projects in Southern Africa which, even if not actually in Zimbabwe, will be of direct benefit to Zimbabwe.
  Finally, I have just heard that the European Community has committed some £54 million of which the United Kingdom's share will be about £10 million. On the whole, that is not a bad effort for Zimbabwe.
  Mr. John Farr: The whole House will be pleased to learn of the new aid which the Lord President of the Council is announcing in Salisbury today. Is my hon. Friend aware that a number of would-be students in further education in Zimbabwe who want to come to Britain to pursue their education are having to go to study behind the Iron Curtain because financial facilities are not available in this country? Is not that something which we as a Government should do our utmost to prevent?
  Mr. Marten: That may be so. All over the world that argument is put and it may be perfectly true. Those students have the option of going there or of coming here if they are within the education programme. I take the point. It is something which naturally I do not like particularly, but we cannot educate everybody in this country.
  Mr. Nigel Spearing: In relation to the £10 million for resettlement that the hon. Gentleman mentioned, can he tell the House whether it is all going for land purchase? Is it half and half, and are the Zimbabwe Government still expected to double that amount from their own resources? As he will know and, I think, acknowledge, aid for the purchase of land is likely to come only from the United Kingdom and not from elsewhere.
  Mr. Marten: The use of the £10 million will be one of the subjects that the Lord President of the Council will be discussing. I must leave it to him to come back with the answer to that question.
  The second topic concerns overseas students. The overall policy concerning the withdrawal of the indiscriminate subsidy on overseas students' fees is a matter for my right hon. and learned Friend the Secretary of State for Education and Science, and the Government are monitoring the effect of the withdrawal of that subsidy. But, as for the aid programme, we recently announced our intention to restore the number of new awards in 1981–82

  827
  under our Government-to-Government programme to approximately the levels of 1978 and 1979. We have taken a similar step in respect of the Commonwealth scholarship and fellowship plan, bearing in mind the strong support for the scheme at the Commonwealth Education Ministers' conference in Colombo.
  Finally, we have extended for 1981–82 our fee support scheme for selected private postgraduate students from developing countries who have had difficulty in meeting the cost of fees. All these schemes are based on a careful selection of award holders for the study of subjects of direct relevance to their countries' development.
  During the debate on Belize last week the hon. Member for Crewe (Mrs. Dunwoody) asked about National Health Service charges for overseas students. We intend to meet the cost of health treatment for those students and trainees brought to Britain under our Government-to-Government programmes and the Commonwealth scholarships and fellowships plan.
  Viscount Cranborne rose——
  Mr. Kevin McNamara (Kingston-upon-Hull, Central): The hon. Gentleman has only just entered the Chamber.
  Mr. Marten: I am trying to finish my speech to allow as many other speeches to be made as possible in this short debate.
  In these debates we tend to concentrate on the bilateral aid programme. That is understandable, for it is the part of the programme over which we have the greatest control. It remains our aim to shift the balance from multilateral aid towards the bilateral programme in the long term. However, it is worth recording again the degree of our present support for the activities of the major multilateral institutions.
  We have confirmed our support in principle for the $40 billion general capital increase of the World Bank and for the sixth replenishment of the International Development Association. Our share of the IDA VI total of $12 billion will be £555 million, which is 10·1 per cent. of the total. Subject to the United States Administration obtaining the endorsements and appropriations from Congress necessary to trigger off IDA V1, our promissory notes will be deposited over three years.
  As the House already knows from the debate on 4 March, we have obtained parliamentary approval to participate in the IDA VI bridging arrangement. This will enable us to provide up to £184 million as part of the bridging operation—that is, one-third of the total—to help fill the gap until replenishment can become fully effective through appropriate action by other participating Governments.
  Under the second Lomé convention, which came into force on 1 January 1981, we shall make a contribution of about £460 million to the European development fund, which is 18 per cent. of the total contribution.
  There is a danger in concentrating too heavily on what donor Governments can do through the provision of official assistance. Official assistance is important, as the Government recognise, and especially for the poorest of countries. However, we should remember that responsibility for their development rests on the developing countries themselves and on the use that they make of their own resources,
  Mr. Bruce Douglas-Mann rose——
  Mr. Marten: Moreover, trade access is of critical importance. Britain will continue to work for an open trade system. Our record in this respect is a good one.
  Mr. Douglas-Mann rose——
  Mr. Marten: I want to get on.
  We take a greater share of manufactured imports from the developing countries than does any other European country. There have recently been some important improvements in the second Lomé convention and the new generalised scheme of preferences. Incidentally, some hon. Members who call vociferously for more aid are precisely those who are simultaneously pressing for tighter import controls. This would severely hit developing countries that are trying to build up their own industries.
  Mr. McNamara rose——
  Mr Douglas-Mann rose——
  Mr. Nick Budgen rose——
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. The Minister is not giving way. I remind the House that 12 right hon. and hon. Members wish to take part in the debate. Interruptions will only reduce the time that is available for them.
  Miss Betty Boothroyd: What about hon. Ladies?
  Mr. Marten: Touché.
  I emphasise that private direct investment, bank lending and export credits are of much greater importance in total for the developing world and especially for the middle and upper income countries.
  One of the unsung statistics that should have more publicity is that in 1979—the last year for which we have firm figures—we were second only to the United States of America in terms both of the volume of private flows at market terms to developing countries and of total resource flows to developing countries. In that year net private flows in sterling from the United Kingdom amounted to £1·3 billion and there was a further £3 billion in foreign currency that was recycled through financial institutions here which carry the risk, a total of £4·3 billion or 2·37 per cent. of gross national product.
  The Government's decision to remove exchange controls shortly after coming into office helped significantly to facilitate the flows of private finance to the developing world.
  I hope that what I have said will reassure hon. Members that our aid programme is directed at the right target area, that it is substantial and that it will have the support of this House in the Division Lobbies tonight.
  4.57 pm
  Mr. David Ennals: I am certain that both sides of the House will welcome the Minister's statement on Zimbabwe. We shall want to examine it carefully. I hope that the hon. Gentleman will consider the intervention of the hon. Member for Harborough (Mr. Farr) on the position of students. I have received similar representations in my constituency.
  We problably all sympathise with the Minister, because he has had the unenviable task of visiting so many

  829
  countries to break the bad news to them. I do not accept that they all readily accepted his explanation. As he knows, I followed him to one or two countries, and I can assure him that they did not accept his explanation.
  The fact of the reduction in British aid is not in dispute. My hon. Friend the Member for Greenwich (Mr. Barnett) referred to a cut of 15·3 per cent. As he said, that cut is disproportionate to other public expenditure cuts and disproportionate to the aid effort of other countries. The World Bank has a 0·7 per cent. of gross national product target scale for aid. It may be that the Prime Minister's attacks on the International Monetary Fund now extend to the World Bank, but I hope that that is not so. Against its target scale, a dozen countries are moving upwards. These are Austria, Belgium, Denmark, Finland, France, Holland, Italy, Japan, Norway, Switzerland, West Germany and the United States, although threats from Washington suggest that the rise of the United States on the target scale may not continue.
  Unfortunately, Britain is slipping down the scale after several years of rising on it. For that reason Britain has come in for sharp criticism from the World Bank, from the Finance Ministers of the Commonwealth and from voluntary aid organisations in Britain, such as Oxfam, Christian Aid, Catholic Aid and Overseas Development. The amount by which we are cutting aid next year is seven times the total amount that can be expected to be raised by all the voluntary aid programmes put together in Britain. The voluntary sector cannot possibly fill the gap that will be left by the reduction in Government aid.
  Criticism is not limited to an alliance of what I suppose the Prime Minister would consider to be the aid wets. It comes from sources such as the British Atlantic Committee's defence and overseas policy working party, which is chaired by Marshal of the Royal Air Force Sir Neil Cameron, who called on the Government for a more constructive aid programme to stem Soviet advances in the Third world. It is not only a wet approach that is being made to the Government.
  There is sadness in and condemnation by countries such as Bangladesh, Pakistan, Malawi and Kenya. Those are countries that I have visited in the past few months. In other Third world countries, such as India, the feeling is extremely strong. These countries link the cuts and the effect that they will have upon their economies—
  Mr. John Townend: If the right hon. Gentleman is so critical, will he compare our present aid programme after the Government's cuts with that of the Japanese, Japan being a much wealthier country?
  Mr. Ennis: The hon. Gentleman should put his question to the Minister so that he can make his own comparison with Japan. I shall not be drawn into that argument. I am concerned with our performance. I said that Japan was proportionately increasing its performance and that Britain was proportionately worsening its performance.
  People in developing countries that have suffered from the Government's action link the cuts in what the Prime Minister calls a handout and what we call development aid with other Government actions. For example, I believe that the cuts in the overseas student intake as a result of the massive increase in fees will be very serious indeed. There is a reduction already, and it looks as though by next year it will be between 40 and 50 per cent. Cuts have been
  830
  made in the work of the British Council and in the overseas service of the BBC. There is the question of National Health Service costs for overseas students. I was concerned that when the Minister thought that he was giving an assurance about this he was referring to only a very limited number of students who will not now he expected to pay National Health Service costs while they are here.
  The Government's policies show no sense of the moral obligation of the more developed world to help the less developed world, which was so strongly and rightly emphasised in the Brandt report and on which the right hon. Member for Sidcup (Mr. Heath) has virtually stomped the country arguing a case that the Government have denied. The Government's attitude reflects the Prime Minister's cynical disinterest—one can only call it that—in the Third world. It shows a lack of concern for the special needs of very poor countries that are deeply affected by the rising prices of oil and the capital goods that they need to import.
  Those countries have few resources of their own. They cannot raise money through the international banking system or attract inward investment. The Prime Minister's crisp comment that we have our problems and they have theirs sums up her approach to these matters.
  My main contention is that the Government's overseas aid policy is doing great damage to Britain's long-term and short-term interests. Most of the cut of about £125 million will be borne by Britain's bilateral aid programme. As the Minister knows, about three-quarters of that programme is tied to the purchase of British goods and services. As my hon. Friend the Member for Greenwich pointed out, it has recently been reliably estimated that a cut of £125 million is likely to lead to a loss of exports of about £100 million and a loss of about 15,000 jobs in Britain. If the Minister thinks that that estimate is incorrect, I hope that he will tell us so. It would have been useful had he told us the effect on the British economy of the cuts that he has had to justify in this Parliament and overseas. According to the survey, half of the British companies winning orders as a result of the British aid programme employ fewer than 200 workers. They are small firms, about which the Government profess to be deeply concerned.
  The whole package of Tory policies on aid, overseas students, National Health Service costs, the BBC overseas service, and so on, will serve to break invaluable links of history, language and technology which have made a small country—and Britain is, after all, a small country—into a great country. With this Government, Great Britain will be great no more. "Stop the world, we want to get off' seems to be the Government's attitude to the rest of the world, an attitude which denies the whole concept and principle of the interdependence of nations. Moreover, those who in the past took pride in Britain's overseas achievements—and the Minister rightly paid tribute to those involved in our aid programme and in giving technical advice to other countries—now find it deeply humiliating to recognise the position that the Government are taking.
  5.5 pm
  Mr. John Townend: I support the Government's rather small reductions in overseas aid. I see no need for Ministers to be embarrassed about them, as they have the overwhelming support of the people of this country. Labour Members seem to be out of touch

  831
  with the grass roots. I certainly find that the average working class Labour voter wishes that the Government would reduce overseas aid more rather than less. The Government's policy is naturally opposed by the intellectual do-gooders of the soft centre, but they are very much the minority.
  I turn for a moment to the philosophy behind overseas aid. The arguments advanced are often misconceived and muddled. I often hear it said that as an ex-colonial Power we have a responsibility for starvation and poverty in our ex-colonies. In my view, that is nonsense. Many of the people in those ex-colonies were better fed and more prosperous and had sounder economies when they were colonies.
  I cite a few examples. Ghana had a large balance of foreign currency when it became independent. Within five years, President Nkrumah had squandered it. As a colony, Uganda never suffered the starvation, terror or other problems that it faced under General Amin. Even now that he has been replaced, the Ugandans are far worse off than they were under colonial rule. Burma was a large exporter of rice under British rule, but that ceased within a few years of independence.
  The same is now happening in Zimbabwe. I do not oppose the Government giving aid to that country, but as Southern Rhodesia it never needed international aid. Now, progressively, it is holding out the begging bowl. Indeed, the Head of State is asking for no less than £800 million.
  The second problem facing the Third world is the lack of private investment. Again this is often the result of actions by the Third world itself. In too many instances, Western investors have seen, at worst, their investments expropriated or nationalised, or at best, restrictions placed upon the remission of dividends and profits by Left-wing governments.
  There is a lack of management skills. But how often have the newly-independent countries driven out white ex-patriates? Much of the lack of management skill in East Africa is due to the racialist way in which the East African Asians were persecuted and then excluded.
  Mr. Douglas-Mann: I hesitate to interrupt the hon. Gentleman's racialist speech. Does he not recall that in 1945 it was necessary for Europe to hand round a begging bowl in the United States to rehabilitate the damage caused by our own internecine war? The example of Zimbabwe is as irrelevant to the situation in the developing world as would be the suggestion that Europe is incapable of managing its own affairs.
  Mr. Townend: That is not a fair comparison at all. There are plenty of examples of countries in Africa where there was no war of independence but which through their own actions have reduced their economies to ruin. Many of them seem to lack the ability to grow sufficient food for their own population. There are instances in which this is due to the political stance of the Government of. the country. Collectivisation in Tanzania severely reduced food production. In other areas, food production is affected by religious beliefs. In India, millions of cattle have to be fed but cannot be slaughtered for meat due to religious principles. Overpopulation is a problem. Again, it is not only a question of education. In many cases, it arises because of traditions and religion. None of those problems will be solved by overseas aid.
  832
  The second argument used by Labour Members is a moral argument, which is valid. It is said that the rich have a duty to help the poor. I believe that among civilised people charity has a role to play, especially to help the world's poor following natural disasters and famines. The Victorians gave us a good example. They argued that much of this help should derive from the work of private charities and religious bodies.
  However, even in extreme places such as Cambodia, where the problem was self-inflicted by political disputes, we are now receiving reports that the size of the problem was exaggerated and that the massive volume of Western aid was in the first instance used to shore up the Vietnamese-backed Communist Government by providing for their functionaries and supporters before the population at large.
  However, the moral argument can also be questioned. Western aid is paid for by Western taxpayers, both rich and poor. Such aid is not given to the poor of the Third World. In most instances, it is given to Third World Governments who are often partly responsible for the poverty of their subjects.
  In some cases they use this money for prestige projects such as building capital cities, running airlines—which they should not in any case—building universities and even buying arms, which many Labour Members oppose. In other cases, although the aid is spent on worthwhile projects, it releases other finance for the prestige projects that I have mentioned.
  The hon. Member for Greenwich (Mr. Barnett) referred to India. I could not understand him. According to the Supply Estimates for 1981–82, our aid to India still amounts to £80 million, even though there has been a small reduction. I am appalled that British taxpayers are providing £80 million worth of aid to India when that country is spending millions of pounds on nuclear development which could well give it the capability of producing atomic weapons.
  The third argument in support of overseas aid is that it creates jobs and helps exports. That applies only to bilateral aid. I am delighted to know that the Government will move progressively from multilateral aid to bilateral aid.
  Mr. Ennals: That is what they are cutting.
  Mr. Townend: With respect, the Minister said that in the long term the Government aim to move from multilateral aid to bilateral aid.
  Professor Bauer dealt with that point extremely well when he compared it with the shopkeeper who had been burgled and, who might justly think himself none the worse off if the burgler spent some of his swag in his shop. If we are worried about jobs, I am sure that our economy would benefit far more by spending £200 million on railway electrification or help to the textile industry, where literally thousands of jobs have been shed, than by spending it on overseas aid.
  I support the Government's policy progressively to reduce the PSBR. I look forward to the time when we eventually produce a balanced budget. In a year when the PSBR will be more than £10½ billion, I do not see how we can justify spending £1 billion on overseas aid. In simple man's language, we are borrowing money to give away. That does not make sound common sense.
  I come from a rural constituency. My constituents, like many others, are suffering from the 20p increase in petrol

  833
  tax. I voted for that because I support the Government's financial strategy. If we spend money, we should be prepared to raise it in taxation. However, the Government would have been much more popular and better understood had they reduced overseas aid by £250 million this year and increased the petrol tax by 15p rather than 20p.
  I accept that there is a case for overseas aid. A total of £700 million could be well spent. I support the helping of overseas students, but that should be done through the overseas aid budget and not through the education budget. I agree with the use of overseas aid if it is to the financial and political benefit of this country. Britain has used aid in this manner for several hundred years. However, in recent years we have not received an adequate return on our investment.
  An example is India, our largest recipient. It is clear from India's voting record in the United Nations that it is far from one of our best allies.
  The poverty of the Third world will not be changed by aid. If the massive movement of resources recommended by the Brandt report were put into operation, it would mean transferring resources from the relatively efficient and skilled to the relatively inefficient and unskilled; from the honest to the corrupt; from the experienced to the inexperienced; and from the productive sector of the Western economies to the parasitic public sectors of many Third world economies.
  One has only to look at those Third world countries which have succeeded—South Korea, Taiwan, Hong Kong and Singapore—to see the importance of the free market economy. One must be honest and say that racial and religious differences must play a part, because the peoples that I have just mentioned are mainly of Chinese origin, compared with the Africans, whose success rate has been far worse.
  Aid will not stop the slide in Africa which has progressively accelerated since the end of Western colonisation. Under such circumstances, perhaps the only answer to the terrible things that we have seen on that continent—black inhumanity to black, the exploitation of the population by black power elites, corruption, maladministration and civil war—is some form of recolonisation in the long term.
  I accept that that is completely impractical, and I do not put it forward as a valid argument. However, as I believe that such problems will not be solved by overseas aid, I strongly urge the Government to re-examine their overseas aid policy.
  The Government have been singularly unsuccessful in reducing public spending. In a few months, they will be examining public expenditure plans for the coming year. I strongly urge them to wield the axe and cut £200 million or £250 million from the overseas aid budget. In our present economic difficulties, with unemployment at more than 2 million, that money could be used for productive investment to create more jobs.
  The Opposition criticise the Government for the cuts that have been made, but they have not come clean and said exactly by how much they would like to see the overseas aid budget increased. Nor have they said where the money would come from. Would they cut other programmes such as the youth employment programmes; would they increase taxation; or would they borrow? If
  834
  they wish to increase spending on overseas aid, which is not popular with the ordinary man in the street, they have a duty to tell the House where the money will come from.
  5.18 pm
  Mr. Kevin McNamara: As I listened with interest to the speech of the hon. Member for Bridlington (Mr. Townend), I thought of his predecessor, now Lord Holderness, and of his distinguished record under Mr. Macmillan's Administration when he became Secretary for Technical Co-operation.
  Unlike the hon. Gentleman, Lord Holderness understood the importance of aid to man's dignity and the need for common decency. More importantly, he realised that aid and development were vital for at least one basic human reason—that, if people's bellies are full and if they feel that there is hope and security for them and for their children, there is less chance of war. If there is less chance of war, there is far less chance of this country being dragged into a world conflict. God knows we hope and pray that there will not be another war.
  A future world war will not be the result of an eyeball to eyeball confrontation between the Prime Minister and Mr. Brezhnev. In one way or another we shall be dragged into a war by the surrogate Powers of America and Russia's colonies or neo-colonies. One of those countries may drag its patron into a conflict. We can avoid that situation by giving security and stability to the developing world. We can afford to give more in terms of aid and development. The hon. Member for Bridlington seemed to believe that aid was unpopular with the ordinary working man. He should consider the great response of the British people to tragedies such as those in Cambodia and Somalia. He should bear in mind what a "Blue Peter" appeal can do.
  As legislators, our task is to gear that voluntary, spontaneous and generous spirit of the British people into a continuous programme, so that we become alarmed not only when we see people starving as a result of a natural famine but also when we see people starving and debilitated as a result of polluted water and malnutrition. I am not speaking so much about disasters such as the Sahel drought—which has caused the deaths of many people—as about the ever-present problems. People should realise that many of these disasters are not sent by God or created by nature. They can be overcome by human ingenuity and effort. If we are prepared to spend more money and to pay more attention to this subject the problems can be solved.
  It may be asked where the money will come from. It must come from our pockets and from the money that is to be spent on tanks and Trident. The sending of tractors and simple agricultural instruments will be of far greater help in the maintenance of Western security, and will provide a more lasting investment in peace, than the provision of tanks, Armalite rifles and other weapons of destruction. We should say that defence of the West and of its institutions is based on world stability and security. Such stability comes when individuals throughout the world feel that they have a place under the sun that is not exposed to its intolerable heat. That involves human decency and understanding. We are talking about giving the children of the hon. Member for Bridlington and my children an opportunity to live in peace. Indeed. I hope

  835
  that our grandchildren will also have that opportunity. I am not talking about the type of attitude that the hon. Gentleman adopted.
  I regret that as time is short I shall not expand my argument. However, I should like to ask the Minister a few questions about Zimbabwe. Is the money additional money within the aid programme, or will it come from other parts of the programme? Where will the money come from, and who will get it? Zimbabwean students have been allocated £5 million. I think that all my hon. Friends who sat on the Sub-Committee on Zimbabwe appreciate the stand that the Government are taking. We look forward to knowing the details. We had hoped for more, but at least the Government have come some way towards meeting the situation. Will that education be in the United Kingdom or Zimbabwe? No mention has been made about the nonsense over the rates due for Rhodesia House, which is now Zimbabwe House. The time has come for that debt to be written of. It is nonsense, and it should not cause us problems. The country has changed.
  I understand the Government's attitude to aid. They say that they are being treated unfairly and that they are spending money. They say that no one understands what they are trying to do. However, since the Conservative party came to office there has been a catalogue of events. For example, development education was the victim of the Government's first cut. That was a mean cut. Then came the cut in official aid. Measures to deal with overseas students were then introduced. Many students were dealt with in a nasty way. Indeed, the problems of many private students have not yet been dealt with.
  I welcome the Minister's remarks about improving the conditions and increasing the numbers of overseas students. That takes us back to the previous position. Many private students who have been sponsored by a Village fund, a charity or an international agency will not be helped. It was the grudging reaction to the Brandt report that filled rooms throughout the kingdom. People from all walks of life attended meetings. They came to listen to speeches about the Brandt report and about what it means for world peace. The Brandt report caught people's imaginations in a way that is hard to describe. Hon. Members from all parties spoke about Brandt. They received far greater audiences than many of them had known previously in their political careers. People attended meetings in remote villages. Village halls were crowded. In the bigger cities hundreds of people crowded in to buildings to discuss the Brandt programme and the way in which it should be implemented.
  The Minister should tell the Prime Minister and the Foreign Secretary that, as they have belatedly accepted the idea of a Brandt summit and of going to Mexico, they must gear their ideas towards something positive and imaginative. Our attitude to overseas development has cost us our prestige, and our loss is almost immeasurable in terms of money and status. It is impossible to calculate what we have lost. Our actions have affected the attitudes of all countries, whether in the Commonwealth or in the United Nations.
  When for the first time, the nations of almost the whole world—and particularly the developing countries—are united with the West in condemnation of the Russian invasion of Afghanistan, because they realise that it represents a threat to them, we must not squander that
  836
  advantage. The good will that exists will be dissipated unless the Prime Minister and President Reagan—I welcome the fact that he is going to Mexico—and the other leaders of the West can say to the developing world "Look, our way of life is better. We are concerned not only with human rights and the old liberal values but with the basic human rights of food, warmth and a roof over one's head."
  If we can translate our belief in that to positive programmes and actions, those two leaders and the Western World will have done an enormous service to the cause of democracy and liberty in which we all believe. None of those virtues can flourish unless a man feels that he is free to make real decisions. To do that he must have a full belly.
  5.31 pm
  Mr. Bowen Wells: I am disappointed at the terms in which the debate has been conducted. It is possibly the tradition of the House that we exaggerate in order to make our points, but some hon. Members have contributed to the debate in a way that is counter-productive to the imaginative feeling and concerned approach that the hon. Member for Kingston upon Hull, Central (Mr. McNamara) exhibited. It is the imagination that we have to spark world-wide and in this country. Indeed, to my hon. Friends who disagree with that approach I say that unless we seek for the sky to aid the poor and to develop where underdevelopment has caused misery, poverty and death, we as a nation do not and should not aspire to world leadership, let alone influence in the world.
  I deprecate some of the opening remarks of the hon. Member for Greenwich (Mr. Barnett), because he said that the Government's development programme was characterised by ignorance, meanness and downright selfishness. I know that he is a compassionate man, but such language, when one is considering an aid programme of £1 billion and the tremendous efforts to which he paid tribute—I believe that he exempted my hon. Friend the Member for Banbury (Mr. Marten), the Minister for Overseas Development, from those strictures—is a strong indictment and cannot possibly be sustained.
  To be even-handed, I say to my hon. Friend the Member for Bridlington (Mr. Townend) that to talk about transferring resources from the honest to the corrupt is an exaggeration that will not stand up to examination. Indeed, it is a slur not only on those whom one accuses of corruption but on the honest who give to the corrupt. That kind of exaggeration reveals the extent of the task to which we all have to bend our minds and hearts—that of educating everyone to the problems that face the world.
  Basically, there are three mistakes in the Opposition's approach. After the speech of the hon. Member for Greenwich, I can add a fourth mistake. The first is that it is assumed that Government aid produces development. That is not necessarily true. Just under 50 per cent. of the aid programme goes into what is characterised as project aid. The House should remember that project aid is funnelled through the Government machine. It is Government-to-Government aid. If an overseas Government wish to build a canning factory, the British Government may agree to contribute and pay for the purchase and building. That may create development, and it may enable horticultural development to take place and over-production to be preserved, but if the horticultural processes and the harvesting of the goods to be canned are

  837
  not properly carried out, financed and controlled, the canning factory will be a white elephant and the money will be wasted.
  That is a serious problem for all engaged in the development process. The same thing occurs in this country. One can invest and not do one's sums properly. Consequently, the investment becomes a white elephant. Thus, the assumption that by increasing the amount of aid poured in will necessarily produce development is erroneous. That is the second mistake that underlies the Opposition's motion—that more money equals more development. It does not necessarily do so. In fact, it can be counter-productive, because the countries concerned cannot absorb it.
  That leads me to the third mistake—that the poorest countries can use more money. Our aid programme has failed to be drawn down by the poorest countries, which is the basis of the accusation that the Government have not aided the poorest countries. That is again an error. It is not that we have not committed the funds to the poorest countries but that the countries have not been able to draw the money down because they do not have the know-how. Some of them have had it, but have not retained it.
  My hon. Friend the Member for Bridlington made a good point. Unfortunately, he said that it was only the white managerial classes that had deserted the ex-colonial countries. One of the major problems that one finds when development is not taking place as the result of the actions of underdeveloped countries is that the middle classes, the managerial staff—often highly trained in this country—are leaving the country. The examples are Jamaica, Guyana and Tanzania.
  Mr. John Townend: My hon. Friend has misunderstood me. I did not make the point about only white managerial staff. I particularly mentioned Asians in East Africa who had a fundamental effect on the economies of the East African countries when they were expelled.
  Mr. Wells: I am glad that my hon. Friend referred to that. I wanted to try to modify what I did not think was the remark that you intended, because that sparked off an accusation against your admirable speech, that you were talking in racial terms.
  Mr. Deputy Speaker: Order. I remind the hon. Gentleman that he should not bring me into the controversy.
  Mr. Wells: I apologise, Mr. Deputy Speaker. The motion carried me away.
  Mr. James Johnson: I hope that the hon. Gentleman will excuse me, but I have been here long enough to hear the tenor of his speech. I am told that the economies of countries in Africa and elsewhere cannot absorb more than a certain level of investment. Does he accept that they could absorb more social services and education where teachers are needed so badly? Our language needs to be pushed as hard as the French are pushing theirs.
  Mr. Wells: I do not have the time to make the point that the poorer countries cannot absorb a given amount of assistance or resources. It is much more difficult for them to use large quantities of money effectively in the development process. The fact that one can spend more money on factors such as education is undoubted, but one must ensure that the teachers will be properly used in the
  838
  teaching process and will not sit in Government offices as advisers. We must think further than just chucking money at problems. We must put some managerial know-how, administration and imagination into what we are doing, in order to ensure development.
  The hon. Member for Greenwich said that the development purposes are not served by pursuing commercial criteria, as opposed to, I assume, social criteria, for aid and development. The criteria are not alternatives. The development of industry and commerce, which provides profits, jobs, taxes and therefore social services, is the nub of the development process. They are not alternatives. They must be brought together.
  Mr. Guy Barnett: I did not say that they were alternatives. I said that they were not the same—which is quite different.
  Mr. Wells: I know that, but I understood the hon. Gentleman to mean that in some way the quality of the aid programme and the pursuit of commercial profit were inferior to the type of programme that would have been pursued if the Opposition had been in office or that they did pursue during their period in office. The aid budget has been cut by 15 per cent. However, it was increasing by unprecedentedly high amounts when this Government came to office. We should regard the 15 per cent. cut in that light.
  The main burden of my speech is that there is no conflict between aid and trade, and that there is no conflict between the pursuit of commercial objectives and public assistance in the underdeveloped countries. We need a combination of public assistance through the aid programme and the private flow.
  One of the major acts by the Government in relation to overseas aid was the abolition of exchange controls, which has led to major investments by Britain overseas. That in turn has created jobs and profits in the recipient countries and has helped Britain, through interdependence with our trading partners, in terms of interest earned, dividends paid and capital repaid.
  To all those who believe that capital outflows from this country damage Britain's investment I quote an American article:
  In conclusion, the report states: 'Again the job-export theory is shown to have no basis in fact; the U.S. job performance of the group investing more heavily abroad is better than that of the group placing less capital overseas. If there were any truth to the job-export theory, the more intensive foreign-Investing companies would have a much worse job performance in the U.S. than the companies investing less abroad. Since this correlation of better job performance in the U.S. with the more foreign-investment-intensive companies has been consistent throughout all the BI studies so far, it would indicate that the reverse of the job-export theory has more evidence behind it than does the job-export theory. In other words, foreign investment by U.S. companies, at least in relatively large amounts. imports jobs into the U.S. "'
  That illustrates the interdependence of the trading nations and of the rich and the poor. The poor can become richer if we encourage trade. Private outflows are four times the outflows of official public aid.
  The Overseas Development Administration has a fine record. It is unrivalled in the Commonwealth Development Corporation by any other organisation or aid programme in the world. We have made vast strides in the quality of our aid. I want that to go further. I want the public aid programme, allied with private investment programmes overseas, to provide in the underdeveloped

  839
  countries the infrastructure that cannot be achieved by private investment alone. That will bring a real focus to the work that can be done by the private and public sectors.
  We have spoken about Zimbabwe. Millions of pounds have been spent on purchasing farms. That money will fail Zimbabwe and poison the country unless it is utilised by the white and black farmers to form nucleus estates and to teach people how to farm in the most economical way. Many techniques are not yet understood by the people who have been toting arms in the last six years. We must ensure that the money is used properly, in combination with private resources and technology, so that farmers are established on land that they can use properly for the benefit of Zimbabwe. That is what I mean by development. That is what I believe that the Government are pursuing, and that is what I commend to the House.
  5.45 pm
  Miss Betty Boothroyd: I am sure that the hon. Member for Hertford and Stevenage (Mr. Wells) will forgive me if I do not take up his argument. First, I wish to make one narrow but important point. Recently I returned from a parliamentary visit to Nepal, where the Gurkha connection with the United Kingdom plays an important part in the economy, largely as a result of the remittances, the Gurkha pensions, and so on, which are financed by the bilateral aid programme.
  The remittances are restricted. During many years of high inflation they have not been increased, because of an agreement that the United Kingdom Government reached with the Indian Government at the time of India's independence. Therefore, the people involved are adversely affected. More importantly, the remittances from Britain and the support facilities, after earnings from tourism, are Nepal's most valuable source of foreign exchange. Nepal is one of the poorest countries in the world and its people have certainly earned the remittances.
  I am remiss in not giving the Minister warning of the subject that I wish to raise. It would be helpful if he could reply. If he cannot reply today, I am sure that he will find some parliamentary occasion in order to spell out the assistance that we might give to one of the poorest countries in the world.
  I shall cut many of my comments short in order to give colleagues an opportunity to speak, and devote my remarks to the element in the budget involving population activities. I shall do that because of the continuing high rate of population growth, which has an adverse effect and influence on all that we are trying to do and on what recipient countries are trying to achieve.
  We would be foolish if we were too encouraged by the signs that fertility is beginning to decline in some countries. Minute graphs show such a trend in some areas, but there are no grounds for complacency. On the contrary, the fragile gains that have been achieved will be swept away if our efforts are not sustained and increased.
  Aid planners cannot ignore the population factor. Our efforts will be seriously weakened if we allow the recessional period—which might continue for 15 or 20 years, in varying degrees—to deflect us from the long-term objectives of overall development with which population policies are so inextricably bound up.
  The Minister knows my views. No technical aid programme can be considered in isolation from plans to
  840
  improve the social fabric of a recipient country, in terms of its health and better housing. I think, too, of the emancipation of women and their right of access to clean water, their right to family planning, and their right to welfare programmes of all types.
  I hope that the Minister will have something to say about the priority that he gives, in the development programmes, to improving the status and education of women. Women tend to be a forgotten factor. We women are often a forgotten factor, although not an invisible element, in the House. Often, women are an invisible element in development programmes. The failure to consider women in projects and the failure to consider their role in population programmes can lead to the failure of the projects themselves.
  The Minister has to some extent recognised the great need for population programmes and their importance. Although some hon. Members on the Conservative Benches do not feel that the Minister is doing sufficient in this respect, it is only right that I should pay tribute to him. In his booklet "Report of Population Activities", issued by his Department only in the summer of last year, over his signature, the Minister says:
  "I have instructed that a population component should wherever possible be incorporated in new development projects financed by ODA."
  I say on behalf of the parliamentary group for population and development that we are grateful to the Minister for going so far. The hon. Gentleman leaves us in no doubt about his commitment and understanding on the matter, but the Government collectively do not seem to echo his initiative. After the Government had been in office for some months I asked how much of the Labour Government's planned spending on population programmes had been cancelled as a result of cuts in development expenditure. A Foreign Office Minister replied to the questions that I put late in 1979. He said that projects in six countries had been abandoned. I happen to believe that there are more, but I do not challenge the reply at this juncture. He said that there were six countries in which population projects had been abandoned. These were areas of the world where population increase cannot be ignored. I hope that the House will bear with me if I mention them.
  Ghana currently has a population of about 12 million. At the present rate of growth, by the turn of the century—it is only 20 years away—that population will have nearly doubled. In the Caribbean—another area mentioned by the Minister in reply to my question—the population is at present about 30 million. In 20 years' time it will have increased by 13 million. Bangladesh now has a population of 85 million. At the present rate of growth, its population will have nearly doubled, to 154 million, in the same period. Turkey, not one of the poorest countries of the world, with a population of 45 million at present, will be moving towards 70 million by the turn of the century. Nepal, with a population of about 14½ million at present, will then have a population of about 23 million at the present rate of growth. Life expectancy in that country, which is now only 45 years, will have moved only to 50 years in another 20 years' time.
  I must enter a caveat about Nepal. On an up-country visit about two weeks ago I talked to a young nurse who was responsible for the health of 300,000 people. It was a most daunting conversation.

  841
  To revert to the Minister's reply, the Philippines are the last of the six countries where population projects have been abandoned. At present, the Philippines have a population of 51 million. In another 20 years' time, the population will have increased by 33 million to 84 million. This situation is in complete contrast to the Cabinet paper published in 1976 from which I would like to quote. Under the heading "Conclusions and implications for the United Kingdom", the document said that
  "the most urgent and important problem is limitation of population growth."
  The document added that
  "delays in achieving stabilisation and a delay of one generation could increase the world's population by 70 per cent. A large reduction in growth rate must be achieved in developing countries."
  The document went on to say that
  "fertility regulation programmes become effective only when the expectation of life has risen significantly and living standards have started to rise. Thus, aid is needed first to relieve poverty and raise living standards and to help create a social framework that is conducive to the practice of fertility regulation."
  I do not believe that the Government are fully orchestrated in their commitment to welfare and population programmes when they have only an element of 1 per cent. in that budget.
  I turn to requests for bilateral aid funds made since the Government took office. I understand that no new research projects have been undertaken, although seven requests for funds have been received by the Department. I wonder whether the Minister will say why the majority of these requests have been turned down. To which areas of the world did the projects relate? What was the level of assistance required in each case? Most important, what criteria are used in examining such requests? I have put numerous questions on this matter, but I have never really received a satisfactory reply. The House would like an answer. Do the Government accept the conclusions of that Cabinet paper, that population is the most important problem that will be faced over the next 20 years?
  I wish to turn to the Population Bureau itself—that specialist advisory body within the ODA—first established by a Labour Government in 1968. It was established to increase Britain's capacity to provide aid in terms of population. in 1974, which, as the House will recall, was World Population Year, the specialist staff was increased. it was further increased in 1977. Although only a small body, it contained a great deal of expertise. Since the present Government came to office the expert staff has been reduced and posts abolished.
  I must voice my concern about the current situation that exists in the bureau. I understand that the post of director has been vacant for nearly seven months. I am unhappy about the long delay in filling what is an important post. I hope that the Minister will give an assurance that he will move more speedily to see that such important posts are filled.
  I understand that the professional staff in the bureau is half the capacity it was when the Labour Government left office. This cannot be right, in view of the growing and demanding needs related to the Third world, and the population programme and its associated activities. I recognise that the Minister is sincere and understands the problem but I do not believe that the Government share that commitment in their approach to population matters and in relation to aid and development matters in general.
  842
  They give the impression of sounding brass, as we say in the North, but when one examines their activities one finds that they amount to little more than a tinkling cymbal.
  In a world that has been shrunk by the development of the jet engine, we cannot go on ignoring the needs of others who are so traumatically disadvantaged. I ask for a further move of resources into multilateral and bilateral population programmes. We ask for a larger percentage of the aid programme to be used in creating the social framework that is conducive to the practice of fertility regulation. More resources used in family planning, welfare activities and all the matters that I have mentioned would go some way to meet what is a very explosive situation.
  5.58 pm
  Mr. John Farr: I support what my hon. Friend said in presenting this programme of overseas aid. I disagree personally with what has been stated, particularly from the Opposition Benches, in criticism of the programme. I feel that £1,000 million or £972 million in a year—whatever the figure is—is not a matter to be ashamed of. When that is coupled with increased private transactions and funds, it becomes the vast figure of £5·3 billion in a year. That is equivalent to about 2·8 per cent. of gross national product—second only to the United States. As my hon. Friend the Member for Peterborough (Mr. Mawhinney) said, one of the advantages of the Government's freeing capital and fund transactions to and from Britain has been that private industry and capital has been able to leave London in larger quantities and at a greater pace to boost the official Government money. There is nothing to be ashamed of in 2·8 per cent. of GDP.
  I want to refer briefly to Zimbabwe. I have an interest to declare, in that I still have a farm there. It has been abandoned by the guerrillas as unsuitable, and I hope shortly to resume a more personal relationship with it.
  It was brought home to me by a number of Members of Parliament and the Speaker of Zimbabwe, when they were over here, that while the money that our Government are spending there is much needed, there is much concern about the temptation that students from Zimbabwe who want to travel overseas feel from countries behind the Iron Curtain.
  I welcome what was said earlier about the conference that has begun in Salisbury to raise £800 million. I assure my hon.. Friend the Member for Bridlington (Mr.Townend) that Zimbabwe is launching an international campaign and is not seeking to get more than 10 per cent. from Britain. Surely, no hon. Member would criticise an attempt by Zimbabwe to get £800 million of international aid to help developments there, including teaching the new African farmers who need instruction, helping to make land available, providing darns and irrigation, and making it possible for former guerillas to settle down as peaceful farmers.
  We are presented with a wonderful opportunity, and it is a wonderful programme for any Government to be associated with. I am sure that most hon. Members are proud that the British Government are playing a leading role and are channelling into Zimbabwe a sum in the region of another £100 million towards the £800 that is needed. I do not know whether my hon. Friend the Member for Bridlington who criticised the provision of that aid, visited Zimbabwe recently, but it should be pointed out that on the fate of Zimbabwe rests more than

  843
  the fate of one small African nation. On the fate of Zimbabwe and Mr. Mugabe's democratically elected Government rests the whole of Southern Africa and civilisation there. No one in the House can do other than wish Mr. Mugabe well, and help him to the limit of our ability.
  Mr. John Townend: My hon. Friend has misunderstood me. I thought that I had made it clear that I was not criticising aid to Zimbabwe. I merely used it as one of a number of examples of countries that had sound economies under colonial rule and that did not need international aid—I cited Ghana, Burma and Uganda—but required it after the end of colonial rule. I was not opposed to aid to Zimbabwe.
  Mr. Farr: I thank my hon. Friend for that explanation. However, time is short, so I shall not dwell on the matter, except to say that much of the money provided by Her Majesty's Government is for the resettlement of guerrillas and of the two armies, and, as I said, to provide irrigation, roads and a communications network to enable former soldiers to sette down in a peaceful agricultural life. That is money well spent.
  In mentioning Zimbabwe I shall refer to the role of the Commonwealth Development Corporation. My hon. Friend did not mention its role in Zimbabwe. Before UDI, the CDC was involved in building houses, housing estates, agriculture and land development in that country. I hope that in his winding-up speech my hon. Friend will say a word on the subject.
  I want to mention one further matter, which may tend to refute what was said by the Opposition Front Bench about India and how unpopular we were there. One or two Opposition Members, and I together with my hon. Friend the Member for Loughborough (Mr. Dorrell), were in India and met many of its leaders. In India there is nothing but gratitude for what Her Majesty's Government are doing to help solve the massive problems that exist in that country.
  I entirely support what was said by the hon. Member for West Bromwich, West (Miss Boothroyd). The leaders in India and Bangladesh recognise that family planning and population control are absolutely essential if the country is to be helped in any way. I endorse all that the hon. Lady said.
  I also wish to thank my hon. Friend for having seen us after we returned from our visit to India and Bangladesh, and for the assurance that he gave on that occasion that he recognised that proper spending on development aid, particularly in India and Bangladesh, must be tied to the effective and efficient family planning associations that exist, particularly in India, which have been established there since as long ago as 1937.
  I am sure that no one in the House begrudges spending all that we possibly can on overseas aid. However difficult it may be to explain it to our constituents, I, for one, am always prepared to have a try, because a civilised country such as ours, with a fairly high standard of living, has a duty to spare what we can for those who are less fortunate in the world. I fully endorse the programme that has been presented by my hon. Friend this evening.
  6.9 pm
  Mr. Russell Johnston: I welcome the closing words of the hon. Member for Harborough (Mr. Fan), though I do not agree that the Government can be exonerated from the criticisms that have been advanced from the Opposition Benches.
  In the memo to the Secretary of State for Foreign Affairs which various overseas agencies, including Oxfam, Christian Aid and the Catholic Fund for Overseas Development, presented on 14 November, they quoted Rosemary Righter writing in The Sunday Times on 7 September about the United Nations' special session. I am sure that the Minister will remember this. She said:
  "With the exception of Britain's Development Minister, Neil Marten, whose speech has been greeted by friend and foe with bewildered scorn, everybody talks about the urgency of tackling a package to avert crisis and they cite the Brandt report warning that the world's economy is breaking down … Britain is widely identified 'as the top villain—it is the only major industrialised country actually cutting aid'."
  I am not happy about that. I know that the Minister is a good man. I know also that he probably wants to do much more than he is able to do. But I am afraid that the Government are doing much less well than they should. The hon. Member for Kingston upon Hull, Central (Mr. McNamara) made a compassionate and understanding speech, but he did not persuade me that we should exonerate the Government. It is true that more aid does not necessarily produce more development, but it is equally true that less aid certainly produces less development. There is no way around that.
  The hon. Member for Greenwich (Mr. Barnett), who spoke from the Opposition Front Bench, quoted certain figures. I wish to remind the House of the current position. In 1978–79 we gave £805 million, this year we have given £741 million, and it will be £680 million hereafter. By 1982–83 our aid will be only three-quarters of what was originally planned. It will represent only 0·3 per cent. of gross national product. The United Nations' target is 0·7 per cent. Britain is now at half the 1960 level of aid—when we were only half as well off as we are now. That is profoundly unsatisfactory.
  It is not a simple matter of issuing clarion calls for more aid and more trade. It is the quality of aid that counts. Increases in trade must be concentrated on Third world processed manufactured goods, and there must be a stable and guaranteed price for its raw commodities. What progress has there been on the 1976 UNCTAD decision to set up a common fund to provide finance for commodity agreements? We have been talking, talking and talking about that, but nothing has happened.
  Population control was rightly stressed by the hon. Member for West Bromwich, West (Miss Boothroyd). I agree that Britain should not be cutting its contribution in that area. Aid and trade are important, but a further major contribution could be made by Britain and its partners if they cut their consumption of certain materials, notably oil. The West's demand for oil has catastrophic consequences for poor countries. It forces up the world price and makes it harder for non-oil developing countries to buy the oil that they require. That affects their food production.
  Brandt pointed to the unquestionable need to consider more radical changes in the pattern of the international order if we are to cope with the food and material shortages predicted for the 1990s and if we are to deal with the 30

  845
  poorest nations such as Togo and Mali, which are collapsing. When the Prime Minister goes to Mexico, I hope that she will direct her attention to those matters.
  For me the fundamental justification for action is a moral one. I find it unacceptable that a Minister of my country, which is one of the 12 richest countries in the world, should not only defend a 0·3 per cent. expenditure but should assert that we should be proud of it. I am not proud of it—I am ashamed of it. The Good Samaritan did not say "You've got your troubles and I've got mine". Nor did he say, as the hon. Member for Bridlington (Mr. Townend) said in his astonishing speech, that charity has a place among civilised people. That deserves to be the quote of the week.
  There is another aspect of aid to which I wish to make a brief reference. I am aware that a number of hon. Members are anxious to speak. If the descriptions of the horrors of poverty in the poorer countries do not have an effect on the Government in the way that they should, perhaps it will have some impact if we contemplate the damage to Britain that our niggardly behaviour is causing. The Minister referred to overseas students. My right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) said in his speech to the annual congress of the Free Church Federal Council on 19 March:
  "The State visit of Nigerian President Shagari served to remind me of how much damage the Government's policy on overseas student fees is doing. I was told how nearly all of the visiting Nigerian party had been educated in Britain, but how in future none would probably be in that position. In other words we are, in keeping out overseas students, apart from the very rich, steadily undermining our future friendship and relations with the leaders of the developing world. We are turning our backs on the means of promoting future economic links with those countries. Upon those links our future trade depends. Overseas students, apart from what they add to the quality of those educational institutions they attend, are a major part of our contribution to aid for world development. A cheseparing approach, with such comparatively small savings will have far-reaching effects."
  That is a practical argument. It is not the sort of argument that was described in a disparaging fashion by the hon. Member for Bridlington as the wet centre of politics. It is a hard, practical matter. I make no apology for believing that morality is important. If that is called the wet centre, I am part of it. Perhaps we should have a wider, wetter centre.
  As a member of the Commonwealth and the EEC, acting through Lomé—I hope that the Minister will take an opportunity to pay tribute to the work of the EEC in this area—Britain has an exceptional responsibility and an exceptional opportunity. The Government are failing to face either.
  6.17 pm
  Mr. Stephen Dorrell: The problem with much of the Opposition case is that it is based on a largely false premise—that aid is the most important aspect of our economic relations with the developing world. I do not believe that that is so, either in terms of what should happen or in purely factual terms of what has happened.
  The last years for which figures are available show that flows from Britain were £4 billion for the private sector against less than £1 billion for official aid. Factually, the more important element was private investment rather than official aid. The Opposition case, based on the Brandt report, is that we should he increasing our overseas aid programme. The Brandt report has been cited almost as
  846
  though it supported the case of the aid lobby. Of course it does, but aid is only one short chapter in a long report. If we quote Brandt in support of the foreign aid case we must also quote him in support of the case for private investment and for freeing the trading relationships between Britain and the remainder of the world.
  When the Opposition advance a case based purely on the aid programme they are ignoring at least three-quarters of the issue. Let us consider private investment. We heard from my hon. Friends the Members for Harborough (Mr. Farr) and for Hertford and Stevenage (Mr. Wells) and from the Minister that Britain, in recent years, has undertaken a substantial programme of direct investment in the developing world. That has been substantially improved by the Government's right and courageous decision to lift exchange controls. Brandt supported and reinforced that. If Opposition Members want to use the Brandt report in support of their argument, they must be prepared to recognise the force of the argument for lifting exchange controls and encouraging British companies to play a major part in the development process.
  One point in the Brandt report was the need for a new code of practice on the operation of private sector companies in the developing world.
  I shall take up the call made by the hon. Member for Kingston upon Hull, Central (Mr. McNamara) for a positive and imaginative initiative to be launched by the Government of Mexico. They might take up that part of the Brandt report and undertake to obtain agreement among the countries of the developed and developing world on a code of practice under which multinational companies can operate in the developing world to the advantage of the developing and developed countries of the West. Private companies, operating in proper circumstances, have a major role to play, such as in transferring production technology to the developing world—that example is often cited. More important, they play a major role in getting access to the rich countries' markets for the products which are made in the developing world. Many developing countries can make the products, but more often they are short of the marketing expertise to design and sell those products in the developed countries of the West.
  If we are considering the position of the rich countries vis-a-vis the developing countries, I hope that we can take a more positive look at the achievements of the Government in launching a major British initiative to encourage foreign investment in the developing world.
  The second aspect of our relations with that part of the world, about which the Government have nothing to apologise but where the Labour Party has a record which is much less defensible, is in the business of import controls on products from the developing world. I do not see how one can claim to argue the case for the developing world if one prevents our companies from investing in those countries, and prevents our consumers from buying the products which those countries can make. The trading argument is the other side of the investment coin. There can be no better illustration of the case for mutuality of interest made by Brandt than the issue of international trade.
  There is a clear example of that in my constituency. My hon. Friend the Member for Harborough and I have had altercations on that subject in the past.
  Mr. Farr: Friendly altercations.
  Mr. Dorrell: As my hon. Friend rightly says, they were friendly altercations.
  There is a substantial textile industry in my constituency and a company which makes railway engines, which recently has won a £25 million order to export railway engines to Sri Lanka. I do not see how we can expect that trade to continue and grow—as I sincerely hope it does—if we do not accept that we must also buy the products which countries such as Sri Lanka, India and others in the Far East can make. Textiles are a major element of their trade.
  If we are considering the Government's record for the developing world, we are entitled to point to our record on private investment and trading policy. I am proud of that record. It contrasts favourably with the policies advocated by the Labour Party. However, that does not mean that I think that aid is unimportant. If there is a danger of the Labour Party underestimating the importance of the private sector in promoting the development process, there is sometimes a danger of some of my hon. Friends underestimating the role of official aid in the development process.
  Just as there is a case for our promoting investment in the productive sectors of the economy in the developing world, there is an important case for promoting the building of the infrastructure in those countries, to make possible the sort of commercial investment which I have mentioned. That is the argument for concentrating aid in the poorest countries. We should seek to concentrate our aid budget in the least developed countries, to build their infrastructure, which makes it possible for our private sector companies to invest and extend the development process.
  It does not make sense to tell a British company that the burden of development rests on it and that it should invest in the developing world, if we do not provide for it the infrastructure to make investment possible. One cannot invest in an economy if the people one is seeking to employ do not have the education to understand the instructions that they are given, if the communications do not exist to export their products from the country where the companies operate, and if most of them are in a survival, rural economy without the housing and infrastructure of the urban State.
  Therefore, private investment by private companies has an important part to play. Official aid has an equally important part to play in creating the infrastructure which makes that possible. I suggest to the Minister that we should concentrate our aid on health and communication infrastructural projects and on the sort of population projects mentioned by the hon. Member for West Bromwich, West (Miss Boothroyd). I share with her the honour of being joint secretary of the population group of the British Parliament. There is no better example of the way in which official aid can be used effectively to promote the development process than in the population area.
  My hon. Friend the Member for Bridlington (Mr. Townend) illustrated that example with uncanny perception by his figures. Among the many problems in the developing world to which he believed that aid would not help provide a solution, he listed population. He said that our total aid to India was £80 million last year. By a lucky coincidence, £80 million is the total cost of the Indian population control programme. Although our assistance to India was not directed to that programme, it
  848
  paid for the entire Indian population control programme. There could not be a better illustration both of the cheapness of population policy as an element in the development process and of its importance to this country.
  Why should we be interested in what happens in the developing world? There have been several arguments about that question. My hon. Friend the Member for Bridlington said that there was a place for charity. I do not see the primary argument for overseas aid and investment—certainly not for investment—in terms of charity. The much more important argument is not the charity argument but the self-interest argument. There is much latent demand in the developing world. The people there do not have the capacity to buy the goods, although they need them. In the developed countries of the West, there is much idle capacity for producing the goods that the developing countries want. It should be our policy to seek to release that demand to make the wheels of Western industry turn again. The precedent of the Marshall aid programme is much overworked, but it is none the worse for that. Europe pulled the United States into super-growth after the war. There is no reason why the less developed countries should not play a part in the achievement of the same end for our country now.
  6.28 pm
  Mr. Christopher Brocklebank-Fowler: If I had any residual doubts about having crossed the Floor a week ago tonight, they were entirely erased by the speech of the hon. Member for Bridlington (Mr. Townend), which showed such ignorance and such a lack of compassion that it was clear that he did not begin to understand the problems facing developing countries. The hon. Member for Greenwich (Mr. Barnett) reminded us of what the debate is all about. Although I have much sympathy with the hon. Member for Loughborough (Mr. Dorrell), and with the hon. Member for Hertford and Stevenage (Mr. Wells), who talked about the interaction of aid and trade and the importance of both to the prosperity of our economy and that of the developing world, the debate is not about that but about the Government's record in giving aid. Aid to what purpose?
  The hon. Member for Greenwich reminded us at the outset of the debate that in 1981 there live in the world 800 million people whose standard of living is below the poverty line and between 20 million and 25 million children are dying each year from disease which can be overcome by modern medical and health practices. He reminded us that the world spends on the manufacture of weapons and armaments designed to destroy people 20 times the amount it spends on aid.
  I regret that the Government have embarked on a course of increased defence spending and decreased expenditure on overseas aid. It has been argued that in some countries a good aid programme can be a much more effective counter to communism than having an extra half dozen tanks.
  Mr. Alan Clark: On a point of order, Mr. Speaker. As you know, Mr. Speaker, it is customary not to intervene in maiden speeches. May I have your ruling on whether the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) is making a maiden speech?
  Mr. Speaker: That is clever, but it is not the best that the hon. Gentleman has done.
  Mr. Brocklebank-Fowler: I am concerned that defence expenditure is going up and aid expenditure is going down. It is clear that aid, as part of a relation between this country and a developing country, can be a much more cost-effective and useful way of maintaining our friends in the developing world.
  In my speech last week I made clear that I thought that the reason why Britain should play a leading part in the world's aid programme to developing countries, quite apart from our moral responsibility, was that we benefit more than anyone else from our trade with the developing world. I can think of no other country which enjoys such a balance of payments surplus with developing countries. The surplus of £2·1 billion last year is almost the total balance of payments surplus that this country earns. It is right for the country that is head of the Commonwealth and benefits massively from trade with developing countries to play a leading part in the aid programme.
  I regret to say that there are grounds for disappointment in the aid figures. Our country is pledged, with others, to reach a target of 0·7 per cent. of GNP in aid. The Government have achieved 0·51 per cent. and this year 0·34 per cent. Although there may be arithmetical arguments about net and gross sums, as a proportion of GNP the amount Britain spends on the aid programme is falling.
  In my first speech from this position in the House and with the time constraint, I would hate to allow the occasion to pass without paying a small tribute to the Minister.
  Mr. Alan Clark: Will the hon. Gentleman give way?
  Mr. Brocklebank-Fowler: I will not; I do not have the time.
  I join hon. Members on both sides of the House in thanking the Minister for the part he played in bringing about the Government's agreement to increase Britain's aid to Zimbabwe. He announced in the House this afternoon an additional £10 million aid over one year for settlement purposes, £5 million for education and £10 million through the EDF for the SADC programme in Southern Africa. May I ask him whether that £10 million for settlement will be devoted to the purchase of land? There is no doubt—I think the Sub-Committee of the Select Committee on Foreign Affairs will agree—that unless the land settlement issue in Zambabwe is settled, the possibility of peace and stability in that country will be adversely affected. It is the central issue.
  Although I do not press the Government tonight to tell us precisely how that £10 million is to be spent, I hope the Minister will reassure us that the £20 million devoted to land purchase so far and the £10 million which he announced today will not be a once-for-all payment but that, as and when these initial schemes are carried through and people are settled on the land, the Government will be open to further requests from the Government of Zimbabwe to consider further support for this crucial purpose.
  I welcome the £5 million for education and hope that the Minister will find time to tell us that it is intended to assist the 800 Zimbabwean children who are coming up to university qualifying examinations this year. Will he make clear on what that is to be spent?
  Finally, I refer more in sorrow than in anger to the rates on Rhodesia House. It is ridiculous after all this time that the small amount of £300,000 should cause us so much
  850
  political difficulty in Zimbabwe. I hope that the Minister will undertake to discuss with the Treasury means of writing off this debt which was not incurred by the current Government but should be charged against the old Government of Southern Rhodesia.
  6.37 pm
  Mr. Guy BarnettWith the permission of the House I should like to make a brief intervention, largely to enable the Minister to reply to the many matters that have been raised during the debate.
  I thank the Minister for his announcement about Zimbabwe and what his noble Friend will say at the Zimcord conference today. As my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) said, we shall want to judge the Minister's statement, not least in the light of the way in which the Zimcord conference goes and whether the money that comes from other donor countries is likely to meet the immediate and pressing needs of Mr. Mugabe and his Government.
  My hon. Friend the Member for Kingston upon Hull, Central also asked whether this was new money. We should like an answer to that question. I hope that it is new money. If it is not, presumably there could be cuts in other programmes.
  I want to raise an issue that has not so far been raised, namely, the serious problem of the developing food shortage in East Africa. No doubt the Minister will have seen the article in The Times today referring to the proposal put forward by the Secretary-General of the Commonwealth that one possible solution to the problem of famine developing in other parts of East Africa, principally around the area of Muanza, might be to take advantage of a good harvest in Zimbabwe, using funds from donor countries to enable that food to be transferred to areas where famine is likely to develop.
  I note that the President of Tanzania is now saying that, because of the economic situation in Tanzania, caused by the rise in energy costs and the military costs in connection with Uganda, he is hardly able to purchase food from abroad.
  The hon. Members for Hertford and Stevenage (Mr. Wells) and for Loughborough (Mr. Dorrell) may have misunderstood me. At no stage have I or any other Opposition Member criticised the use and importance of private capital in developing countries, but we must make it absolutely clear that it is not a form of aid. If it were a form of aid we should have to say, presumably, that Japanese companies investing in Britain were aiding Britain, or that German companies investing in Britain were doing so. The thing is patent nonsense. Obviously, the transfer of private capital to the developing countries is more often than not extremely useful to the development of those countries—not necessarily or always so, but very often.
  The hon. Member for Loughborough suggested, too, because the debate this evening is limited to the subject of the British aid programme, that the opposition had forgotten that there are large and important elements other than aid that can assist in the development of the Third world. Of course we would not make that mistake, but this is a debate about aid, and one of the points that I want to underline again is that our credibility in terms of the Mexico summit is dependent not least upon our record as

  851
  a country that is giving aid. I take all the points that have been made about trade. I do not have time, obviously, to answer them at the moment.
  There is one other question that I want to put to the Minister. We are now reaching the end of the financial year, and I ask him to say quite clearly whether the aid budget for the current financial year has been fully spent or is is underspent. He should be in a position to tell the House that this evening, and I very much hope that he will do so.
  6.42 pm
  Mr. Marten: I should like to answer what I can of the various points raised in this debate. I am afraid that I cannot give the answer to the point about underspending until the end of the financial year. Then, of course, once the bills have come in—and it takes some time to collect them all—we shall be able to give the answer.
  I am very conscious of the question of food surpluses in Zimbabwe, and the Minister of Agriculture of Zimbabwe came to see me the other day and we discussed their use and sale in Africa. We also discussed the question of the storage of these surpluses until they were needed.
  Many points have been raised in the debate, and, if I cannot reply to all of them because of lack of time, I shall do so by letter.
  The hon. Member for Greenwich (Mr. Barnett) raised the question of India. The fall in aid to the poorest countries is closely linked to the question of aid to India. The hon. Gentleman asked for a detailed explanation of the figures. Drawings in respect of the Indian programme have been lower than expected in the first three-quarters of the present financial year, and we are working with the Indian authorities to try to ensure that the resources available for the year as a whole will be fully and effectively used. The financial year is a relevant period for the Indians and for ourselves and we hope to provide roughly the same amount in 1980–81 as we did in 1979–80—that is, about £123 million gross.
  We give more aid to India than any other bilateral donor. According to World Bank figures, British aid amounted to 34 per cent. of net bilateral aid by members of the Aid India Consortium in 1979–80. That is a very substantial percentage. Several other OECD, OPEC and Communist bloc countries were net negative donors after Indian payment of loan amortisation was taken into account. India also benefits from the multilateral flows, to which Britain contributes heavily—for example, expenditure by the International Development Association.
  The hon. Member for Greenwich also asked about development projects. It is not the case that projects being financed under aid programmes do not continue to be approved on the basis of development criteria. This remains of basic importance for the regular programme and for projects being financed under the aid and trade provision, all of which come to me, and I have to be satisfied that there is a developmental aspect.
  The hon. Member also asked whether I would confirm that the 1980 ODA-GNP ratio would be 0·34 per cent. I am afraid that a firm figure is not yet available. Both components—official development assistance and the GNP estimates—are subject to revision. I do not think it would serve any useful purpose to give a provisional estimate at this stage, but, as I have made clear today, slow
  852
  bilateral spending and the fact that we did not deposit a promissory note with IDA before the end of 1980 because of the American Congress hiccup will mean that the 1980 ODA-GNP figure will be below the level recorded in 1979.
  When speeches such as that of the hon. Member for Inverness (Mr. Johnston) are made about the reduction in aid in 1980, any reasonable person must bear in mind those two factors of the under-drawing by the recipient countries and the IDA replenishment being virtually blocked because Congress failed to play its part during the American elections.
  The hon. Member for Greenwich—I am devoting a lot of time to answering his questions—criticised the Government for assisting Turkey, a crucial member of NATO, to overcome its serious balance of payments difficulties. This, frankly, is slightly surprising considering that the Labour Government found it right to give emergency assistance of this kind to countries facing such difficulties. Any allocation of aid is arguably at the expense of some other recipient. We attempt to keep a reasonable balance at all times between the competing claims on the resources available.
  The hon. Member for Newham, South (Mr. Spearing), in his intervention, raised a question—which was followed up by the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler)—about Zimbabwe and the £10 million for land resettlement. I am afraid that details of its use are still to be discussed with the Zimbabwe Government. The first £20 million was for both purchase and subsequent development of land and we would expect the use of the next £10 million to follow a similar pattern, but this is for discussion. I make one point, however, on what I felt lay behind the remark of the hon. Member for Norfolk, North-West. The question of future aid on land resettlement is at any time open for discussion. What we cannot give as a Government—and I am sure that this is a responsible attitude—is an open-ended commitment to it, which I believe some people would like us to do.
  The right hon. Member for Norwich, North (Mr. Ennals) found a different story told to him when he followed me round some of the places I visited. That, of course, may be so; it depends upon who one speaks to. I speak to my opposite numbers. As a visiting Minister, I speak to the Prime Minister, the President, or whoever it might be, about aid, and they do not say that to me. My hon. Friend the Member for Harborough (Mr. Fan) told us what he found when he went to India, and that rather bears out what is told to me when I travel round. Perhaps the right hon. Gentleman does not. I can understand why, of course: he cannot explain the matter in the terms in which the Government see it. Perhaps we can have a lesson about that so that the next time he goes there he gets the same reaction as I do.
  The right hon. Gentleman then referred to a "stop the world, we want to get off" attitude. It is not that at all, although it was quite a nice way of expressing what I think was in his mind. After all, although I hate rubbing this in, we inherited considerable economic problems which we are now trying to overcome.
  I turn to the speech of my hon. Friend the Member for Bridlington (Mr. Townend). I think it is true to say that a number of people in this House and outside it do not agree with his views, but what he has said reflects a part of public opinion, and therefore he is right to say it. That is what Parliament is all about—putting the different

  853
  views. So to that extent I thank him for what he said, but I should like to pick up briefly one or two points about aid to Zimbabwe. It did not have aid before, but it has been through a tragic period of war and the aid is all about reconstruction after the war.
  My hon. Friend said that some say that aid is given not to poor people but to Governments. That is a Professor Bauerism. A lot of our aid, being infrastructure, is given to Governments. For example, in Sri Lanka we are giving £100 million to build the Victoria dam. That is Government aid, but the dam will enable 20,000 farming families to be resettled on their land to produce food for themselves and their country for export. The dam will also provide electricity for industry. That is an example of how aid given to Governments flows to the people.
  My hon. Friend also told us that it is said that our enonomy would benefit if aid money was spent here. I take the point. I left out of my geographical tour my visit to Egypt. I went there a few weeks ago, and announced £50 million aid to improve Egyptian sewers. The sewers in Cairo were bad enough during the war, but the population has risen from 1 million to 9 million. I stood deep in sewage in the Cairo streets, yet I have letters asking what we are doing giving £50 million to Egypt when the sewers in Little or Big Sodbury need attention. Nothing will change people's views.
  My hon. Friend's final point was that the Opposition should say where the money for increased expenditure should come from. One hon. Gentleman tried to respond but the answer should come from a Front Bench spokesman who may have future responsibility. I do not ask for the suggestion now. Perhaps the hon. Member for Greenwich could write to me.
  I agree with the hon. Member for Kingston upon Hull, Central (Mr. McNamara) that aid is about living in peace. That is why in my original remarks I said that aid helped to achieve stability in the developing world. The hon. Gentleman said that we had belatedly accepted the Mexico summit invitation. We accepted it when we received it. A lot of people thought that we were ducking it, but the invitation perhaps came later than the hon. Gentleman expected.
  My hon. Friend the Member for Hertford and Stevenage (Mr. Wells) said that we must bend our minds and hearts to aid. I agree, provided that we also keep a level head. He made an excellent speech, and brought the debate down to earth in a constructive and helpful way. He normally speaks about the Commonwealth Development Corporation. When I was in the Solomon Islands three weeks ago, I visited the CDC palm oil plantation, and was impressed with the style of its work—its employment of labour and its ability to create overseas earnings for the country involved.
  Mr. Peter Hordern: Is there a prospect that the activities of the CDC will no longer be counted under the public sector borrowing requirement?
  Mr. Marten: I gave way to my hon. Friend because I wanted a sip of water. That is a hint that I do not wish to give way again. We are discussing the matter. My hon. Friend knows that the Treasury is not easy to persuade on such matters.
  I have taken note of the point about Nepal made by the hon. Member for West Bromwich, West (Miss Boothroyd). I shall write to her. If she then wishes to put
  854
  down a question to get the answer officially open, I shall provide her with a written answer. I am grateful to her for her kind remarks on population control. The pressure on me by the parliamentary group, of which the hon. Lady and my hon. Friend the Member for Loughborough (Mr. Dorrell) are such outstanding members, has been great. It has educated me, and I have taken an interest in it. Someone was talking behind me, and I did not quite catch what she said about women. I thought that she said that women are invisible. That is not the case so far as I am concerned.
  My hon. Friend the Member for Harborough mentioned the alternative for students of going behind the Iron Curtain for education. As I said earlier, I recognise that fact, and we give it constant attention, but we cannot expect to educate everyone who wants to come here.
  The hon. Member for Inverness quoted the Oxfam paper which was produced before the organisation met the Foreign Secretary and myself. It was riddled with mistakes, which was surprising. After Oxfam had seen us and had corrected the paper, it reissued a better and more accurate version. The incident illustrates how wrong well-meaning people can be if they do not get the statistics absolutely right. Such a huge area of percentages is not easy to deal with. My Department's information service is available to anyone who wants to write a thesis on our aid programme in percentages or in real terms.
  The hon. Gentleman questioned the famous quotation about myself at the United Nations. Miss Rosemary Righter reported on the supposed United Nations' reaction in the auditorium to my speech. As I have said before., she was not in the auditorium, she was not in New York—indeed, she was not even in America at the time. How could she, therefore, judge the reaction? Oxfam picked up the remark in a rather cheap way, without investigation. My speeches are usually pretty bad, but, as I walked from the rostrum to my seat, I was shaken by the hand by three different African delegations. Miss Righter should report what she knows directly.
  The agenda of the Mexico summit has not yet been agreed. Several hon. Members have suggested points for discussion, which will be fed into our national machine and into the preparatory committee that will draw up an agenda. I am grateful to hon. Members for the suggestions.
  We shall take up the points suggested by my hon. Friend the Member for Loughborough for the Mexico summit. I agree with what he says about trade and the difficulties of hon. Members who have factories in their constituencies affected by imports but who also want a generous approach to aid. It is not consistent to argue for both.
  The hon. Member for Norfolk, North-West regrets increased spending on arms. He is aware that I do not agree with him. Defence is the first priority for any Government.
  I thank all hon. Members for their contributions to the debate, which we will take seriously. I shall answer in writing those that I have not dealt with. A debate like this stimulates the subject of aid and gives it an airing.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 245,Noes 302.

  Division No. 121]

  [7.00 pm

  AYES

  Abse, Leo

  Allaun, Frank

  Adams, Allen

  Anderson, Donald

  855

  Archer, Rt Hon Peter

  Ginsburg, David

  Ashley, Rt Hon Jack

  Golding, John

  Ashton, Joe

  Gourlay, Harry

  Atkinson, N.(H'gey,)

  Graham, Ted

  Bagier, Gordon A, T.

  Grant, George(Morpeth)

  Barnett, Guy (Greenwich)

  Grant, John (Islington C)

  Beith, A, J.

  Hamilton, James(Bothwell)

  Bennett, Andrew(St'kp'tN)

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

  Booth, Rt Hon Albert

  Harrison, Rt Hon Walter

  Boothroyd, Miss Betty

  Hart, Rt Hon Dame Judith

  Bottomley, Rt Hon A(M'b'ro)

  Haynes, Frank

  Bradley, Tom

  Healey, Rt Hon Denis

  Bray, Dr Jeremy

  Hogg, N. (E Dunb't'nshire)

  Brocklebank-Fowler, C.

  Holland, S. (L'b'th, Vauxh'll)

  Brown, Hugh D. (Provan)

  Home Robertson, John

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

  Homewood, William

  Brown, Ron (E'burgh, Leith)

  Hooley, Frank

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

  Horam, John

  Campbell, Ian

  Howell, Rt Hon D.

  Campbell-Savours, Dale

  Howells, Geraint

  Canavan, Dennis

  Hudson Davies, Gwilym E.

  Cant, R. B.

  Hughes, Mark (Durham)

  Carmichael, Neil

  Hughes, Robert (Aberdeen N)

  Carter-Jones, Lewis

  Hughes, Roy (Newport)

  Clark, Dr David (S Shields)

  Janner, Hon Greville

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

  Jay, Rt Hon Douglas

  Cohen, Stanley

  John, Brynmor

  Coleman, Donald

  Johnson, James (Hull West)

  Concannon, Rt Hon J. D.

  Johnson, Walter (Derby S)

  Cook, Robin F.

  Johnston, Russell(Inverness,)

  Cowans, Harry

  Jones, Barry (East Flint)

  Craigen, J. M.

  Jones, Dan (Burnley)

  Crawshaw, Richard

  Kaufman, Rt Hon Gerald

  Crowther, J, S.

  Kerr, Russell

  Cryer, Bob

  Kilroy-Silk, Robert

  Cunliffe, Lawrence

  Lambie, David

  Cunningham, G.(Islington S)

  Lamond, James

  Cunningham, Dr J. (W'h'n)

  Leadbitter, Ted

  Dalyell, Tam

  Leighton, Ronald

  Davidson, Arthur

  Lestor, Miss Joan

  Davies, Rt Hon Denzil (L'lli)

  Lewis, Arthur (N'ham NW)

  Davies, Ifor (Gower)

  Lewis, Ron (Carlisle)

  Davis, Clinton (Hackney C)

  Litherland, Robert

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

  Lyon, Alexander(York)

  Deakins, Eric

  Lyons, Edward (Bradf'd W)

  Dempsey, James

  Mabon, Rt Hon Dr J. Dickson

  Dewar, Donald

  McDonald, Dr Oonagh

  Dixon, Donald

  McGuire, Michael(Ince)

  Dobson, Frank

  McKay, Allen(Penistone)

  Dormand, Jack

  McKelvey, William

  Douglas, Dick

  MacKenzie, Rt Hon Gregor

  Douglas-Mann, Bruce

  Maclennan, Robert

  Dubs, Alfred

  McMahon, Andrew

  Duffy, A. E. P.

  McNamara, Kevin

  Dunn, James A.

  McTaggart, Robert

  Dunnett, Jack

  McWilliam, John

  Dunwoody, Hon Mrs G.

  Magee, Bryan

  Eadie, Alex

  Marshall, D(G'gowS'ton)

  Eastham, Ken

  Marshall, DrEdmund(Goole)

  Edwards, R. (W'hampt'n S E)

  Marshall, Jim (LeicesterS)

  Ellis, R. (NE D'bysh're)

  Martin, M(G'gowS'burn)

  Ellis, Tom (Wrexham)

  Mason, Rt Hon Roy

  English, Michael

  Maxton, John

  Ennals, Rt Hon David

  Maynard, Miss Joan

  Evans, Ioan (Aberdare)

  Meacher, Michael

  Evans, John (Newton)

  Mellish, Rt Hon Robert

  Field, Frank

  Mikardo, Ian

  Fitch, Alan

  Millan, Rt Hon Bruce

  Flannery, Martin

  Mitchell, Austin(Grimsby)

  Fletcher, Ted (Darlington)

  Mitchell, R. C. (Soton Itchen)

  Foot, Rt Hon Michael

  Morris, Rt Hon A. (W'shawe)

  Ford, Ben

  Morris, Rt Hon C. (O'shaw)

  Forrester, John

  Morris, Rt Hon J. (Aberavon)

  Foster, Derek

  Morton, George

  Foulkes, George

  Moyle, Rt Hon Roland

  Fraser, J. (Lamb'th, N'w'd)

  Newens, Stanley

  Freeson, Rt Hon Reginald

  Oakes, Rt Hon Gordon

  Freud, Clement

  O'Halloran, Michael

  Garrett, John (Norwich S)

  O'Neill, Martin

  Garrett, W. E. (Wallsend)

  Orme, Rt Hon Stanley

  856

  Owen, Rt Hon Dr David

  Stott, Roger

  Palmer, Arthur

  Strang, Gavin

  Parker, John

  Straw, Jack

  Pavitt, Laurie

  Summerskill, Hon Dr Shirley

  Pendry, Tom

  Thomas, Dafydd (Merioneth)

  Powell, Raymond (Ogmore)

  Thomas, Jeffrey (Abertillery)

  Prescott, John

  Thomas, Mike(Newcastle E)

  Price, C. (Lewisham W)

  Thomas, DrR.(Carmarthen)

  Race, Reg

  Thorne, Stan (Preston South)

  Radice, Giles

  Tilley, John

  Rees, Rt Hon M (Leeds S)

  Tinn, James

  Richardson, Jo

  Torney, Tom

  Roberts, Albert(Normanton)

  Urwin, Rt Hon Tom

  Roberts, Allan (Bootle)

  Varley, Rt Hon Eric G.

  Roberts, Ernest (Hackney N)

  Wainwright, E. (Dearne V)

  Roberts, Gwilym(Cannock)

  Wainwright, R.(Colne V)

  Robertson, George

  Walker, Rt Hon H.(D'caster)

  Robinson, G. (Coventry NW)

  Watkins, David

  Rodgers, Rt Hon William

  Weetch, Ken

  Rooker, J. W.

  Wellbeloved, James

  Roper, John

  Welsh, Michael

  Ross, Ernest (Dundee West)

  White, Frank R.

  Rowlands, Ted

  White, J.(G'gow pollock)

  Ryman, John

  Whitehead, Phillip

  Sandelson, Neville

  Whitlock, William

  Sever, John

  Wigley, Dafydd

  Sheerman, Barry

  Willey, Rt Hon Frederick

  Sheldon, Rt Hon R.

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

  Shore, Rt Hon Peter

  Williams, SirT.(W'ton)

  Short, Mrs Renée

  Wilson, Gordon (Dundee E)

  Silkin, Rt Hon J. (Deptford)

  Wilson, Rt Hon Sir H.(H'ton)

  Silverman, Julius

  Wilson, William (C'try SE)

  Skinner, Dennis

  Winnick, David

  Smith, Cyril(Rouchdale)

  Woodall, Alec

  Smith, Rt Hon J. (N Lanark)

  Woolmer, Kenneth

  Snape, Peter

  Wrigglesworth, Ian

  Soley, Clive

  Wright, Sheila

  Spearing, Nigel

  Young, David (Bolton E)

  Spriggs, Leslie

  Stallard, A. W.

  Tellers for the Ayes:

  Steel, Rt Hon David

  Mr. Hugh McCartney and Mr. Joseph Dean

  Stewart, Rt Hon D. (W Isles)

  Stoddart, David

  NOES

  Adley, Robert

  Brotherton, Michael

  Aitken, Jonathan

  Brown, Michael(Brigg&Sc'n)

  Alexander, Richard

  Browne, John(Winchester)

  Alison, Michael

  Bruce-Gardyne, John

  Amery, Rt Hon Julian

  Buchanan-Smith, Alick

  Ancram, Michael

  Buck, Antony

  Arnold, Tom

  Budgen, Nick

  Aspinwall, Jack

  Bulmer, Esmond

  Atkins, RtHonH.(S'thorne)

  Burden, SirFrederick

  Atkins, Robert(Preston N)

  Butcher, John

  Atkinson, David(B'm'th, E)

  Cadbury, Jocelyn

  Baker, Kenneth(St, M'bone)

  Carlisle, Kenneth(Lincoln)

  Baker, Nicholas (N Dorset)

  Chalker, Mrs. Lynda

  Banks, Robert

  Channon, Rt. Hon. Paul

  Beaumont-Dark, Anthony

  Chapman, Sydney

  Bell, Sir Ronald

  Churchill, W, S.

  Bendall, Vivian

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

  Benyon, Thomas(A'don)

  Clark, Sir W. (Croydon S)

  Benyon, W. (Buckingham)

  Clarke, Kenneth(Rushcliffe)

  Best, Keith

  Clegg, SirWalter

  Bevan, David Gilroy

  Cockeram, Eric

  Biggs-Davison, John

  Colvin, Michael

  Blackburn, John

  Cope, John

  Blaker, Peter

  Cormack, Patrick

  Body, Richard

  Corrie, John

  Bonsor, Sir Nicholas

  Costain, Sir Albert

  Boscawen, Hon Robert

  Cranborne, Viscount

  Bottomley, Peter (W'wich W)

  Critchley, Julian

  Bowden, Andrew

  Crouch, David

  Boyson,Dr Rhodes

  Dean, Paul (North Somerset)

  Braine, Sir Bernard

  Dickens, Geoffrey

  Bright, Graham

  Dorrell, Stephen

  Brinton, Tim

  Douglas-Hamilton, Lord J.

  Brittan, Leon

  Dover, Denshore

  Brooke, Hon Peter

  du Cann, Rt Hon Edward

  857

  Dunn, Robert (Dartford)

  Hunt, John (Ravensbourne)

  Durant,Tony

  Hurd,HonDouglas

  Dykes, Hugh

  Irving, Charles(Cheltenham)

  Eden, Rt Hon Sir John

  Jenkin,Rt Hon Patrick

  Eggar,Tim

  Johnson Smith, Geoffrey

  Elliott,Sir William

  Jopling,Rt Hon Michael

  Emery, Peter

  Joseph, Rt Hon Sir Keith

  Eyre, Reginald

  Kaberry,Sir Donald

  Fairbairn,Nicholas

  Kershaw,Anthony

  Fairgrieve,Russell

  Kimball,Marcus

  Farr,John

  King, Rt Hon Tom

  Fell,Anthony

  Knight, Mrs Jill

  Fenner, Mrs Peggy

  Knox, David

  Finsberg, Geoffrey

  Lamont,Norman

  Fisher, Sir Nigel

  Lang, Ian

  Fletcher, A. (Ed'nb'gh N)

  Latham,Michael

  Fletcher-Cooke,Sir Charles

  Lawrence, Ivan

  Fookes, Miss Janet

  Lawson, Rt Hon Nigel

  Forman,Nigel

  Lee, John

  Fowler, Rt Hon Norman

  Lennox-Boyd,HonMark

  Fox, Marcus

  Lester, Jim (Beeston)

  Fraser, Rt Hon Sir Hugh

  Lewis,Kenneth(Rutland)

  Fraser, Peter (South Angus)

  Lloyd, Ian (Havant & W'loo)

  Fry, Peter

  Lloyd, Peter (Fareham)

  Galbraith, Hon T. G. D.

  Loveridge,John

  Gardiner,George(Reigate)

  Luce,Richard

  Gardner, Edward (S Fylde)

  Lyell,Nicholas

  Garel-Jones,Tristan

  McCrindle,Robert

  Gilmour, Rt Hon Sir Ian

  Macfarlane,Neil

  Glyn, Dr Alan

  MacKay, John (Argyll)

  Goodhart,Philip

  Macmillan, Rt Hon M.

  Goodlad.Alastair

  McNair-Wilson.M. (N'bury)

  Gorst,John

  McNair-Wilson, P. (New F'st)

  Gow, Ian

  McQuarrie,Albert

  Gower,Sir Raymond

  Madel, David

  Gray, Hamish

  Major,John

  Greenway, Harry

  Marland,Paul

  Grieve, Percy

  Marlow,Tony

  Griffiths, Peter Portsm 'th N)

  Marshall, Michael (Arundel)

  Grist, Ian

  Marten, Neil (Banbury)

  Grylls, Michael

  Mather,Carol

  Gummer,John Selwyn

  Mawby, Ray

  Hamilton, Hon A.

  Mawhinney,Dr Brian

  Hamilton,Michael(Salisbury)

  Maxwell-Hyslop,Robin

  Hampson,Dr Keith

  Mayhew, Patrick

  Hannam,John

  Miller,Hal(B'grove)

  Haselhurst,Alan

  Mills,Iain(Meriden)

  Hastings,Stephen

  Mills, Peter (West Devon)

  Havers, Rt Hon Sir Michael

  Miscampbell,Norman

  Hawkins,Paul

  Moate, Roger

  Hawksley,Warren

  Monro,Hector

  Hayhoe, Barney

  Montgomery, Fergus

  Heddle,John

  Moore,John

  Henderson, Barry

  Morgan,Geraint

  Heseltine,Rt Hon Michael

  Morris, M. (N'hampton S)

  Hicks, Robert

  Morrison, Hon C. (Devizes)

  Higgins, Rt Hon Terence L.

  Morrison, Hon P. (Chester)

  Hill,James

  Mudd, David

  Hogg,Hon Douglas(Gr'th''m)

  Murphy,Christopher

  Holland,Philip(Carlton)

  Myles, David

  Hooson,Tom

  Neale,Gerrard

  Hordern, Peter

  Needham,Richard

  Howe, Rt Hon Sir Geoffrey

  Nelson,Anthony

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

  Neubert, Michael

  Howell, Ralph (N Norfolk)

  Newton,Tony

  Hunt, David (Wirral)

  Normanton,Tom

  858

  Oppenheim, Rt Hon Mrs S.

  Squire,Robin

  Page, John (Harrow, West)

  Stainton,Keith

  Page, Rt Hon Sir G. (Crosby)

  Stanbrook,Ivor

  Page, Richard (SW Herts)

  Stanley,John

  Parkinson,Cecil

  Steen,Anthony

  Parris, Matthew

  Stevens,Martin

  Patten,Christopher(Bath)

  Stewart, Ian (Hitchin)

  Pattie,Geoffrey

  Stewart,A.(E Renfrewshire)

  Pavitt, Laurie

  Stokes,John

  Pawsey, James

  Stradling Thomas,J.

  Percival,Sir Ian

  Tapsell, Peter

  Peyton, Rt Hon John

  Taylor, Robert (Croydon NW)

  Pink, R.Bonner

  Taylor, Teddy (S'end E)

  Pollock,Alexander

  Tebbit,Norman

  Porter, Barry

  Temple-Morris,Peter

  Prentice, Rt Hon Reg

  Thomas, Rt Hon Peter

  Price, Sir David (Eastleigh)

  Thompson,Donald

  Prior, Rt Hon James

  Thorne, Neil(IlfordSouth)

  Proctor, K. Harvey

  Thornton,Malcolm

  Pym, Rt Hon Francis

  Townend, John (Bridlington)

  Raison,Timothy

  Townsend, Cyril D,(B'heath)

  Rathbone,Tim

  Trippier,David

  Rees, Peter (Dover and Deal)

  Trotter,Neville

  Rees-Davies, W. R.

  van Straubenzee, W. R.

  Renton,Tim

  Vaughan,Dr Gerard

  Rhodes James, Robert

  Viggers, Peter

  Rhys Williams,Sir Brandon

  Waddington,David

  Ridley,Hon Nicholas

  Wakeham,John

  Ridsdale,Sir Julian

  Waldegrave,Hon William

  Rifkind,Malcolm

  Walker, B. (Perth)

  Rippon,Rt Hon Geoffrey

  Walker-Smith, Rt Hon Sir D

  Roberts, M. (Cardiff N W)

  Waller, Gary

  Roberts, Wyn (Conway)

  Walters,Dennis

  Rossi, Hugh

  Ward,John

  Rost, Peter

  Warren,Kenneth

  Royle,Sir Anthony

  Watson,John

  Sainsbury, Hon Timothy

  Wells,John(Maidstone)

  St. John-Stevas, Rt Hon N.

  Wells,Bowen

  Scott,Nicholas

  Wheeler,John

  Shaw, Michael (Scarborough)

  Whitelaw,Rt Hon William

  Shelton,William(Streatham)

  Whitney,Raymond

  Shepherd,Colin(Hereford)

  Wickenden,Keith

  Shepherd,Richard

  Wiggin,Jerry

  Silvester, Fred

  Williams, D. (Montgomery)

  Sims, Roger

  Winterton,Nicholas

  Skeet, T. H. H.

  Wolfson,Mark

  Smith,Dudley

  Young, SirGeorge(Acton)

  Speller,Tony

  Younger, Rt Hon George

  Spence,John

  Spicer, Jim (West Dorset)

  Tellers for the Noes:

  Spicer, Michael (S Worcs)

  Mr. Spencer Le Marchant and Mr. Anthony Berry.

  Sproat,Iain

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
  Mr. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House notes that the aid programme for 1981–82 will be in excess of £1,000 million and welcomes the Government's intention to continue to give priority to the poorest countries in allocating bilateral aid.

  Lloyd's Bill (By Order)
  Order for Second Reading read
  Mr. John Wells: On a point of order, Mr. Speaker. You ruled earlier today that members of Lloyd's could not vote on the Bill's Second Reading. Will members of Lloyd's be able to vote on a closure motion if there is one?
  Mr. Speaker: I advised hon. Members who are Members of Lloyd's. I did not give a ruling. I cannot stop any hon. Member from going into the Lobby to support the Bill. I can only warn hon. Members who are members of Lloyd's that there are consequences from so doing. However, it is the right of every hon. Member, whether or not he is a member of Lloyd's, to cast his vote if a closure motion is proposed and is accepted by the Chair. No financial interest can be involved in that procedure. That would be a matter of public business.
  7.12 pm
  Sir Graham Page: I beg to move, That the Bill be now read a Second time.
  First, Mr. Speaker, may I say to you, how grateful I am for your ruling on voting because it is an issue that has caused some anxiety? Earlier today I altered the advice that I had given to my colleagues. I had told them that it was all right to vote if they were members of Lloyd's. I am happy that they should be told not to vote because of the various doubts that exist.
  This is a private Bill promoted by the Society of Lloyd's, which was incorporated by statute as long ago as 1871. The members of the society individually underwrite contracts of insurance, and when they do the liability of each is a several liability that is limited to its own parts but is otherwise an unlimited personal liability. The society is the core of the community of Lloyd's, and in that phrase I include not only the members of the society, the underwriters, but the underwriting agents, Lloyd's associates, annual subscribers, substitutes and Lloyd's brokers. It is a community which, incidentally, earns in overseas earnings the substantial sum of £515 million a year. The society provides employment for no fewer than 72,000 persons, yet it has to look back to the 1871 statute for its constitution.
  In three important respects, and in many other fairly substantial respects, that constitution has proved in modern times to be an obstruction to the effective control and advancement of the society's proper functions in the insurance market. The Act of 110 years ago, the Lloyd's Act 1871, set out in section 24 a long list of subjects upon which rules and regulations of the society can be laid down by byelaws. The byelaws have to be made by a resolution of two general meetings. They cover the most minor matters of government of the society. For example, it needs two general meetings to make a byelaw or to regulate the appointment, employment and remuneration of a secretary and other officers and servants. That is an indication of the present cumbersome procedure.
  It is true that under another section of the 1871 Act the committee, which consists of 16 members, has the management and superintendence of the society's affairs. However, when the committee cannot make rules and regulations, and cannot introduce byelaws, its powers of management are necessarily ineffective.
  The system may have worked 110 years ago in 1871 when the membership of the society was less than 1,000.
  860
  It may have worked 20 years ago when the membership did not exceed 6,000. However, we now have a membership of 19,109 and it is impracticable to try to run an important organisation such as Lloyd's on the present basis.
  Under clause 3, a new council of Lloyd's will be constituted to take over the functions of the existing committee. Clause 6 gives the council not only the management and superintendence of the society's affairs but the power to regulate and direct the business of insurance at Lloyd's, to exercise all the powers of the society and to make byelaws upon the wide area of government that is set out in schedule 2. That is the way in which the Bill overcomes the first obstacle of the present statute.
  The second stumbling block of the 1871 Act is the disciplinary procedure. One wonders how any discipline has ever been kept in Lloyd's up to the present. The procedure provides that to discipline a member of Lloyd's one must have two arbitrators, and possibly an umpire, who finds the accused person guilty of violating a fundamental rule of the society or of any act or default discreditable to him as an underwriter, and so on. When he has been found guilty by this strange form of arbitration, the matter then goes before a general meeting.
  The person cannot be suspended unless two general meetings, one after the other, confirm the arbitrators' ruling. It is an extremely cumbersome procedure. Under a later Act of 1911, the committee was given power temporarily to suspend a person, but that procedure was almost as cumbersome. If the committee suspended a member, he could appeal to a general meeting. If the committee's decision to suspend was to be confirmed, 100 members had to be present and a three-quarters majority had to vote for the suspension. Otherwise, the committee's decision just fell by the wayside.
  The cumbersome and indeed rather ludicrous position of disciplinary actions under the Acts of 1871 and 1911 is shown by a case at present proceeding. I shall refer only to the procedure, not to the merits of the case. In May 1979, Lloyd's set up a working committee to investigate certain accounting discrepancies by a firm of Lloyd's brokers, the Christopher Moran Group of Companies, from which syndicate 566 might have suffered loss.
  The committee reported in June 1979, and disciplinary arbitration proceedings of the kind that I have described were started in October 1979. Since then, preliminaries to the arbitration, applications to the court and even an action for injunction have kept the parties occupied for 18 months, and the arbitration seems to be no closer to a hearing. That is a typical example of how cumbersome the procedure is. Incidentally, in the meantime—in August 1980—Mr. Moran was charged by the police with conspiring to defraud two other syndicates. The procedure is therefore very cumbersome indeed.
  The promoters of the Bill are asking Parliament for power to set up proper disciplinary bodies. Clause 7 provides for an efficient disciplinary procedure by means of a disciplinary committee and an appeal tribunal with proper procedures to deal promptly with potentially dangerous situations arising out of suspected malpractices, while giving the accused all the proper protection.
  As important as those disciplinary proceedings is the power to make byelaws for committees of inquiry. The power to do that is included in schedule 2, which provides for these inquiries to be set up, for persons to be examined

  861
  and for documents to be produced. Had good byelaws of that kind been in existence five or six years ago, the "Savonita" case, which I think is familiar to some hon. Members, would have been tackled far more satisfactorily.
  In the "Savonita" case, several hundred Fiat cars caught fire on board the vessel of that name. They were returned to port and disposed of very much under value. They had been re-insured at Lloyd's, but the brokers resisted the claim. Other brokers were then appointed and settled the claim. The first brokers alleged that Lloyd's had failed to protect them properly. That may be so, under the present procedure that Lloyd's has had to adopt. At that rather late stage, Lloyd's set up a board of inquiry which sat for six months, took a mass of evidence and decided that the allegations were unfounded. I am convinced that if the byelaws contemplated in the Bill had existed then, that inquiry would have started more promptly and would have obtained better evidence more quickly.
  The third stumbling block of the present constitution under the 1871 Act is that the statutes deal only with the Society of Lloyd's, that is to say, the underwriting members of Lloyd's. A good example is the fact that, having looked all through the statutes to see whether Lloyd's brokers were mentioned anywhere, I have found that the phrase is never used. Yet they are very important people in the community of Lloyd's.
  Under its present statute, Lloyd's cannot control the insurance market unless it has regulatory powers over the community of Lloyd's. It has that partially by agreements, but it is now asking Parliament—very reasonably, I think—to allow it to govern all those who operate within the market. In addition to the 19,109 members of the society, there are 1,023 annual subscribers, 142 associates, 5,508 subsititutes and about 175 brokers groups.
  For the good name, reputation and status of Lloyd's, it is essential that its regulatory powers should comprehend the whole community and should be such that suspected malpractices can be dealt with competently and promptly.
  Again, I take an example. Had powers of the kind for which Lloyd's is now asking Parliament existed over the community of Lloyd's in 1977—the byelaw-making powers, suspension of underwriting agents, which is not possible now, the disciplinary and inquiry powers and so on—the Sasse case might not have dragged on through protracted litigation as it has.
  Again, I imagine that a number of hon. Members know of the Sasse case, but I shall briefly put it on record. Syndicate 762 suffered heavy losses because it had been allowed to rely upon overseas agents to whom it had given a binder, that is, an authority to commit it to underwriting contracts. Because there was a loss on those, Lloyd's intervened, settled the losses of some members, but left others dissatisfied. The point is worth making that only at a late stage in the trouble were disciplinary proceedings commenced against some of those involved.
  If such procedures, and those for starting and conducting a proper inquiry, had been more clear-cut and streamlined, as we wish to make them through byelaws under the Bill, might not matters have been disclosed that would have avoided the litigious issues that followed? I think that those blameless in the Sasse affair should welcome the Bill wholeheartedly. Things go wrong because Lloyd's has
  "an antiquated constitution and restricted powers of regulation over its community".
  862
  Those are not my words. They are the words of the Fisher committee which, under Sir Henry Fisher, began its work in February 1979 and made a comprehensive report 15 months later, in May 1980. It was appointed to inquire into self-regulation at Lloyd's, to review Lloyd's constitution, and to review the powers of Lloyd's committee and relevant matters.
  I can sum up the recommendations of the Fisher report—a 200 page document—by saying that it considered a properly conducted system of self-regulation essential, that Lloyd's committee did not provide an efficient system of regulation, that substantial changes in the constitution were necessary, and that the changes could not be made without amending the statutes.
  Between June and October last year Lloyd's held extensive consultation upon the contents of that report, and the Bill is the result. It was put in draft before a general meeting of Lloyd's at the Albert Hall in November 1980, and was approved by an overwhelming majority of 13,219 to 57.
  I apologise for that long introduction. I now turn to the Bill itself. I have already dealt with clause 3, which sets up the new council. However, I should like to mention the constitution of that council. The existing committee of 16 has never been representative of the categories of members of the Society of Lloyd's. The council will now consist of 16 working members, who are defined on page 4 as
  "a member of the Society who occupies himself principally with the conduct of business at Lloyd's by a Lloyd's broker or underwriting agent."
  Those 16 working members will be elected by a working member electoral roll, which is provided for later in the Bill. The council will also consist of six external members, who are any members of the society who are not full working members. Since the Bill was printed, a reasonable argument has been put forward that the representation of external members is too low. Out of the 19,109 members that I have mentioned, the number of working members is 3,794, whereas the number of external members is 15,315. Of course, the working members are geographically capable of doing work and are the experts in council or committee work.
  On behalf of the promoters I undertake that we shall seek to increase the number of external members to at least eight, which will give a better representation. It is intended that those external members should be elected by postal ballot and that they should have a chance to have an election manifesto delivered with the voting papers. That can be inserted into schedule 4, which is the temporary provisions schedule, and it will be a precedent for a permanent byelaw. I also undertake on behalf of the promoters to seek to include the election manifesto provision as an amendment to schedule 4.
  In addition to the 16 working members and the eight external members, there are to be
  "three nominated members of the Council appointed by the Council,…and…confirmed by the Governor for the time. being of the Bank of England".
  They are intended to be independent members of the council outside the community of Lloyd's. It is the intention that the nomination of those members should be by special resolution. Here again, I undertake to ensure that an amendment is moved to insert that provision in the Bill.
  The council is to have power to make byelaws by special resolution. I call attention to what is meant by a special resolution of the council. Such a resolution must

  863
  have the "separate majorities" of the 16 working members and a majority of the external members plus the nominated members. That is a vital piece of the constitution, which will make the council truly representative of the categories of membership.
  I turn to clause 6, which sets out the powers of the council. I have already explained those when talking about the special resolution to make byelaws. That clause contains a long-stop provision for those who object to a byelaw that the council seeks to make. Under an old byelaw, which will be kept alive by the Bill, anyone can call a general meeting if he can get another 15 members of the society to join him in requisitioning such a meeting. However, if he wishes to attack a byelaw made by the council, that meeting will have to be requisitioned by 500 members.
  The council will have power to delegate part of its directions to the committee. Under clause 5 the committee comprises the 16 working members. The council can also delegate to the chairman and other officials, but there is always a veto on that delegation. Anyone who objects can carry out a procedure under clause 6(8) and (9). I shall not go into great detail. It ensures that the council will be representative of the categories of members of the society. Therefore, the general meeting, as is the case under the present constitution, will cease to be the byelaw-making body, and in future the byelaw-making body will be the council.
  I have already mentioned the disciplinary procedure contained in clause 7. Clause 8 is declaratory of the practice of Lloyd's business.
  I now turn to clause 10 and 11. If the new representative council is to be given stronger and prompt powers to prevent malpractices and to control the insurance business at Lloyd's, it should not hesitate to take those powers. Indeed, self-regulation is the fundamental purpose of the Bill. Therefore, there is some argument for saying that it should have some immunity from actions for damages.
  Mr. Nick Budgen: Will my right hon. Friend expand on that argument? It will not help some of us if he just leaves it like that.
  Sir Graham Page: My hon. Friend interrupted me in the middle of my remarks. I was about to explain that the Bill seeks to give the normal immunity—given under section 448 of the Companies Act 1948—to the servants, employees and directors of a company. If the servants of a company act genuinely and honestly, and if the court thinks that they should be excused for the damaging results of any of their acts, it can so excuse them. That is a normal provision. The ordinary company servant is given pretty wide immunity.
  Lloyd's seeks to go further, because it wishes to protect not only its servants and "directors"—members of the council—but the society. Under clause 11, immunity goes further than the normal immunity found under the Companies Act. Careful consideration must be given to this. There must be consultation with those who do not have the opportunity on a Private Members's Bill to make their voices heard during all the Bill's stages. Therefore, I wish to delay any decision so that consultation can take place.
  On behalf of the promoters of the Bill I give an undertaking that they will seek to insert an amendment in
  864
  Committee whereby schedule 2 will provide power for byelaws to be made about immunity. In other words, clause 11 and similar provisions in schedule 2 will be removed from the text of the Bill. If any byelaw of that type is made, it will not be operative until it has been embodied in an Order of Council, which will require the affirmative approval of both Houses of Parliament.
  Mr. Clinton Davis: I am sure that the right hon. Gentleman will agree that this represents a substantial departure from what was originally envisaged. Rightly or wrongly, it was contemplated that this issue would be dealt with in primary legislation. Is it not extremely unsatisfactory that so basic a matter should be dealt with in subordinate legislation that cannot be amended? Would it not be far more courageous if Lloyd's—which has had plenty of time to think about this—were to involve itself in further amendment of clause 11 instead of dealing with this issue in an unsatisfactory way?
  Sir Graham Page: I am obliged to the hon. Gentleman for that intervention. If he can assist in producing an amendment, his efforts will be carefully considered.
  On behalf of the promoters of the Bill I wish to give time for consultation on the proposition. Lloyd's feels that it is basic to the Bill, to the self-regulation of Lloyd's and to the powers of the new council. Apart from the point about consultations, I do not think that it makes much difference whether the issue is dealt with in primary legislation, or subordinate legislation, which has to receive the affirmative approval of the House. I present the Bill to the House with that amendment to clause 11 and with an undertaking that Lloyd's will table an amendment to that effect in Committee. If any right hon. or hon. Member has a satisfactory solution that leaves the society with some form of immunity, it will receive the greatest consideration.
  Clause 12 and schedule 3 repeal some of the dead wood of the old statutes. Schedule 4 set out the transitional provisions. The important schedule is schedule 2, which sets out the byelaws or the subjects on which byelaws can be made. The present committee of Lloyd's is determined that there should be a separation of broking and underwriting and that they should be independent of each other. We can assume that if the committee is determined the new council will be of the same mind and will carry the society's members with it. It is a difficult issue to work out on the Floor of the House or in Committee. Lloyd's wants the new council to consider carefully how independence of operation can be brought about by divestment or some other effective process.
  Mr. Clinton Davis: When we dealt with the Insurance Brokers (Registration) Bill, time limits were applied to a number of important matters relating to the introduction of proposals by brokers. Should not time limits be applied in this respect, and in one or two other respects, if we are to deal with the matter along the lines suggested by the right hon. Gentleman? Otherwise, the matter may never be dealt with.
  Sir Graham Page: I wish to express my personal feelings, without giving any undertaking on behalf of the promoters. I see no reason why a time limit of five years should not be imposed. However, that is a personal

  865
  opinion. If the hon. Gentleman has another formula, that will be considered. Lloyd's is determined to establish the independence of broking and underwriting.
  Mr. Clinton Davis: I am grateful to the right hon. Gentleman for giving way again. He is always courteous about such matters. I am not considering a time limit for the introduction of divestment. I seek an acceptance of the principle of divestment. There could then be a further extension of time—perhaps five years, as Fisher envisaged—for implementation. There are two different phases.
  Sir Graham Page: The promoters of the Bill and I will certainly give that point consideration. One must bear in mind that a new council is about to come into being. I do not wish to cut the ground from under its feet by deciding what form of divestment or separation process is right.
  Mr. Roger Moate: Does my right hon. Friend accept that there is a fundamental difference of principle between independence of operation and total divestment? Is it not unsatisfactory to leave such a vague power in legislative form? Will my right hon. Friend give some indication of the path that the present council wishes to pursue? Does it wish to pursue total divestment and complete legal separation, or the lesser form of divestment that the minority report recommended?
  Sir Graham Page: I cannot go further than my previous remarks. The present committee is determined that there should be independence of operation. It wishes to leave the method to the new council. One must bear in mind that it is not only members of the society who are concerned. We are dealing with brokers. I have been informed that the brokers are in favour of the separation of broking and underwriting. However, the form of separation is a matter for consultation between them and the new council.
  The second important aspect of schedule 2 relates to ensuring that malpractices and fraudulent activities are reported to the council at the earliest possible stage. Paragraphs 21 and 22 give the council considerable powers if the byelaws are made in that form.
  I am obliged to some of my hon. Friends for their suggestions. We did not think that it went far enough, and I give an undertaking that further paragraphs will be added on the following lines: for empowering further byelaws for investigating frauds and crimes, for prosecuting persons responsible and for handing information and documents to the police. There will be another paragraph for regulating the giving of information and the production of documents, and a third paragraph for the preservation of due confidentiality of information documents thus given to Lloyd's.
  These are formidable weapons that Lloyd's will be able to use to attack the malpractices and fraud in the insurance market. Indeed, I feel that the whole Bill gives Lloyd's the right weapons and tools to run the insurance market properly in future. I hope that I shall have support for the Bill.
  7.50 pm
  Mr. K. J. Woolmer: I congratulate the House on ensuring a substantial attendance for what is clearly a most important industry. On many occasions when we have been debating the problems of industries we have hoped for such a good
  866
  turnout. Perhaps that reflects the fact that the City is where money is made and that industries such as textiles in my area are the industries with problems. I am delighted to see the full ranks on the Conservative Benches and hope that hon. Members show the same interest and concern for other industries.
  As the right hon. Member for Crosby (Sir G. Page) said, this is the first major piece of legislation of this type for a considerable time. He will agree that it is important to get it right. I was struck by the number of occasions on which the right hon. Gentleman felt it necessary to make what I regard as potentially major concessions. It is unfortunate that the Bill has had to come before the House on Second Reading with potential concessions which may not be as significant as the right hon. Gentleman suggested. I am not happy with the proposals for dealing with it in view of the right hon. Member's own recognition that they are major matters.
  First, I do not wish to get involved with the problems of the committee, the council and the members. That is a private matter. Nevertheless, it is interesting to see that the risk takers are struggling to get on a par with the workers. Perhaps some of the lessons in the rest of industry are interesting.
  My first reservation relates to clause 11. We cannot shirk the fact that this is a major matter of principle. With my hon. Friend the Member Hackney, Central (Mr. Davis), I am not happy that it is proposed that this matter should be relegated to byelaws and secondary legislation. That is not a satisfactory method of dealing with it. I am looking for a commitment that the principle will be abandoned and that any further discussions will start from the presumption that no blanket immunity can be granted. If we seek to start from there and find such immunities that are desirable in the circumstances to grant, we should start from a fundamentally different position.
  The Bill does not appear to deal with a fundamental matter of principle on the problems of brokers and underwriters. There is a difference between the proposal to break the link by having, in effect, separate companies under the same ownership, and divestment. I hope, together with Conservative Members, that we shall have a clear commitment that the path of divestment will be followed. It is not satisfactory to be given an assurance that in Committee different ways of doing that will be considered. It is not satisfactory for the House to send the Bill to Committee without a clear view about which of those is favoured.
  Mr. Moate: I agree that one needs clarity of intention. I hope that the hon. Gentleman did not draw the conclusion from my earlier intervention that I was in favour of divestment. I favour the reverse.
  Mr. Woolmer: I do not draw conclusions of that nature. Many hon. Members would not be happy with a simple assurance that one of two ways will be found to overcome an agreed problem. The outcome would be fundamentally different, according to the view that one took on the principle. I do not believe that the people outside the House would expect us to allow the Bill to go to Committee without that principle being properly aired. That is what I seek.
  I did not feel that this matter, together with that of indemnity, was properly and adequately aired in the right hon. Gentleman's introductory remarks. They were

  867
  recognised as problems without strong arguments being made about why what appeared to be basic principles of objection should not be fully answered.
  Those are two substantial reasons for the Bill not to go forward this evening. Lloyd's should be asked to reconsider its proposals. This is the first time in 100 years that a major piece of legislation has been proposed for Lloyd's. We should ensure that in modern circumstances it is based firmly on principles which will endure for a substantial time. I hope that the House will vote against giving the Bill a Second Reading, not because we do not wish most of the Bill to go forward but because at least two major matters of principle must be put right.
  7.58 pm
  The Under-Secretary of State for Trade (Mr. Reginald Eyre): It may be for the convenience of the House if I say at this relatively early stage how the Government regard the Bill. I first congratulate my right hon. Friend the Member for Crosby (Sir G. Page) on the excellent way in which he presented his case and on the patient and skilful way in which he has conducted negotiations with the interested parties. As he said, Lloyd's makes an important contribution to the economy of the country.
  I begin by paying tribute to all who contribute to the success of this unique institution. I am sure that the tribute will give pleasure to my hon. Friend the Member for City of London and Westminster, South (Mr. Brooke) who, by a happy coincidence, is on duty on the Government Front Bench.
  In 1979, Lloyd's premium income was £2,247 million, or over £8 million per working day, of which about three-quarters comes from overseas. In the 10-year period from 1970 to 1979 Lloyd's accounted for an average of 42 per cent. of the total income from overseas of the insurance industry. In 1979, out of the £957 million contribution made by the insurance industry to the invisible trade balance, Lloyd's accounted for £383 million. Lloyd's has pioneered many new forms of insurance, such as jumbo jets, super tankers, oil rigs and communications satellites. Lloyd's influences the terms and conditions, including rates of premium, on which business is written throughout the world.
  The very success of Lloyd's has pointed to the problems that the Bill seeks to solve. Its long history means that procedures that have worked perfectly well in the past may be in danger of losing some of their effectiveness in a changing society. Many of Lloyd's procedures are founded firmly in custom and practice. They are none the worse for that. The Government have no enthusiasm for excessively detailed legislation and regulation. However, some updating of the law is timely.
  Lloyd's owes its character as an institution to the fact that it is self-regulating. Providing a framework for the operation of individual underwriters is probably inseparable from regulating their activities. Government regulation could not be substituted for self-regulation without destroying the character of the institution. Not only do we not want to do that, we do not want to add to the functions of government either.
  Lloyd's has proved the value of its commercial services over nearly 300 years, during which it has never defaulted on a legitimate claim. It has demonstrated the institution's
  868
  own capacity to regulate over the same period. The fact that the Bill is before the House now shows that Lloyd's is alive to the changing needs of our time. There may be a case for changing individual provisions of the Bill. That is a matter for debate. There is clearly no case for destroying the institutional framework.
  Much of the internal machinery of Lloyd's stems from an Act of 1871. Lloyd's has troubled the House but little since then. Of the five private Bills that it has promoted since 1871, excluding the one currently under consideration, one was in connection with signal stations and had nothing to do with insurance, and all but one of the remainder involved relatively minor amendments. This Bill continues the pattern of amendments to the 1871 Act. Practices and conventions which were suitable for a society of 675 members in 1871 are no longer adequate for a society of about 19,000 members, most of whom have no regular contact with the underwriting room in Lime Street. It is for Lloyd's to determine, with regard to the needs of its internal organisation, a suitable formula for representing the interests of the external names which will commend itself to Parliament.
  The report of Sir Henry Fisher and his working party has clearly outlined where the major changes are needed, and the report set out specific proposals for this purpose. Here I should say that it is not only the members of Lloyd's who have benefited from this excellent report but everyone who has an interest in this institution has gained an insight into its workings as a result of the painstaking study made by Sir Henry and his working party. Although the Bill does not follow Sir Henry's draft, it is based closely on the working party's recommendations. I must congratulate Lloyd's on the speed with which it has brought forward the proposals for legislation to implement the recommendations.
  Some misgivings have been felt about certain provisions of the Bill. Parliament is rightly concerned at any question of legal immunity. The proposed amendment will allow the matter to be fully and properly considered.
  Mr. Budgen: If we approve the Bill tonight and the provisions of clause 11 are put in a schedule, when the byelaws come before the House there will be no opportunity for amendment. We shall either have to agree to them or reject them as they stand.
  Mr. Eyre: The byelaws will be in the form of secondary legislation. However, I emphasise that my right hon. Friend the Member for Crosby was forthright in saying that he would consider proposals by hon. Members in preparation of the byelaws in question. In addition, the usual affirmative resolution procedure will be required. The order will be laid in draft and its adoption will require consideration by Parliament. That is a reasonable provision for dealing with this matter.
  If a byelaw on immunities is adopted by special resolution, my right hon. Friend the Secretary of State will be prepared to consider it and, if satisfied, to bring it before the Privy Council and Parliament for approval. That is the quickest way for the new regulatory machinery to be established. It enables consultation with all interests to start soon and it retains for Parliament itself the right to decide, in the light of these consultations, what degree of immunity is right. We support the view expressed in the Fisher report that a regulatory authority must be sure of its power to carry out its essential regulatory functions and not be inhibited by fear of harassing litigation.
  Mr. Richard Needham: Is my hon. Friend saying that if the Government are satisfied with the immunities they will come back with the Government's imprimatur? If that is so, is it not a slightly dangerous precedent, considering the immunities that are now granted to trade unions?
  Mr. Eyre: I emphasise my right hon. Friend's offer to consider in detail the proposals for immunity. The proposals will be considered by the Secretary of State. He is conscious of the need to take account of views and to gain support in the House. If my right hon. Friend is satisfied, he will seek to obtain the Privy Council's approval and eventually bring the matter before Parliament for approval. Extra responsibility is put upon my right hon. Friend on the form of the byelaw. He will seek to discharge that responsibility. We will want to commend to Parliament only a form of byelaw that he believes merits support. My right hon. Friend will be most sensitive in that process to take account of all the proper arguments. I have emphasised that, in the light of these consultations, it will be for Parliament itself to decide what degree of immunity is right. We support the view, as I have said, that was expressed in the Fisher report, that a regulatory authority must be sure of its power to carry out these essential regulatory functions.
  I should like to refer to the question of the divestment of underwriting agents from brokers, which is one of great complexity. An attempt to incorporate such requirements in the Bill could cause delay while the principles outlined by Sir Henry Fisher's working party are examined and converted into effective working rules. The problem needs careful examination. In my view, it cannot be dealt with by way of a short addition to the Bill. It is also essential that Lloyd's should be able to deal with fraud. It is right for the House to satisfy itself that proper powers exist for that purpose. I am advised that the arrangements that are to be proposed will have that effect.
  In their examination of the Bill the Government have been concerned to ensure that the provisions are not in conflict with the requirements of the statutes in force or with Government policy. We are satisfied on this score. The details of its provisions are matters for the promoters of the Bill and for the House.
  We are convinced that if Lloyd's is to continue to make its contribution to the economy as a whole it must regulate its own affairs and that it can and will do so effectively with the powers that it now seeks. The community of Lloyd's, on the basis of a wide-ranging inquiry, has decided that changes are necessary. Members of Lloyd's have voted overwhelmingly for the promotion of the Bill. It is clear that some strengthening of Lloyd's regulatory powers is necessary, and that is what the Bill seeks to do. We wish it well.
  8.11 pm
  Mr. Clinton Davis: Like the Minister, I wish to congratulate the right hon. Member for Crosby (Sir G. Page) on the manner in which he introduced the Bill. I also pay tribute to the chairman of Lloyd's and his committee for the painstaking efforts that they have made to consult hon. Members on both sides of the House about this important measure. That is not to say that we are ad idem with them on all the matters embodied in the Bill. I pay tribute to them in that regard. They have
  870
  diligently and in good faith sought to arrive at conclusions that are in the best interests of Lloyd's. It is a matter of judgment whether those conclusions are right.
  I join my hon. Friend the Member for Batley and Morley (Mr. Woolmer) in his keen observation about the presence of so many hon. Members on the Government Benches. It is a remarkable attendance. In this day of new parties that are emerging, I thought, for a moment, that we might get a party of Lloyd's brokers established. Like my hon. Friend, I look forward to attendance and participation on a similar basis in debates dealing with industry, urban deprivation, overseas aid, unemployment and housing and, if I may say so, other equally important matters.
  There has been a remarkable debate about those issues outside Parliament. Over the months that the Bill has been in the course of preparation I have seen some extraordinary headlines. I have seen
  "The affair of the Lloyd's Bill"
  in The Times,
  "Tory dissenters look set to accept Lloyd's Bill"
  and also
  "Top broker criticises 'rapacious' colleagues"
  which might be the sort of language one would expect to be used by some hon. Members about others in this House. Another headline read "Split rivets the sleepers". That was very intriguing. I thought that the best of all which appeared in The Economist some time ago, was "The lady gets shirty". This was not a reference to the Prime Minister's view of the Secretary of State for Employment. It was a reference to the "luckless" Lady Middleton, who has been involved in carrying out opposition to the Bill for some considerable time. "Luckless" is the word attributed by The Economist rather than by myself.
  I believe it was vitally important for Lloyd's to introduce a Bill to revise its procedures. The reputation of Lloyd's for integrity, trustworthiness and fair dealing is a prime ingredient for its survival and expansion. It follows that, while these qualities cannot be imposed by rules, rules which enable Lloyd's to act more promptly to deal with abuse, to deter aberrant behaviour and to provide effective redress can most certainly inspire increasing confidence in Lloyd's.
  There is no doubt that Lloyd's has gone through a dramatic transformation not simply over the last half century but over the last decade. This is spelt out in the Fisher report. For example, it has a vastly increased membership. In 1970 there were 6,001 members. Today there are more than 18,500 members. This variety and diffusion of interests and this change in the character of Lloyd's membership have to some extent led to an erosion of traditions. Perhaps this wide variety of interests is less amenable to some of the traditional, gentlemanly sanctions which were applied some time ago and, indeed, up to the present time. The inadequacy of these methods and sanctions is highlighted in the Fisher report.
  For these reasons and others, it has been concluded that there are substantial grounds for Lloyd's interfering in the free working of the market and such grounds are positively identified in chapter 1, paragraph 19, of the report. It has also been concluded that the changes envisaged by the Fisher report and, to some extent, mirrored in the Bill will represent important steps in safeguarding and enhancing the reputation of Lloyd's, in mitigating the problems that have arisen in recent cases, and in doing justice to policyholders and to others who are concerned in the insurance market.

  871
  In general terms, I welcome the Fisher report. I believe it to be a work of considerable scholarship. It has put forward quite radical proposals in some respects, while preserving, as it has decided is best for Lloyd's, the self-regulatory processes that Lloyd's also want to see retained.
  One of the questions that is properly posed is whether the Bill should preserve the self-regulatory process regarding Lloyd's, or whether the Government, through the Department of Trade, which is responsible for the insurance business, should be assuming a supervisory role in relation to Lloyd's, akin to other parts of the insurance business.
  It is an important matter, but I am bound to say that I regard entry on that route with much caution. Lloyd's is still a highly prestigious organisation securing, as we heard from the Minister, considerable benefits for the United Kingdom, particularly in overseas earnings. If proposals were introduced at this stage to abandon self-regulation without giving the new procedures a chance to work, it could be construed as a vote of no confidence in Lloyd's, and that could result in an erosion of confidence and of its continued ability to match the stiff international competition and to trade profitably abroad.
  It is premature for us to condemn the changes that are envisaged without giving them an opportunity to work, and I hope to say something about those changes in a moment.
  What I have said is entirely without prejudice to the possibility of a more interventionist role for the Department of Trade by a Labour Government to bring Lloyd's more into line with other insurance interests in the way in which they are supervised, should those procedures be found wanting. There is, therefore, a heavy burden on Lloyd's to satisfy the community as a whole that what it is about to do will be effected properly and will meet the public interest.
  Recently there have been enormous pressures on Lloyd's. It has been criticised on numerous occasions for the way it has carried out its duties. It is well within its knowledge that it has to demonstrate more forcefully than ever that the way it does its business ensures that the public interest is satisfactorily maintained.
  Our debate has centred on a number of important issues that have been highlighted by the Fisher report, and I want to deal with them at this stage. I turn, first, to clause 3, dealing with the establishment of the council. I welcome the amendments to the original proposals which were mentioned by the right hon. Member for Crosby. I believe that they provide a better balance between the working members who are capable of dealing with the technical work at present handled by the committee of Lloyd's. I believe that that formula will avoid the domination of working members by a single section of the market—a possibility that has caused some anxiety. There are also the external members and the independent persons, whose role I hope will be impartial, and whose appointments will be confirmed by the Governor of the Bank of England.
  The numerical balance proposed by the right hon. Gentleman is an improvement, and I congratulate him on having reached those conclusions with the Lloyd's team. It is right also that there should be flexibility about the size of the council and the methods of election, which, of course, can be determined by byelaws.
  872
  I turn to clause 6, relating to the making of byelaws. It is right that there should be a division of responsibility between the committee and the council, the latter dealing with important questions of principles and planning. The safeguards contained in subsection (4) lean over backwards to appease the opposition that has been expressed to these proposals. I do not believe that the right hon. Gentleman could have gone further.
  Clause 7 deals with the question of the establishment of the disciplinary committee and appeal tribunal. The right hon. Gentleman was right to assert, as did the Fisher Report, that the present procedures are cumbersome, grossly outdated and wholly inadequate to meet the challenges. The complicated process of arbitration is ludicrous in this day and age. There is no other comparable organisation that has to go through such a procedure to establish its disciplinary processes. It is right, too, that the committee should have a reserve power to compel people to disclose information and give evidence, and that it should be a disciplinary offence to disobey such a request. If that were not provided, the teeth of the disciplinary committees would simply not exist. I welcome, too, the appeal tribunal, which will ensure that a person who is aggrieved should be able to obtain justice.
  I turn next to the issue which, with perhaps one other, has dominated the controversy attaching to the Bill, namely, the immunity provisions. I wish, as does my hon. Friend the Member for Batley and Morley, that the matter had been canvassed more fully by the right hon. Gentleman. He should have dealt with the principles that are involved. In fact, he skated over them. That is almost the only criticism that I make of his contribution to our debate tonight. I do not believe that the Fisher report dealt adequately with those issues. There is unquestionably a difficult problem, namely, how do we reconcile the need to take speedy and effective action to detect and stop abuses so as to avoid, or at least to limit, losses to assureds with the undesirability of providing extensive and unprecedented immunity in law to a self-regulatory body? That is the question.
  Fisher argued that it would be disastrous if the consequences of decisions such as Hedley Byrne v. Heller and other cases that were cited had the effect of discouraging the council from introducing regulatory measures required for the general good because it feared that there would be civil liability to individuals. There is a real problem here. However, I am not encouraged to believe that, by deferring it and relegating it to a future debate, the answers will emerge.
  The right hon Gentleman and Lloyd's appear to have conceded, by removing clause 11, that its terms were too extensive. They feared that those terms would be unacceptable to the House. They have had ample opportunity to put forward proposals to amend that provision. To play for time is no good. The right hon. Gentleman invited me to suggest alternative proposals. I should like to do that. I shall do my best to help, but it is not really my job. Lloyd's has an adequate number of skilled lawyers. It must decide what it wants. It is no good introducing proposals unless the principles can be agreed. Lloyd's has run away from that issue, which I regret.
  The right hon. Gentleman said that Lloyd's would go away and think about it. He was supported—not surprisingly—by the Minister in his view that Lloyd's should produce a draft byelaw that would require the positive affirmation of Parliament. That is not acceptable.

  873
  It was reinforced in that belief by what the right hon. Gentleman said, namely, that the matter was basic to the Bill and to the operation of Lloyd's. If it is so basic, surely it is a matter for primary legislation. It is wholly wrong to introduce it by subordinate legislation, which is not intended to deal with such fundamental principles. I hope that the right hon. Gentleman and Lloyd's will seriously think about the matter.
  The road of subordinate legislation is wrong. Lloyd's believes that. If it had believed that it was a matter for subordinate legislation clause 11 would never have appeared. Lloyd's accepted the principle that it was right to deal with the matter in the Bill. That judgment was correct. A different view is now taken for reasons of expediency. Lloyd's realised that, with justification, many hon. Members did not like clause 11 as it stood. It has run away from the issue. I beg the right hon. Gentleman to counsel Lloyd's not to proceed down the route that he has suggested tonight.
  Perhaps Lloyd's should be thinking in terms of splitting the immunity. I have discussed that purpose with Lloyd's, although I do not commit myself to it. Perhaps it would not be unreasonable to limit the immunity, for the general benefit of market and members, to a position where the council, in exercising its powers to approve membership or in taking other steps vis-a-vis the membership that are contemplated in the Bill, is acting in good faith, but, nevertheless, loss may ensue through the aberrant behaviour of the member concerned. It might be arguable that failure to exercise its power of supervision, which led to the loss—perhaps because of the way in which it operates the fit and proper person procedure—should not be a ground for civil action.
  Perhaps that is one of the ways which could be explored by the right hon. Gentleman. However, if Lloyd's believes that the powers of investigation would be fatally flawed by not having extensive immunity, and if it believes that there is no other way in which that objective can be secured, let it argue that as a matter of principle in primary legislation on the Floor of the House rather than deal with it in the unsatisfactory manner proposed by the right hon. Gentleman.
  If the House approves the suggestion made by the right hon. Gentleman, it will be incumbent on the council to produce byelaws within a reasonable period, as I believe was envisaged by Fisher. Just as the registered brokers had the pistol of time levelled at their heads in producing their byelaws, it is right that Lloyd's should operate in the same way. There is no reason why Lloyd's should be dealt with differently.
  I was glad to hear about the strengthening of the proposals on fraud, mentioned by the right hon. Member for Crosby. The inadequacy of the capacity of Lloyd's to act swiftly has been a matter of grave anxiety in recent cases. It was not its fault, because it was encumbered by the ludicrous procedures, which are totally outdated. The question of the duty of people to divulge information relating to suspicions is difficult. That is argued in chapter 13, paragraph 33. I commend that chapter, because it poses that question to the House.
  Fisher argues that there must be an immediate power to restrain action which, if permitted, could cause grave harm to Lloyd's or to its policyholders. He concludes that there must be apower to give directions in particular cases which are immediately binding and which carry a sanction for disobedience. That is right. The fit and proper person
  874
  procedure concerning admission and continued membership, which are analogous to those vested in the Department of Trade in its supervision of insurance companies, are important in exercising proper control, and control over underwriting agency companies or firms, or over directors or senior employees of such companies. That is also envisaged.
  I now turn to divestment. Fisher strongly recommended by a majority that, over a period of five years, shareholding links between Lloyd's brokers and managing agencies and between non-Lloyd's insurance interests and managing agencies should be severed and prohibited for the future. The links between Lloyd's brokers and member agents would not be so prohibited. Fisher recommended that the decision should be left to the council, which would have the power to make bye laws in that area, It was contemplated that the council would engage in profound consultation with all the relevant interests and would work out how the problems would be resolved.
  It is not satisfactory for that issue to be left in that way. The majority of Fisher described that as a basic principle. The principle is essentially that an agent should not expose himself to a conflict of interests. The right thing to have done—not as Fisher recommended—would have been to embrace the issue in the Bill. Unfortunately, that has not been so. I am sorry that that is so, because again, it will be a prescription for doing nothing. The contemplation will take so long that there will be no action. That at least is the risk. It was summed up in the Financial Times on Monday:
  "What will decide the outcome of the debate is how far the individual commercial interests of the brokers are likely to weigh against the long-term interests of protecting Lloyd's identity as a separate institutional entity rather than allowing it to become a broker managed underwriting pool. With broking in recession the pressures against full divestment are considerable "
  Therefore, this is a prescription for further delay, and I believe that to be wrong.
  The representations made by hon. Members to Lloyd's and to the right hon. member for Crosby, who has been characteristically courteous in receiving those representations, have been helpful. They have led to important amendments being proposed to the Bill.
  I am not happy about some of the results, as I have said. I shall not advise my right hon. and hon. Friends to vote for the closure or for the Bill. Having regard to the unsatisfactory features I have highlighted, I shall he unable to vote for the Bill. I shall not vote against it; I shall abstain.
  8.35 pm
  Sir Anthony Royle: I think that we all heard the thoughtful and powerful speech of the hon. Member for Hackney, Central (Mr. Davis), realising the interest that he took in the insurance industry when he held ministerial office in a previous Government.
  I want to say a few words as probably the senior working member of Lloyd's who is also a Member of Parliament. I was elected as a member of Lloyd's in 1950, so I have spent 31 years as a working member of Lloyd's, and 33 years as an insurance broker at Lloyd's, starting there in 1948. So I am the first speaker tonight who has personal knowledge of Lloyd's and the workings of that institution, which provides a community of interest for so many people.

  875
  I should also declare a further interest, in that I am also director of a large insurance broking firm at Lloyd's. For those reasons I wish to speak for a few minutes to underline the wholehearted support that the community of Lloyd's gives to the Bill.
  As was said by my hon. Friend the Under-Secretary of State and by my right hon. Friend the Member for Crosby (Sir G. Page), Lloyd's, as one of our oldest national institutions, makes a major contribution to the country's balance of payments. More important, during the past 20 or 30 years Lloyd's has seen dramatic changes in Lime Street as an insurance market.
  When I joined Lloyd's in 1948 it was a small market. There were many small broking firms and small syndicates, and everyone knew everyone else. The behaviour of individuals in that market was soon known. For that reason, the arrangements for the disciplining and running of Lloyd's functioned well.
  I remember in 1957, as a marine broker, placing a risk in the market at Lloyd's on the Kariba dam in Central Africa, which had a value of £21 million. The premium paid on that risk was £150,000. At the end of last year my firm placed a risk in Lloyd's on the Thomson dam in Victoria, Australia—a similar dam. The value was £500 million and the premium £1·5 million. In the marine market of Lloyd's, in 1956 a tanker of 250,000 tons was valued and placed at £10 million. In 1981 a liquefied natural gas carrier would be valued and placed at £100 million.
  A drilling platform 10 years ago, in 1971, would have been valued at $75 million, and only last week in Lloyd's a risk was placed on a big Norwegian drilling platform the value of which was $1·5 billion. I think that that underlines the need that has arisen to provide a much larger market in Lloyd's if it is to maintain its role as a world insurance centre.
  My right hon. Friend the Member for Crosby, the sponsor of the Bill, mentioned the dramatic increase in the numbers of members of Lloyd's over the past 20 or 30 years. The fact that there were 3,000 members in 1949–50 and there are nearly 20,000 today has been mentioned by several speakers. The point that I do not think has been made is why that increase has become necessary, because it is that increase that has caused many of the problems that have confronted the committee of Lloyd's over the past five or six years. If, over that period, the committee of Lloyd's had not arranged to increase the total membership it would have meant that business would have drifted overseas and we would not have had the capital base to insure these huge new values.
  I emphasise at this stage that those values that I mentioned earlier on were the values that were insured on the entire world market—in the United Kingdom, in Europe, in America, world-wide. The element of Lloyd's participation was still very high. On average, 40 per cent. of all those risks were insured in the Lloyd's market. I think that it is important to realise that and to understand why the need arose to expand the membership of Lloyd's.
  The market now has large broking firms involved as a result of this expansion. Very large syndicates are involved. There are syndicates in Lloyd's today of 800 or 900 names, which would have been unthinkable 20 years ago. Inevitably, with the expansion of the market, people work in that market who are not known as well as they
  876
  would have been in the small community that was operating many years ago. As a result, the need arose, through a series of issues that I shall mention in a minute, to tackle the problem by, first, setting up the Fisher inquiry, the report of which produced answers that are incorporated in the Bill, and, secondly, providing the committee with the clout that it needs to deal with the minority which in any community tries to bend or evade the rules.
  My hon. Friend the Member for Thanet, East (Mr. Aitken) raised in a debate in March 1978 the "Savonita" claim, and I think that he deserves credit for giving publicity for the first time to an issue that had not before been discussed. I admit that I was one of many involved in the Lloyd's community—and I apologise to him now—who at that time were somewhat doubtful about the fact that he had raised this issue on the Floor of the House. I retract now, because I think that the fact that he raised it drew public attention to the changes in the Lloyd's market and the change that was taking place in the insurance market in the City.
  That was followed by the Sasse syndicate disaster, although of course there had been major losses before Sasse. Some of us will remember the Roylance mishap, which took place in the 1950s, but the Sasse syndicate case hit the headlines. Then, of course, we had the Moran case and others which have not received quite the same publicity. All this is indicative and typical of the problems that arise when dealing with many thousands of people, instead of hundreds, in a market that is crucial and full of people with necessarily an entrepreneurial streak, because that is basically Lloyd's.
  Mr. Clinton Davis: With reference to the "Savonita" case—and perhaps there are others like it—does the hon. Gentleman not think that it would be better, if an hon. Member has a situation of that kind in mind, to give the Minister an opportunity to deal with it before raising it on the Floor of the House?
  Sir Anthony Royle: The hon. Gentleman raises an aspect of the event in the detail of which it would not be very sensible to get involved this evening. I do not know whether my hon. Friend discussed the matter with the hon. Gentleman, but he had a perfect right to raise it on the Floor of the House.
  Mr. Jonathan Aitken: I appreciate my hon. Friend's gracious and generous reference to me, but as a point of factual record I make it clear that, far from raising the matter as a surprise manoeuvre, I saw the Minister and the officials concerned before raising it and gave the Minister the full text of the speech that I intended to make, for which he thanked me when he spoke. I could not have done much more to play fair.
  Sir Anthony Royle: I cannot set myself up this evening as an arbitrator between the hon. Member for Hackney, Central and my hon. Friend. If they wish to debate the matter outside the Chamber, I wish them luck.
  The incidents that I have mentioned are major and have a fall-out effect on the reputation of Lloyd's. They had a great deal of influence on the work of the Fisher committee, which started meeting before the "Savonita" case came up, although it added importance to the deliberations. These cases and the smaller ones, which may not have had the same publicity, have underlined the

  877
  fundamental point that the House has a duty to sustain a national institution like Lloyd's and give it the opportunity to put its house in order, as it is requesting us to do this evening.
  Concern has been expressed outside about four major issues that have been mentioned by all the speakers so far. My right hon. Friend the promoter of the Bill has satisfied both sides of the House about representation on the council. However, the hon. Member for Hackney, Central still has reservations about clause 11. It is a matter that the committee of Lloyd's through the promoter of the Bill, is prepared to discuss in greater detail at later stages in the passage of the legislation. At an earlier stage the hon. Gentleman underlined the fact that the committee of Lloyd's had taken a great deal of trouble to consult those concerned, including himself, in order to find a solution. If members of the committee of Lloyd's read Hansard tomorrow, they will learn what hon. Members feel and what action they would like to take. My right hon. Friend the promoter of the Bill has made it clear that that is also his intention. The suggestions put forward for alterations to the Bill should meet the point on fraud in full. I welcome the assurances given by my right hon. Friend.
  I wish to spend a second or two on the fourth point—divestment. As we all know, brokers own agencies at Lloyd's. I am glad that the sponsors of the Bill have proposed that the council should deal with this as a matter of urgency immediately it is set up. As a director of a major broking firm at Lloyd's, I am in no way opposed to divestment. I do not share the views of the hon. Member for Hackney, Central that the council's suggestions to deal with the poblem is a means of doing nothing at all. Such is the public interest in divestment, and such is the need for the committee of Lloyd's to satisfy it, that the new council will not be allowed to sit on the matter. It will have to deal with it.
  Hon. Members should appreciate the real problems involved in divestment which make it important that the new council should decide and that we should not try to do its job for it. What happens if a broker is no longer allowed to own an agency in Lloyd's and decides to own an insurance company instead, and if the broking community then moves out into the wider insurance market by owning insurance companies and starts to place its business in those companies instead of at Lloyd's? That is one question that has to be answered. I shall not answer it tonight.
  Secondly, London brokers may decide that if they are not allowed to be involved in owning underwriting agencies in Lime Street they will own overseas underwriting agencies instead. Might not that have a disastrous effect on Lloyd's, with a moving of business out of the London market into overseas markets? So far as I am aware, there is no evidence that the names are actually prejudiced by brokers' agents. Indeed, the Wilson, the Roylance and the Sasse syndicates were all run by non-broker-owned agencies.
  There is another point. Who would replace the present brokers as owners of those agencies? Perhaps a big industrial company would buy—Tiny Rowlands, Tesco, some conglomerate—I do not know. The outside pressures would clearly build up. I am not saying that that is necessarily a bad thing, but it is something that one has to consider. Outside pressures would build up if, for instance, overseas interests moved in and bought the agencies.
  878
  Let us look next at the possibility of the ownership being taken over by names themselves. Could the names afford it? To purchase some of the major and profitable agencies in Lloyd's today would cost a great deal of money. One wonders whether the names, who obviously would be the ideal people to own them, would be able to raise the necessary cash to do so.
  Mr. Needham: It is a question, is it not. of the divestment of managing agencies? It has not been suggested that membership agencies should be transferred or divested. Surely the brokers would still have their interest, and therefore their entitlement, to continue in the market.
  Sir Anthony Royle: Yes, they would. If the names could not buy the agencies themselves, the temptation for brokers, rather than to get involved in the complications and difficulties of operating in the market, might be to move overseas.
  I think that answers can be found to all these problems. I am not opposed to divestment, but I feel that the committee and the council of Lloyd's should find the answers and that we should not try to find them here in this House.
  Independent underwriting teams owning themselves is the ideal solution, and it is one that many people would like to see. I hope that the new council will encourage that. There is a feeling in the market and among the general public that the major brokers have become too powerful. If Lloyd's is to flourish, it needs to encourage the entrepreneurial energy of underwriters, which exists today. They need to build up their agency and to sell it in a market where they can sell for a profit the expertise that has been built up over the years. If that cannot be done Lloyd's will be damaged.
  It is right that the new council should tackle and decide this complicated, but important, issue that has been mentioned by all hon. Members who have spoken. I apologise for keeping the House for so long but, as shown by the Warncliffe meeting at the Albert Hall, which I attended, there is an overwhelming majority of both working and external names for the Bill. The community of Lloyd's wants the Bill. It is vital to our future and crucial to the City that Lloyd's is able to function well and is seen to be doing so. It is right that, where possible, our major institutions should police themselves and not involve the Government. The Bill provides for just that, and I hope that it will be accorded its Second Reading this evening.
  8.55 pm
  Viscount Cranborne: Although I am not a member of Lloyd's I cannot disagree with my right hon. Friend the Member for Crosby (Mr. Page) in drawing attention to the extraordinarily important place that Lloyd's occupies not only in the City of London but in earning a colossal amount of foreign exchange and making an extraordinarily large contribution to Britain's invisible exports. It seems entirely appropriate that this issue should attract enormous interest. The rather snide comments from Labour Members do them no credit. The same comment may be made of the fact that Labour Members are here in such small numbers to consider a vital part of our economy.
  Mr. Michael English: The Chair did not call my hon. Friend the Member for Keighley (Mr. Cryer).
  Viscount Cranborne: It is plain that the Bill is needed urgently. Equally, there can be no doubt that an institution with the reputation of Lloyd's for innovation, flexibility and all the remarkable virtues that have given it its preeminence in insurance should adhere to the principle of self-regulation. Many of the disadvantages from which other insurance markets suffer in other parts of the world stem from the fact that they are unquestionably governed by rigid regulations and Government rules that inhibit the powers of innovation and flexibility that Lloyd's enjoys.
  My right hon. Friend the Member for Crosby referred to the great changes that have occurred over the past decade in the market at Lloyd's. Bearing in mind the shortage of time, it would be churlish to rehearse those arguments, which I accept entirely. A Bill is needed because of those changes, and it was with considerable relief that those who are interested in Lloyd's heard that a Bill was forthcoming and that the committee and council of Lloyd's regarded the Bill as urgent.
  It was with considerable interest that I addressed myself to the document when it was published. My sense of anticipation and relief turned to some extent to disappointment when I read what the Bill contained. We knew that the changes in the market of Lloyd's in the past decade or so have led to an astonishing number of rather doubtful stories, many of which have been referred to by right hon. and hon. Members this evening. I do not wish to rehearse them, but if we are to accept the importance of the principle of self-regulation, surely it is vital that the self-regulating body should not only be above reproach but be seen as such by the country at large. In other words, it must be more Catholic than the Pope.
  Bearing in mind the number of stories that have emerged over the past few years about Lloyd's and those who work at Lloyd's, the Bill should have presented Lloyd's with an opportunity to show, if I may continue the religious mataphor, a firm purpose of amendment, as I believe the Catholics call it. That firm purpose of amendment is signally lacking in the expressions in the Bill.
  What about fraud? There has been an enormous amount of publicity about fraud in the past few years in matters concerning Lloyd's. It was surely only natural to think that the Bill would contain at least some passing reference to this undesirable activity. The House will be able to imagine my surprise when I found no such references when I read the Bill. I believe that I did so with proper care and attention. I looked as hard as I could, but not once did I find that five-letter word in the entire Bill.
  That remarkable fact reminded me of nothing so much as of an impoverished noble family sitting in a large and stately home trying to ignore the nasty smells from the drains that they could not afford to have repaired. That parallel surely cannot apply to Lloyd's, however. Although it is undoubtedly a noble institution, no one in his right mind could describe it as impoverished. The simile that I prefer, therefore, is that it is acting as though it inhabits an ivory tower. That is something that an innovative, flexible market, which Lloyd's has a reputation for being, cannot afford to do. I am delighted that my right hon. Friend was able to assure us about fraud; he did much to allay the questions in my mind.
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  There are other matters, however, such as divestment. My hon. Friend the Member for Richmond, Surrey (Sir A. Royle) has already referred to the undesirable growth of broker power over the past few years. Surely we must all accept that this phenomenon must be attacked by those in authority in Lloyd's. I was delighted to hear from my right hon. Friend that they intend to do so.
  As the hon. Member for Hackney, Central (Mr. Davis) said, the question of divestment has been hanging around for a considerable time; I believe that the Cromer report raised the matter over a decade ago. The committee of Lloyd's has been discussing it for over 10 years. We hear that it has reached some conclusions, but we have no clear evidence that it intends to take any action on the matter. Conclusions are a small advance, perhaps, but, for such a flexible and innovative institution, Lloyd's hardly shows any great sense of empressement in taking 11 years to come to a conclusion. Will it take 30 years for us to see some action? One is reminded of a reluctant bather by the Serpentine on Christmas day, trying to make up his mind to take the plunge. To the interested passer by, the longer the hesitation on the brink, the less attractive the body becomes.
  My right hon. Friend has done signal service today by trying to ensure that the sponsors at least do something in Committee to improve the original Bill. I sincerely hope that he will be able to prevail upon them and those who consider the Bill in Committee to give a binding and public undertaking that some kind of divestment—even a separation of powers would be an advance—will take place within a set period. My hon. Friend the Member for Richmond was right to say that this raises great difficulties. Nevertheless, the principle is so important that Lloyd's, with its reputation for intelligence and flexibility, must do something to solve the problem.
  I shall not continue too long, as many other hon. Members wish to speak, but I cannot close without mentioning immunity, in which Labour Members have expressed great interest. The history of the Labour Party shows clearly that its members are experts on the subject. They have done their best to defend immunities when it seemed in their best interests to do so. It all seems curiously one-sided.
  Mr. English: The hon. Gentleman will recollect that it was a Liberal Government who created those immunities.
  Viscount Cranborne: I recollect perhaps rather less well than the hon. Gentleman what happened in 1906, because I was not alive at the time. However, I recollect rather more clearly that further immunities were granted by Labour Governments in 1974 and 1976, which perhaps reinforced the fell work of the Liberal Government of 1906.
  We must be careful before we grant anyone new immunities. We Conservatives are reasonable men. We recognise that there may be occasions when some immunity is necessary, but the Bill provides a scale of immunity which I am advised is enjoyed by no one apart from the Privy Council and the Crown. That seems excessive, and I suggest that the promoters address their minds carefully to the question. We should seriously consider the granting of such extraordinarily excessive powers to a body which, in spite of the large number of Conservative Members present, does not have the political clout of the trade unions.

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  I question whether the same object could not be achieved by the council of Lloyd's by other means. We know that clause 10 confers on the council and its members the privileges conferred by section 448 of the Companies Act 1948. If Lloyd's wants more immunities, perhaps the redress lies within its own power. Surely that flexible institution could devise an insurance policy which would protect it as the immunities seek to do.
  I shall vote for the Bill as a disinterested outsider, in the clear expectation that the remarkable remedial work of my right hon. Friend the Member for Crosby (Sir G. Page) will continue in Committee. I hope that he will be able to give us the assurances we need. If I vote for the Bill and find that my expectations have been dashed, I shall have learnt a lesson from which I can only profit in future.
  9.7 pm
  Mr. Bob Cryer: Conservative Members are here in strength tonight.
  Mr. John Prescott: It must be about money.
  Mr. Cryer: Indeed. It is said that Lloyd's is representative of innovation and flexibility. Many years ago, when I wanted to insure a steam-operated railway, Lloyd's proved to be neither innovative nor flexible. In fact, an ordinary commercial insurance company undertook what was a fairly new venture with aplomb and courtesy.
  It is said that the community of Lloyd's wants the Bill, but there is more to it than that. There is a public interest in the Bill as well as a public interest in the operation of Lloyd's. Lloyd's does an enormous amount of business. If it is to maintain a reputation of service and credibility among its clients, the degree of scrutiny which will ensure that credibility must be maintained.
  It is claimed that the Bill is required in order to update the self-scrutiny of Lloyd's. The Bill, irrespective of clause 11, gives enormous powers to an outside body. Parliament should be careful about handing over such powers to a body, no matter how old, traditional or well-established.
  Under clause 7, the council is able to establish a disciplinary committee and an appeal committee. In the normal course of events, a professional body has to ask the Minister to introduce a regulation to obtain such powers. Therefore, the House would give Lloyd's an enormous advantage.
  My hon. Friend the Member for Hackney, Central (Mr. Davis) said that the appeal system would ensure that justice was carried out within the internal workings of Lloyd's. Under clause 7(2) the council can, by byelaw, specify the classes of
  "decisions, findings, orders, acts or omissions"
  against which appeals can be made to the appeal tribunal. It has the right to decide whether something should be the subject of an appeal. In other words, we are handing over the application of some sort of justice to an outside body. We should examine that right carefully.
  I turn to the contentious subject of clause 11. The hon. Member for Dorset, South (Viscount Cranborne) mentioned trade unions. If trade unions saw clause 11, they would would have their breath taken away by the scope and magnitude of the immunities granted. [Hon. Members: "Hear, hear".] Conservative Members may say that members of Lloyd's do not have immunity and are at
  882
  an unfair advantage. However, from their note of approval for my comment about the reactions of trade unions, I gather that they are critical of clause 11. Such approval for my comments does not often spring from Conservative Members.
  Trade unions are in a different position. First, they do not have such breathtaking immunity. Secondly, they are subject to a registrar, established by legislation, who produces an annual report on how trade unions are functioning. The applications of trade union funds for political purposes is the subject of legislation and of close scrutiny. Therefore, the position is different. The House should be careful before handing over such a power to an outside body, regardless of its prestige.
  I hope that the right hon. Member for Crosby (Sir. G. Page) will not think unkindly of me if I say that I have great regard for the work that he does in the House. However, he said that byelaws would be introduced under the powers contained in the Bill to remove clause 11 and to introduce some modified form of immunity. That is not a good process. Regardless of whether this is a public or private Bill, we should strive to avoid that. To hand over the creation of primary legislation is to usurp the legislative functions of this House. Therefore, it is to usurp Parliament's very power.
  The right hon. Gentleman said that such an alteration would take the form of an affirmative statutory instrument. However, such an instrument is not subject to modification. One must take it or leave it. If anyone has reservations he must vote against it. There is no grey area of debate. Indeed, debate is limited to one and a half hours. In the nature of our operations that hour and a half of debate will take place not in the early part of the evening, but at 11 pm, midnight or at 1 am. Our cerebral processes may not be at their best at that time. That is a relatively trivial reason, but the most important principle is that even on public legislation I am concerned about the powers that Ministers have to produce regulations to alter and shape essentially primary legislation. That is not a satisfactory substitute for getting primary legislation right the first time for debate and vote on the Floor of the House.
  I turn to schedule 2. The essence of the Bill is self-regulation. I have great reservations about it. An annual report should be available describing how the self-regulatory body is proceeding. If it is proceeding satisfactorily, it should harm no one. It should be a proud boast that it is proceeding satisfactorily. If it is less than satisfactory, it is a cause for anxiety, but it will ensure that outside pressures put the regulatory procedures in train if, by any chance, those inside the prestigious, long-established body are too comatose or complacent to carry them out with due speed. Long-established prestigious organisations often develop an inertia to remedy faults which need outside pressure to produce a correction.
  There is a useful point of comparison with trade unions, and there should be a form of annual report. The right hon. Member for Crosby said that he would propose additions to paragraphs 21 and 22 of schedule 2. They would be the mechanisms for informing the police about malpractice and byelaws for prosecuting offenders. I want to be sure that any self-regulatory body does not have double standards—that is, one standard for internal organisation where malpractices and criminal activities occur and another for the rest of the public.
  I should like to see the clauses so framed that an internal investigation under the schedule should be accompanied

  883
  by external investigations. There would be no possibility of that being brushed to one side because those inside the prestigious institution felt that calling in outside public officers such as the police might be harmful. That is always a possibility within an institution that believes that outside scrutiny and prosecution by the police might harm its reputation. We want to see similar institutions placed on a par, whether it is Lloyd's or an ordinary insurance company. Everybody should be open to prosecution for criminal activities. The Bill is concerned only with internal self-regulatory mechanisms. We all welcome proper and adequate scrutiny and wish to ensure that external public examination is undertaken as well.
  I shall vote against the Bill because I do not think that it should proceed without being opposed, because that strengthens its position in the later stages. That may dull people's critical faculties. In view of the breathtaking immunities contained in clause 11, something must be done to the clause now so that hon. Members who complain about the immunities of trade unions can claim that they did not have double standards and voted against immunities for trade unions but voted for breathtaking powers for a tiny, very profitable organisation in which a fair chunk of them have financial interests. A stronger element of public accountability is needed by means of an annual published report made available to hon. Members and the public which can be debated in the House. In the final analysis, public scrutiny is the best form of accountability.
  9.20 pm
  Mr. Nick Budgen: I hope that I shall not dissipate any support that I might have for my views by saying that I thought that the hon. Member for Keighley (Mr. Cryer) made a splendid speech. Because I agree with him so warmly I am deeply concerned about clause 11, to which I shall direct all my observations.
  Many of my hon. Friends believe that the immunities at present enjoyed by trade unions are bad not only for the country but for the trade unions. We are sometimes described as union bashers, but we believe that when we attack their immunities we speak on behalf of ordinary working people and of trade unionists who are locked into a structure from which they have no lawful appeal.
  When an institution with which we have many links of friendship and interest asks for special and wide privileges, we must examine them carefully. I am in favour of self-regulation. As a member of the Bar I am subject to self-regulation from the Bar Council. After many years of playing with horses, I know something about the activities of the Jockey Club which is also a self-regulatory body and has functions which are partly quasi-judicial and partly administrative.
  As the hon. Member for Keighley said, the Jockey Club used to be a sleepy, complacent organisation which often did much injustice to the broad sections of the community that came before it. However, it was not subject to any immunity. A number of useful actions were brought before the courts and the club changed its procedures for the better.
  The arguments for clause 11 are remarkably defective. I apologise to my right hon. Friend the Member for Crosby (Sir G. Page) for jumping into his argument rather quickly.
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  I had hoped that he would deal with the issue of principle at some length and with some weight of argument. My right hon. Friend has had many discussions with many of his hon. Friends who are worried about the matter. We looked for some compelling arguments of principle so that we could distinguish the position of Lloyd's from that of trade unions, for instance.
  All that my right hon. Friend did was to repeat the passage on page 2 of his briefing document which states:
  "Lloyd's needs powers which can tackle abuses which in recent times have received publicity. There is, therefore, an argument for providing some immunity for the Council."
  I see no logical connection between the first and second sentences. I interrupted my right hon. Friend in the hope that he would provide that connection. I thought that he might say that if there were disciplinary proceedings there might be some publicity of the allegations against the accused person, that perhaps the disciplinary body would be frightened of actions for libel and that then we would have to examine whether the system of qualified privilege is an adequate defence. However, my right hon. Friend did not say that.
  It is important to examine the arguments advanced by Fisher. I found the most desultory discussion of the issue in paragraph 6.05 of chapter 6. The committee simply says that it would be disastrous if no immunity were granted, bearing in mind the extension of the law of negligence following the Hedly Burn case. Hon. Members should be clear that the Fisher committee was saying that if some form of protection is required, there are three available courses. The first course, according to the committee, is to try to cover by insurance any liability towards members. We have heard nothing about that course from my right hon. Friend. The second course, the committee says, is the possibility of requiring members and others—I shall not read out the whole sub-section—
  "to agree not to sue the Corporation of Lloyd's, and/or to agree to indemnify the Corporation of Lloyd's' against civil liability."
  The report goes on to explain that some consequential change in the law would be necessary to allow that. It points out that the third course is to ask for the indemnity that has been asked for. If my right hon. and hon. Friends are serious in our assertion that we make so often to our constituents and sometimes to my right hon. Friend the Secretary of State for Employment that the immunities granted to the trade unions are vast—although, I concede, much more regulated than what is proposed in clause 11—and should be diminished, we would surely agree to anything approaching clause 11 only if we were satisfied absolutely that the case for immunities was overwhelming and that no other course was open in the circumstances. It is no good saying, as my right hon. Friend has said to me on occasion, that it is difficult to insure against this. It is difficult to insure against claims for negligence, but banisters are now thought, in certain circumstances, to be liable to claims for negligence. We insure. I should have thought that the council of Lloyd's could also insure. Of course, it reduces profitability.
  A high issue of principle is involved here. It is no good saying "Send it off and with a bit of fudging and mudging, a few cups of coffee, and a drink for someone else, we will fiddle our way through." This is a great issue of principle that touches the whole of the body politic. There is nothing new about this situation. Every rich, strong and powerful

  885
  group in our society, at various times, has sought special privileges. This House has, above all, existed to try to diminish and criticise that claim for special privileges.
  As I listened to my right hon. Friend, I remembered how I was taught that, after the Norman conquest, the great feudal barons had their manorial courts and how zealously and jealously they guarded their privileges against the encroachment of the King's justice. I feel that my right hon. Friend was like a very wise, very eloquent abbot of, if I may say, advancing years, whom the feudal barons had put up to support their case for special privileges.
  I am afraid that, as my right hon. Friend put the case forward, like the careful lawyer he is, he was saying that there is an argument. In my experience, there is an argument in life for almost everything. I am not sure that there is a proper or an honourable argument for those Conservative Members who believe that, in the interests of all the people, and most of all in the interests of ordinary trade unionists, our duty in the future is to seek to diminish areas of special privilege in our society.
  9.30 pm
  Mr. Michael English: I must follow the speech of the hon. Member for Wolverhampton, South-West (Mr. Budgen) with one short sentence. I have in my constituency a piece of land which was once the prior of Lenton, and the prior of Lenton—in some books he is called the abbot—was the only person who was hanged at the gates of his own priory on behalf of Henry VIII, because he was the only person who did not take a pension when Henry VIII and this House and the other place changed the religion of this country in 1536. He preferred to be hanged. In that case, I think that the constituent of my predecessor in title, as it were, could claim that he was an honest man. There are not many such men. Most take pensions, and they did in 1536.
  I wish to make only one comment on the Bill. It behoves anyone who takes money to inquire where it comes from, and it behoves anyone in business to inquire where his money comes from and where it goes to. I am sure that in the case of Lloyd's, the money comes entirely from legitimate quarters—at least, I hope so. It is not always true that everyone in Lloyd's knows where it goes to.
  Lloyd's has a tendency to regard itself as a collection of individual firms, individual people, of whom, as we have heard, there are a large number, some working members and some external members. But it is a matter of concern whether they always know the results of their own actions. The Sasse case is a clear example, and I do not think I need go into the details of that.
  I am concerned about another sort of insurance—insurance against kidnapping. Such insurance is not generally known about, because there is a clause in every policy which says that no person insured may declare that he has such a policy. Thus, the matter is kept secret, and there is good reason for that in this context. The matter is also kept outside the area of discussion. There are people in Italy, for example, who say that we in this country are more concerned about making money out of insurance than about where the money goes to. There may be people in Italy who are the recipients of the products of such insurance policies.
  886
  It must be a matter of some concern to Lloyd's—not a collection of firms, but a singular corporation—that., to quote the preamble to the Bill,
  "By Lloyd's Act 1871 certain persons were united into a society or corporation".
  In fact, Lloyd's is a singular corporation. Whether it acts as such is not necessarily something that we know about. When it is a question of deciding what their colleagues should insure against, members have a tendency to assume that all their colleagues are gentlemen. Perhaps that was once true. It cannot necessarily be said to be true that it is good for the image of this country in the rest of the world that we are almost the only people who insure against kidnapping.
  If somebody is kidnapped the ransom is provided out of his insurance—if he is lucky enough to have such an insurance. We all know how unljucky some people can be. It is deeply unfortunate if your name happens to be Rolf Schild instead of Rothschild. It can be said that every corporation and public company in this land that is a member of the British Insurance Association does not insure people against kidnapping. Such insurance is not provided even by the majority of the members of Lloyd's, but a minority, uncontrolled by the society to which they belong, do offer it.
  I am not suggesting that they intend to do evil. Evil is sometimes done by people who do not intend to do it. They are simply concerned for themselves. But it is of importance that anyone should determine—[Interruption.] Is someone suggesting that such insurance is not being offered? A couple of firms, no more, in Lloyd's offer insurance against kidnapping. As a result, in effect and in actuality, they are paying money to those who have kidnapped their clients. It is a great advantage for the kidnappers to have an insured income. I suggest that that practice should cease.
  9.36 pm
  Mr. Richard Needham: I wish to declare an interst, in that I am a mini-member of Lloyd's. I emphasise the word "mini" because the hon. Member for Blackburn (Mr. Straw), on a point of order this afternoon, said that £100,000 was required by a person wishing to become a member of Lloyd's. He was not correct. When I joined Lloyd's I needed £37,500, and I had £37,632—admittedly that excluded my house, or that part of it that my wife does not own. The reason why I am making this important point is that the days when Lloyd's was a great institution, entirely dominated by the very rich, are at an end. Large numbers of people of middle means have joined Lloyd's. Inevitably, that has changed its character. I shall not give away any secrets if I say that the chairman of Lloyd's, on the occasions that he has visited the House, has not painted a happy financial picture for its immediate future.
  The problems faced by Lloyd's are great. High interest rates around the world mean that many new people wish to get into the insurance business. Inevitably, that means lower premiums, which makes competition more difficult—as, of course, does the general effect of the world recession. That has led to a serious dimunition of under-writing profits and, in many cases, to underwriting losses. Many agencies have been kept above their financial bankruptcy level only by large amounts of premium income which they have been able to offset against losses on their underwriting. The loss of earnings in the outflow

  887
  of premiums has meant that many emerging countries wish to start their own home insurance business. The outlook for insurance is gloomy all over the world.
  On top of that, Lloyd's has another problem. As my hon. Friend the Member for Richmond, Surrey (Sir. A. Royle) said, it needed to expand in the latter half of the 1970s from about 5,000 to 20,000 names. That led to more syndicates, which led to more competition and lower rates in Lloyd's.
  I accept, as I am sure most of my hon. Friends do, that self-regulation is the right direction in which Lloyd's should go. Fisher made that clear on page 3 of the report. Referring to self-regulation, it said in paragraph 1.12:
  "The freedom thus granted by the law carries with it great responsibility. The areas of activity controlled by self-regulating bodies are of considerable national importance and affect the lives of many people. Self-regulating institutions must use their freedom wisely and fairly in the public interest and must be able to demonstrate by their actions that they are doing so."
  I understand that the argument behind self-regulation, as opposed to governmental regulations, is, perhaps "set a thief to catch a thief'. I should like to consider the major issues on self-regulation, why they are important to Lloyd's and whether in its current legislation Lloyd's lives up to what Fisher said in paragraph 1.12 it must do.
  All right hon. and hon. Members will accept that one cannot have effective self-regulation if there is a conflict of interest. The problem now in Lloyd's is that since the war the power of the brokers over the whole Lloyd's market has become dominant. Of the present council of Lloyd's, 11 members are attached to brokers in one way or another. One has only to look at the enormous power of brokers in the business that they give and at the control that they have over managing and membership agencies to realise their dominance.
  If Lloyd's wishes to come to Parliament to ask for self-regulation, it can do so only if there is no conflict of interest. If the gloomy picture painted by the chairman of Lloyd's is correct, increasing pressure will be brought on Lloyd's by its external names, and by the vast number of people who have invested in Lloyd's, without fully understanding what they were doing. Therefore, in seeking assurances about alterations to the Bill from my right hon. Friend the Member for Crosby (Sir G. Page), who has been extraordinarily helpful, the question of divestment cannot and must not go away. I am sure that if Lloyd's tries to make it go away, untold damage will be done.
  There is a great need for the representation at Lloyd's to be seen to be fair. My right hon. Friend has gone a long way towards achieving that. However, six members of external names is not enough. It is crucial that when the election to the new council takes place the external names know who they are voting for. My right hon. Friend has also gone some way towards meeting that need. However, if the new council were to end up by being dominated by the same group of people as in the past and if the same whiff of scandal continues as the economic problems of Lloyd's mount up, the danger to Lloyd's of a different kind of legislation and control will become much greater.
  The right of members to have recourse to the court was mentioned in connection with immunities. I hope that my right hon. Friend's shrewd change will mean that the Bill need never come back to this place. I openly admit that. Clause 10 should be sufficient.
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  If Lloyd's wonders why we doubted it in looking at the Bill, it is because when an institution comes to us for self-regulation it is asking too much if there is nothing in the body of the Bill about divestment, nothing about fraud, an unsatisfactory attempt to set up an electoral system and a demand for enormous immunities.
  I am delighted that my right hon. Friend the Member for Crosby is dealing with fraud. It is crucial to Lloyd's that everyone within the market is clear beyond doubt that fraud is a criminal issue and comes above the law of agency. Through my right hon. Friend, Lloyd's has given these assurances.
  There are doubts in my mind that until Lloyd's has established these byelaws further pressure will be needed to bring them into effect. It will be a great tragedy to the insurance business if there is any more fudging or mudging. Lloyd's and the council will have to live with the pressure that they will get from 20,000 new external names. It is in the interests of Lloyd's and of the market that Lloyd's should act on the byelaws as soon as the Bill goes through Parliament.
  9.46 pm
  Mr. Archie Hamilton: I would first declare that I have no financial interests in Lloyd's; nor has any near member of my family. I am concerned about the Bill because I regard Lloyd's as a major financial institution that must work in a way that is beyond reproach, must at all times avoid scandal and must be seen to be whiter than white.
  I therefore welcome he Bill, with the undertakings that my right hon. Friend the Member for Crosby has inserted in it. It is essential that Lloyd's has greater powers of self-regulation. Here we must look to the experience of the Stock Exchange, which shows that policing is best done by those who understand the business.
  I hope the new committee with greater powers will realise that there are certain new realities of Lloyd's. The first is that it is no longer a coffee shop where deals are struck between people who know each other extremely well. It is no longer an exclusive gentlemen's club, if it ever was. It has today about 19,000 members many of whom are foreigners living abroad. It can hardly therefore be described as exclusive. It is also a major financial institution and, with its massive export earnings, it needs the skills of players rather than those of gentlemen. It is a business of professionals rather than of amateurs.
  The problem is that non-working members who risk their capital are by definition amateurs. These people look to the committee ultimately to safeguard their interests. Recently they have had reason to feel that they do not have the protection to which they imagine they are entitled, so I am delighted that Lloyd's committee should have these greater powers, but only on the strict understanding that it carries much greater responsibilities as well.
  One responsibility must be to ensure that non-working members, particularly new members, understand how Lloyd's works. There is still far too much mystique at Lloyd's. This seems to be maintained for the benefit of working members, the people on the inside track, while it works against the interests of new members and people who may not understand how well it works.
  For instance, how many potential new members know that commissions can now be paid for introduction to syndicates of up to £1,000, which is not inconsiderable in anybody's language? How many potential new members

  889
  know that a members agency cannot offer the full choice of syndicates at Lloyd's because the best syndicates may be over-subscribed? Anyway, a members agency is liable to be greatly influenced by the commission that is paid to it by a managing agency. How many potential new members know that there is a complete list of underwriting syndicate results but this is held by the committee and is not available to anybody who is thinking of investing in Lloyd's. Those who do understand the way that Lloyd's works know that, of the 400 syndicates, 50 are extremely profitable, 300 make a decent return and 50 lose money.
  We have to ask ourselves why the members should not have this information. In the opinion of Lloyd's members who were on the Fisher committee, that information could be misleading. I am afraid I fail to understand how knowledge that certain syndicates lose money year after year could he misleading. The only thing that I consider could be misleading is to put somebody on to such a syndicate and risk his money.
  I look to the new committee to take the responsibility of opening up the amount of information on syndicates that is available so that market forces can work properly. In those circumstances, bad syndicates will go to the wall and good ones will flourish, but that is the way that markets should be seen to operate.
  A further protection for non-working members must come from uniform agency agreements; all members should be offered the same deal by their members agencies and there should be no exclusion of liability by these members agencies, as there has been in some instances in the past. Members must be aware that commissions paid to underwriting agencies can vary considerably between 20 per cent. and 33 per cent. of the profits that they get from those underwriting agencies. Those commissions vary dramatically. That is the sort of information that should be available to people who intend to invest in Lloyd' s.
  Finally, we must turn to divestment. Eight brokers, all publicly quoted companies, control nearly 60 per cent. of the underwriting syndicates, yet, as we know, brokers are supposed to act for the client and underwriters are supposed to work for the members who have their money at risk. So there is clearly a commercial conflict of interest here. Also, the invitation is permanently there to push through fraudulent claims, as the big brokers want to keep their large customers satisfied and they cannot risk losing business; they might well take the view that they can get the money back on the next premium anyway.
  In the opinion of one of the witnesses to the Fisher committee, brokers are prone to load their expenses on to the syndicates. The Fisher report recommended that there should be complete divestment within five years, and surely the evidence is overwhelming that this should be in the Bill. I hope that the Bill's later stages will include some definite commitment to divestment, as Fisher recommended.
  Then there is immunity, in clause 11. I accept that there is a radical amendment now in the schedule by my right hon. Friend the Member for Crosby (Sir G. Page), but it is outrageous that this provision should ever have been in the Bill. In the whole of its existence Lloyd's has only been sued once, and that was by the Sasse syndicate. The committee paid up because, in my opinion, it realised that it had been negligent since the information received by it in 1976 from its lawyers in the United States was not passed on to the agent or the syndicate. Why, in these circumstances, should we then give Lloyd's immunity
  890
  from future prosecution? It seems absurd that, if Lloyd's committee does not carry out its obligations to members, it should not be liable to be sued.
  I welcome the increased powers and responsibility to pursue fraud. It must be possible for working members, particularly brokers, now to report fraud to the committee when they know about it, and there is no doubt that the brokers are the people most likely to detect fraud. If Lloyd's became known as an insurance market that was easy on fraud, its days would be numbered. As it is, its reputation can only be enhanced by taking a firm stand on fraud.
  I wish this Bill luck and I wish Lloyd's and the chairman, Mr. Peter Green, every good fortune. If he strives to protect the interests of non-working members with the same courage and determination with which he has resisted amendments to this Bill, the members of Lloyd's will be able to face their future with confidence.
  9.56 pm
  Mrs. Peggy Fenner: I sat through the debate in the hope that I would have a few minutes to introduce a different note. I cannot agree with my hon. Friend the Member for Epsom and Ewell (Mr. Hamilton) that the chairman of Lloyd's has been reluctant to amend the legislation. Almost everything said by my right hon. Friend the Member for Crosby (Sir G. Page) demonstrated the co-operation of the society in getting the Bill on to the statute book.
  The Minister paid tribute to the way in which Lloyd's contributes to our economy. I am not a member of Lloyd's, nor am I one of the rich and influential people referred to by Opposition Members. I wish in the time-honoured tradition of the House to pay tribute to Lloyd's for its important contribution to my constituency. I have a constituency interest in the continuing success of this great international institution. It has fine, award-winning buildings fronting the Medway, where a large number of my constituents work in magnificent conditions. From the introduction of the Bill I learnt nothing about the prestigious nature of Lloyd's. Some of my hon. Friends have done less than justice to the institution. It is a wonderfully participating business constituent and a fine contributor to Medway's community life.
  There can be no dispute about the necessity for the Bill. No one could expect such an important institution to continue with regulations determined in 1871 without changes. Lloyd's requires an effective system of self-regulation. My right hon. Friend the Member for Richmond, Surrey (Sir A. Royle) told us that the scale of business at Lloyd's and the expansion in the number of members demands that it has additional powers in order to be self-regulating. I was impressed by the degree of concentration, and disappointed that some of my hon. Friends found it less than satisfactory.
  I am also impressed by the fact that the overwhelming majority of Lloyd's members are wholeheartedly behind the sponsors in deciding the contents of the Bill. There has been full consultation with the market associations, which all support the Bill. In discussions with hon. Members and in the subsequent compromises arrived at there has been great awareness of the concern inside and outside the House over the controversial clauses. In the innovation of external members on the committee there was bound to be a divergence of view about the right number. I am

  891
  delighted that my right hon. Friend the Member for Crosby has balanced the number by announcing that it will not be six but eight.
  I accept the concern about immunities. I do not agree with the comparison made by some of my hon. Friends. I share the view of the Secretary of State for Employment
  892
  in the Green Paper about trade unions. We should be thinking about a positive Bill of Rights and not about immunities. I am delighted that it is sought to move clause 11 from the main substance of the Bill and to introduce it in the second schedule so that Lloyd's can be truly self-regulatory and form an effective byelaw.
  Sir Graham Page rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to
  Question put accordingly, That the Bill be now read a Second time:—
  The House divided: Ayes 206, Noes 42.

  Division No. 122]

  [at 10.00

  AYES

  Adley, Robert

  Gardner, Edward (S Fylde)

  Alexander, Richard

  Garel-Jones, Tristan

  Arnold, Tom

  Gilmour, Rt Hon Sir Ian

  Aspinwall, Jack

  Glyn, Dr Alan

  Atkins, Robert (PrestonN)

  Goodhart, Philip

  Baker, Kenneth(St. M'bone)

  Gorst, John

  Baker, Nicholas (N Dorset)

  Gower, Sir Raymond

  Beaumont-Dark, Anthony

  Grant, Anthony (Harrow C)

  Beith, A, J.

  Greenway, Harry

  Bell, Sir Ronald

  Griffiths, E. (B'ySt. Edm 'ds)

  Benyon, Thomas(A 'don)

  Griffiths, Peter Portsm'thN)

  Benyon, W. (Buckingham)

  Grylls, Michael

  Bevan, David Gilroy

  Gummer, John Selwyn

  Biggs-Davison, John

  Hamilton, Hon A.

  Blackburn, John

  Hamilton, Michael(Salisbury)

  Bottomley, Peter (W'wich W)

  Haselhurst, Alan

  Bowden, Andrew

  Hastings, Stephen

  Braine, Sir Bernard

  Havers, Rt Hon Sir Michael

  Bright, Graham

  Hawkins, Paul

  Brinton, Tim

  Hawksley, Warren

  Brittan, Leon

  Hicks, Robert

  Brotherton, Michael

  Hill, James

  Brown, Michael (Brigg&Sc'n)

  Hogg, Hon Douglas (Gr'th'm)

  Browne, John(Winchester)

  Hooson, Tom

  Bruce-Gardyne, John

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

  Buchanan-Smith, Alick

  Howells, Geraint

  Buck, Antony

  Hunt, David (Wirral)

  Bulmer, Esmond

  Hunt, John (Ravensbourne)

  Butcher, John

  Hurd, Hon Douglas

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

  Jenkin, Rt Hon Patrick

  Channon, Rt. Hon. Paul

  JohnsonSmith, Geoffrey

  Chapman, Sydney

  Johnston, Russell (Inverness)

  Clark, Sir W. (Croydon S)

  Kaberry, Sir Donald

  Clarke, Kenneth (Rushcliffe)

  Kershaw, Anthon y

  Clegg, Sir Walter

  Kilfedder, James A.

  Colvin, Michael

  King, Rt Hon Tom

  Cope, John

  Knight, Mrs Jill

  Cormack, Patrick

  Latham, Michael

  Corrie, John

  LeMarchant, Spencer

  Cranborne, Viscount

  Lennox-Boyd, Hon Mark

  Crawshaw, Richard

  Loveridge, John

  Critchley, Julian

  Luce, Richard

  Crouch, David

  McCrindle, Robert

  Dean, Paul (North Somerset)

  Macfarlane, Neil

  Dorrell, Stephen

  MacKay, John (Argyll)

  Dover, Denshore

  Macmillan, Rt Hon M.

  Dunn, Robert (Dartford)

  McNair-Wilson, M. (N'bury)

  Dunnett, Jack

  McNair-Wilson, P. (New F'st)

  Durant, Tony

  McQuarrie, Albert

  Eden, Rt Hon Sir John

  Marten, Neil (Banbury)

  Elliott, Sir William

  Mawby, Ray

  Emery, Peter

  Maxwell-Hyslop, Robin

  Eyre, Reginald

  Mayhew, Patrick

  Fairbairn, Nicholas

  Miller, Hal(B'grove)

  Fairgrieve, Russell

  Mills, Iain(Meriden)

  Fenner, Mrs Peggy

  Mills, Peter (West Devon)

  Fisher, Sir Nigel

  Miscampbell, Norman

  Fletcher, A. (Ed'nb'gh N)

  Molyneaux, James

  Fletcher-Cooke, Sir Charles

  Monro, Hector

  Fookes, Miss Janet

  Montgomery, Fergus

  Fowler, Rt Hon Norman

  Morgan, Geraint

  Fox, Marcus

  Morris, M. (N'hampton S)

  Fraser, Peter (South Angus)

  Morrison, Hon P. (Chester)

  Freud, Clement

  Mudd, David

  Gardiner, George(Reigate)

  Murphy, Christopher

  894

  Myles, David

  Speller, Tony

  Nelson, Anthony

  Spence, John

  Neubert, Michael

  Spicer, Jim (West Dorset)

  Newton, Tony

  Spicer, Michael (S Worcs)

  Normanton, Tom

  Squire, Robin

  Page, John (Harrow, West)

  Stanbrook, Ivor

  Page, Rt Hon Sir G. (Crosby)

  Stanley, John

  Page, Richard (SW Herts)

  Steel, Rt Hon David

  Patten, Christopher(Bath)

  Stevens, Martin

  Pattie, Geoffrey

  Stewart, Ian (Hitchin)

  Pawsey, James

  Stewart, A. (E Renfrewshire)

  Penhaligon, David

  Stradling Thomas, J.

  Percival, Sir Ian

  Tapsell, Peter

  Pollock, Alexander

  Taylor, Teddy (S'end E)

  Powell, Rt Hon J, E. (S Down)

  Tebbit, Norman

  Prentice, Rt Hon Reg

  Temple-Morris, Peter

  Prior, Rt Hon James

  Thomas, Rt Hon Peter

  Proctor, K. Harvey

  Thompson, Donald

  Rathbone, Tim

  Townsend, Cyril D, (B'heath)

  Rees-Davies, W. R.

  Trippier, David

  Rhodes James, Robert

  Trotter, Neville

  RhysWilliams, Sir Brandon

  van Straubenzee, W. B.

  Ridley, Hon Nicholas

  Wainwright, R, (Colne V)

  Ridsdale, Sir Julian

  Walker, B. (Perth)

  Rifkind, Malcolm

  Walker-Smith, Rt Hon Sir D.

  Rippon, Rt Hon Geoffrey

  Waller, Gary

  Roberts, M. (Cardiff NW)

  Walters, Dennis

  Roberts, Wyn (Conway)

  Weetch, Ken

  Ross, Stephen (Isle of Wight)

  Wells, Bowen

  Rossi, Hugh

  Wheeler, John

  Sainsbury, Hon Timothy

  Whitelaw, Rt Hon William

  Sandelson, Neville

  Whitney, Raymond

  Scott, Nicholas

  Wilkinson, John

  Shaw, Michael(Scaroorough)

  Williams, D.(Montgomery)

  Shepherd, Coline(Hereford)

  Wolfson, Mark

  Silvester, Fred

  Sims, Roger

  Tellers for the Ayes:

  Skeet, T. H. H.

  Mr. John Major and Mr. John Meddle.

  Smith, Cyril(Rochdale)

  Smith, Dudley

  NOES

  Ashton, Joe

  McKelvey, William

  Bagier, Gordon A. T.

  Marshall, Dr Edmund (Goole)

  Bennett, Andrew(St'kp'tN)

  O'Neill, Martin

  Booth, Rt Hon Albert

  Palmer, Arthur

  Campbell-Savours, Dale

  Powell, Raymond (Ogmore)

  Clark, Dr David (S Shields)

  Prescott, John

  Cryer, Bob

  Price, C. (Lewisham W)

  Davidson, Arthur

  Roberts, Gwilym(Cannock)

  Dixon, Donald

  Robinson, G. (Coventry NW)

  Dobson, Frank

  Ross, Ernest (Dundee West)

  Duffy, A. E. P.

  Sheerman, Barry

  Ellis, R(NE D'bysh're)

  Skinner, Dennis

  Evans, John (Newton)

  Spriggs, Leslie

  Field, Frank

  Stott, Roger

  Fletcher, Ted (Darlington)

  Strang, Gavin

  Freeson, Rt Hon Reginald

  Straw, Jack

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

  Taylor, Mrs Ann (Bolton W)

  Haynes, Frank

  Wigley, Dafydd

  Lewis, Arthur (N'ham NW)

  Young, David (Bolton E)

  Lyon, Alexander(York)

  McDonald, Dr Oonagh

  Tellers for the Noes:

  McGuire, Michael(Ince)

  Mr. K. J. Woolmer and Mr. Nick Budgen

  McKay, Allen(Penistone)

  Question accordingly agreed to
  Bill accordingly read a Second time and referred to the Examiners of Petitions for Private Bills

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting the Merchant Shipping Bill [Lords] and the International Organisations Bill [Lords] may be proceeded with, though opposed, until any hour.——[Mr. Boscawen]

  Merchant Shipping Bill [Lords]
  As amended (in the Standing Committee), considered
  10.12 pm
  The Under-Secretary of State for Trade (Mr. Reginald Eyre): I beg to move, That the Bill be now read the Third time.
  As explained at earlier stages, the Bill is concerned with changing mechanisms rather than with introducing new policies. It deals with the way in which financial limits to legal liability are expressed in two United Kingdom Acts in the maritime field and has the object of replacing the now obsolete gold francs as the unit of account by the more modern special drawing right of the International Monetary Fund. It will enable the United Kingdom to ratify two protocols to international conventions, the wider international adoption of which will bring considerable benefit to interests in this country through greater international harmonisation and removal of commercial distortions.
  Although focused on one issue only, the importance of the Bill should not be underestimated. There is very deep concern internationally on the question of the interpretation of gold-based monetary units. The practice as regards conversion into national currency unfortunately varies from country to country. Based on the free market value of gold, a British shipowner or insurer abroad may be faced with liability amounts in some cases up to 12 or even 15 times higher than his foreign counterpart would be subject to in this country. Differences of that order of magnitude represent a very significant commercial disadvantage to our national interests. That is why it is important that the internationally agreed procedures, which we already follow, should be implemented as widely as possible and as quickly as possible. It is for this reason that the United Kingdom wishes to set a lead and thereby encourage others to follow suit. There is growing international awareness of the problem, and it is right that we should help to maintain the momentum.
  It is clear that the Bill is widely accepted as a modest but necessary measure of some importance, and I am grateful for the continued support that it has received.
  10.14 pm
  Mr. Clinton Davis: As the Bill simply follows the Labour Government's policy, I fully support it. It is to be commended on that basis. I recommend it as a precedent which the Minister should follow in the future.
  Question put and agreed to
  Bill accordingly read the Third time and passed, with amendments

  International Organisations Bill [Lords]
  As amended (in the Standing Committee), considered
  10.15 pm
  The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd): I beg to move, That the Bill be now read the Third time.
  The Bill's two main objectives are to do away with provisions in the 1968 Act, which discriminate against organisations composed of Commonwealth States, and to afford certain privileges and immunities to international commodity organisations of which the United Kingdom is not a Member.
  10.16 pm
  Mr. Giles Radice: This is a highly uncontroversial occasion. There was no discussion on Second Reading, almost no discussion in Committee and no discussion on Report. In essence, this is a technical Bill, which corrects certain anomalies.
  As the Minister said, our international organisation legislation has in the past discriminated against the Commonwealth. Secondly, our representatives at Western European Union and the Council of Europe have not had the same immunities as we accord to all Members of Parliament during Sessions of Parliament.
  As I understand it, the only exception is clause 2, which enables a limited range of privileges and immunities to be granted to an international commodity organisation of which the United Kingdom is not a member which has an office in this country. What advantages are to be gained in the United Kingdom through such commodity organisations having an office in this country, and what organisations do the Government hope to attract in the future?
  I hope that the Minister will confirm that this is enabling legislation, which will be operative by affirmative order. That means that the House will be able to consider individual Orders in Council and check whether immunities and privileges are being abused.
  10.17 pm
  Mr. Ivan Lawrence: When a Bill is presented which purports to extend immunities to organisations and conferences sponsored by those organisations, and to sub-organisations of those organisations of which Britain is not a member, it is important for a Back Bencher on one side of the House or the other to question what is being done.
  I noticed the speedy way in which my hon. Friend the Minister presented the Bill and the immediate acceptance given to it by the hon. Member for Chester-le-Street (Mr. Radice).
  At a time of international terrorism, when diplomatic immunity has been blatantly seen to have been abused by terrorist organisations from other countries, when attacks on foreign nationals have taken place in London's streets and when British citizens have been threatened indirectly by warfare on our streets, we should consider more closely the diplomatic immunities which exist rather than gaily extend them in a minute and a half to organisations to which they do not apply.
  I have no objection to the broad features of the Bill—
  Mr. Cyril Smith: It is a bit late.
  Mr. Lawrence: It is not my choosing that the Bill is being discussed at this hour, nor is it my choosing that it was introduced in the House of Lords. It is never too late to question what we are doing.
  On the whole, no one can object to reasonable extensions of tax relief or concessions to Commonwealth organisations and commodity markets. Indeed, I do not object to that. Under the Bill representatives of organisations of which Britain is not a member, representatives to conferences convened by such organisations, and members of subordinate bodies of those organisations may be exempted from searches of personal baggage.
  I expect that my hon. Friend the Minister will reassure me that the possibility of inspecting baggage is not precluded. The authorities were not precluded from inspecting the

  897
  baggage of the Libyans who probably brought guns and ammunition into the country by means of a diplomatic bag. On arrival they caused murder and mayhem. On several occasions the House has debated how, without breach of our international obligations, it can more easily search diplomatic bags and ensure that weapons are not brought into the country in personal baggage.
  In the space of a minute and a half we may extend immunity to organisations with which we are not directly connected, and there will be no general power of search. The extension of immunity is limited, because action must be taken through an Order in Council and an affirmative resolution. Such proceedings usually take place at a late hour. Indeed, I have never seen so many Liberal Members in the Chamber at such a late hour. Nevertheless, I should like an assurance that terrorist organisations or any organisations that have the faintest hint of terrorism about them will be subject to more searching scrutiny than appears likely under the provisions of the Bill.
  We should avoid extending immunity to countries which have relations with terrorist organisations. They may abuse the system and bring more terror to our streets. I hope that my hon. Friend will give the assurance for which I have asked. If he does, I shall not attempt to divide the House.
  10.23 pm
  Mr. Hurd: I shall briefly reply to the hon. Member for Chester-le-Street (Mr. Radice) and to my hon. Friend the Member for Burton (Mr. Lawrence). The hon. Member for Chester-le-Street concentrated on clause 2. He asked why the Government wanted commodity organisations to which we do not belong to be able to set up their headquarters in Britain. Traditionally, London has been the centre of the world commodity trade. Seven commodity organisations already serve the interests of producers and consumers in Britain. It is to London's advantage that, as they take shape, similar organisations should be encouraged to settle in London.
  However, competition is involved. In competitions between cities that offer themselves as the sites for headquarters, one element is the ability to grant a certain amount of privilege and immunity. The hon. Gentleman asked for an example. The International Tea Promotion Association comes to mind. It has not yet made a decision. It is a producer organisation and therefore we would not be a member of it. Obviously, there is an advantage to us if it settles and has its headquarters in London.
  Secondly, I confirm that this is an enabling Bill. It does not commit the House or grant privileges or immunities to anyone. It is primary legislation enabling the House, should the House so decide, to grant privileges and immunities to different organisations covered in the Bill. I hope that that answers my hon. Friend the Member for Burton.
  If a proposal were made which contained some form of taint, to which my hon. Friend referred, the House would be quick to find that taint and to express its views. An affirmative order would be required on each occasion. The
  898
  Government have no intention of extending the privileges and immunities except where, in our view, we would be bound to do so by negotiation and agreement to attract an organisation to settle here under clause 2.
  We are as concerned as anybody about any abuse that may occur of the privileges and immunities which have already been granted or which may be granted. As my hon. Friend said, we have discussed this several times in the House. It is correct that we should do so. My hon. Friend referred to the the searching of baggage. The exemption which might—I underline "might"—be granted under clause 2 to any organisation would not preclude authorities from inspecting baggage if there were grounds for presuming that it contained prohibited articles. After recent experiences to which my hon. Friend alluded, that is an area about which we are careful. We are trying to ensure that everyone who possesses privileges and immunities is aware of the strong views that we take. In the light of that assurance, I hope that my hon. Friend will be content that the Bill should receive a Third Reading.
  Question put and agreed to
  Bill accordingly read the Third time and passed, with amendments

Petition

  Unemployment
  10.28 pm
  Mr. Cyril Smith: With your permission, Mr. Speaker, and that of the House, I beg leave to present a petition from the Liberal Party, supported by 271,957 people. It relates to the disastrous level of unemployment and the need to change the Government's policy, which has led to that high unemployment. It demonstrates the anxiety that my party feels and, more importantly, that the public feel for this matter. The petition is signed by people throughout the United Kingdom who are deeply concerned at the way the country is being led.
  With your leave, Mr. Speaker, I shall read the petition.
  It states:
  To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled. The humble petition of the citizens of the United Kingdom sheweth:
  That the policies of Her Majesty's Government, including public spending cuts and higher taxation upon employment, are causing the closure of well-run businesses, and real misery and mass unemployment throughout the United Kingdom;
  That the industrial base and international competitiveness of the country are being destroyed, and young people are being offered no hope for the future.
  Wherefore your Petitioners humbly pray that your Honourable House will reject these policies and as a matter of the greatest urgency cause the Government to reduce interest rates, halt destructive public expenditure cuts, finance investment in new industry, increase training and retraining programmes and improve our international trading position to bring more jobs to the people
  And your Petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table

  Young Persons (Military Service)
  Motion made and Question proposed, That this House do now adjourn—[Mr. Boscawen.]
  10.30 pm
  Mr. Alexander W. Lyon: It is appropriate that I should be raising the issue of the young unemployed being offered the chance of military training under a proposal by the Secretary of State for Employment immediately after the Liberals have presented their petition on unemployment. Young people are being driven out of work by the Government's policies, and the Government are driving them into military service as the only available alternative.
  The matter arises out of the youth opportunities programme, begun two or three years ago by the Labour Government as a temporary way of providing alternative training and work experience for young people who were thrown out of work in what was thought to be a temporary recession. It is now clear that something more than temporary work experience and training are required.
  In a perceptive analysis of the youth opportunities programme, the organisation Youth Aid says that there must be a new system of youth opportunities programme. It states:
  "The aim of the new YOP must be to provide a range of training and educational opportunities to 16–18 year olds designed to enhance their personal development and increase their future employability. We do not believe that there is any real conflict between these two sets of objectives."
  In a statement, the Secretary of State supported that approach. He said that the Government were to introduce a new system of vocational training for all young persons between the ages of 16 and 18. He said that it was an extremely ambitious programme, and continued:
  "It is nothing less than a new deal for the young unemployed and its success depends on full co-operation from all those concerned, particularly from employers, whose assistance in sponsoring projects is vital."—[Official Report, 21 November 1980; Vol. 994, c. 205.]
  He might well say that that is necessary, because in the league table of training for young people Britain is the bottom in Europe.
  In 1977 in Great Britain, 56 per cent. of young people in the appropriate age group left school and took up full-time general education, full-time vocational education, or apprenticeship. The rest went into either work or unemployment. In Germany the figure was 91 per cent. and in France 81 per cent. In such circumstances, one must ask what we are doing to help our young people to get work experience or training that is appropriate for their future development and to bring us up to the levels of the Germans and the French.
  The proposal to adapt the YOP to a sensible system of providing work experience for all young people is a desirable development. However, the Government have a problem. They propose a YOP system that will give assurance to all children leaving school in July that they will obtain a place on the programme by Christmas if they are still unemployed. For that purpose, the Government are allotting between 400,000 and 440,000 places on the YOP. By July next year, about 600,000 of the 750,000 school leavers are likely to find themselves registering for employment because they will be unable to find a job when they leave school. It is conceivable that by Christmas they will have obtained some employment, but in the present climate and in the prospective climate for next year that is very unlikely. The shortfall might be between 100,000
  900
  and 150,000 places on the projected programme. In those circumstances, the Government have turned to the only device that Tories can ever anticipate—"Give them a chance to do military training."
  When I first aired this proposal in the newspapers in February I was told by the Secretary of State for Employment:
  "No proposal on these lines"——
  namely, that young people on the youth opportunities programme should receive some military training in uniform——
  "has been submitted to the Manpower Services Commission, which administers the youth opportunities programme. However, the Ministry of Defence, which has been a sponsor under YOP since 1978, is considering what further help it might offer unemployed young people and we are in discussion with it about this."—[Official Report, 4 February 1981; Vol. 998, col. 138.]
  The Prime Minister, on 5 February, in response to a supplementary question, said:
  "With regard to his point about opportunities being made available by the Ministry of Defence, such opportunities would, of course, have to comply fully with the youth opportunities programme. If they are able to do so, it would seem reasonable to offer young people that extra chance to work there."—[Official Report, 5 February 1981; Vol. 998, col. 401.]
  There are already some projects on military establishments where young people can get work experience and training in civilian occupations as civilians. It is quite a different matter to say that they should be recruited into the Armed Forces and that they should then be asked to be subject to the normal military discipline. Even as late as 17 March 1981, the Under-Secretary of State for Defence for the Army wrote to Youth Aid saying:
  "Should we decide to offer places to unemployed young people on training courses given to Service men it would be necessary to require the extra trainees to wear uniform to ensure that they were treated no differently from the majority of people on the course. This would allow us to offer access to a greater range of training opportunities, and would simplify the basis on which the Ministry of Defence could offer help. Of course, all places offered under the YOP scheme have to be confirmed as suitable by the MSC and we are discussing with them the type of training we might offer."
  All those answers are untrue. The proposal that has been put to the Manpower Services Commission is that there should be about 1,000 places for young men aged between 17 and 19 who would serve for about six months. The volunteer trainees would spend a period of about six months with the colours, subject to normal military discipline, and would be selected to meet Service standards of physical fitness, character and other attributes. In itself, that requirement is against the proposals in the YOP. It restricts the kind of people who could take part in this kind of training.
  Two types of training with the Army are envisaged. The first is skill-oriented training directly relevant to future possible civilian employment, which would be provided by the technical arms and logistics corps. It would be available to only 300 of the 1,000. In some senses, it may be argued that the 300 would be receiving training that would be relevant to some civilian occupation when they left the military course. It could not be said for the remaining 700 entrants. For them, the second form of training would be general military training. Spare recruit training capacity would be used, and the volunteer trainees would join Regular recruit intakes on GMT courses scheduled for 1981–82.

  901
  The training would last for a maximum of about 20 weeks and the volunteer trainees would then be posted to Service units at home and in the BAOR for a further short period of between six and 12 weeks to complete their six months' opportunity. During that period they would be employed in the same way as their Regular counterparts. That seven-tenths of the 1,000 intake would be square-bashing. After that, they would be put on normal military duties.
  That is not what the YOP was ever intended for, nor is it consistent with the philosophy of the existing YOP. Still less is it consistent with the philosophy of the new YOP that the Seretary of State outlined in his November statement. It is intolerable that such a proposal was put forward. The outcome of the proposal is that £2 million will be used to provide those 1,000 places. The £2 million could have provided 2,000 civilian places on the YOP, because the cost of a place on this scheme will be twice as much as the cost of a place on a YOP scheme.
  Mr. Frank Allaun: Am I right in saying that the people serving in the 1,000 force will receive £23·50 a week, plus food, whereas Regulars will receive £72 a week? In many cases, they will be asked to do the same work, thus undercutting their pay—in fact, scabbing.
  Mr. Lyon: That is absolutely true, the emphasis being on the fact that they will be doing the same work.
  The YOP was never intended for that kind of training. It could be argued that to take £2 million out of the Ministry of Defence budget and use it for this purpose was at any rate within the ethos of the Ministry of Defence allocation. But to take it out of the YOP means that 2,000 young people are being denied the chance of getting relevant civilian training and work experience. It is quite unacceptable on that basis alone.
  It is unacceptable because the links with the local labour markets will be weakened, especially during service overseas. Moreover, it will be impractical to undertake a serious job search or for advice and counselling to be provided by the careers service. Kids who come back from BAOR will be dropped into the unemployment pool with no job training or experience to equip them to find a job. At the moment, kids who come off YOP have that advantage, and a substantial proportion of them manage to find jobs.
  It is also relevant that most of the training provided will be specific to Army needs. My hon. Friend the Member for Salford, East (Mr. Allaun) says that those who serve would get only £23·50 compared with the higher sum for Regular recruits. There is a further element; they would be getting £23·50, but if they were not on the YOP and not in military service they would be getting supplementary benefit, which is about £8 less than the YOP figure. That is a substantial proportion.
  If a young man is faced with the alternative of either going into military service because there are no places on the YOP or staying on supplementary benefit, which will he choose? To say that he is then a volunteer for military service is a misnomer. It is not voluntary military service; it is forcing kids into the Army because they are being forced out of jobs, because there is not the economic atmosphere in which there are jobs for all our young
  902
  people and, moreover, because the system of work-saving and experience promised by the Secretary of State is not available.
  In my judgment, the scheme is nonsense and should be dropped. I hope that the Minister will say that he intends to go no further with it. The Secretary of State said today that he was waiting for the response of the MSC. The MSC is wholly opposed to it—and not only the MSC, but all the participating members of the special programmes board, including the CBI. Youth organisations are opposed to the proposal. I have had letters from different youth organisations all over the country that are opposed to it. If the proposal is forced through, it will be forced through in the teeth of opposition not only from the official Opposition but from all interested bodies throughout Britain. I hope that the Minister will tell us tonight that he will drop the proposal.
  10.46 pm
  The Under-Secretary of State for Employment (Mr. Peter Morrison): I am grateful to the hon. Member for York (Mr. Lyon) for raising this important matter. Although the House is rather sparsely attended, the matter is of great concern throughout the country. As the hon. Gentleman rightly pointed out, it is a question of what jobs and opportunities will be provided for school leavers during the next year.
  I am glad that the hon. Member for Salford, East (Mr. Allaun) is in the Chamber I listened attentively to the question that he put to my right hon. Friend the Secretary of State during Question Time this afternoon. The hon. Member is a prominent member of his party. He is a member of the Labour Party national executive committee, and when he speaks he does so with great authority on behalf of the Labour Party.
  The hon. Member for York knows that the youth opportunities programme is voluntary. It is not compulsory in any way, shape or form. For the hon. Member and his hon. Friends to suggest that we are forcing young men into the Army is wrong. Any man or woman who has joined the youth opportunities programme has done so because he or she decided so to do. To suggest that we are forcing people into the Armed Forces could not be further from the truth. The hon. Gentleman pointed out that the pay for someone on the youth opportunities programme was £23·50. That is correct. But these people will join the Armed Forces only if they are prepared to take that pay. It is similar to the pay offered in other programmes in industry generally.
  My right hon. Friend the Secretary of State and I do not want the youth opportunities programme—regardless of what opportunity is available—to be anything other than voluntary. We shall adhere to that. We do not want any element of compulsion. As the hon. Gentleman said, it is an expanding programme. This year, 320,000 youngsters will take advantage of what the Government are offering on a voluntary basis. By the end of the year, 440,000 youngsters will be involved in the programme. The hon. Gentleman said that there would be a shortfall of 150,000 places on the target of 440,000. I do not know how he arrived at that figure. I accept that the target is ambitious, but the MSC is doing everything in its power to achieve it—in the way that it has done everything in its power to achieve this year's target—which it will do, give or take a few thousand.

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  I hope that both the hon. Member for York and the hon. Member for Salford, East agree that the important point about any programme under the youth opportunities scheme is that it should be of lasting good to the participants. As a result of taking advantage of the youth opportunities programme, school leavers and 17 and 18-year-olds should be more likely to obtain a lasting job. I trust that that is common ground, although I doubt it, judging from the recent words of the hon. Member.
  I assure the hon. Member that no decision has yet been taken. As he rightly said, the MSC has still to give its views on the proposal put forward by my right hon. Friend the Secretary of State. However, I am sure that the MSC, because it is a highly responsible body which wants to do the best for the young school leaver, will want to take into account the views of employers—that is to say, the potential employers of young men who have come out of schemes. It will want to think carefully about what those employers will be looking for in 17 and 18-year-olds. That is the best way in which it can help them. It will also want to take carefully into account, as I am sure it is doing, the views of the young people.
  Mr. Alexander W. Lyon: As the CBI representatives are opposed to the scheme, will the Government also listen to the views of those employers and drop the scheme?
  Mr. Morrison: The hon. Gentleman appears to know more than I do. I do not know whether the CBI representatives are opposed. The hon Member is apparently all-knowledgeable about things about which I am not all-knowledgeable. The CBI is not the eventual employer, but the eventual employers are small business men throughout the country and big companies such as Marks and Spencer and General Electric. Those people will pay and employ the young people who come out of the youth opportunites programme. I am more concerned about those people, for the sake of the young people.
  Not only those people are important; so are the young people themselves. The hon. Member said that every youth organisation he had talked to was opposed to the proposal. That may or may not be so. However, I take more interest in what the young people want. If the school leavers want to join such a scheme, they should have the opportunity so to do.
  We have a highly professional Army, Navy and Air Force, which, for understandable reasons, do not want to be too bothered with amateurs. It is admirable that they are prepared to play their part because of the results of the recession. They are prepared to say that there are school leavers in difficulies, who cannot find jobs, and that they are prepared to do something about it.
  The hon. Member referred to the proposals put to the MSC. I am not sure where he obtained that information. I do not know whether the proposals were published, but such things happen.
  I shall reply to the points made by the hon. Member. Because recruitment in the Armed Services has been restricted, there are under-used training facilities which will be of great interest and use in the long term, were the young people to go on such a scheme. Were such a scheme to be approved by the MSC, it would be only a pilot
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  scheme and it would—I concur with the hon. Gentleman—include only 1,000 young men between the ages of 17 and 19. That would be for the year 1981–82.
  The third thing—entirely endorsing what the hon. Gentleman was saying—is that two types of training would be envisaged. First, there would be the skill-oriented training, which, I hope the hon. Gentleman will agree, regardless of the military side, would be of great value to these young people in terms of their civilian future, and then there would be the general military training.
  I agree entirely with the hon. Gentleman—he did not actually say this, but he implied it—that every applicant who was involved in what I have described as the general military training should be told before he decided to go on such a programme exactly what it involved. It would be quite wrong if he were not told, in terms of not anticipating what could happen. I also agree that it would be wrong if a volunteer—and he would be a volunteer in these circumstances—were not able to terminate his service with the Army, Navy, Air Force, or whatever it was. Certainly, it is right that participants in a voluntary scheme should be able to terminate.
  Mr. Frank Allaun: The new scheme will clearly involve a lot of trouble, new ideas and arrangements. Does the Minister feel that all this trouble will be worth while if the scheme is limited to what he himself says is the very small number of 1,000 men? In other words, I am asking the hon. Gentleman whether this is not really a trial which, if it comes off, will be extended to thousands and thousands of young men who will be under pressure to do this. I can tell him that in the Manchester area no military recruitment officers are allowed in the schools.
  Mr. Morrison: I think that it would be totally worth while. If 1,000 young men aged 16,17 or 18 are to be given an opportunity to do something as a result of which they will gain a proper job because they have learned certain skills, of course it is worth while, even if it is only a pilot scheme; and perhaps it will grow, on a voluntary basis. It certainly is worth while to help young men to find their feet in the world, and I have no doubt whatever that the vast majority of the people in the country feel exactly the same as I do.
  I return to the point about employers, because employers are the key if the young men are to find their feet and find a job. I know that it may sound old-fashioned or out of date, but I believe that what I am about to say is new-fashioned. What employers look for is self-reliance, the ability to work in a team, alertness and punctuality. The hon. Member for York smiles, but it is true. If only more people who are involved in education and training understood that they would be able to do a far greater service to the school leavers and, indeed, to schoolchildren. It is unfair not to tell them what life is all about. It is old-fashioned, perhaps, but in my book it is quite new-fashioned.
  I am grateful to the hon. Member for York for raising this matter. It is a matter of political divide which I quite understand. The hon. Member and his hon. Friend the Member for Salford, East and I do not agree on it, but that is why, unusually in an Adjournment debate, we can have an interesting discussion. The country will decide, no doubt, who is right and who is wrong.

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  I fully agree with the Opposition, in that I would be the first person to say that it should never be compulsory but should be on a voluntary basis—and it is on a voluntary basis. Surely it is right to give the opportunity to young men to help themselves. One of the Opposition Front Bench spokesmen earlier today said that he believed that the youth opportunities scheme was a good scheme and was right.
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  Opposition Members want to help young men as much as I do. I believe that this proposal could help young men in a quite significant way.
  Question put and agreed to
  Adjourned accordingly at one minute to Eleven o'clock