Commons Sitting of 17 November 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  MESSAGE FROM THE QUEEN

    QUEEN'S SPEECH (ANSWER TO ADDRESS)
    The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address as follows:
    I have received with great satisfaction the loyal and dutiful expression of your thanks for the Speech with which I opened the present Session of Parliament.

  PRIVATE BUSINESS
    MIDLOTHIAN DISTRICT COUNCIL ORDER CONFIRMATION BILL
    Considered; to be read the Third time tomorrow.

    CUMBRIA BILL [Lords]
    Ordered,
    That the report from one of the Examiners of Petitions for Private Bills on 19th October in the last Session of Parliament relating to the Cumbria Bill [Lords] (Petition for Additional Provision) be referred to the Standing Orders Committee.—[The Chairman of Ways and Means.]

Oral Answers to Questions
  EMPLOYMENT

    Unemployment Forecasts
    Mr. Hoyleasked the Secretary of State for Employment if he will now answer questions relating to forecasts of future levels of unemployment.
    The Secretary of State for Employment (Mr. Norman Tebbit): I am prepared to respond to such questions on the same basis as my predecessors.
    Mr. Hoyle: Does the Secretary of State agree that now is the time to take positive action about unemployment, because it has increased by almost 1 million during the past year? Unless the idiotic economic policies of the Government are reversed, and if by mischance they run their full term, by May 1984 unemployment will be nearly 5 million. Slimly even the right hon. Gentleman is prepared to do something about that.
    Mr. Tebbit: I do not think that that arises from the question on the Order Paper. But the hon. Gentleman has forgotten a number of factors: first, that short-time working is on the decline; secondly, that overtime working in on the increase; and, thirdly, that the trend of notified
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    vacancies is now rather more firm. Productivity is rising sharply and competitiveness in British industry is increasing. That should suggest to the hon. Gentleman that there is some cause for hope.
    Mr. Latham: If forecasts in my right hon. Friend's Department or in the Manpower Services Commission showed further significant increases in unmployment, would he consider it his first duty to ensure that those forecasts were not achieved in practice and that the trend should soon be downwards?
    Mr. Tebbit: Yes, of course. But the only way to achieve those downwards trends is to regain the markets that we have lost and to become more competitive than our rivals.
    Mr. Allen McKay: If the Secretary of State cannot or will not forecast unemployment levels, how can he expect his right hon. and learned Friend the Chancellor of the Exchequer to get his Budget right and get us out of the mess into which he has got us?
    Mr. Tebbit: Forecasts are difficult to make. recollect putting a similar question to the right hon. Member for Barrow-in-Furness (Mr. Booth), the then Secretary of State for Employment, to which he replied:
    "it is not possible to predict the trend of unemployment with any hope of accuracy".—[Official Report, 14 June 1977; Vol. 933, c. 213.]
    Mr. Lennox-Boyd: Does my right hon. Friend agree that the suggestion that there is an easy solution to the problem of unemployment is a cruel deception of the millions of people who are unemployed? Does he further agree that there is a growing awareness today that the solution of the problem lies less within the gift of the Government that has previously been recognised?
    Mr. Tebbit: My hon. Friend is right. Although we are doing well in a number of areas in industry these days—[HON. MEMBERS: "Oh!"] The recent orders for British Shipbuilders, the orders taken in Brazil, the orders for new steel mills in India and for a new power station in Hong Kong are typical examples. Although we are doing well in a number of areas, it is a cruel deception to suggest that while it takes 41 man-hours to make a Ford Escort at Dagenham compared with 21 man-hours to make a Ford Escort in Saarlouis, Germany, with similar equipment, we can solve the problem of unemployment with a slick and easy answer.

    Vocational Training
    Mr. Sainsburyasked the Secretary of State for Employment what is his latest estimate of the proportion of 16 and 17-year-olds not in higher or further education who are receiving more than one day per week of vocational training.
    The Minister of State, Department of Employment (Mr. Michael Alison): I regret that the information is not available in the form requested. However, it is estimated that of those 16 and 17-year-olds who entered employment in England and Wales in 1979, about 40 per cent. entered jobs which offered training extending over eight weeks or more. The Manpower Services Commission's youth opportunities programme provides basic training and work experience for unemployed 16 and 17-year-olds. Currently, about 259,000 young people are participating in the programme.
    Mr. Sainsbury: I thank my right hon. Friend for that answer. In view of the importance of vocational training if we are to have a labour force with the skills and flexibility necessary for the age in which it must work, is it worth reviewing the availability of information on how widespread vocational training is? Does my right hon. Friend agree that we should move to the stage when such training is made available to all school leavers who do not move to higher or further education?
    Mr. Alison: I confirm that we have all the statistics that we need. I shall check what my hon. Friend said in the first part of his question. I endorse the objective that he outlined. It is one of the primary aims of "A New Training Initiative" which will develop on a large scale in the new year.
    Dr. McDonald: What action does the Minister propose to uphold the Prime Minister's pledge that every unemployed school leaver should have a place on the youth opportunities programme by Christmas, bearing in mind the Manpower Services Commission report that that is unlikely to be achieved, especially in areas of recent high unemployment, such as London and the South-East?
    Mr. Alison: We are vigorously pursuing the undertaking that we gave. We are optimistic that the majority will be able to obtain posts. The latest position cannot be stated categorically because the most recent count, which took place on 12 November, has not yet been assimilated. We shall be in a position to give an answer later.
    Mr. Marlow: While my right hon. Friend is considering the whole range of plans for young people aged 16, 17 and 18, will he leave a possible opening for the development of a scheme for national community service should it appear later that that is something with which the Government would like to proceed?
    Mr. Alison: I know of my hon. Friend's deep interest in the idea of community service. The YOP already features about 30 per cent. of entrants on community schemes. I take note of the interest that my hon. Friend takes in a further extension of that scheme.
    Mr. Barry Jones: Why has the Minister not insisted on a component for training in the new and controversial young workers' scheme? Has he not sold these youngsters short?
    Mr. Alison: Late last night the hon. Gentleman heard the answer to that question. I shall repeat it for him. In the young workers' scheme it is essential to concentrate on a single, narrow and realisable objective—the creation of new jobs for youngsters. The insertion of a training dimension separate from that which is already available would be a diffusion from that aim. We mean to stick to the simple aim.

    Industrial Relations
    Mr. Doverasked the Secretary of State for Employment if he will make a statement on his plans for further legislation on industrial relations.
    Mr. Tebbit: I hope to announce the Government's proposals for further legislation on industrial relations shortly.
    Mr. Dover: In view of the representations following the Green Paper on trade union immunities, does my right hon. Friend feel inclined to bring in measures to curb further the power of the trade unions?
    Mr. Tebbit: Yes, Sir. The thrust of the majority of reactions to the Green Paper is that it is time for a further step forward in this area. [Interruption.] I hope to make a statement about that matter before long.
    Mr. Joseph Dean: The Secretary of State has had a busy time since he was appointed. But has he had the opportunity to read the speech by Lord Scanlon in another place last Thursday, since much of it was devoted to this subject? If the right hon. Gentleman has not read the speech, might I suggest that he does, because he might learn something to help him to deal with the trade unions on behalf of the nation as a whole, not just on behalf of those who responded to the Green Paper?
    Mr. Tebbit: I accept the right hon. Gentleman's invitation to read the speech. I am sure that I shall find in it much to buttress my conclusions.
    Mr. Adley: I recognise that the Institute of Directors runs a good club and produces a good magazine. But does my right hon. Friend recognise that, when dealing with employers' views on industrial relations, he is more likely to hear the authentic voice of British industry from the CBI than from the dining hall?
    Mr. Tebbit: I note what my hon. Friend said. It is right that I should consult widely and listen to people who wish to put forward their views, whether it be the Institute of Directors or the TUC.
    Mr. Cyril Smith: Is the Secretary of State as enthusiastic now about worker participation in industry—which is not unrelated to industrial relations—as he was when, in Opposition, he made speeches in support of it?
    Mr. Tebbit: Yes. The more participation that there is by management and workers, the better for industry. However, I am not sure whether it is appropriate to legislate and force a framework on employers and unions. Good employers should have the common sense to realise that participation is the way to get the most out of their employees.
    Mr. John Evans: What legislation is planned to increase the compensation to workers who are unfairly dismissed by their employers?
    Mr. Tebbit: The hon. Gentleman will have to await my statement. I do not propose to unpick the parcel bit by bit at this stage.

    Industrial Training Boards
    Mr. Warrenasked the Secretary of State for Employment if he will review the level of cash reserves held by the industrial training boards.
    The Under-Secretary of State for Employment (Mr. Peter Morrison): Yes, Sir.
    Mr. Warren: I thank my hon. Friend for that brief reply. Will he return to the subscribers the £30 million paid to the boards which were so wisely abandoned yesterday? Will he also ensure that the £50 million cash reserves of the remaining boards will be promptly employed to train people who want training now rather than held to earn interest year after year as they have in the past?
    Mr. Morrison: As my right hon. Friend made clear yesterday, the Government will pay the balance of the net winding-up and operating costs of the boards that are to be abolished by March 1983. The reserves of the boards will go towards paying the operating costs and winding-up costs. When we come to examine the levy proposals for the boards that are retained, we shall take into account the reserves and ensure that they are used for training.

    Unemployment Statistics
    Mr. Newensasked the Secretary of State for Employment what is the latest figure for the number of registered unemployed persons.
    Mr. Ashleyasked the Secretary of State for Employment what is the latest rate of unemployment.
    Mr. Tebbit: At 8 October the number of people registered as unemployed in the United Kingdom was 2,988,644, or 12·4 per cent.
    Mr. Newens: In the face of those appalling figures, what possible justification can there be for the complacency expressed by the Secretary of State in the House today? Is he aware that the offer of hope that he said exists in working further overtime and so on represents nothing in the way of hope to the majority of the unemployed? Is there not a case for further reflation or Government action?
    Mr. Tebbit: There is no case for any major further reflation. The hon. Gentleman must understand the events that led to the high levels of unemployment.
    Mr. Heffer: Answer.
    Mr. Tebbit: Perhaps the hon. Gentleman will listen to someone other than himself for a moment. Between 1970 and 1981 unit labour costs in British industry rose twice as fast as they did in countries that are our principal competitors. The consequence could only be a massive loss of jobs. In 1980–81 our costs came down nearer to those of our competitors. This year the level is almost static. That is the only way to regain our competitive position and recreate jobs.
    Mr. Maxwell-Hyslop: How many of the unemployed are unemployed, despite there being employers who wish to employ them, simply because they are denied a 714 certificate as it is less than three years since they left school? Without a three-year employment record, the Inland Revenue will refuse to issue a 714 certificate.
    Mr. Tebbit: My hon. Friend raises a serious point. It would be impossible to produce the figure that he requests under the normal convention of statistics. However, I shall consider the matter. No doubt he will raise it with my right hon. and learned Friend the Chancellor of the Exchequer.
    Dr. Summerskill: Does the Secretary of State agree that the rate of increase in unemployment can have as serious an impact upon a town such as Halifax as the level of unemployment? Is he aware that unemployment in Halifax has increased by 136 per cent. in the past year? If he agrees with me, will be convey that view to his right hon. Friend the Secretary of State for Industry and ask him to take that into account when help for industry and employers is being considered?
    Mr. Tebbit: That matter is among the many matters to be taken into consideration when we assess whether an
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    area should be designated for assisted area status. It is not the only criterion. Many criteria are taken into consideration by my right hon. Friend when reaching his conclusions.
    Mr. Cockeram: Has my right hon. Friend made an estimate of the increase in unemployment that would follow the Opposition's planned renationalisation, in the event of the disaster of a Labour Government taking power `again?
    Mr. Tebbit: Contingency planning is a good thing, but not for contingencies so outrageously improbable as a Government led by the Leader of the Opposition.
    Mr. Heffer: Is the Secretary of State aware that he has shown today the same stupidity and ignorance about unemployment as he showed when he attacked workers in Liverpool in his speech at the Tory Party conference? Is it not time that he learnt something about simple economics—that it is better to put people back to work than to pay out enormous sums in unemployment benefit, as the Government are now doing?
    Mr. Tebbit: I understand that the hon. Gentleman wants things made simple. I remind him that in the past Merseyside had an especially poor strike record compared with the remainder of Britain. Between 1975 and 1978 Merseyside accounted for 10 per cent. of all working days lost through industrial stoppages in the whole of the United Kingdom. Happily, things have improved greatly since then. I hope that they will continue to improve so that the people of Merseyside can overcome that bad reputation, which has done them so much damage.
    Sir William Clark: Following the valid point raised by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), will my right hon. Friend add his weight to the pressure on the Chancellor of the Exchequer to make the three-year waiting period more flexible?
    Mr. Tebbit: I take careful note of my hon. Friend's request. I shall consider the matter carefully.
    Mr. Varley: Is the right hon. Gentleman aware that during the short period that he has held the office of Secretary of State for Employment, and the short period during which he has answered questions—this is the first employment Question Time for him—he has effectively demonstrated that there is no way in which the inexorable rise in unemployment will be stopped while he holds office? Would it not be better to put people back to work than to take away their jobs? Would not that, rather than the destructive policies that he is about to pursue, make for social cohesion and harmony?
    Mr. Tebbit: When the right hon. Gentleman understands that customers who buy create jobs and customers who walk away destroy jobs, he will be more fitted to hold office.

    Youth Opportunities Programme
    Mr. Hannamasked the Secretary of State for Employment if he will provide travelling expenses for those young people taking part in the youth opportunities programme.
    Mr. Alison: Young people taking part in the youth opportunities programme can claim travelling expenses over £4 a week.
    Mr. Hannam: Is my right hon. Friend aware that a number of local youth organisations and MSC representatives have said that youngsters faced with travelling costs of £2, £3 or £4 per week are opting out of the YOP? Will he reconsider the matter and extend the travelling costs provision to those further down the scale?
    Mr. Alison: I have no evidence of youngsters opting out of the YOP because of travelling costs. We have the opposite evidence of huge numbers wanting to join the programme. I shall study my hon. Friend's point. He knows that it is possible for the MSC to help people, especially from rural areas, with travel by means of minibuses.
    Mr. James Hamilton: As well as taking note of the point about travelling expenses, will the Minister take cognisance of the MSC's recommendation that the £23·50 should be increased to £28? Is he aware that in Bothwell many youngsters are being exploited? The sooner an investigation is carried out, the better it will be for all concerned.
    Mr. Alison: I note the hon. Gentleman's point. The main question relates to travelling expenses. If the hon. Gentleman wishes to table a question about the YOP allowance, I shall seek to answer it.

    Preston
    Mr. Stan Thorneasked the Secretary of State for Employment what are the latest figures available in respect of unemployed males and females in the Preston travel-to-work area.
    Mr. Peter Morrison: On 8 October there were 12,003 males and 5,899 females registered as unemployed in the Preston travel-to-work area.
    Mr. Thorne: In view of the remarkable increase in the number of unemployed in the Preston travel-to-work area, will the Under-Secretary of State explain how he justifies the cutting of industrial training boards? As there is no early opportunity of re-employment, industrial training provides a good alternative for many youngsters in the area.
    Mr. Morrison: I am not aware that industrial training boards have created any jobs. They have provided training for industry. The hon. Gentleman will be aware that the Government are helping thousands of people in Preston through the temporary short-time working compensation scheme, the youth opportunities programme and the job release scheme.

    Mass Meetings (Strike Decisions)
    Mr. Hal Millerasked the Secretary of State for Employment if he will have discussions with the Trades Union Congress about the practice of reaching strike decisions at mass meetings.
    The Under-Secretary of State for Employment (Mr. David Waddington): My right hon. Friend is always happy to meet the TUC and would welcome the opportunity to discuss the widespread concern felt about this practice.
    Mr. Miller: Does my hon. and learned Friend agree that it is offensive to our ideals of democracy, injurious to personal liberties and livelihoods and, in the case of a
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    major dispute, such as British Leyland, prejudicial to the whole economy, that such decisions should be reached at open meetings, in open parks, with no check on those attending? Does he agree that something should be done to rectify that situation?
    Mr. Waddington: The Government feel that strike decisions should not be taken at huge outdoor meetings. There is too much risk of intimidation and vote rigging. The time has certainly come for the TUC to remove its absurd boycott on the provision of Government funds for secret ballots. That is absurd and irresponsible when the TUC is prepared to accept money from the Government for training and for the Welsh TUC to take a trip to Spain.
    Mr. Ashton: By what democratic process did British Leyland decide to cut the relaxation time of its workers from one hour to 51 minutes? Is it not true that all too often car manufacturers, when they have surplus stocks, deliberately create strikes on the shop floor to run down those stocks? There is a strong feeling that British Leyland is doing exactly that now to get rid of its stockpile.
    Mr. Speaker: Order. That question is not related to the main question. It is a separate question.
    Mr. John Evans: Will the Under-Secretary take this opportunity to explain to his hon. Friends that if the Government, through legislation, insist that ballots take place before strikes are called, there will have to be ballots to call off strikes? Would that not lead to a dangerous position for industry, the trade union movement and industrial relations?
    Mr. Waddington: The hon. Gentleman will have to contain his impatience and await the announcement of my right hon. Friend's proposals.
    Sir Albert Costain: Does my hon. and learned Friend agree that employment in the motor car industry depends on the number of motor cars that are sold? How can we get across to employees that strikes merely stop the public buying motor cars and cause more unemployment?
    Mr. Waddington: It may be that the message has come across to employees. The difficulty is to ensure that true democracy is restored within trade unions.

    Youth Opportunities Scheme
    Mr. Altonasked the Secretary of State for Employment whether he will take steps to ensure that the youth opportunities programme provides an increased amount of training for participants and an appropriate grounding for apprenticeships.
    Mr. Tebbit: The Prime Minister announced on 27 July that the Government were considering an improved training scheme for young people and I expect to make an announcement by the turn of the year.
    Mr. Alton: I thank the Secretary of State for that reply. As many of the training boards are to be wound up, will he be prepared to ensure that some resources are redeployed from job creation into training schemes? Is he aware that in the North-West of England 170,000 young people are unemployed and that 41 per cent. of them are under the age of 25 years? Is he not concerned that many of these young people are being preyed upon by those in extreme Left-wing groups, especially by those involved in the so-called youth training centres in many cities?
    Mr. Tebbit: Yes. The hon. Gentleman draws attention to a serious problem. I assure him that I want to get ahead with developing YOP into a much more comprehensive training programme as soon as possible. I hope to make a further statement on the new training initiative and on that scheme before too long.
    Mr. Kenneth Carlisle: Does my right hon. Friend accept that one of the flaws in YOP has been the lack of contact that the schemes have with reality in the world of industry? Will he confirm that one of the prime aims of the new training initiative is to bring the schemes much more into contact with jobs in the real world? Does he accept that in so doing the schemes will need to have a large vocational content?
    Mr. Tebbit: Yes. I accept my hon. Friend's contention. The schemes will have to provide for different types of training in different areas to meet the demands of the local labour market. It is important that we involve all those who are concerned in industry in ensuring that that is achieved.
    Mr. Barry Jones: Is the right hon. Gentleman proposing a training tax on employers because he cannot fund the new training initiative?
    Mr. Tebbit: No. I am not making any such proposal. I shall not make a. positive proposal in that direction. I have suggested in various speeches that it would not be a bad idea if we considered all the options in the longer term, including a remissible training tax of the sort that is levied in France.

    Picketing
    Mr. Stokesasked the Secretary of State for Employment if he is satisfied with the present arrangements for dealing with picketing during a strike.
    Mr. John Carlisleasked the Secretary of State for Employment whether he is satisfied that the code of practice in the formation of picket lines is being observed.
    Mr. Waddington: The code of practice makes it clear that pickets are not immune from the provisions of the criminal law. If pickets act in a violent or disorderly manner, or by sheer numbers seek to stop people going to work, those responsible may be committing criminal offences. They may also lose any immunity that they may have under the civil law. In general the code is being observed, but I deplore the recent cases where it has not been observed.
    Mr. Stokes: I thank my hon. and learned Friend for that reply. Is he aware that considerable alarm was caused by the huge number of pickets outside some of the BL works during the strike, which intimidated and alarmed many people, both employees and those living nearby? Does he accept that the present arrangements are not working?
    Mr. Waddington: Disorderly picketing of the sort that has occurred at some of the BL plants is a matter for the criminal law. The law has never protected pickets who use threatening behaviour, act in a disorderly manner or obstruct the highway to prevent ordinary people from exercising their right to go to work. The enforcement of the criminal law is a matter for the police.
    Mr. John Carlisle: Following the trouble at British Leyland, is my hon. and learned Friend aware that
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    intimidation took place during the recent one-day strike at Vauxhalls at Luton and that some of my constituents who attempted to cross the picket line were subjected to threats to tear up their union cards? Surely it is time to bring under the control of legislation the thugs who completely ignore the code of practice and for my hon. and learned Friend to bring the appropriate legislation before the House.
    Mr. Waddington: The code of practice gives guidance, but it does not impose rules or regulations. This is primarily an issue for the criminal law. The police are responsible for the enforcement of that law. Throughout the past year the code has, in general, been observed. On certain occasions during the Civil Service strike picket leaders handed to pickets copies of the code of practice so that they would know how to behave.
    Mr. Eastham: Will the hon. and learned Gentleman comment on the continuous vilification that we hear from Conservative Members in their attacks on strikers? Does he recognise that we are aware of bandit employers in some cities? Is he aware that one such employer in Manchester used low-flying helicopters and thereby put life and property in grave danger? Surely it is time to introduce a code of practice for some employers.
    Mr. Waddington: If a man decides to use a helicopter rather than a horse and cart to move his own goods he is entitled to do so, providing that he does not break the law of the land. The hon. Gentleman would be better employed in helping the police to discover those responsible for causing £500,000-worth of damage by looting within the works.
    Mr. Archie Hamilton: Does my hon. and learned Friend agree that the Government should do all that they can to encourage moderation in wage claims? Will he acknowledge that one way to do so would be to legislate to make it easier for employees to break strikes? Will he therefore give consideration to the closed shop?
    Mr. Waddington: Once again, my hon. Friend is tempting me. He will have to await my right hon. Friend's statement.
    Mr. John Evans: Is the hon. and learned Gentleman aware that during the passage of the 1980 legislation the Government were warned by the Opposition that the code would not work in emotional situations such as those that arose at BL? How is he proposing that the police should enforce that legislation? Alternatively, is he proposing further legislation in that direction?
    Mr. Waddington: I thought that I had explained in words of one syllable that what went wrong at certain BL plants was that a number of people defied the law of the land and committed criminal offences. They committed offences that were contrary to the law of the land before the enactment of the 1980 legislation and, that remains the law of the land today.

    Greater London
    Mr. Pittasked the Secretary of State for Employment what is the current rate of unemployment in Greater London.
    Mr. Peter Morrison: At 8 October the rate of unemployment in Greater London was 8·9 per cent.
    Mr. Pitt: I thank the hon. Gentleman for that reply. Does he accept the report of the Institute for Fiscal Studies,

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    which states that each unemployed person costs the Government £4,500? If he does, does he accept also that a policy of economic regeneration, including investment in jobs rather than the dole, would be a far better investment of Government money?
    Mr. Morrison: I am delighted that representatives of the Liberal Party are present in the Chamber. During the debate on the Queen's Speech last week there was one occasion when for three-quarters of an hour only one Liberal Member was present in the Chamber. It is interesting that Liberals are now taking an interest in employment. I do not necessarily accept the report to which the hon. Gentleman refers. Reflation creates a loss of jobs.
    Mr. Jessel: Does my hon. Friend agree that one of the greatest threats to employment in Greater London consists of the heavy rates that are levied on employers by the Greater London Council?
    Mr. Morrison: Yes. There can be no doubt about that. There is some evidence that firms are moving out of, London because of the increased rates in the London area.
    Mr. Pavitt: Will the Government do something for the inner city areas of London, such as Willesden, in which unemployment has doubled in the past 12 months? Is he aware that the Guiness company, a large firm in my constituency, has 250 redundancies in the pipeline? I understand that Heinz has 200 redundancies in prospect and that Associated Automation will close with the loss of 500 jobs. Will the hon. Gentleman take some new initiatives?
    Mr. Morrison: There are already two inner city partnerships in London, with a budget of £24 million this year. There is also an urban development corporation, with a budget of £65 million. With respect, I cannot comment specifically on the hon. Gentleman's constituency, because I do not know.

    Job Creation Measures
    Mr. R. C. Mitchellasked the Secretary of State for Employment what progress has been made in measures to reduce unemployment.
    Mr. Tebbit: Manufacturing output has begun to recover; exports are doing well. Substantial recent engineering and construction orders, strong retail sales and substantial productivity increases alongside a fall in notified redundancies, a fall in short-time working, a rise in overtime working and a firmer trend in notified vacancies suggest that gains in competitiveness are being exploited. Only by regaining lost customers can jobs be recreated. In the meantime, the special measures programme offers help to many workers who might otherwise be unemployed.
    Mr. Mitchell: Which of the measures mentioned by the right hon. Gentleman are at this moment reducing unemployment? Which of the measures does he expect will reduce unemployment? When does he expect the number of unemployed to start coming down?
    Mr. Tebbit: I am not sure whether the hon. Gentleman was here when I answered question 1 and stood by the precedents set by my predecessors in many Governments not to give forecasts of unemployment. The hon.
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    Gentleman asked which measures are reducing unemployment. All those things mentioned are reducing unemployment below what it would otherwise have been.
    Mr. Heddle: Does my right hon. Friend agree that the service industries are capable of reducing unemployment? Will he therefore have urgent discussions with our right hon. and learned Friend the Chancellor of the Exchequer to see whether there are ways in which the industrial buildings allowance rules can be amended to ensure that service industries are also capable of occupying such nursery units as are provided for manufacturing industry?
    Mr. Tebbit: I shall draw my hon. Friend's remarks to the attention of my right hon. and learned Friend the Chancellor of the Exchequer. However, although it is true that service industries will create many new jobs, there is plenty of possibility for the creation of new jobs in manufacturing industries. Some of the recent, massive, new export orders show that that is possible and that it is being done.
    Mr. Bagier: If the right hon. Gentleman will not forecast the unemployment figures, will he ponder on the fact that in the last 10 years, under successive Governments, about 150,000 new jobs were created in the Northern region but that in the last 12 months alone 145,000 have been lost. Why is that?
    Mr. Tebbit: That is because the customers have not bought the goods produced by those industries. Until those industries produce the goods that the customers want at prices that they can afford, and until such goods are delivered on time, the industries will not regain those customers.
    Mr. Hill: Is my right hon. Friend aware that he has missed out a significant cause of unemployment, certainly in the port of Southampton, where five unions, by going slow and working only one shift for five days, are creating great fears of unemployment among port ancillary workers there? When will he tackle that problem?
    Mr. Tebbit: My hon. Friend draws attention to one particularly unhappy example of how restrictive practices and disputes increase costs and put men out of work. I am happy to say that Southampton docks has generally had a good reputation. I hope that it will not be long before that unhappy dispute is resolved.
    Mr. Varley: Why does not the right hon. Gentleman give the true facts? Interest rates have never been higher, bankruptcies and liquidations are at record levels, investment intentions have never been more pessimistic and inflation is rising. Is that not a recipe for more unemployment? Why does not the right hon. Gentleman tell the House the truth?
    Mr. Tebbit: I find that telling the House the truth goes down well with Conservative Members, but that the Opposition always shout and yell, and try to suppress it. The right hon. Gentleman is wrong. Interest rates are not at a record level. He is wrong to refer only to bankruptcies and liquidations and not to remember that the rate of creation of new firms is reaching record levels. Why cannot he present a balanced picture instead of for ever whining about how ghastly it all is?

    Youth Opportunities Programme
    Mr. Hooleyasked the Secretary of State for Employment if he will now initiate an inquiry into the operation of the youth opportunities programme.
    Mr. Alison: No, Sir. We have recently been carrying out the annual review of the youth opportunities programme and other special employment measures. My right hon. Friend expects to make an announcement by the turn of the year on training measures for the young unemployed, following the consultations on "A New Training Initiative".
    Mr. Hooley: Is the hon. Gentleman aware that the cycle for boys and girls of entering YOP and then going back on the dole queue is creating despair and disillusionment? Would it not be more sensible for the Government, instead of spending that £700 million on various gimmicks, to put that money into projects that would create real jobs on a large scale?
    Mr. Alison: The fact that 30 per cent. of YOP trainees enter jobs immediately after leaving training and that a further 12 per cent. go into further education or training, which is almost 50 per cent. altogether, is not sufficient. I agree with the hon. Gentleman about that. However, the young workers' scheme will make a radical difference and secure greater opportunities for youngsters to enter new jobs when it is introduced next month.

  PRIME MINISTER

    Engagements
    Mr. Sainsburyasked the Prime Minister if she will list her official engagements for Tuesday 17 November.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had a meeting with King Hussein of Jordan. Following other meetings with ministerial colleagues, I attended the memorial service for Lord Boyle of Handsworth. In addition to my duties in the House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen before departing for Bonn, where I shall have talks with Chancellor Schmidt tomorrow.
    Mr. Sainsbury: Is my right hon. Friend aware that the announcement yesterday about industrial training boards has already been widely welcomed by industry and commerce as contributing to a useful reduction in bureaucracy and making it easier to provide cost-effective training? However, could she find time in her busy day to consider whether more steps could be taken in the near future to make vocational training more widely available to all age groups, especially school leavers?
    The Prime Minister: My hon. Friend is right. The new arrangements for industrial training boards that my right hon. Friend the Secretary of State for Employment announced are in line with the wishes and needs of industry. With regard to the future, my right hon. Friend hopes to announce by the end of the year new measures for more comprehensive provisions for the training of our young unemployed and generally for training our young people.
    Mr. Bidwell: Is the Prime Minister aware that the old age pension increase later this month for a married couple will be nearly £5 lower than it would be under the Labour Government's criteria? Is she not utterly ashamed of that?
    The Prime Minister: The world recession would have hit the Labour Government just as much as it has hit this Government. I ask the hon. Gentleman to remember the record of the Labour Government during the last world recession, when they had to go to the IMF because they were broke.
    Mr. Stokes: Will my right hon. Friend give an assurance, with regard to Northern Ireland, that the small number of gunmen who are terrorising that Province are being dealt with by the armed forces without any let or hindrance for any political or other reason?
    The Prime Minister: I can certainly give that assurance. A number of things have been said in the last two days which may make the situation more difficult for the security forces in Northern Ireland. Whatever happens, the Army and police will carry out their duty, as we would expect them to do.
    Mr. Foot: If the Prime Minister believes her claims about the recession ending, and if she wishes to help young people, as she said a few minutes ago, will she undertake to review immediately the programme for the universities? Is she aware that it is undermining a principle accepted by every Government for the past 20 years, that higher education should be available to those who are able and willing to use it? Will she take immediate steps to take action in that area?
    The Prime Minister: I think that my words were that the trough of the recession was reached—[Interruption.] I looked at the words. I said that the trough of the recession was reached in the second quarter, according to most of the commentators. That is not quite what the right hon. Gentleman said.
    I understand that the matter of the universities is to be debated this week, and doubtless my right hon. Friend the Secretary of State for Education and Science will listen keenly to what is said in the House.
    Mr. Foot: Will the right hon. Lady do more than that? In her programme for the universitites, she is inflicting permanent damage on this country and on many young people. Does she not recognise that however the money is used, under these cuts about 6,000 or 7,000 university teachers will lose their jobs? Does she consider that to be an intelligent way of dealing with the crisis?
    The Prime Minister: My right hon. Friend has already said that if the economies can be achieved in another way, of course he will consider it. The University Grants Committee programme amounts to over £900 million, which is a large amount to be spending on university education. It is similar to the amount that has previously been spent, and I have no doubt that there will continue to be a large measure of university education for those young people who need it, and also higher education in the polytechnics and other colleges of advanced education.
    Mr. David Steel: As the Prime Minister is always looking for economies, will she take note of the latest delay announced in the Trident programme in the United States? In view of the mounting costs of that programme, will she review it in her plans?
    The Prime Minister: The precise programme for Trident has not yet been finalised, and the change by the United States to the D5 will have consequences, which my right hon. Friend the Secretary of State will be considering, for the programme itself.
    Mr. Ward: Is my right hon. Friend aware of the continuing resentment in the private sector over the provision of index-linked pensions in the public sector? Will she undertake to look again at the matter?
    The Prime Minister: We have already had the Scott report on that matter, although the committee's terms of reference were confined mainly to whether the contributions should be raised for the provisions of index-linked pensions. The real answer is to continue with policies that, in the end, will get inflation down. That is the best possible form of index-linking.

    Disabled Persons (Employment)
    Mr. Andrew F. Bennettasked the Prime Minister what steps Her Majesty's Government are taking to increase job opportunities for the disabled and, in particular, the young disabled.
    The Prime Minister: The Manpower Services Commission's "Fit for Work" campaign is designed to make employers aware of the abilities and potential of disabled workers. The National Advisory Council on Employment of Disabled People is arranging an in-depth study on how best to meet the needs of young disabled people.
    The Government seek to promote the employment of disabled people through the job introduction scheme, employment rehabilitation courses, the funding of sheltered employment, and the work of the disablement resettlement officers in the MSC's jobcentres.
    Mr. Bennett: Does the Prime Minister accept that the damage that she has done to the British economy has particularly harmed disabled people in their search for jobs? Is she aware that the most effective policy that she could pursue would be to insist that all firms obey the law and employ the 3 per cent. of disabled people that they are supposed to?
    The Prime Minister: The hon. Gentleman disregards some of the facts. There are only about 1·9 per cent. of the work force on the disablement register and there are not enough for all firms to employ 3 per cent. of disabled people. That is why the Manpower Services Commission has been issuing permits for firms that wish to take on extra people, even though they are not up to their full disablement quota. The hon. Gentleman should take into account all the facts about the numbers of people who are disabled and actually on the register.
    Mr. Hannam: In looking at this worrying problem, will my right hon. Friend take time to consider the example of West Germany where, by the use of a combined system of a 5 per cent. quota and levies on those who do not fulfil that quota, a 4·9 per cent. level of employment of disabled workers has been achieved?
    The Prime Minister: I think that our problem here is that there are only about 1·9 per cent. on the disablement register. The present law requires firms with 20 or more employees to employ 3 per cent. of registered disabled people. It is not an offence to be below the quota. An
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    employer in that position who wishes to engage anyone other than a registered disabled person must obtain a permit to do so. Firms are obtaining permits to do so at present because there are not sufficient disabled people to meet the quota.
    Mr. Pavitt: Will the Prime Minister take steps to remove one of the anomalies that prevent blind people from getting employment? Is not she aware that they are the only disabled people who cannot move from outside employment back again to sheltered work shops and that they are the only disabled people who receive no mobility allowance, which militates against their accepting jobs where there are travelling problems?
    The Prime Minister: I shall certainly examine what the hon. Gentleman has said. We are trying in every way to help the disabled to get work, as the special "Fit for Work" campaign demonstrates. We shall examine, in particular, the hon. Gentleman's point about mobility.

    Engagements
    Mr. Freudasked the Prime Minister if she will list her official engagements for Tuesday 17 November.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Freud: Is the Prime Minister aware that our annual expenditure on military bands last year was £28 million? Is she further aware that for the sake of less than one-tenth of that sum the Conservative-controlled Cambridgeshire county council is reducing capitation, cutting village schools, stopping courses in further education and is now considering bussing mentally handicapped children to places away from Ely? Does she really think that she has her priorities right and that there is no alternative?
    The Prime Minister: The amount spent under the rate support grant and through rates on the education of each pupil is the same in real terms as it has been in the past. How it is spent is a matter for the local county council.
    Mr. Adley: Does my right hon. Friend recall that when President Mitterrand was elected he was given a rapturous welcome in the House by the Leader of the Opposition? Will my right hon. Friend now welcome President Mitterrand's latest decision on nuclear weapons and his robust rejection of unilateral disarmament, and perhaps invite the Leader of the Opposition to join her?
    The Prime Minister: My hon. Friend is right. President Mitterrand has been staunch in providing for the defence of France and in joining in providing weapons and soldiers for the whole of the Western Alliance. He has also been staunch on the need for a nuclear deterrent and never in favour of unilateral disarmament, because he believes, as most of us do, in multilateral disarmament. The way to achieve that is the way in which we are proceeding.
    Mr. Winnick: Was not yesterday's outburst and exhibitionism a good illustration of the attitude of certain Unionist leaders who are determined to do what they can to create total confusion over the steps taken by the British and Irish Governments? Will the Prime Minister give an assurance today that neither the hon. Gentleman who was responsible for yesterday's outburst, nor the IRA murderers, will prevent the steps that have been taken with the Dublin Government from developing? Does she agree

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    that those steps should be developed in order to make it easier for an agreement to be reached between Dublin and London?
    The Prime Minister: What has happened will not deflect the Government in any way. The security forces will carry out their duty, as will the police. Most of us deplored what happened yesterday and believe that that—and the alleged assertion of one hon. Member that he will make the Province ungovernable—is not in the true interests of the people of Ulster. It could put the lives of many innocent people at risk and make the task of the security forces more difficult.
    Mr. Latham: When, this morning, my right hon. Friend met King Hussein of Jordan—a country with which we have long had close relations—did she discuss with him how Britain, Europe and the Americans could best get their policies together on the Middle East? At present there seems to be a horrendous gap.
    The Prime Minister: That is exactly what we were trying to discuss. We have the Camp David agreement, the European initiative and the eight principles enunciated by Saudi Arabia. The latter will be discussed soon at an Arab summit. Those proposals are on the table and we are all seeking a comprehensive settlement of the Middle East problem. As a first step, we all want recognition by the
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    Palestinian people of the right of Israel to exist behind secure boundaries and simultaneous recognition by the Israelis of the rights of the Palestinian people to self-determination. If we could achieve that it would be a major step forward. I believe that everyone is seeking a way in which to achieve it.

    Secretary of State for Employment
    Mr. Gwilym Robertsasked the Prime Minister if she will dismiss the Secretary of State for Employment.
    The Prime Minister: No, Sir. The hon. Member may assume that I do not intend to make any changes in ministerial appointments or responsibilities unless or until I make a statement to the contrary.
    Mr. Roberts: Does the Prime Minister accept that the Secretary of State for Employment, as was clear from his answers today, is symbolic of the irrational policies pursued by the Government, which have added about 2 million people to the dole queue and lowered living standards for the great mass of people in this country? Is it not high time that she told him to get on his bike?
    The Prime Minister: From what I heard, my right hon. Friend's answers were robust, sensible and realistic. Long may they continue.

Sub Judice Rule
Mr. Leslie Spriggs: On a point of order, Mr. Speaker. I refer to early-day motion 31 headed "Master of the Rolls". When I attended the Table Office to add my name to that early-day motion, I was told that I could not do so because the matter was sub judice. May I have your guidance on this, Mr. Speaker, as I would wish at the earliest possible date to add my signature in support?
Mr. Speaker: I understand the hon. Gentleman, but I also understand that since the GLC-London Transport case became sub judice no new signatures have been accepted to early-day motion 31 and that it has not been reproduced among the notices of motions and will not be until the case is dealt with and the appeal is heard.
Later—
Mr. R. C. Mitchell: On a point of order, Mr. Speaker. In the years that I have been in the House, the sub judice rule has gradually been toughened compared with the position 10 or 15 years ago. Under the present ruling, I may say things in a newspaper article that I am not entitled to say in the House. Would it be possible for you, Mr. Speaker, or the appropriate Committee, seriously to consider the sub judice rule to see whether the way in which it is now applied is really necessary?
Mr. Speaker: With respect to the hon. Gentleman, this is the High Court of Parliament. Many things happen in the media that we would not allow to happen in this honourable House. If the House cares to examine the sub judice rule, so be it. But I honestly believe that the rule which has stood us in good stead for a very long period, enabling the various branches in our system of government to function properly, ought not to be lightly discarded.
Several Hon. Members rose—
Mr. Speaker: Order. I shall, of course, take points of order if hon. Members feel so burdened that I ought to take them.
Mr. Frank Hooley: Further to that point of order, Mr. Speaker, I entirely accept your view
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that many things take place in the media that we would not wish to see in the House, but is not the general principle that there should be no less freedom of speech in the House than in the media a very important consideration?
Mr. Speaker: It is very important that in the House we observe the sub judice rule. If our constitution is to function properly, I believe that here, above all, the sub judice rule must be observed.
Sir Derek Walker-Smith: Further to that point of order, Mr. Speaker, With the utmost respect, may I wholly endorse and applaud the ruling that you have been good enough to give to the House? Does not the sub judice rule owe its origin to a proper desire to avoid conflicts of jurisdiction between the courts of justice and the High Court of Parliament? Is it not important, therefore, from a constitutional point of view, that that position be preserved?
Mr. Christopher Price: Further to that point of order, Mr. Speaker. Did not the House give instructions to you by resolution, both in 1963 and in 1972, that the sub judice rule in the House stands at your discretion and that when matters of supreme national importance, take place outside the House, as occurred in 1973, notwithstanding the existence of the sub judice rule you have discretion to overlook the rule? Would not the present case, which involves the Greater London council and touches on the legality of the use of public expenditure to reduce the cost of transport, fall very close to that point at which you could properly exercise the discretion invested in you by the House?
Mr. Speaker: I am much obliged to those who have contributed. I always feel more comfortable when the judgment of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) on legal matters coincides with my own. I am deeply grateful to him. I am grateful, too, to the hon. Member for Lewisham, West (Mr. Price) for reminding the House that it is to me that discretion has been given, and I have exercised it.

Members' Speeches (Upper Galleries)
Mr. David Winnick: On a point of order, Mr. Speaker. One appreciates that the Upper Galleries reserved for hon. Members have been used for a long period, for reasons which we understand. Is there not a case, however, for the House to consider removing the right of hon. Members to speak from those Galleries? In view of the events of yesterday, is there not a strong case for establishing a tradition that hon. Members may speak at Question Time or in debates only from the Floor of the Chamber? I therefore ask you, Mr. Speaker, to give careful consideration to removing the right of hon. Members to speak from the Upper Galleries.
Mr. Speaker: Naturally, I have been giving consideration to that question I in no way seek to limit the rights of right hon. and hon. Members. I am always very guarded about limiting a right which has existed. I have, however thought to myself that where the Speaker's eye falls is his business—and, of course, the business of the person upon whom his eye falls—and that in future it is more likely to fall down here than up there.
Mr. J. Grimond: Further to that point of order, Mr. Speaker. I have considerable sympathy with the view that the position of speakers in the Upper Galleries is anomalous. However, should not the House resist altering its procedures merely because advantage is taken of them by those who wish only to gain publicity and who, as was said yesterday, have no interest in treating the House with respect? It seems to me, therefore, that we should ignore that reason for changing the procedure, and that if there are any other reasons they should be separated from that one.
Mr. Speaker: I should greatly welcome it if any Select Committee were to examine this matter. I should, indeed, have a few other matters to refer to the Committee.

Orders of the Day

  Shipbuilding Bill
  Order for Second Reading read.
  3.38 pm
  The Minister of State, Department of Industry (Mr. Norman Lamont): I beg to move, That the Bill be now read a Second time.
  This is the second Shipbuilding Bill to come before this Parliament. In the period since the last Bill, the industry has been through traumatic developments worldwide. It has also been a period of difficult adjustment in the United Kingdom industry. As I shall hope to show the House, there are reasons for believing that the painful adjustments of the last two years have also secured some gains and the prospect of further ones.
  The Bill has two purposes. The first, as with the previous Bill, is to raise the limit on the amounts which British Shipbuilders and its wholly owned subsidiaries may borrow in the form of loans, or receive by way of public dividend capital. The present borrowing limit for British Shipbuilders under the Shipbuilding Act 1979 is £500 million, which may be raised by order, subject to the approval of the House, to £600 million. An order has been laid before the House in draft and is to be considered after this debate.
  Under the Bill, the limit on borrowing is raised to £700 million, with provision for a further increase to £800 million by order. Those hon. Members who follow such matters will recall that that compares with the £300 million limit under the Aircraft and Shipbuilding Industries Act 1977, which the House was told at the time of nationalisation would be sufficient to last until 1982. I shall, of course, wish to comment later on the financial record of British Shipbuilders.
  The total borrowing that counts against the limit was, at the end of British Shipbuilders' financial year in March, £408 million. British Shipbuilders expects that by the end of the year that might amount to £500 million. But at the same time it is necessary to ensure that any temporary fluctuations can be accommodated within the statutory limit and for that reason an order increasing the limit to £600 million—in addition to the Bill—has been laid before the House.
  The Bill's second purpose is to provide for the prolongation by order subject to affirmative resolution of the shipbuilding redundancy payments schemes for Great Britain and Northern Ireland for two years beyond June 1983. The existing powers for the prolongation to June 1983 were passed under the Industry Act only last Session and I am sure that both sides of the House will regret that there appears to be any need for further prolongation beyond June 1983.
  Before any alarmist statements are made, I should emphasise that there is no immediate need for the legislation to be introduced. The period of the scheme extends until the middle of 1983, but any power to extend it would have had to be taken either in the next Session or in this Session. This measure seemed a convenient vehicle. I should also emphasise that we are not extending the powers but merely taking the power to do so. To extend

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  the powers we would have to come before the House and table an order, which the House would then have an opportunity to debate.
  The reason for the present provision is the forecast in the White Paper on the defence programme that job opportunities in surface warship building will inevitably decline compared with current levels. It is not possible at this stage to give any detailed forecast of the job implications. The present naval workload in British Shipbuilders extends some years ahead, which gives time for adjustment where possible. The defence review also gives opportunities to British Shipbuilders and to Vickers, for example, in the construction of submarines. British Shipbuilders is also anxious to increase naval exports and its efforts in that direction are a factor that will have to be taken into account.
  Mr. Dick Douglas: I am grateful to the Minister for having given way so early in his speech. Was he in the House when the Prime Minister implied that there might be a reappraisal of the Trident programme because of the difficulties and changes taking place in the United States of America? What effect will such delays have on the United Kingdom's naval yards?
  Mr. Lamont: I cannot say at present. However, as I have suggested, there are uncertainties on the naval defence side and the Secretary of State will make the position clear to the House in due course.
  Before moving on to the general outlook for British Shipbuilders, I should comment on the absence in the Bill of proposals for privatisation. I am aware that that will be a disappointment to my hon. Friends who believe, as I do, that private enterprise offers a better hope for jobs and prosperity than public ownership. I can assure my hon. Friends that it is the Government's aim—time permitting—to take powers during this Parliament to facilitate private investment in British Shipbuilders.
  My hon. Friends will want to know to what extent the Government's policy of reducing subsidies to the industry is succeeding and what the prospects are. They will also want to hear something about British Shipbuilders' corporate plan.
  Mr. Don Dixon: Before the Minister moves on to the general points, will he explain why there is a difference in clause 2 between the redundancy payments paid to shipyard workers, those paid to steel workers and those paid to miners?
  Mr. Lamont: I understand that the hon. Gentleman is talking about workers who are covered by different schemes. There is no reason why they should be the same. However, the hon. Gentleman may choose to raise that point in Committee. At the conclusion of the debate my hon. Friend the Under-Secretary may reply to the hon. Gentleman, but the hon. Gentleman's remarks do not have great force because those workers are covered by separate schemes and separate pieces of legislation.
  Dr. J. Dickson Mabon: As regards privatisation, Ministers' earlier announcements have been of two different types. The first proposal was that there should be direct investment in yards, such as Yarrows and in one or two naval shipbuilders. The second
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  proposal was that there should be an equity holding in British Shipbuilders. Which proposal do the Government favour?
  Mr. Lamont: The Government are not making any decision at present on either option. I said only that the Government would take powers, if the time were available, to remove the obstacles. Various statutory obstacles prevent privatisation in either of the ways that the right hon. Gentleman referred to. However, no decision has been made about either route.
  I said that the House would want to know to what extent the policy of reducing subsidies was being successful. The external financing limit and British Shipbuilders' trading losses before tax are in many ways the best indicators of progress. In 1979–80 the external financing limit that we inherited from the previous Government was £250 million. For 1981–82, the limit is £150 million. The limit for 1982–83 is likely to be lower than that. British Shipbuilders' trading losses before intervention fund assistance have also steadily declined. In 1979–80 they were £174 million and in 1980–81 they were £85 million. For this year, the target losses should be marginally lower. Those improvements have been secured at a time when the intervention fund has also been diminishing. The intervention fund tranches in 1979–80, 1980–81, and from July 1981 are £65 million, £55 million and £45 million respectively. Therefore, subsidies have been and are being reduced.
  While the performance of British Shipbuilders has improved, total losses since vesting day amount to £341 million after tax, interest and extraordinary items. Most of the £400 million advanced to British Shipbuilders so far has gone towards meeting losses. No one could say that Governments have not supported British Shipbuilders. The total amount of support paid by way of public dividend capital, intervention fund and redundancy payments reached £500 million by March 1981. As these figures show, the overall financial record of British Shipbuilders since nationalisation has been disappointing. However, the recent figures demonstrate a large improvement.
  I know that the chairman and his board are determined that this improvement should continue and that the dependence on the taxpayer should be further reduced. Part of the recent improvement is related to improvements in the world market. Supply and demand have been brought more into balance, partly as a result of capacity reductions. World output has decreased from 16·5 million compensated gross registered tonnes in 1978 to 12·6 million compensated gross registered tonnes last year. The reduction in capacity has taken place worldwide. At the same time, world new orders have increased from 10·8 million compensated gross registered tonnes in 1978 to 14·4 million in 1980. While most commentators would describe the recovery as hesitant and modest, it has had the effect at least that British Shipbuilders is no longer struggling quite so much with the problem of getting sufficient orders. While British Shipbuilders has had the benefit of an improving market, a large part of the improvement has been due to its own efforts and the benefits of restructuring.
  A major factor has been the commercial approach under the chairman of British Shipbuilders, Mr. Atkinson, who came to the job some 18 months ago. The financial control and accountability of British Shipbuilders have been increased by his reorganisation of the corporation into five

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  operating divisions. Steps have been taken to strengthen marketing, both on merchant ships and warships. The offshore division has been established, and the House will know that an important order has just been secured.
  I should like to pay tribute to the trade union side for its contribution to the improvements. A total of 19,000 employees have left British Shipbuilders at a cost to the Exchequer of £55 million under the shipbuilding redundancy scheme. This shows the scale of the restructuring, and no one would underestimate the strain that this has imposed on many areas that already have above average levels of unemployment.
  Mr. Gordon Wilson: The Minister has rightly paid tribute to the amount of help that has been given to redundant shipbuilding workers. Has he spared a thought for the situation in those areas where no jobs are available for unemployed shipbuilding workers and where there is no question of relocation because of the distance from other yards?
  Is it not time that British Shipbuilders endeavoured to keep yards open now that orders are becoming available and there is no prospect of alternative jobs? Alternatively, should not British shipbuilders be given an obligation in other legislation for certain social and economic responsibilities for workers in areas that are experiencing tremendous problems? I draw the hon. Gentleman's attention in particular to the steel industry's obligation to steel workers who unfortunately have been made redundant.
  Mr. Lamont: I do not agree with the hon. Gentleman. Decisions about yards must be for the commercial judgment of the board, and it should take those decisions on commercial grounds. As the hon. Gentleman said, there are certain areas where this poses great problems, but that is an argument in favour of redundancy payment schemes of the kind that we are discussing. It is an argument in favour of sharpening regional policy in the way that we have done, so that more aid goes to areas of highest unemployment.
  On present trends of orders, I expect British Shipbuilders to be able to make a further improvement in its financial performance. The external financing limit for 1982–83 will be lower than the present limit of £150 million. Within the lower external financing limit there will also be increased provision for capital expenditure so that financial retrenchment is combined with provision for the future. It is not all retreat.
  Formidable problems lie ahead. British Shipbuilders are a long way from viability. While the intervention fund has secured orders to keep most yards in business up to the end of 1982, and several well into 1983, the cost of the fund remains high. Currently, the level of intervention fund subsidy, while lower than two years ago, is still approaching £3,500 per man year of work. Although the productivity of British Shipbuilders is improving, the overall level is still worrying.
  Hon. Members will know that productivity is notoriously difficult to measure in an industry such as shipbuilding. There is the problem of comparing like with like, such as that part of the work that is subcontracted outside the main business. It is also difficult to distinguish between real improvements in productivity and changes in the capacity loading of yards. With those qualifications, the latest figures for throughput per employee in merchant
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  yards are 15·3 compensated gross registered tonnes a year in 1978, 13·2 in 1979 and 15 in 1980. Thus, while there was a dip in 1979, there was a rise last year with better order books. However, British Shipbuilders must still surpass the levels that existed before nationalisation.
  I know that the corporation is making an intensive effort to improve productivity. Each yard must meet a detailed programme. They have set themselves a target of 5 per cent. improvement this year and a 10 per cent. improvement next year. We must hope that these efforts will be successful. Increases in productivity are absolutely essential for the industry's competitiveness as well as its future.
  The behaviour of the market and the prices available will be heavily influenced by the actions of Japan, which has been referred to by an hon. Member. So far, developments are disquieting. Although the market recovery has been modest, Japan has increased its share of new orders taken by the OECD from the 50 per cent. prevailing at the height of the shipbuilding recession two years ago to more than 60 per cent. today. We and other Community countries have made known in OECD our deep concern at the trend of Japanese orders.
  Hon. Members will recall that the intervention fund was originally introduced to avoid a collapse of the industry against Far Eastern competition. I hope that Japanese shipbuilders will see that in a world where the forces for protectionism and against the open trading system are strengthening, it is in their interest to exercise restraint and thus help to reduce subsidies. The Government will continue to make clear their concern at Japan's excessive share of orders.
  Many of these matters are referred to in the corporate plan of British Shipbuilders, which the Government are still studying in the light of the defence review. This is an ambitious plan which sets out the conditions that will have to be achieved if merchant shipbuilding by the end of the planned period in 1984–85 is to be near break-even point without the benefit of any intervention fund subsidy. The size of the problem is indicated by the fact that the merchant shipbuilding division of British Shipbuilders lost £43 million in 1980–81 after crediting intervention fund assistance of £44 million. In other words, to reach break-even point without subsidies, there would have to be a turn-round of £87 million per annum.
  From that background, it is quite clear that such a turn-round will only be achieved with an increase in the price of ships and a large increase in the levels of productivity well in excess of those reached before nationalisation. Because of the size of the gap, continued support from the taxpayer will be required if the industry is to secure an adequate supply of orders.
  Our industry is, of course, not alone in receiving support. Practically every shipbuilding industry in Western Europe receives subsidies in one form or another. Sometimes it is through credit arrangements and sometimes it is in the form of direct production aid. Naturally, each country's industry points to the most favourable features of its competitors, and true comparisons are difficult. But there is no doubt that the EEC shipbuilding directives play a valuable part in the reduction of these subsidies. Without them there would be a danger of a subsidy race and a further delay in raising prices, which is important for the industry. Both the Government and the Community consider that aid to shipbuilding should be temporary and diminishing.

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  While it is clear from our examination of the corporate plan that further support will be required, the present tranche of the intervention fund does not expire until July 1982. The Government wish to be clearer about international developments and market trends before coming to a view on the precise level of support. We shall also take into account the progress of the industry towards greater competitiveness. I assure the House that it will continue to be our firm policy to reduce the total amount of aid to British Shipbuilders.
  Equally, I hope I have made it clear that the Government are prepared to continue to put money behind the corporation's efforts to become viable and to build on the progress already made. The Bill is proof of our intent, but we should not forget that the money has to come from elsewhere. It has to be paid for by taxes or borrowing. It is the Government's hope, as I am sure it is of all hon. Members, that the industry will become viable, but Government funds themselves cannot do that. As the chairman of the corporation recognised and has emphasise, the industry wishes to be rid of its present dependence on Government funds as soon as it can.
  British Shipbuilders has had a good run of orders this year and most of the yards have work in hand or in prospect to the end of 1982. The corporation has also shown a capability and capacity for change. While the Far Eastern yards continue to dominate the basic bulk carrier market, British Shipbuilders has sought orders for technically advanced vessels. The Great Lake vessels ordered from Govan, the nuclear fuel carriers from Swan Hunter, the Thor Dahl newsprint carrier from Swan Hunter and the offshore supply vessels being built at a number of the smaller yards, are evidence of the success and the energy of British Shipbuilders in this direction.
  I should also say, as there is so much emphasis in these debates on the intervention fund, that British Shipbuilders has won a number of orders for small vessels without intervention fund support.
  Scott Lithgow and Cammell Laird have been brought progressively into offshore rig construction as the scope of naval work at those two yards diminishes. I take this opportunity of congratulating Scott Lithgow on recently winning a major order for a heavy duty drilling rig for the BNOC. The rig, when it is delivered in 1984, will be one of the most advanced available worldwide, capable of drilling in over 4,000 ft of water in the most adverse conditions. Not only does the order provide a substantial work load for Scott Lithgow; it places BS in a favourable position to pursue further orders for advanced heavy duty rigs.
  There are good developments and these are some of them. However, it is also essential for BS to recover warship export markets which it has lost. I assure the House that the Government will do all they can to help in this matter.
  I can understand the impatience of some of my hon. Friends that the lessening of the dependence of BS should be accelerated. But real progress is being made in the industry. In our view, the record of the industry justifies the further support inherent in the Bill.
  It is also necessary to provide insurance against hardship which may be caused by the rate of change. That
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  we can do through the extension of the shipbuilding redundancy payments scheme. I commend the Bill to the House.
  4.3 pm
  Dr. John Cunningham: I should begin by declaring an interest, in that I am sponsored by one of the unions heavily involved in shipbuilding—the General and Municipal Workers Union.
  The Minister made a curious speech. He has given no convincing reasons why the Bill is being introduced now. After all, as he admitted, British Shipbuilders is significantly within the existing borrowing limit. There is already provision, without further legislation, for extending that borrowing limit. Furthermore, current provisions for redundancy payments would suffice until at least the middle of 1983, and if the situation were to deteriorate—we hope it will not—there would be ample time to make further provision.
  It is curious that in spite of all the Government say about the PSBR, they should be introducing a measure which would, in theory at least, provide the opportunity for expanding the PSBR if British Shipbuilders were to take up some of the extra borrowing provision.
  As far as we can tell, the corporation has not asked for any of the measures contained in the Bill, and the unions certainly are not asking for further provision for redundancies in the industry. If behind these proposals are Government intentions to have further reductions in shipbuilding capacity and further redundancies, we are totally opposed to such moves.
  The effect of what is contained in the Bill—and the effect of much of what the Minister has said in introducing it—will be to create further unnecessary uncertainty in the British shipbuilding industry. It is the case, as he rightly said, that the unions have made a major contribution to the significant restructuring which has taken place in the industry and they desperately want to continue to do so.
  What the Minister has said about redundancies, about privatisation, and about reduction in support for the industry through the intervention fund—and what he has not said about positive measures that the Government might have taken to help our shipbuilding and associated industries—are all matters which will have caused a great deal of uncertainty for the people whose lives depend upon British Shipbuilders. Those people are, in the main, in areas of already very severe unemployment.
  Even in the Minister's own constituency in Greater London, and in the South-East and the South in general, many secondary companies in engineering—members of the British Marine Equipment Manufacturers Council—are themselves dependent on shipbuilding being the assembly industry that it is, and closures of yards would have wide repercussions throughout the British engineering industry.
  The Minister could have made a much more positive speech than he has done today, and the Government could have made a much greater contribution to the future of people working in British Shipbuilders.
  Declaring a man redundant in British Shipbuilders costs more than £8,000. The Manpower Services Commission's calculation is that declaring one person redundant, together with the average cost of redundancy payments, amounts to over £8,000, and there is no real benefit to anyone in the community in the long term by simply wiping out jobs and spending money in that way. It is not

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  only in political and social terms that we would oppose further reductions and closures. It is not in our interests as a maritime nation or as a nation heavily committed to naval defence, and it is not in our interests as a trading nation, to have a further rundown in British shipbuilding capability.
  The Minister dealt at some length with the financial situation in British Shipbuilders. We welcome the improvements. In many respects, no thanks are due to this Administration. When the Minister was talking about the reductions in losses and about the reduction in the external financing limit, he did not say that there has also been a regrettable reduction in the amount of money being invested in fixed assets in the corporation. When the Minister talked about competition and productivity, his words rang a little hollow. He knows very well that the level of investment in Japan, in Korea, and in shipyards in other countries which are in direct competition with British Shipbuilders, is of a different order of magnitude from that being allowed by the Government in our own shipyards.
  Against that kind of competition, and with that imbalance in investment in new techniques, it is increasingly more difficult for our shipbuilders to compete on anything like an equal footing. On the same point, it is impossible for shipbuilders to improve their productivity with berthing programmes which leave wide gaps in their ability to produce anything at all. That has been another major problem in the past two years.
  The Minister was right to praise the trade unions' contribution. They have made a major contribution. As the Minister said, there have been about 20,000 redundancies since vesting day and all, until the recent events at Robb Caledon, wthout any major industrial dispute. That situation, however, is now clearly at risk. Jim Murray of the boilermakers' union the major union in the industry, recently wrote in his union's journal:
  "I am convinced there has been a positive campaign to create a chasm between us."
  That is between the management and the unions in British Shipbuilders. Mr. Murray continues:
  "And to certain senior members who continue to tread the path of fear I shall repeat—as sure as night follows day there will come a time when our members will no longer accept seeing their leaders constantly humiliated in their endeavours to seek an honourable solution."
  The threatened breakdown in the successful co-operation and involvement of the unions in the British Shipbuilders operation was echoed on a slightly different point yesterday by Maurice Reed of the General and Municipal Workers Union. He said that because, of the deteriorating situation, it was likely that the cherished British Shipbuilders' national pay deal would come to an end due to the "consistent refusal" of the chairman and board of British Shipbuilders to behave as a responsible nationalised industry and allow the unions their rights of participation and consultation as the nationalisation Act laid down.
  There is grave concern about the attitude of both the Government and the members of the board. That is perhaps best summed up by a letter to me from someone else who is prominent on the union side of the industry. He said:
  "I think it is also worthwhile telling you that in the last 12 to 18 months our relationships with British Shipbuilders have been
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  gradually deteriorating and this we can only attribute to the hard-line attitude being encouraged by the present Government on industrial relations in general and to the new attitude now prevailing in Brishish Shipbuilders."
  I have quoted senior people associated with the industry who take a sad view of the prospects for such an important, indeed crucial, facet of the progress that has been made to date in the shipbuilding corporation and its restructuring.
  I emphasise that the unions are not seeking conflict and that the Government should act—the Minister had nothing to say about this—to preserve the valuable contribution that the unions have been making. Sections 5 and 6 of the 1977 Act gave the Government the opportunity to do that. In our view, the Government should strain every sinew to ensure that the co-operation of the last four years is not only maintained but developed.
  I do not believe that it is in anyone's interest that the national bargain should disappear. The reduction of 168 bargains to two has been a major gain for everyone in the industry and has made a major contribution to the elimination of many problems. It is worth the Government fighting hard for that alone. The Government should look at the deteriorating situation closely and do whatever they can to help resolve the problems.
  I agree with the Minister that the current level of orders is quite good. He is right to emphasise the good news of the BNOC order for the Clyde. There was more good news yesterday, with further orders for Govan Shipbuilders. That yard was threatened with closure by the previous Secretary of State; it is not only surviving, but has a full order book up to at least 1983.
  Continuity of ordering and work is vital. We have to ask whether present order levels are likely to be maintained, let alone improved, without a number of significant changes in Government policy. The Opposition, unions in the industry and, to a large extent, British Shipbuilders and the industry generally think that the ordering situation is unlikely to be maintained without such changes,
  What, after the industrial relations issues that I have raised, do we think are the key issues? I emphasise that none of those key issues is dealt with by the Bill. I have mentioned investment. Over the past couple of years, investment in fixed assets has been falling. The industry, at vesting day, had suffered from chronic under-investment in private hands. Much was on the verge of bankruptcy. That is the typical story of much of the private sector of British industry.
  I understand that about £18·2 million was invested in fixed assets in 1979 and that the figure decreased to less than £17 million in 1980–81. By comparison, Japanese shipbuilders are investing £626 million this year, which is an increase of 18 per cent. on their investment level last year. The Opposition are in no doubt that increased capital investment is essential if British Shipbuilders is to have an opportunity of improving its productivity and competing.
  The chairman of British Shipbuilders said in the 1981 report:
  "Performance is not merely a matter of people working harder. There is an urgent need to establish the most modern management and production systems incorporating recent technological advances, particularly in computer aided design, computer graphics and manufacturing techniques."
  We believe that the chairman is right to emphasise those points in connection with the need to invest more in the

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  corporation's activities and to give the work force the opportunity to do exactly what he and the rest of us want them to do—improve productivity.
  A major decision was taken, surely correctly, by the corporation to diversify and alter the offshore operations work of Scott Lithgow on the Clyde and of Cammell Laird. As a nation, we surely must seek to achieve a larger share, not only of business in the British sector of the North Sea, but of the growing market for offshore structures worldwide.
  The present order book is a good one and to the credit of British Shipbuilders; orders are in excess of £200 million. However, is it really sensible that orders from British operators should go to the Far East, as they have done? Is it sensible for British Gas—a public corporation—to order structures for the Ruff field from other than British shipyards? Should the Government not be ensuring that public corporations, in particular, place their orders in British yards? We say that they should do so, and we hope that the Government will act accordingly.
  Merchant shipbuilding has suffered a great decline. I do not quarrel with the Minister's analysis of the last few years. There has been a world-wide decline since 1975 from something in excess of 34 million gross registered tonnes to just over 13 million gross registered tonnes in 1980. That is a major world-wide slump in merchant shipping orders. There is some evidence, as the hon. Gentleman said, that the situation is now levelling out. The inevitable restructuring of British Shipbuilders in the face of this decline has had a major impact on employment. I would, however, suggest to the Minister and to Conservative Members that, given the nature of this business and, in particular, the cyclical nature of ordering, there is not the slightest shred of evidence to suppose that if any of the yards had been in private hands they would have done better. Most of them would have been closed long ago.
  In the face of the kind of recession that is taking place, no one other than the Government and the public corporation can take the necessary action to counteract the forces that have been prevailing. As the Minister said, it is not a question, as many of his hon. Friends, and no doubt he himself, would like, of their own favourite market forces. Subsidy and support is wide-ranging and world-wide, including, in many forms, the yards in Japan and Korea.
  There is no evidence to suppose that if we continue along the course to which the Government are committed and withdraw progressively support from our industries those in the Far East and elsewhere will follow suit. The result of the Government's pursuit of such policies is likely further to disadvantage our merchant ship building yards. As the Minister remarked, in the first six months of this year throughout the OECD countries Japan took almost 70 per cent. of all orders. That is no coincidence. It is not merely a question of investment and better productivity. It is a question of better financing arrangements, more generous financing arrangements and greater support for shipowners to build their ships and buy their ships from Japanese yards. We believe that the Government should take a leaf out of the Japanese book. So do British shipping owners and operators. They have been making similar representations to the Minister's hon. Friend at the Department of Trade recently.
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  Of current British Shipbuilders orders, 40 per cent. are for overseas registration. Export orders are currently as high as 70 per cent. of sales intake. This emphasises the fact that very little, or perhaps I should say not sufficient, of the business coming to our shipyards emanates from British shipping. Too much of British shipping business for new vessels, for repair and maintenance and for conversion is going abroad. The Government should act to end that situation.
  British shipping itself is in decline. This is made clear in an article in Lloyd's List today, headed:
  "UK's fleet poised to dip below 30m mark."
  There is deep concern. In her speech last night, the Prime Minister said that we were a trading nation—a nation of traders and a maritime nation. Are the Government happy not only to see a further decline in British shipbuilding but also to see a decline in British shipping? Do not the two things to some extent go hand in hand? Do not the Government have a responsibility to take action to improve the situation?
  Mr. R. C. Mitchell: I am interested in the hon. Gentleman's argument. Would not the Labour Party's policy of massive import controls, leading inevitably to massive retaliation against our exports, prove very damaging to the shipping industry of this country?
  Dr. Cunningham: The hon. Gentleman has some nerve, given that he supported Labour Party policy on shipbuilding in his own constituency, to start now attacking party policy in a wholly inaccurate manner. The hon. Gentleman is right to say that the Labour Party is concerned about import controls. We would be in favour, as he knows well, of selective action. The hon. Gentleman used the word "massive" and implied "all-embracing". I reject both descriptions of what Labour Party policy would be. I do not, however, flinch from the argument that we are interested in taking action to defend our industries against the kind of competition that I have described. If the hon. Gentleman does not subscribe to that view, the first people to whom he should make this fact clear are the shipworkers in his constituency.
  The Minister said something that sounded almost like praise of what had been taking place in the EEC with respect to shipbuilding. I find it difficult to find much of value or support for our industry in what has taken place in the European Economic Community. There has been total failure to make any progress on a scrap and build programme. No progress at all has been made in that connection. The fifth directive is not really helpful to our industry. The reduction of the intervention fund is not in the interests of British shipbuilding. I find little or nothing positive that has come out of the EEC to help our industry.
  As my hon. Friend the Member for Jarrow (Mr. Dixon) has said, the EEC refused to come up with a redundancy payments scheme for shipbuilding at anything like the same level of support that was forthcoming for steel. In their way, the rundown and the closures have been equally as dramatic in many riverside communities as have closures in steel areas. I do not find any cause to be satisfied with what has happened in terms of the EEC approach to shipbuilding. Indeed, I am almost inclined to say that there is no coherent approach at all. The Government would do well to take a far more aggressive stance in the Community in defence of British shipbuilding and British shipping.

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  The Minister referred to the defence programme. It is clear from what has been said and what has transpired that British Shipbuilders had no prior warning of the Government's switch of emphasis in terms of the change from surface vessels to submarines and the Trident programme. Effectively, the decision has blown a massive hole in British Shipbuilders' corporate plan, well below the waterline. It has been a very damaging experience for British Shipbuilders. As the Minister, I am sure, knows well, it is causing increasing anxiety in terms of the future, not only of some naval yards but also of the so-called mixed yards, such as Swan Hunter and others, because of a great lack of orders looming up, which will cause serious problems.
  Far from the current defence programme being a major support to British Shipbuilders, the reverse is the case. It may guarantee the future of one or two yards but it will do much widespread damage in the rest of the corporation's activities. The Opposition simply do not believe that the Trident programme is necessary or that even this Government will in the end be able to face the increasingly high cost of such a programme. The sooner the Government come to that conclusion and admit it the better it will be, not only for our defence but also for our shipbuilding interests.
  The Minister, almost apologetically, made the required genuflection—incidentally, to an array of empty Conservative Back Benches—about privatisation. He said that he understood Conservative Members' concern, but they were not here to express it. That showed how unnecessary was the genuflection that he made in their direction.
  The Minister did not advance one valid argument in favour of privatisation in the present circumstances. We believe that if many of the operations had been in the private sector they would not have survived. If the Government sought to dismember the corporation, some of the yards would not find buyers. If the warship yards, stuffed full of orders from the Ministry of Defence, were offered for sale, it would cause immeasurable damage to the corporation's remaining activities. It would end the great concentration of effort in design and the associated activities that the corporation has worked so hard to centralise, to economise on and to make more efficient.
  Mr. Gordon A. T. Bagier: In the absence of the Minister finding a good excuse for privatisation, will my hon. Friend remind him of Sunderland Shipbuilders Ltd.—which was part of a private holiday company called Court Lines—and what almost happened to that shipyard when the holiday company crashed?
  Dr. Cunningham: My hon. Friend, who has a major and successful shipbuilding operation in his constituency, has done that adequately. The incident shows that private enterprise in shipbuilding has failed in Britain. The evidence is that the industry would be unable to cope with the scale of the problems facing it if it were to return to private hands.
  If some of the policy issues that I have mentioned were taken up by the Government, they would provide a major boost to our important ship repair industry. Acceptance or achievement of a scrap and build programme would be a major gain for the ship repair industry. I regret that the Minister had nothing to say about that matter.
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  The Government should take a leaf out of the book of the United States of America. Lloyd's List contains a fund of information today. I refer the Minister to another front page article headed
  "Marad makes its shipping priorities clear".
  I see that the Minister's advisers are already unwrapping the article to which I referred. If the Government took the aggressive attitude towards shipbuilding and shipping that is increasingly being taken by the United States—that well-known home of free enterprise and market forces—British shipping and shipbuilding would be in a much healthier and happier state. The workers in the industry would be much happier about their future prospects.
  There is a strong case for relaxing financial limits to allow British Shipbuilders to invest more money. Incentives should be provided to British shipowners to have their ships built in British yards. There should be regulated and organised public sector ordering, especially for Royal Navy vessels. The Government should renounce any thought of privatising the assets of British Shipbuilders. They must adopt a much higher profile in discussions within the EEC about matters that affect British shipbuilding, especially the scrap and build policy.
  We believe that the Government should look at British shipbuilding and British shipping together. A concerted maritime strategy covering both industries would gain widespread support, not only from Opposition Members. It would be supported by British Shipbuilders, the General Council of British Shipping, the Confederation of Shipbuilding and Engineering Unions, the National Union of Seamen and the Trades Union Congress as a whole. It would almost certainly be supported by those organisations in the engineering industry that are so heavily dependent upon the future of British Shipbuilders. It is an opportunity that must be grasped. The Government have shown no sign of their willingness to do so.
  Mr. Anthony Nelson: I sympathise with what the hon. Gentleman said about the shipbuilding and shipowning sectors. Would such a policy imply that finance should be made available preferentially where orders are related solely to British-owned companies buying British-built ships? For example, the Ship Mortgage Finance Company Ltd. makes mortgage finance available for the purchase of ships at a preferential and low rate of interest. That money is available to British shipping companies to finance the purchase of ships anywhere in the world. If the scheme was limited to British yards—there is an argument for that—it might be opposed by shipping companies. It would help the House if the hon. Gentleman made known his position about that.
  Dr. Cunningham: I am arguing for significant aid to build British ships in British shipyards. I hope that my argument has not been unclear. I do not say that the proposal would be universally popular, but, as a maritime trading nation with major interests in shipping—Britain still has the fourth largest merchant fleet and is the sixth largest shipbuilding nation, although its production is now tiny—it is incumbent upon us to think about a programme that will bring together those interlocking interests. We need a programme that will offer us an industrial opportunity and an opportunity for employment, developing new skills and developing British technology and getting it sold world-wide. The Government should

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  address themselves to those matters and not just to the restricted nature of the Bill. However, I assure the Minister that we shall not seek to divide the House this afternoon.
  4.38 pm
  Mr. James Hill: I congratulate the Minister on a good opening speech, which received the approbation of the House and dealt with the conflicts that have occurred since the formation of British Shipbuilders.
  Although Vosper Thornycroft is not in my constituency, its dry docks are situated there and many of its employees live in Southampton, Test. Since Vosper Thornycroft took over the repair work of Harland and Wolff, when it pulled back to Belfast, the overall picture has been one of great hope. Until the cuts in Ministry of Defence expenditure, the yards, both in Southampton and Gosport, created much employment and prosperity.
  Naturally enough, I and the hon. Member for Southampton, Itchen (Mr. Mitchell) slightly resent the argument that more aid should go to the regions and less to what used to be the prosperous South. It is not 1981 talk to argue that regional aid and employment provisions should be concentrated on the North-East, the North-West, Scotland or Northern Ireland. The South of England also has an unemployment problem.
  Mr. Atkinson, chairman of British Shipbuilders, and his board adopted an active, imaginative and realistic approach. I pressurised them as much as I could from the Back Benches to take over the Southampton dry docks. They eventually reached agreement with the unions and the company now manages and owns the dry docks. As Mr. Atkinson was only too well aware, without these dry docks it would have been extremely difficult for Vosper Thornycroft to continue not only to repair surface warships but to build warships, with their complicated underwater structure. I am pleased that the company came to a workable agreement not only with the unions but also with the British Transport Docks Board and that after an emotive few months the situation has been resolved.
  The Opposition frequently tell the Government what they believe they should do. The Government have done much more to make British Shipbuilders viable than the Labour Government. Government support of £500 million by March 1981 is excellent. We are desperately willing British Shipbuilders to succeed. We see the same story over all the nationalised industries—carping from the Opposition and at least chequebook action from the Government. I congratulate the Department on its excellent support of British Shipbuilders.
  In the eyes of the public the Bill has little significance, as it is merely increasing the borrowing level. However, it is most important to have the levels increased from time to time. I am pleased that the top level will be £800 million, which will provide greater opportunities, particularly for building warships.
  Only a short time ago the building of warships was supporting the other operations. The picture is now different. The cut in the defence programme means fewer opportunities in the warship building yards. No doubt many Opposition Members will press the case for their regions that are already getting the maximum aid and forget that human emotions and families are involved whether a man is unemployed in Aberdeen, Liverpool or Southampton. Just as much careful thought and
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  consideration should be given to a constituency such as mine and we shall pressure the Government to ensure that we get our fair share of the orders available.
  Mr. R. C. MitchellCan the hon. Gentleman tell us how many people were unemployed in Southampton in 1979 before the Government came to power and how many are unemployed now?
  Mr. Hill: I believe, working from memory, that in 1979 unemployment stood at about 6 per cent.; it is now about 9·1 per cent.
  Mr. Gordon Wilson: Is that all? It is 16 per cent. in my constituency.
  Mr. Hill: Is the hon. Gentleman saying that the 9·1 per cent. do not count because he has 16 per cent. of his constituents unemployed? Is he saying that his people should eat for ever and mine should starve? It is an irrational approach. Unemployment in the shipbuilding industry is a general problem.
  The problem is more imminent in warship building than in merchant shipbuilding. The Opposition say that we should not sell warships to certain countries. That is ridiculous. Crowd control does not need a frigate or submarine. Gunboats do not drive up the high street. I will not name the countries. It is an idiotic suggestion. The Opposition frequently argue that we should not sell certain articles of war to certain countries. In many ways I agree.
  Mr. Stanley Orme: Will the hon. Gentleman give way?
  Mr. Hill: I serve on the Council of Europe migration, refugees and demography committee in Paris. We have studied human rights in Latin America. Those rights will not be advanced by our not selling warships to the surrounding countries. I am fighting for my constituents.
  Mr. Orme: Will the hon. Gentleman give way?
  Mr. Hill: The right hon. Gentleman will have his turn as a Front Bench spokesman. The Opposition do not wish to hear the truth, as was illustrated at Question Time today.
  I am pleased that the Government intend to bring private investment into British Shipbuilders. My only bone of contention is that Vosper Thornycroft wished to have the whole of its company back when the Conservative Government took control.
  The most encouraging aspect of the matter, which cannot be stopped by discussion inside or outside the House, is that world demand is increasing. Demand brings prosperity. It is the simple lesson reiterated by every Government spokesman. Manufacturers need customers. British Shipbuilders is beginning to gain from the increase of almost 50 per cent. in world demand. I hope that a certain percentage of the increased demand will be for warships.
  Mr. Ernie Ross: A Labour Government would not sell warships to Chile if the Government there continue to oppress their people. We have made that clear.
  Mr. Hill: I should back Vosper Thornycroft to the hilt to get an order from the Chilean Government. It would bring productivity and prosperity to my constituency and would not deprive anyone of his human rights. Frankly, the more orders we can get from any part of the world, the better.

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  The trade unions have co-operated completely, not only with the Government but with the British Shipbuilders management. A group of shop stewards came to the House at the time when British Shipbuilders and the British Transport Docks Board were negotiating to take over the dry docks. Their co-operation was magnificent, and it was right for the Minister to praise them. Even though 19,000 employees have left the industry, the prospects for the remainder are that much healthier. I am sure that as a result of the restructuring the industry will be much more healthy and able to compete against market forces throughout the Community, and with Taiwan, Japan and elsewhere.
  We have been told that the behaviour of the market and the prices available are dictated by the actions of Japan. It may be true. I wanted to put a question to the Shadow Minister the hon. Member for Whitehaven (Dr. Cunningham) when he spoke, but out of courtesy I did not interrupt him, when he said that the Community had done nothing. In fact, the Community has saved British Shipbuilders from a lot more harm. The Community agreed that there should be a uniform subsidy to shipbuilding yards within the Community. If it had not been for that I could understand one or two countries heavily subsidising their industries to the detriment of other members of the Community. There would have been a subsidy war which we could not have won. I hope that the Minister, in winding up, will give us more details of the way in which the Community, by agreeing on an overall subsidy structure, has aided British Shipbuilders in its survival plan.
  I hope that the British Shipbuilders corporate plan will be investigated by the Select Committee on Industry and Trade. That Committee has already dealt with a corporate plan for British Steel and one for British Leyland. It would, therefore, seem natural to examine the corporate plan of British Shipbuilders. It would be easy at the same time to find what effect the increase in cost by British Steel would have on the corporate plan during the next two to three years, because, as we all know, the chairman of British Steel has announced that he wants to increase his prices for steel products in the future.
  The EEC shipbuilding directives that I mentioned earlier need more explanation. Those hon. Members who hardly leave the Tea Room of the House of Commons probably know a lot about events in Chile and South Africa, but they know little about what happens in the Community. I hope that my hon. Friend will give more information—perhaps not tonight—about Community policy on shipbuilding and how the various directives affect the industry and the manning programmes. If he can do so, it will be a great help to the House.
  I am pleased to hear that United Kingdom yards are getting orders from the Far East for the bulk carrier, the Great Lakes vessels, newsprint carriers and offshore supply vessels. We are and always have been a maritime nation, and the fact that we now have a smaller fleet is probably because many vessels are registered under flags of convenience. The price of labour has probably attracted less scrupulous shipowners to operate under flags of convenience, perhaps even to survive. As I said, we are a maritime nation, and the South Coast has been famous for warship building for many centuries.
  The present recovery plan for the "Mary Rose" is coming along well, and another £1 million or so is required. Perhaps I should not quote Henry VIII as a great warship builder, but we in Southampton depend on the
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  warship trade. We have unemployment problems. Highly-skilled men who are unemployed in the shipbuilding industry have great difficulty in finding alternative employment. That should not all go to the North-West, the North-East and areas for which the voices of Opposition Members are the loudest. It should be structured, and I hope that when Mr. Atkinson reads our proceedings tomorrow he will do all that he can to obtain further warship orders throughout the world for what was—and, I think, can still be—the most profitable side of British Shipbuilders.
  4.57 pm
  Mr. R. McTaggart: I am glad to have the opportunity to speak in the debate, not least because I am a former employee of British Shipbuilders at its Govan yard. Although, as my hon. Friend the Member for Whitehaven (Dr. Cunningham) said, we shall not oppose these measures today, I want to express my bitter disappointment that they do not go much further.
  I have kept in close contact with many of my former colleagues and friends. I wish to point out certain anomalies in the present redundancy scheme, particularly for former members of the work force who are over 40 years of age. Depending on length of service, people over 40 years of age, as well as qualifying for the State redundancy scheme and the British Shipbuilders redundancy scheme, also qualify for a pension. That pension is based on earnings throughout service. The total entitlement is spread in weekly payments over two years. Many Conservative Members may not know, and I urge them to read the facts before the next general election, that unemployment benefit is paid to an individual for only 52 weeks. When those 52 weeks are up, he reverts to some other form of State aid which is means-tested. It is normally supplementary benefit. Under the present scheme, an employee qualifies for a State pension of perhaps £5 a week to be paid over two years. That may be all right for the first year—the £5 being to help reduce the hardship of unemployment—but in the second year of unemployment the person's pension is taken into consideration and his supplementary benefit is reduced by a corresponding amount. Many people, because the pension scheme is an inducement for them to give up their jobs and voluntarily to become redundant, feel 12 months later that they are being conned. Although it may be costing the British Shipbuilders pension fund, money is going back into the Government's coffers.
  A much fairer scheme would be to divide the sum by 52, spreading any pension entitlement over a one-year period. I am sure that that would get rid of much of the resentment which now prevails in the industry. The scheme was probably well intentioned. It was intended that people looking for alternative employment would have extra money at that time. However, unfortunately the unemployment figures have tended to rise. It is possible that many of my former colleagues who took redundancy in the hope of alternative employment, particularly if they were over 40, will have little chance of working again.
  I am disappointed at the plans for the future of shipbuilding. The Government say that the recession is bottoming out, that silver clouds are in the sky and that by the end of the 1980s industry and commerce will be on the up and up.
  The yard at which I worked used to take on 140 apprentices a year. This year only 25 apprentices have

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  been taken on, and that was only after much arguing by the shop stewards. If the upsurge comes for shipbuilding there will be a dearth of skilled tradesmen to meet the demand. There was never a more opportune time to encourage British Shipbuilders to set up a fund to enable it to take on apprentices.
  We are told that the first two years of an apprentice's training is the most uneconomical for an employer, that the employer receives little return for the in-depth training given to an apprentice. However, a ship is a floating town and needs all the skills of joiners, carpenters, plumbers, electricians and engineers. Apprentices could be trained in the shipyards to create a pool into which employers could dip when the industry picks up. That would go a long way to wipe out the criticisms of the YOP. It would benefit private employers and show that the Government are truly concerned about youth unemployment.
  Britain is an island nation. It needs shipping and a healthy shipbuilding industry. My suggestions would solve some of the problems experienced by British Shipbuilders, but much more is needed. Encouragement and inducement are required so that owners not only scrap and build but scrap and build British. Since we want to build a competitive industry for the future I urge the Government to take my ideas on board.
  5.3 pm
  Mr. W. E. Garrett: I shall not attempt to emulate the hon. Member for Southampton, Test (Mr. Hill) by rambling to Chile or elsewhere. I shall concentrate on matters arising from the Minister's speech. I was pleased that he referred to the work of the chairman of British Shipbuilders and his excellent team of officials. Mr. Atkinson served his apprenticeship at Swan Hunter in Wallsend and has risen to the top of the industrial world. He is a man of tremendous experience. I pay tribute to the senior officials who roamed the world for orders. Having listened to them, I realise that theirs has been a hard and difficult job involving many weeks from home. Attaining such orders in spite of the competition is no mean achievement. The House and employees in the industry should give credit where it is due.
  We live in a difficult world which is particularly difficult for the shipbuildng industry. People who depend on the industry for their living appreciate that the Government have recognised the importance of the industry by raising the borrowing limits. A year ago I did not think that that was possible. I thought that the shipbuilding industry, like other industries, would suffer severe cuts in cash. At last there is some recognition that some industries need State funds to survive, at least for the time being.
  The issue is not all negative. Some of the money has been used for training, as it will be in future. The skills of our technicians in the higher echelons are equal to any skills in the world. Without the skills acquired in the shipbuilding, ship repairing and marine engineering industries we should have had great difficulty in obtaining the craftsmen and skilled personnel to man our offshore oil industry. Plumbers, fitters, electricians, riggers and many other skilled personnel in that industry started their careers in the shipbuilding industry. I agree with my hon. Friend the Member for Glasgow, Central (Mr. McTaggart) that we should maintain and possibly improve the input of
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  apprentices, not merely for the future of the shipbuilding industry but for the future of the other technologies which I have mentioned.
  When the cash is allocated for research I hope that the Minister will consider the industry's orphan—marine engineering. If the British shipbuilding industry obtained a fraction of the money for the development of marine engineering that is given to the car industry we would re-establish ourselves as the biggest and most important marine engineering industry in the world.
  We have slipped to an abysmally low level. However, we can improve and obtain orders in this highly competitive field. We have some expertise in marine engineering. If we spent more money on research and development it would be a better investment than putting it in some sectors of the car industry.
  I acknowledge that there have been some hiccups in industrial relations lately. The Robb Caledon dispute comes to mind. I always try to keep out of industrial relations because, as a Member sponsored by the AEUW, I should probably be told to mind my own business. However, in the last few years there has been an improvement in industrial relations. Perhaps my hon. Friend the Member for Whitehaven (Dr. Cunningham) will disagree with that. The hiccups are nothing compared with what used to happen. Goodwill and understanding exist on both sides. I believe that there will be closer liaison to get the best out of the industry and the best for the nation.
  If hon. Members knew the competition involved in obtaining ship repair orders, getting the ship into the repair yard or close to the docks and meeting time limits, they would understand how important industrial relations are. The ship repair sector is not doing too badly—things could be better—relative to world conditions.
  The shipbuilding industry is in a slightly better shape than it was on the last occasion that we debated the borrowing powers. It is certainly much leaner. It is improving, and we are moving up the world league. Credit is due to all concerned. I hope that the Government's future role will be to encourage both sides in that important industry to work together to the benefit of all.
  5.10 pm
  Mr. Gordon Wilson: The hon. Member for Wallsend (Mr. Garrett) made a thoughtful speech. He rightly said that the shipbuilding industry is on the upturn. We should congratulate those yards that have recently secured valuable orders—all the more valuable because they have been won against extensive competition. That is good for the morale of the industry.
  The hon. Gentleman said that there had been some industrial relations problems in the industry. He referred to the Robb Caledon dispute as a "hiccup". For the city of Dundee, that hiccup is a mighty disturbance in its bodily system. It is having a substantial knock-on effect throughout the industry.
  Mr. W. E. Garrett: I must apologise if I gave the hon. Gentleman the wrong impression. I was not saying that it did not affect the people of Dundee. I know that it is not a hiccup to them.
  Mr. Wilson: I am grateful to the hon. Gentleman for his apology. I have known him well for many years, and I know that he did not mean to convey that impression.

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  Dundee has already lost 800 jobs, and 141 men should still be employed at the Robb Caledon yard. The effects of the dispute have spread far and wide beyond Dundee. It is essentially linked with a breach of the Blackpool agreement. The industrial objections were called off recently because it was hoped that the problem would be solved if the yard was taken over by Kestrel Marine. People in Dundee thought that that would take place. Unfortunately because of the attitude of the ports authority which sought to secure land on the site occupied by British Shipbuilders in the harbour area, the Kestrel takeover has been shelved, at least for the time being.
  I hope that the negotiations will resume. I call upon the port authority in Dundee to accept the industrial case for the build-up and use of the harbour area. It should allow Kestrel Marine to have the land that it requires. The Robb Caledon workers should be transferred to the operations of Kestrel Marine, thereby retaining the employment based on that site. Nevertheless, the negotiations have fallen through. The trade unions will have to look again at their attitude towards British Shipbuilders.
  If Kestrel Marine does not take over the yard, British Shipbuilders could be in breach of the Blackpool agreement on non-voluntary redundancies. The redundancies at Robb Caledon are compulsory. It is ludicrous to propose that the workers go to Leith, some 60 miles away, on a regular day-to-day basis. The explanation given by British Shipbuilders that the redundancies are voluntary is not acceptable to any reasonable person. There is a danger that the industrial problems afflicting British Shipbuilders since September will resume.
  I hope that the Minister is listening carefully. I urge him to intervene in the British Shipbuilders—Robb Caledon problem. It will do nobody any good—not the Government, British Shipbuilders or Dundee—if the dispute is allowed to drag on, week in week out, with a sit-in at the yard. The Minister has had cited to him the cases of two yards that previously appeared to be in danger of closure—the yard at Govan and the UIE yard—formerly Marathon—at Clydebank, both of which are doing extremely well. Simply because a yard has had difficulties in the past does not necessarily mean that it must be closed and the shipbuilding operation curtailed or ended.
  If the Robb Caledon yard had been given the necessary capital investment, and especially the opportunity of orders supplied by British Shipbuilders, it would have fulfilled its orders effectively and efficiently. Faced with the prospect of further industrial problems for British Shipbuilders, at a time when the market for shipbuilding is improving and when it is showing that it can win orders on the international market, it is sensible and pragmatic for the Government to suggest to British Shipbuilders that it reconsider the position of shipbuilding in the Dundee area.
  The original legislation involving the nationalisation of the yard was incomplete and weak in the industrial duties placed on British Shipbuilders. It should have been placed under a legal obligation to take a greater interest in its operations so as to maintain employment in areas that lack job opportunities. British Steel has gone out of its way to use the facilities made redundant to steelmaking by entering the area of factory erection and other businesses. That attitude is far more constructive and positive than that displayed by British Shipbuilders in closing down the Robb Caledon yard.
  In the past I have been severe in my criticism of the management of British Shipbuilders. It has acted in a way
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  that would have caused Victorian employers to have second thoughts. It has deliberately gone out of its way to assassinate the Robb Caledon yard and, through a starvation of orders, to prevent it from competing to build ships. Having made those trenchant criticisms of British Shipbuilders, I hope that it will realise that it would be better for the overall health of the British shipbuilding industry, as well as for the industrial health of Dundee, if it admitted that it was rash and mistaken and now went out of its way to provide orders to allow the men at the Robb Caledon yard to prove that they can produce the ships for which the yard was intended. Given that opportunity, I am sure that they would rise to the challenge.
  5.18 pm
  Mr. Don Dixon: I apologise to the Minister and my hon. Friend the Member for Whitehaven (Dr. Cunningham) for not being present at the start of the debate. I had to attend a Select Committee. In spite of all the talk about productivity, I have not yet worked out how to be in two places at the same time.
  Like my right hon. and hon. Friends, I welcome the Bill. Clause 1 extends the borrowing powers of British Shipbuilders. Clause 2 extends the date by which redundancy payments can be made. When the previous Bill was debated, my right hon. Friend the Member for Deptford (Mr. Silkin) quoted Iain Macleod as having said, on a similar occasion, that to vote against such a measure would be like shooting a one-legged Santa Claus. That sums up the Bill.
  Since I have been a Member of the House, we have debated the shipbuilding industry many times, and on every occasion, as now, we have discussed redundancy and limiting the powers of British Shipbuilders My hon. Friend the Member for Wallsend (Mr. Garrett) said that there had been a hiccup in industrial relations. The only reason for it is that the men are concerned about being thrown on to the streets. The shipbuilding industry has been subjected to this kind of treatment for years. I know what I am talking about on this subject, because I have worked in the shipbuilding industry all my working life. I have been unemployed on many occasions. I still live among shipbuilding families and I know the hardships that they endure when the breadwinner is out of work.
  I pay tribute to the Labour Government for nationalising the shipbuilding industry. If they had not done so, we should not now be having this debate, because there would have been no shipbuilding industry left to debate. I should also like to give credit to my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) and his colleagues for their hard work in getting the legislation on the statute book.
  The shipbuilding industry is a typical example of the failure of competitive capitalism. We in Jarrow are still dealing with some of the scars of the pre-war years. The slag heap at the centre of Jarrow, which was an eyesore for many years, was eventually cleared and we are having to pay a substantial sum to the owner of the land on which the heap was situated.
  The shipbuilding industry has been contracting for a considerable time. The Minister said that 19,000 people had been made redundant since 1979. Between 1958 and 1965 manpower in shipbuilding fell from 90,000 to 50,000. I should like to see in the Bill provision not necessarily for an extension of the borrowing powers of British Shipbuilders but to give it more money to invest

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  in equipment and plant. That is what British Shipbuilders wants, because it has been starved of investment for many years.
  I was pleased that the Minister said, when referring to productivity, that we should compare like with like. Mr. Robert Atkinson, the chairman of British Shipbuilders, wrote a letter to The Times which was reproduced in an article in this month's Shipbuilding News. In the course of giving the reasons for the decline of the shipbuilding industry in Western Europe he said:
  "The postwar growth of foreign fleets and shipbuilding is not because of failure but because of a combination of factors such as nationalism, changing patterns of world trade and, above all else, the financial, taxation and other direct and indirect support given by foreign governments to their home shipping and shipbuilding industries."
  When talking about competition, we must remember that British Shipbuilders is operating in an unfair market, because other countries give hidden subsidies to their industries. We should bear that in mind when considering British Shipbuilders and the men who work in it.
  When the industry was in private hands it was starved of investment. There was virtually no investment. A survey was carried out in the early 1970s which showed that, for every man employed in the British shipbuilding industry, the asset worth was £825. For everyone employed in the industry in West Germany the asset worth was £1,000, in Italy £1,200, in Sweden £1,800, and in Japan £2,800. A later survey showed that an additional amount of only £80 per man had been invested in the British shipbuilding industry. West Germany had invested a further £162 per worker, Japan a further £409, and Sweden a further £554.
  My hon. Friend the Member for Whitehaven mentioned Lloyd's List. In September it stated that Japan's seven largest shipbuilders had earmarked £626 million for investment in plant and equipment this year. That is the sort of investment with which British shipbuilding workers have to compete.
  We are sick and tired of reports on the industry. There was the Paton report of 1962, the Geddes report of 1966 and the Booz Allen report of 1972. Every one of those reports referred to the lack of investment in the shipbuilding industry. Indeed, there was never a better case presented for nationalisation than that set out in the Booz Allen report.
  When talking about prices and competitiveness, it should be remembered that the work of British Shipbuilders accounts for only 28 per cent. of the price of a ship. The suppliers and others outside the control of British Shipbuilders account for the remaining 72 per cent.
  I was pleased when the Minister referred to good labour relations. The chairman of British Shipbuilders stated in the report and accounts that the number of days lost through industrial action during the year was fewer by 1,000 than the total number of days available. That is worth noting.
  In a previous debate, I said that men working in British shipbuilding yards were still pushing shell plates around on wooden barrows. My hon. Friend the Member for South Shields (Dr. Clark) and I invited the hon. Member for Beeston (Mr. Lester), who was then an Under-Secretary of State for Employment, to visit one of the ship repair yards on South Tyneside. I showed him one of the wooden barrows which was still in use there last year. That
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  is the sort of equipment that the men in the industry are having to use while faced with competition from other countries.
  The Government's decision to cut back on the surface fleet will hit mixed yards such as Swan Hunter, especially in the North-East, where there is a great dependence on shipbuilding. The cutback will have a tremendous effect. Nearly 8 per cent. of those working in manufacturing industry in the North-East are engaged in the shipbuilding industry. The region provides 20 per cent. of the total work force in the shipbuilding, ship repairing and marine engineering industries. Any further contraction will hit areas such as the North-East extremely hard.
  When the previous Labour Government negotiated the Polish deal there was a great deal of criticism from Conservative Members. In fact, it was one of the best deals ever to be negotiated. It is far better to build ships for Poles than to send them food parcels, although in the present climate no one criticises the aid that is being given to the Poles.
  In my area 672 skilled platers were signing the book earlier this year. At that time there was not one vacancy in Tyne and Wear. At the same time 924 skilled welders were signing the book when there were only two vacancies. On 28 October the Newcastle Journal included an article about 7,000 drivers in the North-East chasing 67 jobs. On 9 November the same paper featured a report about 3,000 school leavers in the Sunderland area on Wearside chasing 41 jobs.
  Dr. David Clark: Does my hon. Friend agree that that led to tragic advertisements in the North-Eastern papers towards the end of last year on behalf of the MOD, when it urged people to apply for a job for life in the Chatham dockyard? The boilermakers, the coppersmiths and the platelayers have now been served notice. Not only that, but they are likely to be turned out of their tied houses in Chatham. That is a desperate situation.
  Mr. Dixon: That is in line with what the Prime Minister says, that the unemployed should be mobile. What happens when people move from areas of high unemployment to areas where they can obtain jobs and there is contraction of employment in that area? The last in are the first out. People who have moved hundreds of miles from their friends and families find themselves out of work again. That is a tragedy. It is nonsense that we should be jumping on our bikes and moving to different areas to find jobs.
  The Mercantile dry dock in a ship repairing yard in my constituency was put on care and maintenance by British Shipbuilders. That repair yard worked through the war. Hitler's bombers could not stop that yard repairing ships. The men worked on night shifts during the war. However, the Government have put the screws on and those men are now signing the book.
  Clause 2 extends the date for redundancy payments. It is interesting that the Bill states that the
  "current average benefit under existing schemes is about £3,800 per employee."
  When the Shipbuilding (Redundancy Payments) Act was introduced, there were banner headlines about shipyard workers receiving golden handshakes of £10,000 plus. That statement in the Bill proves how misleading those newspaper reports were.

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  Earlier I asked the Minister why there were different redundancy payments for shipyard workers, steel workers and mine workers. They have all been made redundant by nationalised industries. They all live in areas where there is little, if any, alternative work. Most of the workers who are made redundant are 40 and over. There is little prospect of them ever being employed again.
  Therefore, why is there that difference in redundancy pay? The Minister said that there were different agreements. Is that a reason—because the shipyard workers have been too co-operative? If that is the Minister's reason, no wonder there will be bad labour relations. There is no reason why shipyard workers, miners or steel workers should have different sums of redundancy pay. We are selling not only an existing job, but a job opportunity for someone who is to come into the industry at later date.
  What has happened to the scrap and build scheme, to which my hon. Friend the Member for Whitehaven referred? We have asked that question repeatedly. Japan has had a scrap and build scheme for a considerable time. What incentives will the Minister give to shipowners to build in this country? I accept the point made by my hon. Friend the Member for Glasgow, Central (Mr. McTaggart), that if incentives are to be given they should be incentives to build in this country. Bearing in mind that the Minister has just been transferred from the Department of Energy, will he give additional finance to the British shipbuilding industry for more research into converting ship's boilers from burning oil to burning coal?
  We would like to see the Minister take those steps. If possible, the borrowing powers of British Shipbuilders should be extended. We want more than just an extension of the period in which redundancy payments are given. That is not sufficient support.
  A while ago I heard a tale that reminds me of what is happening in the industry today. It was the tale of the donkey and the economist. The economist decided to reduce the amount of oats that he gave to his donkey by a handful each week. Later he said to one of his friends that he had reduced the amount to only a handful per week, and would have reduced it further, but the donkey had died of starvation. That is what we are facing in the British shipbuilding industry.
  British Shipbuilders should not become the Shipbuilding Security Co. Ltd. of the post-war era. We saw what happened before the war when the assets were sold in the shipyards and there was an embargo of 40 years on the yards so that ships could not be built. That happenend to Jarrow in 1936. A few years later, in 1939 the Government pleaded with the men to go back and build ships because of the war.
  We live on an island in a world with seven-eighths of its surface covered by water. We depend on trade, on ships to carry that trade and on the shipbuilding industry to build those ships. Therefore, I hope that the Minister will take on board some of the points that my right hon. and hon. Friends and I have made.
  5.36 pm
  Mr. Frederick Willey: I support the speech of my hon. Friend the Member for Jarrow (Mr. Dixon). He has said effectively what should be said in the debate. I also congratulate the Minister. If my recollections are right, he was on the Opposition Front Bench on the last occasion that we discussed this matter.
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  The Minister made it clear that this Parliament will not carry out privatisation. That is a good thing. We were asked why the Bill was brought in early. I believe that it is for the same reason—to satisfy British Shipbuilders that it will not be interfered with for the rest of this Parliament.
  However, what the Minister did not do was to explain why he was introducing the Bill. The measures were introduced for only a limited time. They were supposed to be once and for all. Why is the Minister extending them? My hon. Friend the Member for Jarrow gave the reasons. We must compare this country with other competing countries. There is no alternative but to help. That is Mr. Atkinson's view, and he has gone much further. He has made it clear, to me at any rate, that we will have to do something about Japan and Korea. That is why it is proper that we should spend some time looking at the EEC. We should have been told why the scrap and build programme was abandoned. We want to know what the EEC will do. The measures that are being taken now are helpful, but not nearly enough.
  I have spoken along those lines since I came to the House. We have got to ensure fair competition. I spoke when British Shipbuilders represented more than half the world's shipbuilding capacity and it is material that really we deal with the matter.
  I agree with my hon. Friend the Member for Jarrow about redundancy payments. We want an extension of those payments, but that is not enough. The help has been negative when we needed positive help. Associated with closures we need the provision of alternative work. That affects me in Sunderland. I am still concerned about Doxford's. What will be provided there? We probably have the two best shipyards in Europe. We have orders for as long as it is worth taking orders, but far fewer men are engaged in the yards than a few years ago. However, we want someone to take the responsibility and some provision to be made for alternative work. I am told that this is ridiculous, but it is not.
  At present, we are receiving well over £100 million in unemployment pay. That is a large sum for one locality to receive. One out of every four of our men is out of work. There should be an association between the cost and the provision of alternative work. That would be a positive measure that the Government could undertake.
  The present position is not a reflection upon the industry. British Shipbuilders has shown that management is important in industry, and we should give credit to Mr. Atkinson who has made considerable changes in management and great economies at headquarters level. However, there is still much to be done. We must go back to the discussions that took place when the Bill was introduced. There is still much to be done to get better industrial relations. They have been improved, but they must be further improved. We must ensure that the management is the best that can be provided.
  5.41 pm
  Mr. Ernie Ross: Like my right hon. and hon. Friends, I welcome this chance to discuss British Shipbuilders and the role of its work force and management. Clearly, as a maritime nation it is important that this, one of our basic industries, should be sustained and supported. All the signs show that we are gradually coming out of the shipbuilding recession, and the only way

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  to be able to take advantage of that is by having a nationalised industry that is able to react and compete internationally.
  "Since its restructuring, made possible by nationalisation, British Shipbuilders has worked miracles in a period of world recession."
  That comment was made in a pamphlet published last year by my union, the TASS section of the AUEW, entitled "The Future of British Shipbuilding". The comment is borne out by the end-of-year figures in the latest British Shipbuilders annual report, and the recent spate of merchant shipping orders.
  Despite the tremendous problems facing British shipbuilding—opposition from the EEC, the high inflation level and the continued strength of sterling against the currencies of our main competitors in Europe and Japan—the corporation's losses for the financial year ending March 1981 were slashed. The annual report reveals a trading loss of £41·44 million, £68·49 million down on the previous year. When added to the intervention fund subsidy, the total loss was £85·54 million, well within the Government's loss limit of £90 million set at the start of the year. At the same time, the corporation used only £176 million, including the intervention fund money, of the £185 million external financing limit. Clearly the workers and the board are to be congratulated.
  There is no disputing the financial summary of the chairman of the corporation, Mr. Robert Atkinson, who said:
  "The corporation is achieving improvements and a steady reduction in the level of both losses and cash requirements."
  The congratulations of the House must not go to management alone. They must also go to the work force, which has made it all possible through its achievements. In recent years, strikes and stoppages have been well below the national average, with only 0·1 per cent. of man hours lost in the last year. Along with significant improvement in production—as the Minister conceded, an average of 15 per cent. in merchant yards—ships are now being delivered on or ahead of schedule at competitive prices. The House should congratulate the corporation and the work force on their efforts, encourage them and make clear that we intend to continue supporting the industry and to make it viable.
  Warship building, the one consistently profitable division, has in recent years been almost entirely dependent on Royal Navy orders. According to the chairman of British Shipbuilders, the suddenness in the reduction of Ministry of Defence work will put at risk several thousand jobs. The loss of Royal Navy orders has prompted British Shipbuilders to renew its efforts to sell more warships abroad to take up capacity. But, as should be obvious to the Government and to the House, that takes time, special arrangements and a more suitable product range. Export orders will go only to nations that are willing to offer early delivery of a proven design that is already built. The United Kingdom has no production lines of general purpose frigates.
  In May, British Shipbuilders submitted its corporate plan to the Government in which it attempted to chart a course of viability along which the corporation could progress. But the corporate plan was drawn up in a vacuum, without warning of the Ministry of Defence
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  review bombshell. That is just one example of the United Kingdom's unco-ordinated approach to British shipbuilding.
  Mr. Tristan Garel-Jones: Is the hon. Gentleman saying that he regrets the review that has taken place and that he would wish the expenditure on defence to continue and to be extended? If so, that is a novel departure for the hon. Gentleman.
  Mr. Ross: I should like to make it clear that while I have opposed the Government's defence policy, and shall continue to oppose it, nevertheless, at this stage, many of my colleagues in the trade union movement are employed in shipyards. They are anxious to diversify, but at present they are building ships. As I made clear earlier, I am speaking on behalf of my colleagues in the shipbuilding industry.
  Mr. Orme: Is not my hon. Friend saying—this is a point that I should like to make to the hon. Member for Southampton, Test (Mr. Hill)—that the money that will be wasted on Trident and nuclear weapons to which we are opposed should be spent on conventional forces that will be needed for a considerable time and which will provide work in the workshops and shipyards about which he is talking? The money that will be thrown down the drain on a few nuclear weapons is a complete waste of public expenditure in Britain.
  Mr. Ross: My right hon. Friend is, of course, correct. I would want to go further and diversify in the yards to use the skills of the work force there for other projects. There is not one Labour Member who does not wish to defend the country. But we wish to defend it for different reasons from those advanced by Conservative Members. We do not wish to defend it simply so that it can become an island and a battleground for the Americans. I want to defend it on behalf of the people who live here.
  Mr. Hill: The hon. Gentleman obviously has the same problems that I have in Southampton. I went to the extent of saying earlier that, regardless of where surface warship orders come from, I would be prepared for British Shipbuilders to find the orders. Would the hon. Gentleman reciprocate on that?
  Mr. Ross: Absolutely not. In no circumstances would I sell any type of warship to South Africa or Chile. Nor would I encourage any of my colleagues or hon. Friends to associate themselves with such a proposal. That has been the policy of previous Labour Governments on Chile.
  The unco-ordinated approach which, unfortunately, has been forced on British Shipbuilders is one to which we object. The pamphlet to which I referred earlier argued for a national maritime policy. When my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) was Prime Minister, he designated the Lord Privy Seal as the co-ordinating Minister for maritime affairs. The Greenwich Forum has urgently argued for a national maritime policy, co-ordinated by a senior Cabinet Minister without departmental responsibilities who would be supported by a maritime policy staff and a senior official as full-time director. The staff would be seconded from existing Departments with major maritime interests, including the Ministry of Defence, the Departments of Trade, Industry and commerce and Transport, and the Home Office. Such a structure would ensure that Ministry and Government decisions were part and parcel of detailed

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  consultation within the industry. Consequently, a corporate plan would be drawn up with full knowledge of Government intentions.
  It goes without saying that my union utterly opposes denationalisation in any form. Our view on that has been expressed in other debates and in the TASS pamphlet. In July 1981, the previous Secretary of State, convinced by the financial realities of hiving off, drew back from precipitate privatisation. Nevertheless, as we heard today, it remains a major manifesto promise for Conservative Members. If they return to the subject, we assure them that there will be outright and total support from Labour Members for the views that I have expressed.
  On a lesser scale, but of no less concern to Labour Members, there have been attempts in a minor way to hive off particular yards. I turn to the problems that I and my colleagues face in Dundee. The yard at Haverton Hill was closed and is now rented to a private company, William Press and Son. Part of the dry dock facility at Bingham and Cowan has been rented to two of its previous managers who have established a private company. Clark Hawthorn at Hartlepool is due for closure. In the previous financial year, £5 million was received from the sale of assets.
  British Shipbuilders will stay intact only if it receives adequate Government financial support. A world-wide subsidy war is still being waged. One has only to consider Japan, which increased its shipbuilding production during 1980 by 1·4 million tonnes to 6·1 million tonnes and in April announced loans on a further 31 ships with a gross tonnage of 1·83 million, to be built in Japan under the latest shipbuilding programme which is even more preferential to Japanese shipbuilders. In July 1981, United States naval yards were given a further boost by the Reagan Administration with a plan to increase United States naval forces to 600 ships.
  The United Kingdom leads the European shipbuilding nations, but it has been overtaken in the world lead by those countries which heavily subsidise their domestic industries. If we wish to have a strong, viable domestic industry in this country, we must do more for British Shipbuilders.
  The hon. Member for Dundee, East (Mr. Wilson) referred earlier to the problems facing Dundee. A determined British Shipbuilders board has decided that the Robb Caledon yard will close and will not reopen under British Shipbuilders management. Thus British Shipbuilders seeks to end 108 proud years of shipbuilding in Dundee. Many people, myself included, are determined to ensure that that does not happen. The shipyard is as much a part of Dundee as the famous Tay Bridge or the Law Hill. It has trained and educated apprentices who have become the backbone of the light engineering industry of which we are so proud. That industry has attracted international and multinational companies to Dundee, many of which are currently experiencing a boom period, sustained by engineers trained in a yard which British Shipbuilders is determined to close.
  I remember walking into the yard as a 16-year-old in 1958. It was like walking into an industrial museum, and I wondered whether I had stepped back into the 1900s. Yet in that industrial museum the work force has built ships at the very edge of technology, carrying its name and skills throughout the world where they are regarded with great admiration. We are determined that those skills will not be lost to Dundee.
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  There has been a history of misinformation from British Shipbuilders about Robb Caledon, Dundee—on productivity, finance and, most important, intention. British Shipbuilders has either misinformed people or deliberately had no intention of living up to its promises. The work force has been misled and deceived with promises which the British Shipbuilders board never intended to fulfil. Unemployment in Dundee has increased by 90 per cent. in two years of Conservative Government. At present, the odds against finding a job are 60:1 generally, but in engineering the figure is 280:1. For the 140 workers in the tenth week of their sit-in at the yard, the odds are even worse. Not only are there no shipbuilding jobs, but the alternatives are a 120-mile round trip to a yard at Dailly, or the upset and upheaval of moving permanently to another area.
  There is some light on the horizon for those workers, however. A company in Dundee with a very good record in oil-related construction work wishes to take over the yard if British Shipbuilders does not reopen it. The company is having difficulties, however. It would be helpful if the Minister would take note of some of the difficulties being experienced by Kestrel Marine in discussions with the port authority and convey them to his right hon. Friend the Secretary of State for Scotland, who has nominees on the port authority whom he might influence or even direct. At the very least the Secretary of State for Scotland should discuss with them how best to proceed. If British Shipbuilders is determined to keep the yard closed, the skills of the Robb Caledon work force, which has proved its ability and flexibility over many years, should not be lost to the city. Kestrel Marine should at least have the opportunity to take over the facilities and the work force and to expand.
  The present problem seems to be that Kestrel Marine requires to take over almost the entire 21-acre site on the waterfront currently occupied by Robb Caledon. The port authority, rightly and responsibly, is concerned that if it reassigns the lease on the yard to Kestrel Marine, a private company, the site might not be developed to its full potential. I have said publicly that I accept the importance of the port authority carrying out its responsibilities and assuring itself that if the lease is reassigned the developer intends to develop the site to its full potential, but there seems to have been a breakdown in communications.
  The potential developer, Kestrel Marine, has a good and proven record and is among the top three companies in oil module work in this country. Kestrel Marine wishes to build a flow line module-building production site on the present Robb Caledon site and to be linked with its existing facilities, thus doubling capacity almost immediately. It is currently quoting for orders based on the probability that it will be able to take over the site. If there is to be development at the site, that proposal by a company with a proven record in this sphere would have the support of the people of Dundee. Certainly for the workers at the yard it offers at least the hope of long-term employment.
  I hope that the Secretary of State for Scotland will read the debate and that the Minister will pass our comments on to him, as I know that there is to be a meeting tomorrow, called by the local authority, bringing Kestrel Marine and the port authority together to try to iron out the difficulties. That meeting will be followed by a meeting of the port authority on Friday to take the final decision on reassignment of the lease on the site. It is extremely

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  important that everyone should be concerned with the best long-term interests of the area and the skills at present unused in the yard.
  That will in no way remove the difficulty that still exists—the failure of the British Shipbuilders board to accept the Blackpool agreement and its contents. Ultimately, there will have to be a decision about its intention to break that agreement and to force redundancy on to the 140 employees presently in that yard. That argument will have to be settled, but it is an argument that the unions are quite capable of discussing and handling with British Shipbuilders.
  We on the Opposition Benches welcome the Bill, although it does not go far enough. However, in Committee we shall be able to convince the Government of the need to increase the limits in the Bill in the best interests of the British shipbuilding industry.
  6.1 pm
  Mr. Frank Field: I follow my hon. Friend the Member for Dundee, West (Mr. Ross) in expressing support for this measure but I must say that it is a funny little Bill. It deals with two aspects of the shipbuilding industry. The first aspect is the external finance level and the second is the time limit for the redundancy payment scheme.
  My hon. Friend the Member for Whitehaven (Dr. Cunningham) asked why the Bill was being introduced now. What is so important about the external finance level or the redundancy payment scheme's time limit when there is no pressure on either front? Hon. Members may object to the way in which the Government have brought forward this measure while failing to provide the House and the industry with crucial information. Hon. Members needed to know what the Government's plans are on defence spending. To have a shipbuilding debate without that information is like trying to perform Hamlet without the ghost. For some of my constituents, that information is a ghost.
  I believe that I am correct in saying that the industry put its corporate plan to the Government in May 1981 but has not yet had a response. At first, we understood that there was no response because the Government were reviewing their defence strategy. Indeed, they reviewed their defence strategy and announced their changes. During the Navy debate before the Summer Recess some hon. Members wondered, if the Government went ahead with changes—and the cost of Trident continued to rise—whether further cuts would be inevitable in the Navy budget. We were assured before Parliament rose for the Summer Recess that there was no chance of the Trident budget escalating. Since then we have learnt that the Trident budget has increased by about £1 billion. Will the Government tell the House why there is such a long time lag between the submission of the British Shipbuilders corporate plan and the Government's reply?
  The missing ingredient in the debate has been the Government's position on Navy orders and without that crucial piece of information we cannot make sense of what will happen to the size or structure of the yards and the long-term future and prosperity of this key industry. All hon. Members, not least those with constituents working in the industry, have a right to know when the Government will make up their mind. One has only to think back over
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  the past few years and to the role that defence expenditure has played in restructuring the industry to see how crucial the restructuring has been. The Minister and many of my hon. Friends have paid tribute not only to management, but also—and correctly—to the workers. They paid tribute to the part that they have played in restructuring the industry. If I were pedantic, I would refer to ex-workers and the part that they had played in restructuring industry. There has been a decrease in our labour force of between 19,000 and 20,000 men. It is they who have borne the cost of restructuring British Shipbuilders. However, they made that sacrifice only because they were assured that the industry had a long-term future and that any redundancies would be voluntary, not compulsory.
  Because the Government cannot make up their mind about the size of Navy orders in the coming years, we do not know whether the policy of voluntary redundancies will continue or whether the Government will shortly embark on a policy of compulsory redundancies. If the Government force British Shipbuilders down that path through major changes in their naval defence strategy, the House and the country should realise what is being lost. I have a personal interest because I have the privilege of representing Birkenhead and its major industry is shipbuilding. In the past few years we have seen the cuts that other yards have experienced and we have also seen a shortened order book. Yet with that shortening order book there has been a considerable increase in productivity.
  When the first order was issued for a type-42 frigate the Ministry of Defence decided on an eight-year building period. Cammell Laird was given five years, but it completed the order in four years. That happened at a time when men felt that they might be working themselves out of jobs. However, they responded to the Blackpool agreement—they felt that they had a future and that changes would not be forced, but would come about through voluntary agreements. In the House and in speeches around the country the Prime Minister often asks for such changes in productivity. How can we allow an industry to perform in the way that we wish it to perform and yet fail to come up with a long-term future for it?
  I do not apologise for labouring the fact that we cannot discuss a long-term future plan for British Shipbuilders until we know the Government's plans for the Navy. The Minister is not in the Chamber and has probably been called away on business. However, in his opening speech he showed the speaking skills that we have come to expect from him as a Minister. However, he also showed the schizophrenic face of Thatcherism. On the one hand, he told us that the Government were getting tough with the industry, but he failed to mention that world output is only one-third of what it was in 1975. The Minister spoke of the loss target for 1979–80 of £100 million being reduced after intervention fund support to £25 million this year. That was the tough side. On the other hand, to cheer up his hon. Friends—particularly the hon. Member for Southampton, Test (Mr. Hill)—he pointed out how generous the Government had been to the industry and mentioned that financial support had reached £500 million.
  These are interesting figures, but none of us could make any sense of them. It is impossible to make sense of a declining level of support or a squeezed level of intervention fund support unless the Government set the target for the industry. By "target" I mean how many ships

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  will be built in the next few years and how many people will be involved. There is no point in wiping out the subsidy to the industry if at the end of the period there is no industry to support and no industry to work in. The figures were quite unrelated to the Government's expectations for the industry in the next few years. I sympathise with the Minister who will reply to the debate. How can he give answers to those questions unless the Ministry of Defence has informed him of the size of the Navy contribution over the next few years?
  I echo the plea made by my hon. Friend the Member for Whitehaven. If, as we should, we are thinking about planning a long-term future for this industry, we should not only be concerned with this measur, which is not even required bearing in mind the time scale involved. We should be considering bolder reforms, a number of which were referred to by my hon. Friend.
  He talked about the present level of capitalisation in the industry. Hon. Members will be shocked if they compare the level of capital investment in the Japanese shipbuilding industry this year with the level of investment in some of our shipyards. It is a privilege to speak in a shipbuilding debate, because my hon. Friend the Member for Jarrow (Mr. Dixon) always participates. One of our strengths is that we have hon. Members who know something practical about the industry. That certainly applies to my hon. Friend. He compared the wooden wheelbarrows that are still used in the Jarrow shipyards with the £600 million investment this year in the Japanese shipyards. When that is compared with the level of orders won by British Shipbuilders, one wonders what the industry might win if our workers received only half the level of support that Japanese workers get from their banks and Government.
  My hon. Friend the Member for Whitehaven also referred to the need for incentive schemes to get firms to order with British yards. I was interested to hear the intervention of the hon. Member for Chichester (Mr. Nelson). He suggested that the support currently given to shippers should go only to those who place orders with British yards. Will the Minister respond to that positive suggestion?
  I also echo the plea for a planned programme of public sector orders. The industry got that under the last Government. I make a modified plea to the present Government. We would just like some public sector orders, whether they are planned or not. We must also look at the EEC programme on scrap and build. Given that we are an island Power, I am sure that all hon. Members agree that we shall need a shipbuilding industry in the next century. In that case, will we be able to guarantee a future unless we push this debate in the institutions of Europe? Will we be able to debate the size of the current level of British shipbuilding if all the suggestions that have been made are not acted upon?
  I support this measure. Like many other hon. Members, I wonder why we are discussing the Bill at the present time. I make a powerful plea for a real debate on shipbuilding as soon as possible. However, we cannot have such a debate until the Government have made up their mind about the level of Navy orders for the next decade or more. The crucial question now asked by workers and management alike is when we shall be given that information.
  6.13 pm
  Mr. Tristan Garel-Jones: I apologise to the House, particularly to the hon. Member for Whitehaven (Dr. Cunningham) and my hon. Friend the Minister of State for not being present at the beginning of the debate, but a number of constituents came to visit me. I also apologise for leaving the Chamber from time to time, but, as hon. Members are probably aware, certain business is taking place upstairs that is of some interest to the Conservative Party.
  I am pleased to follow the hon. Member for Birkenhead (Mr. Field). As we all expected, he made a serious and thoughtful contribution. He said that a debate on shipbuilding without precise figures on defence expenditure was rather like Hamlet without the ghost. With respect, there is something ghostly about the Opposition these days and their approach to many of these issues.
  I listened with growing amazement to the speech of the hon. Member for Dundee, West (Mr. Ross), who referred to the fact that in his youth he had joined what he described as "an industrial museum". The hon. Gentleman is something of an ideological museum himself. I say that with the utmost friendliness. I was surprised at the force with which he said that he wanted to defend this country. However, I must ask him "From whom?".
  We know that the hon. Gentleman wishes to defend us from Chile and South Africa. He certainly wishes to defend his constituents from any prospect of orders from those countries going to the shipyards of Dundee. But I am not clear about the group of countries from which the hon. Gentleman seeks to defend us. I sometimes suspect that he would like to defend us from the United States—our greatest ally.
  Mr. Ernie Ross: I hesitate to delay the House because I have already spoken at length. I seek to defend us from the military-industrial complex that has grown up throughout the world and which wastes massive amounts of money on research and development on armaments that will never be used. Clearly, our shipyards could well do without Trident, as could the rest of our manufacturing industry.
  Mr. Garel-Jones: No one would disagree with the hon. Gentleman's statement of principle. He is in favour of working for peace and towards a de-escalation of the frightening arms race. He is saying that we should be involved in the slow and gradual process of reducing the size of the arms industry. No one disagrees with that. However, whereas the hon. Gentleman is firm and open about the fact that British Shipbuilders should not accept orders from Chile, South Africa or regimes of which he disapproves, presumably he and his hon. Friend the Member for Jarrow (Mr. Dixon) have no ideological resistance to the selling of ships to Poland. Presumably, the hon. Gentleman finds Poland more ideologically congenial to his point of view. However, the selling of ships is in this case a euphemism, because they were tantamount to a gift. I take it that the hon. Gentleman approves of that.
  Mr. Field: Let me ask a ghost-like question. To which clause is the hon. Member for "Watford Dock" addressing his remarks?
  Mr. Garel-Jones: I am indulging in the customary courtesy, when time is not too pressing, of referring to the

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  speeches already made by hon. Members. I am making the point that a great ideological difficulty faces the Conservative Party as the party of Government when considering propositions made by the Labour Party.
  I listened to the speech of the hon. Member for Jarrow with great care. The hon. Gentleman has an experience and direct knowledge of these matters that I cannot share. Like him, I give a warm welcome to the Bill, principally because it raises the financing limits for British Shipbuilders from £500 million to £700 million, with the likelihood of a further £100 million being made available.
  I welcome that simply because it underlines the fact that the Government are not ideological in their approach to these industrial matters. In some ways, I wish that the money expended by the Government in supporting our nationalised industries was publicised to better effect. I feel that from time to time my right hon. and hon. Friends on the Front Bench have perhaps been too apologetic over the way in which we have supported our nationalised industries.
  I am slightly concerned to see that the redundancy payments scheme is to continue for two years beyond 1983. That shows that further redundancies are expected, and that must be a matter of regret to all of us.
  I do not expect to find any echo from Labour Members to my concern that my hon. Friend the Minister of State, Department of Industry, has not been able to come forward with any proposals for the privatisation of the industry. Unlike the hon. Member for Jarrow, I do not regard nationalisation of the industry as having been a wise step by the previous Government. The Minister may have touched on this point in opening the debate—if so, I apologise—but I fear that the vast majority of the money already voted for British Shipbuilders—and perhaps much of what we are now making available—has been spent on covering the losses that have taken place in the nationalised industry since vesting day.
  I am aware that both the management and work force in British Shipbuilders have taken great steps forward in making that industry more productive and much more competitive. Clearly that must be the case. Nineteen thousand redundancies have already been achieved with the co-operation of the trade union movement and, while it has obviously been a painful process, it is part of the constructive approach of the trade union movement.
  The shipbuilding industry's order book has been going through an enormous world-wide crisis in the last 10 years. It is showing some signs of picking up. I do not regard that as being tremendous ground for optimism for the future. There may be a very short rise in the graph, but demand may not run as high as we would like or need for a number of years. There are still grave difficulties facing the British shipbuilding industry. There are problems towards the reduction of which, I accept, both the management and the unions have made significant contributions. If and when a pick-up in demand comes, I am sure that we shall be in a position to take advantage of it.
  Labour Members will be aware that for a number of reasons it has always been difficult to measure productivity in the shipbuilding industry. When my hon. Friend replies, will he tell us, if the figures exist, to what extent productivity is better now than it was when the firms involved were part of the private sector? In spite of what the hon. Member for Birkenhead said, and in spite of the
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  improvements that we all recognise are taking place, I fear that productivity now, compared with productivity before nationalisation, does not paint such a happy picture as we might hope for.
  My final point concerns industrial strategy and the way in which it would affect not just our shipbuilding industry but all the industries in which Governments have, of necessity, a role to play. Before doing so, I must make another ideological point. I listened with respect to the hon. Member for Jarrow, who is a man with great practical experience in this industry. However, I detected in his remarks—and certainly in the remarks of the hon. Member for Dundee, West—an ideological lack of faith in and even enmity towards the capitalist system. When talking of industrial strategy, the first thing on which we all have to agree is that we are all trying to make a social market economy function better.
  One of the difficulties that we face as a nation—and I say this with the greatest respect—is that many Labour Members do not believe in the social market economy, and see the purpose of their life as being to overthrow and destroy it. That is why they came into public life and that is why they came to the House of Commons.
  Therefore, in discussing industrial strategy the first thing the nation has to know is whether the Labour Party is trying to make the system work better. The sooner the Labour Party settles its ideological difficulties, the easier it will be for debate to flow from both sides of the Chamber.
  With regard to industrial strategy in general, the problem is that, because of the ideological battle, there are many Conservative Members who have a faith in the hidden hand of the market place which is perhaps slightly over-enthusiastic, and they find themselves in conflict with those Labour Members who wish to destroy the system. Frequently, discussions about industry have been related to those two poles. If we can start from the basis that on each side we are trying to make the system work better, then of course it is possible—
  Mr. Harry Cowans: With the greatest respect to the hon. Member, I have never heard so much rubbish in my life. It is obvious that the hon. Member has never worked in a shipyard. Productivity has risen because at last the workers see that they have some chance of getting together and doing something about it. The hon. Member does not acknowledge that under his system the workers were held down for a very long time. Now, at last, workers are having a chance to contribute towards management, but Conservative Members are totally opposed to that.
  Mr. Garel-Jones: What the hon. Gentleman refers to as my system is not my system. It is not a system that is exclusive to the Conservative Benches. It is the system that I hope all hon. Members—and certainly the majority of our fellow citizens—believe in and support. It is the system of the social market economy. I do not imply for a moment that management has been perfect. I am ready to accept that if working people have been brought more into management decisions and discussions in the shipbuilding industry, that can only be good for the industry.
  I am unaware of the hon. Gentleman's position in relation to the ideological divide. But he must know that I am not making a cheap party political point when I say

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  to him that, sitting in this Chamber at this very moment, are two of his hon. Friends—they are perfectly entitled to their views—who are devoted to destroying the system.
  Mr. Cowans: That is rubbish.
  Mr. Dixon: The industry always failed when it was in private hands. When the industry was nationalised in 1977, that was the first time that the workers has a chance to have some say in the industry and some co-operation with the management of it. But prior to that capitalism failed in the shipbuilding industry.
  Mr. Garel-Jones: My point is perfectly clear. The majority of Conservative Members—and, I believe, still the majority of Labour Members—wish to make the system under which, broadly speaking, we live and prosper work rather better than it does at the moment. That implies that my hon. Friends and I cannot be ideological in our approach to nationalised industries. We should try to make nationalised industries succeed and certainly try to involve the work force more. I am not making a cheap ideological point when I say that it is difficult to talk about consensus industrial policies of the sort we need when there is a division among the Opposition on whether the object of the exercise should be to make the system work.
  Mr. Ernie Ross: We shall send the hon. Gentleman a copy of our industrial strategy and it will all become clear to him.
  Mr. Garel-Jones: The hon. Gentleman's industrial strategy is well known to me. I only wish that it were better known to the public. However, the strategy propagated by the hon. Gentleman and his right hon. Friend the Member for Bristol, South-East (Mr. Benn) is gradually getting across to the public, and the hon. Gentleman must ask himself whether that explains some of the difficulties that his party is experiencing. However, I do not want to be drawn any further on that matter.
  We have to accept that when British Shipbuilders or any other great enterprise in this country competes for contracts overseas there is no such thing as a totally free market. We know that other Governments provide soft loans and other forms of industrial assistance.
  We need to follow the example of the United States, Japan and France and set up a system in which the Government, the trade union movement, industrialists and the banking community can have sensible discussions about the strategy that we ought to pursue, whether in shipbuilding, steel making, coal mining or any other industry. That sounds good, but occasionally it may have to be decided, as it has been decided in Japan, that, say, the shipbuilding industry must be run down and the computer industry given more help. Such decisions are difficult, but we shall not be in a position even to start considering whether we should take that sort of decision until we get the industrial consensus to which, I fear, the Opposition are incapable of making the contribution that they could and should make.
  6.32 pm
  Mr. Ron Brown: I assure the hon. Member for Watford (Mr. Garel-Jones) that I do not intend to join the Tory Party or the SDP—the semi-detached party.
  Mr. Garel-Jones: Just join the Labour Party, Ron.
  Mr. Brown: Perhaps the hon. Member lived for too long in Franco's Spain. His ideas do not attract me in any way.
  All Labour Members agree that shipbuilding is important to our economy, and it is certainly important to my constituents. Therefore, I welcome the Bill, limited though it is.
  We must consider the history of the industry. We all know that the previous owners neglected and abused it for a long time. In the good days, fast profits were made, but there was little investment. The attitude of the old owners was to chase a fast buck, wherever it could be found, and usually to send capital out of this country. Unfortunately, that attitude still prevails in other parts of the economy.
  After nationalisation in 1977 the old owners were given a golden handshake in return for their daylight robbery. I regret that it was a Labour Government who provided those golden handshakes. The capitalist system conned that Government, but I do not believe that, despite the view of the hon. Member for Watford, any future Labour Government will be conned.
  Recently, a Labour Member—I cannot remember his name—spoke about nationalisation without compensation. He was spot on, and the argument should have applied to the shipyards, for which the nation has paid dearly. The yards were run down and many were using antiques for machinery and equipment. Things were so bad that it was rumoured in 1977 that Arthur Negus was thinking of applying for the job of chairman of British Shipbuilders! Many yards were held back because they did not have the necessary equipment.
  Some hon. Members will point to exceptions and claim that not all owners took the same view. I accept that, but generally the previous owners did not look after the yards; they abused them and made extremely high profits from them. Since the setting up of British Shipbuilders the new management has tried to make up for the neglect and abuses of the past. New techniques are being introduced, but about 20,000 workers have lost their jobs and many closures have taken place.
  We have to tell the Government and the management that that process cannot continue. That is why I support the Robb Caledon workers at Dundee. They have a right to fight for their yard and their jobs. They realise that redundancy payments, however generous, only buy a place on the dole queue, and in Dundee, many other parts of Scotland and the North of England, workers face a lifetime on the dole. Official figures tell us that we have 3 million on the dole. That is not strictly true. The real figure is 4 million or 4½ million, and if we include youngsters on so-called youth opportunity schemes the figure becomes almost incredible.
  Our present desperate plight breeds pessimism in many parts of the country. The Prime Minister speaks at banquets about hopes for the future, but she is really saying "Bankers rule, OK?" The CBI does not agree with her. It pointed out in a recent survey that 77 per cent. of its members were working below capacity and that there has been a 15 per cent. cut in investment. The prospects for the future look pretty grim and the CBI sees no light at the end of the tunnel. A record number of companies have gone to the wall since the Government took office.
  It may help to put matters in perspective if we recall that 30 years ago British shipbuilding was doing well and Britain controlled 25 per cent. of world trade. Today, it

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  is unlikely that we control even 10 per cent. of world trade. That is a measure of the decline of our economy and of the problems that face us.
  There is a feeling among people outside the House that things will go from bad to worse. The words "recession", "slump" and "crisis" are on their lips. They are right to take that view. The extent of the crisis can be seen in the British merchant fleet. In 1975 our fleet totalled 50 million deadweight tons. In March, this year, the figure had been reduced to 35 million deadweight tons, indicating to what extent this country has slipped down the plughole. It is claimed that we are an exporting country. One can see how the industry has been affected. One can appreciate that ships are not being produced because ships are not being bought by British owners. Private enterprise has failed in the past. It is failing again. The animal should be called by its real name. We are really talking about the capitalist system. It is a system of society that is unfair, corrupt and inefficient. It cannot produce the goods. It is not the system of society that Adam Smith spoke about. Today, it is dominated by big business.
  What is Labour's answer? Conservative Members have repeatedly asked this question. What we say, or, at least, what I say to the shipyard workers, is that I believe and we believe in nationalisation because it is vital to get the economy going. When we say that, we should not simply argue the point that what has gone before is good enough for the future. Old style nationalisation is not gool enough. We have to democratise industry. We have to introduce workers' control into industry. If we agree with Nye Bevan, we should be taking over the commanding heights of industry in order to help British Shipbuilders. We do not agree, surely, that 20 per cent. of the economy should be in public hands. The percentage should be far greater.
  The Labour Party has to argue for a bold Socialist policy. This means taking the fight outside. It is a question of realising that we have to show to people outside that we mean business. It is a question of action rather than words. It is a question of telling the union leaders to stop backpedalling with this Government. Every hesitation only encourages the Government and their big business backers. They become more arrogant every time that trade union leaders back pedal.
  This is a matter that we, as a party, have to spell out. This party of ours has to give a lead. That lead is for the working people. If that is done, I am pretty sure that we shall be backed by the working people. They would include the shipyard workers in Leith and also the Robb Caledon workers in my area who certainly back a fighting, campaigning Labour Party. They are sick to death of the Government's attack on jobs and living standards. The Government have sown the seed and will reap the class whirlwind. The message for our supporters should be that if all pull together this Government and their rotten backers will be blown into the rubbish heap of history.
  6.43 pm
  Mr. Gordon A. T. Bagier: Like many of my colleagues, I wish to intervene for a few moments to welcome this small Bill. After hearing the opening speeches, I had to leave the Chamber for a short time to attend meetings, which means that I have not heard all the debate. I shall, therefore, address my remarks to the opening speeches.
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  I have the same worries as those expressed by my hon. Friend the Member for Whitehaven (Dr. Cunningham). My hon. Friend questioned the extension of redundancy payments from six to eight years at this stage. He wondered why it was so imperative to produce the Bill now. Some of the remarks made by the Minister about the efficiency of shipbuilding seemed almost to eulogise the fact that 20,000 redundancies have occurred inside the industry. I find no great joy in that situation. Nor do my colleagues. Those redundancies have been achieved, by and large, with the co-operation, if not entirely the agreement, of the trade unions. The unions recognise that the shipbuilding industry faces great competition throughout the world.
  I considered the Minister's opening remarks a little grudging. In some places, he gave plaudits. I join the rejoicing over the orders received in certain yards in Scotland and elsewhere. I wish, however, that the hon. Gentleman had managed some praise for what happens on Wearside, which has an excellent shipbuilding industry. Two companies on Wearside have successful order books lasting until 1983. Those companies have stumped the world to gain the orders. They have a first-class delivery record blotted only to a small extent by the steel strike, which was outside their control and which affected the supply of steel and marine engines. I hope that the Minister who replies will at least mention the record of those who work on Wearside.
  The hon. Member for Watford (Mr. Garel-Jones)—I am sorry that he has left the Chamber—spent much time eulogising the capitalist system. The hon. Gentleman wondered why we are suspicious of it. We on Wearside have every right to be suspicious of it. We remember that before the nationalisation of the whole of the shipbuilding industry the shipbuilding yard of Sunderland Shipbuilders Ltd. had to be rescued from the capitalist system because of the collapse of Court Line. We do not need to look into a crystal ball to discover what happens inside the capitalist system. The shipyard section of the conglomerate was successful. Nevertheless, because of the crash of the holiday side of Court Line, it was in danger of falling into the hands of the receiver. It had to be taken, lock, stock and barrel, into public ownership by a Labour Government Minister to prevent loss of orders. We have bitter experience of the private sector in shipbuilding prior to public ownership.
  The Minister brings forward the Bill grudgingly. He hangs over the industry the implied threat of privatisation at some future date. I could have explained to the hon. Member for Watford, if he had been here, why his colleagues are not interested in shipbuilding and privatisation. There is not enough money in it to hand over to their friends. It is not profitable enough. They would probably welcome the ploughing of more money into the industry to make it profitable and then for the bargain basement to be opened for their friends to cream off once again something that is successful.
  It is not easy to make shipbuilding successful. I understand the difficulties of Ministers of both parties in keeping shipbuilding viable. It is the responsibility of a British Government to ensure that a maritime nation such as ours does not have to depend on overseas builders to build our ships. This fact has to be faced. If the Japanese can find it in their hearts to sustain their shipbuilding industry, and if the Spaniards and the Koreans can do the same, Great Britain can also do it. If any Government seek

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  to allow the British shipbuilding industry to go down the drain through lack of resources, lack of understanding or through failing to appreciate that it is not possible to compete with both hands tied behind one's back, this is a situation that Parliament cannot tolerate. I hope the Minister will see that this does not happen.
  I hope to hear a tribute from the Government to British Shipbuilders. Its management is stumping the world to achieve orders. It is a matter worthy of tribute that orders have been brought back from China and all over the world in the face of intense competition. Their success is due to the fact that the product is first class. The owner of a ship built on Wearside offered a holiday on a cruise liner to one of the work force so great was his appreciation of the quality and workmanship of the vessel. The chap has just returned from the cruise. His name came out of the hat. Good luck to him. I hope he goes on to win the pools and enjoys a prosperous future.
  Although there is much carping about our shipbuilding industry, I hope that all hon. Members will congratulate British Shipbuilders on the excellent job that it is doing to gain orders from overseas. I also hope that the Minister will forget about privatisation. We who live in Wearside have nasty memories about privatisation and we do not wish to see it return.
  6.50 pm
  Mr. Neville Trotter: I apologise for not attending the debate earlier, but I was involved in matters related to the shipping industry.
  The future of British shipping is a major factor in the future of the British shipbuilding industry, and I hope that we shall soon have an opportunity to discuss its decline. The decline is serious—from 50 million tonnes to just over 30 million tonnes. The fall has continued largely because of a change in world conditions adverse to Britain as a Western shipowning and operating country. The shipping industry needs a healthy shipbuilding industry, and the shipbuilding industry equally needs a healthy shipping industry. It is an added burden for British Shipbuilders that our shipping industry is at present in heavy seas. That is why it is so important that we should be successful in exporting.
  I add my tribute to those already expressed by hon. Members to the efforts of British Shipbuilders. It has gone to the ends of the world and has returned with orders from some astonishing places. I noted recently an order from Brazil for six ships. I hope that it has been confirmed and that I am not premature in referring to it. There is much concern in the Brazilian shipbuilding industry because it is a low-cost producer of ships. British Shipbuilders has achieved a great deal in selling ships to Brazil, which is developing a shipbuilding industry of its own with the advantage of the low costs that come with lower industrial wages. There have been significant successes in exports because of a great effort, from the top downwards, in the marketing sector of British Shipbuilders.
  Recently, there has been a considerable change in British Shipbuilders. The number of merchant berths has declined from 66 to 28. That is as much a sign of increasing productivity as it is of difficult market conditions. For the industry to be successful in the future it will have to concentrate its activity on a smaller number of berths and make better use of them.
  Last year I was in Korea. I visited an enormous shipyard where the main method of launching was to float
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  the ships out of the dock in the modern way, but there was one berth where the ship was pushed into the water. This berth was empty and I asked those concerned whether they built any ships on it. They told me that they built small ships on it if there was a demand for them. I asked them what size of small ship they were talking about, to which they replied, "20,000 tonnes." To me, 20,000 tonnes is a large ship, although it is not in the same league as a crude oil carrier of 500,000 tonnes.
  I asked the representatives how many ships of that type could be built in a year. They said that they could build 12 such ships a year. I asked where they would build those ships. They looked at me as if I had not understood and said "On that slipway." They were geared to build 12 20,000-tonne ships on one slipway. That is the direction in which shipbuilding is moving in modern yards.
  The hon. Member for Sunderland, South (Mr Bagier) will know that some yards in his area are moving in that direction. The trouble with being able to build 14 to 16 ships a year—as they can in the Sunderland yards—is that they must have many orders to keep the work flowing. Once a yard stops receiving orders, it loses productivity and efficiency. I believe that there have been hiccups in those yards but that the position has now been improved.
  The productivity of British Shipbuilders during the past year was 16 per cent. higher than in the previous year. One should praise that, just as it is right to say that the improvement was long overdue. The right steps are now being taken to improve efficiency and productivity, which are essential to the successful future that all hon. Members wish to see for the industry.
  The Bill, which provides more money to British Shipbuilders, was, I understand, not asked for by the corporation. It is unusual that a Bill providing more money should come before the House when the recipient has not requested it. I presume that the Bill is looking to the future rather than the present.
  It would be discourteous to speak at length, having missed the earlier part of the debate, but I wish to mention warship building. Again, we have both home and export demand. About half our shipbuilding workers are engaged in warship building. Unfortunately, almost all of them are engaged on domestic and not export building.
  Hon. Members will know the uncertainty which hangs over the Royal Navy's ordering programme and which makes it difficult for British Shipbuilders to plan ahead. The Minister also has some difficulty, because, although British Shipbuilders' plan has been with the Ministry for some time, whatever it says about warship building is irrelevant because the future size and shape of the Royal Navy is uncertain. I support my right hon. and hon. Friends in the Department of Industry in their efforts to obtain decisions from the Ministry of Defence about what sort of Navy we shall have, how many and what type of ships there will be and where they will be built. Those decisions must be taken soon.
  I expect that we will build more type-22 destroyers at the Yarrow yard. They are good ships, although expensive. The main reason for building them may be to keep Yarrow alive although of course the Navy will welcome them. The type-23 frigate has been talked about for some time. There was a type-24, which was never built, and a type-44, which was so expensive that it did not last long even as a plan. I hope that we are not deluding ourselves. We are trying to solve problems that no one has been able to resolve and to produce an effective, cheap

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  ship. There is no easy way of doing it. If we succeed, we shall produce a cheaper ship that is less effective, although we may obtain a 50 per cent. reduction in cost and only a 30 per cent. reduction in capability, but the Royal Navy will be less pleased with the ship.
  It is easy to say that the Royal Navy has wanted ships that are too sophisticated and expensive for other countries, but the fact that Britain has not exported warships abroad in recent years is not the fault of the Royal Navy. I was recently on board a type-42 vessel of the Argentinian Navy, which the Argentinians built for themselves. They have another that was built for them at Barrow. Those are sophisticated ships—all the same as the latest equipment of the Royal Navy—and the Argentinian Navy can operate them very well. The officers and crew are of a standard similar to those on board HMS "Newcastle" or HMS "Sheffield", which are the same class of vessel.
  Other countries have bought sophisticated ships from Britain, but they are now going elsewhere—for example, to Germany, Holland, Italy and France. Sometimes the ships that they buy are less capable than the latest equipment of the Royal Navy but sometimes they are not.
  A Dutch frigate of the Kortenaer class will soon be sailing up the Thames—if she is not already there—and some hon. Members have been invited aboard later this week. Those ships are in the front line of vessels of that type. The Dutch have been able to sell them to other countries where Britain has not made any sales.
  The Department should consider carefully what is holding back our warship sales. I do not believe that it is the complexity of their design. We must seek other explanations. I am pleased to see that British Shipbuilders recognises the need for action and that great effort is going into warship marketing. I hope that it will be successful. Many thousands of jobs in the industry depend on that success. Indeed, the future of at least one yard will depend on our obtaining export warship orders.
  The industry has weathered a storm of immense severity and it is in good heart, although the storm continues. Those at the helm are coping in the best way possible. We must continue to support them and the industry in every way. It would be wholly wrong if we no longer built merchant and naval ships in this country.
  7 pm
  Dr. David Clark: I hope that Tyneside will not take it too unkindly if for once I agree with the hon. Member for Tynemouth (Mr. Trotter) on two matters. First, it would be unthinkable if we stopped building merchant or naval ships. Secondly, the hon. Gentleman complimented the workers in British Shipbuilders, who have operated in an almost impossible world scenario and have succeeded. As my hon. Friend the Member for Whitehaven (Dr. Cunningham) said in his thoughtful and constructive speech, most of that success has been with export orders. The hon. Member for Tynemouth and I not only sit on opposite sides of the House. We also represent constituencies on the opposite banks of the Tyne. But he and I agree on those two matters.
  In my constituency on the Tyne many men work in shipbuilding and repairing, so I welcome the Bill. I should be horrified not to have had such a measure. I looked at
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  two reports this week—the 1934 report into unemployment in the North-East and the Hailsham report of 1963. The North-East would readily say "Come back, Lord Hailsham, we desperately need you."
  My hon. Friend the Member for Jarrow (Mr. Dixon), whose constituency surrounds mine, spoke eloquently and constructively. Male unemployment on Tyneside is one in four. It has almost reached the catastrophic proportions of 1934, when it stood at 30 per cent. It is now 25 per cent., not including the many youngsters on job creation schemes. If they were in the employment market, unemployment on Tyneside would be seen to be at the record level of the 1930s.
  Shipbuilding and ship repairing are major sources of employment on Tyneside, so I was reassured to hear that there would be no privatisation this Session. My hon. Friend the Member for Sunderland, South (Mr. Bagier) mentioned Court Line. South Shields was at the sharp end, with the Tyne ship repairing group, which was owned by Court Line when it went bust. But for nationalisation those jobs would have gone. We want no large-scale privatisation on the Tyne.
  I am sad and worried about the tardiness of public sector orders going to British Shipbuilders. How many hydrographic vessels have been ordered from the corporation? How many public sector orders have been placed with British Shipbuilders since the Government came to office? How many Ministry of Defence orders have been placed since May 1979.
  Can the Minister assure us that the Government are in no way involved in blocking the EEC scrap and build programme? May we have a categorical assurance that they are in favour of the programme and actively support it in the Council of Ministers? Such an assurance would help all connected with the shipbuilding industry.
  I am sorry that the hon. Member for Watford (Mr. Garel-Jones) is not in the Chamber. He made innuendoes about the Labour Party's defence programme. I cannot see the relevance of his point. We are talking about maritime shipbuilding interests. The only part of our defence programme that he could have been referring to was Trident. Almost all the parties on the opposition Benches are against building Trident, and I predict that eventually the Government will drop it. It makes no sense.
  The Government state that the Trident submarines—we do not yet know which they will be—will be built at the Vickers yard in Barrow-in-Furness. They refuse to open the yard at Birkenhed. The Barrow yard is the only yard in which nuclear submarines will be built. So the Government's plan will interfere with the programme for the hunter-killer submarines. Two weeks ago a Russian submarine was discovered in Swedish waters. That incident illustrates only too well the need for detector submarines. By pushing forward Trident the Government are not helping our defences. A Labour Government would continue to build hunter-killer submarines at Barrow. Building Trident submarines will delay the hunter-killer programme by six years, because the Government have closed the option of building them at Birkenhead. The Minister should reassure British Shipbuilders about that important matter.
  Mr. Trotter: Is not the most worrying feature of the old "Whiskey" class conventional submarine going ashore in Sweden the fact that it was equipped with nuclear

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  torpedoes—a fact which appears to indicate that they are a way of everyday life with Russia? Are we, therefore, not right to maintain a nuclear deterrent?
  Dr. Clark: I concede that. The "Whiskey" class submarine is basically a 1940s or 1950s vessel. It is beyond me to explain why it should have ended up in highly sensitive Swedish waters. I am not ashamed to declare that I am concerned about the fact that the Russians regard tactical nuclear and chemical weapons as an extension of conventional weapons. However, it is much more vital to have detecting nuclear submarines than submarines that give us an offensive independent nuclear capability. That adds nothing to our collective defence capability.
  I want to end on a general point—the same point on which I started. In spite of the Channel tunnel that we are likely to have, and in spite of the development of the Galaxy aircraft and other aeroplanes, we must remember, as my hon. Friend the Member for Jarrow said, that seven-eighths of the world is maritime. Ships will be needed, certainly by Britain. Our European competitors are high-wage competitors, and they do very well. Another major competitor is Japan which is a low-wage economy. We should and can compete with Japan if we have the investment.
  Shipbuilding should be one of our industries of the future. I therefore hope that every effort will be put into research and development, not only by British Shipbuilders, bur by the Department of Industry and the Department of Education and Science, in institutions such as the naval architecture department at Newcastle university, the South Shields marine and technical college, and other colleges and universities throughout the country which do much constructive work in this connection. I hope that the Minister can assure us in that regard.
  The world will run out of oil, and we shall have to find alternative ways to power ships. The nuclear option is not the one that all of us want. As the Minister knows, there have been orders for coal-powered ships. I am talking not about stokers loading coal, but about sophisticated fuel mixtures of coal, oil, shale and water. So I hope that the Minister can assure us that he will give every encouragement to British Shipbuilders and individual agencies to press ahead in research in this connection.
  British Shipbuilders is an industry in which we as a country should invest because of our geographical position, and because it is a basic industry. If shipbuilding runs down, our steel industry runs down. If the steel industry runs down, our coal industry runs down, and the domino effect goes on and on.
  We—certainly those of us in the North-East—are telling the Government that the situation is almost as bad as the 1930s. We hope that they can give us a slender gleam of hope and offer us a small assurance that, for one industry in particular, they are willing to do something. I hope that the Minister will give us that assurance tonight.
  7.13 pm
  Dr. John Cunningham: I shall speak briefly, having spoken earlier in the debate. I shall summarise the arguments that my hon. Friends and I have put to the Government.
  There has been unqualified support from these Benches for British Shipbuilders and the full maintenance of the corporation. Although the Minister of State made a
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  passing reference to privatisation, he had little or no support, even from his own Back Benchers, when he raised that spectre in the debate.
  There has been widespread support for the role that the trade unions and management together have played in the activities of the corporation. I reiterate my view that the Government should not lightly allow that situation to deteriorate, as there is some evidence that it may do, given the problems that exist. I take the point made by my hon. Friend the Member for Wallsend (Mr. Garrett) that we do not want a detailed Government involvement in industrial relations. Nevertheless, there is something that is worthwhile preserving, and the Government should do what they can to preserve those relationships.
  Much emphasis has been placed on the inadequate investment in our shipbuilding industry. I welcome the comments of the hon. Member for Tynemouth (Mr. Trotter), even though they were made at the eleventh hour. At least he had the courtesy to stay in the Chamber, which is more than can be said of the hon. Member for Watford (Mr. Garel-Jones), who made a long, boring and irrelevant intervention very late and then promptly left.
  It was right to emphasise, as did a number of other hon. Gentlemen, particularly my hon. Friends, that a massive lacuna is at the heart of British Shipbuilders, particularly in connection with defence orders for the naval yards. This hiatus has existed since the spring of this year because of the Government's decision to embark on the Trident programme, which is not welcomed by British Shipbuilders. It will seriously disorganise the corporation. It will distort operations in its yards, and there is now increasing evidence that the Government do not believe that they can proceed with Trident. The sooner that they reach that conclusion, inform British Shipbuilders of any change in policy, and get together a systematic naval ordering programme, the better it will be for British Shipbuilders.
  There has been significant support from both sides of the House for the need to take a comprehensive view of British shipping and shipbuilding interests. I hope that the Minister in winding up will respond, at least in general terms, to what has been said in that respect.
  I emphasise, too, that there has been precious little support for the activities and the policies of the EEC in the past two years. Of course, the intervention fund has been important, but it has played a decreasing role since the Government came to office. Little or no progress has been made on the other issues of EEC policy.
  I reiterate the general welcome that has been given to the proposal to increase the borrowing limits of the corporation. We have still not had a real explanation for that increase, but I hope that we shall be given one in a few moments' time. However, there is considerable apprehension about the provisions to extend the redundancy payments scheme, not because we on this side are against redundancy payments, but because we do not view with favour even the slightest hint that further closures may be around the corner in British shipyards, coming as they would on top of a significant rundown in Clydeside, Tyneside and Merseyside, as has been made clear, particularly by my hon. Friends the Members for Sunderland, South (Mr. Bagier), South Shields (Dr. Clark) and Jarrow (Mr. Dixon), where male unemployment is already one in four of the population. We cannot accept that further redundancies should be declared in an

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  industry which is now presented with opportunities when the Government do not take the initiative and enable it to grasp them.
  To my sorrow and regret, there was a signal lack of any indication by the Minister of State that there was to be an intitiative by the Government to enable British Shipbuilders, not simply to survive, but to grasp the opportunities that we believe will be there.
  7.20 pm
  The Under-Secretary of State for Industry (Mr. John Wakeham): The debate has been useful and interesting. It has ranged widely over the shipbuilding industry and British Shipbuilders. Occasionally I smelt the whiff of reselection in the air. Rarely have I heard the capitalist system spoken of so frequently as if it were a contagious disease. However, generally the debate was serious. Important points were made by many hon. Members, some of whom have worked for most their lives in the industry. The House is a better place for such debates by hon. Members who know about the industry and the people whom they represent.
  The main purpose of the Bill is to increase the borrowing powers of British Shipbuilders from £500 million to £700 million. It is essential that Parliament controls those powers. The powers must be realistic and I shall attempt to explain why the Bill is necessary.
  The second purpose of the Bill is to extend the shipbuilding redundancy payments schemes from 1983 to 1985. We have been asked why that should be necessary. The answer is simple. The Government's view is that it is better to deal with the matter in good time. That means bringing the legislation forward this Session rather than in the next when we might run into difficulties if the parliamentary timetable becomes congested. That is a practical reason for that part of the Bill.
  Total borrowings are expected to be about £500 million some time in the new year. In shipbuilding cash flow is a problem. It fluctuates rapidly depending on the state of orders and completion dates. To provide for this, the limit is to be raised to £600 million because it is necessary to have some headroom.
  The Minister who held my position in the Labour Administration said in 1979 that it was essential that the borrowing elements should be recognised well in advance because that gave more certainty to the industry and was therefore desirable. The last time that such a Bill was introduced there was criticism that we were running perilously close to Royal Assent and that the borrowing limits might have reached the peak.
  It is curious that the hon. Member for Whitehaven (Dr. Cunningham) should be the first to query the need for the Bill, since he first raised the need for more investment. The hon. Gentleman is experienced and wise enough to know that investment requires cash and that increased borrowing is a likely part of increased investment.
  Within the current external financing limit there is a plan for increased capital expenditure. Since nationalisation, of the £500 million of public money that has gone into the industry, about £100 million has been for capital investment. If British Shipbuilders had been able to contain its losses it would have had more money for investment. However, we believe that investment is important.
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  Substantial private investment took place in the merchant shipping yards before nationalisation, much of it financed under the Industry Act 1972. It was unfortunate that much of that investment was not fully used because of lack of orders. We hope that that aspect will improve.
  The hon. Member for Whitehaven said that the industry had been held back by the Government. That is not so. The industry is working within the BS corporate plan. We hope that that can continue. The Government have not set the industry a target capacity for merchant shipbuilding. BS told the unions in 1979 that its target capacity was 430,000 compensated gross registered tonnes, employing 20,000 people. My hon. Friend the Member for Bosworth (Mr. Butler) told the House in July 1979 that BS would find it difficult to sustain that target capacity. Employment on merchant shipping is now about 17,000 people who produce about 350,000 tonnes a year. The industry could achieve a higher output if greater utilisation and productivity were achieved. It is wrong to say that the 350,000 tonnes output represents the industry's capacity. By any account, there has been a marked reduction in capacity and output. There are now 15 merchant shipyards in BS compared with 27 on vesting day.
  Some people would like the Government to underwrite the capacity of the industry. That is not a proper function of Government. No one has the right to a job guaranteed by Government. The fact of nationalisation does not guarantee jobs in shipbuilding or elsewhere. We do not believe that it is practical for the Government to guarantee jobs. The only guarantee of an industry's jobs is commercial success.
  British Shipbuilders has to face a reduction in naval orders. There are uncertainties about whether BS will be able to adjust in time. The function of Government is to decide how much aid the industry should receive. The industry has been receiving massive financial aid which we believe should and must be reduced. However, it is too early for us to come to a view about exactly how we should deal with the problems relating to the cut in defence orders.
  I listened to what hon. Members said about industrial relations. A number of hon. Members on both sides commented upon the good industrial relations in the industry. I also noted the problems that they mentioned. Such matters are not for me but for the board of BS. However, the Government watch and hope that substantially better industrial relations will continue.
  I agree that the Government should bring forward public sector orders wherever possible. That is what the Government have done. We have placed £40 million worth of orders since March 1980. That is a welcome addition to the merchant shipping order book. Other orders are on the way. It is not for me to talk about the defence programme.
  Dr. John Cunningham: The Minister has seen the fly and missed the elephant. He is talking about £40 million worth of public sector orders compared with defence orders the value of which have dropped from £300 million to zero.
  Mr. Wakeham: I understand the hon. Gentleman's intervention. However, the BS corporate plan was submitted to the Government in May. The White Paper was published in June. We must consider its implications. Of course, it will be in everybody's interests to decide how

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  best to deal with the situation as soon as possible. Not only my Department is involved. It is impossible for me to give details today of how the matter is to be resolved. I understand the uncertainties.
  My hon. Friend the Member for Southampton, Test (Mr. Hill) made his usual vigorous contribution. I guarantee that no part of the money will be spent on lifting the "Mary Rose" from the bottom of the Solent. However, his plug for that project may attract further contributions. He was right to stress that the Government are determined to support British Shipbuilders in every way that is reasonable and possible. He also stressed the need for British Shipbuilders to go out and gain more customers. He paid tribute to the excellent work done in recent years by the marketing sector of British Shipbuilders. He was right to point out the important part played by the EEC in trying to stabilise national aids to shipbuilding. I shall deal with that matter later.
  My hon. Friend and a number of other hon. Members raised the question of Japan. The best way to deal with the problem is together with the EEC. With our fellow members, we shall take up the matter with the Japanese Government later this month. We shall again point out that it is in Japan's interest, as well as that of everyone else, that it should exercise restraint.
  The hon. Member for Glasgow, Central (Mr. McTaggart) spoke with feeling about his industry. I am pleased that he thinks the redundancy scheme to be a good one. The £55 million that has been paid since 1977 has given some help to the 19,000 workers who have left the industry. I took note of his points on how the scheme should be changed. I cannot say that it is possible to change it, but his points have been noted. His remarks about training will, no doubt, be taken on board by British Shipbuilders. Because of his experience of the industry, his remarks will be seriously considered.
  The hon. Member for Wallsend (Mr. Garrett) also speaks with authority on shipbuilding matters. He spoke about marine engineering and the corporation's plans for engine building which are being examined by my Department. His remarks will be considered. The hon. Members for Dundee, East (Mr. Wilson) and for Dundee, West (Mr. Ross), in their different ways, raised questions about Robb Caledon. I understand their concern. However, industrial relations is a matter not for the Government but far the board. The Government have no statutory power to intervene. I do not wish to shelter behind that statement. We do not believe that it is wise or sensible to interfere in these matters. I note the point about Kestrel Marine and the Dundee port authority. There are proposals aimed at trying to meet all the requirements of the site. The way forward is by discussion among the interested parties.
  Mr. Ernie Ross: Does not the Minister accept that he has a responsibility in the matter? The Secretary of State for Scotland has nominees on the board of the Dundee port authority. The Minister should ask him to give them direction in the way in which the board assigns its assets. He could also give: direction inside British Shipbuilders. It is strange that the proposal for that site put forward by Kestrel Marine is exactly the same as that which all the organisations, elected representatives, and local Members of Parliament, the Tory-controlled Tayside regional council and the Tory and Labour district councils put
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  forward to the Secretary of State for Industry in July 1980. That site should be developed. We want that direction to be given.
  Mr. Wakeham: Nothing would do more harm to industrial relations than the Government interfering in that matter. It is a matter for the board of directors and the trade unions to resolve. The hon. Gentleman and I will have to differ. Kestrel Marine is not a matter for the Government. The discussions have not been exhausted. I hope that they will continue and reach a satisfactory solution.
  The hon. Member for Jarrow (Mr. Dixon) speaks with great authority. He was right to say that the shipbuilding industry does not operate in a free market. All Governments give assistance to shipbuilding, and this Government are no exception. We have contributed £500 million towards supporting our shipbuilding industry, and there is more to come as the industry progresses. That is better than the aid given by a number of other countries, although it may not be as good as some. It is difficult accurately to compare assistance. The EEC has been trying to achieve some sense in the matter. The law of the jungle will not help anybody. We must try to restrain and control the levels of subsidies for shipbuilding on an international basis. We must try to make our industry more competitive.
  On the EEC scrap and build programme, the Government made it clear that they supported the scheme discussed in 1979, provided a cost-effective method could be devised. Agreement could not be reached and since then, because of an increase in orders and a higher rate of scrapping, the case for the scheme has disappeared. We wish to encourage those who want to reduce the levels of subsidies throughout the industry.
  The hon. Member for Jarrow and the hon. Member for Sunderland, South (Mr. Bagier) raised questions about the Government's help with home credit schemes. That echoes a request from British Shipbuilders and the General Council of British Shipping to make our home credit scheme more flexible. We do not intend to make it more favourable than the export credit scheme. However, within that parameter we shall do what we can to make it more flexible. If that means that we can help with some orders so much the better.
  A number of hon. Members mentioned the EEC. There have been discussions about its role in shipbuilding. The majority of Opposition Members have little to say in favour of the EEC. When the previous Labour Government were in office they acknowledged publicly the inevitability of some contraction in the industry. The Commission's role has been to try to ensure that national subsidies are controlled as far as possible. We support that policy and we think that it has done a reasonable job in a difficult time.
  Our objection to the Polish ships deal, to which the hon. Member for Jarrow referred, rested not merely on the excessive aid that went into it but on the harm that it did to our shipbuilding industry, which was the argument advanced by my hon. Friend the Member for Tynemouth (Mr. Trotter).
  The hon. Member for Dundee, West is rightly concerned about the effect that defence changes will have on British Shipbuilders. Our industry used to enjoy a substantial business in exporting naval ships. The reasons for our market share falling so drastically are complex. However, chief among them is the fact that we were not competitive in the designs offered, in prices or on

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  completion dates. I do not wish to make too much of this factor, but political difficulties played their part. However, in that area and in others British Shipbuilders is increasing its efficiency substantially. A new director of warship export marketing has been appointed. New classes of Royal Navy vessels, of which the Leeds Castle class of offshore patrol craft is the first, are being designed with greater export potential. Submarines and the type-23 destroyer-frigate will follow.
  Mr. Field: The Minister has suggested that he knows what is taking place with defence orders. If he does, will he share rather more information with the House? He reminded us that British Shipbuilders submitted its corporate plan in May and that the Government published their White Paper on defence changes in June. Has the Ministry of Defence been able to tell the Minister and British Shipbuilders in outline the demands that it will be making on British Shipbuilders over the next few years? We understand that the costs of Trident have escalated by about one-fifth. Will that increase in costs have an effect on the original estimates which were submitted by the Ministry of Defence to British Shipbuilders?
  Mr. Wakeham: The hon. Gentleman is persuasive but he cannot tempt me. I am not in a position to give him the information that he wants, for the straightforward and simple reason that the review and the consequences of the defence changes have not been completed.
  Mr. Field: Is the hon. Gentleman saying that British Shipbuilders has no idea what demands may be made upon it by the Ministry of Defence? If that is so, can he give the House an idea of when British Shipbuilders will be acquainted with the demands that are to be placed upon it?
  Mr. Wakeham: We are discussing that issue with British Shipbuilders. There are uncertainties and no final view has been formed. It would be unwise of me to anticipate the discussions that will take place. British Shipbuilders' corporate plan has been with my Department for some months and it knows the reasons for the delay. The corporate plan seeks to assess the prospects in the various markets for British Shipbuilders' products and to chart a course for the future in the light of the prospects. British Shipbuilders has tried to take into account the considerable uncertainties that cloud the outlook while recognising that the uncertainties make it extremely difficult to plan ahead.
  The fact that the Government are prepared to put considerable sums behind British Shipbuilders' effort to become viable is proof of our confidence in its ability. We shall have to reach a judgment on how much money we should make available to back British Shipbuilders. We are not yet ready to reach that judgment. A number of factors have to be taken into account—for example, the industry's record and its progress towards viability. I assure the House that employment, industrial and defence considerations are being taken into account.
  It seems that the new management and the work force of British Shipbuilders are to be congratulated on the progress that has been made. Perhaps the best way of judging a nationalised industry is to take into account its external financing limits, which for British Shipbuilders were reduced from £250 million to £185 million in 1981
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  and will be £150 million in the current year. It is forecast that there will be a further reduction next year. There were losses of £174 million in 1979–80 which were reduced to £85 million. They will probably be slightly less than that this year.
  British Shipbuilders is to be congratulated on its better management, financial control, marketing and success in that marketing. There have been difficulties to overcome in the major restructuring that has taken place, but industrial relations have been such that the number of hours lost has been negligible.
  There are formidable problems and British Shipbuilders is a long way from viability. However, the order book is better. Great efforts have been made. More sophisticated ships are being sold. Productivity is better. My hon. Friend the Member for Watford (Mr. Garel-Jones) was right to suggest that it is difficult to measure productivity in an industry in which the work load fluctuates considerably. It would be unhelpful to try to measure the level of productivity now with the level that was achieved when the industry was in private hands. However, it is certain that if the industry is to succeed in world markets, the level of productivity in future must be better than the present level and better than that which was achieved in the best days under private ownership.
  The Government have backed British Shipbuilders with substantial funds. It is undertaking a difficult task in a highly competitive industry. Since nationalisation £500 million of taxpayers' money has been paid to the industry. British Shipbuilders' corporate plan has been submitted to the Government by the directors. Despite some doubts about the level of activity, the Government have backed the plan with cash. We are aware of the improvements and the problems. We shall continue to support the industry.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  Shipbuilding Bill

    SHIPBUILDING [MONEY]
    Queen's Recommendation having been signified—
    Resolved,
    That, for the purposes of any Act of the present Session to raise the limits imposed by section 11 of the Aircraft and Shipbuilding Industries Act 1977 in relation to the finances of British Shipbuilders and its wholly owned subsidiaries and to provide for extending the period in relation to which schemes under the Shipbuilding (Redundancy Payments) Act 1978 operate, it is expedient to authorise—

    (a) any increase in the sums payable out of the National Loans Fund, the Consolidated Fund or money provided by Parliament under the Aircraft and Shipbuilding Industries Act 1977 which is attributable to provisions of the said Act of the present Session raising to £700 million the limit imposed by section 11 of the Aircraft and Shipbuilding Industries Act 1977 in relation to British Shipbuilders and its wholly owned subsidiaries, and authorising the Secretary of State to provide by order for that limit to be further raised to £800 million;

    (b) any increase in the sums payable out of money provided by Parliament under the Shipbuilding (Redundancy Payments) Act 1978 which is attributable to provisions of the said Act of the present Session giving power to increase from six years to eight years the period in relation to which schemes made under the Shipbuilding (Redundancy Payments) Act 1978 operate; and

    (c) the payment of any sums into the National Loans Fund or the Consolidated Fund.—[Mr. Wakeham.]

    AIRCRAFT AND SHIPBUILDING INDUSTRIES
    Resolved,
    That the draft British Shipbuilders Borrowing Powers (Increase of Limit) Order 1981, which was laid before this House on 6th November, be approved.—[Mr. Norman Lamont.]

  European Community Proposals (Battery Hens)
  Mr. Deputy Speaker (Mr. Ernest Armstrong): I tell the House that Mr. Speaker has selected the Opposition's amendment.
  7.49 pm
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I beg to move,
  That this House takes note of European Community Document No. 8832/81 containing proposals laying down minimum standards for the protection of laying hens kept in battery cages and supports the Government's intention to seek agreement to arrangements which would enhance conditions and strengthen controls in the Community as a whole while fully meeting the requirements of the United Kingdom.
  These proposals made by the Commission are the culmination of two years' work and, before I describe the proposals, I should like to explain what has happened in those two years.
  At the September 1979 Council of Agriculture Ministers, my right hon. Friend fully supported the initiative taken by Herr Ertl, the Agriculture Minister of the German Federal Republic, to promote a discussion on the Community's work on animal welfare. The Commission was asked to prepare a report on systems of egg production that would satisfy animal welfare requirements, hygiene, and social ethics, and which would take economic considerations into account. The Council also asked for proposals to bring to an end after a period of years the system of keeping hens in batteries as currently practised in the Community.
  The Commission prepared an interim report for the July 1980 Council of Agriculture Ministers. The report concluded that current knowledge was not sufficient to justify a prohibition on battery housing. Too little was known about other systems to say whether they were more satisfactory for the birds and met the requirements of producers and consumers. It recommended further research and development, which is in hand, by the Commission and the early introduction of minimum requirements for more humane battery-cage housing.
  The Council agreed that the keeping of laying hens in cages must be subject to compliance with minimum standards and criteria in order to ensure the protection of the birds. It invited the Commission to submit before 1 July 1981 a further report and proposals for achieving that objective, taking into account the economic implications.
  In the event, this report and proposals were not submitted to the Council until 6 August this year and the Council has also now missed its self-imposed deadline of 1 November for the adoption of a directive. Nevertheless, the matter is under active consideration by the Council, though, given the absence of an opinion from the European Parliament, the Council is now unlikely to be able to take a decision at its next meeting.
  The report from the Commission, which accompanies the proposals, considers the economic aspects of minimum standards for caged laying hens and the scientific aspects of the welfare of laying hens. It concludes that there is a wide divergence of opinion on the behavioural needs of laying hens and on the effects of battery cages. It also concludes that there would have to be a transitional period to allow the industry to adapt with minimum disturbance

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  to the market. It adds that further studies are needed on various systems of housing, including cage design, and also on the economic and marketing aspects of egg production.
  The proposed directive would, specify minimum standards for laying hens in battery cages. In particular it would require each hen to be provided with at least 500 sq cm of unrestricted floor space. Standards would also be set for feeding and drinking equipment, cage height and floor type and slope. Further, more general conditions are set out in the annex to the proposed directive.
  Member States would be required to ensure inspections to verify the requirements of the directive. The directive would also provide for inspections by Community experts. As mentioned earlier, provision is made for the Commission to continue its studies on the welfare of laying hens and to report to the Council, with proposals if appropriate, before 1 January 1984.
  Member States would have to bring into force legislation to implement the directive on 1 July 1983. Minimum standards would apply from that date to cages used for the first time, and to all cages from 1 July 1995.
  The Agriculture Departments have circulated the report and proposals to a wide range of interests for comment. The views of the various interests are understandably polarised. On the one hand, the industry is concerned that it would have to meet a substantial cost following implementation of the directive. It questions whether the changes proposed would be of enough welfare benefit to the birds to justify the cost, drawing attention to the Commission's conclusion that current economic and scientific evidence points to a minimum floor area per bird of 450 sq cm. Many welfare interests argue strongly for the immediate abolition of battery cages on the grounds that this production system cannot meet the needs of the birds. Some welfare groups would support, as an interim measure, the early introduction of a minimum floor area of 750 sq cm.
  The Agriculture Ministers have also sought the views of the Farm Animal Welfare Council. The council's advice, which it has published, stresses the need for immediate action to help improve the welfare of all hens kept in battery cages. It argues that any proposals for minimum standards must be seen as an interim measure pending the outcome of research into alternative systems. Against that background, the Farm Animal Welfare Council seeks the early introduction of a minimum floor area of 600 sq cm per bird as an interim measure. That would mean reduced stocking rates in the United Kingdom and the council expresses the hope that some producers would turn to other systems to make good any loss in egg production. The council also made a number of comments on the annex to the proposed directive.
  The Government have taken account of the views on battery cages expressed in the recent report of the Select Committee on Agriculture on animal welfare. The Government will make their views clear to this House on the whole of the important Select Committee report as soon as they have prepared their formal response.
  The Commission's proposals have been subject to some improvement in the discussions so far in the council. many people were concerned at the Commission's idea that a minimum floor area should, for some years, apply only in new cages. We shared that concern and have supported an
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  alternative two-stage approach. Under that approach, a basic minimum floor area would be fixed from an early date, probably 1 July 1983. We have supported a minimum area of at least 450 sq cm per bird at this stage.
  At a second stage, after a reasonable transitional period, a more generous space allowance and the other minimum cage design standards would come fully into force. We are not only seeking a figure of 600 sq cm per bird but we want it to apply from a date earlier than 1995. We are also insisting that there must be reasonable provision for Community monitoring of the inspection arrangements in all member States.
  It is fair to add that the views of member States are fairly divergent. Germany, Denmark and the Netherlands in particular have joined us in pressing for higher standards of welfare for battery hens; other member States argue for floor area figures as low as 450 sq cm per bird even in 1995. We believe that we should recognise the need of the industry for a reasonable time to adapt, and the need to keep to an acceptable level the likely increases in production costs and any consequent increase in the price of eggs. But we are supporting more generous space allowances than the Commission proposed, to apply from an earlier date than they proposed. For that reason, I can accept the amendment tabled in the name of the Leader of the Opposition.
  I mentioned earlier the need for time to adapt. We estimate that in Great Britain the capital cost of achieving a minimum floor area per bird of 600 sq cm in the early 1990s would be about £67 million, or an addition to the cost of production of about 6 per cent. In Northern Ireland, where producers may have even greater difficulty in adapting to improved standards, the capital cost would be proportionately higher—at about £10 million—with a production cost impact of perhaps 8 per cent. Nevertheless, we believe it is right, in the interests of the birds, to press for those standards to be applied uniformly throughout the Community. But, as I have said, time will be needed to adjust to those effects.
  We expect the council to agree the directive in the near future. Agriculture Ministers will then have to make regulations under part I of the Agriculture (Miscellaneous Provisions) Act 1968, which are subject to the affirmative resolution procedure. Regulations will also be required in Northern Ireland.
  It is clear that the conditions in which hens are kept vary widely in the Community and we believe that it is right, as a first step, to remove the worst of those conditions. Research into the requirements of laying hens and how they can be met under the various systems of housing cannot be undertaken overnight. The proposals in their present form will provide for a significant improvement in the conditions of all hens kept in batteries in the Community. Until there is a clear, practical alternative with definite welfare benefits for the birds, I do not believe that we can realistically look to do more at this time.
  8.2 pm
  Mr. Mark Hughes: In its written comments to the European Legislation Committee on 22 September 1981, the British Poultry Federation made the following important statement:
  "It must be right to ensure that birds are not only protected from cruelty but also that they enjoy an environment that is as pleasant as we can make it."

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  I wish to preface any remarks that I may subsequently make with the clear statement that the vast majority—99 per cent.—of poultry farmers in this country are concerned with the welfare of the hens in their keeping, that I do not believe that they are intentionally cruel or that they are in any way involved in knowingly causing hurt to the birds in their care. But when the hon. Lady talks about so many square centimetres per bird, many hon. Members get confused.
  Yesterday morning, in preparation for this debate, I took the trouble to measure the square area of this Dispatch Box. That is what the debate is about. The number of square centimetres on the Dispatch Box is approximately 2,000. It measures 58 cm by 34 cm. We are saying that at present, within the confines of this Dispatch Box, five hens should live out their miserable lives and that by 1995, out of our kindness, we reduce that number to four. That is a position which, as a legislator, I am appalled to recommend to the House. If it is said that five fully grown hens—even if they are white leghorn crosses and are very small—can comfortably, humanely and properly live out their lives in that confined space, I do not believe it.
  I am concerned about the reduction of that number, first to four. The normal Order Paper of the House is marginally larger than the amount of floor space that is allowed for a battery hen to live out its life. If we believe that that is the way, in this time and in this society, and that that is the amount of space in which we expect hens to live out their lives, then count me out. I shall not ask, and I would not require under law, for that to be the minimum—never mind the maximum—amount of space. By 1995, another 10 generations of hens will have had to live out their lives on a space smaller than the size of our Order Paper. I shall not have that.
  Mr. David Myles: Does the hon. Gentleman agree, however, that while that is the space per hen, the hens can move about off that space and around the cage?
  Mr. Hughes: If all roll over, one moves out. As long as the other three make way, there is room for the other. That is where the scientific advice given to the Community moves into the levels of obscenity. The anticipated space is half as much again as this Dispatch Box because, according to the experts, there is a fine balance to be drawn between the ability of a hen to stretch on its legs, stretch up its neck and flap its wings. However, if the hen is given too much room, the next hen in the same cage can mount it. Therefore, the ceiling has to be kept down to prevent that. In the name of the humane treatment of hens, I find that totally obscene,
  I shall come in a moment to my outright objection to keeping hens in batteries, but my first main concern is that the area of this Dispatch Box instead of holding, as is our current practice, five laying hens each on 400 sq cm, should hold four, each on 500 sq cm. That is the order of magnitude, and if any hon. Member believes that it is humane, proper and decent to keep even five small hens in the area of this Dispatch Box, I defy him to tell the House that.
  I am arguing not that battery hen keepers are cruel, but that unwittingly they are involved in a system which deprives laying hens of the essential requirements for the limited freedom and enjoyment of life available to that species. I cannot put it better than the terms of the British Poultry Federation's letter of 22 September to the
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  European Legislation Committee, in answer to its request for evidence on this specific legislation. The federation said:
  "It must be right to ensure that birds are not only protected from cruelty but also that they enjoy an environment that is as pleasant as we can make it."
  If anyone tells me that keeping five hens in an area the size of this Dispatch Box is as pleasant an environment as we can make, I do not and will not believe him.
  To change the regulations as I would wish would clearly involve some extra cost. Again, I refer to the written evidence given to the Scrutiny Committee by the eggs authority. If the number of hens in the area were reduced from five, which is the current practice, to four, the production cost per dozen eggs would rise from 40·1p to 42·2p That is an increase of 5 per cent., but it would not catastrophically reduce consumption. I accept that it would not do the egg producers a great deal of good, but it would not be catastrophic. If the same area held three rather than five hens, the production cost per dozen eggs would rise to 46·4p That was the evidence of the eggs authority, from ADAS, to the Scrutiny Committee in September and October this year. So the case that abandoning the current levels of stocking would be catastrophic to the British egg industry is difficult to sustain. There are, of course, capital costs which are not included in those figures. According to those calculations, a reduction from five hens to four would involve between £60 million and £70 million, and a reduction from five hens to three would involve a sum about three times as great. One accepts that.
  The interesting fact, however, is that when the number of hens in the area of the Dispatch Box is reduced from five to three, the litter and straw yards become competitive, so that those methods of hen keeping and egg production become economic not too far down the line along which these proposals inadequately move.
  In dealing with the evidence to the Select Committee, I must crave the indulgence of the House because for the first seven meetings I had the privilege of being a member of the Committee, hearing the evidence and listening to the private discussions which took place after the evidence was given but thereafter, I ceased to be a member of the Select Committee and thus was not privy to any of its debates. Therefore, anything that I may say must be treated with the care with which I hope that I shall now treat the Select Committee's recommendations, having been an early member of it and having asked many questions at its earlier hearings, but not having had the privilege of being present during its later deliberations.
  Paragraph 150 of the Select Committee report, Cmnd. 406-I, states unequivocally that
  "the Governments of the Community should make a clear statement of intention that after, say, 5 years from now egg production will be limited to approved methods which will not include battery cages in their present form, and that imports of eggs into the Community will not be allowed from sources which do not observe equivalent restrictions."
  That recommendation by the Select Committee is unequivocal. There is no dubiety about it. The Commission proposal does not adequately answer it and nor does the Government motion. Indeed, if I may say so, even the Opposition amendment does not wholly satisfy the requirements of the Select Committee.
  In this matter, we are faced with the difficulty of the "slowest ship in the convoy" syndrome. Not only the ability to legislate, but, more importantly, the ability to

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  monitor and enforce legislation among our Community colleagues is highly suspect. I do not believe that in signing the Treaty of Accession to the European Community the House intended to deny itself the ability to pass animal welfare legislation, with consequential restitutions if there were economic difficulties. Even though I voted against it, I thought that when we accepted the Treaty of Accession matters such as animal welfare would remain the prerogative of the House, which would retain the ability to take countervailing action if it did not accord with Community rules. I do not believe that the Government can use poultry health as a proper means, which I would support, of banning the import of poultry products, eggs and so on, not because they damage human beings, but because they affect the welfare and health of poultry. The House cannot be prohibited from legislating on the welfare of caged birds, because welfare and health—as those of us who served on the Select Committee found, time after time—are inextricably intertwined.
  The rule that bans the import of French turkeys or eggs must apply because of the possibility of Newcastle disease or this country's determination that our poultry should be treated humanely. If the Government argue that they are inhibited from protecting our laying birds adequately from the dangers of the battery hen system because of our membership of the Community, not only the Government but our membership of the Community will stand condemned. Even if we are out of step with the French, Germans or Italians—leave aside the Frankfurt high court judgment—if we cannot say that we shall require a countervailing duty to protect our poultry farmers, there is something wrong with our relationship with our Community partners.
  That is the crux of the problem. Unless the Government accept the corollary of the current court case on Newcastle disease et al, they cannot do other than accept that we have a national interest in animal welfare—beyond the hazards of particular aspects of animal health—that the House must continue to determine. I am delighted that the Government have accepted the amendment. It would be a little wicked to say that we shall watch what happens in the poultry field like hawks, but we shall watch carefully to ensure that the national interests of the British poultry producer are not interfered with through unfair European competition. However, the demands of the Select Committee, the animal welfare lobby and the House will not allow inhumane methods to continue.
  8.23 pm
  Sir William Elliott: I am happy to speak after the hon. Member for Durham (Mr. Hughes). As Chairman of the Select Committee that produced the report mentioned in the amendment and in the hon. Gentleman's speech, I thank him for his contribution to it. As he said, he was with us for only seven sittings. We appreciated his opinions and the contribution that he made to the report. We have missed him, although we realise that he left us for reasons of promotion.
  I shall be brief. My right hon. Friend the Minister has responded to the report in an interim form. I have received a letter from him in which he states—and my hon. Friend the Minister has confirmed this—that he will fully respond to the report before Christmas. I hope that it will be a full response and that it might take the form of a White Paper.
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  This is an important subject with far-reaching consequences. When we receive that full response I hope that we shall have a full debate on the report.
  The Committee was well aware of the effect that any recommendations might have on agriculture. Indeed considerable amounts have been invested in the present intensive methods of production, including the battery hen system. The Committee was fully aware of that. As our report makes clear, the Committee was also aware that the pressure of economic circumstances brought about such intensive methods of production. Indeed, in the Committee's opinion those methods were, in some cases, inhumane.
  I appreciated the vivid analogy drawn between the Dispatch Box and the battery cage. As Chairman of the Committee, I thought I had seen so many battery hens during the past year that I would rarely have a night for some time when I did not see them every time I closed my eyes. There is no doubt that the battery system leads to great congestion. However, we were well aware that any recommendations that we made would have a heavy bearing on those who had invested capital. Nevertheless, our recommendations have been made and we believe they are right.
  All of us fully appreciate that note must be taken of this European recommendation. Indeed, note is being taken. I am extremely glad that the Government have found it possible to accept the amendment. The hon. Member for Durham quoted paragraph 150 of the report, in which we recommend a five year period for adjustment. Two years is not nearly as far away as 1995, by which time some of us will be quite senior hon. Members. The five year period is sufficient to make adjustments.
  During the entire course of our deliberations we were also aware that it was essential for all the member States to move together. It is impossible to envisage one country in the Community having regulations that would increase the costs to its producers to their detriment, because the product could be imported at a lower cost from other countries within the Community. Once again, we have made it clear that all member States should move as one.
  Mr. Stan Crowther: Does the hon. Gentleman agree that there is in Europe a considerable difference in the rate of progress towards confining hens in cages? According to my information, only 50 per cent. of Denmark's laying hens are in cages, whereas the figure in Britain is 95 per cent. Given that there is such a difference in the rate of movement, why should the hon. Gentleman feel it necessary to move in the opposite direction at the same speed?
  Sir William Elliott: I am recommending no such thing. It is essential that we have Community standards for intensive food production. It is also essential that there is similar supervision throughout the Community once we have achieved those equal standards. I do not believe that to be impossible.
  Our report makes it clear that when the Council of Ministers considers the Commission's recommendations my right hon. Friend should take a strong initiative to lay down a minimum standard for adult laying hens. We would like a minimum standard of 750 sq cm per bird, but our report suggests that he should not settle for anything less than 550 sq cm.
  The welfare codes on poultry have not yet been produced. My right hon. Friend's full reply to our report

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  is not yet before us. We should therefore take note of this document, but I strongly recommend a full debate in due course on this all-important present and future problem.
  8.30 pm
  Mr. Donald Stewart: My intervention shall be brief. It can be argued that the present situation is slightly better than it was. I am therefore glad that the Minister has accepted the Opposition amendment, but that only makes the position slightly better than deplorable.
  I take it that the figures referred to are the minimum and that they would not prevent any Community country from laying down reasonable standards. The hon. Member for Newcastle upon Tyne, North (Sir W. Elliott) referred to the cost to farmers. Of course, money has been invested, but everyone recognises the system to be cruel. Anyone who has seen day old chicks running about scraping in the farmyard knows that this system is an unnatural way of raising hens.
  I just wonder how many farmers keep their hens in battery cages. In my opinion, this is an entirely different type of industry. If the farming community raises animals and birds without heart and feeling, it will lose public sympathy. The battery hen system is totally repugnant, and it would serve such producers right if the consumer decided only to buy free-range eggs.
  Arguments about square centimetres, Community standards and so on are deplorable. This system should be banned because it is one of deplorable cruelty. It has been argued that its banning would make eggs marginally more expensive. However, if I argued that the price of beef could be reduced by 30p in the pound if animals were raised by a cruel method, would hon. Members back me up? Of course not. There is, therefore, no justification for battery farming.
  It is shameful that this method of production should continue, especially when the British pat themselves on the back for being animal lovers. It is a cruel system that ought to end at the earliest possible moment.
  8.34 pm
  Mr. Peter Mills: I am grateful for the chance to speak in this debate, because this is a difficult problem. I doubt whether the Council of Ministers will find it easy to reach a decision that will satisfy everyone, let alone our own Minister. Firm views are held by both sides. The farmers feel that they have a strong case, as does the welfare lobby. We must try to strike the right balance and, above all, look at the facts.
  I was wondering whether the hon. Member for Durham (Mr. Hughes) reflected Socialist policy on these matters, and perhaps the House could be told whether what he said is the official view of the Labour Party. I do not say that in any sense of criticism. Farmers and welfare people want to know the answer.
  I apologise for not declaring my interest as a farmer. Most people know that I am one, although I do not keep any egg-producing birds.
  The proposals must be taken seriously and examined carefully. It is unwise for the farming community to dismiss the concern about this type of production felt by many people—such as the right hon. Member for Western Isles (Mr. Stewart)—who believe that battery farming should be outlawed. They should look carefully at the facts and the results of such a decision, which would be serious.
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  My hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott) was right to make common standards one of his major points. I support in principle common standards for battery cages throughout the EEC. I am just as concerned about birds in Germany, France, Italy, Greece, or wherever, as I am about those in this country. There should be common standards throughout the Community.
  If welfare standards are high in one country, as I believe they are here, but not in others, unfair advantages in production would occur to the detriment of those who are seeking to maintain welfare standards for their birds. Therefore, it is necessary that we have common standards throughout the Community.
  In the United Kingdom there is no question but that we have good standards. We have codes of practice that have been in operation for 10 years or more. It is right and proper that we should constantly put these practices to a welfare committee in order to bring producers up to date with the latest developments. In the past, these have worked well. Mortality is at its lowest ebb these days. Our producers ensure that we have fresh eggs and that consumers enjoy advantages of price, among others.
  Intensive production is repugnant to some people, but when I was a young man it was repugnant and alarming that birds were subjected to the conditions of the farmyard, with wind and rain, lack of food and the ever-present danger of foxes. Today they have warmth and contentment in many of the battery cages. I know which I would rather have if I were a bird.
  British egg producers are to be congratulated on their standards. That is not to say that there is no room for improvements and alterations. Out high standard is not to be found in other European countries. A general all-round improvement in Europe would be in the interests of animal welfare and we must therefore support it. I trust that the Minister will urge that this should happen before moving forward to even bigger changes in this country. We need to see a fairly dramatic improvement in their standards.
  The next problem, if changes are to be made, is that of Community policing. I have a terrible fear that we would keep to the rules and others would not. We have seen it time and again. We keep to the standards and other countries do not. I know that it is unfair to generalise but it is true. It would be a considerable problem to ensure that standards were maintained in the Community. If they were not, it would be totally unfair to British producers. A proper system must be devised and agreed before any changes are made. United Kingdom producers fear that we shall keep to the rules and that others will not.
  I wonder whether the public appreciate that eggs produced outside battery production cost substantially more. The pamphlet that was sent to us by the Farm Animal Welfare Co-ordinating Executive quotes the extra cost that is involved. It is somewhat greater than many hon. Members appreciate. It is not a minor matter for the housewife.
  If there were to be a return to the old free-range methods that were in use when I was a boy, eggs would cost at least 30p a dozen more. That would be a considerable extra amount for the housewife to pay. With four birds a cage, the cost would increase by only 1p a dozen. With three birds a cage, it would increase by 3p a dozen. With birds in deep litter, the cost would increase by about 7·5p a dozen. There can be no doubt, therefore, that the increased cost to the consumer would be considerable. I wonder

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  what housewives would say if they had to pay that extra cost. Would they accept it? No doubt some would be prepared to do so. [Interruption.] Some hon. Members, no doubt, buy only free-range eggs. I do not know how they can tell the difference. There are many so-called free-range eggs that have been produced in batteries.
  One way forward would be to put the problem—as I believe the Minister has—to his welfare committee. I do not feel qualified to deal with the scientific aspects of the question. I am not sure whether Labour and Conservative Members who condemn the system are qualified to consider it from a scientific point of view. The welfare committee, which has scientists on it, should consider the question as quickly as possible and advise the Minister accordingly.
  We should seek to get other European egg producers to bring their standards up to ours. Much research needs to be done on the subject. It should be started as quickly as possible.
  I should like to refer to the very reasonable brief that has come to us from the British Poultry Federation. The NFU also supplied us with a brief, but I thought that the one from the federation was particularly useful and helpful. It suggests that the way forward is to consider the dimension of the cage; that it should be shown whether the battery is the best system of egg production; that it should be shown whether an increase in cage size would be beneficial to birds; and whether the extra cost would be acceptable to industry and the consumer. I believe that those four suggestions are the best way forward. I ask the Minister to consider them carefully before the matter is discussed by the Council of Ministers.
  The problem will not go away. We need to look at it calmly and carefully and, although it is an emotive subject, we have to strike a balance between the welfare and fanning sides and try to get it right, in the interests of the consumer and of the welfare of the birds.
  8.45 pm
  Mr. Thomas Torney: I agree with much that the hon. Member for Devon, West (Mr. Mills) said. He touched on an important aspect when he mentioned welfare in the poultry industry.
  As a member of the Select Committee, I felt that we failed to pay sufficient attention to welfare matters in the poultry and pig industries. I was particularly concerned that we were not able to get to the crux of the problem when we questioned Ministry vets. We did not cover adequately their inspection duties and their concern and interest in welfare matters, which are extremely important in all aspects of farming. As an ex-trade union official, I am more accustomed to talking about the welfare of operatives, but here I am concerned with the welfare of animals. I was not satisfied that the Committee was able to ascertain that there were enough Ministry vets to carry out inspections properly or that they were able to deal with welfare aspects.
  Five freedoms are essential for hens—the freedom to turn round, the freedom to groom themselves, the freedom to get up and down, the freedom to lie down and the freedom to stretch and flap their wings. In the battery cages that the Select Committee saw, those freedoms were impossible. However, when the Committee visited Denmark I was not impressed by the Pennsylvania system,
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  which is one of the alternatives to battery cages. That was little, if any, better than the cages used here and in some places on the Continent.
  The Pennsylvania system comprises two large wire netting enclosures on a platform, with struts through which the droppings fall. The droppings are removed only at the end of a cycle and I found our half-hour visit to the cages particularly unpleasant. I was almost overcome by the intense fumes. Hon. Members can imagine why. I saw birds there with none of the five freedoms that should be available to birds in battery cages. The cages were built on a slope. The birds were climbing over each other to try to reach the food. I did not think that this system was a substantial improvement.
  I am grateful that the Government have accepted the Opposition amendment. That is right. I am pleased that there seems to be agreement on both sides of the House that we should urge upon the EEC the need to abolish ultimately this system of battery cages for hens. I am certain that it is cruel. I am also realistic about the economic situation. There are those who say that they will buy only free range eggs and free range chickens. I am sensible enough to realise that most people in a supermarket will buy the eggs that are the best quality at the cheapest price.
  I also believe that the Select Committee realised that it would be useless to impose a ban on the present method of producing eggs or chickens or both. If a ban meant that there were insufficient eggs to meet the needs of the population, no earthly purpose would be served in the cause of animal welfare—much as I condemn the present system of rearing hens in battery cages—by purchasing eggs from other European countries that produced them in precisely the same way. We need to seek, as I think is the aim of the amendment and also, for that matter, the Government motion, some international or at least European agreement to stop the source of supply that would simply replace that in this country if we were to abandon all battery cages and go back to the old-fashioned method. This would be preferable from the point of view of animal welfare but it would also force up the price of eggs in the shops.
  Knowing the distributive industry as I do, being sponsored by a distributive trade union, and knowing, I think, the British housewife, I am sure that the housewife would opt for the best quality product at the cheapest possible price. This would apply to eggs, joints of meat, or whatever the commodity. There is no point in abolishing our system merely to buy the product from abroad and put our poultry farmers out of business. We need to try to secure agreement in Europe despite the condemnation that I have made of the Common Market, which I do not retract. I am sure that that is what the Parliamentary Secretary who will reply to the debate will say that she is trying to do.
  The Government—who have accepted our amendment—must press for the abolition of cages in the EEC so that we have a more humane method of rearing birds. I agree with the hon. Member for Devon, West (Mr. Mills) that so often in Common Market negotiations and rulings Britain honours the rules but France and the other countries do not. If there are agreements within the EEC that battery cages should be bigger, that there should be fewer hens in them or that the cages should be abolished, we must ensure that the other countries honour those agreements and do not put our poultry farmers at a

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  disadvantage, as they have done in other spheres in recent years by their subsidies. We have kept to the rules and they have broken them.
  Cheap eggs should not be imported into Britain which are produced under wrong rules and which compete with and put out of business our poultry farmers.
  8.58 pm
  Miss Janet Fookes: One often hears that first impressions are the vivid and lasting ones. I shall never forget the occasion some years ago when two ladies from "Chickens' Lib" brought two miserable specimens of hens to my flat and carefully laid them on newspaper on my lounge floor. Those hens had bare chests where they had been rubbed. They could not stand properly. They were at the end of their laying period when very often they can be bought cheaply. I have never forgotten those two miserable hens. Unfortunately, I have seen their like on many occasions since in the battery hen houses that I have visited. I have seen bad examples and, in the West Country I have seen a good example of battery units.
  However, nothing can convince me that battery units are not a cruel confinement for those creatures. The caging of the birds means that they cannot fulfil many of their natural chatacteristics. They cannot stretch out their wings or preen. They cannot peck around for food or dust bathe. Those are things that hens in a more natural environment would do and to which those battery hens that are released from the system and given another start very often return. We are sometimes told that the hens now being bred understand the new system—hut when given half a chance they soon revert to the habits of their ancestors over thousands of years. That is why I am adamantly opposed to the battery cage system.
  That is also true of the society that I represent. I should here declare a non-financial interest as vice-chairman of the council of the RSPCA.
  Mr. Douglas Hogg: I thought my hon. Friend was chairman.
  Miss Fookes: My hon. Friend is not accurate in his facts. I am now vice-chairman.
  Mr. John Carlisle: Is my hon. Friend convinced that the lens that were brought before her came from a battery? Will she confirm that free-range hens suffer from cannibalism and feather pecking, which is impossible in the battery system?
  Miss Fookes: I am satisfied that the two creatures that I saw had been in a battery cage, if only because my subsequent researches showed me other such creatures in their battery cages. It is also important to recall that vices prevail even among caged birds and that they will go for each other. Indeed, that is one problem of the intensive system.
  I am in a particular dilemma over the EEC directive. I welcome the fact that, on behalf of the Government, my hon. Friend has accepted the Opposition amendment, but I still feel that, even souped up a little, the EEC proposals fall so far short of being acceptable that I wonder whether they are worth having. We are to have the hope of 600 sq cm of space for each bird. My hon. Friend said that that would be worked towards as a second stage. This piece of card is precisely 600 sq cm I ask whether such progress is any progress at all.
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  The other fear that haunts me is that, if one accepts the proposals, whether they be improved or not, we might then give a certain respectability to a system which I deplore and which I want to see phased out in a reasonable time. I fear that we could lock ourselves into the system.
  The European Commission is making inquiries into other systems for laying hens, and the Government have given money for research into alternatives to battery systems. I warmly welcome those developments, but it is strange that we should consider the recommendations for battery cages when at the end of 1983, if not before, we shall be getting the results of the EEC's inquiries and might hope for some information from our own researches.
  If we accept the EEC proposals as a minor step forward, I hope that that will not deflect us from the central objective to find suitable alternative systems that do not so radically alter the natural behaviour of hens. I warn my hon. Friend that there are hon. Members on both sides of the House who will not be content with little or no progress. In this connection, my hon. Friend the Member for Cheltenham (Mr. Irving), who cannot be here tonight, has asked me to express his deep concern about any inhumanity to hens kept in the battery system.
  Moreover, it is not simply British welfare organisations, such as the RSPCA and others, which are concerned. There is now a body known as the Eurogroup, which consists of the leading animal welfare organisations in all the countries of the Community. They have got together and expressed their concern about the developments which are taking place. That group will be a more and more powerful force of which individual Governments and the European Community will have to take note. I trust therefore that in the near future there will be real developments towards a total change in the system. I, for one, will be content with nothing less.
  9.6 pm
  Mr. Geraint Howells: I hold the view that the draft directive contradicts the European Convention for the Protection of Animals Kept for Farming Purposes. Being a farmer, I declare my interest, as is the tradition of the House, although I have very few hens on my farm.
  Article 3 of the convention lays down:
  "Animals shall be housed and provided with food, water and care in a manner which … is appropriate to their physiological … needs in accordance with established experience and scientific knowledge".
  Article 4 says:
  "The freedom of movement appropriate to an animal … shall not be restricted in such a manner as to cause it unnecessary suffering or injury".
  This convention has been ratified by the United Kingdom and other EEC countries.
  Evidence presented to the Council of Europe by the Society for Veterinary Ecology makes it clear that battery cages prevent natural behaviour such as dust bathing, and lead to increased pecking damage. That is increased by the lack of normal nesting facilities. There is a higher incidence of hysteria in cages, especially with young birds. Mortality rates are higher, as shown in recent laying tests, and diseases such as the fatty liver syndrome are more likely. It is difficult to see how the battery cage system now operating in this country can be reconciled with the convention within Europe.
  Moreover, the Select Committee report on animal welfare recommends the phasing out of batteries within

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  five years. The European directive makes no such recommendations, being content to ask for slightly more room in cages—500 sq cm—and even that should not come into effect until 1995. Thus, for another 14 years, the present admittedly unsatisfactory system would be maintained in this country.
  It is arguable that acceptance of the draft would mean an end to any possibility of radical reform, even if research continues into possible alternatives. Surely there must be a firm, and much shorter, time limit. There are farmers who use other methods with commercial success.
  People are being misled about the possible extra costs. According to the Agricultural Development and Advisory Service, battery cage eggs cost 40.5p per dozen and free range eggs 72.5p per dozen. A switch to a system of aviaries, straw yards and deep litter would result in only a ½p increase per egg according to the Minister's desk study.
  The House should make up its mind whether the Select Committee report is more acceptable than the European draft. That is what we must decide tonight. We must ask whether the acceptance of the directive would lessen the chance of phasing out battery cages. If we accept the directive as a step in the right direction we must at least insist on 750 sq cm.
  Mr. Clement Freud: Does my hon. Friend accept that he is arguing about whether a chicken is incredibly uncomfortably or tremendously uncomfortable?
  Mr. Howells: I am grateful to my hon. Friend. I am sure that a chicken is very uncomfortable in its small cage. It is a fact of life. I welcome the Oppositions's amendment as a step in the right direction.
  Mr. Delwyn Williams: Can the hon. Gentleman comment about the discomfort of small chicken producers? In my constituency, which is near the hon. Gentleman's, producers with no more than 6,000 hens have costs which will go up by £8,000 a year in income and £42,000 in capital if they have to change to accord with the European directive. Will the hon. Gentleman comment on their discomfort?
  Mr. Howells: We are debating battery hens, not producers.
  More improvements are necessary than reducing the number of years in which changes must be made. I call on the Minister to make a statement of intent to ban battery cages altogether. Until then she should make a firm commitment in favour of larger cages. Does the Minister intend to implement the Select Committee's recommendations? Will she take steps to ensure that any agreement in the EEC will be implemented by all member countries so that British farmers will not suffer from unfair competition? That is what it is all about.
  9.17 pm
  Mr. Colin Shepherd: It is obvious from the tenor of the debate that there are a number of deeply held fears, worries and concerns about all aspects of the egg producing industry. It could be said, if it were not an unfortunate allusion to Denmark, that all was not well in the State of Denmark. In spite of all the rhetoric and deeply
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  held concern, we must pay careful attention to the practical problems involved in transition which might be the consequence of what emerges from tonight's discussion.
  People involved in the industry seem to be constructive in their attitude to what is needed and how it can be achieved. We have to pay attention to a number of their anxieties. We owe it to them to do that because we have a duty to take responsible action which will not lead to problems that could have been foreseen. Hon. Members who have made a number of suggestions tonight have not properly considered the consequences that they invite.
  There is a European aspect to this. We are discussing a draft directive that is being considered on a European basis. We have to examine it in that context, whether we like it or not. We should not proceed further or faster than the European body of opinion. It is right to direct our efforts towards improving standards across Europe as a whole. It is tempting to say that we should raise national barriers to imports from the Community. However, it is right to say that within the Community we should raise barriers to imports from outside the Community that do not accord with the standards for which we aim within the Community. If we are part of the Community, we should seek to achieve the same standards of production across Europe so that the question of raising barriers at the Channel and North Sea ports does not arise. If we decide unreasonably to erect unnatural national barriers when there is not an ability to fulfil the market, as the hon. Member for Bradford, South (Mr. Torney) said in graphic terms, there would be crazy consequences. We must consider the matter in European terms. We must do all we can to raise the European standards to those that we want to see in Britain.
  There is a competitive question concerning export potential. We should never forget the export potential of our food production. We have for so long considered ourselves to be food importers that we have almost brainwashed out of ourselves the thought that it might be possible to export food.
  Mr. Robin Maxwell-Hyslop: We export lamb.
  Mr. Shepherd: My hon. Friend is right. We are beginning to turn around under the guidance of my right hon. Friend.
  Let us not forget the export potential of the poultry industry. It exists, and can be developed because it is not necessarily dependent only on United Kingdom matters. We can put ourselves at a disadvantage by moving too far out of step with our European colleagues. Even now, we do better in relation to the horrible dimensions of cages that we have heard about this evening than most of our European partners. There is plenty of work for us to do within the Community to raise standards.
  I wish to develop the competitive aspect. We are discussing a transitional period. Those who conform as soon as the new standards become effective will be at a competitive disadvantage with those operating on older standards to the end of the transitional period. That point has not received the consideration that it merits. It is an important point. In a competitive market such as egg production, it makes a difference between the ability to stay in business and not being able to do so.
  Mr. Maxwell-Hyslop: Before my hon. Friend leaves that important point, will he embrace the fact that some

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  of our competitors can borrow money to finance their transition at one-half or one-third of the rate of interest charged to our producers?
  Mr. Shepherd: My hon. Friend makes a fair point that must be taken into account in considering the consequences of any actions we advocate or take as a result of the debate and also when considering any future legislation. I am grateful to him for adding that dimension to the argument.
  If changes are made to the cage sizes, either producers must be allowed to operate to existing stocking densities or financial help must be made available during the transitional period. I do not know from where that financial help for the transition might come, but it is important that we recognise the competitive element.
  I hope that when my hon. Friend replies she will be able to give me guidance on what is being rumoured within the Community about the Dutch Government providing cash to assist their producers to conform with any new standards without financial hardship. I hope that she will tell us whether in her opinion other Governments will follow suit.
  In my hon. Friend's opening remarks, which I warmly support, she referred to monitoring. I should prefer to call it policing. I accept that there must be some form of Community policing. However, before we proceed any further we must have the method of policing cut and dried. It must be verifiable and "foolproof". I do not want to find that the officials of other countries who sign certificates that state that certain conditions are being complied with are different in nature from our officials.
  Mr. Maxwell-Hyslop: My hon. Friend means "corruption". Let us call it what it is.
  Mr. Shepherd: I am talking not necessarily of corruption but of different ideas about what constitutes a vet, for example, between the United Kingdom and other Continental countries.
  Various figures have been bandied about while discussing costs. There is no doubt that if we move from the battery system there will be cost penalties. We must not forget why there has been such pressure on the system, why there is such insensitivity and why the system has reached its present level.
  It is we the consumers who have applied pressure. It is not necessarily we the consumers who visit the supermarket or the neighbourhood shop to buy half a dozen eggs who are responsible. It is we the consumers who take into account whether half a pound of ginger nuts produced by one manufacturer is cheaper than half a pound produced by another manufacturer. The manufacture of ginger nuts requires the use of eggs and that requires the manufacture of eggs. We are consumers of eggs when we consider whether to eat at one transport cafe or another. We take into account whether egg and chips is cheaper at one such cafe than at another. We the consumers have put the pressure on the system and the industry has responded to try to oblige us.
  It is easy to say that the consumers will accept a premium of 5p per dozen eggs—
  Mr. Maxwell-Hyslop: Will they?
  Mr. Shepherd: I do not know. I am told so by the Farm Animal Welfare Co-ordinating Executive. Apparently a Gallup survey was conducted and 937 consumers were
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  asked how much more they would be willing to pay for non-battery eggs. It transpired that nearly two-thirds of those so questioned were willing to pay the premium. The element that we fail to take into account is the different price of ginger nuts in different shops. The manufacture of such products requires enormous egg production. It is the eggs that are used in catering and not the two eggs in a double egg cup that appear on the breakfast table in the morning that requires a high level of production. We ignore that at our peril.
  Are we to allow a price increase of 5p or 10p per dozen eggs? Let us not confuse the extra cost of production with the extra cost of a dozen eggs on the shelf. An additional 5p in the production of a dozen eggs cannot be translated into an additional 5p per dozen eggs on the shelf. The increase will be another 12p per dozen on the shelf. There is a multiplier of two and a half for distribution, handling margins and all the other factors.
  If we create circumstances in which eggs appear on the supermarket shelves at a higher price, we shall not know the consequences until that happens. Perhaps the overall consumption of eggs will fall off. Fewer eggs will be purchased. People will vote with their feet and find substitutes for eggs. All of us in the House are agreed that eggs are a healthy product. They are a balanced product and a good diet—generally speaking, they are good for us unless we breakfast on two dozen or more. In moderation, they are good.
  Therefore, we can damage the industry. We can damage the countryside if we take an unreasoned action and put on a heavy price penalty. We would have done it for the best possible reasons, but we might not like the consequences. It is important that everyone—not just hon. Members, but those outside the House—should be aware of the consequences, because we are all consumers.
  Mr. Maxwell-Hyslop: Has my hon. Friend noticed that the Select Committee states in its report that the cost will not exceed a maximum of 4·9p per dozen and gives a footnote? If one follows up the footnote in the evidence, one sees that a maximum is not given—it refers to about 4·9p. In other words, what the Committee report says is a maximum in the evidence is a scatter figure with that as the median. That is different.
  Mr. Shepherd: I agree with my hon. Friend. I take his point. It reflects the diligent care with which my hon. Friend reads the reports. The House is grateful to him for his observation.
  Research is also important. It has been touched on because it relates to where we go from here, and how. I understand that the Community proposal calls for fundamental changes in the law in 1983. It then calls for research into alternative systems to be made public in 1984. It seems slightly imprudent, to say the least, to make legal changes on an arbitrary basis in advance of research that might show the need for something completely different.
  If the legislation goes ahead on the present lines, it will virtually kill the chances of any viable alternative to battery cages being developed. It will stifle rather than encourage research. That is not what we are looking for. It is essential that research into more effective means of egg production that will satisfy the reasonable requirements of the House, the public, and the producers—in fact everyone, including the hens—is not stifled.

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  I am told that the British Egg Association is putting £140,000 into research into the aviary system. I have no means of knowing whether the aviary system is advanced, but I am certain that I would not want to see that money wasted. The association also does not want to see its money wasted. That research should be done and should not be stifled.
  As a final part of the need to consider the transitional arrangements, it is important that we should not be too firm on dimensions until we are certain that the battery is the best system of egg production, that an increased cage size is beneficial to the bird and that the costs are acceptable to the industry and the consumer, in the many aspects in which we consume the products.
  I crave the indulgence of the House as I have spoken for longer than I meant to. However, that reflects the importance of those points to the industry, the consumer and the hens.
  9.30 pm
  Miss Joan Maynard: I believe that in 1965 Britain took the lead in animal welfare when we produced the Brambell committee report. I regret that we did not build on it, as I had hoped we would.
  I am opposed to intensive farming. It is cruel to the birds and animals and it is often dangerous to the people employed in the industry, whether they are the farmers or farm workers. It can also often be dangerous to the consumers who eat the food that is produced by the various intensive farming methods.
  The hon. Member for Newcastle upon Tyne, North (Sir W. Elliott) spoke about Community standards. But we should be thinking about—tonight and always—the humane standards. The way in which we treat animals who cannot speak for themselves is a measure of our civilisation. I understand that we are also talking about productivity and money. But the drive for profit means putting more and more pressure on animals and birds, which is what we have done in the farming industry.
  I agree with the hon. Member for Hereford (Mr. Shepherd) who said that we need to spend more money on research into alternative systems. The Select Committee challenged those who said that it would be more expensive to have less intensive systems than the battery system, but they did not have much evidence to back up their arguments. We should make more use of the aviary system, the straw yard system and probably the deep litter system.
  History shows that, whenever reforms have been called for, there has always been the problem of cost. There is no doubt that the poultry industry is capital-intensive and the grant system in this country has encouraged that. Whenever people have called for a less intensive farming system it has been said that that would be ruinous for the producers, who would be put out of business. That reminds me of the arguments that were used when we wanted to bring children out of the mines and factories. It was also said that when farm workers were given Saturday afternoons off the farmers would be ruined. Nevertheless, the Select Committee gave some credence to the argument in favour of less intensive systems. It felt that battery cages in their present form should be phased out within five years. Therefore, I find the EEC proposals that will stretch the timetable to 1985 unacceptable.
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  Again, I put forward a plea for more research, particularly in welfare, and not just on technical developments and economic aspects. More money should be spent on the welfare aspects, and the Government should find the resources for it. They will not come from anyone else but the Government. There has been much talk about how the less intensive systems would push up the price of the product—in this case, eggs. I am not sure that that would be the effect. When we were pressed on the question there was not much evidence to prove that that would be the effect.
  There are other costs involved in intensive farming methods—namely, the possible health costs that people could suffer as a result of eating food produced by the various intensive methods. We have also been told that producers are responding to the demands of consumers. The demands of consumers are conditioned by our advertising system. People are persuaded that what they want is being sold. I am not convinced of that argument.
  Mr. Colin Shepherd: I am puzzled and interested by the health aspect of battery eggs as at present produced. Does the hon. Lady have a specific point in mind? This is important, as the debate will be widely read and I should not like it to be felt that there was something injurious about the eggs at present produced. Does the hon. Lady feel that some particular practice might be developed, or is there some particular current practice that worries her?
  Miss Maynard: I am certainly prepared to defend my argument. I believe that there is less food value in battery-produced eggs than in those produced by less intensive systems. In speaking of the health aspect of consuming foods produced by various intensive methods, I was making a more general statement. [HON. MEMBERS: "Ah!"] For instance, a large number of young people in this country are dying of cancer. It should be borne in mind that many hens are fattened by pumping hormones and antibiotics into them. I do not believe that it is good to eat food produced in that way. That is a personal view that I am entitled to hold. Indeed, I believe that I may ultimately be proved right.
  Mr. Maxwell-Hyslop: The hon. Lady began by referring to the evidence given to the Select Committee, which I have taken the trouble to read. The evidence was to the effect that there was a health risk in deep litter methods due to the excreta and dirt in which the eggs were produced. The hon. Lady has now gone from talking about the evidence to talking about her personal beliefs. She is entitled to her personal beliefs, but she is not entitled to wrap those personal beliefs in a spurious description of the evidence given to the Select Committee which was in fact to the opposite effect.
  Miss Maynard: I in no way wished to confuse the House as between my own personal views and the evidence to the Select Committee. I said that I should like to see greater use of aviaries and straw yards and—perhaps—of the deep litter system.
  Some people argue that stockmen prefer to look after battery hens indoors. That has not been the experience of my union. We have found that the majority of stockmen prefer to work out of doors. After all, that is why most of them decide to work in agriculture. It is certainly not for the wages that they draw at the end of the week. Most stockmen object to cramming as much stock as possible

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  into the smallest possible area. I appreciate, of course, that density and warmth affect the amount of food needed by the birds and than producers have that worked out to a fine art.
  The stockmen consulted by the union asked that considerable thought be given to stocking density. They stated that heat and dust seem always to be present in intensive poultry houses. The dust cannot he good either for the birds or for the men who work there, and it is no wonder that the incidence of respiratory disease among farm workers is increasing. They believe that animals should have sufficient room to move around without treading on one another. They also oppose the keeping of four or five birds in one cage so that it is virtually impossible for a bird to flap its wings without hitting another bird or the side of the cage.
  Most farm workers therefore find battery cages objectionable. So do I. The Select Committee was right to ask for battery cages to be phased out over a five-year period. The 14 years proposed by the EEC is far too long a period. I hope that our Minister will veto any such proposal and that the Government will make a commitment today that at least they accept the Select Committee's proposal to phase out battery cages over a five-year period.
  9.40 pm
  Mr. David Myles: I, too, must declare an interest:. I am a farmer and have produced eggs not through the battery system but through the free range system, with hatching eggs, which require the use of the free-range system.
  I was also a member of the Select Committee on Agriculture. I was very interested in the manner in which the hon. Member for Sheffield, Brightside (Miss Maynard) switched around the evidence given to the Committee. I do not fully agree with what she said, but I shall develop that in my argument.
  Dr. Rose Wegner, from Celle in Germany, said in her evidence to the Committee that the hen's egg was still the most valuable and reasonably priced protein source for human nutrition. this country, 96 per cent. of eggs are produced by the battery cage method. I do not think that the producers of 96 per cent of our eggs are without compassion or are disinterested in animal welfare. I disagree with my hon. Friend the Member for Devon, West (Mr. Mills), who spoke of the need for a balance between farmers and welfarists, whoever they are. I am a farmer, and I feel that I have been a welfarist all my life. Therefore, I believe that there is no conflict between animal welfare and farming. I wish to confine my remarks to animal welfare.
  Mr. Peter Mills: Does my hon. Friend suggest that there is not a balance now? The balance is right at the moment.
  Mr. Myles: I am grateful to my hon. Friend; I may have misunderstood him.
  The document before us is a reasonable one. It does not start with the promise, as do so many documents, that keeping hens in batteries is cruel. I shall confine my remarks to the welfare of the hen. I could never condone cruelty purely from an economic standpoint. As a member of the Agriculture Select Committee, which studied the subject, I was privileged to hear evidence on this subject
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  from all shades of opinion. I recommend that all hon. Members study that evidence deeply, as obviously one hon. Member has already done, and not simply the Committee's findings. Not only the conclusions are important in that document. There is a great deal of evidence which should be read.
  I was disappointed, but not surprised, that there was a dearth of scientific evidence to prove or disprove that hens were content in the battery cage system. The only real evidence we heard was that hens laid better and lived longer. That evidence came from Dr. Lindgren from Denmark, who said:
  "Intensive egg production through the last two decades has experienced a drastic improvement on bird health. This development towards higher productive records and low mortality figures has been coincident with the increasing use of laying cages at the expense of housing on litter."
  He continues in detail to enumerate poultry diseases which
  can be caught from excreta, litter and mites.
  Mr. Douglas Hogg: My hon. Friend has just told us that hens now live longer and feel better, and has attributed that improvement to intensive methods. However, those changes have also coincided with genetic breeding, and they might be attributable to that as well as to changes in the methods of rearing hens.
  Mr. Myles: That is not the evidence. I should have thought that the hon. Gentleman would be interested in the evidence. I was quoting evidence on health and the diseases that can attack birds. Caged birds are much freer from diseases than are birds that are kept under other systems. To some extent the health of birds must he important unless it is said that we can have happy, unhealthy hens or that hens are happier if they are naturally unhealthy.
  We heard from evidence—I think that the Committee agreed on this—that those entrusted to look after hens and other animals were the most likely to inflict cruelty on them. Battery cage systems for laying poultry eliminate most of the risks of human neglect or inadequacy. Some systems are so fully automated that one man can look after 64,000 birds.
  Many people argue that humans would not want to live in such conditions. However, we should not be so arrogant as to assume that we know how a bird feels. Robert BURNS—[HON. MEMBERS: "Ah."]—is thought to be one of our most compassionate poets, yet over 200 years ago he said to the fieldmouse—
  "Still thou art blest compared wi me!
  The present only toucheth thee;"
  Might it not be that with its brain the present only
  toucheth the hen? Does not the evidence suggest that nothing could be better than a controlled environment that is automatically kept clean? No other system allows the battery hen to remain separate from her excreta. There is no dreadful smell of ammonia such as is found in deep litter systems. Committee members saw some deep litter systems that made their eyes stream. The conditions were atrocious. Indeed, Dr. Lindgren mentions that aspect.
  It is interesting to note that those who advocate the free range system also claim that we should not catch foxes. They seem to suggest that we should allow the fox his natural instinct to pull hens limb from limb, as is its wont. Battery hens are automatically fed and watered and are almost safe from human neglect. If we accept that hens should be kept to provide us with such valuable protein—and I respect the arguments of those who say that

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  it is unethical to keep hens for that reason—we must accept that battery cages come as near as possible to the ideal environment in terms of the birds' welfare. The Select Committee did not hear any scientific or other hard evidence to disprove that assertion.
  The document also refers to the size of cages. One of the problems about keeping hens in large numbers is their propensity to huddle together to the extent that many are often smothered. I have seen these hens huddle together, and they do so to keep warm. We must be careful about increasing the size of cages to such an extent that they are no longer able to maintain their natural body temperature.
  When we visited Denmark, we found evidence of broken wings when the birds had too much room in which to move. I am disappointed that the document does not mention such evidence. If the birds become entangled in the bars of the cages, they can suffer from broken wings. We must also pay attention to that point.
  I do not disagree with the Opposition amendment. It
  "finds the proposed timetable stretching to 1995 for implementing minimal improvements incompatible with the views of the Agricultural Committee"
  the views were not universal; there were certainly divisions of opinion
  "expressed in their First Report of Session 1980–81 … the demands of those interested in animal welfare and the expectations of this House."
  We need a definition of what is meant by
  "those interested in animal welfare",
  because I certainly am. There is no reason for not accepting both the amendment and the document.
  9.53 pm
  Mr. Stan Crowther: Tonight is the first time that I have heard it seriously argued that hens are put into these appallingly tiny cages for their own benefit. Have the hon. Members for Banff (Mr. Myles) and Devon, West (Mr. Mills) ever offered a hen, which has hitherto been running free, a cage of the dimensions described tonight? I wonder whether it would voluntarily walk into such a cage and spend the rest of its life there.
  Mr. Peter Mills: I have done exactly that, and they have hopped back in again.
  Mr. Crowther: The hon. Gentleman has not said whether the hen hopped back out of the cage or chose to spend the rest of its life in it.
  Mr. Stanley Newens: Is my hon. Friend aware that we saw some of these conditions in Germany? We were told that some of the hens retreated into the cages. We were subsequently told that there were hawks in the vicinity. There was therefore little doubt about why the hens retreated into their cages.
  Mr. Crowther: I was referring to a hen that had previously been allowed to run free, whereas I think the hon. Member for Devon, West was talking about a hen that had the misfortune of spending all its life in one of these cages.
  The Commission document is pitifully inadequate. Once again, it demonstrates the way in which the Commission can be influenced by powerful commercial interests, not only in Britain but throughout the Community.
  The Minister rightly said that the Commission has concluded that a wide divergence of opinion exists on the
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  interpretation of the available information on the behavioural needs of laying hens and on the adverse effects of battery cages. At the end of two years, the Commission has arrived at the amazing conclusion that there is a wide divergence of opinion. That divergence is clear from the debate. It does not need two years of study to find that out.
  Mr. Nicholas Baker: The hon. Gentleman seems to be suggesting that the industry's views should not be taken into consideration. Is he unaware of the critical state of the industry and the effect that a large increase in capital expenditure, let alone revenue expenditure, would have on it? Surely its views should carry some weight in the deliberations.
  Mr. Crowther: I am not by any means unaware of the problems of the industry, and I shall say something about the capital expenditure to which reference has been made.
  The Commission is manifestly dragging its feet. It was instructed two years ago by the Council of Ministers, in unequivocal terms, to prepare a report on systems of egg production which would be able to satisfy animal welfare requirements and those of hygiene and of social ethics. At the end of two years, on the basis of that instruction, the Commission has produced a document in which the best it can say is that there is a wide divergence of opinion and that much more research is needed.
  How much more research do we need to prove that it is cruel to keep any animal in conditions in which it can barely move, and in which it certainly cannot make the normal movements that it would make in conditions of freedom? If that does not appear to any ordinary reasonable human being to be cruel, I do not know what is.
  Mr. Douglas Hogg: It is clear that the hon. Member is against cages. What system does he favour as a means of producing eggs in large volume?
  Mr. Crowther: I thought that we were debating the Commission document, and I intend to confine my comments to the document which is the subject of the debate.
  We are not making the kind of progress towards removing elements of cruelty in the keeping of hens that the Council of Ministers intended us to make when it gave that instruction to the Commission. I do not need to be provided with much more evidence and research to prove to my satisfaction that it is cruel to keep hens in the conditions which have been described.
  Conservative Members may wish to justify this cruelty on economic grounds. They appear to be arguing that it is unfortunate that suffering is involved but that for good economic and commercial reasons it has to be continued. That is an argument that I and many of my hon. Friends do not accept.
  If a householder kept a cat or a dog in such conditions in a cage—[Interruption.] If Conservative Members think that this is funny, I strongly disagree with them. I see nothing humorous in cruelty to animals. If a householder kept a dog or a cat in a cage of the proportions that we are discussing, the RSPCA would prosecute, and every hon. Member would applaud it for doing so. But because we are talking here about commercial considerations, apparently different standards must be applied. I totally reject that argument. It is clear from the evidence that has been given to the—
  Mr. Freud: The hon. Member is comparing chickens with dogs and cats. Would not he accept that dogs and cats are pretty nice animals by and large? There is nothing remotely charming about a chicken; they are boring and dreary animals. If the hon. Gentleman has ever met a gregarious chicken or a pleasant chicken let him say so. They are very useful for laying eggs and the more uncomfortable they are, the cheaper are the eggs they lay.
  Mr. Crowther: If I were invited to select the most outstanding example of mankind's arrogance in relation to the rest of the living world, I could not do better than quote what has just been said.
  Mr. Douglas Hogg: On behalf of the Liberals too.
  Mr. Crowther: I do not know whether the hon. Member for the Isle of Ely (Mr. Freud) said what he did on behalf of the Liberal Party or the dog food manufacturers. [t is quite clear from the evidence presented by the various bodies representing egg producers that they all have basically the same approach. The theme is that a great deal of capital investment is represented in their existing equipment and their present cages and that moving to a more humane system would cost a lot of money. Therefore, we should either not do it at all, or at least do it very slowly.
  I am not sure that there is a lot of money involved. The Minister quoted an amount for the estimated cost of moving towards a very moderate improvement as proposed by the Commission. Unless my mathematics are a long way out, that totals something less than £2 per bird space in capital terms. That does not seem to tie up at all with a figure that was mentioned by one of the Minister's hon. Friends. That hon. Member ought to talk to the Minister and see which figure is right.
  I do not believe that capital costs should be a good argument against moving towards a more humane arrangement. I am not greatly moved by the arguments advanced on behalf of the egg producers that it will cost so much money. appreciate that it would be much easier for them if the hens would meet the needs of the cages, because then the cages would not have to meet the needs of the hens. If we proceed like this, evolution will eventually produce a wingless hen with no legs and no feathers and we will not have this problem.
  Mr. Myles: Is the hon. Gentleman not at all concerned about the interests of the consumer? He referred to the producer, but surely it is the consumer that we are thinking about. The producer would not produce eggs if the consumer did not want them.
  Mr. Crowther.: I grew up eating eggs which were not produced in cages, and very enjoyable eggs they were. I had the great benefit of having relations who were farmers and I much enjoyed the eggs produced by hens which ran loose on the farm. [Interruption.] I am not discussing their political affiliations because I have never asked them, as a matter of fact. To suggest that we must continue producing eggs in these appallingly cruel conditions if we wish to continue eating eggs is nonsense. Of course, that is not true.
  I presume that the Danes eat eggs and the proportion of eggs produced in Denmark by what I regard as cruel methods is only 50 per cent. In Britain, the proportion is 95 per cent. The Danes manage to eat eggs, just as we do. I have no doubt that the same market forces operate in Denmark as in the rest of the Community.
  Mr. Nicholas Baker: The hon. Member made an interesting point when he said that he had never asked chickens about their political affiliations. I make a perfectly serious point by asking whether it is relevant—it seems to me that he has ignored this—whether chickens are suffering. No hon. Members want to see suffering; we are all against cruelty. Surely the individuals we must consider are the animals themselves—the chickens, and not human beings putting themselves in the position of chickens. Will the hon. Gentleman address himself to that?
  Mr. Crowther: The hon. Gentleman is trying to turn the debate into a music hall and I do not intend to join in that. I regard this as a serious matter.
  Mr. Donald Stewart: Will the hon. Gentleman accept that, despite all the criticism from the Conservative Benches, we are arguing over a document in which even the EEC, by its tacit acceptance in 1995—although this is not acceptable to many hon. Members—recognises that this is a practice that should come to an end?
  Mr. Crowther: I am grateful to the right hon. Gentleman. That is precisely the point. The Government, by accepting not only the EEC document but by accepting the Opposition amendment, which says that the document does not go far enough, fast enough, agree with the point that has just been made. If there was no acceptance of the fact that cruelty is involved, this debate would not he taking place. That needs to be understood.
  I fear that I cannot agree entirely with the kind words used by my hon. Friend the Member for Durham (Mr. Hughes) about the British Poultry Federation Ltd. My hon. Friend referred to the federation's paper which says:
  "It must be right, in our view, to ensure that birds are of only protected from cruelty, but also that they enjoy an environment that is as pleasant as we can make it."
  The words are splendid. What, however, is the federation doing about it? Are the members of the federation doing what they say? Are they making the environment for these birds as pleasant as they can? Do they not really mean to say "as pleasant as we can make it provided that it does not affect our profits"? That is what they really mean.
  Many Conservative Members have clearly taken the view—I happily exclude from my criticism the hon. Member for Plymouth, Drake (Miss Fookes) who made a splendid contribution—that is accepted by the producers. While they may not wish to be cruel, it is, unfortunately, necessary to be cruel in order to make a profit and to stay in business. That is a position that I cannot accept. The only reason why new capital expenditure needs to be involved in changing the system is that money was invested voluntarily and deliberately in the first place in a system that involves cruelty. Conservative Members shake their heads. They should argue with the Commission that it is wrong. They should tell the Council of Ministers that it was wrong to ask for the report. If hon. Members do not agree that cruelty is involved, why do not they protest that the Council of Ministers was wrong to ask for the report and that there is no need to make changes?
  Cruelty is, of course, involved. The question of spending more money arises only because producers put their money originally into the present system. I do not shed tears for people who invest in cruelty. If the egg producers had not engaged in this barbaric system in the

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  first place, they would not now be under pressure to change it. I agree with my hon. Friend the Member for Sheffield, Brightside (Miss Maynard) that one way of measuring the degree of civilisation in any society is the manner in which that society treats its captive animals. This is not a matter that should provoke laughter as some Conservative Members seem to think. It is not a sentimental question. It is a basic moral question. It goes to the heart of our ethics.
  Mr. Freud: Will the hon. Gentleman give way?
  Mr. Crowther: I have given way enough. I wish to conclude by saying that I welcome the Government's decision to accept the Opposition's amendment, modest though it is. I wish only that I had heard a commitment from the Government that they will legislate to phase out completely this appalling system.
  10.10 pm
  Mr. Richard Alexander: I am glad to follow the hon. Member for Rotherham (Mr. Crowther), although I feel that his conclusions rather went over the top of the evidence before us. The Minister, in her explanatory memorandum, correctly stated that if the proposals are adopted most producers who use the cage system must replace their cages within the transitional period.
  I cannot believe that the farming community has had such a fine return on capital invested that we can cheerfully contemplate that burden being put upon it without looking at what it will mean. The Commission report states that "in certain cases" the keeping of laying hens in cages
  "leads to unnecessary and excessive suffering on the part of the animal".
  My agricultural expertise is less than that of my constituents, but I always believed that a hen was a bird and not an animal. Perhaps I shall be corrected later.
  The Commission uses the words "in certain cases". It does not go the whole way to say that the battery cage system is cruel, and nor did the hon. Member for Durham (Mr. Hughes), who spoke from the Opposition Front Bench, say that in so many words. Although he was moving towards saying that, he was reluctant to say on behalf of the Opposition that the battery system is cruel. He cannot have it both ways. He said that 99 per cent. of farmers were not cruel. Either they are adopting a cruel system or they are not. If they are adopting a cruel system, they must be cruel people. The hon. Gentleman must clarify his position.
  Some Opposition Members said that we can ignore what goes on in Europe and make sure that our system is not cruel. I cannot accept the logic or the humanity of that argument. Either the battery system is of itself cruel—and it is not purely cruel in Britain—or we must say that we accept it. Cruelty does not end at Dover. Surely if we work together within Europe towards a humane system, we shall assist in the ensuring the welfare of birds.
  A farmer in try constituency advises me that if he must provide a space of 600 sq cm per bird he would have to reduce the number of his birds by one-third or build more accommodation, with consequent increased heating costs, interest payments and so on, because his cages are on one tier only. It would cost him nearly £100,000. That is the evidence for which the hon. Member for Sheffield, Brightside (Miss Maynard) asked. The hon. Lady seemed to ignore the fact that in this world one gets nothing for nothing.
  Mr. Mark Hughes: The hon. Gentleman's constituent is complaining about increasing the size of his cages to 600 sq cm. This piece of paper that I have folded is 20 cm by 20 cm, which is 400 sq cm. Is that the space that the hon. Gentleman wants for each hen in this day and age?
  Mr. Alexander: I am not intimidated by that comment. I shall come in a moment to my constituent's view on the condition of his birds. If we impose such costs on the farmer, they will be passed on to the consumer. One gets nothing for nothing. The transitional periods for the farming industry must be reasonable and as generous as we can make them.
  My constituent assures me that his birds are comfortable and that within that comfort he gets a reasonable rate of return. My hon. Friend the Member for
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  Banff (Mr. Myles) asked how we know that it is cruel to keep birds in such conditions. I accept my constituent's word—he has been in the industry for perhaps 50 years—that the system gives them a reasonably comfortable life.
  Mr. Allen McKay: Why, then, do birds kept in such conditions have broken wings and cysts on their chests and are defeathered and need de-beaking?
  Mr. Alexander: My constituent's birds are not in that condition. He has invited me and any other hon. Member to visit the caged birds to see whether they are in the condition alleged. I should be happy to accompany the hon. Gentleman if he wishes to do so.
  Mr. John Carlisle: It is obvious that the birds are happy in such an environment because they produce large numbers of eggs. They would not do so if they were in a poor condition.
  Mr. Alexander: That is so. If the hens were in an extremely poor condition, they would not produce profitably.
  Whatever emerges from the consultations that my hon. Friend has, I hope, as do many of my hon. Friends, that one thing will be made abundantly clear. If we accept the increase in bird space, our competitors in Europe will, too, at the same pace and subject to the same inspection, policing and controls. We must not in this matter, as we have done in so many agricultural matters, play by the rules but allow the EEC to turn a blind eye to what goes on elsewhere.
  10.17 pm
  Mr. Stanley Newens: Anyone who considers the proposals before the House other than from a narrow, commercial, aspect must recognise that the space provided, even if the Commission's recommendations are accepted, is still woefully inadequate. If the hon. Member for Newark (Mr. Alexander) discarded the commercial argument, he would not be able to justify the Commission's view, let alone the present state of affairs.
  The Select Committee on which I served recommended a minimun of 750 sq cm per bird, which is still gross overcrowding. However, as long as the battery system exists there are problems in further expanding the area for birds without making the system uneconomic. For that reason, the Select Committee finally came down in favour of getting rid of the battery system completely over a period of five years or so on the basis not of emotional choice, as may be suggested, but of the evidence that we considered.
  We recognise that instant banning of the cage system would not make sense. We recognise that other systems, in certain circumstances, could be even worse, although I do not agree with my hon. Friend the Member for Bradford, South (Mr. Torney), in saying that the Pennsylvania system was necessarily worse. We recognise, too, that if we ban cages and the battery system in this country and then import eggs from abroad which are produced in that way, we should achieve nothing. I therefore believe that the Select Committee put forward a responsible view.
  The hon. Member for Banff (Mr. Myles) and several other hon. Members considered the philosophical implications of welfare and whether a bird in a battery system could be happy. The Select Committee also

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  considered that issue and went into the problem of how far overcrowding in cages actually constitutes cruelty. I wish to express my personal point of view on the matter.
  I believe that some birds will not show signs of stress, even in conditions of extreme confinement and overcrowding, but that many birds do. However, we must recognise that it is possible to condition living creatures, even human beings, to live without stress in conditions of extreme deprivation, but that does not justify our doing it. In such conditions, the animals fail to develop even those innate potentialities which remain after generations of domestic breeding. If one keeps an animal in such conditions that it cannot develop naturally even the genetic heritage that it has after domestic breeding, I maintain that the environment in which it is being kept is totally at odds with its nature, and in those circumstances one sees certain results.
  Mr. John Carlisle: I thank the hon. Gentleman for giving way. I wonder how the hens manage to lay eggs at all in these terrible conditions.
  Mr. Newens: It is by means of a biological process which will not necessarily be snuffed out, even in the worst conditions. When human beings were kept in concentration camps they continued to perform certain natural functions, but that is no justification for concentration camps. Neither is the fact that hens still lay eggs a justification of the battery system.
  I do not accept that in the long run complete subjugation of every principle of compassion to commercial criteria can be justified. I do not suggest that that is being done. I suggest that the logic of certain arguments is that commercial considerations and motives should be given absolute priority.
  We do not yet fully know what may be the result of breeding hens so far away from their original nature over many generations. In this connection, I am not relying on the evidence, but I suggest that we should view some of these matters with a certain caution, because we know that in the past certain plants and animals which man has produced have suddenly become subject to serious diseases, and so on. This may yet take place if we commit ourselves entirely to this form of battery production of eggs.
  Mr. John Carlisle: Is the hon. Gentleman agreeing with his hon. Friend the Member for Sheffield, Brightside (Miss Maynard) that battery eggs could lead to cancer?
  Mr. Newens: I have never suggested that. Not for one moment did I suggest that battery-produced eggs could lead to cancer. I do not think that my hon. Friend the Member for Sheffield, Brightside (Miss Maynard) did either. The hon. Member for Luton, West (Mr. Carlisle) should address himself to the arguments. He should not erect windmills which he wishes to demolish, because that shows the weakness of his argument. People who are opposed to the battery system are saying, not that battery-produced eggs lead to cancer—
  Mr. Douglas Hogg: Will the hon. Gentleman give way?
  Mr. Newens: I want to pursue my argument because we are getting too far from it.
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  We have become committed to a battery system, and it seems that it is too costly to develop satisfactory alternatives. There is no evidence to suggest that we have arrived at the perfect system for producing eggs or for keeping hens. Anybody who listened to Conservative Members would imagine that we had arrived at the perfect system.
  The Government should step in and reach agreement with other egg-producing countries not only to impose the trivial limits recommended on the worst battery producers but to develop new methods so that the battery system can be replaced, as the Select Committee recommended.
  As my hon. Friend the Member for Brightside said, nearly every reform approved by the House has been opposed on cost grounds. Some hon. Members who have raised their voices this evening would have been at one with their predecessors who argued against limiting the hours that children were forced to work in factories and with those who wanted children to work underground in the mines. In those days the argument was that it was too costly to get rid of the system.
  Mr. Peter Mills: That is absolute nonsense.
  Mr. Newens: I am glad that the hon. Member for Devon, West (Mr. Mills) protests. However, that is the logic of the arguments expressed by his hon. Friends tonight. I am sorry that he thinks that my argument applies to him, because it does not. If he thinks that it applies to him I am sorry, because I thought that he had more compassion. Some of his hon. Friends have views different from his.
  The Government must step in and take action. We need a prosperous egg-producing industry. Members of the Select Committee made recommendations because we believed that it was possible to have such an industry on that basis. It is wrong to suggest that we are concerned only with compassion—although we make no apology for being concerned with that. We are concerned also to achieve a prosperous egg-producing industry on a compassionate basis. If the Government step in, that can be achieved.
  If we take action immediately to ensure that the necessary research is put in hand; if we insist and make use of our veto if necessary in the EEC, it is possible to get rid of the battery system and to produce all the eggs that we require on a better basis. I hope that ultimately every hon. Member will have that as his objective.
  10.30 pm
  Mr. Richard Body: Like other hon. Members who have spoken, I have an interest in farming. I do not make money out of hens. I keep them, and most mornings I feed them and let them loose. My hens are free range and, I regret to say, quite uneconomic. I do not usually fall out with my hon. Friend the Member for Devon, West (Mr. Mills), but I thought I heard him say that one could not tell the difference between a battery egg and a free range egg.
  Mr. Peter Mills: I did not.
  Mr. Body: I am glad. I must have misunderstood. My birds run around the yard and occasionally produce a few eggs. I infinitely prefer to eat them rather than the filthy things which come out of battery cages.
  I must tell my hon. Friend the Member for Luton, West (Mr. Carlisle) that there is evidence from the United States

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  that a number of heart diseases can be attibuted to the battery egg, for reasons that have already been given. My hon. Friend suggested that free range chickens give rise to cannibalism and all sorts of vice. If a cock is put among the hens, he soon sorts them out and there will not be any cannibalism or vice. If my hon. Friend is worried about vice, he should get a good cock.
  I look forward to progress being made. A dangerous wedge is being driven steadily between farmers and a growing number of the public. That is very bad for the reputation of farmers. All concerned with farming admit that a large part of their livelihood depends upon support from the taxpayer. It is crucial that farmers should retain the good will of the public. If they lose it, they could face a critical time.
  My hon. Friend the Member for Hereford (Mr. Shepherd) and others spoke about costs. There is a fallacy in the argument that they put forward. At home we have a large implement building, facing south, with a concrete floor. I was advised that it would be ideal for a straw yard. We contemplated making the building into a straw yard, and we could have kept several hundred birds. It would have cost only a few pounds to adapt the building. We would not have received any Goverment grant or tax allowance. However, had we adapted the building it would have proved uneconomic. We could have produced eggs by a method that every hon. Member who has questioned battery cages would regard as humane. It would have been more worthwhile economically to have demolished the whole building at some expense, erected a new wooden building and put in row upon row of battery cages. That would have been worth our while, although it might have cost £10,000. Our money would have been returned eventually from not the consumer but the taxpayer. The buildings would have been written off over a period and the battery cages would have been written off after 12 months out of tax. The result of our calculations and the advice that we were given was that we did not go ahead with what we had been contemplating.
  The battery egg is made artificially cheap as a result of our tax system. The old-fashioned methods of the free range, the Pennsylvania system and all the other systems are made artificially expensive because of our tax system.
  Mr. Douglas Hogg: And the grant system.
  Mr. Body: Indeed. How would the costings work out if we brought tax allowances to an end? I suspect that the housewife would be paying for a battery egg a little more than for other sorts of egg.
  It is agri-businesses and not farmers that have gained considerably during the past two decades from our tax system for farming. That has not been to the advantage of ordinary farmers. Those of us who are more than 50 years of age can remember when hundreds of small farmers kept a number of hens. The surplus eggs would go to market and quite a useful addition to their livelihoods would be gained by the efforts of the farmers' wives. Those days may be gone for ever.
  At the same time, we have lost the thousands of farmers who were able with 1,000 or 2,000 birds to make a useful supplement to their livelihoods. That was not a bad form of mixed fanning. I regret that those days have come to an end, largely because of the present tax system. I support what the Community is doing in this sphere.
  Mr. Keith Wickenden: My hon. Friend has told us that he had a chicken house on which he had to spend nothing and that it could not be economic. He explained that if he had spent £10,000 and had received tax relief it would have been economic. How can that be right? The tax man gives not a 100 per cent. allowance but one that is based on the tax that is paid. I do not understand how an uneconomic operation can be made economic merely by tax relief.
  Mr. Body: I was advised that the tax allowances on the cages themselves would have been 100 per cent. in 12 months and that the cost of the building would be written off over a number of years because of tax allowance. I have forgotten the exact number of years, but others may know. The calculations made it plain that one might be able to make the venture pay on those terms but not by converting building into a straw yard at the cost of only a few pounds. That is the point that I was seeking to make.
  Mr. Maxwell-Hyslop: Perhaps my hon. Friend has other sources of income against which the tax could be allowed. Are we not talking about farmers who have to live on the income from producing eggs? We are not discussing those who have an income from being Members of Parliament or barristers against which they can offset costs on other activities.
  Mr. Body: I hope that my hon. Friend will not talk to my tax inspector. He knows better than I that a person cannot set off his income as a barrister or Member of Parliament against farming losses. I do not wish to be drawn into too close an inspection of my tax affairs. I merely repeat the advice that I was given, which I think was the best advice possible on the subject.
  I hope that progress will be made. I fear that it will be slow. If it is, the farmers will not gain. The only people who will gain will be the agri-businesses at the expense of the farmers.
  10.40 pm
  Mr. Douglas Hogg: I shall make a short speech, because I note that the hon. Member for Durham (Mr. Hughes) is keen that I should.
  The provisions and suggestions contained in the draft directive are useful and they are a modest step forward. We can talk only of a modest step forward, because at this stage I do not believe that there is any real prospect of a major change being achieved. Like other hon. Members who served on the Select Committee and, indeed, many other hon. Members, I have taken the opportunity of looking around many battery systems. Most of us would agree that judged by the standards by which we as human beings judge these matters, they are not terribly attractive. They are too cramped, and so on. Therefore, it is useful to try to enlarge the general comfort of the battery system in precisely the way that is suggested in article 3 of the draft directive.
  There are other points that we must also bear in mind. First, we must do the best that we can with the available evidence. I do not believe that there is an alternative system now available for producing the volume of eggs that we need to produce at reasonable cost. We have to face that. It is the present position. It may change, and we hope that it will. Opposition Members, and, indeed, Conservative Members, demand the complete phasing out

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  or abolition of the battery system, but it does not make sense. At this stage, there is no alternative that we can put in its place.
  Secondly, all forms of husbandry involve some type of constraint. I cannot think of any form that I have encountered that does not. The idea that one can bring up animals or produce food in the way that our ancestors did 500 years ago is grotesque. We must achieve a balance between humanity and economic production. There are no absolute truths in this matter and hon. Members have failed to recognise the importance of that basic proposition.
  I should like to mention two other points. First, before the Select Committee there was a great diversity of opinion as to the extent to which the costs would increase by moving away from the present system of producing eggs. There are a variety of problems associated with that judgment, not least because if there is no viable alternative now it is difficult to assess with clarity what the increased costs would be in producing eggs in a situation that we cannot yet tell.
  Does the hon. Member for Durham wish to intervene, or is he just grumbling?
  Mr. Mark Hughes: I was just grumbling.
  Mr. Hogg: That is very like the hon. Gentleman, but no matter. The point is that unless we can put an alternative before a Committee, the House or another body of assessment, it is difficult to be precise about the increase in cost. The overwhelming body of evidence was that there would be a substantial increase to the consumer and, perhaps more important for these purposes, a substantial increase to the producer. It is nonsense to pretend, as one Labour Member did, that we should simply ignore the interests of the producer. That is a monstrous idea. It is like nationalisation without compensation, which is also put forward from the Labour Benches from time to time and then, of course, denounced.
  Mr. Newens: Which Labour hon. Member does the hon. Gentleman mean?
  Mr. Hogg: I was referring to the hon. Member who was sitting to the right of the hon. Member for Harlow (Mr. Newens). I do not know his name. What is more, he has left the Chamber. But he was there earlier, and he clearly told the House that he did not give a damn, if I may use that word, about the producers, because they had voluntarily put themselves into that position.
  Mr. Newens: I never argued that.
  Mr. Hogg: No, it was certainly not the hon. Member for Harlow. It was the hon. Member sitting to his right, whose name I do not know, whom I have not seen before in the House and who has now gone away. The hon. Gentleman must not grumble if I cannot identify an absent Member. His opinions, however, were highly offensive, because he told the House that producers who had responded to the consumers' desires were to be punished for so responding because a massive increase in cost would be imposed upon them for which there would be no compensation at all. That is typical of the Labour Party but not, I think, of this country.
  If we are to impose upon our producers more rigorous requirements than are at present imposed, we must
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  shoulder the cost. It is we as society who permitted them to do the one thing and if we require them to do something else we as society must finance it. It matters not a great deal whether it is done by grants, subsidies, taxation or higher prices, but the financial burden rests upon us and not upon them.
  Finally, I support the modest step contemplated in the draft directive. I believe that in the fullness of time we shall be able to take a more ambitious step forward, and I welcome that. But any step forward that we contemplate and any directive that we support must include a proper system for enforcing the provisions throughout the EEC.
  I draw the attention of both Front Benches—after all, in 15 years' time the hon. Member for Durham may have responsibility for these matters—to the provisions of articles 6 and 9. Any directive that we approve must provide for on-the-spot, random inspections. Even more importantly, they must be carried out by inspectors who are not answerable merely to their own national Governments. I do not trust inspectors in Greece, or in Portugal when the time comes, or in some parts of France, to impose and enforce the regulations as rigorously as the inspectors in Lincolnshire. I do not see why my constituents should be treated more harshly than producers in Greece.
  That being so, any draft directive that we accept must have a proper enforcement procedure. That means enforcement by inspectors who are answerable not merely to their own national Governments, because we know that many of those national Governments cheat.
  10.49 pm
  Mr. Allen McKay: The hon. Member for Grantham (Mr. Hogg) spoke about consumers and producers, but that is a chicken and egg argument. Consumers are entitled to consume and are usually encouraged to do so by producers. Indeed, producers often advertise. Therefore, that is not the argument.
  We are discussing whether it is cruel to keep hens in battery cages. Many Conservative Members have said that chickens live in a good environment. However, I would argue about that. They are not in a natural environment. When we forget the feelings of birds, animals and humans, we are well on the way to degrading mankind. It is said that Europe does this or that. However, we should remember that we are Great Britain and at one time we used to make decisions and take a lead. There is no reason why we still should not take a lead and why we should not do so in animal welfare. One of the Sunday newspapers showed how humans could treat animals and birds. A battery hen cage is 500 cm. in size. Can any hon. Member say that it is natural for a fully-grown hen to live in a space that size? It is not. If someone were to tell me that it was natural to stop a hen from carrying out its normal functions of dust washing and socialising with other hens I would tell him that he was wrong.
  It is argued that, because we can produce more eggs cheaply, the concept that we must not be cruel to animals must go out of the window. We are in danger of saying that it does not matter whether the production method is cruel. We are talking about turning a live bird into a pure and simple egg-producing machine that is there to produce eggs for 12 months. After 12 months some hens produce artificial moultings. That is brought about by turning off

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  the lights for hours and so on. Hens can then produce eggs like an egg machine for a further 12 months. Therefore, humane treatment goes out of the system.
  There are alternative systems. In Marlborough, the Martin Pits farm has a free-range approach. Each hen has its own nesting box. Hens have always produced eggs in a social atmosphere. At the same time, the hen can go into the pen and carry on its normal life scratching about in the grass, pecking and moving about. As for foxes, the system is fenced.
  Dr. Sainsbury's straw yard system produces eggs quite cheaply in some cases. Much has been said about the consumer. Let us consider the price of eggs. A five-bird cage works out at 40·1 pence per dozen, a four-bird cage at 42·2 pence, a three-bird cage at 46·4 pence and a deep-litter cage—according to Dr. Sainsbury's idea—at 47·4 pence, or an extra 5 pence a dozen. The straw yard system works out at 47·.4 pence. Therefore, the consumers' interests, as well as the birds' interests, are being looked after.
  I hope that the Minister will carefully consider the present system of inspection. I am not naive enough to think that we shall throw out the battery system next year or the year after that. However, I hope that we shall fully commit ourselves to a period of five, six or seven years in which to do away with the battery system. In the meantime, will the Minister scrutinise the methods of inspection, and the times of inspection according to European legislation. According to that legislation, battery hens must be inspected every day. Some of the battery systems have 20,000 or 30,000 birds. As a result, the top and bottom tiers are sometimes not inspected as they should be. I should like an assurance that, until we get rid of the battery system, inspections will be increased with inspectors from our Department as well.
  10.55 pm
  Mr. Mark Hughes: With the leave of the House, Mr. Deputy Speaker, may I say that we have had an interesting debate, and I am grateful to the Minister for accepting the amendment.
  I wish to ask only two questions. Is the hon. Lady satisfied that the Government are able to legislate on animal welfare, as the Danes did, without the agreement of our European colleagues and to take countervailing action if there is an economic disadvantage? From what has been said, the clear strength of feeling is that we ought to do something about battery hens. Can that be done in the context of our membership of the Community? I simply ask for information. Are we permitted to do that under the terms of the Treaty of Accession and the Treaty of Rome on animal welfare grounds along the same lines as the Government are seeking to follow on animal health grounds in respect of Newcastle disease? I do not find a clear distinction between the two.
  Secondly, do the Government anticipate that they will be able to accept in the terms of the amendment a five-year phasing out of battery hen egg production?
  10.57 pm
  Mrs. Fenner: With the leave of the House, Mr. Deputy Speaker, I should like to reply to the debate.
  The concern that we all feel about the welfare of laying hens has been evident throughout the debate. I can appreciate the views of those hon. Members who would like to see more done for these animals, which provide us
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  with such a nutritious source of food. Carefully planned studies are now taking place that will guide us in the future as to the steps that can be taken further to improve the welfare of hens. A move towards this aim is about to be made, and the matter will not rest there.
  During this longish debate, hon. Members have raised a number of points and I shall try to comment briefly on as many as possible.
  Many hon. Members have referred to points made in the Select Committee report. I know that hon. Members will appreciate that it will be the task of my right hon. Friend to come to the House with a proper response to that important report. There is no way in which I can comment on it tonight. It would be a discourtesy to the House if anything other than a considered and full response were made to that extremely important report.
  The hon. Member for Durham (Mr. Hughes) expressed concern about whether the Government are satisfied that they can legislate, just as the Danes have done in the past. The United Kingdom Government can introduce higher standards in the United Kingdom. However, the Danes did not retaliate on imports when they introduced the 480 sq cm cage.
  We are members of the Community, and, although we can debate animal welfare in strong words in this House, it is surely to the benefit of animal welfare if we can succeed in spreading those high standards over a wider area in the Community.
  When I was a Member of the House previously there was great concern about the transport of live animals, and we have had success in the Community in securing the sort of standards in which we in Britain believe. I trust that in the present matter hon. Members will agree that it is a good objective to try to secure the acceptance of standards over the length and breath of the Community.
  My hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott), with his special experience of the Select Committee, emphasised—as have many hon. Members on each side of the House—that in the light of the directive we should be certain that the inspection is equal, and that it is carried out with integrity and with independence. That point was succinctly made by my hon. Friend the Member for Grantham (Mr. Hogg). It will be our intention to secure that independent inspection with which hon. Members were naturally concerned.
  My hon. Friend the Member for Devon, West (Mr. Mills) made the point, in support of what I said, that we should try to secure proper standards throughout the Community. He referred, as I did in my opening speech, to the recommendations of the Farm Animal Welfare Council. I know that my hon. friend the Member for Plymouth, Drake (Miss Fookes)—whose work in the RSPCA is very well known in this House and outside—will be aware that there are two officials of the RSPCA on the Farm Animal Welfare Council, and that the council has been set up to give Ministers just that advice in welfare that I am sure we would all want them to receive from experts. I reiterate, as I made clear in my opening remarks, that their advice was in favour of the 600 sq cm.
  My hon. Friend the Member for Drake said that we do not want to be locked into a system. I remind hon. Members that in 1979, when my right hon. Friend the Minister of Agriculture, Fisheries and Food supported the initiative on the new approach to the question of the welfare of hens in battery cages, he did so in regard to an interim improvement in standards, which is what we are

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  speaking about now. The council also requested the Commission to consider phasing out over a period. The Commission had been charged not only with research in the interim period but with research into alternative systems.
  Many hon. Members on both sides of the House have referred to research into alternatives. The Commission is charged with the task of reporting on this research in 1984. Research is being undertaken in the United Kingdom, and the Commission's research will be a co-ordination of the research throughout the Community. In this research we shall be playing a part. Research in the United Kingdom is being undertaken notably at the Gleadthorpe experimental husbandry farm and at the poultry research centre. The system being researched there, to which hon. Members have referred, is the aviary system, and it was chosen deliberately, being judged on the available evidence to be the most likely to meet certain welfare criteria, while offering a compromise commercially.
  I am sorry that the hon. Member for Rotherham (Mr. Crowther) was so intemperate in his remarks about the British Poultry Federation. I assure him that the federation cares very much about research and is allocating £20,000 a year over seven years to assist in that important task.
  The hon. Member for Bradford, South (Mr. Torney) showed an understanding of the consequences of distortion of competition, which was also referred to by many of my hon. Friends. My hon. Friend the Member for Hereford (Mr. Shepherd) was particularly concerned about the distortion of competition in cage sizes during the interim period. I assure him that, although the original proposals may have given rise to some distortion of competition when cages were replaced during the transitional period, any such potential distortion has been largely eliminated by amendments made to the text during the discussions simply to require that new cages would be capable of complying with the most stringent standards from the later date.
  The hon. Member for Bradford, South implied that my acceptance of the Opposition amendment meant an acceptance of the desirability of abolishing cages. I should make it clear that I accepted the amendment on the basis that it was wholly consistent with the policy that we have been following in Brussels.
  The hon. Member also referred to an inadequacy of welfare inspections by Ministry vets. That is one of the matters raised by the Select Committee and I have informed its members that we shall respond to the report as soon as possible.
  I am sorry that the hon. Member for Sheffield, Brightside (Miss Maynard) has not been able to stay in the
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  Chamber. She gave some personal opinions, but she also referred to health hazards in the intensive system. That was unfortunate, because there is no evidence that there is a health hazard in eating battery eggs. Indeed, there is much less chance of a battery egg being infected with salmonella compared with either deep litter or free range eggs. There is also no demonstrable difference in the food value of eggs from battery hens compared with those from other systems.
  My hon. Friend the Member for Banff (Mr. Myles) referred to broken wings in cages. The Community is funding a project in Sweden which has for the past five years examined possible ways of improving cage design. Reports on that work are published annually.
  The hon. Member for Rotherham referred to the Danish system. Only 50 per cent. of Danish chickens are kept in cages and the reason for the lower proportion of cage-produced eggs in Denmark is interesting. Until recently it was illegal to use cages in Denmark—yet half the eggs still came from caged birds and most of the rest came from the Pennsylvania system. The hon. Member for Bradford, South said that that system had many disadvantages, but the hon. Member for Harlow (Mr. Newens) did not wholly agree with that. The Danes have found it necessary to remove the ban on cages.
  Many matters were raised in the debate, and I hope that I have covered them. I have even tried to deal with the issues raised by hon. Members who are now absent. It has been an extremely interesting debate. I know that many hon. Members looked forward to it and wished to take part, because they believe that the subject is important. I hope that, from my opening remarks, hon. Members will accept that the Government are supporting the work being done by the Commission, on the Council's instructions, to look at commercially viable alternatives, but in the interim to secure some early improvement, remembering that our standards are not reproduced in many other countries.
  I apologise if I have omitted to deal with other points raised by hon. Members. I hope that I have said enough to convince the House that the motion, as amended, should be approved.
  Amendment agreed to.
  Main Question, as amended, agreed to.
  Resolved,
  That this House takes note of European Community Document No. 8832/81 containing proposals laying down minimum standards for the protection of laying hens kept in battery cages and supports the Government's intention to seek agreement to arrangements which would enhance conditions and strengthen controls in the Community, but finds the proposed time-table stretching to 1995 for implementing minimal improvements incompatible with the views of the Agriculture Committee expressed in their First Report of Session 1980–81 (H. C. 406), the demands of those interested in animal welfare and the expectations of this House.

  Industrial Building Allowances
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mather.]
  11.11 pm
  Mr. John Heddle: I wish first to thank you, Mr. Deputy Speaker, for selecting this motion for debate on the Adjournment of the House. I also thank my hon. Friend the Financial Secretary to the Treasury for coining here at such a late hour after waiting in the wings, penned in his office whilst the House debated the issue of battery hens.
  I wish to draw the attention of the House to industrial building allowances and, because of the rigidity of the rules that govern them, to their inability to create new jobs. I must record my gratitute to my hon. Friends the Members for Chipping Barnet (Mr. Chapman), for Hereford (Mr. Shepherd) and for Huntingdonshire (Mr. Major), who have agreed to support me in the Chamber this evening. Their knowledge; of the building industry and the creation of new jobs is acknowledged by all hon. Members and far beyond the House.
  My hon. Friend the Financial Secretary will know how badly the West Midlands in general—and my constituency of Lichfield and Tamworth especially—has been hit by the world recession. He will, I hope, agree to consider amending a well-intentioned piece of legislation that has sadly, with the: benefit of 13 years' experience and hindsight, gone off the rails.
  My hon. Friend the Financial Secretary will have received a brief entitled
  "Industrial Buildings Allowance and Small Manufacturing Businesses—An Urgent Case for Legislation"
  prepared by Mr. Anthony Grant, an acknowledged expert in industrial relocation. I am grateful to Mr. Grant for having brought the matter to my attention so that I may bring it to the attention of the House. Industrial building allowances and their effect on job creation, affects every hon. Member. It is sad that I must place on record the fact that the Opposition benches are bare, especially when we are debating a subject that so often exercises the minds of Opposition Members—the vital issue of unemployment and the creation of new jobs.
  Mr. Douglas Hogg: There are no Social Democrats here.
  Mr. Heddle: My hon. Friend is right. The Social Democratic Party has not seen fit to add its weight to my proposition.
  In accordance with the custom of the House, I must declare a non-pecuniary interest. I am a consultant to a firm of chartered surveyors that will have knowledge of these matters. I do not have a direct influence in the practice.
  Just over 18 months ago, following my right hon. and learned Friend's Budget of 1980, the rules concerning industrial building allowances were revised to encourage the development of what have come to be known as nursery units. That was a laudable aim. Incentives to industrial building contractors and investment companies were created in the form of tax allowances to encourage the building of small, light industrial factory premises. The result was a flurry of construction activity which was confidently expected to create many thousands of jobs throughout the country. So far so good.
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  A mood of optimism prevailed at that time, just 18 months ago. Hundreds of nursery units, many in regions suffering from the worst effects of the recession, were built on spec. The square feet were provided to stimulate small business, but those who drafted the legislation were found to have their feet firmly planted in clay. They had failed to study the small print of their handiwork. The theory was that building contractors and investors would obtain their 100 per cent. allowances and that the industrial units would become available for occupation by small seedcorn—acorn—companies anxious to get on with the business of creating jobs.
  I am aware that the scope of an Adjournment debate does not allow one to put forward constructive alternative suggestions to existing legislation, so I merely draw the attention of the House to the way in which the loose drafting of the Finance Act 1980 and possibly of the Capital Allowances Act 1968 tend to act as a disincentive to job creation.
  Regrettably, all the optimism is still theory. Most of the units built since the rules were revised are still standing empty. Even allowing for the recession, vacancies are unusually high. Building contractors, investors and would-be tenants are sadly disenchanted with the Government's industrial building allowance programme.
  The basis of the problem is terminology rather than concept. It is widely felt that the difficulty over letting units is an accident arising purely from the retention of an archaic definition of what constitutes an industrial development. My hon. Friend will know that certain criteria were laid down in the Capital Allowances Act under which buildings could qualify for industrial building allowance, but, in essence, pure and simple, only 100 per cent. manufacturing operations qualify for the incentives.
  As a spur to production and a boost to exports, the provisions of the Act were arguably at the time perfectly adequate. However, I ask my hon. Friend the Financial Secretary to agree that the face of industry in Great Britain has changed dramatically in the intervening 13 years. An increasing proportion of occupiers of the new buildings are now in the trades of servicing, storing and distributing rather than in manufacturing goods. Many manufacturing industries are now capable of employing high technology and automation. The modern paradox is that factories can employ fewer people than service depots and other firms of equivalent size. Service industries are at least as labour intensive today as manufacturing industries were in 1968.
  If the aim of the industrial buildings allowance procedure is to create jobs in the hign technology 1980s, the legislation introduced in last year's Budget should surely be amended to take that into account. It is simply a question of contradiction between the aim of the 1968 Act and the 1980 provisions for small workshops and nursery units.
  The 100 per cent. industrial building allowance introduced in 1980 was largely employment related and its measures reflected the Government's laudable aims to contain unemployment and to encourage existing small businesses to modernise. New businesses could be expected to emerge in the place of obsolescent industries.
  I am delighted to note, too, the presence on the Front Bench of the Under-Secretary of State for Industry, my hon. Friend the Member for Norfolk, South (Mr. MacGregor). Clearly, the matter that we are considering is a fiscal matter and one of definition, but it equally affects my hon. Friend's responsibilities in the Department

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  of Industry, and also my right hon. Friend the Secretary of State for Employment, with whom I raised the matter at Question Time today.
  When the 100 per cent. IBAs were introduced, the Government of the day took the view that, if corporate and private investors could offset 100 per cent. of the capital cost, at the time when the expenditure was incurred, against all types of income, there would be a major incentive to provide small industrial units. That was absolutely right. However, within months of the Finance Act 1980 receiving the Royal Assent and 100 per cent. IBAs becoming a certainty, there was a spate of activity throughout the country by builders and contractors starting to construct terraces of nursery units. Today, those terraces remain empty and a silent epitaph to the rather loose and unsympathetic drafting of the 1980 Act.
  Local authorities, as well as central Government agencies, were keen to assist in the provision of nursery units in most parts of the country, and it was regarded as a legitimate means of combating unemployment and stimulating new industries and seed-corn firms. There was a welcome degree of unanimity between trade unions, local authorities, public authorities, private investors and the building industry.
  However, a by-product of this bricks and mortar stalemate is that further investment in nursery units is bound to be prejudiced, with regrettable economic and social consequences, having regard to the high unemployment in the building industry that that implies. The irony is that those units do not stand empty because of any lack of demand. The problem is that most firms want to occupy the buildings, but they do not comply with the guidelines set out in the Capital Allowances Act 1968. Most prospective tenants for nursery units are in the servicing sector today not the manufacturing sector. An absurd legislative anomaly has arisen in that buildings, erected as a direct consequence of my right hon. Friend's welcome initiatives to industry, are standing empty at a time when new expanding and existing firms would be willing to take the space and create jobs if only they were allowed to do so. Investors seeking industrial building allowances must refuse applications from prospective tenants who are service companies, because otherwise they would lose the advantage of the IBA. The dilemma is aggravated by high interest rates on completed buildings which produce no income or profit but which simultaneously incur the burden of rates, insurance and other outgoings.
  Even the Inland Revenue appears to have cold feet about the whole IBA procedure. In March 1980, Inland Revenue officials said that they would be prepared to deal with industrial building allowances claims for estates consisting of small industrial workshops on a global instead of an individual basis. An inspector would normally be satisfied with a general description of uses and would not ask for particulars of trade carried on by individual tenants or for details of the uses to which the premises were put.
  At first sight, that appeared to be a welcome relaxation on the part of the Inland Revenue. However, the Revenue statement concluded that the new practice was intended to simplify administration and would not apply in circumstances where—
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  "the relief available would be significantly lower in a strict application of the Industrial Buildings Allowances rules".
  There is a solution to the problem, and it could be completed in a matter of weeks, given the will by the Government, dedicated—as my right hon. Friend the Prime Minister said at the Lord Mayor's banquet last night—to giving every form of encouragement and incentive to the small business sector, on which the prosperity of Great Britain Ltd. depends. It is simply an appreciation of the problems created by the Inland Revenue. I suggest that all buildings capable of generating employment on industrial and trading estates should qualify for industrial buildings allowances, provided that they are within the use classes III—light industry—IV—general industry, including furniture factories, plastics factories, metal working and engineering concerns—X which is warehouse and distribution depots. I do not suggest that my hon. Friend the Minister should widen the definition beyond classes III, IV and X. I would not expect the definition to include retail shops or offices.
  The Inland Revenue and the town planners should be speaking the same language. It is logical that the definition of industrial development in the Finance Acts should be the same as they are in the Town and Country Planning Acts. That makes sense to the firms throughout the country which want to create new jobs. It would be particularly welcome in the West Midlands because many firms there would take up immediately the advantage of industrial building allowances and begin the business of creating wealth and jobs once more.
  11.25 pm
  Mr. Sydney Chapman: Not for the first time, I rise to support my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle), who, in his characteristic way has dealt with a complicated, technical matter with clarity and eloquence. I support him fully.
  I declare an interest in the subject as a non-executive director of a development company and a professional interest as a fellow of the Royal Town Planning Institute.
  In southern England, as my hon. Friend the Member for Sevenoaks (Mr. Wolfson) will agree, there has been a change in the nature of industrial employment in recent years. The problem in the West Midlands—and I see that my hon. Friend the Member for Dudley, West (Mr. Blackburn) agrees—is that many prospective lessees of workshops in large industrial buildings tend to be in the servicing and repairing sphere rather than, traditionally, in the manufacturing of goods. Under the present tax laws they are not acceptable to a builder who has put up such buildings, because he would lose the industrial building allowance.
  The evidence is that it is not an exaggeration to say that many premises stand empty while a suitable lessee, who has to qualify within tax legislation, is sought and while other lessees who would employ as many or more people are turned away. I cannot believe that that is right.
  Far too many politicians have a hang-up and discriminate between basic manufacturing industries and servicing and repairing industries. We need both and we should encourage both, particularly when unemployment is high.
  Many service people are in manufacturing industry. Not a few in service and repair industries make goods. The assertion is that the problems facing builders searching for

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  lessees could t e solved by making the tax legislation definition of industrial premises the same as the definition in the Town and Country Planning Acts. I support and congratulate my hon. Friend on bringing the attention of the House to a problem that will become increasingly acute unless action is taken. I hope that the Minister will respond favourably.
  11.29 pm
  Mr. Colin Shepherd: I am grateful to the Minister for allowing me a brief intervention in this timely debate originated by my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle). I want to illustrate my point by citing the case of a firm of expert air conditioning and refrigeration engineers and manufacturers in my constituency that is desperately trying to expand its servicing facilities all over the country. The expansion of its facilities would lead to more employment, but it is inhibited because it cannot find premises except those denied it by the current legislation.
  I put it to the Minister that the servicing and repair sector of industry is just as important as the manufacturing side. There are many instances when outlying service engineers, working from a depot, would create more employment than would be the case if it were a manufacturing-only operation.
  11.30 pm
  Mr. Mark Wolfson: I should like to add my support to the clearly articulated points made by my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) in an admirable speech. The Government have, in my view, lacked a clearly articulated and developed industrial strategy during the past two years. Action to put this right has been encouraging. This debate has pointed to the case for the Government accepting the view put forward by my hon. Friend because I believe that it would be in line with an acceptance of the reality of the situation. We all agree that new jobs will come from the service sector. The Treasury should be assisting the creation of those jobs by developing policy in the way that has been outlined.
  11.31 pm
  The Financial Secretary to the Treasury (Mr. Nicholas Ridley): I congratulate my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) on raising this important and interesting subject, which will certainly benefit from an airing. I thank my hon. Friends the Members for Hereford (Mr. Shepherd) and Sevenoaks (Mr. Wolfson) for their contributions, although lack of time may mean that I shall not be able to deal at length with them.
  The time is right to consider industrial building allowances. We inherited a 50 per cent. initial write-off with a 4 per cent. per annum figure thereafter. The changes that we have made since then have been staggering in their scale. My right hon. and learned Friend the Chancellor of the Exchequer, in his 1980 Budget, introduced a 100 per cent. allowance for industrial and commercial buildings in enterprise zones. He introduced a similar allowance for the small industrial workshops for a three-year experimental period in the 1981 Budget. He also increased the general level from 50 per cent. to 75 per cent. for the initial allowance for industrial buildings. We have, therefore, a fairly mixed pattern.
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  Apart from enterprise zones, no commercial buildings receive the allowance, hotels being a special category where special remedies have been found. My hon. Friend the Member for Lichfield and Tamworth would widen the definition of qualifying industrial buildings. This definition is contained in the Capital Allowances Act 1968 and legislation would be required to alter it. It is predominantly transport undertakings, mills and such other concerns that are classified as "industrial".
  I share the views of my hon. Friends that there is something invidious about the distinction between industrial, or manufacturing, and service industries. There were strong reasons for my right hon. and learned Friend's decisions in the original legislation. The purpose of the legislation was to increase employment by increasing manufacturing activity. There appeared to be a serious national shortage of these small industrial units for new manufacturing companies. It was to put that right that the 100 per cent. small industrial workshops allowance was introduced.
  Secondly, often these small manufacturing businesses need almost purpose-made buildings, buildings that are suited to their needs and which are not normally suitable for commercial purposes. There is a difference between the requirements of the two sectors. The manufacturing buildings are more expensive, which is the reason for the improved capital allowance.
  Thirdly, there was a worry that, because of the strength of the services sector, to which my hon. Friends have drawn attention, the service industries could crowd out manufacturing and take so much of the new industrial buildings that there would not be enough space for the manufacturing side. The purpose of the whole relief would thus have been negated.
  There has been a greater success than my hon. Friend seemed to indicate. The response is patchy across the country, but in many areas there has been a complete take-up of the new small workshops, and it is only elsewhere that some are still standing idle. I think that my hon. Friend underestimated the large number of workshops that have been provided under the scheme, and the success that the scheme has enjoyed.
  My hon. Friend suggested that the problem arises from no more than loose drafting in the Finance Act 1980. Perhaps he should have described the drafting as too tight, because it excludes the service industries, as he made out.
  The question is and always will be where to draw the line. My hon. Friend said that he does not want to go as far as shops and offices, but the line has to be drawn somewhere. I do not think that he remembers our debates on the selective employment tax. They always led one to the point that, wherever the line was drawn, someone pushed for it to be drawn a little further one way or the other.
  The following considerations therefore seem to me to be relevant. Is there, then, such a great shortage? The take-up has been greater than my hon. Friend suggests. Will we not find manufacturing businesses that want to take the empty factories in due course? If there are empty factories, would it not perhaps be as well to allow their availability to be restricted to manufacturing concerns so that the pressure of shortage of demand forced down the rents to a certain extent, leaving them more within the purchase range of new small manufacturing concerns? That is a possibility, and I put it no higher than that.

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  The cost of the scheme is quite considerable. It is done at the expense of allowing people to make investments in these small factories which is very generous, particularly to high taxpayers, which was, indeed, the point. I am not complaining about that, but we do not want to extend that sort of relief wider than is right from the point of view of providing jobs, because the whole purpose of the scheme is to provide not only small businesses but the jobs that they bring.
  When considering whether they will provide jobs, one has to consider the nature of the service industries concerned. Repairs and storage and such activities may often not provide net new jobs because the volume of business in such concerns depends to a large extent on the state of economic activity, and there is no room for more repairs and service businesses than the state of the economy allows. Perhaps in certain classifications it is possible that assistance would encourage employment, but I am sure that my hon. Friends agree that that should be one of the criteria by which we seek to draw the line. Will extending the line produce a resumption of business, and increase in new business and an increase in jobs? Or will it simply take people from one set of premises, give them
  264
  a subsidy and put them into another set of premises, possibly to the disadvantage of manufacturing concerns which might want to occupy those premises in due course?
  As my hon. Friend said, the labour intensity of service industries often tends to be greater than that of manufacturing industry, but we must distinguish between those that are labour-intensive but are incapable of expansion and those where expansion is possible. Therefore, it is a question of where to draw the line. I can only assure my hon. Friends that we take seriously what they have said tonight. We shall consider carefully where that line should be drawn. We shall keep the whole question under careful review.
  There will be an opportunity to study this subject further, because shortly we shall be publishing the Green Paper on corporation tax, which is perhaps the parent tax under which capital allowances come, and there will be sections dealing with capital allowances in it. We shall welcome views from all quarters, and certainly from my hon. Friends, on how changes can be made in order to—
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at nineteen minutes to Twelve o'clock.