Commons Sitting of 21 June 1982

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  HONG KONG AND CHINA GAS COMPANY PLC BILL [Lords]
  Read the Third time, and passed, with amendment.
  TEES AND HARTLEPOOL PORT AUTHORITY BILL
  As amended, considered; to be read the Third time.
Oral Answers to Questions
  TRADE

    Spain (Motor Vehicle Trade)
    Mr. Hal Millerasked the Minister for Trade what are the respective import tariffs in the United Kingdom and Spain relating to trade in motor vehicles between the two countries.
    The Minister for Trade (Mr. Peter Rees): A number of rates of duty apply. For example, for cars the rates are 4·2 per cent. and 36·7 per cent. respectively; for large commercial vehicles 8·8 per cent. and 28 per cent.; and for small commercial vehicles 4·4 per cent. and 31·6 per cent. These rates stem from an agreement signed in 1970 between Spain and the Community of Six.
    Mr. Miller: I thank my hon. and learned Friend for confirming the great disparity in tariffs, particularly for motor vehicles. Given the delay in any agreement on the date of Spain's formal assumption of the obligations of EEC membership and the doubt about the length of any interim period, for how long are the Government willing to put up with such a gross disparity? Cars can be imported into Britain on a large scale, and the situation is likely to be aggravated by the introduction next year of General Motors' S car.
    Mr. Rees: The transitional period for Spain— in the event of Spain's accession to the European Community — is under discussion in Luxembourg today. We shall press for a short transitional period because of the disadvantage to which my hon. Friend has drawn attention. However, I assure my hon. Friend that that will not discourage us from raising the question bilaterally in the intervening period.
    Mr. John H. Osborn: Is my hon. and learned Friend aware that the component manufacturers—many of whom are in the Sheffield area—find themselves at a considerable disadvantage when selling their products in this country, let alone in other EEC countries, because of the tariff system? Will he do his utmost to speed up the shortening of the tariff gap between British exports to Spain and Spanish exports to Britain?
    Mr. Rees: I gladly give my hon. Friend that assurance.

    Export Statistics
    Mr. Knoxasked the Minister for Trade if he will list the eight countries that took most British exports in the most recent year for which figures are available.
    Mr. Peter Rees: In 1980, the latest year for which figures are available, the United Kingdom's top export market was the Federal Republic of Germany, followed by the United States of America, Netherlands, France, Irish Republic, Belgium and Luxembourg, Switzerland and Italy.
    Mr. Knox: Is it not significant that six of those eight countries are in the EEC? Is there any guarantee that we would still be able to sell as much to those countries if we were not in the Community?
    Mr. Rees: It is implicit in my hon. Friend's question that the EC is our fastest growing and most important market. There is certainly no guarantee that it would remain our fastest growing market or that we should have such successful access to it if we were outside the Community.
    Mr. Arthur Lewis: Like most Ministers, in his initial reply the hon. and learned Gentleman said that the latest year for which figures were available was 1980. We now have computers, calculators and electronic this and that. In 1982, why cannot Ministers give more up-to-date figures, like they used to do in 1945?
    Mr. Rees: I can give an answer, although it gives me no pleasure to do so. Industrial action prevented the statistics from being brought up to date. It was thought more appropriate to catch up with later, rather than earlier, figures. I take the hon. Gentleman's point and hope that we shall have the complete figures for 1981 as soon as possible. However, I cannot guarantee when that will be.
    Mr. Kenneth Carlisle: Is not the significant aspect of my hon. and learned Friend's answer that most of our trade now goes to the Common Market, whereas in 1974 it did not? There has been a major switch by our manufacturers to the Common Market and away from the rest of the world. Having made that switch, if we were to withdraw from the Common Market our manufacturers would lose heavily and there would be a severe loss of jobs.
    Mr. Rees: It is true that there has been a shift of emphasis in trade with the United Kingdom. I should not like to give the House the impression that the other countries of the European Community are our largest markets, but they represent one of our most important markets and the fastest growing one. For that reason, we must be sensitive to suggestions that sometimes emanate from certain quarters of the House that we should withdraw from the European Community.

    British Airways
    Mr. John Smithasked the Minister for Trade if the Government have been consulted by British Airways on any proposals to sell off subsidiary companies.
    The Under-Secretary of State for Trade (Mr. Iain Sproat): The disposal of International Aeradio Limited is under consideration.
    Mr. Smith: Has there not been much speculation recently on the disposal of International Aeradio Limited? If that happens, a very important earner for British Airways will be disposed of. Is it the policy of the Government that if anything in the public sector is successful it has to be sold off, thereby diminishing the future earning capacity of public corporations? Will the Minister also end the disgraceful uncertainty about the future of British Airways Helicopters, which is doing no good whatever to that company?
    Mr. Sproat: I have had no proposals so far from British Airways about disposing of British Airways Helicopters. If and when such proposals come before me, I shall
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    consider them on their merits. As to the general financial aspect, the disposal of subsidiaries of British Airways is a matter for the board of British Airways.
    Mr. McCrindle: I recognise that the disposal of assets such as International Aeradio Limited will contribute to a reduction of British Airways' capital debt, but will my hon. Friend confirm that it will also reduce any trend towards trading profitability? Does he agree that, in moving towards the privatisation of British Airways, a record of growing profitability is extremely important? Therefore, is he sure that British Airways have got the matter right.
    Mr. Sproat: Yes, I am certain that British Airways have got the matter right. If they decide that they want to sell off International Aeradio Limited, that is a matter for them. I am glad to tell the House that British Airways are right on the road towards privatisation.

    Non-oil Goods (Exports)
    Mr. Ron Lewisasked the Minister for Trade what was the seasonally adjusted index for the volume of exports of non-oil goods for the latest available three-month period compared with the volume index for 1979.
    Mr. Peter Rees: In the first quarter of this year, non-oil export volume was 2 per cent. lower than the average for the year 1979.
    Mr. Lewis: As we are continually told by Ministers that the recession is on its way out, how can the Minister justify such statements in view of the figures that he has just announced?
    Mr. Rees: When we are concerned with exports, we are concerned with other countries' response to a world recession. The hon. Gentleman might care to ponder the fact that, while the United Kingdom is emerging satisfactorily and robustly from the recession, other countries are moving a little more slowly in that direction.
    Mr. Marlow: As a matter of interest to the House, what has happened to the non-oil export index with the Community over the last few months compared with 1979, and how does it compare with the non-oil import index with the Community?
    Mr. Rees: I should require notice of that question to give the precise figures. I shall be happy to give them to my hon. Friend if he wishes to press that point.
    Mr. Woolmer: Is it not time that the Government stopped misleading the country about the prospects for economic recovery and falling unemployment? Is it not true that, under the Labour Government, exports of non-oil products increased by 4 per cent. a year, whereas under the Conservative Government they have fallen by 2 per cent. over three years?
    Has the Minister seen the latest CBI report, which states that economic prospects are flat? Does not British Business, published by the Departments of Industry and Trade, confirm that export prospects, however much we want them to increase, are not at all promising? When will the Government be honest with the nation and admit that the prospects for recovery under the Conservative Government are indeed remote?
    Mr. Rees: The prospects for recovery under this Government are not remote. We have never made any

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    attempt to conceal the relevant facts from the country. If the hon. Gentleman reflects, he may feel that it is a testimony to Britain's exporting strength that we have managed to maintain our exports at such a high rate against a background of world recession. That testifies to the underlying strength of British industry.

    Consumers and Investors (Deposits)
    Mr. John Fraserasked the Minister for Trade if he will seek to introduce legislation to protect consumers' and investors' deposits.
    The Minister for Consumer Affairs (Dr. Gerard Vaughan): This will be for consideration in the light of the Cork committee's recommendations, and those I shall be receiving in due course from Professor Gower.
    Mr. Fraser: Has the hon. Gentleman had a chance to study the recent annual report of the Metropolitan and City fraud squad, which describes legislation for the protection of depositors as inadequate? In the light of that report and the farce of Laker's collapse, with people having paid for scheduled air tickets in advance, does he agree with the general principle that consumers' and investors' money ought to be protected by the depositor keeping proper accounts and keeping a clients' account? Will he eventually move to outlaw muddle and meddling with investors' and consumers' cash?
    Dr. Vaughan: That is a very important aspect. The Conservative Party has always concerned itself with people's ability to save and with protecting their savings when they are abused. I am looking at several different reports on the matter. We shall have to wait until we have had an opportunity to look in detail not only at the Cork committee's proposals, but at the Gower discussion document and the comments that are coming in on that.
    I welcome the comments in the Cork report about trust funds being used for deposits where they exist and are appropriate.
    Mr. Squire: Does my hon. Friend accept that many hundreds, if not thousands, of people in Britain are losing money every year under the present legislation and that several of us would support a major change in that legislation? At first sight, the Cork committee's proposals will not of themselves do very much to change the underlying position.
    Dr. Vaughan: I accept that there are some serious abuses in this area. We shall have to consider whether we should do what Cork would like and take his report as a package to be legislated on as a whole, or to pull out some parts of it and deal with the more urgent abuses more immediately.
    Mr. Christopher Price: Is there no quick help that the Minister can offer to my constituents, Mr. and Mrs. Johnston, of Cranston Road, Forest Hill, who were foolish enough to pay their deposit for their Laker holiday through an Access credit card and now find that the credit card companies are hiding behind the small print? It looks as though there will be many months of expensive litigation before Mr. and Mrs. Johnston see a penny of their money. On top of that, they get wholly unhelpful answers from the Minister.
    Dr. Vaughan: I am deeply concerned about Mr. and Mrs. Johnston and, if I may say so, about many other Mr. and Mrs. Johnstons in various parts of the country.
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    My hon. Friend will be answering a question later this afternoon about the collapse of Laker Airways.
    Mr. McCrindle: I in no way challenge the validity of the proposition contained in the question, but would it not be as well for my hon. Friend to make it clear to the House and the country that if the idea were to be extended—as it is arguable that it should—to those going on package holidays, the interruption of cash flow to travel agents and tour operators would necessitate a very considerable increase in the cost of package holidays?
    Dr. Vaughan: As my hon. Friend knows, we are very concerned about these matters, and we are looking into them. Meanwhile, my advice is that people should use credit cards when it is appropriate, because they get some protection in that way. They should also deal with traders who are members of the voluntary bonding schemes which are run by different parts of the industry.

    Visible Exports
    Mr. Parkasked the Minister for Trade if he will make a statement on the recent trend in the volume of visible exports.
    Mr. Peter Rees: The export trend rose through 1981. Recent figures have been particularly volatile and therefore the underlying position is difficult to interpret. However, it is reassuring to note that export volume in the first quarter of 1982 is 3 per cent. above the level recorded for the same period a year ago.
    Mr. Park: I accept that the figures fluctuate from month to month, but does the Minister accept that the figures for the latest three months taken together show a 5½ per cent. fall over the previous three months? If he examines exports of services by volume he will find that they fell by 3 per cent. in the first three months, which is 10 per cent. less than in 1979. How does that square with the tales of recovery?
    Mr. Rees: The hon. Gentleman, with his dexterity with figures and statistics, no doubt endeavours—[Interruption.] I should like to pay a tribute without interruption—to make a case which is not substantiated by the figures. There was a fall in the January figures. That is why I referred to their volatility. The underlying trend is still strong, and I am happy to testify to the exporting strength of British industry and to the British service industry in particular.
    Mr. McNally: How much do hidden barriers to trade still affect the volume of our exports? What proposals does the Minister have either to eradicate them or to retaliate against countries which employ such methods against British exporters?
    Mr. Rees: Hidden barriers to trade undoubtedly have an impact on our exports, just as they have on some other countries' exports, too. It is a matter that we shall want to press inside the European Community, particularly with regard to the directive on insurance. We are also concerned with hidden barriers in Japan. That is a matter that we take up regularly and with varying degrees of success.
    Mr. Woolmer: We all wish British exports to succeed and we applaud the enormous efforts made by British manufacturers, management and workers, but surely the

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    Minister recognises that British Business, published by the
    Departments of Industry and Trade, at the end of May said that, despite the problems of volatility, the underlying trend in exports is, at best, flat. Is that not the truth, however much we might want it otherwise? Why does the hon. and learned Gentleman mislead not only the House but the country by false optimism, just as the Treasury Ministers have misled us?
    Mr. Rees: I am sure that the House will be reassured by the statement that the Opposition wish British exporters well. Sometimes that does not shine through in the questions that they put to me and to my hon. Friends. We have stated with perfect truth that the trend is flat, but, as I said earlier, in a period of world recession we have done very well to maintain our level of exports by contrast with other countries.

    Electrical Equipment (Retail Outlets)
    Mr. Michael McNair-Wilsonasked the Minister for Trade if he will introduce legislation to provide that retail outlets selling electrical equipment that requires servicing shall provide such facilities.
    Dr. Vaughan: Of course, it is important that customers should be able to have the goods that they buy serviced when necessary, but I ask my hon. Friend to consider that legislation to compel all retailers to provide this would not be advisable, since it would in some cases reduce the service available and also jeopardise a number of small firms which specialise in servicing.
    Mr. McNair-Wilson: Does my hon. Friend agree that it is anomalous that small shops should provide service facilities at considerable cost to themselves for the electrical equipment they sell and that sold by other retailing outlets, whereas hypermarkets sell such equipment at cut prices because they provide no service? In those circumstances, should we not follow the West German example and insist that shops, such as hypermarkets, should provide the same servicing as is provided by the smaller outlets?
    Dr. Vaughan: No, I do not agree. As part of a free market and competition, it is important that people should be able to provide services in different ways and at different prices.
    Mr. Hal Miller: Does my hon. Friend accept that there is a particular problem with the servicing of expensive items of imported electrical equipment, the manufacturers of which appear to disown all responsibility for subsequent servicing of their equipment?
    Dr. Vaughan: There are difficulties. It seems to me that my hon. Friend is making a case for people, whenever they can and wish, to buy goods produced in the home markets, where servicing is undoubtedly easier.

    British Airways
    Mr. Colvinasked the Minister for Trade how much of British Airways' debt is backed by Government guarantees.
    Mr. Sproat: As at 31 March 1982, Government guarantees covered £940 million of British Airways' loan and lease finance. This represents almost all of the airline's capital borrowings.
    Mr. Colvin: In view of the size of British Airways' debt, does my hon. Friend agree that the company is in no position to provide the £50 million to recapitalise International Aeradio Ltd., which was referred to in an earlier question, and that, therefore, it would be in the best interests of that company, those who work in it and the taxpayer, too, if it were sold off to the private sector at the earliest opportunity?
    Mr. Sproat: I am grateful to my hon. Friend for those remarks. Certainly, if that is the judgment of the British Airways Board, we would support it. I must also congratulate my hon. Friend on bringing out the point that International Aeradio Ltd. may benefit from being freed from the shackles of the rest of British Airways.
    Mr. John Smith: The Minister told us earlier that his plans for privatisation were "right on target". I think that was the phrase that he used. Will he explain now, since he has been asked a number of times, what the Government propose to do about the moneys owed by British Airways to American banks and others? Are these to be taken off the back of British Airways by the Government prior to privatisation? If not, what does he expect to get from the sale?
    Mr. Sproat: The right hon. Gentleman said that I had been asked the question many times. He is right: I have. I have given him the answer many times that he must wait and see what the financial position of British Airways is as we approach the date for privatisation. I hope that we will have the strong support of the right hon. Gentleman when the date for privatisation comes.
    Mr. Robert Atkins: Does my hon. Friend agree that it will be a clear mark of the achievement of British Airways if and when they get down to the target of 43,000 staff? Is there any possibility of that happening within the distant or foreseeable future?
    Mr. Sproat: I am extremely glad to be able to tell the House that not only is there the prospect of British Airways reaching 43,000 staff, but that they have already gone below that target. It is a great tribute to the grip that Sir John King and the management have now taken on the finances of British Airways that they have managed to do that. That is one of the reasons why I say that British Airways are right on target for privatisation.
    Mr. Douglas: Does the Minister accept that part of the purpose of giving a guarantee is to enable public corporations, such as British Airways, to borrow more cheaply on the capital market? How many of the guarantees have ever been called up?
    Mr. Sproat: I am happy to tell the House that so far the Government have not had to pay up for any of the £940 million. However, I remind the House that when Sir Freddie Laker went bankrupt his debts were about a quarter of the debts of British Airways. That is another example of how nationalised industries are protected when they can rely on the taxpayer to support them by guarantees.

    Laker Airways
    Mr. Maxtonasked the Minister for Trade when he expects the receiver to report on the financial collapse of Laker Airways.
    Mr. Dobsonasked the Minister for Trade if the receiver has yet made his full report on the collapse of Laker Airways.
    Mr. Sproat: The receiver's statutory duty is to file with the Registrar of Companies a copy of the statement of affairs prepared by the directors of the company. He may, if he sees fit, comment upon the statement. Once filed, it will be open to public inspection. The receiver is unable to estimate at present when the statement will be filed, but I have no doubt he will carry out his duty as quickly as he can.
    Mr. Dobson: Will the receiver's report cover the activities, or rather the inactivity, of Ministers who were aware that the company had gone bust, yet allowed the public to be deceived by Laker into buying a large proportion of the 17,000 tickets for translantic flights? Will the receiver also investigate the Prime Minister's role in this shabby affair?
    Mr. Sproat: I do not know what the receiver will say, but I should think it extremely unlikely that he will say anything remotely like what the hon. Gentleman said. Perhaps I should point out that when the Bank of England, other banks, the Civil Aviation Authority and Ministers were examining the position prior to 2 February, 90 per cent. of the debts owed by Laker were owed to those banks. The banks believed that a package could be put together. If those to whom 90 per cent. of the debts were owed thought it was worth going on, I agree with the Civil Aviation Authority that it should have gone on until it did.
    Mr. Colvin: Have any of Laker's Airbuses yet been sold? Will he confirm that when they are sold Her Majesty's Government will be relieved of any guarantees that they gave for their purchase?
    Mr. Sproat: I cannot give my hon. Friend an exact answer about the Airbuses, but I shall carry out a check and let him know the result.
    Mr. Ginsburg: Has the receiver intimated to the Minister the number of repudiated Laker Airways tickets? Will the hon. Gentleman bear this in mind when he contemplates the privatisation of British Airways? Surely, copper-bottomed financial guarantees for ticket holders will be required.
    Mr. Sproat: I shall bear in mind all the relevant facts when the happy day comes to privatise British Airways.
    Mr. John Smith: Is the hon. Gentleman aware that recently he said that the banks' judgment was the important factor when it came to considering whether Laker Airways should be allowed to continue trading? Is it not deplorable that a Minister is prepared to abdicate his responsibilities in favour of the judgment of banks which lent money to Laker Airways? The Laker Airways affair left thousands of people and many companies in debt. It is gratuitously and ridiculously offensive of the Minister to try to compare British Airways with the collapse and fiasco of Laker Airways.
    Mr. Sproat: When comparing Laker Airways with British Airways I said—this should be of interest to the whole House—that Laker's debts were about one-quarter of the debts of British Airways. When talking about the banks, I made the reasonable point that 90 per cent. of the debts were owed to those who wanted to ascertain whether a package could be put together, and that was a good
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    reason for Ministers to examine whether such a package could be assembled. We did not abdicate our responsibilities. We and the Civil Aviation Authority kept in the closest touch. We agreed with everything that the authority did until the day when Sir Freddie went into receivership.
    Mr. Bill Walker: Does my hon. Friend agree that, notwithstanding the receiver examining the matter in depth, all the available information shows that Laker Airways' problems arose not because of competition on the North Atlantic route, but because of borrowing and difficulty in supporting the debt due to the cost of doing so.
    Mr. William Hamilton: High interest rates.
    Mr. Sproat: I am grateful to my hon. Friend the Member for Perth and East Perthshire (Mr. Walker) for his question. Sir Freddie's difficulties were brought about: by borrowing too much at too high a rate of interest to buy aeroplanes that he did not really need.
    Mr. Dobson: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Minister's reply, I shall seek to raise the matter on the Adjournment.

    European Community (Balance of Trade)
    Mr. Ioan Evansasked the Minister for Trade if he will make a statement on the trends in the balance of trade between the United Kingdom and the European Community countries, excluding oil and oil products.
    Mr. Peter Rees: In this trade with the rest of the European Community the United Kingdom was in deficit by £1 billion in the first quarter of 1982 compared with a deficit of £1½ billion in the fourth quarter of 1981. However, this should be seen in the context of an overall surplus on the current account of the balance of payments of about £2 billion in these two quarters.
    Mr. Evans: Would it not be better for the oil figures to be separated from the rest of the balance of payments figures when they are presented? Does the hon. and learned Gentleman agree that membership of the Common Market is disadvantageous for British consumers of agricultural produce and that it is not widely favourable for British manufacturing industry? What will the Government do to ensure that we get a better deal for manufacturing industry?
    Mr. Rees: It would be unrealistic to exclude the oil figures, which are an important part of the national economy. As I have said on numerous occasions, the European Community is Britain's fastest growing market. I am sure that British industry in both the oil and non-oil sectors will continue to exploit to its profit and that of the United Kingdom the opportunities that are offered on the Continent of Europe.
    Sir Anthony Meyer: Will my hon. and learned Friend explain carefully to Opposition Members that even our trade with the European Community in manufactures has a better export-import balance than with any of our other major trading partners in the industrial world?
    Mr. Rees: It would take more than my modest powers of advocacy to overcome the prejudice of some Opposition Members and to persuade them to accept the advantages to Britain of membership of the European Community.

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    However, my hon. Friend has made a sound point. It is strongly to the advantage of British industry that we should be and should remain a member of the Community, which offers considerable scope for our exports and for other trading patterns.
    Mr. Hooley: What industrial raw material do we need to import from Europe that is comparable to the oil that we send to it?
    Mr. Rees: Certain types of food.
    Mr. Teddy Taylor: If my hon. and learned Friend wants to get rid of prejudice and misunderstanding on these issues, will he tell us why the Government found no difficulty in telling the world about the tens of thousands of jobs that were lost because Japan made a £1 billion profit in manufacturing trade with Britain but made no assessment of the balance of payments deficit in manufactured goods of £1 million in three months with the Common Market? What is the difference?
    Mr. Rees: We do not encounter on the Continent of Europe the same non-tariff barriers that we encounter in Japan. Secondly, the proportions are not quite of the same order.

    Japan (Tariffs)
    Mr. Lennox-Boydasked the Minister for Trade what steps are being taken to induce the Japanese Government to reduce the number of tariffs they apply to imports.
    Mr. Peter Rees: As a result of pressure from their main trading partners, including the United Kingdom, the Japanese Government are currently carrying out a programme of modest reductions in a large number of tariffs. We shall continue to press for further reductions, particularly on the limited number of items of interest to British exporters on which the tariffs remain high.
    Mr. Lennox-Boyd: Does my hon. and learned Friend agree that it is especially important to press harder in this direction for two reasons, which are that the countries of the free world are struggling to emerge from the recession and, secondly, that it is likely that a large order for the replacement of the "Atlantic Conveyer" might be placed in Japan?
    Mr. Rees: The replacement of the "Atlantic Conveyer" must be a matter for the company concerned. I have no doubt that it will take note of what my hon. Friend has said. My hon. Friend is right in general terms. The Japanese market is extremely important and it is important to impress on our friends in Japan that our companies should have the same open access to their markets as we afford to its companies in the United Kingdom.
    Mr. Dubs: The Minister has commented adversely on the non-tariff barriers erected by the Japanese Government and Japanese industry. What is he doing about these barriers?
    Mr. Rees: Constant multilateral and bilateral pressure has resulted recently in the package of measures announced by Prime Minister Suzuki. I do not pretend to the House that they completely satisfy us, but they are a further step in the right direction.
    Mr. Bowen Wells: I wish to encourage my hon. and learned Friend to persuade the Japanese to reduce tariff
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    and non-tariff barriers to our trade, but we have been singularly unsuccessful over the years in achieving that. Does he agree that the real answer is to encourage investment by Japan in the United Kingdom? Can he tell me what progress has been made with the Nissan investment?
    Mr. Rees: I am not able to give the House the up-to-date position on the Nissan investment, which is primarily the responsibility of my right hon. Friend the Secretary of State for Industry. My hon. Friend is right to say that we should encourage investment by Japanese companies in the United Kingdom, provided that it is on the right terms and involves an increase in British jobs and a transfer of technology to this country.
    Mr. John Smith: Will the hon. and learned Gentleman review his answer about the Government's noninvolvement in the order to replace the "Atlantic Conveyer"? The British merchant fleet is not purely a commercial entity as recent events have shown. Secondly, would it not be disgraceful if Japan became the beneficiary of the sad loss of the "Atlantic Conveyor", when Japan has pursued an opportunistic economic and political policy over recent months?
    Mr. Rees: I would be sorry, as I am sure the House would, if an order of this dimension went to a Japanese rather than a British yard. However, unlike the right hon. Gentleman, I do not adopt a dirigiste view of the economy, particularly in regard to merchant shipping.

    Manufactured Goods
    Mr. Douglasasked the Minister for Trade if he will make a statement on the current level of imports of manufactured goods into the United Kingdom.
    Mr. Peter Rees: The volume of imports of manufactured goods now appears to have settled at a level similar to that recorded in the first half of 1980, following an increase in 1981.
    Mr. Douglas: Does the Minister agree that if we were experiencing the type of economic recovery that the Government claim, the volume of imports of manufactured goods would be declining? Will the Minister give attention to the excellent article in this week's The Economist on the Japanese economy, which shows clearly that when we have tried to place restrictions on the Japanese in one area, they have gone into another area, particularly high technology? What percentage of the manufactured goods coming into the United Kingdom are of a high technology content?
    Mr. Rees: The hon. Gentleman may want time to study my answer to his question. If he does so, he will notice that the volume of imports of manufactured goods has declined since 1980, which bears out the point that he would like the Government to take on board. I cannot give the figures for the precise volume of imported high-technology Japanese goods without prior notice. However, if needs be, I shall write to the hon. Gentleman.
    Sir Peter Emery: As some manufactured imports are coming from the United States, will my hon. and learned Friend tell the House what action he intends to take against the American restrictions placed on the import into the United States of specialist steel from the British Steel Corporation? Will my hon. and learned Friend

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    consider—as the negotiations carried out by the Community have not met with as much success as we would like—taking a unilateral line concerning British exports to America as soon as possible?
    Mr. Rees: I assure the House that the Government are extremely concerned by the preliminary determination of the Department of Commerce in Washington on the countervailing duties on British steel, as well as steels from other companies in the European Community. Before we give up the idea of a Continental European approach concerted with our own, we should remember that that is a matter for discussion at the ministerial Council, which I shall attend in Luxembourg tomorrow. I hope that a robust and concerted Community position will emerge, but we shall have to consider our national position if that does not happen
    Mr. Ioan Evans: Is it not a fact that many imported manufactured goods could be manufactured in this country? Should not the Government look at their policy on exchange controls, because, after North Sea oil, one of our largest exports is British capital that could be invested in British industry?
    Mr. Rees: No, Sir. I do not believe that we should reconsider our policy on exchange controls, nor do I believe that the protectionist policies which, by implication, the hon. Gentleman advocates would do other than harm to the British economy.
    Mr. Cormack: Are we not subsidising Japanese imports by failing to work with our allies in persuading Japan to take on a greater responsibility for her own defence?
    Mr. Rees: Defence matters are not for me. The European Community is considering action against the Japanese by an application under article XXIII of GATT.

    Argentina (Trade Sanctions)
    Mr. Canavanasked the Minister for Trade whether he remains satisfied with the efficacy of trade sanctions against Argentina.
    Mr. Altonasked the Minister for Trade if he will make a statement on the effectiveness of the operation of trade sanctions against Argentina.
    Mr. Dewarasked the Minister for Trade what recent assessment he has made of the effectiveness of trade sanctions against Argentina.
    Mr. Peter Rees: The trade sanctions taken by the European Community and other countries have contributed substantially to the withdrawal of international confidence in the Argentine economy.
    Mr. Canavan: Will the Minister give an assurance that the Falklands inquiry promised by the Prime Minister will investigate how British bankers such as Schroder Wagg were allowed to continue loan arrangements that helped to prop up the Argentine economy and how even the Bank of England was allowed to continue short-term loan arrangements with Argentina, while over 1,000 lives were being lost in a costly military conflict? Do the Tory Government believe that bankers' profits are more important than human lives?
    Mr. Rees: Certainly not. The House is used to the unsubstantiated allegations of the hon. Gentleman, which
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    he repeats on many occasions without bothering to back them up with solid evidence. If there is solid evidence of breaches of the order that was introduced by this Administration after the invasion by the Argentine troops, I shall be happy to look at it.
    Mr. Stokes: Is not my hon. and learned Friend somewhat disappointed with the attitude of our EEC partners in dropping sanctions against Argentina so quickly? Does that not show that in trade matters, as in defence, the first duty of the Government is to look after our own country's interests?
    Mr. Rees: It is the Government's duty to look after this country's interests, but they must do so within the framework that various Governments have considered appropriate and helpful to embrace other countries' activities. My hon. Friend referred to sanctions by the other countries of the European Community. I am sure that the House will recognise the remarkable solidarity that has been shown throughout this period. [Interruption.] I do not think that it is appropriate or necessary to consider that allegation. I am not certain whose back was stabbed by whom. The European Community has stated categorically that, should there be a resumption of hostilities, a new situation would arise to which the 10 members of the European Community would have to react immediately.
    Mr. Faulds: If trade sanctions were so effective in this minor and ill-judged adventure in the South Atlantic, will the Minister consider impressing on his colleagues the efficacy of trade sanctions, as far as the EEC trade and financial agreements are concerned, on the genocidal policies of Israel?
    Mr. Squire rose—
    Mr. Speaker: Mr. Robin Squire. Mr. Faulds: Answer the Question.
    Mr. Speaker: Order. The hon. Gentleman's question was about Israel. That subject does not arise on this question.
    Mr. Faulds: On a point of Order, Mr. Speaker. Surely representations to a colleague are perfectly in order. Perhaps I can be allowed occasionally to make a point in the House of Commons.
    Mr. Speaker: The hon. Gentleman's question did not relate to the original question.
    Mr. Squire: Contrary to an earlier comment, does my hon. and learned Friend agree that the prompt delivery of sanctions by our European colleagues, which was sustained by the overwhelming majority throughout our hostilities, was a fine example of the co-operation that we receive from Europe, which should be applauded and not criticised?
    Mr. Rees: I entirely agree with my hon. Friend. That was a fine example of European co-operation, which made a significant impact on the Argentines, judging from their renotification to GATT that they wished to have the sanctions lifted.
    Mr. Dalyell: Realistically, is there a cat's chance in hell that our European partners will reimpose sanctions once they have been lifted? Is not the sanctions policy in ruins? Will the Department of Trade look carefully at what

    15
    happens to the end user certificates for the export of arms? Is there not evidence that Colombia, Venezuela and other countries have been lax in the use of end user certificates?
    Mr. Rees: In reply to the hon. Gentleman, I can say truthfully that the policy on economic sanctions is not in ruins. It would be idle for me to speculate on how, why and in what circumstances the policy might have to be resurrected by the European Community. I am sure that the House hopes that a situation that would make it necessary for the Community to consider a reimposition of sanctions will not arise. With regard to the hon. Gentleman's second point, we shall consider the question of end user certificates.

    Free Ports (Report)
    Mr. Proctorasked the Minister for Trade whether he has yet reached any conclusion on the report by the Adam Smith Institute, in which it recommended the establishment of free ports; and if he will make a statement.
    Mr. Sproat: We are in the final stages of our consideration of this report and now await the views of certain outside bodies that have expressed interest in the subject.
    Mr. Proctor: Would not the creation of free ports, together with the Government's policy on enterprise zones, make a substantial impact on job creation?
    Mr. Sproat: The prospects for job creation are one of the important aspects of this matter, which we shall consider when we receive the views of the various outside bodies.
    Mr. McQuarrie: My hon. Friend will be aware that the Select Committee on Scottish Affairs is examining the matter. Does he agree that employment similar to that created in the free ports of Shannon, Hamburg and Brussels would be the salvation of Prestwich and of great advantage in Aberdeen, where there is a considerable drop in employment with the loss of oil-related work?
    Mr. Sproat: I am always eager to foster more jobs in Aberdeen. I look forward in due course to the opportunity to appear before the Select Committee to give my views on the subject. Shanon and Hamburg are perhaps different examples from what we might want to set up.
    Mr. Skinner: Will the Minister invite Sir Freddie Laker, the arch exponent of monetarism, free ports, enterprise zones and the rest, to take part in the exercise in view of his massive fall from grace only a few months ago? If an arch monetarist cannot make the system work, what is the point of extending it to other areas?
    Mr. Sproat: As usual, the hon. Gentleman's question is so idiotic that it does not deserve an answer.

  OVERSEAS DEVELOPMENT

    Project Support
    Mr. Kenneth Lewisasked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied that British companies are given a comparable level of support from his Department in carrying out projects abroad to that provided by other countries, in particular other member States of the European Community.
    The Minister for Overseas Development (Mr. Neil Marten): Yes, Sir. The bulk of our substantial aid programme is spent on the purchase of goods and services from British companies, we have a special facility for countering the use of mixed credits by other Governments and I believe that the technical support services offered to British companies competing for project business abroad are as good as any other.
    Mr. Lewis: Do not the French do this a good deal better? They give special facilities to their industries to trade with their previous overseas possession. Should we not do a little more in that direction?
    Mr. Marten: The French probably do it a little better, but not always within the same guidelines as we have.
    Mr. Greville Janner: In view of the Minister's helpful answer to the effect that most of the trade in these cases arising from overseas aid goes to British companies and helps employment in this country, will the Government emphasise the importance of overseas aid for us as well as the recipients and try to extend it, especially to countries like India, which need it so very badly?
    Mr. Marten: I constantly emphasise that fact. The hon. and learned Gentleman will know how much India is getting in this year's programme. It is a substantial amount. India is the recipient of the greatest amount of our aid.
    Mr. Chapman: Although members of the British Consultants Bureau, who are responsible for projects abroad worth thousands of millions of pounds each year, appreciate the personal contacts that they have with the Department, will my right hon. Friend bear in mind that they feel at a disadvantage because of the financial help given to consultants undertaking projects from other countries? Will he keep an open door for those people and their problems?
    Mr. Marten: I shall bear that in mind, but believe that the consultants do extremely well. Perhaps my hon. Friend will let me know if he has a particular point in mind.
    Mr. Brocklebank-Fowler: Will the right hon. Gentleman bear in mind that a major stumbling block to companies gaining orders in the developing world is the lack of funds available for feasibility studies? Will he reconsider making aid funds available for that purpose?
    Mr. Marten: Aid funds are available for that purpose. Again, perhaps the hon. Gentleman could let me know if he has a specific proposal.
    Mr. McElhone: Is not one country in which British companies could play a major role Nicaragua, if only the Department would be more generous? The derisory sum given this month was £20,000. Among all EEC countries we give the lowest amount to that country. Is the Minister aware that one of the best ways to rebuild our relationships with Latin American countries is to give Nicaragua substantial aid, especially to help with the floods?
    Mr. Marten: Perhaps I can answer that question when we come to the other question on the Order Paper about Nicaragua.

    Overseas Students
    Mr. Ioan Evansasked the Secretary of State for Foreign and Commonwealth Affairs what representation

    17
    he has received regarding the number of overseas students currently being assisted by funds from his Department; and if he will make a statement.
    Mr. Canavanasked the Secretary of State for Foreign and Commonwealth Affairs how many overseas students are currently being assisted by the Overseas Development Administration.
    Mr. Neil Marten: I have received no recent representation specifically on the numbers of overseas students funded by my Department. We have trained about 13,000 people over the past year in this country on courses of varying length. I hope to sustain a similar programme in 1982, but I cannot at this stage give a total for the whole year. At the moment there are about 6,200 people undergoing training.
    Mr. Evans: Has the Minister received representations from the United Kingdom branch of the Inter-Parliamentary Union to the effect that parliamentarians, particularly from Commonwealth and developing countries, are disturbed about the Government's attitude? Is he aware that in the past many students have come here to study and have returned to influential Government posts, but that similar people are now going East, West or to other parts of Europe?
    Mr. Marten: I do not recall receiving representations from the IPU. The Overseas Students Trust study was published on 6 June. We are considering it, and that sort of question will arise.
    Mr. Canavan: Will the Government rectify the unjust anomoly mentioned in that study, whereby students from British dependent territories such as Hong Kong have to pay up to 12 times the fee of students from Common Market countries?
    Mr. Marten: That is one question that we shall consider. I have noticed the motion on the Order Paper.
    Mr. Rhodes James: As the Overseas Students Trust spent 18 months preparing the report, and as its recommendations are reasonable and, I hope, acceptable to the Government, will my right hon. Friend invite the Leader of the House to give us the opportunity to debate the subject before the Summer Recess?
    Mr. Marten: The Leader of the House is sitting on my right. I do not believe that he is deaf and he will have heard my hon. Friend's plea.

    Zimbabwe
    Mr. Proctorasked the Secretary of State for Foreign and Commonwealth Affairs if he will publish in the Official Report a detailed breakdown of the £112 million development assistance pledged to Zimbabwe in
    1982–83.
    Mr. Neil Marten: Yes, Sir.
    Mr. Proctor: How far are the Government prepared to go in allowing the Zimbabwe Government to trample on the terms of the Lancaster House agreement and to set up a one-party State before it affects the £112 million worth of assistance?
    Mr. Marten: A Bill to amend the constitution, such as I believe my hon. Friend is referring to, requires the votes of not less than 70 per cent. of the Members of the House
    18
    of Assembly and not less than two-thirds of the Members of the Senate. For seven years from independence representation provisions for the white minority are amendable only by a unanimous vote of the House of Assembly and two-thirds of the Senate.
    Mr. Spearing: Is not a significant proportion of that sum of money available for land resettlement? Do the Government believe that land resettlement schemes should be proceeded with as quickly as possible but that money should be invested only in schemes that show promise of permament benefit? Has anything been done to speed up the system either of disbursements from Whitehall or work on the ground in Zimbabwe?
    Mr. Marten: We have allocated £30 million to land resettlement. When Mr. Mugabe was here recently we discussed the matter. We have agreed to see whether there is a hold-up at our end and, if so, to be more flexible in getting things moving. I also saw Dr. Chidzero He is to produce a wider plan for land resettlement to include the building of schools, community centres and so on, which will make it more attractive for other donors to tip funds in for land resettlement.
    Mr. Brocklebank-Fowler: Will official development assistance be available to help the Zimbabwe Government with the development of Harare airport?
    Mr. Marten: We shall always consider propositions that are made to us for the use of our development funds. If we received a proposition with regard to Harare airport, we should examine it to see whether it was developmentally sound.
    Following is the information:

    Zimbabwe Allocation of £112 million Development Assistance pledged by the United Kingdom since April 1980.

    £ million

    Land Resettlement

    30·0

    Training of Zimbabweans

    24·7

    Reconstruction Programme

    12·0

    Manpower assistance and consultancy services

    10·3

    Programme Loan (for purchase of equipment)

    10·0

    Railway Electrification

    8·0

    EDF contribution

    2·0

    Repatriation of Refugees

    1·0

    Joint funding of projects with voluntary agencies

    0·5

    For commitment

    *13·5

    112·0

    * Of which £5 million is likely to be allocated to further purchases of British equipment and £5 million is provisionally allocated to an agreement covering a number of different development projects.

    Breast Milk Substitute
    Mr. Altonasked the Secretary of State for Foreign and Commonwealth Affairs if he has received any requests from Governments of developing countries for financial or technical assistance in the field of implementing and monitoring the World Health Organisation's code of marketing breast milk substitutes.
    Mr. Neil Marten: No.
    Mr. Alton: Following our discussions with our European partners last October about breast food substitutes, what concerted action are we taking with our European partners to combat the problem? What is being

    19
    done about illiteracy in Third world countries? Does the right hon. Gentleman agree that that is one of the reasons why the substitutes are being abused?
    Mr. Marten: Although illiteracy is relevant, it is wide of this question. It is up to the developing country concerned to ask us if it wants help. The World Health
    20
    Organisation is monitoring the problem throughout the developing world and it will tell us whether it believes that anything should be done. The question is primarily one for my right hon. Friends the Minister of Agriculture, Fisheries and Food and the Secretary of State for Social Services.

Ministerial Statement
Mr. Tam Dalyell: On a point of order, Mr. Speaker. With his characteristic courtesy, the Leader of the House has sat through Question Time. Perhaps I might raise a matter of which I have given him notice. Is it not a matter for parliamentary incredulity that no statement has been forthcoming on a major event—
Mr. Speaker: Order. The hon. Member knows better than that. He knows that that is not a point of order.
Mr. Dalyell rose—
Mr. Speaker: Order. We cannot argue now about the fact that I have not received a request for a statement. That is a matter of fact and not something upon which I must rule. I have received no request.

Youth Training Scheme
3.31 pm
The Secretary of State for Employment (Mr. Norman Tebbit): With permission, Mr. Speaker, I should like to make a statement on youth training. Last December I told the House of the Government's plans to introduce from September 1983 a new youth training scheme which would guarantee up to a full year's foundation training for all 16-year-old school leavers who find themselves without a job. This would remove from them the threat of unemployment during their first year on the labour market and help them to acquire the skills they need to obtain and keep jobs.
At the same time I announced increased expenditure for the training of young workers and said that, if the Manpower Services Commission could make other proposals to bring more young unemployed people into paid jobs with proper training, the Government would be willing to consider the transfer of resources proportionately from the new scheme to such proposals.
In response to this invitation, the MSC published on 4 May a comprehensive scheme proposed by its youth task group, on which representatives of the CBI and TUC sat. The scheme was unanimously recommended to me by the MSC, supported by the CBI and the TUC, and has generally been endorsed by the Select Committee on Employment.
The scheme is fully in line with the Government's ultimate objective for training young people. It meets the Government's requirements on the guarantee to all unemployed 16-year-olds, on the September 1983 date of introduction, on the content and length of the training programme, on involvement of the local community in delivery and on the need to keep within the resources made available in last December's White Paper. However, the MSC scheme extends beyond last December's proposals by covering also many young people in employment, including apprentices, and it proposes a higher level of training allowance.
In this wider scheme employers share in the training costs and the Government accept that in these circumstances the training allowance can be increased without more cost to the taxpayer or any loss of training standards. A training allowance of £1,300 a year seems appropriate for the launch of the scheme in 1983, although this and the question of excessive travel costs will be reviewed in the summer of 1983, when the MSC will offer its advice to me.
The Government generally accept the revised scheme and delivery arrangements as set out in parts IV and V of the youth task group report, on the basis that its costs will be kept within resources already made available for 1983–84 and 1984–85. Although we believe the resources will be sufficient to cover all unemployed 17-year-old school leavers when the scheme begins, it is not yet possible to give a guarantee to this group nor to say when we might extend the scheme to cover all other unemployed 17-year-olds. In deciding the resources required we have assumed substantial assistance from the European social fund, and this is essential.
We accept the need for large initial Government funding of the new scheme while youth unemployment is still high, but we intend before 1985 to review the future distribution of the training costs between employers and

23
the Government. The MSC intends to undertake, in cooperation with the Government, a study of the funding of industrial training generally, which should help us decide the level of public funding in the longer term.
We already undertake that all unemployed school leavers will be offered a place on the youth opportunities programme. My predecessor as Secretary of State for Employment made it clear that, when the Government were in the position to guarantee that no 16-year-old need be unemployed, it would be time to withdraw supplementary benefit from 16-year-olds in their own right. Last December we also stated our belief that it would be right for young people, whether in education, the new training scheme or unemployed, to be regarded in general as dependent on their parents for the first year after reaching the minimum school leaving age.
We still believe that these young people should not be entitled to supplementary benefit in their own right. None the less, the Government have noted the firmly held and clearly expressed views of those on whom the operation of the scheme depends that its launch could be seriously impaired by the withdrawal of supplementary benefit from 16-year-olds. We have therefore decided that withdrawal of supplementary benefit will not take place in September 1983 and that there will be a further review after a year's operation of the scheme.
This will, I believe, also meet the views of the Select Committee and the Social Security Advisory Committee, which were similarly concerned. Meanwhile, in line with their views, we shall provide that those who unreasonably refuse a suitable training place will, like adults, have their benefit reduced for six weeks.
This scheme is an immense step forward towards setting standards and systems of training for our young people as good as those anywhere overseas. Its success now depends above all on the efforts made by employers and other sponsors, supported by unions, all of whom have fashioned its shape, to provide enough good quality training places. We shall certainly expect commercial and industrial establishments in the public sector to contribute and I hope that all in this House and outside will give this imaginative new scheme the wholehearted support needed to ensure its successful operation from September 1983.
Mr. Eric G. Varley: Is the Secretary of State aware that the Opposition welcome the changes that he has just announced in the youth training scheme? We congratulate the task group of the Manpower Services Commission on convincing him that had he proceeded with the ludicrously low level of allowance that he proposed and withdrawn supplementary benefit from non-trainees the scheme would have been unworkable. Having been saved that humiliation, will the right hon. Gentleman confirm that the allowance will be at least as much as the current youth opportunities programme allowance, adjusted to meet the increase in inflation? The task group called for that in its report.
Does the right hon. Gentleman agree that the scale of unemployment among the young is now the most serious problem afflicting the nation? Does he agree also that of the hundreds of thousands of young people who will enter the youth opportunities programme this year and the new youth training scheme next year, only a tiny proportion, rather less than 50 per cent., will get permament jobs?
24
Does the Secretary of State accept that after the proposed training young people will face a long period of unemployment? Does he agree that any analysis of the problems show that although worthwhile training is to be welcomed—we welcome the scheme—the Government should bring forward policies of economic and industrial expansion to create more jobs? Is it not abundantly clear that every indicator shows that the Government have failed dismally and that the only hope for the young and for the other 3 million unemployed is to get a Government who are committed to expansion and full employment?
Mr. Tebbit: First, I thank the right hon. Gentleman for his generous welcome of the scheme. I find no difficulty in conceding that those who are to deliver the scheme have made proposals to me which I have accepted. The Government are providing taxpayers' money and it now depends upon those who have proposed that the scheme should operate in this way to deliver it.
I emphasise that we have decided that the allowance should be £25, which is the current YOP allowance, subject to review next year, but I can give no undertaking in advance of the outcome of that review—otherwise I should be conducting it now.
I differ slightly from the right hon. Gentleman, because, in the light of this scheme, I believe that the most serious problem that we now have is not so much youth unemployment, which is being dealt with to a considerable extent by the scheme, but long-term unemployment among many other age groups as well.
Finally, I believe that for the first and subsequent generations of youngsters coming out of the scheme the economic climate, on any reasonable forecast, is likely to be much more optimistic than the present situation. If the right hon. Gentleman persists in advocating enormous public expenditure in the belief that that will improve the state of the economy, I think that my right hon. Friends and I could get together to raise enough money to send him on a day trip across the Channel.
Several hon. Members rose—
Mr. Speaker: Order. As there are two Supply debates today, I propose that questions on this statement should not continue after 4 o'clock by the digital clock.
Mr. Alan Haselhurst: Does my right hon. Friend accept that today's news will be very welcome to young people and will provide a fine new foundation for training prospects? How quickly does he estimate resources will be available for the scheme to encompass 17-year-olds as well as 16-year-olds, as the MSC hopes?
Mr. Tebbit: I emphasise that we think that the resources are already adequate to deal with all unemployed 17-year-old school leavers, but it is difficult to offer guarantees to this group at present and I should not wish to offer a guarantee which I could not be absolutely sure of delivering.
Mr. A. J. Beith: Is the Minister aware that we welcome the improvement in the allowance and the removal of the compulsory element, which will get the scheme off to a better start? Does he agree, however, that the scheme may prove much more attractive than staying on at school to take the new 17-plus

25
qualification or A-levels? Will he therefore have urgent discussions with the Secretary of State for Education and Science about educational maintenance allowances?
Mr. Tebbit: First, as I have said many times, there never has been, and there was never intended to be, an element of compulsion. Secondly, the proposed level of the allowance is being made possible because employers are willing to finance it. If the hon. Gentleman thinks that we could now finance educational allowances of that nature, he must be incapable of basic arithmetic. Moreover, youngsters participating in the scheme will be in a very different position from those still at school. Their expenses will be greater and they will bring benefit to employers, albeit not a net benefit.
Mr. John Golding: Is the right hon. Gentleman aware that the Select Committee will be pleased to learn that he has decided to increase the level of allowances and that the Government do not intend to stop supplementary benefit? Is he further aware that the Select Committee also recommended that 18-year-olds with special needs, including the disabled and the educationally subnormal, should be included in the scheme from the start? As we understood from the MSC that this would not greatly disturb the costing, why are the Government not making provision immediately for this group of young people, who are very much at risk in terms of finding employment?
Mr. Tebbit: I in turn thank the hon. Gentleman and his Committee for their very helpful report on this matter. I considered carefully whether the problems of the 18-yearolds to whom he referred could best be dealt with within this scheme or through some other scheme. I feel that they will be best dealt with through community industry, as I believe the MSC agrees, and I hope that that will be the best way forward for them.
Sir David Price: I congratulate my right hon. Friend and the MSC on their initiative. Is my right hon. Friend aware that, at long last, we are beginning to catch up with our European competitors in the training of young people? Is he aware that the key to this lies in the recommendation in the MSC report that young people joining the scheme should be treated as trainees and not as young employed, so that they will remain part of the educational process, as envisaged in the unimplemented parts of the Education Act 1944?
Mr. Tebbit: I thank my hon. Friend for his remarks. Certainly the youngsters will be trainees and will receive considerable benefit in improved training. In addition, we shall receive the benefit of a better trained work force.
Mr. John Grant: I congratulate the Secretary of State on a welcome and sensible decision, which may well have been against his own natural instincts. I hope that the scheme will now be speedily and successfully implemented. May I press the right hon. Gentleman on the matter that he himself raised? Will he make a further statement before the Summer Recess on the problem of long-term unemployment, which he accepts is becoming increasingly acute and about which the Government have so far been remarkably vague?
Mr. Tebbit: I thank the hon. Gentleman for his compliment, even though it was a slightly backhanded one. I assure him that the Government are actively considering how we can develop the proposals made with
26
regard to the long-term unemployed by my right hon. and learned Friend the Chancellor of the Exchequer in his Budget.
Mr. Derek Foster: Does the Secretary of State accept that all those responsible for implementing the scheme will be glad to learn that he has belatedly seen sense over the allowance and compulsion? Is he aware, however, that for young people the great test of the scheme will be whether they find jobs at the end of it? Does he agree that that is no more likely now than under the youth opportunities programme? Is he further aware that the scheme really requires the proper working together of the Department of Education and Science and the Department of Employment? Will he pay attention to the crying need for proper educational maintenance allowances, so as to encourage those who should remain at school or go to colleges of further education to do so?
Mr. Tebbit: Again, the hon. Gentleman seems incapable of basic arithmetic. I do not know what level of educational allowance he has in mind, but if he reckons that there are about 400,000 16-year-olds and 400,000 17-year-olds at school, he might rapidly begin to tot up the cost. It is simply not possible. Secondly, as I have already said, the status of a trainee in industry is different from that of a youngster at school. That is recognised in the terms and conditions that apply, and have applied for a long time, to apprentices as opposed to those remaining at school.
Mr. John Major: Is my right hon. Friend aware that his statement will be very good news for hundreds of thousands of school leavers? How much support does he expect from the European social fund, as this is clearly critical to the level of support available for the scheme?
Mr. Tebbit: I thank my hon. Friend for his remarks. Currently, the European social fund is supporting the youth opportunities programme, the costs of which are less than one-half of those of the new scheme, to the tune of some £60 million per year. That is certainly useful.
Mr. Peter Hardy: Will the right hon. Gentleman ensure that the new scheme will not in practice actually diminish the prospects of employment of those 17-year-olds and 18-year-olds who have never had a job? What steps does he intend to take to persuade such young people that society and the Government have not written them off?
Mr. Tebbit: The hon. Gentleman should be reasonable in what he asks. We cannot guarantee that a scheme that brings many more youngsters into useful and paid service in the community will not have an effect somewhere on someone else.
I am sure that the hon. Gentleman fully understands that nothing can guarantee jobs in the future for the youngsters, the middle-aged or the elderly except an ability to compete and to satisfy customers by offering goods that they want, that they can afford and at a time when they want them.
Dr. Keith Hampson: Is my right hon. Friend aware that, unlike the wingeing brigade on the Opposition Benches, many Conservative Members are aware that he has been trying to ensure a much higher and improved element of training in the new scheme compared with the old, and at the same time have a reasonable maintenance allowance? To achieve that balance, a major employer

27
contribution is required. Therefore, the scheme is welcome. Can my right hon. Friend confirm that it is not a short-term scheme and that it is part of the Government's intention to have a fully integrated long-term training provision for the entire age group?
Mr. Tebbit: Certainly it is the Government's intention not only that the standard of youth training is raised next year and the year after but that it is continually improved to meet and beat that offered by our competitors. The scheme is funded through 1984–85, and the MSC will be considering, in a much wider context, how we fund industrial training in future.
Mr. Allen McKay: When considering the travel allowance in the summer of 1983, will the Minister also take into consideration such things as safety boots, equipment and overalls, which the boys will need and which sometimes the parents will have to purchase?
Mr. Tebbit: I am not sure exactly how those items will be provided, but I take note of what the hon. Gentleman says. However, that is part of the reason why these youngsters are in a different category from those at school and why they will receive an allowance which those at school do not get.
Mr. David Madel: To ensure that these welcome alterations are effective, does my right hon. Friend agree that it is important that the MSC should make sure that local education authorities are ready with the appropriate personnel and premises to carry out their important functions under the scheme?
Mr. Tebbit: Yes. I am not sure whether many local authorities are short of premises these days. I hope that most of these youngsters will be accommodated in normal employers' places of work. I am not saying that local authorities are not normal employers or that in many cases they cannot give very good training, but I hope that most of the training will be given in the course of normal employment and not have to be done by local authorities setting up special centres.
Mr. Andrew Faulds: In view of the right hon. Gentleman's original under-funded and compulsory scheme, would not a moment of contrition and private prayer on his part be in order?
Mr. Tebbit: I can recommend contrition and even public prayer to the hon. Gentleman. I am sure that he would find that extremely beneficial. The scheme was not under-funded and the taxpayer is not putting in any extra funds. As usual, the hon. Gentleman only hears what he wants to hear. He did not hear that the employers' side is providing the extra resources to enable these youngsters to have higher allowances.
Mr. Kenneth Lewis: Is my right hon. Friend aware that all Conservative Members congratulate him on showing the flexibility that we have come to expect of him? Can he assure the House that the Government will cover any extra cost involved in the travel allowance and that it will not be a charge on employers? Some young people who have to travel long distances might experience difficulties.
Mr. Tebbit: I thank my hon. Friend for his welcome to the scheme, and I note what he says about the travel
28
allowance. He must note that there is a substantial taxpayers' contribution to the scheme, which already amounts to about 1p on the standard rate of income tax.
With regard to my flexibility, I hope that everyone inside and outside the House can recognise an olive branch when it is offered and do not go too far by using it to beat about the ears those who offer it.
Mr. Greville Janner: I welcome the Minister's conversion to dove-like capitulation, but does he nevertheless agree that unless permanent jobs are available for these young people at the end of their training they will merely regard the year as the postponement of unemployment? They will come out of that year even more wretched and disillusioned.
Mr. Tebbit: I notice that the hon. and learned Gentleman is as adept as anyone on the Opposition Benches at finding a cloud to every silver lining. He should accept that the scheme is a useful step forward that will improve the prospects for these youngsters, and he should accept it on that basis.
For my part, I have got the scheme that I wanted, at no extra cost to the taxpayer, and I am perfectly content about the outcome of it. I still believe that the Government's view on supplementary benefit is right and that it is socially and morally correct that youngsters should be given an incentive to go into constructive paths rather than an incentive to opt out from socially constructive paths. I am content to accept what those who will have to deliver the scheme have said—that to make this change in September would prejudice it. I think more of the future of these youngsters than I do of the view, even though I have so strongly expressed it, that now is the time to make the change.
Mr. Jonathan Aitken: I welcome many of the concessions announced today, but is my right hon. Friend aware of the anxiety over the fact that he may have been too flexible on supplementary benefit? Will he bear in mind that Germany and many other European countries do not pay supplementary benefit, or its equivalent, to those who refuse a place under their State training schemes? When my right hon. Friend reviews the operation in a year's time, will he make sure that it is not Britain alone that takes the soft option?
Mr. Tebbit: I note what my hon. Friend says, and he has no doubt noted my remarks. When I review the scheme after it has been in operation for a year I shall consider how effectively we do things here compared with abroad.
Mr. Alexander W. Lyon: As there never was a tendency for people to refuse a YOP scheme when it was a viable way to a job, and as the Government could always deal with the problem by giving people jobs, would that not have been a better method than dealing with the problem by means of supplementary benefit? I accept that the Minister has announced some improvement, but having done the little bit of maths suggested by him, on the educational maintenance allowances it appears that the cost, even at the rate proposed, would be just over £1 billion. That is substantially less than we have spent on the Falklands adventure. Surely the interests of 800,000 young people are worth putting into the balance against the interests of 1,800 people on the Falkland Islands.
Mr. Tebbit: I shall not tangle with the hon. Gentleman on the morality of whether we should be willing to spend

29
to uphold freedom and the rule of law. I merely note that he has introduced yet another proposal for spending by his party that would put 1p on income tax.
Mr. Peter Bottomley: Would my right hon. Friend prefer to avoid the embarrassment of being welcomed as a good, moderate leading member of the Tory Party, and instead accept that he has broad support from his party for the decision that he has taken rather than the concessions? Will he emphasise to the MSC, through his Department, that families and parents will need to support their young people in order to get the best value from this new training initiative? Will he also correct the reference by the Opposition to boys and emphasise that the scheme applies just as much to girls as it does to boys?
Mr. Tebbit: I thank my hon. Friend for his kind remarks. It is difficult to be both good and moderate, but I always do my best. We should all emphasise the measure of support that youngsters of both sexes should expect from, and should be given by, their families. Certainly this scheme applies to girls as well as to boys. After all, there are many abilities—I almost said unused talent, but that is probably the wrong expression—that are not fully used in our industrial and commercial world.
Mr. Arthur Lewis: The right hon. Gentleman referred to travel allowances. As there is a need to get people back on to public transport, will he consider issuing a public transport pass rather than introducing cash allowances for travel?
Mr. Tebbit: Among other things, we must increase the revenues so that public transport can be effectively operated. Perhaps the best way of doing that is for people to pay their fares.
Several Hon. Members rose—
Mr. Speaker: Order. Two hon. Members on either side are waiting to be called. I think that I can call them all and still ensure that we begin the next business before five minutes past Four.
Mr. Dennis Skinner: Will the right hon. Gentleman confirm that what he has proposed today is little more than a scheme to carry the Government over the next general election? There is nothing long-term about what he has said and therefore he cannot receive my congratulations. Will he acknowledge that in its policy the Labour Party has proposed a £20 a week maintenance grant, covering the full 52 weeks in a year? That had better be put on the record, because the whole tendency has backed that. Will he also confirm that while hundreds of thousands of young boys and girls have no prospects for the future, it is significant that today, when the nation is awaiting the birth of the Royal child, that child will not have to suffer a YOP scheme or look for a school maintenance grant?
Mr. Tebbit: The answer to the hon. Gentleman's first question is "No". I note what he said about another of the barmy schemes that have been put forward. I notice that he does not now describe that scheme as the policy of the Labour Party, but rather the policy of the "tendency".
Mr. Michael Colvin: Will my right hon. Friend confirm that this youth training scheme is the first real attempt by any British Government to produce a truly comprehensive scheme to bridge the gap
30
between school and work? Will he also confirm that its success will largely depend on the co-operation of employers and employees, notably the CBI and the TUC? Can he anticipate what their reaction will be to his new proposals?
Mr. Tebbit: I thank my hon. Friend for what he has said. I hope that both the employers and trade union sides will welcome what I have said, because in effect I have given them exactly what they asked for as condition; for setting up the scheme and taking it forward. This is an ideal example of collaboration between the Government, both sides of industry and education interests.
Mr. David Ennals: The Secretary of State has received some credit either for flexibility or capitulation. One wonders why it took him so long to realise that the original proposals were unacceptable. What sort of opportunities will the young people have for consultation about the nature of their courses, both through trade union membership and perhaps even membership of the appropriate boards?
Mr. Tebbit: I thank the right hon. Gentleman for his half-carping congratulations, for which, I suppose, I should be grateful. As to consultation, these youngsters, who are trainees, will be coming from school into work. It is likely that the employers and trade union sides, as well as educationists, will have the best idea of what courses these young people should follow and the way in which those courses should be constructed. I hope that everyone will listen to the youngsters as well. After all, if they find the courses unattractive the scheme will be a failure, and we want to make it a success.
Mr. Tim Eggar: I join in the warm welcome that has been given to my right hon. Friend's announcement. Is he satisfied that enough places will be forthcoming and that co-operation at local level will be similar to the level of co-operation at national level?
Mr. Tebbit: There is no reason why co-operation at local level should be less than that at national level. I hope that it will be much more, because there is good reason for it. As a result of my conversations with major employers over recent months, I believe that places will be available. However, there will be some areas where this will be difficult, not least perhaps in rural areas, where it is difficult to find large employers who have training facilities of this sort.
Mr. Tony Marlow: My right hon. Friend will correct me if I am wrong, but I calculate that 300,000 young people getting an extra £10 a week will cost employers and industry about £150 million a year. What additional advantage over the original proposals will industry and employers get from the scheme?
Mr. Tebbit: Many advantages are possible for employers and industry, not least the fact that it has been agreed that there can be provision whereby an employer will be allowed to take on as trainees some youngsters whom he would have wanted anyway alongside some of these youth trainees. In that way, he can reorganise his training system so that he and the youngsters concerned can gain some benefit from it. There is a benefit in that respect. The CBI is convinced that there is a benefit, and it should know best.

Orders of the Day
  SUPPLY
  [20th ALLOTTED DAY]—considered.
  SUPPLY

    British Rail
    4.6 pm
    Mr. Albert Booth: I beg to move,
    That this House deplores the Government's refusal to respond to the Opposition's proposals to intervene to avert a rail strike, and, recognising the contribution of the rail unions to manpower savings and productivity increases in British Rail, regrets the Government's failure to match this with the increased investment urgently necessary to re-equip and modernise Britain's railways; and calls upon the Government to authorise a corporate plan for investment including mainline network electrification.
    Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
    Mr. Booth: The threatened strike by the National Union of Railwaymen is not the cause of the rail crisis that the country now faces. Rather, it is the result of a conviction among a large number of people who work on British Rail that the Government are pursuing a course that will result in a collapse of the railways and that that course is being pursued at a time when it is clear to anyone who studies the railways that major investment is needed to reequip and modernise if there is to be a future for our railway network.
    That view has been represented to the Government time and again. A significant example of that occurred in March last year when the British Railways Board decided to publish a rail policy document in which it submitted that it was crucial that a decision should be taken soon. It did so following the submission of a paper in May 1980 which called upon the Government to recognise what was needed for the renewal of equipment on the railways, if only to maintain the operational reliability and safety of British Rail.
    That rail policy document pointed out that the physical effect of continuing the level of investment that then existed would be that about 3,000 track miles of British Rail would have to be taken out of operation within the decade, that there would be a fall in main line locomotive availability of about 50 per cent., and that the availability of diesel multiple units, which cater for many of our feeder lines as well as some of our main lines, would fall to about 60 per cent. In other words, there was no prospect of maintaining our existing post-Beeching rail network without an increase in the amount of investment expenditure in British Rail. The Government have yet to reply to that rail policy document submitted by British Rail last year.
    More notably, on one of the major investment propositions—electification of the main lines—the Government expressed no willingness to adopt any of the five options that were unanimously agreed by the Department of Transport and British Rail. Instead, British Rail has been subjected to a series of changes in the Government policy on electrification, told that the basis of the five options is no longer acceptable, told to do its calculations again line by line and told to calculate on the basis that the proposals apply only to those parts of the
    32
    mainline network that will be viable by 1985. It was told to do the calculations again because there had been an ASLEF strike. Some people at British Rail's headquarters must be sick of doing new calculations on investment proposals for electrification.
    The proposals did not ask for something vastly ambitious. Even the largest of the five options would have resulted in only about 80 per cent. of passengers and 70 per cent. of freight being electric hauled. That would have brought our railways up to the standard that the French attained in 1970, the Belgians in 1947 and the Italians in 1940. Our electrification is inadequate by any of the standards accepted by our European partners.
    If we are to bring about a major improvement there must be a commitment to choose one of the options. To do it line by line makes nonsense of attempting to plan an intelligent, long-term investment programme for British Rail. A decision to go for one of the options would mean much work for Scotland and South Wales. It is clear that if we do not electrify our mainline network we must replace our diesel locomotives with engines that are heavier, less economic and more costly to maintain than the electic locomotives in which we could now invest if we were modernising our railways.
    Irrespective of whether we electrify, it is necessary for operational, safety and efficiency reasons to spend more on the railways. The Secretary of State and the Government know that. Their response was not even to sustain the existing inadequate expenditure on investment, but to reduce it. Expenditure by the British Railways Board on investment in 1979, at mid-1981 figures, was £379 million. This year the board forecasts investment to be £265 million, which is a drop of £100 million in expenditure on what was held to be a level inadequate to maintain our railways in their present state.
    Mr. David Madel: The right hon. Gentleman is chastising the Government for not getting on with electrification. Does he agree that it is difficult to press ahead with more spending if, for example when we have a brand new electrified line between Bedford and St. Pancras, management and unions still cannot agree on manning and new expensive stock is unused because of the inability to reach agreement?
    Mr. Booth: I am well aware that that excuse will be canvassed frequently during the debate. I assure the hon. Gentleman, whose sincerity I respect, that I intend to deal with the point in some detail.
    The present investment level bears no relationship to the investment ceiling. The combined effect of the external financing limit set by the Government and the restriction of investment approval, coupled with the public service obligation, is that there is no possibility of British Rail spending up to the investment ceiling. To say that we have had a constant investment ceiling does not show what is happening with railway investment. If the Government wish to attach any importance to the ceiling, they should realise that it now stands at £100 million a year below the assessed requirement of investment expenditure for renewal of the essential assets. It is £160 million a year below what would be required to renew the essential assets and to proceed with main line electrification.
    Mr. Terence Higgins: Do I understand the right hon. Gentleman to be saying that what is limiting investment is not the Government's investment ceiling but

    33
    the actual investment being carried out by British Rail? That is restrained because British Rail has spent far too high a proportion on current expenditure.
    Mr. Booth: The right hon. Gentleman does not understand me correctly. The investment ceiling has become irrelevant. What determines how much British Rail can spend on investment, in so far as there is Government control, are the external financing limit and the number of investment schemes that the Government are prepared to approve. Without a properly structured EFL and a proper programme of improvement investments it is impossible to spend up to the investment ceiling. The amount spent on railway investment is half of what is needed for essential renewal. Therefore, we are heading towards the breakdown of our railway service.
    Against that background, I wish to come to the point made by the hon. Member for Bedfordshire, South (Mr. Madel). Trade unions are negotiating about pay, productivity and conditions in the clear knowledge that their industry is running rapidly into a crisis. Those unions have a good record of working with management to adjust manpower to investment in their industry. Between 1970 and 1979 the number of staff required to run British Rail was reduced by 30,200, not at a time of negative productivity because of curtailed services, but when there was an investment programme that was making some headway. I do not say that it was an adequate or generous programme, but it enabled the railways to be run with 30,000 fewer employees and with no threats of strikes.
    Such was the record of co-operation between the trade unions and the British Railways Board that the board put forward a corporate plan for 1981 to 1985 in the belief that railway staff could be reduced by a further 38,300, if the investment programme was commensurate with that. The unions tried to formalise that understanding with the board. There was an agreement, known as the "Balance Sheet of Change", between British Rail and the trade unions in November 1980.
    The balance sheet of change was a significant document, because it listed in detail, on the left hand side, a series of commitments by the trade unions to make considerable changes in manpower levels and working practices and, on the right hand side, a series of investment proposals and financial arrangements with the Government which the board was prepared to back. That document was put to the then Secretary of State in January 1981. It was discussed by the Secretary of State and the Rail Council in June 1981 and I am assured by those who were at that meeting that they were given to understand by the Secretary of State that he recognised the need to synchronise the improvements in productivity with investment approval coming forward from the Government. In other words, the productivity delivery would be geared to the investment decisions. That is a simple and common sense proposition which can be understood by anyone who looks at the relationship between manpower levels and investment.
    Those who suggest that the unions have not responded or are standing in the way of progress should look at what happened in the two financial years up to April 1982. A further 15,510 posts were eliminated from the industry. How long can unions go on sacrificing jobs against a promise of investment to enable the industry to perform better with fewer men when that investment is not forthcoming?
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    In a speech 11 days ago the Secretary of State accused the unions of being Luddites. He was not only unjust, but insulting, to men who have tried hard to work with the board so that we may have a modern railway system. They have achieved savings of £74 million on staff costs and £25 million on fuel and track and equipment maintenance.
    Over the longer term of staff savings, during a period when we did not see the crisis in the present terms, there was a reduction of 41,300 posts on British Rail between 1970 and 1981.
    Mr. Reg Prentice: The right hon. Gentleman refers to the unions collectively. Does he not make a distinction between the relatively constructive attitude of the NUR and the TSSA, and that of ASLEF? What comments will he be making on ASLEF's refusal even to consider Lord McCarthy's latest proposals?
    Mr. Booth: I do not propose in this debate to try to draw a distinction between the approaches of the three rail unions. If the present Government policy continues, the unions will have to rise up one after another and object to what has happened. It happens to be the NUR that is threatening a strike; it happened to be ASLEF that was involved in strikes a few months ago.
    The background against which the unions have negotiated and the way in which they have done so shows two things clearly. They appreciate, first, the need for investment in the industry and, secondly, the great contribution that they have to make to productivity. They have been able and willing to deliver considerable staff reductions in persuit of that policy.
    Mr. Tim Eggar: So that the country may be in no doubt about where the right hon. Gentleman stands, will he tell us whether he supports the action being promised by the NUR and whether he supported the action taken by ASLEF?
    Mr. Peter Snape: What a silly boy the hon. Gentleman is.
    Mr. Booth: My comments in the House about the ASLEF dispute are on record and I defend them. I objected to a number of comments by Tory Members about that strike. We should be anxious, not to decide whether we will support disputes, but to take steps to avoid them and to improve the performance of British Rail.
    When I talk about increases in productivity, I am not talking about a mere head count. That is silly and it is far too crude a yardstick of productivity. Productivity improvements can be seen in the more efficient marshalling yard arrangements, the more efficient modern signalling introduced on some lines, the better use of a loco and traction fleet and, in particular, in British Rail's use of fleet wagons.
    If the terrible worry that existed in the railway workshop plans as a result of the proposed workshop closures did nothing else, it at least caused the Secretary of State and myself to look carefully at what determined the work load of those workshops, particularly the one at Shildon. I am sure that the Secretary of State is as aware as I am that one reason for the closure proposal was that there is a much more efficient use of freight wagons following the introduction of modern technology and the use of computers in freight wagon location. Wagon utilisation was improved by 25 per cent. last year.
    When we talk about improving productivity we are not talking only about putting people out of jobs. The bitter

    35
    attitude that has developed among the rail unions has been caused by their belief that the Government have reneged on their part of the balance sheet of change. The unions believe, justifiably, that on the Government's side of delivery of investment and the financial framework there is precious little to suggest that the Government will keep their side of an investment bargain. Of the six specific investment proposals on the right hand side of the balance sheet of change, one has had full approval, another has received partial approval, but the other four have been lost or put aside.
    I put it to the House that the pay offer, which is ostensibly the cause of the strike threat by NUR, is only part of a much broader picture. An offer of 5 per cent. five months after the annual pay date could hardly be said to be a tempting offer, even if it had not been linked to productivity. The offer means that the rail unions are being given a choice: they can accept the offer and deliver the improvements in productivity, without a guarantee of investment, in which case the fall in their standard of living will be equivalent to the inflation rate minus 5 per cent., or they can turn down the offer and face a fall in their standard of living equivalent to the inflation rate. I do not believe that the unions can be asked to accept that they are seeing real benefits from the savings that they worked with the board to achieve.
    The strike threat has followed the long period of crisis. My right hon and hon. Friends and I recognise that the ability of British Rail to pay railwaymen decent wages and to deliver the service required by industry and passengers depends vitally on a proper investment programme. A railway system starved of investment is bound to deteriorate, leading inevitably to closures.
    The NUR states, through its general secretary, that it has delivered on all the commitments into which it has entered and has honoured all its agreements. I thought that I heard a Conservative Member say from a sedentary position that that is not true. If the Secretary of State or any Conservative Member says that that statement is not true, or, to put it in a milder form, that it is contentious, he has an obligation to say where the union has failed to deliver and to what extent that has been linked with the Government's failure to deliver on investment. Unless the Secretary of State is prepared to tell us which failure to deliver by the unions has led to the Government's massive withholding of investment, there is no basis on which an understanding can be reached and no basis for negotiations leading to an effective working of the railway system.
    What has happened to the idea of synchronising and moving stage by stage on improvements in productivity and investment? What has happened to the gearing of the investment decisions? The Opposition do not call upon the Government to fund or to improve investment without getting a combined commitment from the British Railways Board and the unions. On the contrary, we welcome that approach. Our whole commitment to industrial democracy and to planning agreements carries with it, implicitly and explicitly, the belief that if investment is to make sense, it is not only those in management who will determine whether it makes sense, but those who have to work it and who should be party to the agreements.
    Mr. Peter Fry: I have followed with great interest the remarks of the right hon. Gentleman. He
    36
    speaks all the time about investment. Indeed, the motion speaks entirely in terms of investment. As the immediate issue is pay, will the right hon. Gentleman say whether he is in favour of an increased pay offer by British Rail? If so, will he say where the money is to come from to meet the increase? This, after all, is the immediate issue confronting the railways.
    Mr. Booth: I am sorry that I have not made the point clear to the hon. Gentleman. I was saying that I recognise that the ability of the British Railways Board to pay railwaymen decent wages and give them decent conditions depends upon proper investment in a railway network so that it can earn money and provide services. The extent to which the cost is met by the taxpayer, and the extent to which we choose to fund a social railway, as opposed to other means, is a separate issue. What we recognise is that if men are to be paid good wages to provide a good transport system, it is possible in modern terms only if there is investment in a good transport system.
    There is a limit to what can be done by men alone in an era of high technology. If we now run into a bitter and protracted strike that is damaging to our economy and to British Rail, it will be a strike that could have been averted. It could even now be averted by a Government initiative to bring about a tripartite form of agreement in which the British Railways Board, the unions and the Government understand what is meant by the balance sheet of change and by entering into an agreement to invest in the railway industry. This is necessary so that those whose jobs have been changed and whose jobs have been sacrificed to give Britain a modern and efficient railway will see that the aim is realised.
    4.32 pm
    The Secretary of State for Transport (Mr. David Howell): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
    'this House supports the efforts to achieve increased productivity on the railways, welcomes the substantial support the Government provides for the system, deplores the threat of strike action which will undermine the railway's future and calls on the unions to recognise the vital need for modern work practices.'.
    I must tell the right hon. Member for Barrow-in-Furness (Mr. Booth) that I agree with him at least on one point. If there are more strikes in the rail industry, this will be a disaster for the railways and an appalling setback for all hopes which, I believe, are widely shared, of a modern and efficient rail system. Most of the right hon. Gentleman's remaining remarks seemed to be a mixture of misplaced facts and opinions. I think, therefore, that I owe it to the House to put on record the realities. On these serious issues affecting the future of the industry, clarity is vital.
    I appreciate the feeling and the sincerity of the right hon. Gentleman and some of his colleagues. But sincerity and feeling do not make wrong facts right. I wish to establish clearly what are the facts, what they have been, and where they are leading. I should first like to deal with the main contention of the Opposition motion and the subject to which a great deal of the right hon. Gentleman's speech was devoted. It is claimed that there has been a failure to increase investment in the railway system. I have to ask the right hon. Gentleman how he is able to maintain that propostion and how it lives alongside some of the facts about the money that has been, and is, going into the railways.

    37
    As the right hon. Gentleman and, I believe, many people in the rail industry know, there is an enormous list of projects. I have one set of examples in front of me. We are coming to the end of the high-speed diesel train programme amounting to £200 million. There is the St. Pancras-Bedford electrification, alas, unused at the moment, costing £150 million. There is the five-year rolling programme of freight engines and wagons now taking place. Most of British Rail is equipped with air brake freight wagons. Vast resignalling projects are going ahead. There is the building of 200 new electric coaches a year now coming on to the railways. There are 210 new sleeping cars being built. Anglia electrification has been approved.
    In the pipeline, before me for approval, are proposals for new diesel coaches, for a resignalling project at Leeds and for the electrification of the East Coast main line system. The Government are committed in principle to a 10-year rolling programme of electrification. I have to ask the right hon. Gentleman and his colleagues if this squares with the proposition that there has been a lack of new equipment or new investment going into the industry.
    It is not merely a question of new projects. The right hon. Gentleman commented on the overall level of resources going into the industry. The social grant to the railways is running £100 million up in real terms on the levels of 1980 and the levels originally sought for 1981. That is a massive increase, only marginally reduced this year. It is still in record terms. On top of that, there is the commitment by the Government, through the Serpell review, to examine the long-term future of the railways constructively, the finances that will be needed and the nature of the railway that we can afford over the next 20 years. I do not believe, when one looks at the picture objectively, that a great deal of what the right hon. Gentleman states about the railway being allowed to fall into decay, together with the other emotive words that he used., stands besides the facts.
    Mr. Alexander W. Lyon: The Secretary of State does not have to consider only what is stated by the Opposition. It is manifestly clear from the chairman's report last year that the railways are very much under-invested and that a massive increase is needed.
    Mr. Howell: Of course, it is recognised that a substantial increase in investment is needed. It is also recognised that the investment has to come not only from the taxpayer — from whom it does come in substantial amounts — but from resources generated in the railway system. The difficulty over shortage of investment funds arises not from the ceilings set by the Government but from the amount of resources that the railways can generate.
    These are difficult issues. Part of the problem is that the membership of the rail unions and, certainly, the National Union of Railwaymen, are not hearing the correct story. The right hon. Gentleman had a good deal to say about "the balance sheet of change". The NUR listed a number of items on which it expected change from the Government. The right hon. Gentleman's speech, I fear, confirms and entrenches these points that, I believe, are not substantiated.
    The union is telling its members that none of the items expected were delivered by the Government. If one looks at the latest "Transport Review" issued by the National
    38
    Union of Railwaymen to its members, one sees a list of what it expected from the Government. The union says that it expected an increased grant for passenger services to realistic levels. Against that, in large red letters, appears the word "No". It has not been forthcoming. The word, of course, should be "Yes". The right hon. Gentleman knows that. There has been a £100 million increase in real terms in the PSO grant.
    The union talks about the endorsement of the rolling programme of electrification and asks if this has been forthcoming. According to the paper, the answer is "No". But the Government have, of course, endorsed the rolling programme of electrification and believe, depending upon productivity and business performance, that it should go forward.
    Mr. Les Huckfield rose—
    Mr. Howell: I should like to finish my remarks, because the mis-information aspect is important. It is incumbent upon both sides of the House to put the facts across. The list asks whether the Anglian electrification has taken place. Against that the word "No" is written in large red letters. However, electrification has been authorised. It is important that the right hon. Member for Barrow-in-Furness and the House should know the facts and the commitments that have been given.
    Several other substantial items on the investment list that were put forward by the NUR are items that the British Railways Board is not yet ready to undertake for business reasons that are quite unrelated to the availability of funds. It is wholly misleading to suggest that the Government have been holding back. I hope that the right hon. Gentleman will use his influence to get over the facts—rather than the non-facts—about what has been done, and is being done for our railways.
    Mr. Huckfield: When did the right hon. Gentleman approve an increase in the public service obligation in real terms?
    Mr. Howell: I cannot give the precise date, but I believe that I approved an increase towards the end of last year. The Government and I approved a £110 million increase in the public service obligation. Furthermore, the uniquely high level raised last year in response to arguments that particular circumstances faced British Rail was maintained this year, or only marginally decreased. Therefore, approval was given both last year and this year.
    I turn to another claim running through the speech made by the right hon. Member for Barrow-in-Furness. He said that that the agreed levels of productivity had been delivered, but that there had been nothing in return. The House is familiar with ASLEF's atrocious record on the signed agreements on productivity. I do not know how that record can be defended. I should like to know whether any hon. Member intends to defend it this afternoon. The inquiry by the Advisory Conciliation and Arbitration Service pointed out what should be done about flexible rosters and hours. The railway tribunal under Lord McCarthy said how that should be done. It has not been done. The pay increase—the extra 3 per cent. last year — has been taken, but the restrictive practices have not been surrendered in return.
    We all know what happened. The industry was bled of over £80 million during the fruitless and pointless disruptions earlier in the year, thus severely constraining

    39
    the amount that can be offered for pay in 1982. It may be argued that there is an alternative, but what is it? The alternative is that the taxpayer picks up the bill for ASLEF's behaviour. The Government are not prepared to contemplate that alternative.
    Mr. Leslie Spriggs: Is not the right hon. Gentleman aware that the McCarthy report fully vindicated the NUR's policy?
    Mr. Howell: I was about to refer to the NUR, but I was referring to ASLEF and to its refusal to accept McCarthy's findings. However, I say to those who are associated with the NUR that I am the first to concede that its record is far better than that of ASLEF. There has been co-operation in the demanning that has taken place in the face of falling demand. It is true that pilot schemes are now in operation with open stations. Indeed, that was one of the six agreements signed last year for which additional pay — 11 per cent.—was taken. It is also true that 80 per cent. of guards' depots are now working to flexible rosters. Incidentally, the board has rewarded that flexibility with an extra payment of 50p per turn worked.
    The right hon. Member for Barrow-in-Furness issued a challenge, asking when the NUR had not delivered. However, the NUR has not delivered despite the fact that the agreement was signed and the pay increase taken. First, progress has not been made on the proposal to withdraw guards from some freight trains. The NUR has not agreed to the one-man operation of modern electric trains with sliding doors. As my hon. Friend the Member for Bedfordshire, South (Mr. Madel) reminded us, NUR opposition to single manning has delayed the introduction of the new electric trains to Bedford.
    Therefore, although the NUR has been more responsible than ASLEF, progress has been painfully slow, to say the least. It is wrong to suggest that in six out of seven cases the NUR has delivered last year's productivity increases, although it undertook to deliver them in return for the pay increases that it received last year. The position facing us cannot be defended.
    The central problem of productivity remains. The right hon. Member for Barrow-in-Furness has given us his prescription—more money. However, more taxpayers' money is being spent on the railways than at any time during their history. The tragedy is that even now overall productivity is back only to the 1979 level. Indeed, it may be slightly below that level. That means that when the railway industry talks about ending restrictive practices, it cannot talk about a bargaining game with the taxpayers in which restrictive practices are surrendered in accordance with some voluntary timetable, in line with this or that huge new commitment of taxpayers' money. It might be nice to talk about that, but the point is that restrictive practices must be ended if the railways are to survive in their present form.
    Mr. Tam Dalyell: Is it not also true that more taxpayers' money than ever before is spent on the railway systems in Germany, France, Italy and the Netherlands? Is it not true that among modern countries that need railway systems that is a common phenomenon?
    Mr. Howell: The Bundesbahn also covers the interest on the capital debt that has not been written off, as it has
    40
    been for, British Rail. The hon. Gentleman has mentioned countries in which the new work practices have been adopted. Flexible rosters are used, just as they are used by the guards in the NUR. Therefore, the hon. Gentleman has put his finger on one of the obstacles that stand in the way of developing a modern railway.
    In the railway industry and its unions there are many dedicated people who badly want to provide a good, safe and reliable service, despite all sorts of difficult conditions. They strive to do that. I know that to be so from my experience and from conversations with many of those who have spent a lifetime in the industry. However, it does no service to them to continue to imply — as the right hon. Member for Barrow-in-Furness did — that someone else is to blame and that the crisis facing the industry can be somehow pushed aside by demands for more taxpayers' money. I beg the right hon. Gentleman and his friends to tell the industry, which is in a very dangerous condition, that its future is in its own hands. The demand for more taxpayers' money merely promotes the delusion that there is an easy way out of the difficulties. There is not. Such a demand postpones recognition of the railways' vital need to keep and win customers. It is worth bearing in mind that customers can and will go elsewhere. Indeed, some have already done so as a result of the futile interruptions earlier this year in the rail service. The customers cannot be taken for granted, and may not — possibly will not—come back if the railways are constantly interrupted.
    Whatever the right hon. Gentleman's feelings on the matter, his motion raises false hopes. Those false hopes have for too long nourished false beliefs and false goals inside the industry, and have led for too long to the postponement of decisions that ought to have been taken within the unions and within the industry. This sort of motion serves only to try to delay the day when our rail industry must face squarely the reality from which there is no hiding place.
    I hope that the House, having debated the motion, will reject it decisively in favour of the amendment.
    Mr. Deputy Speaker (Mr. Bernard Wealtherill): More than a dozen right hon. and hon. Members wish to take part in this very important debate. As the debate is due to finish at 7 pm, I hope that contributions will be brief.
    4.50 pm
    Mr. William Rodgers: The railway industry is certainly facing a crisis. I agree with the Secretary of State that the real question is whether the crisis turns into a disaster.
    As we all know, ever since the development of road transport for passengers and freight, the railways have faced an increasingly difficult problem. However else we may attribute the blame, it is only fair to say that what we see now is partly the result of a cumulative process. Successive Governments and both sides of industry are in part responsible for the fact that the prospect is now so bleak. Certainly the prospect of industrial action in a week's time is only one element in that crisis.
    I have great sympathy with the unions in their rejection of the 5 per cent. offer, which, in effect, is only 3 per cent. per annum. I understand how it is that the members of all the unions feel that they are the victims of the Government's economic policy and their arbitrary treatment of the public sector.

    41
    Mr. Sid Weighell of the National Union of Railwaymen has been a persistent advocate of a pay policy, and he is right. Only a pay policy for the public sector can, in the long run, ensure the avoidance of the dilemma that we now face. I am sure that that is the best hope for railwaymen, to whatever union they belong. I also agree with the remarks made by Mr. Bill Sirs on the radio this morning relating to his painful experience in the industrial dispute in the steel industry.
    The board has very little room for manoeuvre, but I hope—maybe we all hope—that it will be able to massage the offer in some way, although its case for being unable to do so is very strong. There is no hope for railwaymen in a strike. I believe that is the majority view of railwaymen themselves. It is a matter not of justice—I wish it were—but of reality.
    I have no doubt that other hon. Members will pay tribute to the chairman of the board, Sir Peter Parker. I want to say a word about his period in office, and in particular about the period in which his time in office overlapped with mine as Secretary of State. In my view, he has been an outstanding chairman of the board. It is tragic that this cumulative crisis should have occurred during his time in office.
    Sir Peter Parker, whom I did not appoint, took office on 16 September 1976—the same day as I did. I believe that he wanted to give the railways a stable future—and so did I. He identified himself immediately with the railway community and set about what was, I think, a new form of very positive leadership.
    One of the earliest steps taken by Sir Peter Parker was to make the board more strongly executive. I supported him in that, and he was supported at the time by both sides of the House.
    Secondly, Sir Peter wanted to find a more imaginative approach to marketing. That he has done, although it has produced some complications for us all. I welcomed his intention.
    Thirdly, Sir Peter supported a demand from the unions for a much higher level of investment. I believe that it was £150 million at 1975 prices. In my view, and in the view of the Government of which I was a member—including the right hon. Member for Barrow-in-Furness (Mr. Booth)—that was not possible in the post-IMF period, but I understood the chairman's approach. He wanted to build a relationship of confidence within the industry between the board and all those who worked in the industry. He would be the industry's champion; he would take on the Government and he would demonstrate—that was his intention six years ago—that the industry could deliver its part of any bargain.
    For two and a half years I worked with Sir Peter Parker. Looking back, I think that the record was good. I say that in relation to the problems that we face today, without for the moment attributing blame for them.
    In November 1976 I gave approval for the Bedford to St. Pancras electrification. It is one of the ironies now—I share the anxiety of the hon. Member for Bedfordshire, South (Mr. Madel) in this respect—that, although that electrification was completed, there are still problems. Reluctantly, I have to say that I think in this respect the NUR is at fault.
    In April 1977 I announced a programme for EMUs for the Southern Region of British Railways worth £33 million at current prices.
    42
    In November 1977, after a long debate in the House and a great deal of lobbying, I arranged for Freightliner to go back to British Rail. That was, in my view, a vote of confidence in the railways. In that respect, I was leaning again towards the argument that Sir Peter Parker was building a new relationship within the industry and that in due course it would bear fruit.
    In turning to main line electrification, I should like to claim credit for setting up the review in May 1978 It seemed to me then that the case for main line electrification was building up very strongly, and that it was right that representatives of what was then my Department and British Railways should examine it very closely.
    When I think of the changes in the summer timetables for this year, I recall that in June 1978 I authorised the go-ahead for the high speed trains between Edinburgh and Newcastle at one end, and the South-West of England at the other.
    Those are examples—there are many more—of an investment programme, amounting to more than £400 million, at 1975 prices, in major projects alone, designed by the then Government in good faith, and in support of the board, to give the railways a new future. I am sorry that Sir Peter Parker has been disappointed, and that the efforts made at the time by the Government of which I was a member have borne so little fruit.
    Looking round the Chamber, I recognise a number of hon. Members who were present at the time when we debated the 1977 White Paper for which I was responsible. It was prepared in the aftermath of the visit of the IMF, which had been made towards the end of the previous year. Anyone who has had ministerial experience will not be surprised at the very strong pressure from the Treasury against commitment to any new investment. I was lobbied very hard by Sir Peter Parker and, in particular, by Mr. Sid Weighell of the NUR. In the light of their arguments, I decided that the door should be kept open.
    There is a sentence in the 1977 White Paper that I remember writing. It was:
    "The Government hope that the developing prospects (that is, for the railways) will justify the case for some increase in railway investment as the plans for public investment are rolled forward."
    That may sound a very small thing, but at the time it was a major victory. I know that the right hon. Member for Worthing (Mr. Higgins), with his Treasury experience, will understand how much argument there could have been over that small group of crucial words. As Secretary of State I said that there should never be another Beeching. I meant it, and I meant it as someone who had been elected to the House about the time that the Beeching report came out.
    Mr. Fry: On that particular point, does the right hon. Gentleman agree that one of the great problems facing British Rail is its inability to create sufficient capital from its resources for investment and that, because of the enormous amount of money required for the public service obligation on uneconomic lines, there is a strong case for looking at the size of the rail network to see whether public money could be better used in investment rather than in subsidising uneconomic routes?
    Mr. Rodgers: I was never against the examination of particular lines where there may have been an overwhelming case, in terms of the cost of maintaining them, for finding an alternative service. As the hon.

    43
    Gentleman may recall, the argument on both sides of the House—an argument in which he joined—was whether it was possible, in the light of previous experience, even to examine single branch lines and hope to maintain a form of public transport once a railway had been taken away. I have never been against some modification, but I was then, and have so far remained—I put it that way—against another swingeing cutting of the rail network of the type undertaken by Lord Beeching. I wish to make it clear that that was a view adopted by the new Secretary of State, the right hon. Member for Sutton Coldfield (Mr. Fowler), when he came to office. I had tried to give the railways stability, and it seemed to me at the time that he wanted much the same thing.
    Time has passed and bitterness has replaced much of that good will. There is great anxiety. More and more people are beginning to despair about the future of the railways. I am glad that British Rail has succeeded in reprieving the railway workshops. I was one of the many who made strong representations, particularly about Shildon. It would have been a hammer blow for Shildon had closure gone ahead. I hope that deferment will lead to a long-term solution. That is the only bright spot, and how bright it turns out we shall have to wait and see. Everything else is critical.
    A stoppage on the railways can still cause chaos. We have seen that in London today. I agree with the Secretary of State that in the long run there is no doubt that increased industrial disputes on the railways will frighten away traffic. The Freight Transport Association has already advertised the advantage of road haulage, as it is entitled to do. Passengers will certainly find other ways to travel. The Government have relaxed the licensing of both freight traffic and passenger transport by road. Many people will be willing to pick up any traffic from the railways.
    Mr. Snape: Will the right hon. Gentleman point out that the Freight Transport Association is part of the road lobby? There was an extremely misleading news report in The Guardian on Saturday morning which made it appear that an impartial organisation was saying that freight was likely to be diverted from rail to road. That is, of course, exactly what that organisation wants. I would be grateful if the right hon. Gentleman would make that clear.
    Mr. Rodgers: I entirely agree. That is what the organisation wants and that is what it will get. It is entitled to make it clear that it provides a service. I have always wanted more freight traffic to go by rail, but the hard reality is that every dispute on the railways frightens some freight traffic away. It is a great pity. Whatever the rights and wrongs of the issue, a strike will guarantee that the crisis will go much deeper.
    As I said earlier, I set up the review of main line electrification four years ago. I welcomed the final report in 1981, and I welcomed the recent report of the Transport Committee. Electrification could be a significant factor—I and my colleagues have made that plain—in the reflation of Britain's economy and in bringing down unemployment some way from its present intolerable level. Despite what the right hon. Member for Barrow-in-Furness said earlier, unless there are solutions to the railways' productivity problems, electrification must be in doubt.
    I strongly commend the report of the Transport Select Committee under the chairmanship of my hon. Friend the
    44
    Member for Leicester, East (Mr. Bradley) with a number of distinguished Members of the House who are here today who have spent a long time in the railway business. I note the presence of the hon. Members for Newcastle upon Tyne, Central (Mr. Cowans) and Sunderland, South (Mr. Bagier).
    I shall give three quotations from the Committee's report. It said that
    "the Government must inevitably consider developments in productivity when drawing up the Board's financial targets and spending limits."
    I agree. The report goes on to mention the need, in relation to electrification and modernisation generally,
    "for all involved in the future of the railway industry to accept the challenge … in the spirit of co-operation rather than conflict."
    Perhaps that is anodyne, but it needed saying again. The Committee also said:
    "we believe that it is essential that the negotiations on productivity … should reach a successful conclusion. Improvements in efficiency are essential to the case for further investment."
    That is the precise point. I hope that electrification will go ahead, but it cannot go ahead unless there is a stable era of industrial relations and rising productivity to ensure that there will be traffic left to attract when electrification takes place.
    I have one final comment about plans for the railways. Three years ago I had a conversation with the hon. Member for Sunderland, South. I hope that he will not be embarrassed. I thought that the time was coming for a new initiative on the Channel tunnel. I made it privately known, in the way that Ministers do, that I would benefit from the views of the House in that respect. The present Government have moved in slow motion—I am sorry about that—but no Government could commit themselves to a Channel tunnel and a new lifeline to the Continent if that lifeline could be cut off at any time by industrial action or by an inter-union dispute. Nor could they commit huge investment if all their calculations were likely to be thrown out by resistance to whatever level of manning and forms of rostering made best commercial sense. In both those respects—electrification and the Channel tunnel—the railway industry and all those who work in it are in a position to determine their own destiny by their behaviour and intentions.
    I share the board's view on flexible rostering. As I said earlier, I hope that the board will be able to find, even among the present gloom, some prospect for the railways' future.
    The railway industry started in Stockton-on-Tees more than 150 years ago. It is now in a position to save or to destroy itself. I hope that the Government—even this Government—in the person of the Secretary of State will still offer it a genuine partnership. The industry will have to demonstrate that it can live at peace, with the separate trade unions working together in a way that they have not done in the past and working with management to abandon out-of-date practices of every possible type. Unless there is industrial peace and rising productivity, there can be no further investment. Without major investment, the industry as we have known it will die.
    The amendment standing in the names of my right hon. and hon. Friends accurately reflects the balance of arguments in these matters, but, as it is not to be called, we shall reluctantly vote for the official Opposition motion, despite its one-sided wording, its call for

    45
    intervention, which is not the right course, and the tone of much of what the right hon. Member for Barrow-in-Furness said and the absence of much of what he ought to have said. We regret the necessity to do so, but our amendment stands on the Order Paper. The Government—this is an important final thought—cannot abandon their obligation to seek a partnership with the industry, despite all the present frustrations and difficulties. Only a partnership between the Government and the industry can lead to any prospect of stable conditions for the future.
    5.10 pm
    Mr. Terence Higgins: As the time available for the debate is limited, I do not propose to take up the remarks of the right hon. Member for Stockton (Mr. Rogers) on autobiographies or on self-congratulation. I fear that I may have to recount some of the history of recent matters in bringing the debate into perspective. I hope not to go back as far as the opening of the Stockton-Darlington railway, although it is difficult not to believe that some of the restrictive trade practices that are adopted within the railway industry may not date back that far.
    Only last week during Prime Minister's Question Time the Leader of the Opposition asked whether the Government would stand idly by in the face of the threat of a national rail strike. That seemed a singularly inappropriate expression, since those who were standing idly by were, to a large extent, members of ASLEF, who, because they will not accept flexible rostering, are standing idly by for considerable periods when a more efficient system could help them considerably.
    Secondly, if the threat of the rail strike comes to pass, those who will be standing idly by rather than getting on with the work that they would like to do will be the passengers of British Rail, especially commuters, including those from my constituency.
    The dispute that is likely once again to come to a head—it seems to have come to a head on a number of occasions over the past year—has a considerable history. Only last July we had a dispute and British Rail offered a 7 per cent. pay increase. The unions demanded 15 per cent., despite the fact that British Rail was making losses and clearly could not afford any increase. The McCarthy tribunal split the difference but gave a little more in favour of the unions—8 per cent. plus the controversial 3 per cent., which was linked subsequently to productivity.
    The House will recall that in the subsequent month discussions took place at ACAS on productivity, pay and the length of the working week. There was considerable controversy over whether the two agreements reached—one on productivity and the other on pay—were part of the same agreement or whether they were separate but related agreements.
    As a result of the dispute that followed we had a considerable period of industrial action, or inaction, by ASLEF in January and February. Many were put to great inconvenience. I understand that the cost was over £80 million. That was almost exactly the same amount that the general secretary of the National Union of Railwaymen tells us in his letter has been saved because of the manning reductions that have taken place. At all events, it was a damaging industrial dispute.
    I share many of the views that were expressed by the right hon. Member for Stockton about Sir Peter Parker's considerable abilities. However, I think that throughout
    46
    the dispute the British Railways Board has tended to be somewhat over-optimistic. It is clear from the press releases that it issued in February following the industrial action that it thought that the issues of productivity and pay had been linked and that there would be a satisfactory conclusion. The reality is that that issue has still not yet been resolved. That is not because of the technicalities of the dispute but because British Rail cannot afford to pay more unless there are increases in productivity and progress on the six points that were clearly set out and specified in last year's agreement.
    In his opening remarks the right hon. Member for Barrow-in-Furness (Mr. Booth), speaking from the Opposition Front Bench, said that British Rail's offer was derisory. It is worth stressing that the 3 per cent. for productivity improvements has already been paid. However, the increases in productivity, certainly from ASLEF, have not materialised.
    Mr. Les Huckfield: Does the right hon. Gentleman recollect that the outcome of the dispute to which he constantly makes reference was an inquiry, and that the specific finding was that the 3 per cent. was not related to the productivity items?
    Mr. Higgins: I thought that I had made that clear. Whatever the formalities—in my view Ray Buckton went back from what he had signed—British Rail does not have the money and will not have it unless it gets the increases in productivity that flexible rostering would achieve. Flexible rostering has not been introduced, productivity, therefore, has not increased, and British Rail does not have the money to pay the 3 per cent. That is the economic reality.
    Mr. Snape: Without discussing the rights and wrongs of ASLEF's case—the NUR does not wish to do that—I hope that the right hon. Gentleman will accept that total train crew costs for British Rail—drivers and guards alike and taking ASLEF and the NUR together—amount to slightly less than 5 per cent. of its total outgoings. It is nonsense to say that British Rail's financial future depends on an agreement being reached. We are talking about a small proportion of British Rail's outgoings.
    Mr. Higgins: Having given way respectively to ASLEF and the NUR, perhaps I can take a balanced view. The important issue is not whether train crew costs are 5 per cent. of British Rail's outgoings. The important point concerns that percentage in relation to profit and loss. That is the relevant percentage. We shall not get the extra investment in British Rail that we all want to see unless new equipment can be operated efficiently. It is absurd to introduce new trains on the St. Pancras-Bedford line, for example, without getting the changes in operating practices that are justified by that change in technology and that expenditure. That is the reality of the problem that we are facing.
    There has been a difference in attitude between ASLEF, which is clearly determined to preserve restrictive trade practices, and the NUR. Mr. Weighell's letter concentrates on the balance sheet of change and dwells rather less on the specific extent to which the NUR has implemented the six points in last year's agreement. Deadlines have been set time and time again for manning, for example, but the extent to which there has been any significant material implementation of these policies has been substantially delayed and is not yet in sight.

    47
    I intervened in the speech of the right hon. Member for Barrow-in-Furness to say that it is not the ceiling that has been set by the Government on investment that is proving effectively to be the financial restraint. External financing limits may to some extent have inhibited it, but the split between investment and current expenditure has been wrong. We are all familiar with the reasons why current expenditure has increased. That has been caused to happen by pay claims that are not justified in terms of British Rail's profitability or by the return on investment. The level of investment in British Rail in real terms is £100 million higher than it was two years ago. There was a bulge last year for special reasons but the Government have taken a constructive attitude.
    Mr. Alexander W. Lyon rose—
    Mr. Higgins: The NUR is putting considerable stress on synchronisation, but it cannot be reasonably argued that British Rail's investment has not been somewhat ahead of the productivity improvements that have taken place. There is a distinction between changes in practice that have taken place in relation to market conditions and the abandonment of restrictive trade practices.
    The gruesome prospect for my constituents and others is of a national rail strike that apparently will be related to pay. Against the background of the past year or so and the failure of both unions to implement the productivity improvements that are required, it cannot be argued that any such strike is justified now.
    If, as we did in the earlier part of this year, we lose £100 million there and £100 million somewhere else as a result of industrial disputes, can we expect that any Government will provide the finance that is necessary for the modernisation of the railways? The tragedy is that because of the intransigent attitude, particularly of ASLEF, and the way in which it has procrastinated time and again, as Sir Peter Parker has rightly said, the future of the railways is at stake. It is not just a question of investment and jobs, important though that is, but whether we can maintain a railway of the present size. That is a very important matter. I profoundly hope that it will be possible to do so.
    We must rely to a greater extent than we have in the debate on the Opposition setting out clearly what the facts are and doing all they can to avert a national rail strike.
    5.21 pm
    Mr. Walter Johnson: I shall try to follow your advice, Mr. Deputy Speaker, and be as brief as possible. I know that many of my colleagues wish to take part in the debate.
    In the last 20 years I have been involved in negotiations with the British Railways Board, and as I have sat on the Rail Council, which is the top consultative body for the railways, I should like to give the House the benefit of my experience and try to issue some advice to the railway unions, the British Railways Board and the Government. If the strike goes ahead, we are in for probably the worst-ever crisis in the railway industry. That is my view.
    We have had such crises before. We have lived with them on and off for 10 or 15 years. We have managed to resolve them fairly well during that time, but there is no doubt that in this crisis there is a real danger of the railway network closing down, which will affect those who work in the industry and the railway industry generally.
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    The debate is about whether the strike will take place. We have debated transport over and over again, but today we are debating the effect that the strike will have both on those who work in the industry and on the customers.
    During the ASLEF strike earlier in the year British Rail lost many customers who will never come back. Fare-paying passengers on the railways found alternative ways of getting to and from work. We must face those facts of life. That will be the situation once again if the strike takes place, only it will be over a longer period, because I believe that the British Railways Board means what it says this time. There will be no fudging. If the strike takes place there will be a complete shut down of the railway network, with all the consequent effects. Passengers and freight will be lost. That is unfortunate, because the freight side of the business was picking up. All the signs were that we would have had a much more effective system.
    I am one of those who share the view of the right hon. Member for Stockton (Mr. Rodgers) that Sir Peter Parker is a first-class chairman of British Rail. He is doing a good job in difficult circumstances. Having worked with him during discussions and negotiations, I know that he is enthusiastic and keen to make a success of his job as chairman. That is my personal experience of how Sir Peter Parker has been dealing with his job.
    The only people who will rub their hands if the strike takes place are the road hauliers and the bus companies, who will get additional business. At present they are doing nicely anyway.
    What concerns me more than anything else is the effect that a strike would have upon those who work in the industry. There would be massive redundancies on a scale that we cannot envisage. If the British Railways Board does not have the money to deal with the current pay claim, it will not have the money to deal with severance or redundancy payments. That is another factor which I hope will be taken into account.
    It is only a few weeks since there was the threatened closure of the railway workshops. Many of us are concerned about that. There was a magnificent lobby of the House of Commons. The enthusiasm shown by those who work in the railway workshops, coupled with the help and support that they received from my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) and others, was responsible for keeping open the railway workshops.
    What will happen to the railway workshops if the strike takes place? They will be closed for good. There is no question about that. The British Railway Board was helpful about the workshops. It handled the situation badly in the first place, but when it was faced with dealing with the situation, it was helpful.
    I have outlined what will happen to the industry if the strike takes place next Monday, which will be absolutely disastrous for many commuters who had a rough time during the ASLEF dispute. Against that background, surely it is not too late for something to be done to try to assist. I hope that the Secretary of State will find it possible during this week, before the strike takes place, to get together the unions and the management, talk to them and try to find a way around the dispute. That has been done in the past, time and again, and there is no reason why it should not be done again.
    The unyielding and tough approach of the British Railways Board has been brought about largely by the dispute earlier in the year by ASLEF. I shall not go into

    49
    the pros and cons of that dispute. It was wrong. The union did not measure up to the full requirements on productivity. That is a personal view. That dispute has led to the tough line that has been taken by the British Railways Board in the current set of pay negotiations.
    The British Railways Board's offer of 5 per cent. from September was provocative and ridiculous. It knew that the anniversary date was towards the end of April. To make an offer of 5 per cent. from September, which has been estimated at 3 per cent. during the year, is unfair and unreasonable to the vast majority of railwaymen, who are doing a first-class job. It annoys me that the two unions that have met the productivity deals right, left and centre—the National Union of Railwaymen and the Transport Salaried Staffs Association—are now having to pay the price of what took place earlier this year. The British Railways Board is taking a tough stance. Something can be done about that.
    I hope that a meeting will take place this week between the railway management and the unions concerned. I hope that Sir Peter Parker and the British Railways Board will come off their high horse and realise that a more realistic offer than 5 per cent. must be made. The offer must be sensible and one that the unions can recommend to their members. I know the problem. I realise that the obvious question is: where will the money come from? My answer is: if any other industries, whether gas, electricity or oil, are in financial difficulty, what do they do? They put up their charges. I do not want fares or freight charges to go up. However, if that is the only way in which the British Railways Board can make a realistic pay offer, that should be done if the board needs the money.
    In addition, the Government should play their part. I hope that a meeting will take place between Sir Peter Parker and the railway unions this week. If there is still difficulty, the Secretary of State should intervene and call the parties together. If the Government do not intervene to stop the disastrous strike, it will be a disgrace. They want the railways to continue. It is nonsense to let them decline.
    I have friends in the NUR, including Sid Weighell. I know them well and have worked closely with them. I ask them to use the machinery to the utmost. If all else fails this week they must go to the Railway Staff National Tribunal. That will see that the issue is properly aired again before an independent body that will make recommendations. It will put the ball in the Government's court. I hope that the NUR will use that mechanism as a last resort. It will delay the dispute to allow wiser counsels to prevail.
    I hope that the Government will take on board the suggestions that have been made. The NUR and the TSSA have played the game on productivity. In just over one year 15,000 railwaymen have left the service, saving £74 million. Not many other industries can measure up to that. The will is there. Railwaymen want to make a success of their industry and to provide a service. I ask the Government to give them the opportunity to do so.
    5.31 pm
    Mr. Mark Wolfson: I am pleased to follow the hon. Member for Derby, South (Mr. Johnson), who emphasised the danger that a possible strike poses to the railway industry and those who work in it. People in the industry must be aware of the damage that a strike will do to their future.
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    In the aftermath of the oil crisis of 1974 a British Rail advertisement showed a decayed motorway garage and stated that this was the age of the train. It was to show that the car was on its way out and the railways were the answer to the fuel crisis. Unfortunately, it has not worked out that way. A more realistic picture is of decaying railway plant of all kinds as the roads are used more and more for personal travel and the movement of freight.
    We have three sorts of railway. The first is the freight railway, which can be profitable, and which was improving before last year's dispute. Secondly, we have a passenger railway, which can be run economically. Before last year's problems and the recession, the intercity railways were improving greatly in their service and attraction to passengers. The third type of railway is what the chairman of British Rail describes as the social railway—the lines that will always require Government support. They fall into two categories—the rural lines and the commuter services.
    The Government should continue to subsidise the railways. No railway system in the world can run without subsidies. We should compare Paris's developing commuter services with London's decaying services. One reason for the improved Parisian service is the much higher subsidy. That was made possible because of a healthier economy in the past than in Britain and, as a result, better co-operation between management and unions in implementing modern work practices.
    Mr. Dalyell: More money has been put into the railways of Paris by the Government and the city than has been given to the whole of British Rail.
    Mr. Wolfson: The hon. Gentleman makes my point. Subsidies will continue to be necessary. I support higher levels of subsidy for London commuter services but only if I am confident that the management and work force can effectively use them to produce a modern system.
    The new rolling stock lying idle for the service between Bedford and St. Pancras, which has been referred to many times, cannot encourage us to support higher subsidies. Those who work in British Rail and want a secure future must move with the times and accept more effective work practices. If they do so, they will get increased support from myself and my colleagues.
    The travelling public, who will be seriously inconvenienced by a strike, is in no mood to pressure British Rail management or the Government to make further concessions to the unions. They are out of sympathy with the reason behind the projected strike. In mid-winter last year they put up with great difficulties.
    Mr. Harry Cowans: So did the railwaymen.
    Mr. Wolfson: I accept that.
    The users and the taxpayers pay for the railway. They hoped that the apparent good faith of the management in paying the increase under duress would be rewarded by ASLEF accepting flexible rostering. That has not happened. The people inconvenienced by strikes, including firms whose earning ability will be cut because they cannot move freight, feel that it is essential for the future of the railways and of the country that the apparent inflexibility and out-dated attitude that prevents railway workers adopting modern productivity methods must be changed to achieve a sensible future. Therefore, I cannot

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    support Government intervention. I support the management of British Rail in taking a stand after having made every effort to achieve changes in productivity. The public will support that stand and a strike can do no good to those who work in the railway system.
    5.39 pm
    Mr. Harry Cowans: I am sorry to follow the hon. Member for Sevenoaks (Mr. Wolfson). I should have been delighted to follow my hon. Friend the Member for Derby, South (Mr. Johnson). My hon. Friend was right to say that no one in the industry wants a strike, and I hope that the Minister will take note of what my hon. Friend said and intervene to bring the parties together.
    I shall now reveal one of the best known secrets in the House. I am a Member sponsored by the National Union of Railwaymen. Perhaps it is less well known that I worked in the industry for 30 years before coming here. I can therefore claim to have a little knowledge of what goes on in the industry.
    Much attention has been paid to how the problem might be solved. Perhaps it would be useful to examine what caused it. The first item is the miserly offer of 5 per cent. that was made by the British Railways Board. In effect, the 5 per cent. means a wage freeze. In real terms its value is only 3·2 per cent., which is lower than any offer that has been made to any other industry in the present pay round. Moreover, it is lower than the offer made to any other group of workers in the public sector.
    The Government try to absolve themselves from blame, but they cannot get off so easily. They have helped to cause the problem. They talked of a tripartite agreement between the board, the trade unions and themselves. The trade unions believed that the Government would synchronise investment with productivity deals.
    Despite what the Secretary of State says, there has been a chronic lack of investment in the industry. Nowhere is that better highlighted than by the unique occasion when the ten major organisations that represent the road and railway industries—management and unions—got together and agreed to submit a document to the then Secretary of State. It is a different tale from that of bad trade unions opposing management.
    The rail and road operators in transport unions joined forces in a call for more transport investment. I shall give the Minister a copy of the document if he does not have one. It should be in the archives of the Department of Transport, because it was sent to the Department. The ten said:
    "It is not an understatement to say that the whole transport industry is deeply concerned at the continuing decline in public investment in transport. We believe that the transport industry is vital to Britain's industrial development and that it is essential to restore the proportion of the nation's income devoted to transport investment to the levels of the mid-1970s."
    That is vastly different from what the Secretary of State said: They continued:
    "In collaborating in this way we are making it clear that we are concerned not simply with the comparative claims on resources of road and rail but with the fundamental need to maintain and develop the necessary infrastructure to enable road and rail to make the most of what each has to offer."
    There is no sign of disagreement within the transport industry there. Only the Secretary of State disagrees.
    They further stated:
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    "We would wish to press on the Government, therefore, the view that failure to increase the level of investment in transport is deterring the economic recovery which the nation is seeking. We see action in this area not only as supportive of national recovery, but it is a forerunner of it."
    They went on to deal with what the Secretary of State had said. The views are not mine; they are those of management and trade unions throughout the transport industry. They pointed out that, compared with investment in transport infrastructure in the rest of Europe, Britain lags behind. In 1977 Germany devoted 1·3 per cent. of its gross domestic product to rail and road investment. France devoted 1·2 per cent., Italy 1 per cent. and the United Kingdom 0·8 per cent. Yet both France and Germany already have superior road and rail networks to our own. That is a different picture from that painted today by the Secretary of State.
    Two other documents, "The Challenge of the 80s" and "Balance Sheet of Change", were presented to the Department of Transport. What was the response? As we have heard about the nasty trade unions, we should analyse their response. They were committed to the documents. Little has been said about that. The six areas of productivity that were agreed under the ACAS agreement have been delivered by the NUR and most other railway unions.
    No one expected the Minister to describe the results, and he did not do so. Had he done so he would have painted a different picture. The result has been a saving of £74 million in staff costs on an annually recurring basis. Operating costs have been reduced by £25 million and staff numbers were reduced in 1980–81 by 17,000. That is not a long time. Since December 1981, just prior to the present Secretary of State being appointed—I congratulate him, although he faces many problems—jobs were being lost at a rate of 1,000 a month. When I was in the industry, during a much longer period jobs were reduced by 250,000.
    The trade union movement can hardly be accused of taking a Luddite approach. It was hardly the approach of a trade union movement that did not want to contribute to the industry that it served. The Secretary of State's own Luddite approach does no good for conciliation. He is faced with undeniable facts.
    The Government have not synchronised productivity and investment. The facts that I have quoted demonstrate that the Government's reaction was completely different. Where has investment been synchronised with productivity? Even if one accepts that only half of the productivity was agreed—a premise which I cannot accept—one would have thought that half of the investment would be forthcoming. Productivity can be generated only if investment is made. Productivity cannot be regenerated by constantly reducing investment, but the Government have done just that. Whatever the Secretary of State may say, investment is half that required by the board in its 1981–85 corporate plan, and half of what it was 10 years ago, and the external financing limit has been set so low that actual investment is less than half what is required.
    The Minister mentioned the public service obligation. There was an increase before he took office, but there has been a £15 million reduction in the current PSO, and even that is £80 million less than the board asked for merely to retain and maintain rural and commuter services. The board's total investment in 1982 was £265 million. In 1978

    53
    it was £351 million. The Opposition have been accused of not being able to add up. One does not need to be a bachelor of mathematics to know that that is not an increase, but a substantial decrease. It is equally easy to calculate that it is only 47 per cent. of the investment required. Where is the synchronisation? Where is the Government investment to balance the unions' productivity?
    It has been said on many occasions that nobody wants another Beeching. I submit that the Government's policy is Beeching by stealth. It is a travesty. The Government's record is one of broken promises and commitments. If the Minister challenges that, I refer him to the commitments made by his predecessor. As those statements have not been withdrawn, we are entitled to assume that the new Minister is bound by them.
    When he met the Rail Council on 29 January 1981, the then Minister stated that many of the problems of the industry were the inheritance of a lack of investment over a long period of time and that there was a need for a sensible bipartisan programme. On 22 June 1981 he said that he recognised that the recession had hit British Rail very hard and that measures were needed to overcome the shortfall. He stated that the Government were concerned not only with the present but with the long-term future of the industry. He recognised the need to synchronise moves to meet the objectives of the rail industry and said that steps taken by the railways to improve productivity had to be geared to investment decisions taken by the Government. There has been a distinct lack of any such investment.
    The chairman of the British Railways Board—I hope that he is still of the same opinion—said on 17 December 1981 that the industry had made significant strides in productivity during the past year to 18 months, but that there was a feeling that while the industry had delivered on its side of the balance sheet the Government had not moved at the same pace. In his view, there was a need to bring forward the vital decisions on investment required by the industry. He also stressed very strongly that the industry had delivered on every target set by Government in the past five years.
    That is a vastly different picture from that painted by the Minister. The Government have tried to make out that on their side everything in the garden is lovely and that they have done all that they can. The truth is very different. The Government talk about investment from within and then blithely hive off to the private sector every profitable or potentially profitable subsidiary, often at knock-down prices so that the full value does not go back to British Rail to generate the required investment.
    The trade unions have delivered, but have the Government delivered their part? Can they truthfully say that five of the major investment schemes laid down have been delivered? I suggest that they cannot. It is no wonder that morale is low and that people in the industry are discouraged. Many productivity deals have been delivered, and many workers are no longer in the industry, yet every day, due entirely to the Government's policies, the industry has to rob Peter to pay Paul. Spare parts have to be taken from locomotives and rolling stock to service other units.
    Many workers in the industry had to give up their jobs for advantages such as high-speed trains, modernised signalling and such electrification as there is. They now see all that being eroded through inability to maintain the
    54
    track on which the trains run, due to Government cuts in the financial allocation for track renewal. In Newcastle alone, there is more than a year's backlog in track maintenance and more than 50 speed restrictions resulting directly from track conditions.
    Lest it be thought that that is merely the unnecessarily gloomy view of a potentially biased NUR-sponsored Member, I quote the best authority in the world on the subject—Mr. R. B. Reid, chief executive of British Rail. Mr. Reid said:
    "Initially investment is urgently needed to catch up on the backlog of renewals and repairs to BR's network to make it suitable for electrification. There will be little benefit from electrifying a worn-out railway."
    Even he agrees that it is worn out. Again, that is a very different picture from that painted by the Minister.
    Time and again BR workers have to bear the complaints of passeengers about delays and clapped-out rolling stock. How can there be any morale among people suffering those conditions? Even if every trade union in the industry agreed tomorrow morning to every productivity deal that has ever been thought of, is there any guarantee that that would be met by Government investment in the future of the industry? I submit that there is not. How does one explain the position to men who have given their best when the workshops at Shildon and Swindon are simply to be hammered into the ground, with no thought whether they are viable or profitable?
    The Government cannot opt out of this. If they really believe in the industry and wish it to continue, it is of paramount importance that they agree—as, allegedly, they previously agreed—to provide investment to meet the productivity. They must show some belief in the industry and bring the parties together to make those agreements. If they would do that, we shall not have this dispute. If they will not do it, I can only conclude with regret that they desire a confrontation, regardless of the effect on the industry. That is a sad charge, but the Government can disprove it tomorrow morning by convening a meeting such as I have suggested.
    Mr. Deputy Speaker: Before I call the next speaker I should advise the House that the wind-up speeches are due to start at 6.30 pm. Six hon. Members are still anxious to be called in this important debate and if the speeches are limited to five minutes each I can call them all.
    6 pm
    Mr. Tim Eggar: I hope that the horn. Member for Newcastle upon Tyne, Central (Mr. Cowans) will forgive me if I do not follow his speech. I recognise that he felt he had to earn his official sponsorhip fee in the debate.
    Mr. Snape: On a point of order, Mr. Deputy Speaker. I realise that the hon. Member for Enfield, North (Mr. Eggar) is very much a new boy. Could you point out to him that sponsored Members of Parliament, at least in the Opposition, do not receive a fee from their sponsoring unions? Most of us are sponsored because of our connection with an industry—in this case the railways—and we are proud to speak because we believe in it. That certainly applies to my hon, Friend the Member for Newcastle upon Tyne, Central (Mr. Cowans). The hon. Member for Enfield, North should immediately withdraw his silly imputation.
    Mr. Deputy Speaker: Order. I heard the hon. Member for Newcastle upon Tyne, Central (Mr. Cowans) declare his interest.
    Mr. Eggar: I accept the motivation of the hon. Member for Newcastle upon Tyne, Central, but I speak from a different perspective. I represent a constituency that has no fewer than three commuter railway lines running through it. One of them has earned the description from the eastern area regional director of being the worst line in his area. Another line can be best described as giving a declining standard of service for an increase in real fares. The third line has been the subject of considerable capital investment by British Rail. I believe that it was the first suburban line to be electrified by the right hon. Member for Stockton (Mr. Rodgers) in his capacity as Secretary of State for Transport.
    I draw attention to that line because the investment has not resulted in any improvement in manning levels. It has not been rewarded with any flexibility from the unions and the same manning levels exist that we had before the significant capital investment committed by the Labour Government.
    I do not buy the argument that increased capital investment will improve the railway service, and improve cost and operating levels. I strongly believe that if we are to have a modern, flexible and well-run railways we need the co-operation of the unions, freely given.
    I understand the reluctance of railway unions to change. They are, after all, part of what is, through an accident of history, a declining industry that has been declining for many years. Jobs have been lost because there has been a lack of demand for the services and because technology has changed. The unions are naturally anxious to preserve their membership because it gives them political and other power.
    There is another factor that all hon. Members should admit. Governments of both parties have been trying to buy off trouble on the railways beause trouble has meant political and economic difficulties. Governments of both parties—despite the attempt by the right hon. Member for Stockton to rewrite history—have grudgingly given the minimum amount of money to the railways that would result in the minimum disruption. The British Railways Board has consistently run away from reality. It has not been prepared to use the money that it has been given to reduce current costs, to tackle the problems of manning levels and to invest in schemes to produe a better service. We must admit that that is partly due to backward looking conservative unions and, generally speaking, to poor management at all levels on British Rail—and I except Sir Peter Parker from that criticism.
    A further fact needs to be considered. As we come out of the recession and go for economic growth, one of the major points to be addressed is whether we shall allow nationalised industries, and public enterprises of all kinds, to squander that growth in current expenditure—particularly in increased wages—or whether we are to make sure that it is channelled into investment that provides for the future,
    I accept that the railways need more money, but I honestly do not believe that we can justify giving that money without a clear awareness that the money allocated is specifically used for investment and that increases in wages are earned through productivity improvements. I could not support my right hon. Friend if he sought to
    56
    undermine the board in its determination to make the unions live up to the productivity agreement that they signed over a year ago and that has still not been fulfilled. I go further. Should the unions meet that commitment and be willing to accept the offer and work for productivity improvements, I would be the first on the Conservative Benches to argue, with my right hon. Friend, that we must go ahead with the electrification, and other schemes, that have been mentioned by the Opposition. The choice rests with the unions. My right hon. Friend is right to support the board and I am sure that my commuting constituents agree.
    6.8 pm
    Mr. David Penhaligon: On the positive side, and as someone who lives a considerable distance from the House and uses the railways every week—I sometimes feel that I am a one-man attempt to make British Rail pay—it strikes me that we still have a national network. It is a system that is clean, comfortable to ride in and, by and large, delivers one to one's destination on time. It is a massive asset that we fritter away at our peril.
    British Rail has a network that could become—I do not suggest that it is now—as good and useful a network as any available in similar countries in the Western democracies. There are many assets and positive aspects in British Rail, despite Beeching. I say that as a member of a part of the country that was hit particularly hard by the Beeching cuts. I do not claim, as many Opposition Members do, to have spent years working in the industry, although by training I am an engineer. There is undoubtedly a massive and sustained reluctance by the unions in the industry to accept new productivity deals. The simple truth is that there is a fear by this Government—it has existed in previous Governments and will, I suspect, exist in future Governments—that to increase the rail subsidy will be to invite yet more reluctance to improve productivity. One suspects that a substantial proportion of the existing subsidy is paying for over-manning and lack of productivity. Clearly the Government must fear that more money will mean more over-manning.
    We are on the verge of a major strike that could rapidly escalate. If one section of the rail unions strikes, British Rail will be forced to lock out the rest of its employees because it has no money. Within a short time there would be a major strike that would last for a considerable time. I appeal to those who work in the industry, particularly in areas such as my own, to ask whether the position now being adopted by the unions is logical. The people who will get the sack or will be made redundant, or the stations that will be closed, will be in the remoter parts of the country, where there are already weak economies.
    In my own area, a rail strike at this time of year will mean that tourists will not be able to use the railway service to Cornwall. That will give another boost to the coach operators and will be a further reason for not keeping open the railway line in that part of the country. Goodness only knows the Cornwall economy is weak enough already and cannot afford to lose British Rail services.
    In my view, the Government should intervene. Conservative Members have often said that they want a positive commitment from the unions towards productivity. I accept that. Indeed, I understand the arguments and the reasons why Conservative Members advance that

    57
    proposition, but I am not convinced that as yet there is a positive commitment by the Government to invest the money required if such a commitment from the unions were forthcoming. We are in a ludicrous situation, one that is almost akin to asking "Which came first, the chicken or the egg?"
    Even at this late hour, the most logical thing would be for the Minister to call all the parties together so that at that level there could be a major attempt to resolve the problem. Unless the Minister is prepared to do so, I shall not be able to support the Government in the Lobby. If the Government are unwilling, even at this late hour, to negotiate and put a deal together, come the final analysis they will have to pick up the major political burden, because in general stations will be closed in the constituencies of Conservative Members.
    I notice that the hon. Member for Devon, North (Mr. Speller) is present. I am sure he will agree that the stations threatened with closure are not those in the large cities but those in the remoter parts of the South-West, North-West, South-East and Scotland, which by and large are represented by Conservative Members.
    Mr. Tony Speller: What the hon. Gentleman has said is entirely correct. It is interesting that in the remoter regions the representatives of the railway unions are voting against strike action because their jobs are in danger. As the hon. Gentleman has said, the workers in the large cities are voting for strike action because their jobs are safe in the long run.
    Mr. Penhaligon: There is a fair element of truth in what the hon. Gentleman says, although I doubt whether jobs in the big cities are safe in the long run, given the state that British Rail is now in.
    I ask the Minister seriously to consider taking the initiative and calling all sides together. He would lose nothing if he did so.
    6.12 pm
    Mr. John Major: It seems likely that we are within a few days of a damaging national rail strike from which, I suspect, no one will benefit. If it starts, I fear that it will be a long strike. I am sure that it will have a predictable and gloomy outcome. It will certainly weaken the railway system, end fresh investment, and cost British Rail an enormous sum of revenue that it cannot afford to lose. It will probably cost jobs that might otherwise be saved and leave a lengthy and unnecessary legacy of bitterness. Once again, the railway customers, both commercial and private, will bear the principal burden of the rail dispute.
    I support the railway system and wish to see it improved and become successful. Therefore, I very much regret that what I fear will come about. I have always regarded the NUR as an admirable union that has been well led and well represented in this House. The hon. Members for Newcastle upon Tyne, Central (Mr. Cowans) and Derby, South (Mr. Johnson) illustrated that well this afternoon.
    I regret that the NUR finds itself in this dispute at this time, but I cannot accept that it has responded in terms of the productivity agreement that it signed about a year ago. I cannot accept that it has responded adequately to the concept of driver-only passenger trains or the necessary reduction in overmanning on freight trains. Nor has the
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    NUR been prepared to contemplate removing guards from freight and non-passenger carrying trains. However, in the interests of brevity, I shall not elaborate on those points.
    I understand the NUR's commitment to preserve its members' jobs, but the inevitable effect of preserving unnecessary jobs that really do not exist is poor wages and poor wage offers. It will mean that a loss-making railway system will continue to make losses, and that will result in unsatisfactory future investment for British Rail. That is the certain result if the strike continues and if unnecessary and unreal jobs are sustained in the railway network. That is the reality that the NUR must face. I suspect that it knows that is so. I regret that in present circumstances it will not accept that view.
    When one considers the present pay offer, it must be understood that British Rail's current financial situation is bleak in the extreme. There simply is no more money in British Rail's hands. Despite high fares that have driven people off the railways, and despite £800 million of grant subsidy in the current year, British Rail will probably make a loss this year in excess of £160 million—£100 million of which will be the direct result of the ASLEF strike in January.
    In those circumstances, this year's pay offer was bound to be lamentably small. I regret that, but it is inevitable. Given those circumstances, it would not be proper for the Government to provide more money. The Government have provided £2·7 billion in grants between 1979 and 1982. They have shown their willingness to commence and to continue electrification. They have increased the external financing limit and have made exceptional grants to cover the losses due to the recession. There comes a time when the community demands a better return on that investment from the British Rail unions, and I believe that we have now reached that time.
    I therefore hope that the British Railways Board will stand firm on its pay offer. I expect that the Government will fully support the board during the currency of any industrial dispute that may take place. That may lead to inconvenience for many commuters and many of my constituents, but it is better that they face that inconvenience now in the hope of achieving a properly run railway system with adequate investment in the future rather than continuing with out-dated industrial practices and consequential inadequate investment.
    There is a general wish in the House to see a modern and efficient railway system that offers a good service to industry and the traveller. There is a wish to see rising investment, modern rolling stock and electrification, wherever possible. There is also a wish to see secure and well-paid employment of the professional railway men who, I hope, will man a professional rail service once we have managed to secure satisfactory industrial relations. None of those things will be possible without the introduction of modern industrial practices. If we must now withstand a damaging industrial dispute to secure the introduction of those modern industrial practices, it is a price that we should be prepared to pay.
    6.19 pm
    Mr. Les Huckfield: I do not think that I would like to follow the hon. Member for Huntingdonshire (Mr. Major). The Secretary of State made a not very convincing speech in which he tried to disclaim all responsibility for what was now taking place on the railways. He tried to say that he had done everything to

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    keep his part of the bargain, had provided the investment and that if things were now going wrong it was the fault of the unions. Most of my hon. Friends and I would totally dissociate ourselves from that view and say that the Secretary of State cannot escape his responsibilities. An article in The Times on 4 February this year stated:
    "The 1982–83 cash limit is only £950 million—only 3% more than 1981 despite 12% inflation. Unless this limit is eased, real investment will virtually cease. Cash limits at the present level could only be achieved by dramatic action like closing down the railway completely at weekends."
    The article later spoke of the finances of British Rail disappearing into
    "a black hole of dwindling services and revenue that could have only one logical end: disintegration of the national rail network".
    That article was written by Richard Hope, editor of the Railway Gazette International, who is reputed to be one of ASLEF's biggest critics. He was not blaming ASLEF but the Government and the Secretary of State for completely failing to provide adequate external financing limits and an adequate PSO grant. The main faults of our railway system are that the Secretary of State has reduced in real terms not only the external financing limit but the public service obligation grant.
    Even in the 1981 corporate review which was made a year ago—well before any of the disputes that we are now discussing—an overshoot of £200 million from the external financing limits was forecast and an overshoot of £202 million was planned for the PSO forecasts. In those figures there was a forecast loss of about £197 million. That forecast had nothing to do with the previous dispute and is entirely isolated from any of the disputes we have been discussing today. I hope that hon. Members will read the history and recognise that the figures show that it is not ASLEF or the NUR that is at fault but the Secretary of State.
    Conservative Members have been trying to give the impression that one cannot run a modern railway system without train crews working flexible rosters. Intrigued by those oft-quoted assertions from the British Railways Board, I checked the tribunal report. I refer to page 40, paragraphs 140 and 141, which provide the estimated savings from the introduction of flexible rosters as estimated by the tribunal after taking expert evidence from the assessors. It says:
    "We are told that the figure arrived at"—
    we are talking of a saving of £9·1 million aggregate during the next three years
    "represents about 2% of present footplate costs".
    If that is the magical ingredient that the railways must have before the system can be run properly, if all that it represents is a 2 per cent. saving on present footplate costs and if one examines the increased costs that will be accounted for by the 39-hour week and the fact that footplate staff must presumably share in some of those savings, it would appear that the board will hardly make any savings. Yet we are being told that, unless some kind of agreement can be found on flexible rosters, the railway system will be unworkable. I hope that hon. Members will take into account the 5 per cent.—the overall train costs as a percentage of the total operating costs—and the mere 2 per cent. figure that could be gained if the board got what it wished on flexible rosters. If we examine the flexibility that is already enshrined in present agreements, the average overtime that drivers work is about 58 minutes and
    60
    45 per cent. of footplatemen work about 45 hours. The important figures are that since 1950 footplate staff have fallen by 73 per cent., traffic carried per footplateman has increased by 150 per cent., yet railway investment per year in real terms decreased by £100 million. I can quote more figures that show that it is not productivity but the diminution in investment that is the real problem.
    Mr. Michael McNair-Wilson: Will the hon. Gentleman give way?
    Mr. Huckfield: No, I am trying to be brief.
    When the Under-Secretary of State replies on behalf of the Secretary of State he cannot dodge responsibility. Had there never been a dispute over flexible rosters with ASLEF or the forecast present dispute, those figures would not have been very different. The real problem is that the Secretary of State has failed to provide an adequate external financing limit, an adequate public service obligation grant or an adequate financial base for the railways. He cannot stand back, put the blame on the trade unions and say that it is up to the railway unions and management. If the dispute is to be solved and the railway system saved, the Secretary of State must intervene.
    6.25 pm
    Mr. Peter Snape: Conservative Members alleged that the railway unions in general, and especially the National Union of Railwaymen, failed to honour agreements and obligations entered into during the past year. The Bedford-St. Pancras line is in a similar position to that outlined by my hon. Friend the Member for Nuneaton (Mr. Huckfield). To listen to Conservative Members one would imagine that the future prosperity of the railway industry depends on the 60 guards at present employed on that line signing on the dole. That was the implication. [Interruption.] The right hon. Member for Worthing (Mr. Higgins) makes a sedentary intervention. Early in his speech he said that he did not wish to delve into history. If one considers his history as a Minister, that is not surprising. We need no lectures on railway productivity and finance from a man who, as a senior Treasury Minister, created some wonderfully efficient monoliths in local government such as regional water authorities, which was one of his better medallions.
    Mr. Higgins: The hon. Gentleman says that it is not important whether the Bedford-St. Pancras route is brought into line with modern practices. The crucial point is that there will be an incentive to invest more in electrification if the railways are prepared to adjust their manning procedures accordingly.
    Mr. Snape: It is not a question of the railway unions not being prepared to adjust manning procedures. On the Bedford-St. Pancras line, one signal box at West Hampstead controls the entire line. Forty signal boxes, with at least three signalmen in each, have gone.
    Mr. Alexander W. Lyon: Eighty.
    Mr. Snape: My hon. Friend tells me that it is 80. That was with the full co-operation of the National Union of Railwaymen. The union does not believe that it is sensible to rush into a system of one-man train operations. We all know what has happened with one-man operated buses. Conservative Members seem to believe that we are defending jobs that are relics of the Victorian age just for

    61
    the sake of it. However, we know what happened with the bus services. Perhaps Conservative Members do not know because I do not suppose that many of them travel by bus. However, there has been a massive vote by the passengers with their feet against such operations, because they are inherently slow and inefficient.
    The board already has one signal box to control the Bedford-St. Pancras line. It has the agreement of the NUR to the open station concept, thus doing away with railway staff, and in addition it wishes to have one-man train operation. The cynic would say that the driver, who must do every other job, would benefit from the strategic positioning of a brush so that he could sweep the platform on his way.
    The de-humanisation of the railway system proposed by the board has not yet been agreed to by the major railway union, for very good reasons. It is not a case of our being Luddites. The NUR and ASLEF co-operated wholeheartedly in the Kings Cross-Hitchin electrification scheme. It was a slightly different type of rolling stock and a guard has to be present to operate the doors, but the number of signal boxes on that line has been reduced from 57 to one, with the full co-operation of the major union, the number of signalmen has been reduced from 220 to 30 and there has also been a reduction in the number of station staff. That is an illustration of the wholehearted co-operation that the unions have offered to the board.
    The hon. Member for Enfield, North (Mr. Eggar) made perhaps the silliest comment in the debate when he said that trains between Liverpool Street and Enfield are manned as before. It would be surprising if they were not, since they are the same trains that have been running since the 1930s and the signal boxes are the same.
    Mr. Eggar: Will the hon. Gentleman give way?
    Mr. Snape: No. The hon. Gentleman gave the impression that his railway expertise was confined to collecting engine numbers when he was a schoolboy. If he wants to dabble in these matters he ought to do the House the courtesy of learning something about them.
    Mr. Eggar: On a point of order, Mr. Deputy Speaker.
    Mr. Deputy Speaker: Order. There cannot be a point of order arising from what has been said. Perhaps the hon. Member for Enfield, North (Mr. Eggar) has a point of argument.
    Mr. Snape: If we are to have the sterile argument from Conservative Members that railway unions are interested only in preserving Victorian jobs, the collapse of the industry will come about sooner rather than later.
    The kernel of the dispute is ostensibly the derisory 3·2 per cent. pay offer, but we all know that we are talking about far more than that. The railways have been an "if only" industry for too long. For the Secretary of State and his colleagues to promise a land of milk and honey, or at least a land of steel rails, on slim financial margins is absolute nonsense.
    The Government have a duty to intervene. If they do not do so there will be a railway strike from Monday, with all the recurring consequences.
    6.32 pm
    Mr. Roger Stott: I apologise for not being able to deal with this subject adequately, because of the constraints of time. I shall not have time to say much of what I wanted to say.
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    The debate has clearly demonstrated that there is a mounting crisis in the railway industry which could result in a fundamental and strategic diminution of the rail network, which would be to no one's advantage and would be devastating to the nation.
    The reasons for the current crisis cannot simply be attributed, as the Secretary of State and some of his hon. Friends have implied, to the Luddite approaches of the trade unions. The problem is far more complex and it ought to be treated with the seriousness that it deserves.
    We ought at least to attempt to set the debate in its proper context and to rebut some of the absurd charges that have been made against the work force. I can do no better than quote from Sir Peter Parker's speech to the NUR's annual conference in June last year:
    "We had a four year track record of success until we slammed up against the buffers of the recession. It was that track record which held our case generally intact as we ran through the gauntlet of the last few months of analysis and debate. Without being able to say we had delivered on the financial objectives of recent years, we would never have come through.
    Over four years we made sweeping improvements we cut down the freight losses, we pushed up passenger traffic. We cost the taxpayer 14 per cent. less in real terms than five years ago, even at the end of the grim 1980. Passenger journeys were the highest for nine years, and passenger miles were only 1 per cert. down on 1979 and still in the high levels near the 20 billion mark last reached in the early '60s, pre-Beeching.
    And by a neutral study of international comparisons we have been shown to be the most cost effective railway in Europe."
    Those are the words of Sir Peter Parker, the chairman of British Rail, a man who is universally acknowledged to have done his best for the industry.
    On any objective analysis it is clear and, in my opinion, beyond dispute that over the past few years the railway community has contributed to productivity improvements, demanning and the loss of more than 30,000 jobs. In many areas, particularly the BR engineering workshops, one of which I have the honour to represent, demarcation disputes have become a thing of the past and craft interchangeability has resulted in vast improvements in productivity and output, contributing to vast savings for the industry.
    I readily concede, as did my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), that there are still important differences of opinion on outstanding productivity issues which will have to be resolved by negotiation in the best interests of the long-term future of the railways, but, by and large, the industry's record on productivity over the past few years has, as Sir Peter Parker and I have outlined, been remarkably good.
    The complex nature of the current crisis arises from a number of causes, including the growing arrears of replacements, the rundown in coaching and infrastructure, the continuing trading losses and, I regret to say, the financial cost of the industrial dispute earlier this year, as well as the Government's refusal—despite what they say—to allow adequate levels of investment spending and their continued obstruction of the modernisation and electrification programmme.
    The storm clouds have been on the horizon for some time, but the extent of the crisis is comparatively recent. It is rooted, as my right hon. Friend the Member for Barrow-in-Furness said, in the breakdown during 1980 of the understanding that existed within the railway community about its immediate and long-term aims and its approach to the Government.
    The experience of the economic recession and the imposition of an unsupported financial regime by the

    63
    Government were bound to generate tensions and disagreements in the industry about how to weather the political and economic storm, yet, even in that unfavourable climate, BR management and unions began the 1980s with an agreed agenda—the balance sheet of change—which involved radical adjustment of the railways' operations and acceptance by the unions of considerable changes in manning and in working practices.
    However, those changes could be possible only if faith existed in the long-term future of the railways, and that faith has been tested to the point of destruction by the Government's constant sniping at the industry's performance, by the new powers they have given themselves to hive off the successful parts of British Rail's subsidiary businesses and by the torpedoing of vital investment and modernisation.
    Without firm Government backing change seems less worth while and the railways are in disarray. The work force is disillusioned because it sees inadequate returns to the railways for demanning and changes in working practices. The management feels obliged to insist on further changes to justify greater investment, but it feels let down by the Government when agreement on changes is secured. I regret to say that there is, once again, a breakdown of trust on all sides.
    Over the past three years the Opposition have been pressing the Government on the need for greater investment in British Rail. The warnings have been signalled by the Opposition, but the Government have failed to heed them. British Rail management and trade unions, in addition to politicians in the House, including some on the Conservative Benches, have long recognised that the future of the railway business depends upon investment in equipment to renew the system and in new technology to develop its potential.
    The trade unions committed themselves to this approach. Their commitment was shown in their serious consideration of the board's paper "The Challenge of the Eighties" presented in 1979. In addition, the trade unions endorsed "The balance sheet of change" in 1980. In 1981, the British Railways Board published its rail policy document—a statement of its policies and potential for the 1980s. This included and looked beyond the items in "The balance sheet of change". It made a strong case for an entirely new financial regime for the railways.
    The Board has stated, as we on the Opposition Benches have argued continually, that if major expenditure on replacement is not started by 1983, the inevitable consequence will be a rapid rundown in the whole of the railway system. The year of decision to authorise the necessary planning, design and ordering for the replacement programme was 1981. In graphic terms, the board described the consequences of failing to increase investment during the next 10 years. Its view can only be described as extremely alarming—track miles withdrawn from traffic, 3,000 and rising; miles carrying temporary speed restrictions, 800; annual failure of mechanical signalling systems now at 40 per cent., rising by 10 per cent.; resultant annual duration of train delays, currently at 5,000 hours, going up to 8,500 hours and rising; availability of locomotives, now at 75 per cent., reducing
    64
    to 50 per cent.; availability of electric multiple units, currently at 85 per cent., reducing to 70 per cent. The dismal tale goes on and on.
    The rail policy document also indicated that electrification was one of the major planks of British Rail's policy. In 1981, the Department of Transport and British Rail jointly produced a document that showed that the internal return from a substantial electrification programme would be about 11 per cent. in real terms. What has been seen since that document was issued in 1981? There has been continued vacillation by the Government over electrification. They are doing the very reverse of what was recommended in their own document. They are acting on a piecemeal basis, and every agreement is subject to tortuous academic scrutiny. The Guardian, in a recent editorial, stated:
    "What a way to run a railway?".
    What a way to run a railway indeed. To compound their vacillation on a sensible decision over electrification, the Government have continued to prevaricate over the amount of money that they are prepared to invest in British Rail. It is hardly surprising, I regret to say, that the railways have now become the plaything for that neolithic bunch of crackpots in the Centre for Policy Studies who seem to have a major influence upon the Prime Minister. In an apposite article in The Observer a few weeks ago, Mr. Robert Taylor said:
    "The omens are not good for British Rail. A new Cabinet committee of hardline Ministers to cover the nationalised industries was formed recently. Mrs. Thatcher is chairing it and she has Parker and the railways firmly in her sights."
    This is unquestionably why British Rail and the Secretary of State cannot now proceed in the way in which they wanted to proceed initially in regard to investment in the industry. My right hon. and hon. Friends have indicated the extent to which the investment has been lacking. I wish only that I had the time to underpin what they have said, but I fear that time is not available.
    None of us who uses the railways extensively or even occasionally can have failed to notice the deterioration in rolling stock and the rescheduling of timetables. Those who have to use certain rural commuter routes will recognise the inordinate number of speed restrictions that have been placed upon them. Conservative Members should recognise that the only solution to those problems is investment. It has nothing to do with short-term productivity increases. If a track needs to be renewed because it is falling apart, it needs to be renewed. If an engine needs to be replaced, it needs to be replaced. We have whole fleets of clapped out diesel multiple units trundling round the countryside long after their life expectancy has run out. Never has the demise of British Rail been more clearly shown than in a recent BBC programme called "Brass Tacks", which illustrated graphically the insurmountable problems that British Rail has to face and the difficulties and hardships placed on the travelling public. Sir Peter Parker called it the crumbling edge of quality. The crumbling edge of quality has accelerated to become the declining core of the network.
    It is a sad commentary on the state of a great and strategically important industry when, out of desperation, the National Union of Railwaymen, which has not been involved in an official stoppage of any significance on the railways since the General Strike of 1926, has to resort to this kind of action. The only way that the log-jam can be released is through an investment initiative by the

    65
    Government. It is for the Government to deliver their part of the bargain. That is a necessary first step in breaking the deadlock. If they fail, they will rightly be condemned as one of the main perpetrators of the dispute.
    6.46 pm
    The Under-Secretary of State for Transport (Mr Reginald Eyre): The situation now facing British Rail is critical. The hon. Member for Derby, South (Mr. Johnson), whose understanding of the railways I respect, emphasised the seriousness of the situation. I believe also that right hon. and hon. Members on both sides of the House are saddened by this state of affairs. Crucial decisions that could affect the whole future of the railways in this country will be made within the next few days. It seemed to me a pity that during a responsible and serious debate there should be a degree of misrepresentation of the facts that apply economically to British Rail and the crisis that it now faces. I realise that those misrepresentations of the economic situation can be based on misunderstanding. Nevertheless, they cause misunderstanding of the problem with which we are striving to grapple.
    Many Opposition Members appear to argue that if only the Government made more money available all the problems would magically disappear. The Railways Board more accurately recognises what needs to be done. It has been struggling for two years to achieve some of the changes in working practices needed to bring the railways into the second half of the twentieth century. Without productivity improvements, no amount of investment in new equipment will enable the railways to compete and survive in the years ahead and to provide the modern and efficient railways service that all wish to see. Investment and productivity must go hand in hand.
    In the short time available to me, I wish to explain what the Government have been doing to help the railways in recent years. Opposition Members argue that there is a feeling among the unions that the Government have not been playing their part. While I understand those feelings, I have to say that the Government have been playing their part. This is borne out by the facts. It is totally false to suggest that the level of Government support for the railways has been cut or that we have imposed impossible cash limits. On the contrary, the level of support and the total of external finance in 1981–82 were at their highest ever levels in real terms. This exceptional support has been repeated in the current year. Taking account of the total support from the PTEs and for railway crossings, the figure for last year was £907 million and the figure for this year £902 million. The change is insignificant since the figure is virtually the same as that for last year. In recognition of the sudden decline in passenger travel we agreed last year to increase the public service obligation grant by £110 million. Taking local and central Government resources together the grant in 1981 was £829 million. That is £2·3 million every day. In 1982 the grant will be £902 million, which is virtually the same in real terms, although the railway has now had time to respond to the fall in traffic.
    These grants are intended to meet British Rail's costs in providing its unremunerative services, including the maintenance of track and structure. The hon. Member for Newcastle upon Tyne, Central (Mr. Cowans) expressed anxiety about the track, but the allocation of such considerable resources is intended to enable British Rail to discharge its liability in that respect. As I have said, the
    66
    figure is £2·3 million per day. To ensure that these items are not neglected because of the pressure of short-term financial problems, my right hon. Friend has decided that part of the grant in 1982 should be specifically earmarked for repair and renewal expenditure.
    We are providing a great deal, but we cannot go on indefinitely increasing the resources that the railways preempt from the economy. Private businesses and, indeed, other nationalised industries have to live within the financial resources available to them and we all know that there is a limit to what the country can afford.
    It is misleading in the extreme to suggest that the railways have been starved of investment in recent years. About £200 million has been spent on 95 high-speed trains. About £150 million has been spent on the electrification of the St. Pancras-Bedford line. There have been five-year rolling programmes for freight locomotives and wagons at rates of 25 locomotives and 1,550 wagons a year respectively. There are major resignalling projects in the West of England, one costing £28 million. The Brighton line resignalling will cost £45 million and the investment in 200 sleeping cars will cost £52 million. In addition, investment in the Anglia electrification—on which work is due to start in 1984—will cost £30 million. Literally thousands of millions of pounds have been put into railway investment in the past 10 years.
    Overall, the board's investment ceiling has remained at roughly the same level for the past 10 years. Indeed, the right hon. Member for Barrow-in-Furness (Mr. Booth) conceded that the investment ceiling was irrelevant to the main question of investment. In this financial year the ceiling stands at £462 million. Of course, the Government would like to see more investment in the railways, but the investment ceiling is not to blame. It is the failure to reduce costs and improve productivity that has eaten into the funds available for investment. On this, as on everything else, we return to the problem of productivity.
    I turn to the question of future investment, including electrification. It is totally mischievous to suggest that the Government are not working for a modern railways system. On the contrary, we were delighted to approve the electrification as far as Norwich, shortly after the NCR accepted the new agreement on flexible rostering for guards, which we strongly welcomed. We have endorsed in principle the rolling programme of mainline electrification, subject to the necessary improvements in productivity and business results. We have not received proposals from the board for rolling programmes of locomotives, freight wagons or electric multiple units, nor proposals for the advanced passenger train. Clearly we cannot approve things before the board puts them forward as being justified by the business results. But we have before us, and are urgently considering, the first proposals for the long awaited start for programmes to replace the diesel multiple units and we also have proposals for further resignalling and for East Coast main line electrification. But it would be irresponsible of any Government to bring forward such major decisions on investment while the prospects for productivity and industrial peace on the railways are so uncertain.
    Much has been made about the fall in the number of British Rail staff in recent years. The hon. Members for Newcastle upon Tyne, Central and for West Bromwich, East touched on the figures. It is true that in the past two years there has been a reduction of 17,000 in the number of staff. However, the reductions—all, incidentally,

    67
    obtained by natural wastage and voluntary redundancies—have been brought about by adjusting resources to meet lower demand and by withdrawing from loss-making businesses. Those are the sort of negative productivity gains that every business has to face up to during a recession, but they are not of the same order as the reductions that British Steel and British Leyland have had to accept. Moreover, they are not the result of the major changes in working practices sought by the British Rail Board.
    At the same time, railway pay increased by 20 per cent. in 1980 and by a total of 11 per cent. in 1981—and the board is still owed productivity for the 1981 agreement. It is the productivity shortfall from last year that the board is now trying to secure as part of the 1982 pay negotiations. The House must support the efforts of the board in seeking to persuade the railway unions that their best interests will be met by serving the customers rather than by beginning a disastrous strike that will certainly lead to fewer jobs in the industry.
    The NUR claims to have delivered all it can on productivity. It is true that of the six items included in last years' package it has delivered on two—open stations and flexible rostering. On some of the other items it has been in difficulty because of ASLEF's wholly unreasonable attitude. But that said—having leaned over as far as any reasonable man could to see its side—the degree of "delivery" is seriously disappointing. It has not made any real progress on the proposal to withdraw guards from freight trains. It has not agreed to one-man operation of modern electric trains with sliding doors. In those areas where ASLEF would also need to co-operate—the single manning of traction units and the development of the trainman concept—there has been little real progress. Of the six items mentioned so often in the debate for which the board agreed to pay in last year's wage settlement, only two are yet offering it any returns, even from NUR members.
    Mr. Gordon A. T. Bagier: Will the Minister please reply to the most important point in the debate? Will the Secretary of State and the Minister try to get the sides together round a table to avoid a strike?
    Mr. Eyre: The hon. Gentleman well knows that the British Railways Board and the unions have been talking together. The British Railways Board is in charge of the negotiations and well understands the details of the matter. It would be wrong and weakening for the Government to intervene in such a dispute.
    Against that background, how can it be justifiable to demand that the taxpayer should foot the bill? That was the main reason given by the right hon. Member for Stockton (Mr. Rodgers) for the SDP's vote in support of the Opposition. Employees in other industries, in both the public and private sectors, have to live with the consequences of their actions and the actions of their fellow employees. Inevitably, that applies to British Rail. If one group of workers insists on damaging the prospects of the industry, fellow workers cannot hope to escape unscathed.
    I am sorry that I cannot refer to all the points that have been raised in the debate but, in the words of the Government amendment to the motion, I ask the House to support
    68
    "the efforts to achieve increased productivity on the railways",
    to welcome the
    "support the Government provides for the system",
    to deplore
    "the threat of strike action which will undermine the railway's future",
    and to call on the trade unions
    "to recognise the vital need for modern work practices".
    Referring again to Lord McCarthy's report, that is the only way in which British Rail will remove what he referred to as
    "the shadow of a bleak and unpromising future"
    which now hangs over it.
    The BRB is clear about what has to be done. We in this House must support its efforts to create a modern, efficient and competitive system. I urge the House to reject the motion and to support the amendment.
    Question put, That the original words stand part of the Question:—
    The House divided: Ayes 238, Noes 288.

    Division No. 229]

    [7 pm

    AYES

    Abse, Leo

    Dubs, Alfred

    Adams, Allen

    Duffy, A. E. P.

    Allaun, Frank

    Dunn, James A.

    Alton, David

    Dunnett, Jack

    Anderson, Donald

    Dunwoody, Hon Mrs G.

    Archer, Rt Hon Peter

    Eadie, Alex

    Ashton, Joe

    Eastham, Ken

    Atkinson, N. (H'gey,)

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

    Bagier, Gordon AT.

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

    Barnett, Guy (Greenwich)

    Ellis, Tom (Wrexham)

    Barnett, Rt Hon Joel (H'wd)

    English, Michael

    Beith, A. J.

    Ennals, Rt Hon David

    Benn, Rt Hon Tony

    Evans, Ioan (Aberdare)

    Bidwell, Sydney

    Evans, John (Newton)

    Booth, Rt Hon Albert

    Ewing, Harry

    Boothroyd, Miss Betty

    Faulds, Andrew

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

    Field, Frank

    Bray, Dr Jeremy

    Flannery, Martin

    Brocklebank-Fowler, C.

    Fletcher, Ted (Darlington)

    Brown, Ronald W. (H'ckn'y S)

    Foot, Rt Hon Michael

    Brown, Ron (E'burgh, Leith)

    Ford, Ben

    Callaghan, Rt Hon J.

    Forrester, John

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

    Foster, Derek

    Campbell, Ian

    Foulkes, George

    Canavan, Dennis

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

    Cant, R. B.

    Garrett, John (Norwich S)

    Carmichael, Neil

    George, Bruce

    Carter-Jones, Lewis

    Gilbert, Rt Hon Dr John

    Cartwright, John

    Ginsburg, David

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

    Golding, John

    Cohen, Stanley

    Gourlay, Harry

    Concannon, Rt Hon J. D.

    Graham, Ted

    Conlan, Bernard

    Grant, John (Islington C)

    Cook, Robin F.

    Hamilton, James (Bothwell)

    Cowans, Harry

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

    Cox, T. (W'dsw'th, Toot'g)

    Hardy, Peter

    Craigen, J. M. (G'gow, M'hill)

    Harrison, Rt Hon Walter

    Crowther, Stan

    Hart, Rt Hon Dame Judith

    Cryer, Bob

    Hattersley, Rt Hon Roy

    Cunliffe, Lawrence

    Healey, Rt Hon Denis

    Cunningham, G.(Islington S)

    Heffer, Eric S.

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

    Hogg, N. (EDunb't'nshire)

    Dalyell, Tam

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

    Davidson, Arthur

    Home Robertson, John

    Davies, Rt Hon Denzil (L'lli)

    Hooley, Frank

    Davis, Clinton (Hackney C)

    Horam, John

    Davis, Terry (B'ham, Stechf'd)

    Howell, Rt Hon D.

    Deakins, Eric

    Hoyle, Douglas

    Dean, Joseph (Leeds West)

    Huckfield, Les

    Dewar, Donald

    Hughes, Mark (Durham)

    Dixon, Donald

    Hughes, Robert (Aberdeen N)

    Dobson, Frank

    Hughes, Roy (Newport)

    Dormand, Jack

    Janner, HonGreville

    Douglas, Dick

    Jay, Rt Hon Douglas

    69

    John, Brynmor

    Race, Reg

    Johnson, James (Hull West)

    Radice, Giles

    Johnson, Walter (Derby S)

    Rees, Rt Hon M (Leeds S)

    Jones, Rt Hon Alec (Rh'dda)

    Richardson, Jo

    Jones, Barry (East Flint)

    Roberts, Albert (Normanton)

    Kaufman, Rt Hon Gerald

    Roberts, Allan (Bootle)

    Kerr, Russell

    Roberts, Ernest (Hackney N)

    Kilroy-Silk, Robert

    Robertson, George

    Lamborn, Harry

    Rodgers, Rt Hon William

    Lamond, James

    Rooker, J. W.

    Leadbitter, Ted

    Ross, Ernest (Dundee West)

    Leighton, Ronald

    Rowlands, Ted

    Lewis, Arthur (N'ham NW)

    Ryman, John

    Lewis, Ron (Carlisle)

    Sandelson, Neville

    Litherland, Robert

    Sever, John

    Lofthouse, Geoffrey

    Sheerman, Barry

    Lyon, Alexander (York)

    Sheldon, Rt Hon R.

    Lyons, Edward (Bradf'dW)

    Shore, Rt Hon Peter

    McCartney, Hugh

    Short, Mrs Renée

    McDonald, Dr Oonagh

    Silkin, Rt Hon J. (Deptford)

    McElhone, Frank

    Silkin, Rt Hon S. C. (Dulwich)

    McGuire, Michael (Ince)

    Silverman, julius

    McKay, Allen (Penistone)

    Skinner, Dennis

    McKelvey, William

    Snape, Peter

    MacKenzie, Rt Hon Gregor

    Soley, Clive

    McMahon, Andrew

    Spearing, Nigel

    McNally, Thomas

    Spriggs, Leslie

    McNamara, Kevin

    Stallard, A.W.

    McTaggart, Robert

    Stewart, Rt Hon D. (W Isles)

    McWilliam, John

    Stoddart, David

    Magee, Bryan

    Stott, Roger

    Marshall, D (G'gow S'ton)

    Strang, Gavin

    Marshall, Dr Edmund (Goole)

    Straw, Jack

    Marshall, Jim (Leicester S)

    Summerskill, Hon Dr Shirley

    Martin, M (G'gow S'burn)

    Taylor, Mrs Ann (Bolton W)

    Mason, Rt Hon Roy

    Thomas, Dr R.(Carmarthen)

    Maxton, John

    Thorne, Stan (Preston South)

    Maynard, Miss Joan

    Tilley, John

    Meacher, Michael

    Tinn, James

    Mellish, Rt Hon Robert

    Varley, Rt Hon Eric G.

    Mikardo, Ian

    Wainwright, E. (Dearne V)

    Mlllan, Rt Hon Bruce

    Wainwright, R.(Colne V)

    Miller, Dr M. S. (E Kilbride)

    Walker, Rt Hon H.(D'caster)

    Mitchell, Austin (Grimsby)

    Watkins, David

    Mitchell, R.C. (Soton Itchen)

    Weetch, Ken

    Morris, Rt Hon A. (W'shawe)

    Wellbeloved, James

    Morris, Rt Hon C. (O'shaw)

    Welsh, Michael

    Morris, Rt Hon J. (Aberavon)

    White, Frank R.

    Moyle, Rt Hon Roland

    White, J. (G'gow Pollok)

    Mulley, Rt Hon Frederick

    Whitehead, Phillip

    Oakes, Rt Hon Gordon

    Whitlock, William

    Ogden, Eric

    Wigley, Dafydd

    O'Halloran, Michael

    Willey, Rt Hon Frederick

    O'Neill, Martin

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

    Orme, Rt Hon Stanley

    Williams, Rt Hon Mrs (Crosby)

    Owen, Rt Hon Dr David

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

    Palmer, Arthur

    Wilson, William (C'try SE)

    Park, George

    Winnick, David

    Parker, John

    Woodall, Alec

    Parry, Robert

    Woolmer, Kenneth

    Pavitt, Laurie

    Wrigglesworth, Ian

    Pendry, Tom

    Wright, Sheila

    Penhaligon, David

    Young, David (Bolton E)

    Pitt, William Henry

    Powell, Raymond (Ogmore)

    Tellers for the Ayes:

    Prescott, John

    Mr. George Morton and

    Price, C. (Lewisham W)

    Mr. Frank Haynes.

    NOES

    Aitken, Jonathan

    Banks, Robert

    Alison, Rt Hon Michael

    Beaumont-Dark, Anthony

    Amery, Rt Hon Julian

    Bendall, Vivian

    Ancram, Michael

    Benyon, Thomas (A'don)

    Arnold, Tom

    Benyon, W. (Buckingham)

    Aspinwall, Jack

    Best, Keith

    Atkins, Rt Hon H.(S'thorne)

    Biffen, Rt Hon John

    Atkins, Robert (Preston N)

    Biggs-Davison, Sir John

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

    Blackburn, John

    Baker, Kenneth (St. M'bone)

    Blaker, Peter

    Baker, Nicholas (N Dorset)

    Bonsor, Sir Nicholas

    70

    Boscawen, Hon Robert

    Haselhurst, Alan

    Bottomley, Peter (W'wich W)

    Hastings, Stephen

    Bowden, Andrew

    Havers, Rt Hon Sir Michael

    Boyson, Dr Rhodes

    Hawkins, Sir Paul

    Braine, Sir Bernard

    Hawksley, Warren

    Bright, Graham

    Hayhoe, Barney

    Brinton, Tim

    Heddle, John

    Brittan, Rt. Hon. Leon

    Henderson, Barry

    Brooke, Hon Peter

    Heseltine, Rt Hon Michael

    Brown, Michael (Brigg & Sc'n)

    Higgins, Rt Hon Terence L.

    Browne, Jonn (Winchester)

    Hill, James

    Bruce-Gardyne, John

    Hogg, Hon Douglas (Gr'th'm)

    Bryan, Sir Paul

    Holland, Philip (Carlton)

    Buchanan-Smith, Rt. Hon. A.

    Hooson, Tom

    Buck, Antony

    Hordern, Peter

    Budgen, Nick

    Howe, Rt Hon Sir Geoffrey

    Bulmer, Esmond

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

    Burden, Sir Frederick

    Howell, Ralph (N Norfolk)

    Butcher, John

    Hunt, David (Wirral)

    Cadbury, Jocelyn

    Hunt, John (Ravensbourne)

    Carlisle, John (Luton West)

    Hurd, Rt Hon Douglas

    Carlisle, Kenneth (Lincoln)

    Irvine, Bryant Godman

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

    Jenkin, Rt Hon Patrick

    Chalker, Mrs. Lynda

    Jessel, Toby

    Channon, Rt. Hon. Paul

    Jopling, Rt Hon Michael

    Chapman, Sydney

    Joseph, Rt Hon Sir Keith

    Churchill, W.S.

    Kaberry, Sir Donald

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

    Kellett-Bowman, Mrs Elaine

    Clark, Sir W. (Croydon S)

    Kershaw, Sir Anthony

    Clegg, Sir Walter

    Kimball, Sir Marcus

    Cockeram, Eric

    King, Rt Hon Tom

    Colvin, Michael

    Kitson, Sir Timothy

    Cope, John

    Knight, Mrs Jill

    Cormack, Patrick

    Knox, David

    Costain, Sir Albert

    Lamont, Norman

    Cranborne, Viscount

    Lang, Ian

    Critchley, Julian

    Langford-Holt, Sir John

    Crouch, David

    Latham, Michael

    Dickens, Geoffrey

    Lawrence, Ivan

    Dorrell, Stephen

    Lawson, Rt Hon Nigel

    Douglas-Hamilton, Lord J.

    Lee, John

    Dover, Denshore

    Lennox-Boyd, Hon Mark

    du Cann, Rt Hon Edward

    Lester, Jim (Beeston)

    Dunn, Robert (Dartford)

    Lewis, Kenneth (Rutland)

    Durant, Tony

    Lloyd, Ian (Havant & W'loo)

    Dykes, Hugh

    Lloyd, Peter (Fareham)

    Eden, Rt Hon Sir John

    Loveridge, John

    Eggar, Tim

    Luce, Richard

    Emery, Sir Peter

    Lyell, Nicholas

    Eyre, Reginald

    McCrindle, Robert

    Faith, Mrs Sheila

    Macfarlane, Neil

    Farr, John

    MacKay, John (Argyll)

    Finsberg, Geoffrey

    Macmillan, Rt Hon M.

    Fisher, Sir Nigel

    McNair-Wilson, M. (N'bury)

    Fletcher-Cooke, Sir Charles

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

    Fookes, Miss Janet

    McQuarrie, Albert

    Fox, Marcus

    Madel, David

    Fraser, Rt Hon Sir Hugh

    Major, John

    Fraser, Peter (South Angus)

    Marland, Paul

    Fry, Peter

    Marlow, Antony

    Gardiner, George (Reigate)

    Marshall, Michael (Arundel)

    Gardner, Edward (S Fylde)

    Marten, Rt Hon Neil

    Garel-Jones, Tristan

    Mates, Michael

    Glyn, Dr Alan

    Maude, Rt Hon Sir Angus

    Goodhart, Sir Philip

    Mawby, Ray

    Goodhew, Sir Victor

    Mawhinney, Dr Brian

    Goodlad, Alastair

    Maxwell-Hyslop, Robin

    Gorst, John

    Mayhew, Patrick

    Gow, Ian

    Mellor, David

    Grant, Anthony (Harrow C)

    Meyer, Sir Anthony

    Greenway Harry

    Miller, Hal (B'grove)

    Griffiths, E. (B'y St. Edm'ds)

    Mills, Iain (Meriden)

    Griffiths, Peter Portsm'th N)

    Mills, Sir Peter (West Devon)

    Grist, Ian

    Miscampbell, Norman

    Grylls, Michael

    Moate, Roger

    Gummer, John Selwyn

    Monro, Sir Hector

    Hamilton, Hon A.

    Montgomery, Fergus

    Hamilton, Micheal (Salisbury)

    Moore, John

    Hampson, Dr Keith

    Morgan, Geraint

    Hannam, John

    Morris, M. (N'hampton S)

    71

    Morrison, Hon C. (Devizes)

    Smith, Dudley

    Morrison, Hon P. (Chester)

    Smith, Tim (Beaconsfield)

    Mudd, David

    Speed, Keith

    Murphy, Christopher

    Speller, Tony

    Myles, David

    Spicer, Jim (West Dorset)

    Neale, Gerrard

    Spicer, Michael (S Worcs)

    Needham, Richard

    Sproat, Iain

    Nelson, Anthony

    Squire, Robin

    Newton, Tony

    Stainton, Keith

    Normanton, Tom

    Stanbrook, Ivor

    Nott, Rt Hon John

    Stanley, John

    Onslow, Cranley

    Steen, Anthony

    Oppenheim, Rt Hon Mrs S.

    Stevens, Martin

    Osborn, John

    Stokes, John

    Page, John (Harrow, West)

    Stradling Thomas, J.

    Page, Richard (SW Herts)

    Tapsell, Peter

    Parkinson, Rt Hon Cecil

    Taylor, Teddy (S'end E)

    Parris, Matthew

    Tebbit, Rt Hon Norman

    Patten, John (Oxford)

    Temple-Morris, Peter

    Pattie, Geoffrey

    Thomas, Rt Hon Peter

    Pawsey, James

    Thompson, Donald

    Percival, Sir Ian

    Thorne, Neil (Ilford South)

    Peyton, Rt Hon John

    Thornton, Malcolm

    Pink, R. Bonner

    Townend, John (Bridlington)

    Pollock, Alexander

    Townsend, Cyril D, (B'heath)

    Porter, Barry

    Trippier, David

    Prentice, Rt Hon Reg

    Trotter, Neville

    Price, Sir David (Eastleigh)

    van Straubenzee, Sir W.

    Proctor, K. Harvey

    Vaughan, Dr Gerard

    Pym, Rt Hon Francis

    Viggers, Peter

    Raison, Rt Hon Timothy

    Wakeham, John

    Rathbone, Tim

    Waldegrave, Hon William

    Rees, Peter (Dover and Deal)

    Walker, Rt Hon P. (W'cester)

    Rees-Davies, W. R.

    Walker, B. (Perth)

    Renton, Tim

    Wall, Sir Patrick

    Rhodes James, Robert

    Waller, Gary

    Rhys Williams, Sir Brandon

    Walters, Dennis

    Ridsdale, Sir Julian

    Ward, John

    Rifkind, Malcolm

    Warren, Kenneth

    Roberts, M. (Cardiff NW)

    Wells, Bowen

    Roberts, Wyn (Conway)

    Wells, John (Maidstone)

    Rossi, Hugh

    Wheeler, John

    Rost, Peter

    Whitney, Raymond

    Royle, Sir Anthony

    Wickenden, Keith

    Rumbold, Mrs A. C. R.

    Wiggin, Jerry

    Sainsbury, Hon Timothy

    Wilkinson, John

    St. John-Stevas, Rt Hon N.

    Williams, D. (Montgomery)

    Shaw, Giles (Pudsey)

    Winterton, Nicholas

    Shaw, Sir Michael (Scarb')

    Wolfson, Mark

    Shelton, William (Streatham)

    Young, Sir George (Acton)

    Shepherd, Richard

    Younger, Rt Hon George

    Shersby, Michael

    Silvester, Fred

    Tellers for the Noes:

    Sims, Roger

    Mr. Anthony Berry and

    Skeet, T. H. H.

    Mr. Carol Mather.

    Question accordingly negatived.
    Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
    MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
    Resolved,
    That this House supports the efforts to achieve increased productivity on the railways, welcomes the substantial support the Government provides for the system, deplores the threat of strike action which will undermine the railway's future and calls on the unions to recognise the vital need for modern work practices.

  Unemployment (Young Persons)
  7.13 pm
  Mr. Harry Ewing: I beg to move,
  That this House condemns Her Majesty's Government for pursuing economic and industrial policies which have resulted in a massive rise in unemployment, hardship and demoralisation among young people.
  I am sure that when the Secretary of State for Employment came to the House today to make his statement on his new proposals for youth training, he came—
  Mr. Speaker: Order. I am sorry to interrupt the hon. Gentleman. I should have announced that I have selected the amendment in the name of the Prime Minister.
  Mr. Ewing: I never cease to be surprised, Mr. Speaker.
  I am sure that the Secretary of State for Employment came with the impression that his statement would really take the feet from under the Opposition's case with regard to this Supply day debate. I am bound at the beginning of my remarks to disabuse the Secretary of State of any such notion. In fairness, the right hon. Gentleman made the most graceful about-turn that I have seen a Minister make since the Government came to office in May 1979. Indeed, so graceful was the right hon. Gentleman that I cannot understand why he does not do it more often. He is much better when he is making such graceful about-turns than when he is usually abusing right hon. and hon. Members.
  The debate is opportune because it gives us an added opportunity to examine in a little more detail the right hon. Gentleman's statement before we go on to examine in greater detail the problems of unemployment and the difficulties that it causes for young people throughout the United Kingdom.
  The Secretary of State made his statement against a background of pressure. However he dressed it up, he has yielded to the pressure by the TUC, the CBI and various other organisations. He attempted to display an air of flexibility when, in my view, The Guardian of Thursday 17 June—the statement was leaked to The Guardian last week—probably had a much more accurate account of the Secretary of State's approach to the subject. The Guardian article said:
  "Mr. Norman Tebbit, the Employment Secretary, has backed down on his controversial plan to deny supplementary benefit to 16-year-old school-leavers who refuse to take a place on the Government's new £1 billion training scheme. The decision has still to be ratified by the Cabinet"—
  we know that the decision has been ratified—
  "but the Government appears to accept that the rift it would cause among unions and employers is not worth the risk.
  Mr. Tebbit and other senior Ministers came to their decision after considering the views of the Manpower Services Commission, which told him that the CBI and the TUC were in favour of volunteerism and that to refuse supplementary benefit smacked of 'job conscription'.
  The likely outcome, therefore, is that the Government will announce that the scheme will be kept under constant review and that changes could be made in future. Mr. Tebbit's views will be made known to the MSC before the end of the month."
  The article goes on to describe much of the background to the Government's climb-down, making the point that the climb-down owes as much to the CBI's determination as to that of the TUC. From wherever the pressure comes, we are grateful that the Secretary of State has seen sense,

  73
  although I understand from The Guardian article that the statement he made today was made very much against his wishes.
  We are considering particularly the problems of unemployment among young people. Perhaps I may quote from the youth task group's report, published in April 1982. In paragraph 2.5 the report says:
  "From the point of view of young people the immediate employment and training prospects—and the choices these imply—are grim, without the major intervention of public policy. The shape of that policy will have to reflect their longer term needs."
  I have used that quote because it was abundantly clear from the Secretary of State's statement and his replies to the questions that followed that the new scheme would contain no Government money and that all the additional resources would be coming from the various employers taking part in the scheme. As the exchanges continued across the Floor of the House, the right hon. Gentleman was at pains repeatedly to say that he expected "those who had shaped the scheme to deliver the scheme". Even as early as this afternoon the right hon. Gentleman was laying the foundation for excuses should the scheme not succeed or should it be modified in the promised review in the summer of 1983.
  We are delighted that the decision on supplementary benefit has been reversed and that trainees will receive an increase. All participants in the scheme who are 17 years of age will receive an increase in September 1983. The right hon. Gentleman's original proposal was just over £14 a week, but it was announced this afternoon that that will be increased to £25 a week.
  The Secretary of State said that he regarded the scheme as very much a stepping-stone between full-time education and employment. I shall reiterate the argument advanced by my right hon. Friend the Member for Chesterfield (Mr. Varley) and the point made in the document produced by the youth task group. It is clear that, unless Government economic policies are changed, the scheme will rapidly become not a stepping-stone from full-time education to employment, but a stepping-stone from full-time education to unemployment.
  We are entitled to ask: what will happen at the end of the training period? I believe that one year is not long enough, but that is a matter for debate. The training period may be all right, but we are entitled to ask: what will happen when it comes to an end? The evidence of the past three years does not lead us with any great confidence to believe that those leaving the training scheme at the end of their year's foundation training will find their way into full-time employment. Indeed, the evidence is to the contrary. The register shows clearly that more and more young people are failing to find jobs and are unemployed for longer and longer periods.
  The House of Lords Select Committee on Unemployment published its report last week. It is interesting to note that total unemployment doubled between the date on which the Select Committee was set up and the publication of its report.
  There is an interesting passage in the Select Committee's report, based on the work of Mr. W. W. Daniel, a senior research fellow of the Policy Studies Institute. A table has been published dealing with 18 to 24-year-olds. Mr. Daniel talks about those entering the register, not about registered unemployment, which he regards as the unemployment stock. I suppose that is a
  74
  more accurate measure of the skills available. It appears that 18 to 24-year-olds represented 36 per cent. of all those unemployed who were entering the register at the time of the Daniel study. The evidence is that young people are now unemployed for longer and longer periods.
  It is clear, even on the Government's figures, that people are remaining unemployed for much longer periods. That is equally true of those in the younger age groups to whom I have referred. Table 3.8 on page 14 of the Select Committee's report shows that the number unemployed for between 26 and 52 weeks has increased. I shall take the base line of October 1979, because that accurately reflects the Government's tenure of office and the damage that the Government have done to the economy.
  From October 1979 to October 1981 those remaining unemployed for 26 to 52 weeks increased from 14.9 per cent. to 23·1 per cent. Those who were unemployed for 52 weeks or more remained fairly constant during that period. There was a slight increase from 26·1 per cent. to 26·3 per cent. It is natural that if people are unemployed for longer periods, the number of those who are unemployed for shorter periods will diminish. That is because everyone is unemployed for longer and there are fewer people to be unemployed for shorter periods.
  Every area of the United Kingdom is affected by the problem that the House is debating. Youth unemployment is devastating. At the 1981 Conservative Party conference—it may have been the conference before that—the right hon. Member for Sidcup (Mr. Heath), referring to education, said that the Government were writing off a complete generation. That charge can be laid at the Government's door in respect of youth unemployment. The Government are writing off successive generations of young people.
  The Government forecast that unemployment would increase by 300,000 in the financial year covered by the Budget and that it would continue at that level through 1984–85. There is no evidence from the Government that unemployment is about to fall. There may be reduced unemployment of 1,000 here or 1,000 there, but that does not add up to very much. The underlying trend is that unemployment will continue to increase. The scheme announced by the Secretary of State this afternoon covets only 16 to 17-year-olds.
  I return to my original question: what happens to young people when the initial year's training is over? All the evidence is that they will move from the training scheme to the unemployment register. There is a strong possibility that some of our young people who are about to leave school—there is another school leaving date as we approach the end of the summer term—will be unable to secure jobs during a large part of their working lives. That has been the experience of those who have left school during the past three or four years.
  I know that there are those who suspect my motives in opening the debate and who have mentioned to me in art offhand way that it has something to do with the by-election at Coatbridge and Airdrie. Far be it from me to disappoint hon. Members who want me to mention Coatbridge and Airdrie. I am always willing to oblige. I shall do so in a most devastating way. Hon. Members from both sides of the House have been canvassing in Coatbridge and Airdrie in recent weeks. It is soul-destroying to canvass in an industrial area such as

  75
  Coatbridge and Airdrie, where house after house is affected by the curse of unemployment among young people.
  I thank the Secretary of State for Employment for joining us in the debate. He is a great man of the people. I wish that he had taken his feelings into Coatbridge and Airdrie, knocked on some doors and heard the comments of some of the youngsters in that constituency about what he and his Government are doing to their future. Those comments are anything but complimentary.
  In Coatbridge and Airdrie there are 1,200 young unemployed and only five vacancies. There are 240 youngsters for every vacancy in Coatbridge and Airdrie. That is why on Thursday the verdict of the electors there will be devastating.
  Mr. Bill Walker: Be careful.
  Mr. Ewing: I do not need to be careful. I suggest that the hon. Gentleman dips deep in his pockets to help his colleague to pay his deposit. The result in Coatbridge and Airdrie will reflect the damage that has been done to those young people by the Government.
  Mr. Tony Marlow: That problem moves us all deeply, but if it is a problem that moves the Labour Party so deeply, why are there only 11 members of the Labour Party in the Chamber for this important debate? Is that another example of placid indignation from the Labour Party?
  Mr. Ewing: I knew that I should have had more sense than to give way to the hon. Gentleman. We always learn from our mistakes. That cheap ploy is not worth replying to. I shall not take up that issue. [Interruption.] Conservative Members seem to think that it is funny that there are 1,200 youngsters unemployed in Coatbridge and Airdrie. The laughter and hilarity on the Conservative Benches will be noted in Coatbridge and Airdrie. Unemployment is a serious subject. It deserves to be treated more seriously than it has been by the hon. Member for Northampton, North (Mr. Marlow).
  It is appropriate that I should say a few words about the Falkland Islands crisis, because I am one of the few hon. Members who have not commented on it so far. I have been much aware of the praise and adulation that have been heaped on our young men in the South Atlantic. That praise is much deserved. I join in the tribute. Those young men are now returning to this country. Many of them will leave the Armed Forces at the end of their contracts.
  The Minister of State, Department of Employment (Mr. Michael Alison): They may stay on.
  Mr. Ewing: Some may stay on, but what are those who decide not to stay on returning to? Are they returning to a land fit for heroes to live in or to a future of unemployment? If they knock at the Prime Minister's door, No. 10, they will get the usual platitude that she is trying to create real jobs and that only an upturn in the economy will provide them with permanent employment. Worse still, if they knock on the door of the Secretary of State for Employment, they will be told to get on their bikes and look for jobs. What are those young men
  76
  returning to? They are returning to the same future as that of every one of our young men and women—a bleak future.
  The Government's new training initiative was originally wholly unacceptable. I am glad that the Secretary of State for Employment made a statement today. That fits in well with the debate, which will give all my right hon. and hon. Friends a greater opportunity to examine the statement. I am glad that the Secretary of State has climbed down and agreed to amend his proposals. He has not only amended them, but introduced new proposals in the face of the opposition that was mounted by the Labour Party, the TUC and the CBI.
  When the Minister of State opens the debate for the Government, I should like him to answer a question that is posed in the statement:
  "We accept the need for large initial Government funding of the new scheme while youth unemployment is still high, but we intend before 1985 to review the future distribution of the training costs between employers and the Government. The MSC intends to undertake, in co-operation with the Government, a study of the funding of industrial training generally, which should help us decide the level of public funding in the longer term."
  In that paragraph there is a hidden threat and a great danger. By definition, anyone who is unemployed and over 18 is automatically on the adult register. There is a distinct possibility that if a 17-year-old leaves the initial training scheme and does not get a job, which is likely according to the evidence and economic reviews, he will move on to the adult register. The training scheme is bound to reduce youth unemployment figures, and in that process it will conceal the real problem of youngsters leaving the training scheme and moving directly to the register.
  There is a need for the Secretary of State to consider an additional scheme to take care of what will happen when the youngsters' training is finished. The scheme announced today will come about near to the general election. There is a possibility that the Government will go to the country and say "Look what we have done. All the youngsters are in training". They will not say what will happen when the youngsters come out of training. Therefore, the large initial Government funding should be amended to large continuous Government funding to deal with the problems of youth unemployment.
  I return to what I said when I moved the motion. The Government stand condemned on their economic and industrial policies. I have not dealt with the economy, because I wanted to concentrate on the problems of youth unemployment. All the indicators are that investment is down—there is no evidence of investment increasing—and that manufacturing production is continuing at a low level. It is only in the distributive and service sectors of the economy that there seems to be a slight improvement. There is an increase of about 2·6 per cent., but the decrease in the manufacturing sector more than takes account of that. There is no evidence that the future is bright for our youngsters. All the evidence is that the future is bleak.
  When the country is called on to decide the stewardship of the Government under the right hon. Lady—particularly the stewardship of the Secretary of State for Employment—the damage done to our young people will be reflected in the ballot boxes. Not only do I invite my right hon. and hon. Friends to join me in the Lobby, but I appeal to a wider audience. I ask our young people to join us in the fight to ensure that the Government are replaced

  77
  by those who will introduce economic policies to ensure that training will lead to jobs, not to further unemployment.
  7.40 pm
  The Minister of State, Department of Employment (Mr. Michael Alison): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
  "this House welcomes the introduction of a new youth training scheme as part of Her Majesty's Government's economic and industrial policies which are the only means by which the competitiveness of British industry will be restored and the right conditions created for increased growth and employment".
  The "Book of Proverbs" says:
  "The first to present his case seems right, till another conies forward and questions him".
  As the second speaker in this short debate propose to do more than question the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) who opened for the Opposition. I propose to rebut him categorically in his assertion, and that of the Opposition motion itself, that it is the Government's economic and industrial policies that have produced the present levels of unemployment. The reverse is the case. It is, above all, the past misdeeds of the last Labour Government that have produced the present levels of unemployment. It is they who opened up the gusher of unemployment, and it is to us that the much more difficult task of shutting it off has been left. [Interruption.] I can see from the way that the hon. Member for Ashfield (Mr. Haynes) reacts that that is the truth.
  I can make my point most simply by quoting one set of figures. This compares the increase in manufacturing industry unit labour costs in the United Kingdom over the five-year period 1975 to 1980 with the record of our principal overseas competitors. Incidentally, this period covers roughly the period in office of the last Labour Government—a period in office, moreover, that was marked by an unprecedented willingness on the part of that Government, coming to office in the aftermath of the 1974 miners' dispute, to accede to practically any request that the trade union movement put to it.
  It is against that background that we found that between 1975 and 1980 United Kingdom unit labour costs in manufacturing industry virtually doubled, while those of our major competitors increased by much less; Canada's by less than half, America's by about a third, Germany's by less than one-fifth and Japan's not at all. That dramatic decline in our competitiveness was the kind of preparation that the last Labour Government made for Britain when the nation came to face the Arctic economic environment ushered in by the tripling of oil prices in 1979.
  No wonder, with a decline in our competitiveness on that scale, that Britain's rate of unemployment rose at first much more rapidly than that of our main competitors. We were scarcely better prepared to meet the cold winds of world recession after 1979, compared, say, with Japan or Germany, than General Galtieri's Argentine conscripts were to match up to Britain in the South Atlantic. The responsibility for that lies squarely with the performance of the last Government.
  It cannot now seriously be argued that a return to the economic philosophy of the 1960s and 1970s—the basic Keynesian idea of spending one's way out of a recession—is a convincing alternative to the Government's policy. The hon. Member for Stirling,
  78
  Falkirk and Grangemouth did not have one alternative prescription. At least the right hon. Member for Chesterfield (Mr. Varley) in response to the statement this afternoon laid bare the Opposition's basic philosophy—a general economic reflation.
  In every Parliament since 1964, and before the present one, we have seen a general policy pursued on a virtually bipartisan basis of allowing inflation and Government expenditure to increase year by year in the hope that the inexorable rise in the average unemployment level would be reduced. It has not worked. Each Parliament that I have been in since 1964 has handed over to its successor a higher level of inflation and a higher level of unemployment than it inherited. It cannot be seriously argued that the growth in inflation year by year, Parliament by Parliament, in the 1960s and 1970s was caused by unemployment rather than the other way round—the inflation itself being the main cause of the unemployment. A large part of the cause of the inflation was the way in which Governments financed public expenditure, as well as the sheer scale of it.
  Mr. Bruce Millan: What about youth unemployment?
  Mr. Alison: I shall come to that. It is a special case of general unemployment.
  I come back to the only positive Opposition alternative, which the right hon. Member for Chesterfield, the Shadow Secretary of State, advanced—general economic reflation.
  Dr. Keith Hampson: Does my right hon. Friend recall that the French Government came to power, much heralded by Opposition Members, on the same programme, and unemployment in Frence has been reduced by only 100,000—at terrible cost? That policy now has to be reversed.
  Mr. Alison: My hon. Friend anticipates a point that I shall come to. That reinforces the fact that informed minds think alike.
  The policy of general economic expansion has been tried in the past and found profoundly wanting. Let us take the decade 1969 to 1979 up to the threshold of this Parliament. Total domestic expenditure increased by 308 per cent. at current prices but by only 23 per cent. at constant prices. Under 8 per cent. of the increased money demand unleashed on the economy in that decade resulted in an increase in output. Over 92 per cent. of the increased money demand went straight into prices. In the second half of the decade, with unemployment averaging nearly 6 per cent.—far from full employment, with plenty of scope for general expansionary measures to bring unemployment down—over 94 per cent. of the increased monetary expenditure was dissipated in inflation and not in an increase in output.
  The alternative policy canvassed by the official Opposition—a return to a programme of general economic expansion—is enough to fill the employed and unemployed alike with profound gloom tempered only with a realisation that the Labour Party is unlikely to have a real opportunity to put it into effect.
  An interesting project was conducted by The Times last year. It tested on the Treasury computer model of the economy a simulation of a £4 billion reflation package—£2 billion in tax cuts and £2 billion in increased public sector investment. The indication was that

  79
  unemployment would fall by only 130,000 and inflation would accelerate rapidly. That is the sequence of the old familiar poison. In persisting in adhering to policies of general economic expansion the Opposition simply show that they have forgotten nothing and learnt nothing.
  Mr. Derek Foster: The Minister makes great play of the Government's success, but it amounts to only a marginal reduction in the rate of inflation if one discounts the inflation that ensued in their first 18 months of office, largely as a result of increasing VAT. At what cost has that success been achieved? Unemployment has now more than doubled. It has increased far more rapidly here than in any other European country. The Minister is now trying to pin all the blame for that on the Labour Government.
  Mr. Alison: I am sorry that the hon. Gentleman has not followed the argument. The doubling of our unit labour costs as compared with Japan's not increasing at all lies behind the massive increase in unemployment. There is always a time lag. He asked whether I had something better to show than a decrease in inflation. I do and I shall come to it.
  The Opposition motion lays special emphasis on the hardship that is experienced by unemployed young people. I make no apology for having started with a general review of the background causes of the present high level of adult unemployment. If adults suffer from the economic recession, youngsters, who are necessarily less skilled and experienced—especially school leavers—will suffer more than proportionately. That is why it is as important, if not more important, for young people that we pursue the right strategy for the economy.
  There is little doubt that we are on the right course. Pay moderation and higher productivity mean that unit labour costs in manufacturing industry—the same yardstick that produced the disastrous figures to which I referred earlier—rose by less than 3 per cent. in the year to February 1982. That figure is below the rate of increase for many of our principal industrial competitors. Believe it or not, it is on a par with increases in Germany and Japan behind whom we lagged so far and so disastrously in the period 1975–80. That, coupled with the steady downward trend in inflation, has laid a solid foundation for economic recovery. Indeed, we look like being the first post-war Government that will leave to our successor—a Conservative successor, of course—a lower rate of inflation than we inherited.
  Mr. John Grant: What about the 3 million unemployed?
  Mr. Alison: There is always a gap between seed time and harvest—before the long-term reduction of unemployment that I am persuaded will occur begins.
  It is worth reminding the House of the beginnings of the improvement. The underlying rate of increase in unemployment has dropped markedly from 105,000 a month in the last quarter of 1980—the full lag effects of the outgoing Government—through 33,000 a month, to a dramatic decrease in the last quarter of last year, to 22,000 in the first five months of this year. The vacancies inflow averaged 164,000 a month from February to April this year as compared with 163,000 a month in November to
  80
  January and 155,000 a month in August to October last year. The stock of vacancies, seasonally adjusted in the three months March to May, averaged 109,000 as compared with 111,000 in the previous three months and 101,000 in the period September to November 1981. The trend is in the right direction. The gap between righting the damage done by the Labour Government's policies and the beginning of the long-term decline in unemployment that I am persuaded that we shall witness merits a special response. In that context, I shall now deal with the measures that we have introduced and are developing to help youngsters.
  Mr. Harry Ewing: I am grateful to the Minister for giving way. Is he suggesting that the Treasury forecast at the time of the Budget that was contained in papers connected with it is now wrong and that unemployment will not increase in line with it, or is unemployment still expected to rise in line with what the Chancellor said?
  Mr. Alison: The hon. Gentleman is familiar enough with jargon to know that the Treasury extrapolation is not a forecast. Since I came to the House in 1964, every Parliament has witnessed a steady increase in the rate of unemployment. I hope that I shall remain in the House as long again during which time we shall witness a long-term decline in the rate of unemployment as we have already seen with inflation.
  Mr. Bill Walker: Will my hon. Friend note that the long-term unemployed in my constituency have been unemployed for a very long time? In Blairgowrie, 20 per cent. are unemployed because the factory that employed them closed down when the Labour Government were in power. The Labour Party produced that problem, which it now pretends does not exist. Yet those long-term unemployed are a direct result of the policies of the Labour Administration.
  Mr. Alison: That is exactly my point. The root cause of our present difficulties lies in the appalling unit labour costs in manufacturing industry that occurred during the period of office of the Labour Government.
  Mr. Nigel Spearing rose—
  Mr. Alison: The hon. Gentleman is a respected parliamentary colleague. I shall try to give way to him later. I shall deal now with the positive steps that we are taking in the interim period of a relatively high level of unemployment.
  The Government have placed in the gap that exists before unemployment starts a long-term decline one of the most generously funded, imaginative and comprehensive schemes for school leavers ever known in Britain. Further details of the scheme, the roots of which admittedly lie in the steadily growing youth opportunities programme, were announced by my right hon. Friend the Secretary of State today. We have in prospect a programme for school leavers as historic and far-reaching as the great educational reforms of the nineteenth century.
  The new youth training scheme is best placed in perspective by the scale and growth of expenditure on special employment measures for youngsters. In 1979–80—our first year in office—about £125 million was spend on YOP. In the financial year 1981–82 that had been increased to about £400 million. In the current financial year, the estimated expenditure on young people through YOP will be more than £700 million. When the new youth

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  training scheme takes over in September 1983, we shall be committed to a programme costing nearly £1 billion in 1983–84 and £1,112 million in 1984–85. When the new scheme is fully operational in 1984–85, expenditure on training young people will have increased 17 times since 1978–79—the Opposition's last year in Government.
  That is a far higher rate of increase than the increase in youth unemployment, which has just about doubled between the last monthly count under the last Government—January 1979, when it was about 107,000—and the latest January count which is about 220,000. Bearing in mind the relatively much bigger effort that the present Government are making to tackle a problem that is not of their own making, one wonders what the Opposition were doing when they were in power and how they have had the effrontery to table the type of motion that is before us.
  Mrs. Elaine Kellett-Bowman: My right hon. Friend the Secretary of State said that the Government assumed substantial assistance for the youth training scheme from the European social fund. No doubt he is aware that that fund is heavily over-subscribed. What would happen if he did not receive the full amount of funding for which he asked? Would some training places have to be sacrificed?
  Mr. Alison: We would start by getting hold of Mr. Ivor Richard by the ear. I think that I had better not go further than that now.
  Mr. Spearing: I am grateful to the Minister for giving way. He practises what he preaches about people questioning. He talks about training. But training for what? Does he agree that the Government have placed no block on the export of capital and that since North Sea oil began to flow there has been an increase in import substitution for manufactured goods in this country? Does he agree that if the young people whom he is to train are to obtain effective employment we need more investment in manufacturing industry and therefore more jobs for them to take up?
  Mr. Alison: I agree that it is always to the advantage of Britain as a great trading country that every commodity that is tradeable internationally should be liberally exported and imported, as it pays off better in the end.
  Mr. John Grant: Will the Minister give way?
  Mr. Alison: No, I must get on.
  The net effect of our new scheme is nothing less than the removal of the threat of unemployment from all 16-year-old school leavers. Moreover, as our guarantee of a place on the training scheme will hold good for a year after a youngster has left school at the minimum permitted age, many will be 17 before the guarantee expires, so it is not only from 16-year-olds that the threat of unemployment is now effectively removed.
  Nor should any cynic complain—it is a pity that the hon. Member for Stirling, Falkirk and Grangemouth almost comes into that category—that the training scheme merely postpones the evil day of unemployment for youngsters. The most recent survey results show that of young people entering the youth opportunities programme in the autumn of 1980 about 47 per cent. obtained jobs on leaving—a very big increase—and a further 12 per cent. progressed to further education or training. An earlier survey showed that only 30 per cent. were getting jobs on
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  leaving, so the overall trend is sharply upward, and it can only be boosted and improved by the better quality and longer training programme now taking shape.
  Mr. John Grant: Will the Minister give way?
  Mr. Alison: No, I must finish my piece. The hon. Gentleman will have a chance to speak later.
  My right hon. Friend the Secretary of State described the new scheme as
  "an immense step forward towards setting standards and systems of training for our young people as good as those anywhere overseas."
  Those facts, together with the facts on expenditure that I have given, make the terms of the Opposition's motion appear as remote from reality as most of their policies, and I urge the House in due course absolutely to reject it.
  8.2 pm
  Mrs. Shirley Williams: The speech from the official Opposition was long on criticism but extremely short on constructive ideas. In that respect, I bear out what the Minister of State said. However, an increase in the number of unemployed under the age of 24 from 423,000 in April 1979 to more than 1,023,000 in April 1982 hardly deserves the complacency with which the Minister addressed the House. It is incumbent upon us to produce the most constructive ideas we can for what is little short of a tragedy for many young people.
  I begin, therefore, by welcoming the altered youth training scheme announced by the Secretary of State today and pay him due credit for being the first Minister of any Government to introduce a scheme to provide all unemployed 16-year-olds with what we hope will be effective training. It would be less than generous not to admit that the right hon. Gentleman has had more success with his Cabinet colleagues than I had with mine. Nevertheless, certain questions must be asked, and I ask them in all good faith.
  First, when will it be possible to embrace the interim recommendation in the task group's report of April 1982 that all 16-year-olds should be covered and not just those who have no jobs?
  Secondly, does the MSC's statement that there will be no support other than the youth training scheme for those in that age group mean that in the next few months we shall see a development from a one-year foundation scheme to becoming one module in a system of qualifications leading to skill certification? A factor that is missing both from the original task group report and from the Minister's statement is a statement of how far these young people, if they show motivation and ability, will be able to move on towards achieving craft and skill status. That is critical if the money is not to be partly wasted.
  Mr. Marlow: Is the right hon. Lady suggesting in her first question to my right hon. Friend that the scheme should eventually become compulsory for 16-year-olds not in further or higher education? Is she saying, in other words, that if a 16-year-old wants to get a job and can find one he should not be permitted to do so, but should be forced to go into a compulsory scheme?
  Mrs. Williams: No, that is not what I am suggesting. What I have suggested is implicit in the task group's report. It is that places should be made available to young people now in employment who wish to leave that employment to enter the scheme in order to improve their qualifications.

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  In the context of the necessity to progress towards the achievement of skills, the Government must be criticised for the massive decline in the proportion of young people undergoing skill training. The number of young people in apprenticeships has declined from 236,000 in 1968 to 80,000 this year, and the number undergoing other long-term training has fallen from 210,000 to 90,000 in the same period. The simple truth is that it is harder for young people to obtain effective skill training in Britain today than in almost any other advanced European country, when one considers Germany or France, which has come in for a certain amount of knocking in the debate, let alone the Scandinavian countries.
  Therefore, it is fair to ask the Minister to tell us today how the Government envisage the youth training scheme contributing to the great need for more skilled people in this country at a time when all the evidence shows that skill bottlenecks will stand in the way of any recovery at a very early stage.
  Mr. Richard Needham: Does the right hon. Lady agree that the number of apprenticeships has declined steadily since 1968 because the base for such training was narrowing as a result of other factors as well?
  Mrs. Williams: It is certanly fair to say that traditional apprenticeships were no longer appropriate to Britain's industrial and technological needs. My criticism is that the Government did not act quickly enough and adopt the suggestion for a multi-faceted approach to a four-year traineeship as proposed by the MSC in 1980 and repeated in 1981. It is not good enough simply to blame the Labour Government, because the Conservatives have not replaced the traditinal apprenticeships with anything better. [HON MEMBERS: "We have now."] I am not sure about that, just as I am not sure how far the new scheme will lead to recognised skills. Nothing in the Secretary of State's statement, welcome though it was, and nothing in the debate so far has answered my question about skill bottlenecks and recognised skill qualifications. It is legitimate to raise that issue in a debate on youth unemployment, as we know that there are vacancies for certain types of skilled people.
  Mr. Bill Walker: The right hon. Lady referred to other European countries. I believe that all of the countries that she cited, including the Scandinavian countries, have a substantial national service commitment, which would affect both the training programme and the number out of work.
  Mrs. Williams: With great respect, that is not my point. My point is that, outside Iberia, Britain is the only advanced industrial country in Europe where so few young people go on to apprenticeships or equivalent training. Moreover, the proportion has declined from 18 per cent. a decade ago to 12 per cent. today. That is bad news for Britain by any standard. I remember the statistics well.
  The youth task group's statement said of the Manpower Services Commission with regard to the youth opportunities programme that it was
  "Less successful in delivering quality than in delivering quantity."
  That cannot be denied. The quality of some of the courses under the youth opportunities programme are generally relatively poor. What steps are the Government taking,
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  because it is not clear from the final part of the task group's report, to ensure that the schemes now offered will actually comprise training at all?
  I fear that the right hon. Gentleman may be relying too much on blue chip companies, of which there are few in those areas such as Merseyside, parts of Scotland, or Northern Ireland, which are the most affected by unemployment. In my area, the North-West, youth unemployment has jumped from 70,000 to 160,000 in the past three years. Can the right hon. Gentleman be sure that, in areas where there are no blue chip companies capable of offering a high quality of training, the MSC—and its track record is not the best in this sphere—will be able to offer training of a reasonable standard to young people in the most deprived regions?
  I make a further suggestion. It is an arresting fact that in the Republic of Ireland—I do not use a rich country as my alternative example—there is one training officer for every 70 workers in manufacturing employment, yet in the debate on the industrial training boards we learnt that the carpet industry has one training officer for 70,000 employees.
  The ratio of training officers—
  The Under-Secretary of State for Employment (Mr. Peter Morrison)indicated dissent.
  Mrs. Williams: It is no good the Under-Secretary shaking his head. I have just completed a report on the Republic of Ireland and I know what I am talking about. The ratio of training officers to people at work is low in Britain. I am not clear from anything said by the Minister whether steps are being taken to recruit training officers and to establish effective standards for the scheme.
  The youth task group report states that local groups will be overseen by the Manpower Services Commission as far as the quality of training is concerned. But the task group has already said that the MSC does not have an outstanding record in this respect.
  Not unreasonably, the Minister said that we should put forward constructive suggestions. I therefore make the constructive suggestion that the Minister should consider the possibility of establishing a training monitoring group, or inspectorate, that would be able to establish models and then monitor the training to see whether those models were approached by the actual training. Although many hon. Members are busily nodding their heads, I have gone through the document very closely and there is no indication of such a group, other than the proposal for a professional group associated loosely with the supervisory task group, but that is something quite different.
  Mr. Peter Morrison: I am sure that the right hon. Lady does not want to mislead the House. She referred to the number of training officers in the carpet industry. She will be aware that carpet manufacturing companies have training officers of their own. They were not included in the figures that she gave. Therefore, perhaps the impression that she gave was not quite correct.
  Mrs. Williams: I did not want to mislead the House and I shall give a precise parallel. The body concerned with training in Ireland, which is the nearest parallel to the training boards, has a much higher ratio than ours, leaving out the industrial training officers in firms. It is a different ball game altogether. I shall put it bluntly. Much bad so-called training is occurring in British companies. Some of

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  it is under the youth opportunities programme, and so far we have heard nothing credible or convincing from the Government about the monitoring of the quality of the youth training scheme. I shall be delighted to hear an effective reply to that point, if one is forthcoming.
  I have two further questions, one of which was avoided by the Minister and relates to the dependence on the European social fund. Can the Government tell the House whether, if that money is not forthcoming, they will nevertheless proceed with the scheme without cutting it back?
  The other question relates to the issue that the Secretary of State dismissed with some contumely when making his statement. He was asked about education maintenance allowances. He said, dismissively, that hon. Members wanted to put forward proposals for fresh expenditure. However, he knows that in the youth task group's report reference is made to education maintenance allowances with the phrase:
  "We believe in the future, as we move to cover all those under 18 years of age, that this issue of educational maintenance allowances will need to be reviewed as anomalies become more apparent."
  I believe that those anomalies will become more apparent.
  The hon. Member for York (Mr. Lyon), in a question on the statement this afternoon, referred to £1 billion. He is utterly out of court in doing so. It is estimated that the present university and higher education student maintenance system costs £900 million. About 500,000 young people are covered by that. It is estimated that about one quarter of those who stay on at school—about 600,000—would gain from means-tested educational maintenance allowances. The figure is, therefore, about 150,000, and even if they were to get identical allowances to those proposed for the youth training scheme the amount would be more like £175 million or £200 million. There is no reason why the Government should not start in the areas of high unemployment, where the real danger is that young people will cease to stay at school or, more importantly, in technical colleges because of the attraction of the allowance that is being offered under the youth training scheme.
  I give the Government credit for being genuinely concerned about youth training, but do they really want to see young people who are capable of getting technical, engineering and possibly university qualifications drawn away from the schools and further education colleges because they cannot get one penny, however poor their parents may be, and are offered the chance of picking up £25 a week in what is called a youth training scheme? It is a serious proposition and the Secretary of State should not dismiss it so lightly. It is in nobody's interest that that proportion of able young people should leave school or college because they are attracted to getting money, possibly because they have a highly responsible attitude towards the family income. I hope that the Secretary of State and his colleagues will think about that aspect more deeply than they have done hitherto.
  Mr. Harry Greenway: The right hon. Lady will know that sixth form courses last more than a year. Is she suggesting that the educational maintenance allowance should last for two years for an A-level course or three years for an S-level course? What are the limits in what she suggests?
  Mrs. Williams: The figure of 600,000 is not a one-year figure. It is the figure for 16 to 18-year-olds after allowing
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  for the number who stay on after their sixteenth birthday to complete the term. It is a broad estimate, but it is a fair one for 16 to 18-year-olds. It is not a one-year estimate.
  I come now to the broader issues of youth employment. The official Opposition were fair in saying that a youth training scheme, however good, directed towards simply turning young people from one stage of unemployment to another could lead to intense disillusionment.
  The MSC's projections for youth unemployment are 57 per cent. of 16-year-olds and 48 per cent. of 17-year-olds in 1984. Those are terrifying figures. We should link those figures with the evidence in the House of Lords Select Committee report that those areas that suffered riots last spring all had youth unemployment levels exceeding 42 per cent. The evidence from Northern Ireland and from an earlier national stage in 1980 was that young people under the age of 19 coming before the courts were four time s as likely to be unemployed as young people generally.
  The graphs in the House of Lords report show at every stage an almost direct correlation between rising youth unemployment and rising crime figures for young people. Given those facts, how can the party of law and order, which it claims to be, treat youth unemployment quite as complacently as it has done so far in this debate? [Interruption.] I am sorry, but the Minister's remarks appeared to be singularly complacent, whatever the Secretary of State's earlier announcement may have been.
  The view that I have expressed is supported by people a long way from our shores who do not have the same unemployment problems as ours. They are neither SDP nor Labour supporters. The European Commission said in its report to the Council of Employment Ministers—[HON. MEMBERS: "Ivor Richard."] I do not mean Ivor Richard. I quote the remarks of Commissioner Orsini, who as far as I know is a Christian Democrat and not Labour or Social Democrat. He said that there were extreme dangers that the levels of unemployment among young people were becoming intolerable and that they presented threats to the whole basis upon which economic growth had occurred in the last 20 or 30 years. One simply cannot dismiss beliefs of that kind, which are now central to the Community's own programme for unemployment as quoted at the Versailles summit.
  The Government say that we are climbing out of our economic difficulties. The Chief Secretary to the Treasury chirruped last month that
  "evidence of economic recovery is all around us".
  The Secretary of State, who usually adopts a suitably grave mien for his job, broke into smiles a week ago to inform us of the economic upturn. The Chancellor of the Exchequer was almost chorusing with delight on "The World At One" about the way in which recovery was now so rapidly coming. We hear a lot of the dawn chorus, but rarely see the dawn.
  The simple truth is that industrial output is lower than it was in the last quarter of 1981; that manufacturing output has fallen below what it was in that quarter, which was affected by a severe winter; that unemployment, according to the Secretary of State, is likely to exceed 3 million in the next week; that inflation is not coming down but levelling out and may even be going up; that the productivity rise in 1980–81, of which the Government are so proud, merely offset the decline in productivity between 1979–80; and that public investment is 38 per cent. down

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  over the last three years, most markedly in areas such as housing investment, housing improvement and house repairs, which are major job sources.
  The House of Lords produced a unanimous report. It was one of the best reports by a Select Committee that we have seen in the Houses of Parliament for a very long time. It was a report to which Conservative, Liberal, Labour and SDP Members all subscribed. It showed that there is an alternative to the present level of unemployment among young people. It put forward a modest programme amounting to a net cost of about £2 billion a year. It was directed towards the labour-intensive areas of the economy.
  That programme was carefully costed and thought through and was supported by many bodies, including the Cambridge Econometrics Group, elements in the CBI industrial and construction group and others. It was not a partisan report. It should not be so easily dismissed by Conservative Members, because when making his statement this afternoon the Secretary of State asked why we should regard £.1½ billion as too much for fighting for the liberties of our fellow British subjects. One is bound to ask: why should we regard £1·9 billion as too much to recreate hope in our democratic institutions among our young people. That may well be the cost of beginning to establish the chance of an economic recovery and of offering hope to those who are currently unemployed.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Paul Dean): Order. This is a short debate, and the winding-up speeches are due to begin at about 9.30 pm. Many hon. Members wish to catch my eye, and fewer of them will be disappointed if speeches are brief.
  Mr. John Grant: On a point of order, Mr. Deputy Speaker. In view of the misleading remarks by the official Opposition about minority party attendance during the industrial training debate last week, would it be in order for an official Opposition spokesman to come to the Dispatch Box to apologise for the fact that during this debate there have never been more than three or four members of the official Opposition—
  Mr. Deputy Speaker: Order. The hon. Gentleman knows that that is a matter for argument and not for me.
  8.25 pm
  Dr. Keith Hampson: I hope that the right hon. Member for Crosby (Mrs. Williams) will take it in good part if I say that her speech was the best she has made since her return to the House. It contained much good sense.
  It is not always apparent, but it is none the less true, that youth unemployment is viewed by right hon. and hon. Members on both sides of the House as a personal tragedy and a great cost and waste of resources to the nation. It is apparent that the Government are as committed as any other to trying to do something about that personal and national tragedy. Indeed, as the right hon. Lady rightly said, when she went to the Labour Cabinet to seek very much smaller sums than my right hon. Friend has received from this Cabinet, she was scorned. The then Prime Minister and senior members weighed in against her, and she was defeated. Therefore, I should have thought that we had moved on from that.
  Mrs. Shirley Williams: Not totally defeated. We left behind an education maintenance allowance scheme, which I think the Government might well look at again.
  Dr. Hampson: That was a temporary scheme, which was not even fully devolved.
  My right hon. Friend the Minister of State said something with which we can all agree. He told the House that Britain had suffered from appalling unit costs. Our unit costs of production have got worse when compared with our competitors, and that must be at the root of our economic problem. There are, of course, other factors. We can argue about why there is this lack of competitiveness, but that must be accepted as one of our basic failings.
  The corollary is that, as one tries to bring down unit costs of production, there must be unemployment. We have been overmanned, whether in the large nationalised sectors, such as steel, or in many of our private companies, such as ICI and BP. They have found that they can shed labour to become more efficient. Therein lies the tragedy, because, at the same time as shedding overmanning, technology is marching on apace and many of the jobs do not require the same level of manpower. That applies not only to manufacturing but to the service sector, which used to be seen as the great mopping-up sector for many unskilled school leavers. This leaves our school leavers in a terrible plight.
  In apprenticeships, about which the right hon. Lady spoke, there is an even more chronic state of affairs. What a chronic and archaic system of apprenticeships we have had. No Government have been able to deal with the position satisfactorily, largely because the unions have had too vested an interest. The system of serving time marches on, rather than the provision of qualifications by merit.
  Unless a school leaver manages to obtain one of the diminishing band of apprenticeships at 16 he has not a cat in hell's chance of obtaining one later. Once a school leaver has missed an opportunity at the age of 16, he or she is in competition with an increasing number of fresh school leavers. If, as one hopes, the education service is improving, those later school leavers have better qualifications than those who missed the boat the first time round. That is the terrible, vicious circle with which we must contend.
  This is not just a problem of this Government. It is deep-rooted and long-standing and all Governments have ducked away from it. There are some crippling statistics which compare what happens to school leavers in Britain with school leavers in most of our major competitor countries. In Britain one in four school leavers obtains full-time vocational work or an apprenticeship after leaving school compared with two out of four in France, three out of four in Germany and three-and-a-third out of four in Japan. That says a great deal about why this country has had such a rotten economy for so long.
  We must not only grapple with the basic malaise of the British economy—high wage costs and overmanning—but grasp the nettle of the sort of courses and opportunities that we provide for our young people. My right hon. Friend the Minister of State mentioned the need to spend a large sum of money to set up employment schemes for an "interim" period. As I said to my right hon. Friend the Secretary of State earlier, I hope that we have moved beyond that stage. Previous Governments have introduced schemes—the

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  youth opportunities programme and its predecessor—that provided only a patching-up job in dealing with the problem of youth employment.
  The Government should be concerned not just with the tragedy of youth unemployment, but with the long-term prospects for the British economy. How do we reverse some of the crippling statistics that have been mentioned? How do we become more competitive? How do we improve the productivity of our companies? Those questions are related to the opportunities that we provide for our 16 to 18-year-olds in the form of an integrated balance of education and work experience. Work experience may be just as valuable as sitting in a classroom. In a sense, that is the answer to the question posed by the right hon. Member for Crosby. I do not worry too much about offering £25 to young people if it enables them to obtain constructive opportunities to acquire some skills, when the alternative is that they stick around schools where they are already alienated and where there is neither the provision nor the range of courses to stimulate them. We must aim for a scheme that will put pressure—
  Mr. Foster: Does the hon. Gentleman agree that young people who wish to stay on at school or to attend colleges of further education are not always deprived of courses that are relevant for them? The courses are there, but the pupils are not staying on at school for some other reason.
  Dr. Hampson: There is not much evidence of that. The British education system is improving, but it is academically centred towards university entrance. We have a public school influence. We have never had the technical tradition of the French and Germans. We have not gone as far as the Americans, who now have special vocational schools that attract pupils from many neighbourhoods and are much better equipped than our further education colleges. We have a long way to go before young people in education think positively about industry at an early stage and acquire the attitudes as much as the skills of industry.
  We need a two-pronged approach: first, to put pressure on industrialists and employers to give youngsters worth while experience—placements are a problem; obviously they cost companies a great deal—and, secondly, to find incentives for young people to learn industrial skills. Our school system in general, especially in Toxteth and other such areas, has not managed to "turn on" youngsters. Not only the Department of Industry but the Department of Education and Science must examine the matter carefully.
  The reality is that this Government are beginning that process. We have new vocational qualifications in education. The integrated scheme that was launched today will, as the right hon. Member for Crosby suggested, ensure that there will be opportunities to move from module to module under the new combined system to gain national qualifications that are recognised by employers. The qualifications will include experience in industry as well as academic work. At the same time, we have begun to find the means by which 16-year-olds can get off the scrap heap and do something constructive.
  The Secretary of State for Employment (Mr. Norman Tebbit): If my hon. Friend is saying that it is time that we did rather more for 16-year-old school leavers, of whom I was one once, rather than to
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  concentrate everything on pupils in the academic stream who have often learnt disciplines that have not helped the economy, I am inclined to agree with him.
  Dr. Hampson: That puts it in a nutshell. Let me add: people cannot be made to learn. We must develop an environment in our schools that turns them on. Many of the courses and much of the atmosphere in schools do not do that. Further education colleges often do it better. My right hon. Friend the Secretary of State for Education and Science must reconsider the notion of tertiary colleges, which usually have a better atmosphere for young people.
  What has been launched today is the beginning of what many hon. Members on all sides have called for in recent years—a proper comprehensive scheme for that age group. It is imaginative. If the Government show the will and the Prime Minister puts her personal determination behind it, as she did in the Falkland Islands crisis, the nation will respond, and it will be seen as a real breakthrough that no previous Government have managed to achieve.
  8.36 pm
  Mr. Derek Foster: I am pleased to follow two remarkable speeches by the right hon. Member for Crosby (Mrs. Williams) and the hon. Member for Ripon (Dr. Hampson). They contrast with an appallingly complacent speech by the Minister of State.
  It is a little off-putting that Government supporters seem to believe that the new Jerusalem has started today. They are the beneficiaries of the hard work that has been done by education and training agencies during the past five years since the publication of the Holland report. When that report was published, it was regarded as a great leap forward. It was, but Geoffrey Holland began to talk about a new transition from school to work and about a work-based education programme. That was in 1977, long before some hon. Members knew anything about the problem or showed any commitment. Indeed, the Secretary of State has only recently shown any commitment to the matter.
  Conservative Members pretend that it is a great beginning. What we are discussing today, welcome though it is, is only a marginal improvement in the youth opportunities programme until it is proved otherwise. Nothing has been said about the quality of training in the programme. Great claims have been made, but they have been made in every year since 1977. Many young people have yet to see the quality of training that all of us claimed for those programmes as they developed. We need to see evidence of the quality and the amount of effort that will be put into monitoring the schemes by the Manpower Services Commission and other agencies. The large companies have so far, together with Government agencies, shown no commitment to the youth opportunities programme, and until we see the colour of their money and the quality of the training that they are prepared to deliver we must judge this programme as a marginal improvement only on the youth opportunities programme.
  The new programme is twice as long and twice as costly, but let us examine the cost and how much the Government would have to spend if they did nothing except pay those young people supplementary benefit. I estimate that the sum involved would be about £700 million. Therefore, the Government's great boast that they are spending £1 billion on an education programme turns

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  out to be an improvement of only £300 million on doing nothing. The new Jerusalem will not be built with £300 million.
  We should approach the problem with great seriousness and be committed to eradicate the problem of youth unemployment which, at its present level, brands our society as immoral and uncivilised, but none of us can claim that we are doing all that can be done. We must reject the Government's great complacency in their post-Falklands euphoria. They approach every problem with an arrogant complacency, as though they were a great gift to the world.
  The problem for the Government is how many young people will find jobs after taking part in the programme. Will the numbers be an improvement on those achieved under the YOP? I have news for the Government. Young people will not minutely scrutinise the quality of training experience. They want to know whether they will get a job at the end of it. If they do not get a job, they will take the money, but reject the programme in the most cynical way. Having gained only marginal benefits, they will say "This is all that the no-hope, no-future society that the Tory Government have created is offering us." They will learn a bitter lesson from that.
  Mr. Peter Morrison: Can the hon. Gentleman explain why, according to the most recent estimates, more than 70 per cent. of those who have completed a YOP course are happy with the programme?
  Mr. Foster: When does the hon. Gentleman intend to do something about the 75 per cent. of young people in the Northern region who cannot get jobs after completing the programme? That is a more important question. What are you going to do about that?
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. The hon. Gentleman must not involve me in the debate.
  Mr. Foster: I apologise, Mr. Deputy Speaker. I wish to be constructive. I do not condemn the Government's initiative. Indeed, I welcome it, but they must not be allowed to get away with their complacency.
  Much more needs to be done. The rate of job placement must be dealt with and the quality of training must be scrutinised and monitored more efficiently. We must also move on to the integration of education and training, both nationally and locally.
  I am a little ambivalent about whether we should have a national education and training agency. There are constitutional difficulties involving the relationships between local government and national Government and between the MSC and local government, but it is clear that we must develop a coherent philosophy about education and training, particularly for the 16 to 19 age group, but also, in my view, for adults. That would go a long way to deal, at least temporarily, with the problem of long-term unemployment.
  We must also consider the problem identified by the right hon. Member for Crosby. We ought to encourage greater participation in sixth form and further education college courses.
  For many of our young people, particularly working class young people, the best thing that could happen is that
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  they should take conventional sixth form courses and go on to university, polytechnic or colleges of further education to take courses that already exist. That would be the most cost-effective and, in educational terms, the best solution to the problem. We have the lowest participation rate in higher and further education of any developed country. The Government are making the problem worse. They are preventing qualified students from going on to university and polytechnic courses. They must therefore look towards the development of sixth form colleges and tertiary colleges.
  There is not time to go into all these matters, but I should like to mention the problem of educational maintenance allowances. If the 16 to 19-year-old educational and training programme is a patchwork quilt of courses, it is also a patchwork quilt of levels of income support. We are heading for the most appalling anomalies in which there will be positive disincentives for young people to stay at school or to enter colleges of further education and to take what for them will be an inferior course of training. The Government must turn their mind seriously to this problem. Having agreed the allowance, they have the problem of what to do with those who stay at school and enter college.
  This brings me to the Labour Party programme, which I think is extremely progressive in this area.
  Dr. Hampson: We have never heard of it.
  Mr. Foster: Hon. Members may not perhaps have heard about it before, but they will hear much about it now. Young people are very much in favour of it. Those attending colleges of further education and those who know about the problem are also very much in favour of it. It represents the most comprehensive programme of education and training, including a comprehensive set of measures for income support, that many members of the Government do not even realise is a problem. I exclude the hon. Member for Ripon, who understands a great deal about these problems, and also the hon. Member for Beeston (Mr. Lester).
  The next problem to be wrestled with is long-term unemployment. This stands now at over 1 million. The figure has doubled over the past 12 months. That gives the lie to the idea that the cause of the problem lies at the door of the previous Labour Government. We want to know what action the Government intend to take. The community enterprise programme is a derisory response to the problem. What is required is a parallel programme to the youth training scheme for the long-term unemployed. There is need for education and training based upon work experience. Does the Under-Secretary of State not realise that at least 150,000, if not a quarter of a million, of the unemployed cannot read or write? That is a staggering figure. They are unemployable in today's world and in tomorrow's world.
  When will the Government say what they intend to do? We are spending and shovelling down the drain £15 billion funding unemployment. This is another opportunity to spend the money constructively and to introduce proper education and training programmes to give the flexibility, adaptability and mobility that the Government say they so much desire.
  8.49 pm
  Mr. Jim Lester: I hope to make a short speech following the pattern of the speeches made by the

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  right hon. Member for Crosby (Mrs. Williams) and by my hon. Friend the Member for Ripon (Dr. Hampson) and following some of the points made—in his "up" moments, rather than in his "down" moments—by the hon. Member for Bishop Auckland (Mr. Foster).
  The great thing about today is that there is now no doubt about the Government's intentions. I should have thought that all hon. Members would willingly support the youth training scheme, as amended by today's statement, as it represents a most exciting revolution and offers a new way in which to introduce our young people into the world of work so that they can begin to meet the challenge of the future. I am amazed that the Opposition should be so critical and that some of the speeches have been so narrow and needling. We all recognise that the seeds of the problem were planted long before May 1979. I am talking not about the economy but about those young people who have been affected by the bulge in the birth rate, by the fact that unskilled jobs have been vanishing at an enormous pace and by the fact that a further million unskilled jobs are likely to be lost in the next 10 years. The amount paid to young people entering work compared with the amount paid to married women has changed dramatically, thus changing the recruiting patterns of companies. All those trends were set well before May 1979.
  Whatever else people may criticise the Government for, they cannot criticise them for the way in which they have dealt with our young people. We supported the youth opportunities programme when the Labour Party introduced it and did so willingly. We expanded it and found the resources to meet the guarantee. We have shortened the guarantee and have done everything possible, despite the huge escalation in numbers. More people have been involved in mobilising the youth opportunities programme than were involved in the whole of the last war. That has been going on since 1978. It reflects great credit on those involved and on the Government, because they gave it top priority.
  The scheme was invented to deal with a minority of school leavers, so that they could be held usefully until the market took them up. Of course, it has been difficult to develop the scheme to deal with the present huge numbers of unemployed. What have the Government done? They have worked with the Manpower Services Commission and have produced a new and exciting scheme. No one is remotely complacent and no one wants successive generations of young men and women to be left without prospect or hope.
  In our delight with the youth training scheme and in our keenness to evangelise on its behalf we must not forget the youth opportunities programme. It is important to put over the message that we shall need the youth opportunities programme for the whole of next year. We need more sponsors and we need to be able to make a general and smooth transfer from the youth opportunities programme to the youth training scheme. In the needling, narrow criticisms of the fringes of the youth opportunities programme, it would be wrong to imply that we were against it or to imply that it was not performing—and did not still perform—a valuable service.
  I congratulate my right hon. Friend the Secretary of State and find him a pragmatic and reasonable man. It was suggested that he had climbed down from his previous commitments. However, a man's ability to listen to arguments and his willingness to change his mind should
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  be seen as climbing up. It shows the man's stature and does not diminish him in any way. I am delighted that my right hon. Friend the Secretary of State made that statement and that he willingly accepted the valuable work done by the youth task group, which was essentally based on his White Paper. That provided the foundation for the revolutionary change to a full year's foundation training for all 16-yearolds, beginning with the unemployed.
  The Government's commitment is now clear beyond peradventure. The Opposition try to portray the Secretary of State as "Tebbit the Terrible", but it would be much more helpful if they portrayed him, from today, as "Tebbit the Trainer". He has made a major and worthwhile step forward. The problems that could have arisen over the level of allowance and the removal of supplementary benefit are now out of the way. Therefore, the Government's commitment is proven. The Government are committed to a man and we should like to see the same enthusiasm from the Opposition, instead of their narrow needling. Through the task group, the MSC has shown its commitment. I particularly commend the members of the task group from the CBI and the TUC on their farsighted commitment. We hope that tomorrow, at the commission meeting, the whole scheme will be accepted. If they can do it, we ought to be able to do it in this House.
  I have already said that the youth opportunities programme has given valuable service, and many others have recognised the fact. We also recognised that we needed radical changes, for which some of us have been pressing for a long time.
  The right hon. Member for Crosby mentioned the commitment to training and asked how the youth training scheme was to be very much better than YOP. Some of the things for which we have been pressing are essentially to achieve that. We must recognise how much work now rests on the shoulders of the MSC and people of good will.
  The first thing that we wanted is on its way—linking the training services division with the special programmes divisions, so that there is a whole new training input. There will be many trainers involved there. Secondly, there is the whole concept of local area boards instead of district manpower committees, where there will be an involvement of people from training boards, presumably in the local areas. That commitment will increase the level of training.
  The amount of money in the scheme that is directly payable to employers for training is a big improvement on the YOP. The creation of a national standards board, which will be working to create the modules and the certification for sub-skills, where industrial training boards are not already doing it, is a major step forward.
  I should like to see an absolute pledge and commitment from the MSC and from the Secretary of State for Employment that the certification of skills and semi-skills will have a three-year drive, so that in three years' time the whole range of skills and modules will be certificated and integrated into the scheme. That is possible, because the construction industry training board is already committed to that.
  There is still a great deal to do, and we have to do a great deal in this House. The new concept of local boards and the concept of the managing agent, who will be responsible for ensuring the level of training and monitoring it, will take a great deal of persuasion to get off the ground.

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  I have already paid tribute to the top people of the CBI and TUC who have been involved with the MSC, but none of us should imagine that when we get out to the regions and to the individual factories there will not be considerable difficulties. Those of us who are committed to the concept of training and to the youth training scheme have a very valuable role to play in our local communities in ensuring that we mobilise all that is good in terms of leadership, wherever it comes from, in order to put over the scheme and get people to come forward with the places.
  Industry ought not to have any difficulty. Surely industry and commerce ought to recognise our place in the international training league. The right hon. Lady gave the figures. Surely they should recognise the real financial support that the Government are putting into the scheme. They ought also to have the moral commitment in their own local society to the next generation of young people on whom they will ultimately depend.
  The real message that should go out from the debate is not a narrow one but a broad one—that we in this House want to work together to remove any restrictions on the implementation of the youth training scheme. We desire to create a vehicle by 1983 which will perhaps be the first model. No one can pretend that it will be perfect, but I hope that with the good will, the commitment and the recognition of the place in our society of trained and motivated people, we shall create a better vehicle by 1987, and an even better one by 1990.
  I return to the salutary figures that my hon. Friend the Member for Ripon used. In Britain, one person in four receives vocational training, as compared with two in four in France, three in four in Germany, and 3⅓ in four in Japan. There is a recognisable pattern between training activity and jobs and the society that is created as a result of it. If the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) wants to do anything for Coatbridge and Airdrie, he must look at those figures in relation to his local community.
  Now that we have the route and the vehicle, I hope that we shall get the support and commitment of every hon. Member of this House.
  8.59 pm
  Mr. Frank Haynes: I am pleased that the Minister has returned to the Chamber. I listened carefully to what he said and I regret that it was the most complacent speech that I have heard since I came to the House.
  Youngsters cannot get work and I welcome any initiative for a youth training programme, provided that it will do the job—the job that everyone says that it will do. We have heard severe criticisms from the Conservative Benches of the contributions from the Opposition Benches. That attitude is also complacent, because they are trying to hide what is going on and why the Government are to have a training scheme of this type.
  Private industry has brought about this situation. One can visit any public industry and find that it has, and always has had, a first-class training programme. The mining industry has a training programme that is second to none, but it is having to take in so many young people from the dole queue that that is having a serious effect on
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  the programme. The public industries have done their job from way back, and continue to do it, but private industry has failed the nation in its approach to training for youth.
  There are a number of reasons for what has happened. In private industry, profits can be creamed off to fill a few people's pockets. The result is no investment in the industry itself and, at the same time, no investment in a proper training programme.—[Interruption.] Conservative Members laugh, but public industries have first-class training programmes whereas private industry has fallen down on its duty, and the Government are having to pick up the tab.
  In addition to creaming off profits, we must not forget the amount of money that private industry pours into the coffers of the Conservative Party. It happens every year, and it runs into millions of pounds. Money to provide incentives and the development of the process in private industry is being taken away. That must have a serious effect on training.
  When the right hon. Member for Crosby (Mrs. Williams) quoted some figures for youth unemployment I did not hear many comments from the Conservative Benches. There were no comments either on what she had to say about the future and the percentage of youngsters who will not get a job. The figures in the report from which she quoted prove the case, and the same is being said in Europe. There is a clear indication of where the real problem lies. It lies with jobs, and we return to jobs on every occasion.
  We have not heard from the Government Benches how we are to create jobs for the youngsters when they have been through the training programme. My hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) and other Opposition Members have asked where the jobs will come from for young people when they have been through the training programme. The jobs will not be there.
  The Minister made particular reference to unit costs. When I travel around the country and around my constituency, what do I find? I find that many firms have reduced unit costs and increased productivity, and that the Government have forced them to give low wage increases because of the wages policy. The result is that workers are still being laid off. Their jobs have gone, probably for ever.
  There are many who say that the situation now is similar to that of the 1930s. That is not true. In the 1930s there was a massive recession. When the workers left the dole queues and the soup kitchens at the end of that recession they were able to return to the factories to resume work. The picture in the 1980s under a Conservative Administration is very different. The factories have gone and the jobs have gone. There will be no jobs for the youngsters whom we are training for the future.
  The Minister has said that in future, under a Conservative Administration, unemployment will diminish. He should have said that the consequence of the Government's policy is that the number of jobs available to working people is declining. In his Budget Statement the Chancellor of the Exchequer told us that the unemployment figures were increasing and would continue to increase. That will happen unless the Government are prepared to change direction.
  On BBC television on Friday nights there is a short programme that tells us where jobs have been lost and where other jobs have been made available. The screen is

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  filled by a map of Britain and there are flashpoints to show where job losses have occurred. That is followed by one or two flashpoints on the same map to show where jobs have been created. More often than not the jobs that have recently become available are at supermarkets.
  The Government tell us that they are creating real jobs. Are the jobs in supermarkets real jobs? Jobs of that sort will not help the economy. They involve putting products on shelves for customers to buy. Will those jobs help the economy? We want real jobs in industry. If we create real jobs, we are creating jobs for our youngsters when they have finished their training programmes. I hope that the Government will take a fresh look at their programme for jobs. No one on the Conservative Benches has suggested how we shall produce more jobs and reduce the present wicked unemployment levels. As I have said, we are told by Ministers that unemployment will worsen.
  I do not have to remind Ministers and Conservative Members of their promises during the 1979 election campaign. There were huge hoardings througout the country, including in my constituency, telling us that Labour was not working and that the policies of the Labour Government were leading people to the dole queue. This Government have let down the workers, especially our young people.
  I visit the schools in my constituency to talk to the youngsters and the parents. Whenever I can, I seize the opportunity to talk to sixth formers. The Secretary of State for Education and Science has ruined many opportunities for sixth formers to go to colleges of further education or to university.
  I serve on an all-party group in the House. We are looking desperately at the question of adult education. However, there have been Government cuts not only in adult education but in university places. Some sixth form youngsters could go to university if the places were there. Many establishments train youngsters who go on to further education, for example teacher training colleges, yet the Government have cut the number of teachers, so the places are not there. Therefore, the youngsters cannot go in that direction.
  The training programme has not started. I hope that it will not be long before it starts. I hope, too, that it will give the youth of this country exactly what they want, in the interests of the nation. However, what about the youngsters who are waiting for that programme to start?
  The right hon. Member for Crosby was correct when she spoke of law and order. The Conservative Party is the party of law and order—the "hang 'em and bash 'em brigade." However, if we look at the court figures—[Interruption.] Conservative Members do not like that, because those are the facts. The figures for 17 to 19-year-olds in juvenile courts have almost doubled in the past three years, because those young people have nothing to do. They are on the street corners because they cannot get jobs. I hope that they will all be given the opportunity, because that is what the Conservative Front Bench has promised, to enter the training programme.
  I hope that the Government will keep to their word. We must think about what happens to young people when they have been trained. If the jobs are not there, the Government will have failed once again, as they have failed before.
  9.12 pm
  Mr. Peter Hordern: Even the hon. Member for Ashfield (Mr. Haynes), among some rude remarks about the Government, was flattering about the Government's youth training scheme. I join my hon. Friends who have spoken in congratulating my right hon. Friend the Secretary of State on producing the scheme.
  The scheme should have been produced, at least in some form or another, a long time ago. It concerns the vocational training of our young people. As my hon. Friends and the right hon. Member for Crosby (Mrs. Williams) said, our schemes for vocational training and further education for the young lag sadly behind those in other competitor countries. I cannot think but that that has had a profound effect on our manufacturing skills and ability to compete with other countries.
  But the hon. Member for Ashfield seemed to put his finger on the nub of the problem. Of course, we must consider what is to happen about jobs, as he said, after the training schemes have been implemented. It is about that fundamental position that I should like to address the House in a few short remarks.
  It is a serious state of affairs that nearly 18 per cent of the total number of our unemployed are under 20 and that the Manpower Services Commission expects that 25 per cent. of the unemployed by the end of the year will be under 25. There was a time last year when the proportion of the young unemployed to the total number of unemployed was falling. Some of us took comfort from that statistic in the sense that a large turnover of labour was taking place.
  Recently the number of young unemployed has been rising. I take it that that will continue, as the MSC has predicted. That is particularly serious in parts of the country where unemployment is at its highest. I refer in particular to Scotland and Wales, but especially to Northern Ireland. In Northern Ireland generally unemployment stands at 20 per cent., but in some towns and cities and for young people it is a great deal higher. The youth training scheme depends largely on major employers. Are the Government confident that the scheme will be fully effective in Northern Ireland, or must we find other measures to regenerate economic activity?
  I do not suggest that the Government are not doing a great deal about Northern Ireland. We spend £1,000 million more than otherwise would be spent in Northern Ireland, but the money is spent in a subjective way. It has to go through the Departments of Trade and Industry. We should consider special incentives for employment in the regions, and particularly in Northern Ireland.
  I was told in a written answer that if corporation tax were abolished in Northern Ireland for firms operating solely within the Province, it would cost £40 million, which is not a large sum. I do not understand why the Government do not try that. It is the most natural incentive to encourage people to form companies to trade and to do business. The youth training scheme is of the utmost importance, but it is not as important as creating the real jobs.
  Mrs. Shirley Williams: Has the hon. Gentleman considered the French scheme for allowing national insurance to be waived for the first year of a new employee?
  Mr. Hordern: All such schemes should be considered.

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  Foreign trade zones are available in many parts of the world, including the United States and at Shannon airport. If customs duties were abolished in Northern. Ireland, it would mean a loss of only £25 million. With all the Northern Ireland constitutional proposals before us, we should consider such schemes to regenerate employment.
  We are considering why unemployment among the young has risen so quickly. One reason is that the wages of the young have risen faster than those of their elders. The trend has markedly increased in the past 10 years. The second reason is that our vocational training record is poor. The right hon. Member for Crosby mentioned 1968. In that year we had 445,000 trainees and apprentices; in 1980 there were only 239,000. The right hon. Lady took some of the blame for the previous Administration, but not enough. Industry cannot afford to use its full capacity. Only 64 per cent. of approved training places are filled. If firms had the money, plenty of places exist. I hope that the youth training scheme will help.
  I am particularly encouraged by the success of the young workers scheme. About 70,000 people have been taken on. Perhaps the level at which the subsidy starts could be increased. The scheme offers genuine employment.
  As one cause of the problem is the rapid increase in wages for the young in recent years, we should consider the role of the wage councils. I should like to scrap them all. I cannot see their economic benefit, but I understand that there is a major difficulty, because we belong to the International Labour Organisation. We may not suffer mortally by leaving it.
  Germany, of all OECD countries, has the lowest ratio of youth-adult unemployment and its average wage for vocational trainees is 20 per cent. to 40 per cent. of initial wages. In Britain it is 70 per cent. Furthermore, until the scheme was suggested, our record on vocational training was the worst in the Community. In the late 1970s we had a smaller proportion of school leavers—24 per cent.—going on to vocational training or apprenticeships than any other EEC nation. Only 56 per cent. went on to further training or education in the United Kingdom; in Germany it was 90 per cent., and in Japan 94 per cent. As a result of superior training, in 1977 Germany produced twice as many qualified engineers and the output per employee was 50 per cent. higher. I cannot commend the new initiative highly enough, but we have a heavy responsibility to bear for the inadequate training of our young in past years.
  Some say that one difficulty with the Walters scheme is that firms will take young people on, but at the expense of the elderly. That is not a serious handicap. We should have a proper programme for early retirement for people unemployed for over a year. They should have that right. It would cost £130 million and it would be infinitely better than continuing the present scheme that simply allows such people to have supplementary benefit, which is equivalent to the old-age pension. We should abolish the earnings rule for pensions, as we are committed to do in our manifesto. I hope that my right hon. and hon. Friends will get round to that.
  There is a fundamental imbalance in the economy. It is no good throwing money at it. It has been tried too often and too much in the past and has failed, as we have all seen. I understand that the 35 councils that have shown
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  how much land they possess have shown that they own 22,000 acres that they do not at the moment propose to develop. Another 350 councils still have to report. There is, therefore, a vast quantity of development land lying untouched because it is in public ownership—either owned by local councils or nationalised industries.
  I understand that the Government have powers under the Housing Act 1980 to order local authorities and nationalised industries to dispose of such land. What are we waiting for? Why should we not order them to do so, so that the construction industry can be put to work? That would bring more young people into employment more quickly than any other single available action.
  Privatising the public sector, as with the example of British Telecom, is the most certain way of producing employment, especially for the young. The nation cannot afford to leave its assets lying waste. Whether they be owned by nationalised industries or local authorities, the assets must be unlocked and used for the sake of the nation. If they are not, the plight of the young unemployed will get worse. It is time for imaginative schemes. I wish that I thought that they would all be comprehended in the youth training scheme. Unless we take special measures to unlock assets in the public sector, we shall not achieve the improvement in the economy and the regeneration of employment that we so badly need.
  Several Hon. Members rose—
  Mr. Speaker: Order. I understand that the winding-up speeches are to begin at 9.30 pm.
  9.25 pm
  Mr. R. B. Cant: I have listened to the whole debate with great interest. I had not intended to speak, but one partner among the institutions involved—local government itself—has not so far been dealt with. I speak today as chairman of the education committee of one of the shire counties. The impact upon local government of the Government's action, particularly with regard to the training scheme, is traumatic.
  A matter of great interest educationally at local government level is the number of Government Departments involved. One would expect the Department of Education and Science to be involved, but there is also the Department of the Environment which, rather than the Treasury, deals with finance. With the introduction of computer technology in schools, the Department of Industry is now also involved. In these circumstances, it is difficult for local education committees to know what the Government's next move will be.
  I wish to make just two points in the short time available. First, the emergence of that massive institution, the Manpower Services Commission, and its operations at local education level is creating great strains not just at departmental level but also locally. In local education today, there is a great battle between education and training. I agree with my hon. Friend the Member for Bishop Auckland (Mr. Foster) that it would be very sad if the power and money of the MSC were such that too much emphasis were placed on training, important though that is, as against more conventional education.
  The situation is complicated, and not only by the cuts, which impose a terrible discipline because unemployment inevitably means that everyone wants to expand further education. The Department of Education and Science is

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  making further cuts. We understand that polytechnics are to be cut severely in the near future. At the same time, we are asked to increase the courses available.
  If colleges of further education and similar bodies find that the consequences of the new training scheme are such that they must use all their resources to carry out MSC work, serious problems will be created. Any young lad leaving school has three options. He can go through conventional education, but he has no money. If he cannot get a job, he can fall back on social security. Or he may be tempted, as many are, to participate in the new training initiative and the schemes associated with it. This is having a tremendous impact on the whole education pattern for 16 to 19-year-olds.
  Secondly, to what extent will the quality of training under the scheme be diminished because "Tebbit the Trainer", as he must now be called, has—for the best of reasons, I am sure—capitulated? The Department of Employment press notice on today's statement says:
  "The Government has been able to accept … a higher allowance without lowering training standards … because under the MSC's proposals … employers will share in the training costs."
  If the employers do not respond in a positive manner and if their contribution is not so great as the Government expect, most of the £1 billion will inevitably go towards paying the £1,300 per year training allowance. In that case, I believe, the training content of the scheme will be sacrificed.
  I am glad that the Secretary of State for Employment conceded those two important points. However, I should like an assurance that there will be no sacrifice in the quality of training and that the increase in the amount of money to be paid has not pre-empted too high a proportion of the £1 billion, particularly if the blue chip and other companies that are supposed to sponsor this scheme do not respond in a positive fashion to what the Government are trying to do.
  9.30 pm
  Mr. Barry Jones: I am glad to follow my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) because he is the chairman of one of Britain's largest education authorities. I am pleased that the Under-Secretary has heard his remarks. Of all the many questions that the Under-Secretary must answer tonight I hope that he will give a clear reply to my hon. Friend who sought guarantees earlier today regarding education and training for the 18-year-old educationally subnormal and 18-year-old disabled citizens.
  The Secretary of State received many congratulations this afternoon. He celebrated a defeat at the hands of the Manpower Services Commission, the Confederation of British Industry, the Trades Union Congress and the Opposition with a parliamentary performance of skill and considerable quick thinking. Tucked away behind his olive branch we saw the acceptable face of the right hon. Gentleman. We even saw a penitent when he explained the surrender of his policy as being for the benefit of school leavers. The Opposition would be churlish if they did not applaud the right hon. Gentleman's decisions. Nevertheless, his statement represents a major defeat for his preferred policy.
  As regards the frighteningly serious issue of youth unemployment, many in Britain recoil at the stench from this worst of all Conservative Governments' Augean
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  Stable. At the last count there were 125,000 unemployed school leavers. The youth opportunities programme, Britain's compassionate antidote, must cater for 630.000 entrants this year. Compassionate, though partly negative, it requires £730 million of funding.
  The battle to find work for school leavers takes place against a deeply distressing economic background. Over 2 million jobs have evaporated since May 1979. Like a neutron bomb, the Tory policy destroys the jobs but leaves the buildings standing. There are now 3 million jobless citizens, of whom 1 million have been jobless for more than a year. Moreover, we expect to hear tomorrow of an unemployment rate of 3·1 million. We fear a steady rise to at least 3·2 million, with perhaps another 1 million citizens not in work.
  The Northern region enjoys a sickening 16 per cent. rate of unemployment. Wales, the West Midlands and the North-West hover above 15 per cent. Never before in modern times have our boys and girls faced so bewildering and stressful a test in the search for work. Young blacks in the inner cities have been hard hit. Britain is a civilised society, but the disorders in Toxteth, Brixton and Bristol were the measurable protests of our young people. We are testing their patience, character and hopes to the point of destruction.
  One of my own constituency high schools exemplifies the problem. Out of a fifth form of 210 pupils, only 10 per cent. obtained some sort of a job, 50 per cent. found no work and went back to school and the remainder joined the YOP schemes and thereafter joined the dole queue.
  We should not forget the agony of those conscientious parents who desperately seek work for their children. In areas of high unemployment, the stress is now showing. The incidence of non-accidental, family violence, increased alcohol consumption and depression has increased greatly. Headmasters in my constituency have informed me of more than one youngster's suicide attempt.
  The Government have created a situation where it is obvious to senior students that good qualifications no longer lead to a good job. I quote the Secretary of State:
  "Let's get the facts straight. From September 1983 16-year-old school leavers won't be entitled to supplementary benefit in their own right. That is they will be just like other 16-year-olds at present who are in the sixth forms or colleges of further education. What they will be guaranteed, if they want it, is a good 12 month training scheme. They don't have to accept, it … But is there anyone here who thinks they should be paid by taxpayers—including their own mates in jobs—if they opt out?".
  That is what the right hon. Gentleman said in January. However, the sinner has repented. He has abandoned his unjust plan to end the entitlement of 16-year-old school leavers to supplementary benefit, and it appears that he has had second thoughts on the meanest of mean schemes because many of his younger, wet, colleagues warned him that they would not vote for such cynical plans for compulsion.
  How will the new training scheme help? With the best will in the world, even if the new training scheme in 1983–84 is a spanking success, its coverage will be less than the youth opportunities programme. There will be a sharp divide between large-scale resources for unemployed young people and little progress in training for employed young people. That could be highly damaging and could, for example, lead employers to decide not to

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  recruit any young person unless he or she has been through the new training scheme. On that basis, we could be identifying a lost generation.
  Like the hon. Member for Beeston (Mr. Lester), we argue that one of the most immediate concerns must be to keep an improved youth opportunities programmme alive. It has 15 months' life left. We do not want a drop in the provision for young men and women within the youth opportunities programme when it is most needed.
  The most vulnerable will be the 17 to 18-year-old grouping, particularly the 18-year-olds. What plans have the Government to assist that group? Nearly one in five of young people between 18 and 19 are out of work. Is it not the case that the 18 to 25-year-old unemployment grouping is growing steadily and alarmingly, and has now reached the same wretched figures as the 18 to 19-year-old group? What action are the Government prepared to take?
  It is incredible that the young workers' scheme that was mentioned by the hon. Member for Horsham and Crawley (Mr. Hordern) carries no insistence on training and therefore must be seen as inconsistent with the principles and objectives of the new training scheme. The scheme may be beloved of the backwoodsmen of industry and commerce but to us it represents a vital part of the strategy to cut the cost of youth labour. Happily, the MSC, with the backing of the TUC and the CBI, has implicitly criticised this unworthy and exploitative scheme. I refer to paragraph 7.20 of the task group's report. The commission has delivered a slap in the face to the Secretary of State. We assert that this shabby scheme is a disastrous £260 million mistake. The Government should dump it now and generously declare that the budget is to be reallocated either to the new training scheme or to the follow-up measures designed to assist trainees to obtain permanent employment.
  It was pusillanimous of the Secretary of State to have brought this unworthy scheme to the House in the first place. It appears that No. 10 has imposed a policy that is at odds with the honourable traditions of the Department of Employment and, we surmise, with its Civil Service. The young workers scheme is part of the Conservative Party's ideological vendetta against the wages councils and the principles of wage bargaining that they enshrine.
  The right hon. Member for Crosby (Mrs. Williams) mentioned apprenticeships. Our young men and women are entitled to such apprenticeships and it is certainly the hope of their parents that they get them. But last year Britain's employers took on only 10,000 engineering apprentices, which was the lowest figure since records began. Informed sources estimate that Britain requires 20,000 apprenticeships annually to meet our long-term needs and to avoid skill shortages when the economy revives.
  Last year, nearly 5,000 apprentices were made redundant. In Wales there has been a 48 per cent. decline in engineering apprenticeships and a 75 per cent. decline in the apprenticeships offered by the transport industry since 1979. Monetarism has damaged Britain's manufacturing industry more seriously than ever did Hitler's blitz. Now, incomprehensively, the Government are smashing the training boards that are the basis of our skills training and the likeliest mechanism for the successful delivery of
  104
  the new training scheme. The decline in apprenticeships is an especially severe blow to young women, who are greatly disadvantaged in the training industry.
  If the Under-Secretary of State could give us his time and attention rather than smirking idly on the Treasury Bench, as though he does not care about the massive problems of unemployment, we may get more answers to the many questions posed than we got from him last Monday night when, by common consent on the Opposition Benches, his replies were quite pathetic.
  Mr. Tim Renton: Will the hon. Gentleman give way?
  Mr. Barry Jones: I am about to complete my remarks.
  Unemployment, including youth unemployment on the titanic level that has been created by this Government, is a political and social time bomb. The problem cannot even be solved in the medium term until a Government directly sponsor billion pound public works and investment programmes. We remind the Government that President Roosevelt helped his unemployed citizens towards self-respect with such a programme. The British economy and our young unemployed citizens need a New Deal of the same proportions. We remind the Minister of State that the blind vandalism of Toxteth, Bristol and Brixton was a cry for such a new deal. The Opposition's alternative strategy would give hope to many of our unemployed youngsters.
  The striking truth is that, when put to the test in the Falklands battles, our young citizens rose to the challenge. Their mettle and character are not in doubt. The Government's economic strategy is in doubt, and in denouncing their policies we say that they are scarring the lives of an entire generation of young people.
  9.45 pm
  The Under-Secretary of State for Employment (Mr. Peter Morrison): We have heard from the Opposition that yet again they would throw billions of pounds at their problems. That would give much solace and happiness to our competitors, because we should again become an uncompetitive nation and our youngsters would have no chance of getting a job.
  My hon. Friend the Member for Beeston (Mr. Lester) started by saying that there was no doubt about the Government's intentions for training our youngsters. I entirely agree with my hon. Friend, who has played an important part in the Government's training strategy. He went on to say that the Government and the Manpower Services Commission had proposed an exciting challenge. He pointed out that my right hon. Friend's statement today was not, as the hon. Member for Flint, East (Mr. Jones) suggested, a climb down, but a climb up. My right hon. Friend is prepared to listen, as are all Conservative Members. That is apparently not the case with the Labour Party.
  Whether the Opposition's decision to debate youth unemployment today was a coincidence in terms of my right hon. Friend's statement on the youth training scheme, I did not know. However, I now realise, from what was said by the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) that it was no coincidence, but a deliberate decision in the light of the Coatbridge and Airdrie by-election, to which he referred at length. Although that seat should be one of the safest Labour seats in Scotland, I am amazed to see that the official Opposition

  105
  are running scared. Despite that, I noticed that no Scottish Labour Member came to support the hon. Gentleman. I also noticed that until about 9.25 pm only about nine Opposition Back-Bench Members had attended this debate on youth unemployment.
  The hon. Member for Stirling, Falkirk and Grangemouth understandably asked about the prospects of those on the youth opportunities programme and the future youth training scheme. As he is no doubt aware, the latest available figures—I accept that they are out of date—show that 47 per cent. of those who leave the youth opportunities programme will find a full-time job. About 70 per cent. of those in the YOP believe that it is a good scheme.
  I understand that it is the duty of the Opposition to oppose what the Government are doing, but I had always thought that it was sensible for the Opposition to put forward an alternative strategy. The Government are not complacent and the Opposition rightly pointed out that there is a big problem of youth unemployment, but I listened carefully to the Opposition spokesmen and they did not say what they would do about that problem.
  Real jobs will exist only in profitable companies. Profit may not be a word that comes easily to the lips of Labour Members, but it is an important word for real jobs. Profitable companies will exist only in a competitive economy, and that economy will exist only when we manufacture goods that we can sell on a competitive basis at home and abroad. I hope that the Opposition will eventually begin to understand that that is where real jobs come from.
  My right hon. Friend the Minister of State put the matter into perspective when he pointed out that the Government are reaping a harvest. The blame for the high level of unemployment, including youth unemployment, does not rest solely with the Opposition. It rests with their erstwhile hon. Friends in the SDP and it must be galling for the Opposition to find themselves being criticised by those who planted the seeds of what is amounting to Labour's destruction. The rising unit labour costs under the previous Government are the principal reason for the current high level of unemployment.
  Contrary to what some Labour Members may believe, this year's school leavers and their elder brothers and sisters understand that there is a rate for a job. If their pay is too high there will be no job but only the dole. It is as simple as that.
  Mrs. Shirley Williams: If it is as simple as that, can the hon. Gentleman explain why, in the United States, which has adopted monetarist policies, there has been a massive increase in unemployment, even though less than one-quarter of the labour force is organised in any way?
  Mr. Morrison: I was not talking about organised labour. I was pointing out that when the rate for a youngster's job is as high as it has become and the differential has been eroded, the likelihood that those youngsters will get jobs, particularly with proper training, is less.
  Mr. Barry Jones: Is the hon. Gentleman saying that if wage rates are cut there will be more jobs?
  Mr. Morrison: I am pointing out a straightforward economic fact of life. There is a level at which an employer is prepared to offer a job, but above which he is not prepared to do so. That is a straightforward
  106
  economic lesson which the Opposition should begin to understand. If they do not, they are doing the nation's youth a major disservice.
  I return to the point made by the right hon. Member for Crosby (Mrs. Williams). In France and West Germany the wage rates for apprentices are substantially lower. As the right hon. Lady pointed out in her interesting speech, the number of apprenticeships in those countries is substantially higher.
  Mention was made of the level of the allowance in the youth opportunities programme and the youth training programme. I can only say that the youth of this country voted with their feet. They joined the youth opportunities programme in droves. In the first two months of this year over 63,000 have joined. I should have thought that it goes without saying that they at least believe that the allowance is right.
  My hon. Friend the Member for Ripon (Dr. Hampson) drew attention to the apprenticeship part of the new training initiative. My hon. Friend, who knows the subject well, talked about breaking the mould and standards and not time-serving. As he will know, my right hon. Friend and I are particularly concerned that this aspect of the new training initiative should be highlighted as much as possible.
  Mr. Marlow: The excellent scheme that my hon. Friend described is about training for working life. Is there any possibility of its being extended to training generally for adult life? One way would be to have an embryonic scheme of national voluntary community service within the scheme. The right hon. Member for Crosby (Mrs. Williams) referred to the problems in some areas which will not be able to provide blue chip companies with blue chip schemes. Will my hon. Friend consider the possibility of bringing in such a scheme?
  Mr. Morrison: I know that my hon. Friend is particularly keen about that sort of scheme. As my right hon. Friend told him not long ago, community service can be embraced within the youth training scheme.
  I do not believe that there can be any question of any of my right hon. and hon. Friends being complacent about youth unemployment and employment. During our time in Government we have developed several schemes—the community industry scheme, the youth opportunities programme, which has been expanded enormously, and others. As my hon. Friend the Member for Beeston said, there is a great need for that programme to be continued over the next 12 to 18 months while the youth training programme is coming into existence.
  We are also supporting the apprenticeship scheme on a large basis, involving £50 million and more than 30,000 first-year apprentices. There is also the young workers scheme, which the hon. Member for Flint, East derided. I am amazed that the hon. Gentleman should deride the scheme. Over 60,000 youngsters are getting jobs under the scheme. If the hon. Gentleman believes it to be a bad scheme, I can only say that I believe it to be a very good scheme.
  The youth training scheme announced today is, I believe, a major step forward. The hon. Member for Stoke-on-Trent, Central (Mr. Cant), who is perhaps less biased than some Opposition Members, picked up the remark of my hon. Friend the Member for Beeston that my right hon. Friend should be known as "Tebbit the Trainer".

  107
  That is in my view the right way to look at the matter. It is first and foremost a proper training scheme. The whole of industry, that is to say the CBI, the TUC, the education establishments and indeed the voluntary organisations—I cannot stress enough that I believe that these organisations will have an important part of play—are behind the Government's proposals.
  The hon. Member for Bishop Auckland (Mr. Foster) appeared to deride or to belittle the scheme, although I noticed that when he got into deep water he seemed to retract. I think that that was a sensible course to adopt. When £1 billion worth of taxpayers' money a year is spent on these youngsters, it seems not entirely sensible for hon. Members to deride that amount of expenditure.
  The hon. Member for Stirling, Falkirk and Grangemouth said that my right hon. Friend the Secretary of State had done a graceful about turn. He said that there had been background pressure from the TUC. However, he should know that my right hon. Friend is a pragmatic and sensible man, and that is why we have introduced the scheme.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 247, Noes 294.

  Division No. 230]

  [10 pm

  AYES

  Abse, Leo

  Davis, Clinton (Hackney C)

  Adams, Allen

  Davis, Terry (B'ham, Stechf'd)

  Allaun, Frank

  Deakins, Eric

  Alton, David

  Dean, Joseph (Leeds West)

  Anderson, Donald

  Dewar, Donald

  Archer, Rt Hon Peter

  Dixon, Donald

  Ashton, Joe

  Dobson, Frank

  Atkinson, N. (H'gey,)

  Dormand, Jack

  Bagier, Gordon A.T.

  Douglas, Dick

  Barnett, Guy (Greenwich)

  Dubs, Alfred

  Barnett, Rt Hon Joel (H'wd)

  Duffy, A. E. P.

  Beith, A. J.

  Dunn, James A.

  Benn, Rt Hon Tony

  Dunnett, Jack

  Bidwell, Sydney

  Dunwoody, Hon Mrs G.

  Booth, Rt Hon Albert

  Eadie, Alex

  Boothroyd, Miss Betty

  Eastham, Ken

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

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

  Bray, Dr Jeremy

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

  Brocklebank-Fowler, C.

  Ellis, Tom (Wrexham)

  Brown, Ronald W. (H'ckn'y S)

  English, Michael

  Brown, Ron (E'burgh, Leith)

  Ennals, Rt Hon David

  Callaghan, Rt Hon J.

  Evans, loan (Aberdare)

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

  Evans, John (Newton)

  Campbell, Ian

  Ewing, Harry

  Canavan, Dennis

  Faulds, Andrew

  Cant, R. B.

  Field, Frank

  Carmichael, Neil

  Flannery, Martin

  Carter-Jones, Lewis

  Fletcher, Ted (Darlington)

  Cartwright, John

  Foot, Rt Hon Michael

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

  Ford, Ben

  Cohen, Stanley

  Forrester, John

  Concannon, Rt Hon J. D.

  Foster, Derek

  Conlan, Bernard

  FouIkes, George

  Cook, Robin F.

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

  Cowans, Harry

  Freeson, Rt Hon Reginald

  Cox, T. (W'dsw'th, Toot'g)

  Freud, Clement

  Craigen, J. M. (G'gow, M'hill)

  Garrett, John (Norwich S)

  Crawshaw, Richard

  Garrett, W. E. (Wallsend)

  Crowther, Stan

  George, Bruce

  Cryer, Bob

  Gilbert, Rt Hon Dr John

  Cunliffe, Lawrence

  Ginsburg, David

  Cunningham, G. (Islington S)

  Golding, John

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

  Gourlay, Harry

  Dalyell, Tam

  Graham, Ted

  Davidson, Arthur

  Grant, John (Islington C)

  Davies, Rt Hon Denzll (L'lli)

  Grimond, Rt Hon J.

  108

  Hamilton, James(Bofftwell)

  Palmer, Arthur

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

  Park, George

  Hardy, Peter

  Parker, John

  Harrison, Rt Hon Walter

  Parry, Robert

  Hart, Rt Hon Dame Judith

  Pavitt, Laurie

  Hattersley, Rt Hon Roy

  Pendry, Tom

  Haynes, Frank

  Penhaligon, David

  Healey, Rt Hon Denis

  Pitt, William Henry

  Heffer, Eric S.

  Powell, Raymond (Ogmore)

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

  Prescott, John

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

  Price, C. (Lewisham W)

  Home Robertson, John

  Race, Reg

  Hooley, Frank

  Radice, Giles

  Horam, John

  Rees, Rt Hon M (Leeds S)

  Howell, Rt Hon D.

  Richardson, Jo

  Hoyle, Douglas

  Roberts, Albert (Normanton)

  Huckfield, Les

  Roberts, Allan (Bootle)

  Hughes, Mark (Durham)

  Roberts, Ernest (Hackney N)

  Hughes, Robert (Aberdeen N)

  Robertson, George

  Hughes, Roy (Newport)

  Rodgers, Rt Hon William

  Janner, Hon Greville

  Rooker, J. W.

  Jay, Rt Hon Douglas

  Ross, Ernest (Dundee West)

  John, Brynmor

  Rowlands, Ted

  Johnson, James (Hull West)

  Ryman, John

  Johnson, Walter (Derby S)

  Sandelson, Neville

  Jones, Rt Hon Alec (Rh'dda)

  Sever, John

  Jones, Barry (East Flint)

  Sheerman, Barry

  Kaufman, Rt Hon Gerald

  Sheldon, Rt Hon R.

  Kerr, Russell

  Shore, Rt Hon Peter

  Kilfedder, James A.

  Short, Mrs Renée

  Kilroy-Silk, Robert

  Silkin, Rt Hon J.(Deptford)

  Lamborn, Harry

  Silkin, Rt Hon S. C. (Dulwich)

  Lamond, James

  Silverman, Julius

  Leadbitter, Ted

  Skinner, Dennis

  Leighton, Ronald

  Snape, Peter

  Lestor, Miss Joan

  Soley, Clive

  Lewis, Arthur (N'ham NW)

  Spearing, Nigel

  Lewis, Ron (Carlisle)

  Spriggs, Leslie

  Litherland, Robert

  Stallard, A.W.

  Lofthouse, Geoffrey

  Stewart, Rt Hon D. (W Isles)

  Lyon, Alexander (York)

  Stoddart, David

  Lyons, Edward (Bradf'd W)

  Stott, Roger

  McCartney, Hugh

  Strang, Gavin

  McDonald, Dr Oonagh

  Straw, Jack

  McElhone, Frank

  Summerskill, Hon Dr Shirley

  McGuire, Michael (Ince)

  Taylor, Mrs Ann (Bolton W)

  McKelvey, William

  Thomas, Jeffrey (Abertillery)

  MacKenzie, Rt Hon Gregor

  Thomas, Mike (Newcastle E)

  Maclennan, Robert

  Thomas, Dr R. (Carmarthen)

  McMahon, Andrew

  Thorne, Stan (Preston South)

  McNally, Thomas

  Tilley, John

  McNamara, Kevin

  Tinn, James

  McTaggart, Robert

  Varley, Rt Hon Eric G.

  McWilliam, John

  Wainwright, E. (Dearne V)

  Magee, Bryan

  Walker, Rt Hon H. (D'caster)

  Marshall, D (G'gow S'ton)

  Watkins, David

  Marshall, Dr Edmund (Goole)

  Weetch, Ken

  Marshall, Jim (Leicester S)

  Wellbeloved, James

  Martin, M (G'gow S'burn)

  Wells, Bowen

  Mason, Rt Hon Roy

  Welsh, Michael

  Maxton, John

  White, Frank R.

  Maynard, Miss Joan

  White, J. (G'gow Pollok)

  Meacher, Michael

  Whitehead, Phillip

  Mikardo, Ian

  Whitlock, William

  Millan, Rt Hon Bruce

  Wigley, Dafydd

  Miller, Dr M. S. (E Kilbride)

  Willey, Rt Hon Frederick

  Mitchell, Austin (Grimsby)

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

  Mitchell, R. C. (Soton Itchen)

  Williams, Rt Hon Mrs (Crosby)

  Morris, Rt Hon A. (O'shaw)

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

  Morris, Rt Hon C. (O'shaw)

  Wilson, William (C'try SE)

  Morris, Rt Hon J. (Aberavon)

  Winnick, David

  Moyle, Rt Hon Roland

  Woodall, Alec

  Mulley, Rt Hon Frederick

  Woolmer, Kenneth

  Oakes, Rt Hon Gordon

  Wrigglesworth, Ian

  Ogden, Eric

  Wright, Sheila

  O'Halloran, Michael

  Young, David (Bolton E)

  O'Neill, Martin

  Orme, Rt Hon Stanley

  Tellers for the Ayes:

  Owen, Rt Hon Dr David

  Mr. Allen McKay and

  Paisley, Rev Ian

  Mr. George Morton

  109

  NOES

  Aitken, Jonathan

  Faith, Mrs Sheila

  Alison, Rt Hon Michael

  Farr, John

  Amery, Rt Hon Julian

  Finsberg, Geoffrey

  Ancram, Michael

  Fisher, Sir Nigel

  Arnold, Tom

  Fletcher-Cooke, Sir Charles

  Aspinwall, Jack

  Fookes, Miss Janet

  Atkins, Rt Hon H. (S'thorne)

  Fowler, Rt Hon Norman

  Atkins, Robert (Preston N)

  Fox, Marcus

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

  Fraser, Peter (South Angus)

  Baker, Kenneth (St. M'bone)

  Fry, Peter

  Baker, Nicholas (N Dorset)

  Gardiner, George (Reigate)

  Banks, Robert

  Gardner, Edward (S Fylde)

  Beaumont-Dark, Anthony

  Garel-Jones, Tristan

  Bendall, Vivian

  Glyn, Dr Alan

  Benyon, Thomas (A'don)

  Goodhart, Sir Philip

  Benyon, W. (Buckingham)

  Goodhew, Sir Victor

  Best, Keith

  Goodlad, Alastair

  Bevan, David, Gilroy

  Gorst, John

  Biffen, Rt Hon John

  Gow, Ian

  Biggs-Davison, Sir John

  Grant, Anthony (Harrow C)

  Blackburn, John

  Greenway, Harry

  Blaker, Peter

  Griffiths, E.(B'y St. Edm'ds)

  Bonsor, Sir Nicholas

  Griffiths, Peter Portsm'th N)

  Boscawen, Hon Robert

  Grist, Ian

  Bottomley, Peter (W'wich W)

  Grylls, Michael

  Bowden, Andrew

  Gummer, John Selwyn

  Boyson, Dr Rhodes

  Hamilton, Hon A.

  Braine, Sir Bernard

  Hamilton, Michael (Salisbury)

  Bright, Graham

  Hampson, Dr Keith

  Brinton, Tim

  Hannam, John

  Brittan, Rt. Hon. Leon

  Haselhurst, Alan

  Brooke, Hon Peter

  Hastings, Stephen

  Brown, Michael (Brigg & Sc'n)

  Havers, Rt Hon Sir Michael

  Browne, John (Winchester)

  Hawkins, Sir Paul

  Bruce-Gardyne, John

  Hawksley, Warren

  Bryan, Sir Paul

  Hayhoe, Barney

  Buchanan-Smith, Rt. Hon. A.

  Heddle, John

  Buck, Antony

  Henderson, Barry

  Budgen, Nick

  Heseltine, Rt Hon Michael

  Bulmer, Esmond

  Hicks, Robert

  Burden, Sir Frederick

  Higgins, Rt Hon Terence L.

  Butcher, John

  Hill, James

  Butler, Hon Adam

  Hogg, Hon Douglas (Gr'th'm)

  Cadbury, Jocelyn

  Holland, Philip (Carlton)

  Carlisle, John (Luton West)

  Hooson, Tom

  Carlisle, Kenneth (Lincoln)

  Hordern, Peter

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

  Howe, Rt Hon Sir Geoffrey

  Chalker, Mrs. Lynda

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

  Channon, Rt. Hon. Paul

  Howell, Ralph (N Norfolk)

  Chapman, Sydney

  Hunt, David (Wirral)

  Churchill, W. S.

  Hunt, John (Ravensbourne)

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

  Hurd, Rt Hon Douglas

  Clark, Sir W. (Croydon S)

  Irvine, Bryant Godman

  Clarke, Kenneth (Rushcliffe)

  Irving, Charles (Cheltenham)

  Clegg, Sir Walter

  Jenkin, Rt Hon Patrick

  Cockeram, Eric

  Jessel, Toby

  Colvin, Michael

  Jopling, Rt Hon Michael

  Cope, John

  Joseph, Rt Hon Sir Keith

  Cormack, Patrick

  Kaberry, Sir Donald

  Costain, Sir Albert

  Kellett-Bowman, Mrs Elaine

  Cranborne, Viscount

  Kershaw, Sir Antnony

  Critchley, Julian

  Kimball, Sir Marcus

  Crouch, David

  King, Rt Hon Tom

  Dickens, Geoffrey

  Kitson, Sir Timothy

  Dorrell, Stephen

  Knight, Mrs Jill

  Douglas-Hamilton, Lord J.

  Knox, David

  Dover, Denshore

  Lamont, Norman

  du Cann, Rt Hon Edward

  Lang, Ian

  Dunn, Robert (Dartford)

  Langford-Holt, Sir John

  Durant, Tony

  Latham, Michael

  Dykes, Hugh

  Lawrence, Ivan

  Eden, Rt Hon Sir John

  Lawson, Rt Hon Nigel

  Eggar, Tim

  Lee, John

  Emery, Sir Peter

  Lennox-Boyd, Hon Mark

  Eyre, Reginald

  Lester, Jim(Beeston)

  Lewis, Kenneth (Rutland)

  Rhys Williams, Sir Brandon

  Lloyd, Ian (Havant & W'loo)

  Ridsdale, Sir Julian

  Lloyd, Peter(Fareham)

  Rifkind, Malcolm

  Loveridge, John

  Roberts, M. (Cardiff NW)

  Luce, Richard

  Roberts, Wyn (Conway)

  Lyell, Nicholas

  Rossi, Hugh

  McCrindle, Robert

  Rost, Peter

  Macfarlane, Neil

  Royle, Sir Anthony

  MacKay, John (Argyll)

  Rumbold, Mrs A. C. R.

  Macmillan, Rt Hon M.

  Sainsbury, Hon Timothy

  McNair-Wilson, M. (N'bury)

  St. John-Stevas, Rt Hon N.

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

  Scott, Nicholas

  McQuarrie, Albert

  Shaw, Giles (Pudsey)

  Madel, David

  Shaw, Sir Michael (Scarb')

  Major, John

  Shelton, William (Streatham)

  Marland, Paul

  Shepherd, Richard

  Marlow, Antony

  Silvester, Fred

  Marshall, Michael (Arundel)

  Sims, Roger

  Marten, Rt Hon Neil

  Skeet, T. H. H.

  Mates, Michael

  Smith, Dudley

  Maude, Rt Hon Sir Angus

  Smith, Tim (Beaconsfield)

  Mawby, Ray

  Speed, Keith

  Mawhinney, Dr Brian

  Speller, Tony

  Maxwell-Hyslop, Robin

  Spicer, Jim (West Dorset)

  Mayhew, Patrick

  Spicer, Michael (S Worcs)

  Mellor, David

  Sproat, Iain

  Meyer, Sir Anthony

  Squire, Robin

  Miller, Hal (B'grove)

  Stainton, Keith

  Mills, Iain (Meriden)

  Stanbrook, Ivor

  Mills, Sir Peter (West Devon)

  Stanley, John

  Miscampbell, Norman

  Steen, Anthony

  Moate, Roger

  Stevens, Martin

  Monro, Sir Hector

  Stokes, John

  Montgomery, Fergus

  Stradling Thomas, J.

  Moore, John

  Tapsell, Peter

  Morgan, Geraint

  Taylor, Teddy (S'end E)

  Morris, M. (N'hampton S)

  Tebbit, Rt Hon Norman

  Morrison, Hon C. (Devizes)

  Temple-Morris, Peter

  Morrison, Hon P. (Chester)

  Thomas, Rt Hon Peter

  Mudd, David

  Thompson, Donald

  Murphy, Christopher

  Thorne, Neil (Ilford South)

  Myles, David

  Thornton, Malcolm

  Neale, Gerrard

  Townend, John (Bridlington)

  Needham, Richard

  Townsend, Cyril D, (B'heath)

  Nelson, Anthony

  Trippier, David

  Newton, Tony

  Trotter, Neville

  Normanton, Tom

  van Straubenzee, Sir W.

  Nott, Rt Hon John

  Vaughan, Dr Gerard

  Onslow, Cranley

  Viggers, Peter

  Oppenheim, Rt Hon Mrs S.

  Wakeham, John

  Osborn, John

  Waldegrave, Hon William

  Page, John (Harrow, West)

  Walker, Rt Hon P.(W'cester)

  Page, Richard(SW Herts)

  Walker, B. (Perth)

  Parkinson, Rt Hon Cecil

  Wall, Sir Patrick

  Parris, Matthew

  Waller, Gary

  Patten, John (Oxford)

  Walters, Dennis

  Pattie, Geoffrey

  Ward, John

  Pawsey, James

  Warren, Kenneth

  Percival, Sir Ian

  Wells, Bowen

  Peyton, RtHon John

  Wells, John (Maidstone)

  Pink, R.Bonner

  Wheeler, John

  Pollock, Alexander

  Whitney, Raymond

  Porter, Barry

  Wickenden, Keith

  Prentice, Rt Hon Reg

  Wiggin, Jerry

  Price, Sir David (Eastleigh)

  Wilkinson, John

  Prior, Rt Hon James

  Williams, D.(Montgomery)

  Proctor, K. Harvey

  Winterton, Nicholas

  Pym, Rt Hon Francis

  Wolfson, Mark

  Raison, RtHonTimothy

  Young, Sir George (Acton)

  Rathbone, Tim

  Younger, Rt Hon George

  Rees, Peter (Dover and Deal)

  Rees-Davies, W. R.

  Tellers for the Noes:

  Renton, Tim

  Mr. Anthony Berry and

  Rhodes James, Robert

  Mr. Carol Mather.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments), and agreed to.
  MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  That this House welcomes the introduction of a new youth training scheme as part of Her Majesty's Government's economic and industrial policies which are the only means by which the competitiveness of British industry will be restored and the right conditions created for increased growth and employment.

  Royal Birth
  Mr. Speaker: The House is in such a good mood that we are bound to say that we rejoice with the Royal couple at the birth of a son. No doubt the House will have an opportunity to express its opinion at a later date.

  Northern Ireland Departments
  10.15 pm
  The Minister of State, Northern Ireland Office (Mr. Adam Butler): I beg to move,
  That the draft Departments (No. 2) (Northern Ireland) Order 1982, which was laid before this House on 20th May, be approved.
  Whatever the form of government in Northern Ireland, whether devolved or direct, it is clearly essential that its administration should be as efficient and effective as possible. Her Majesty's Government have always been convinced of their responsibilities in this respect. One method through which we concluded this should be pursued was the reorganisation of the Northern Ireland Departments. Therefore, this short, straightforward order seeks to reorganise those Departments most closely concerned with industrial and economic development, other than in agriculture, to enable us to tackle the stubborn problems of the Northern Ireland economy more effectively. It is, however, only one among a number of initiatives undertaken by the present Administration.
  The Departments (Northern Ireland) Order 1982, which came into operation on 1 April 1982, permitted the merging of the control functions of the Departments of Finance and the Civil Service into a new Department of Finance and Personnel, and the transference of certain administrative functions from those Departments to other Northern Ireland Departments. The next step was to create a new unified Department of Economic Development, amalgamating the present functions of the Departments of Commerce and Manpower Services, with one "arm"—the new industrial development board for Northern Ireland.
  For technical reasons, we have had to use two orders to achieve this step and reorganise these two Departments. Already, the Northern Ireland Committee has debated on two occasions the draft Industrial Development (Northern Ireland) Order, and in particular its proposals for the industrial development board. There will be an opportunity for the House to debate that order in the near future, together with relevant matters, such as the all-important guidelines.
  This order will make possible the bringing together of all the functions carried out at the moment by the Departments of Manpower Services and Commerce. Articles 3 and 4 are the relevant parts and, through the established legal method, permit this merger. As a result, responsibility for the direction of the Government's effort in various economic areas will be brought under one management structure. For instance, responsibility for the promotion of industrial development, for the Government's relationship with existing manufacturing industry and commerce, for tourism, the energy industries and mineral exploitation, for manpower questions, including industrial training, the employment and careers services and the new youth training programme will be brought under one management structure.
  My experience over the past 18 months as the Minister concerned with both the existing Departments has convinced me that this will permit a more effective use of resources and a better co-ordination of policies and will be in the best interests of most efficient administration.
  Within the new unified Department will be the executive of the new industrial development board,
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  headed by the chief executive and advised by the new board, with clear responsibilities for industrial development functions. Its distinct, commercial role, is essential, and in the new structure this has been ensured. The rest of the Department, directly under the permanent secretary, will be responsible for the remaining industrial and manpower functions, and for the development of economic and industrial development policies. Common personnel and financial services will be used by the whole Department. This will allow savings of at least 15 posts. Throughout this exercise there have been discussions with the staff representatives about the implications of changes, and their attitude has been constructive, as has the attitude and action of all the staff involved in the exercise.
  I conclude by stressing once again that reorganisation in itself will not solve the harsh economic problems of Northern Ireland. However, it is essential that, in meeting that challenge, we have the best possible institutions through which to work. The order will permit us to create such institutions. I commend the order to the House.
  10.20 pm
  Mr. Clive Soley: It is not new to us to be starting another debate on Northern Ireland at this time of night, but fortunately we shall finish a little earlier, which makes a change.
  The Labour Party has no objection to the order. It brings together two Departments into the Department of Economic Development. We hope that it will not be just a renaming of Departments but something more—a serious attempt to deal with the appalling crisis in the Northern Ireland economy, whether it is the collapsing economic base or the consequent unemployment.
  The explanatory document says of the order that
  "This new Department would allow a more effective organisation of the Government's involvement in industrial, commercial and manpower affairs."
  It is curious how the Government are much more willing to intervene in the economy of Northern Ireland than in the economy of the United Kingdom. The previous Secretary of State, the right hon. Member for Spelthorne (Mr. Atkins), said:
  "I have decided to establish as soon as possible a new unified department of economic development. This will be responsible for the direction of Government's efforts to promote industrial development; for Government's relationship with existing manufacturing industry and commerce, tourism, the energy industries and mineral exploration; and for manpower questions including industrial training, the employment and careers services and schemes for the underpinning of youth and other employment."
  I should like to think that the same emphasis could be given to intervention in the economy by the present Secretary of State for Industry in the rest of the United Kingdom. I cannot help feeling that the seriousness of the economic crisis in Northern Ireland is forcing the Government to give up their monetary policies in that part of the United Kingdom while they continue to experiment with them in England, Scotland and Wales.
  Output has continued to decline in almost all sectors of Northern Ireland industry. Where there has been a revival, the figures show that the most we can say is that we are bouncing along the bottom of the recession. There is no serious sign of the pick-up in the economy about which the Chancellor of the Exchequer constantly tells us. Ministers say inside and outside the House that the economy is beginning to revive. There is no sign of that in Northern Ireland and little sign of it in this country.

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  The need for Government intervention is great. I hope that the new Department of Economic Development will be used for that purpose. I note with trepidation that the Government have decided to close the small engineering firms investment scheme. The reasoning is incredible. Apparently, there have been so many applications that the amount of cash available has been too small. What a reason for closing an investment scheme. If we want small engineering companies or others to make a contribution to the economy, we should keep open that scheme. Why are we not including that—
  Mr. Speaker: Order. I must tell the hon. Gentleman that it will not be possible to have a wide discussion of the economy of Northern Ireland. The debate is solely on the desirability of the administrative changes that are proposed.
  Mr. Soley: You anticipated me, Mr. Speaker, by about five seconds. I was going to say that there was a strong case for keeping the investment scheme alive and putting it under the new Department that is referred to in the order. There is a case for including the investment scheme under that Department, otherwise we shall fear that this is yet another attempt to change names without changing functions.
  I hope that it will be possible for the new Department to join in the talks between the Northern Ireland Economic Council and the National Economic and Social Council, which met in Dublin recently. There is a strong case for recognising the complimentary and competitive areas of the two economies. The new Department of Economic Development should be able to incorporate such thinking in its management and its responses to the economic problems of Northern Ireland. I hope that it will not be just a change of name but a serious effort by the Government to have the necessary State intervention, which practically every political party in the Province—as well as the CBI—accepts as necessary if the economy is to be saved from total collapse. We welcome the order.
  10.24 pm
  Mr. J. Enoch Powell: Before I come to major matters, may I put two technical questions to the Minister of State? The first relates to article 1, which is the commencement of the order. In the explanatory document on the proposals for the order, which was circulated, it was expected that the date would be entered at the time of the laying of the order. I wonder why the specific date has not been included in the draft order before the House. The order which we shall take later and to which the Minister of State referred, the development order, commences on 1 September. I imagine that it is intended that this order should take effect on or before that date. It is difficult to see why at this stage it still has to be left to be appointed by the head of the Department. I wonder whether the Minister of State could say a word about that.
  The second technical point is the manner in which the amalgamation of the two Departments has been carried out. It has been carried out by renaming the Department of Manpower Services and dissolving the Department of Commerce. No doubt there are good technical reasons for that. Perhaps in due course the Minister of State will come to explain them. But it seems paradoxical, when one is
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  creating a new Department, which as to the greater part of its functions will correspond much more with the Department of Commerce than with the Department of Manpower Services, that it should be the Department of Commerce that is selected for the chop and the Department of Manpower Services for renaming. Perhaps the latter has better premises or something of that sort which earned it the preferential treatment. Anyhow, that is a legitimate point of curiosity.
  In itself the amalgamation of two Departments is neither good nor bad but only according to its results. The amalgamation of Manpower Services with Commerce is not self-evidently a logical move, as the interests of the Department of Manpower Services gain something by being specialised and by separate concentration. Indeed, the old United Kingdom Ministry of Labour was specialised out of the Board of Trade because it was thought—I do not believe that that was a mistake—that the interests of the Department of Labour would be met better by a separate Department than under the umbrella of the Board of Trade.
  In itself there is no obvious merit in the amalgamation of the two Departments and nor is the amalgamation necessary for the purposes of the order that is to follow—the industrial development order. It may be convenient to conduct the two operations simultaneously but I do not believe that it could be argued that we could not set up the Industrial Development Board unless we had already amalgamated the Department of Manpower Services with the Department of Commerce.
  There is also the point to be borne in mind that to that extent the change that we are making differentiates rather than assimilates the departmental structure in Northern Ireland from that in England and Wales, but no doubt the argument won the day that it would be more efficient to have those two Departments amalgamated into one. Those of us who correspond, alas perhaps too frequently, with the Minister of State sometimes say to ourselves that it must be a hardship for him to be commuting, if not actually vibrating, among the Departments of Agriculture, Commerce and Manpower Services. There will be only two poles between which, in future, he must fluctuate. Will it conduce to economy for the two Departments to be merged? It was with some disappointment that one read in the explanatory document at paragraph 9:
  "This order will not necessitate the employment of additional staff in the public service nor increase expenditure."
  One would have hoped not indeed. One was glad to hear—if I caught the Minister correctly—that, far from involving additional staff, there will be some saving. I think that the Minister mentioned that 15 posts would be saved. To that extent and in a way that the explanatory memorandum did not foreshadow, one may hope for some economies from the amalgamation.
  Those of us who have studied in the Northern Ireland Committee the proposed industrial development board that will operate under the new Department of Economic Development, are likely to come to the conclusion that so far from there being a diminution of staff, there is likely, if anything, to be an increase. We are not debating the industrial development order or the guidelines of the industrial development board that will operate under it, but since we are creating the Department of Economic Development perhaps it is permissible to point out to what great extent that Department will have to shadow all of the activities, or almost all of the activities, of the industrial

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  development board. Any idea that the industrial development board and its executive will diminish the effort inside the new Department of Economic Development would be misguided.
  I shall take up a couple of matters to illustrate my point. I shall take them from the guidelines with which the Northern Ireland Committee was provided. It says that it is the business of the board to incorporate those priorities
  "into a coherent industrial development strategy".
  That is all right. It continues:
  "to be prepared in consultation with the Policy Unit of the Department."
  So there will be a policy unit in the Department beavering away at industrial strategy, and when the new board has come to its conclusions or is coming to its conclusions the two of them will compare notes. I doubt whether that duplication will conduce to economy of staff or effort.
  In guideline 10, when one comes to specific cases, which is the practical heart of the activity of the new Department of Economic Development, the guidelines stress over and again the ultimate continuing responsibility of the Department. It says:
  "In respect of individual cases the Board's Statutory role is an advisory one, and the ultimate responsibility for action taken as a result will rest with the Minister … The Minister should therefore be given reasonable notice by the Executive of all case papers going to the Board, in order that he may have sufficient opportunity to express his views."
  We all know what lies behind those words—that views expressed by the Minister upon proposals advanced by the industrial development executive to the industrial development board will, quite rightly, not be views that the Minister forms by glancing through the proposals and jottings in the margin. It means that a parallel study of the individual cases will have to be carried out by the Department. Otherwise how can it validly advise the Minister what view he ought to take on them and otherwise how can he validly take the ultimate responsibility for action on the individual cases?
  Again, therefore, one fears that, so far from a net reduction in the staff of the two Departments to be combined, the monitoring of the work of the new industrial development board will lead to expansion rather than to contraction. Indeed, even where there seems to be an area of licence—I use the word in no pejorative sense—for the board to use its own discretion within financial limits, guideline No. 12 contains the following ominous sentence:
  "The consent of DFP may not be assumed in accordance with the foregoing if certain limits on cost per job (to be communicated on a confidential basis to the Board and the Executive) would be exceeded."
  Again, the reality that anyone tinctured with administration senses behind those terms is that a very close financial watch will be kept by the Department upon the operations of the board and the executive. Otherwise, it is not easy to understand how it will be able rationally to fix the cost limits or to watch their effect upon the operations of the board. Thus, even though there appear to be limits of financial discretion, one fears that in the end the result will be a duplication rather than a simplification and that the net result will be an increase in the total staff at present employed by the Department of Commerce and the Department of Manpower Services.
  Those rather gloomy reflections lead me to repeat certain remarks that I made in the Northern Ireland Committee on the whole project of the creation of a board and executive in gremio, as it were, of the Department of
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  Economic Development. In the end, as one studies the structure, it is perfectly clear that responsibility in individual cases, the responsibility for the success of the operation and responsibility for the outcome will be with the Minister and the Government. I make no quarrel with that, because that is where that kind of responsibility should be lodged. If the responsibility is to be with the Government and the Minister, however, I cannot help wondering whether there is really any advantage in interposing a merely conventionally commercial entity between the econonmy itself and would-be enterprise and on the other hand the Department and the Minister.
  As a constituency Member, if any development problem or snag arose in my constituency and I had the choice of going direct to the Department and the Minister or going either in the first instance or alternatively to the board and the executive, I know which I would choose. I would choose to go to the Minister and the Department as the place in which ultimate discretion lies and where there is also a greater political sense of flexibility and adjustment of judgment to the circumstances than one could reasonably expect to meet with from what will essentially be a subordinate Department.
  I do not think that my experience in dealing with the Department of Commerce under the Minister of State will have been very different from that of my colleagues in the representation of Northern Ireland constituencies. I repeat what I said in Committee. One is impressed by the sense of personal commitment that comes through the handling of the problems submitted to the Minister and to his Department. My sense is that that personal commitment is not restricted to the cases that happen to go through a Member of Parliament but is typical of the attitude and mood that inspire the Department under the Minister of State. I cannot believe that that will be improved and I fear that in the end it will be diminished if, instead of a Department, we have an ultimately responsible Department, with a board and executive working in tandem with it.
  Although this experiment—I regard it as an experiment—is to go ahead, it would be a mistake for the Province or for any of us to cherish exaggerated expectations that it will make all things new, that development projects that have been held up in the past will now go ahead and that there will be a greater openness of mind towards economic prospects in the Province. If there is to be a change in those respects, it will come from the Government, and the hon. Member for Hammersmith, North (Mr. Soley) was right to imply that. In personal terms, that change will come from the Minister.
  Although no one in the House will wish to deny the Government the right, by the order, to amalgamate the two Departments and thus to create the Department within which the new industrial development executive and board will operate, I doubt whether at the end of the day a great net saving economically or a great net advantage promotionally will result from what we are doing.
  10.42 pm
  Mr. James Kilfedder: The House should be in a sombre mood as we debate this order. As the hon. Member for Hammersmith, North (Mr. Soley) said, the situation in the Province is appalling. There is a sad and steady decline in the Ulster economy, and the only increase has been in the number of people unemployed. The agony of the situation is truly conveyed by the fact that

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  one in five people are now out of work in Northern Ireland. Therefore, I welcome anything that might resolve the problems in the Province.
  I welcome the order, because it brings the two important Departments of Commerce and Manpower Services together and into the forefront of the attack on the main causes of Ulster's industrial decline. The order recognises that the training, retraining and job-finding techniques that were developed by the Department of Manpower Services over the years are vital components of such an attack. It also recognises the central position that the Government occupy in the attack on the erosion of the industrial base in Northern Ireland. At the same time, it allows for the transfer of the industrial development functions of the Department of Commerce to the new industrial development board.
  Although we all regret the collapse of De Lorean and of the great experiment of trying to establish a thriving motor car industry in Northern Ireland, we must not forget the size of the Government action that helped to transform the green fields outside Belfast into a modern manufacturing plant in under two years. Although we recognise that £88 million of public money was put into it, the creation of the enterprise was a remarkable achievement, and I regret that it has come to naught.
  The Departments of Commerce and Manpower Services worked closely together over the entire spectrum of manpower recruitment, training and management to bring the venture to fruition. As we know, in the end the enterprise passed into the hands of the receiver, although there is still hope that a consortium will take it over. We can learn, and I hope that the new Department and the industrial development board will learn from that experiment.
  If this great venture ends in failure it will not be the fault of the Government or the Departments of Commerce and Manpower Services, though a criticism can be made of the lack of proper surveillance and financial control. I hope that the new amalgamated Department will be able to rectify the mistakes of the past, and I hope, too, that the De Lorean experiment will provide a salutary lesson for the new Department.
  Civil servants have in recent years come in for much criticism in Northern Ireland. Some people feel that they do not have the expertise to deal with the erosion of Northern Ireland's industrial base. It is said that they lack imagination and possess a nine-to-five mentality that destroys the initiative that is required, undermines resolution and produces the bureaucratic machine mentality that is more concerned with self-preservation than with collective achievement.
  However, many of the staff of these two Departments have shown that, given a clear aim, they can work as well as any private enterprise. People should not knock those civil servants who are trying to attract industry to Northern Ireland and to deal with the unemployed. We should pay tribute to them for what they have achieved and for the risks that they have taken.
  Some years ago the Department of Economic Affairs in Great Britain left its mark on regional development policies long after it ceased to exist. Part of the success that attended the efforts of the Department of Economic Affairs was no doubt due to the hard work and personality of Lord George-Brown. However, the machine of which he was
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  the head possessed all the rights and powers necessary to achieve the renewal of regional development and the economic revival of industrial wastelands. Unless the head of the new Department—the Minister concerned—has the rights and powers that he needs to surmount the real difficulty that he will encounter, no amount of good will, resolution or determination will enable him to function effectively or to deal with the terrible unemployment problem that Northern Ireland faces.
  I confess to some disappointment over the order. I have certain fears, which have been expressed admirably by the right hon. Member for Down, South (Mr. Powell). The Minister ought to consult the Ulster Members of Parliament to see how this new Department can deal with the problems. The Department of Commerce is to be dissolved and the Department of Manpower Services is to remain in being. Does that mean that the emphasis will be on manpower, management and training rather than on going into the world's markets to attract new investment and industry to Northern Ireland? With 20 per cent. unemployment, Ulster has an unused reservoir of trained and willing men, women and young people anxious and eager for work.
  I recognise the importance of training and retraining in modern work processes, but I wonder whether at present the emphasis should not be on attracting the industrial plant and investments that are needed in Northern Ireland.
  Our people are crying out for work, particularly those who are not long out of school and who are desperate to become wage earners instead of being on the dole, with all the disillusionment and misery that that causes.
  I hope that the Government will make use of Ulster's elected representatives, so that they can join the fight for jobs and industry. Having amalgamated these two Departments and set new machinery in motion, I hope that the Minister will call in aid Ulster's Members of Parliament and elected representatives. The elected representatives are often accused of dividing the community in Northern Ireland. Perhaps some of them do so when putting their policies to the people, but in trying to save Ulster's industrial base, and in dealing with unemploymemt, we should be united. I hope that the Minister will use the elected representatives in this worthy battle.
  Although I welcome the order, because it sharpens the Government's organisation of industry and manpower, I am a little worried that the enlarged Departments may become bogged down in problems of political and financial accountability. We all remember the De Lorean disaster and the associated loss of taxpayers' money. It is understandable that there should be some caution, but Departments such as commerce and manpower services are in a high-risk business. Their decisions will not always be right. There will be failures as well as successes, and with more than 100,000 people unemployed in Ulster—a frightening 20 per. cent.—an enlarged Department of Economic Development will have failed before it has tried if caution in the search for certainty replaces adventure and risk-taking.
  I wish the Department and those involved in the industrial training board well. We in Ulster need almost a miracle.
  10.51 pm
  Mr. Neville Sandelson: The order seems to my right hon. and hon. Friends to be

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  eminently necessary and sensible. It is no exaggeration to say that Northern Ireland is deteriorating into an industrial wasteland. The proposals in the order will not halt, let alone reverse, the economic decline, but they will unite the various agencies and Departments engaged in the fight to rejuvenate the economy.
  The measures take account of the inter-relationship between job creation and industrial support. The Government cannot be accused of turning a blind eye to the endemic unemployment in the Province, although their policies have not helped the industrial climate there. The link in the measures between job creation and industrial support reveals a commendable interventionist approach to a critical situation. My right hon. and hon. Friends welcome that and hope that the industrial impetus envisaged by the order will produce the desired new employment.
  I trust that it will not be thought that such a merger of the Departments of Commerce and of Manpower Services will become the pattern for Great Britain. I hope that it is not irrelevant for me to mention that aspect of the matter, because such an extension would create an administrative leviathan. It would be a nightmare for the multitude of companies that have dealings with the Departments of Industry and of Employment. That would not be desirable. Perhaps the Minister will confirm that that is also his view.
  Sir John Biggs-Davison: The hon. Gentleman said that he speaks for his colleagues in the SDP. Is he authorised to speak for the other part of the Alliance?
  Mr. Sandelson: I wish that I could answer in the affirmative, because I believe that we are an Alliance or we are nothing. I hope that that comment will go beyond the Chamber.
  The order proposes organisational changes, but there is a limit to what they can achieve and to what we should expect of them. The substance of the problem will remain the same—how best to attract foreign investment and industry. The Government, through the new structure, should examine, for example, why the Irish Development Agency has been so much more successful than the Northern Ireland Development Agency in attracting foreign industry and investment.
  The IDA is structurally more unified, but the main reason must be that the Irish regime offers far greater tax advantages and that has paid off in the creation of many new jobs in the South. The lesson is that success is more likely to be achieved through tax reliefs and remissions than through a system of capital grants, which attracts capital-intensive industry, but few jobs.
  The SDP supports the order, as we support the Secretary of State in all his present endeavours to put Northern Ireland back on the road to sanity and health in political and economic matters.
  10.57 pm
  Rev. Ian Paisley: Those of us who represent constituencies in Northern Ireland are, no less than the Minister of State, who represents commerce in Northern Ireland, all too tragically aware of the terrible situation facing the Province.
  Young people are leaving school and going to Government training centres, only to be told at the end of their training that there is no hope of their getting a job.
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  That is a tremendous tragedy. In addition, if a person is over 50 he will probably never be employed again. Those are sad and tragic facts.
  It is good for the Government to take the advice that they give to many businesses—that they should streamline and seek in every way to establish a proper business or commercial machine. The order proposes to unite two Departments, but I am not optimistic that the formation of the new Department of Economic Development will give us an advantage in battling with the plague of unemployment. We have the worst unemployment in the United Kingdom and in the Common Market.
  I agree with the hon. Member for Hammersmith, North (Mr. Soley) that, if we are to have an efficient Government machine, we must have the wherewithal to get that machine to go. That machine will not go unless the Government do what they tell outside interests to do—invest in Northern Ireland. The Government will have to make available vast sums of money to invest in Northern Ireland.
  I agree to a large extent with the hon. Member for Down, North (Mr. Kilfedder). Hon. Members representing Northern Ireland are well aware that the shadow of the failure of De Lorean colours a good deal of the Government's thinking in other areas. I know that many hon. Members feel strongly about decisions taken by the Department of Commerce on the De Lorean enterprise. I hope and pray that what was a miracle in terms of getting a car factory off the ground so speedily will be preserved. I do not know where those at present employed in the enterprise will find work if the receiver is not successful.
  There has been a reference to the fact that the industrial development board will be working under the Department of Economic Development. As the right hon. Member for Down, South (Mr. Powell) said, there is the possibility that two organisations will be carrying out the same task. The Northern Ireland industrial development board will be probing and dealing with applications at the beginning, with the Minister making the final decision, while another brain tank will be looking over the shoulders of the industrial development board and giving the Minister advice when recommendations from the board come before him. Instead of streamlining the whole project, there will be duplication and unnecessary expenditure. The Minister, who has promised a debate on the industrial development board, can perhaps explain the situation.
  I am not so optimistic as the hon. Member for Hayes and Harlington (Mr. Sandelson), who has been speaking for his absent friends and for others about whose presence or absence he was not sure.
  Sir John Biggs-Davison: Does the hon. Gentleman think that the hon. Member for Hayes and Harlington (Mr. Sandelson) spoke for the Social Democratic Party in Northern Ireland as well as for the Social Democratic Party on this side of the water?
  Rev. Ian Paisley: The hon. Member for Epping Forest (Sir J. Biggs-Davison) cannot speak for the Conservative Party in Northern Ireland, because that does not exist. The hon. Gentleman finds himself in the same position as the hon. Member for Hayes and Harlington.
  Mr. Ivor Stanbrook: We are working on it.
  Rev. Ian Paisley: I am glad to hear it. Some deposits will be forfeited if Conservative Members keep working

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  on it, especially in the Assembly elections. I believe that coming days will prove that the economy of the South of Ireland is not as rosy as some people think and that one cannot buy oneself out of inflation, as is being attempted there.
  The Minister should make it clear to the House that the offer that his Department and the Department of Economic Development can make is in many ways in advance of what can be offered in the South of Ireland. The tax holiday that is offered is all right for someone who is going to make money from day one, but it is no good for a firm that will have to wait some years before seeing a return from a good financial investment.
  Therefore, there are two sides to the story. I should like the Minister's terms of reference to be flexible so that he can offer firms good incentives. The Government will have to make money available. When the Department of Economic Development gets going, I hope that there will be economic development in Northern Ireland. I do not know how we shall create 100,000 jobs or how we shall tackle the situation that is now developing in Northern Ireland. As has been said, we need a miracle. I trust that the Government will help to bring about that miracle by showing that they believe that Northern Ireland has a future by making money available to it. When they have made money available, they can encourage others to do likewise. In that way, the terrible cancer of unemployment that has bedevilled our Province for far too long may be alleviated.
  11.6 pm
  Mr. James Molyneaux: Some have made the mistake of equating this order with the order that we dealt with some months ago. That order also sought to amalgamate Departments, but in that case the Departments involved dealt with a much narrower area than that covered by the two Departments tonight and, I hope, by the unified Department and its industrial development board.
  One glance at the explanatory notes accompanying the order will put matters right and put the order into perspective. Paragraph 2 states:
  "The order will bring together the functions of the Department of Manpower Services and the Department of Commerce into the new Department of Economic Development, which will have responsibility, among other things"—
  that is important as it shows that certain other matters will be included in addition to the following list—
  "for the direction of Government's efforts to promote industrial development; for Government's relationship with existing manufacturing industry and commerce, tourism, the energy industries and mineral exploration; and for manpower questions including industrial training, the employment and careers services and schemes for the underpinning of youth and other employment."
  One could hardly wish for a wider remit. The debate centres on setting up a structure that will be seen as a make or break experiment. Tonight, fears have been expressed that delays may result from the structure that is being set up. It is thought that there is a recipe for confusion, and a certain degree of tension. In addition, it is felt that there may be a wait-and-see attitude among the various elements in the new unified structure. I largely share those fears, but I am also concerned about the immediate present and about the other wait-and-see mentality that is evident, not perhaps in the Department of Commerce, but in certain
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  other organisations. When questioned, those other organisations will say "Of course we are not being held up. Of course we are getting every co-operation from the Minister"—I fully accept that—"and of course we are getting every co-operation from the Department". But in the minds of those who are to be dissolved and completely abolished there is a question mark as to whether they ought to deal with the problem confronting them in the next two or three weeks or months, or whether it is something that they can conveniently pigeon-hole and wait for the new structure to deal with. I know that the Minister is fully alive to the dangers of that kind of situation, and that he will already have taken steps to guard against any unreasonable delay, any tendency or any temptation to shelve projects, or to discourage people who want to take the initiative, particularly in small industries.
  I am sure that the Minister will do what he can to ensure that there is a smooth transition, because that is vitally important. If a small company is under pressure from its creditors or its bankers, it is very important that there should not be a delay for the vital three or four weeks, which could mean its slipping into bankruptcy.
  The Minister of State has presented his order in the crisp and business-like fashion that we have come to expect and appreciate from him. His object and that of the order, as the explanatory notes have said, is to provide a workable and stable structure of which the new industrial development board will be a part. We on the Official Unionist Bench share the Minister's belief that stability is the essential foundation for economic advance. The supreme irony is that another section of the Northern Ireland Office is going in the opposite direction and perpetuating what it has been engaged on for many years—particularly in the past three years. I refer to the political uncertainty caused by endless initiatives, which the Conservative Party has called high-powered initiatives.
  What have the high-powered initiatives been designed to do? The Conservative Party supplies the answer in the notes that have been quoted in other debates not related to this matter, and I shall not go down that road tonight. They are intended to pave the way for a federal constitution linking Ulster to the Irish Republic. If that is the aim of that other dreaded initiative—of which, Mr. Deputy Speaker, I fear you will hear more in days to come—nothing could be more disastrous, in the economic sense, for Northern Ireland.
  No investor in his senses would commit his financial resources if he were not certain about the constitutional future of Northern Ireland, or if the thought were planted in his mind that an investment that he made in good faith, in the belief that it was placed within the United Kingdom, would in a few years be transferred to a foreign State.
  There is another aspect of the proposed linkage which, in the absence of any disavowal, we have to assume is the aim of the other political initiative. As has already been said, the economy of the Irish Republic is not in a flourishing condition. That is putting it very mildly. It is steadily slipping downhill, despite all the bombastic talk, all the outbidding for American investment and the rest. The reality is that it is an economy that is rapidly going on the rocks. Any belief that was put in the minds of external investors that that linkage was likely to take place would compel them to have second thoughts. The high-powered initiative is still, unfortunately, rolling towards

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  that stated objective and, while it continues, the task of the Minister in setting up the structure that he seeks will be difficult.
  I turn now to the economy. The Minister is not receiving much help from those who have, or should have, a vested interest in economic recovery. I wish to draw the attention of the House to one notable statement in the Belfast Telegraph of 16 June by Mr. Noel Stewart of management consultants Cooper and Lybrand. He said:
  "The economic situation and the lack of political progress, rather than the troubles,"—
  that is a most extraordinary statement—
  "are being given as the main reasons for their decision."
  He was referring to the decision of competent executives and experts to leave the Province. He went on to say something which is an economic lesson for all Members. He went on to chide politicians for their unwillingness to get together. He used a phrase later in his remarks that is not unfamiliar and for which he would receive no marks for originality. The same phrase has been used in the debate. He said that
  "one must recognise that our economy is still bumping along the bottom".
  He is referring to the United Kingdom economy.
  Mr. Deputy Speaker (Mr. Paul Dean): Order. I am sorry to interrupt the hon. Gentleman, but he is going a little wide now. We are dealing with the advisability of the administrative changes in the order.
  Mr. Molyneaux: I shall endeavour to act on your advice, Mr. Deputy Speaker.
  It has already been established that while we are part of the United Kingdom we cannot ignore the state of the national economy because of its effects on that part of the United Kingdom that we represent. It has been said truthfully over and over again that Northern Ireland always suffers to a far greater extent from even a fairly mild depression. The backwash in Northern Ireland is always far more severe. That is what the Minister, his new Department and his industrial development board will find before we go much further along the road.
  The task of the Minister and the new board is daunting. Attention has already been drawn to the scope of the responsibility of the new structure. All that must be weighed against the scale of the challenge confronting them. The unprecedentedly high level of unemployment in the Province is due not to any single factor. Another factor—I know the Minister and his Department have been greatly concerned about this—is the relatively high—relative to Great Britain—natural rate of increase in population, which is the major factor in the supply of labour. There is also the decline in the Province of industries that were attracted there in the 1960s. It is difficult to see how the new structure will make any sizeable impact on that factor. There is also the relative inability, compared with the 1960s to attract external investment. It has been said that the difficulty and failure is due mainly to the effects of terrorism. I am not so certain that that is correct. In addition, there is the impact, particularly since 1979, of the severe recession throughout the international economy.
  There is another factor that lies perhaps more in the Province than on this island—the impact of labour replacing technology. As the man-made fibre factories and industries in Northern Ireland have collapsed one by one, their replacement by new high technology industries will
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  not necessarily mean a job-for-job replacement. Indeed, far fewer jobs will be provided in comparison with the scale of investment required for the new factories.
  The latest figures show clearly that the contraction of employment in the four major Northern Ireland manufacturing industries is part of a national trend, which has significantly occurred since the early 1970s, especially within the textile industries at both local and national levels. I suppose that critics of the Minister's proposals will take the view that the proper economic function of the Government is to remove obstacles to the effective exploitation of market forces subject, of course, to a regard for the welfare of labour and environmental preservation. That is something that we could profitably debate on another occasion.
  The Deputy Speaker: Order. I am finding it difficult to relate the hon. Gentleman's remarks to the order.
  Mr. Molyneaux: The explanatory notes refer to energy industries and mineral exploitation. The shattering reduction in employment opportunities in Northern Ireland could be remedied under that heading, which is definitely dealt with in the order. It will be the responsibility of the new Department, as it has been the responsibility of the Department of Commerce. The development of energy has been clearly set out and thoroughly explored by the Northern Ireland Economic Council. That must lead us to hope that the new structure will throw its weight behind the recommendation and policy outlined by the council.
  It makes sense that the combined resources and capacity of the two Departments—the Department of Commerce and the Department of Manpower Services—should be concentrated in one unit. My right hon. and hon. Friends undertake to give all possible support to the Minister in his continuing endeavours.
  11.23 pm
  Mr. Adam Butler: Of the remarks made during the debate one must distinguish between those which related directly to the order, those which touched more on the industrial development order which we have debated in Committee and will debate in the House, those of a more general nature, the understandable references to the economic difficulties in the Province and the gravity of the unemployment situation. Some remarks taxed the boundaries of order themselves.
  Mr. Molyneaux: When drawing up future explanatory notes that are to be circulated with orders—they are made available to the Whips Office, but I am not sure whether they are made available to all right hon. and hon. Members—would it be possible to enter into consultations on what might be regarded as being within the terms of order and omit all headings that are included in the explanatory notes before us, for example, which are apparently outside the scope of the order? Should they not have been omitted before they were circulated and attached by the Treasury tag to the order that was circulated by the Department?
  Mr. Butler: I am not sure whether the hon. Gentleman has been in the House longer than I have, but I am certain that he is wiser in the ways of it. I am sure that he can distinguish very well between what is within the rules of order and what is not. In the ultimate, this is a matter for the discretion of the Chair. The explanatory notes are self-evidently, by definition, an attempt to explain what is in

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  the document. The fact that there are references in the explanatory notes to a range of subjects does not necessarily mean that an outright or free-ranging discussion on those subjects is within the scope of the order or is in order in the debate.
  I never object to comments that draw attention in the House, and therefore in the nation at large, to the problems in Northern Ireland. They can be all too easily forgotten. Many of those who have contributed to the debate have drawn attention to the one in five people out of work and related matters, which emphasises the seriousness of the situation and the need not only for Government action but for an understanding by the taxpayer of the difficulties and of the need for encouragement to be given to him to be ready to support what the Government may choose to do.
  I shall pick up the points that have the greatest relevance to the order. The hon. Member for Hammersmith, North (Mr. Soley) expressed the hope that the draft order was not an exercise in changing names only and not functions. I must disappoint him. The functions of the Department of Manpower Services and of the Department of Commerce will be carried on within the Department of Economic Development. The order does not lend itself to any greater intervention by the Government. The hon. Gentleman suggested that it did and that intervention replaced monetary policy. The success of the Government's so-called monetary policy is providing the first real prospects of national economic recovery for some time. That will have an immense benefit for the economy of Northern Ireland, which is so dependent on the national economy.
  Mr. Soley: Will the Minister give us one or two examples of the signs of that recovery in Northern Ireland?
  Mr. Butler: If the hon. Gentleman had seen, as I do, not official documents, but reported surveys in the local press recently, he would have found one or two swallows telling of an impending summer. Admittedly there are storm clouds as well, but there are signs in the engineering industry of improvement. There is also an improvement in the construction industry. Those are some small improvements.
  The right hon. Member for Down, South (Mr. Powell) also ranged a little wide and admitted that perhaps his remarks had greater relevance to the Northern Ireland industrial development order. I shall answer some of his points. The right hon. Gentleman asked why no specific date was entered in the draft document. My advice is that there is a need to co-ordinate the two orders, which requires one to be brought into operation by a commencement order, as in this case, and the other to carry on the face of it a commencement date.
  The Northern Ireland industrial development order will come into operation on 1 September, if it is approved by the House. It is technically wise to leave the second order subject to a commencement order at the discretion of the Minister. It is planned at the moment that it should come into effect on 6 September. That is a technical necessity, in order to co-ordinate the two orders.
  The right hon. Gentleman asked a second technical question. We have renamed the Department of Manpower Services and abolished the Department of Commerce because the former had about three times as many staff.
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  The right hon. Gentleman pointed kindly to the fact that I might have only two offices to go to in future. He emphasised the fact that I shall not have an office in the industrial development board. I have forsworn that, as the board should be as independent of the Government as possible. The right hon. Gentleman said in Committee that he did not see the necessity for a commercially oriented body to come between the Minister and the object of industrial development policy, but the Government have put the proposal to Parliament and it has generally received a welcome. Equally, the demand is for as great an independence as possible. Although I shall not have an office there, I am certain that I shall spend time in the headquarters in what is now Chichester House. It will be renamed IDB House and will have a face-lift to make it more appropriate for a commercially minded body. The headquarters of the Department of Economic Development will be at Netherleigh, which will be within the complex of Northern Ireland Departments.
  I dealt with staff savings in my opening speech, but the right hon. Gentleman suggested that with the establishment of the IDB there might be staff increases. We should take into account the staff of the Northern Ireland Development Agency, who are, effectively, public servants. The greatest number of staff will be brought into the new IDB executive, but even there there will be savings through the merger of the industrial development arm of the Department of Commerce and the development agency. Further, there are savings by the merger of the two Departments.
  The hon. Member for Down, North (Mr. Kilfedder) welcomed the order but made a special plea that I should be ready to consult Northern Ireland Members about the Department's operation. Primarily, it would be a matter for the Northern Ireland Committee if it chose to examine it. It will also become a matter for the new Assembly with its Select Committee, but that would not necessarily include hon. Members of this House. I am ready to consider with Northern Ireland Members the working of the new Department and other economic matters. Towards the end of last year my right hon. Friend suggested such a meeting, which was attended by a number of hon. Members of this House and MEPs.
  We are dealing with an order with a limited purpose. The most important question that has been raised is whether the merger should take place. Nearly everyone who has spoken has seen the necessity for it and the benefits that will accrue, apart from the right hon. Member for Down, South. He said that there was no obvious merit in bringing the two together.
  The hon. Gentleman rightly said that the industrial development board could have been established without delay. That was the bringing together of the development agency and the division of the Department of Commerce that deals with industrial development matters. It would have been possible to leave the remainder of the Department of Commerce on its own, but because the industrial development board has largely been split off, it makes sense to bring together the residue of the Departments of Commerce and Manpower Services.
  That in itself is not the main reason for the change. There are two main ones. The first is the comparative smallness of the Northern Ireland economy. That lends itself to a combination of functions in one Department which in Whitehall would account for two or three. The Department of Commerce combines the functions of the

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  Departments of Industry, Trade and Energy. It may make sense in such a relatively small political economy to combine functions to a still greater extent. Under the common direction of one Minister, one head of Department and one permanent secretary, there is more likely to be a rationalised and effective approach.
  An even more important reason for combining the functions of the two Departments is that their objectives are common. They both aim to strengthen and broaden the economic base, which leads to the creation of more, and more stable, jobs. Examples of that can be found in the Department of Manpower Services now.
  For example, what body could be more appropriate than the employment service to create jobs and establish a strong economic base by matching the right workers to the right jobs? Similarly, to what purpose is the training activity of the Department of Manpower Services devoted if not to provide skilled workers to strengthen the economic base and eventually to create more employment?
  I speak from personal experience. There is a need for the merger and harmonisation of policies. Although the order does not deal with the industrial development board, its creation should be viewed with that of the new Department, which is designed to, and I believe will, bring to industrial development matters a new sense of urgency, a commercial orientation and speed of implementation. To pick up the pleasant phrase that the hon. Member for Antrim, South (Mr. Molyneaux) used about myself, it will have a crisp and business-like approach. We can return to that matter.
  The hon. Member for Antrim, North (Rev Ian Paisley) spoke about the future. I assure him that the Government believe in the future of Northern Ireland. We intend to do everything that we can to achieve a prosperous and profitable future. We intend, among other things, to establish the best arrangements to assist—in the way that
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  it is proper for the Government to assist—in economic development and the creation of jobs. I therefore commend the draft order to the House.
  Question put and agreed to.
  Resolved,
  That the draft Departments (No. 2) (Northern Ireland) Order 1982, which was laid before this House on 20th May, be approved.

  STATUTORY INSTRUMENTS, &c.
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.)
  STATUTORY INSTRUMENTS, &c.

    WATER
    That the draft Water Authorities and National Water Council (Limit for Borrowing) Order 1982, which was laid before this House on 17th May, be approved.—[Mr. Boscawen.]
    Question agreed to.
    Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.)

    MERCHANT SHIPPING
    That the draft Pilotage Commission (Additional Function) Order 1982, which was laid before this House on 17th May, be approved.—[Mr. Boscawen.]
    Question agreed to.
    Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.)

    AGRICULTURE
    That the Sheep Variable Premium (Protection of Payments) (Amendment) Order 1982 (S.I., 1982, No. 726), a copy of which was laid before this House on 21st May, be approved.—[Mr. Boscawen.]
    Question agreed to.

  National Federation of Retail Newsagents
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
  11.40 pm
  Mr. Tony Speller: In the previous debate, the hon. Member for Down, North (Mr. Kilfedder) spoke of a sombre mood. I do not feel in the least sombre tonight when I have the great pleasure and privilege, on behalf of my constituents, to wish well Her Royal Highness the Princess of Wales on giving birth to our new heir once removed and to say that sobriety and sombreness should not this week be part of our make-up. I seek to bring to the attention of the House problems of a more mundane nature, although I suspect that news of the Royal birth will be good news for newsagents.
  In villages and suburbs the newsagent and sub-post office often forms the information and social centre of the community. In many places, such as Instow in North Devon where I live, the newsagent's shop and sub-post office is run by the same person, working long hours for small reward and having very little power of his own. Such people have no industrial muscle with which to bargain with suppliers, be they newspaper proprietors or wholesalers. The proprietor or wholsaler, on the other hand, has total control over price, discount allowed and conditions of supply.
  The National Federation of Retail Newsagents seeks to represent the small man or woman, but, through historical and legal precedent, it is not allowed to do this effectively. As long ago as 1956, Parliament brought in the first Restrictive Trade Practices Act, with the laudable purpose of avoiding restrictive agreements between suppliers which might be to the public detriment.
  In fact, however, by protecting the public from restrictive practices by suppliers of goods, the Act also protects major manufacturers and suppliers who are in a local or national position, referred to in the Act as being a "preponderant supplier", even though it is in the interests of the public at large that monopoly suppliers should not be allowed to get away with fixing price, discount and all conditions of sale.
  That Act and subsequent amending legislation sought to deal with this problem by the provision of what are colloquially known as "gateways"—provisions in the Act which allow retailers to combine together to negotiate fair terms with a "preponderant supplier". In the normal market conditions obtaining throughout the country, the Act and the escape valve supplied by the "gateways" have worked, but this is not and cannot be the case in the newspaper supply industry.
  The structure of the newspaper supply and distribution industry is unique. In practice, each newspaper dictates its own supply terms, and court decisions have concluded—somewhat artificially, it may be thought—that no single newspaper is a "preponderant supplier". I stress that phrase, as it is intended to indicate one whose position is such as to override and overbear all other suppliers.
  The National Federation of Retail Newsagents suffers from the fact that the "gateways" do not allow for the reality that the newspaper itself dictates the financial terms upon which the paper is made available to both wholesaler
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  and retailer. In practice, negotiations take place between wholesaler, retailer and manufacturer, but always it is the supplier "up the line" who has the power.
  With the exception of multiple-outlet suppliers, such as W. H. Smith or Menzies, each newsagent receives his supplies from a wholesaler. In theory, there is competition between wholesalers, but in practice there is none at all, because some time ago the wholesalers introduced a system known as—we know the word well—"rationalisation", under which they do not compete, but each supplies a given area.
  The logic is the same as that of the milk roundsman. A pint of milk or the Daily Mirror are easily recognised products and it matters not too much to the consumer from whence they come, provided he knows the product, size, quality and price. Rationalisation has meant that the newsagent, the small man at the end of the line, can obtain supplies from only one wholesaler, and each wholesaler is now a monopolist.
  The newsagent has no alternative source of supply. The terms on which he is supplied are dictated by the conditions laid down by his monopoly wholesaler. He is powerless because, although in practice he has one "preponderant supplier", the courts refuse to accept this, pointing out that in theory supplies could be obtained from a number of different sources. In fact, in places such as North Devon that is not the case, because there is only one wholesaler. Therefore, the newsagent is entirely at the mercy of the monopolist.
  No one newspaper is considered a monopolist, because there are many newspapers—The Times, the Daily Mirror, The Guardian, and so on. Nevertheless, each newspaper lays down its conditions of sale and they cannot be queried or moved from in any way by the wholesaler or retailer. All the way down the line there is this dictatorship or what might be termed the "patch" of each wholesaler.
  This matter came to my notice by sheer chance. In my constituency there is a small firm called S and B Commercials. It operates a garage, general shop and small cafe on the Pottington trading estate, about a mile outside Barnstaple. There are no paper shops on the estate, where about 2,500 people work, but there is a demand for newspapers. The firm arranged for a local Barnstaple newsagent to supply 400 to 500 newspapers each week, at an agreed discount—not a bad sale for the newsagent and not a bad sale for the cafe-cum-garage proprietor who sought to supply his customers, my constituents, at the known price.
  That system worked happily from December 1980 to July 1981 when the newsagent who was supplying S and B Commercials—quite properly, being paid in cash, with no problem and increasing his sales—was told by the local wholesaler, Surridge Dawson—a monopoly wholesaler to boot—that if he did not stop the supply he would get no papers at all. He would be put out of business for carrying on what anyone else would consider a normal trading practice. The wholesaler apparently is entitled to make that disgraceful threat. It is legal and has the sanction of various Government Departments. It has the sanction of the Office of Fair Trading. It means that if I, as a wholesaler, do not like the newsagent, it is hard luck. He can be put out of business tomorrow if I so desire.
  My constituent then asked whether the wholesaler could supply him direct. He had no axe to grind. He was

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  happy as a sub-agent. But he was turned down absolutely flat. In a letter dated 23 August 1981 Surridge Dawson stated:
  "All decisions regarding new selling points for newspapers and/or periodicals and magazines rest entirely with the wholesale newspaper distributor concerned."
  I ask the House to note the words,
  "rest entirely with the wholesaler newspaper distributor concerned"—
  not distributors, but distributor. The monopolist controls the market. In other words, no matter how good one is, one may not buy and sell newspapers or magazines by order of the monopolist in charge of the area. Newspaper sales are falling nationally, yet here is a wholesaler making it harder to buy a paper near one's place of work.
  Surprised by that somewhat terse letter, on 17 September 1981 I wrote to Surridge Dawson pointing out that there are no newsagents on the industrial estate and that, even if it was not prepared to supply direct,
  "Surely a sub-sale at split discount is logical even if your firm is unwilling to appoint a new newsagent".
  I understand the wholesaler's position. There may be a plenitude of newsagents, but here is a person prepared to buy, pay for and distribute newspapers. Yet the answer to my letter by the general manager at Surridge Dawson's regional office in Southampton, dated 1 October 1981, was as curt as it was impolite:
  "Thank you for your letter dated 17 September, 1981, in regard to S & B Commercials of Barnstaple.
  I have read your letter with interest.
  Yours sincerely."
  The House will understand why I felt that the small man seeking to sell newspapers was being treated unfairly. That is the head office reaction of a powerful, pompous business to a Member of this House seeking information. Its attitude to firms forced to deal with it can well be imagined.
  Furthermore, there is another point, which I discovered only this evening when reading the federation's weekly publication. Many magazines such as that advertise trade businesses for sale. If a newsagent seeks to sell his business, he sells it as a going concern, yet the monopoly wholesaler for his area has the absolute legal right the day after he sells it to stop supplying papers to the new owner. He also has the absolute right to say to the potential buyer "I am sorry, I shall no longer supply papers to your outlet." In other words, he can beggar that firm before a sale by reducing its value—because no newspapers mean no newsagent—or after a sale when some poor person, perhaps investing his redundancy money, savings or gratuity, has merely sought to make a small living. That power is not so much reprehensible as totally immoral. Unfortunately, it is legal, but I cannot support it.
  Having heard from my constituent about his problem with selling newpapers and from an estate agent about the problem of buying and selling newsagents' firms, I contacted the retail newsagents trading organisation to see how it managed to carry out its negotiations with both hands tied behind its back. It turns out that, because of section 8 of the Restrictive Trade Practices Act, the federation has problems negotiating terms with either publisher or wholesaler. If it succeeds, it cannot suggest to its members that the terms are fair or unfair, because the Office of Fair Trading is quick to presume that any suggestion or recommendation is an implied restrictive recommendation that the newagents should not handle on any other terms.
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  We are seeking to promote fair trading, but in this case we are impeding it. Although I feel stongly about this, I seek only two things. I do not seek carte blanche for the newsagents' federation. No trade union or association of employers has any right to carte blanche. I seek equity.
  The "gateways" within the Act should be redefined to allow the federation to negotiate fair terms for its members and to inform its members of those terms. There are about 30,000 small newsagents. They should be allowed enough muscle at least to prevent the publishers and wholesalers from obtaining a position that is totally in favour of those up the line to the total detriment of those at the bottom of the pack.
  Secondly, the federation should be freed from the artificial shackles of the "implied contract" under section 8, whereby any recommendation by it is deemed as a matter of course to have been accepted by its members. The public interest has not suffered in the past from the habit of many manufacturers recommending a maximum retail price which, frankly, many retailers ignore or use as a guideline. However, in the newspaper and printed paper industry that is not permitted by law. There is no reason to believe that the public interest would suffer in any way if newsagents had the same rights as, for example, a small shopkeeper in the drawing office supply industry. Competition is the enemy of monopoly, and monopoly is the prime cause of high prices.
  The Government, who have done so much to help small businesses and free enterprise, should be aware that in the newspaper supply sector freedom to trade exists only in theory and seldom in practice. It is the small business men that we in this House should seek to protect and aid, not to dominate. It is shameful that, with the best motives in the world, we have allowed the ordinary small newsagent to become the least powerful of any trader in the country. I hope that my hon. Friend will tell me that it will stop.
  11.54 pm
  The Minister for Consumer Affairs (Dr. Gerard Vaughan): I listened carefully to the speech of my hon. Friend the Member for Devon, North (Mr. Speller). I congratulate him on securing this debate and on setting out clearly the difficulties faced by the National Federation of Retail Newsagents and by S & B Commercials of Barnstaple, which I found worrying. I shall examine the position and bear those remarks in mind.
  I understand and sympathise with what my hon. Friend said. He is right to say that we are not talking about just one person, although it would be wrong if one person were faced with injustice. We are talking about 30,000 small shopkeeping newsagents, who belong to the federation and who must trade within the general legal requirements referred to by my hon. Friend. Those 30,000 are an important section of our local shopping community. It is my job not only to encourage more local services for the public but to ensure that local traders, shopkeepers and newsagents can trade more, not less, easily. I take what my hon. Friend says very much to heart.
  I am clear that, wherever it makes sense—it does if ore is elderly or has young children—there should be more and not fewer corner shops. The newsagent-sweet seller is very much a local shop. Newsagents see the present legal requirements as putting them in a weak position. It prevents them from taking collective action to protect themselves against the large publishers and suppliers, which are far fewer, much larger and in a stronger

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  negotiating position than the individual newsagent. I understand how they feel, but I must also—as my hon. Friend realises—keep in mind the viability of the larger suppliers and publishers.
  Under the Restrictive Trade Practices Act 1956 any agreement for trading restrictions of the sort affecting newsagents must be furnished to the Director General of Fair Trading. It is then referred to the restrictive practices court and the agreement will be considered against the public interest if it does not pass certain criteria, which are the gateways mentioned by my hon. Friend. The court can then make an order forbidding the agreement or similar agreements. The procedure was considered by the Labour Government, who published a Green Paper in 1979 entitled the Liesner report. It considered that the Act had contributed to economic efficiency, but said that there might be some scope for more flexibility in some areas.
  I have much sympathy with the federation, but it has proved difficult to find a way of helping it that does not either shift the balance so far in the opposite direction that it creates fresh injustice or opens up undesirable practices in other trades. I make that latter point because it is an important aspect that must be considered when dealing with any possible changes in the legislation.
  This is a complicated and difficult area. My hon. Friend made two suggestions. Firstly, he said that one of the gateways should be redefined. That was examined in the investigation leading to the Liesner report, but no change was recommended. Secondly, he suggests that what he calls the shackles of the implied contract be lifted or that section 8 of the Act be amended. Under that section, recommendations of the federation are treated as if they are agreements entered into by all the federation's members. I appreciate the problems that those members could experience in that regard. It has always been a cardinal feature of the legislation that recommendations by a trade association should be treated as registrable agreements and I do not see a sufficiently strong case for the federation to be exempted.
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  My hon. Friend is aware that the Monopolies and Mergers Commission has reported that it is not against the public interest for wholesalers to limit the numbers of retailers supplied and to select them on the basis of their location and the standard of service that they can provide. The commission reported in 1978 and it is possible that there have been changes since then.
  Mr. Speller: Does not my hon. Friend think it unreasonable that, by sheer chance and rationalisation, there is only one wholesaler in each area—he is a monopolist—and that he should hold the power of commercial life and death over the many newsagents in the area? That is the key to the whole problem. It is monopoly almost by accident, and not by Government intent. The prospects of any firm can be ruined almost at the whim of a bad-tempered manager.
  Dr. Vaughan: I understand that, but the matter was looked into carefully by the monopolies commission and it reported that the procedure was in the public interest. However, if my hon. Friend feels strongly about the matter I shall discuss it with the Director General of Fair Trading, who has the task of watching what is going on in this area, but I do not want to raise hopes. The situation may not have changed radically or sufficiently for us to consider amending the law.
  The federation has been invited to suggest possible changes to the legislation, but so far all the suggestions have had serious drawbacks. If my hon. Friend or the federation bring forward suggestions I shall be willing to consider changes in the Act, but the suggestions must not create major injustices elsewhere.
  Once again, I congratulate my hon. Friend on bringing the matter before the House and on putting the position so clearly and forcefully on behalf of the newsagents.
  Question put and agreed to.
  Adjourned accordingly at two minutes past Twelve o' clock.