Commons Sitting of 16 July 1984

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

    Llandough Hospital
    Mr. Ron Daviesasked the Secretary of State for Wales if he will make a statement on the future of the Llandough hospital.
    Mr. Colemanasked the Secretary of State for Wales what discussions he has had concerning the proposed closures at the Llandough hospital.
    The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): Far from being closed or contracted, Llandough hospital is being expanded at a total cost of about £7 million. Its future is therefore assured.
    I understand that proposals have been made by a sub-committee of the Medical Research Council that the pneumoconiosis unit should be closed. This proposal will be considered by the council in October, and while it is primarily a matter for it and my right hon. Friend the Secretary of State for Education and Science, I have asked to be kept informed.
    Mr. Davies: I am grateful for that reply and the note of hope that the Under-Secretary included in his answer. Does he accept that if the pneumoconiosis unit closes that
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    will be an appalling blow to the medical and social services in Wales and to the morale of the Welsh people? Will he undertake to ensure that the Secretary of State will fight at Cabinet level for the maintenance of the unit, and if he is unsuccessful in that fight, as he is responsible for both the health and education services, will he guarantee to make available additional resources to secure the future of the unit?
    Mr. Roberts: I agree with the hon. Gentleman that the unit has a long and distinguished history and that it has done valuable work. I remind him that it is the responsibility of the Medical Research Council, which set up a sub-committee to examine the workings of the unit. My right hon. Friend's responsibility is limited in the sense that the land and the buildings for the unit are leased from him, but the Medical Research Council is the responsibility of my right hon. Friend the Secretary of State for Education and Science.
    Mr. Coleman: Is the Under-Secretary aware that as long ago as 1943 Llandough hospital became associated with the treatment of pneumonconiotic miners? Is he aware that as a result of that the Government of the day brought pneumonconiosis into the schedule of compensatable illnesses and diseases? Was he consulted by the Medical Research Council when it made this proposal, and if so, what did he say? What will he do to prevent the council from closing the unit, which is vital to the south Wales mining community?
    Mr. Roberts: No decision has yet been taken to close the unit. We have a proposal from a sub-committee of the Medical Research Council, which is to be considered by the council in October. The hon. Gentleman may be interested to know that there are 11 beds associated with the unit's work, and the South Glamorgan authority has made it clear that those beds will continue in use.
    Sir Raymond Gower: Is it not a fact that some years ago strong undertakings were given to develop the hospital, which until recently was in my constituency, as a district general hospital with greatly enhanced facilities? Will my hon. Friend take that into account'' Are the undertakings being fulfilled, since the hospital is

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    admirably sited to cater for the hospital needs of the people in the Vale of Glamorgan and the western parts of the city of Cardiff?
    Mr. Roberts: I am happy to assure my hon. Friend that we are planning for the development of a 90-bed obstetric unit with associated work, some of which is already in progress, to extend the catering, pharmaceutical, X-ray and residential facilities of the hospital at a cost of more than £7 million. It will probably be the biggest development in south Glamorgan since the building of the University hospital of Wales. The obstetric unit is intended to replace that at St. David's.
    Mr. D. E. Thomas: Does the Minister accept that he cannot get away so easily from his Department's responsibility for science and research policy in Wales? Why, if the Medical Research Council and the science board are not prepared to fund the essential pneumoconiosis research in the present unit, does not his Department fund the research on the customer-contractor principle, which it has failed lamentably to do over the years?
    Mr. Roberts: The hon. Gentleman must agree that the progress and direction of research is a matter for the Medical Research Council, not for me or my right hon. Friend. As to the financing of the unit, he will know from the exchange between my right hon. Friend the Prime Minister and the right hon. Member for Islwyn (Mr. Kinnock) on 28 June about the funding of the Medical Research Council that in 1979–80 it received £54·4 million, and in the current year it has received £117·2 million.
    Mr. Barry Jones: Is not this much-loved hospital, which provides a vital service to our mining communities, worthy today of a ministerial vote of confidence? Will the Minister undertake to tell the Medical Research Council that hon. Members do not wish the unit to be closed?
    Mr. Roberts: The hon. Gentleman was clearly not listening to what I said. I talked about a £7 million development of the hospital. I have also told the House about the pneumoconiosis unit. The proposal advanced by the sub-committee is still at an early stage, in that it will be considered by the Medical Research Council in October.

    Transport Infrastructure
    Dr. Marekasked the Secretary of State for Wales what plans he now has to issue a consultation paper on transport infrastructure.
    The Minister of State, Welsh Office (Mr. John Stradling Thomas): I assume that the hon. Member is referring to the consultation paper on local choice in public transport. This was issued on 12 July, and a copy has been sent to the hon. Gentleman.
    Dr. Marek: The Minister will realise that public discussion about the railway infrastructure in Wales is a good thing. Does he also realise that for the Green Paper to be given proper consideration in the Principality it must be seen that proper financial considerations are laid down for any changes? Will he assure the House and Welsh local authorities that that will be the case, and that any changes made as a result of the Green Paper and the consultation
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    period will be more than changes for the sake of possible cuts being seen to be made by local authorities rather than by central Government?
    Mr. Stradling Thomas: The hon. Gentleman raises a very important point, and I can give him a broad assurance in response. We shall welcome views on the detailed financial arrangements. It is a genuine consultation paper. In determining the overall grant required we must take into account the existing public service obligation grant for that service. It is intended that the effect of those suggestions should be financially neutral, so that no change in the effective level of Exchequer support is implied by them.
    Mr. Alex Carlile: People throughout mid-Wales are anxious about the future of the Shrewsbury to Aberystwyth railway line and of the Cambrian coast line. Will the Minister assure the House that those two lines are regarded as an essential part of the infrastructure of transport in Wales and that neither line will be closed or made the subject of what is euphemistically called bus-for-rail substitution?
    Mr. Stradling Thomas: There are at present no proposals for the closure—
    Mr. Carlile: That is not answering the question.
    Mr. Stradling Thomas: With respect, I shall answer the question in my way. There are no proposals for the closure of any lines. Of course, I cannot give an assurance into the long-distance future. Change takes place inevitably, but I can assure the House that there are no proposals to close any railway lines in Wales.
    Mr. Hooson: Is my hon. Friend aware that there will be much satisfaction in Wales at the transfer of greater control of local transport problems to county councils?
    Mr. Stradling Thomas: I am sure that my hon. Friend is right. As I have already stressed, it is a consultation paper and we wish to discuss with the local authorities greater opportunities for local democratic choice.
    Mr. Roy Hughes: Does the Minister appreciate that the Government's proposals as a whole are a recipe for anarchy on our roads and will result in higher fares and reduced services? Is this not yet another example of the Government's privatisation measures, where the vultures are on the sidelines ready to feed from the choice pickings of public industry? Will not the old, the very young, the poor and the sick suffer yet again?
    Mr. Stradling Thomas: No, I do not agree with the hon. Gentleman's conclusions. Experience shows that where greater choice and competition are introduced the public get better service, not worse.

    Local Authorities (Capital Expenditure)
    Mr. Gareth Wardellasked the Secretary of State for Wales if he will undertake not to cut local authorities' capital spending during the year 1984–85.
    The Secretary of State for Wales (Mr. Nicholas Edwards): Discussions on local authority capital spending in 1984–85 are continuing within the framework of the Welsh Consultative Council on Local Government Finance.
    Mr. Wardell: I thank the Secretary of State for that reply, but I would be grateful if he will now say whether

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    he will oppose any Cabinet move to impose any capital moratorium on local authorities in Wales, where it is blatantly obvious that the construction industry is already suffering from the imposition of VAT on building alterations and the phasing out of industrial building allowances? Cuts in capital expenditure would constitute a fatal blow for thousands of employees in the building industry—the largest industry in Wales.
    Mr. Edwards: I have already indicated to the Welsh Grand Committee my concern that, far from being cut, capital programmes are running ahead of plans. We are discussing with local authorities the best way of dealing with this situation.
    Mr. Best: Does my right hon. Friend accept that local authority expenditure is part of total identifiable public expenditure and that, therefore, the Government have a duty to control it? Does he also accept that, more than anything else, local authorities need continuity and an understanding of what will happen in the future, particularly in the housing sector, in so far as that can be ascertained?
    Mr. Edwards: I understand the need for continuity. As my hon. Friend said, that is an important part of our total public spending programme, and we have spelt out our long-term plans for that programme. We must consider seriously substantial overspending in any particular area.
    Mr. Anderson: Housing has been the easy target for Government cuts since 1979. Will the Secretary of State now assure the House that the housing crisis will not be worsened by yet again forcing housing to bear the main burden of the current proposed cuts?
    Mr. Edwards: We are talking about a possible overspend on housing expenditure programmes and, therefore, whether it is necessary to restrain those programmes from running ahead of spending. We are not talking about cutting them from the levels that have been spelt out previously.
    Mr. Wigley: Is the Secretary of State not aware that building and construction firms throughout Wales, particularly in Gwynedd, from where I have received representations, are petrified that we are about to see yet another cycle of stop-go-stop, thus making it impossible to plan ahead in terms of investment and employment? Will the Secretary of State now think seriously about how to get a more coherent form of planning capital expenditure with local authorities so that we can avoid these problems?
    Mr. Edwards: The builders must remember that any problem at present arises from the fact that we are running ahead of our plans, and that they have work on their books which they are carrying through to the end of this financial year. They may be concerned about not getting further additional work on top, but they have substantial work under existing spending programmes.
    Mr. Barry Jones: From the hesitant, fencing replies that we have heard, we fear the worst. Will the right hon. Gentleman commit himself to fighting in the Cabinet against any imposition of cuts?
    Mr. Edwards: I have made it perfectly clear that I am concerned about the fact that we are running ahead of our spending targets, and I am discussing with local government the best way of dealing with that.

    Coal Industry Dispute
    Mr. Gristasked the Secretary of State for Wales what is his latest assessment of the effects of the miners' strike on the economy of South Wales.
    Mr. Ray Powellasked the Secretary of State for Wales what discussions he has had with the chairman of the National Coal Board regarding the effect of the miners' strike on the industrial and commercial economy in Wales.
    Mr. Raffanasked the Secretary of State for Wales if, when he next meets the chairman of the Welsh Confederation of British Industry, if he will discuss the effects of the miners' strike on the Welsh economy.
    Sir Raymond Gowerasked the Secretary of State for Wales what is his latest assessment of the effects of the coal strike on the Welsh economy and on industrial production in the Principality; and if he will make a statement.
    Mr. Bestasked the Secretary of State for Wales what is his latest assessment of the effect of the coal miners' strike on the steel industry in Wales.
    Mr. Nicholas Edwards: While reports indicate that there is no widespread impact on Welsh industry generally and the British Steel Corporation is continuing to take steps to ensure that steel production is maintained, those in employment in Wales will recognise the threat to jobs that a continuation of this damaging strike entails.
    Mr. Powell: On a point of order, Mr. Speaker.
    Mr. Speaker: I shall take it now, exceptionally.
    Mr. Powell: I tabled question No. 7, and I object to it being couple with question No. 4 when it is not directly related to it. My question asks the Secretary of State if he has met the chairman of the National Coal Board.
    Mr. Speaker: The hon. Gentleman knows that I have no responsibility for the way in which Ministers group questions. It is not a matter for me.
    Mr. Powell: Further to that point or order—
    Mr. Speaker: Order. I have nothing more to say.
    Mr. Powell rose—
    Mr. SpeakerOrder. It is not a matter for me. It is a matter for the Minister.
    Mr. Grist: Does my right hon. Friend agree that it is apparent that the only people likely to gain from this senseless strike are oil tanker crews and nuclear power constructors, and that the worst losers will be those engaged in the coal and coal-associated industries?
    Mr. Edwards: All these questions are about the effect of the strike on the economy of Wales. I agree that the strike can do nothing but damage to jobs in other industries and people not directly affected by it. It is deplorable that a strike involving about 200,000 people in two industries should have such threatening consequences for so very many more in a host of other industries.
    Mr. Powell: I realise now why the Secretary of State wanted to group my question with these others. It is clear that he has not yet met the chairman of the National Coal Board. For five months now I have been asking him when he intends to meet the chairman. I wonder whether he was

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    invited to the senior Cabinet meetings today to discuss the strike. The impact of the strike on Wales, especially when it comes to 120 or 130 lorries travelling from Port Talbot to Llanwern and the danger that they cause in the middle lane of the motorway when other motorists are trying to leave the motorway is such that it is time that the Secretary of State took some action, went to the chairman of the National Coal Board and convinced him that the miners have won the strike. Why do they not get round a table and settle it, because there is only one matter in dispute?
    Mr. Edwards: It is quite clear that the miners have not won the strike. The Government are determined that violence and intimidation shall not triumph. I can tell the hon. Gentleman that I was present at the meetings this morning and that one of the matters discussed was that the windows of 32 of the lorries carrying coal from Port Talbot this morning were smashed by strikers. I hope that the hon. Gentleman will join me in condemning that disgraceful violence.
    Mr. Raffan: Does my right hon. Friend agree that those miners on strike must realise that it is their industrial action that has driven up interest rates, that it is their industrial action that is damaging Welsh industry and that it is they who are destroying other Welsh people's jobs? Does he also agree that, by kow-towing to Scargill, Opposition Members are aiding and abetting this destruction of jobs and that they, too, are job wreckers?
    Mr. Edwards: I agree entirely, and I hope that Opposition Members will heed the warnings of the chairman of the British Steel Corporation, who said that this strike threatened the whole recovery to which BSC employees had contributed so much.
    Sir Raymond Gower: In view of the splendid achievements at Llanwern and Port Talbot, would it not be a great tragedy if what had been achieved was damaged by the long continuance of this strike? Is not the future progress of the steel works in South Wales of infinite importance to the coal mining industry in South Wales?
    Mr. Edwards: My hon. Friend is quite correct. The chairman of the BSC pointed out that there were 20 United Kingdom pits which could produce the qualities of coking coal needed in steel production. As he said, it seems an unbelievable policy deliberately to try to drive steel out of business when that would only cut the demand for coal permanently, leading to even greater damage to job prospects in the coal industry than the strike has caused already.
    Mr. Best: Does my right hon. Friend agree that it is unforgivable that the Leader of the Opposition, a Welsh Member, should show such little concern for the great achievements of those in the steel industry at Port Talbot and Llanwern and should instead align himself with a demagogue, by losing his self control, ripping up a speech and showing greater concern for the job wreckers than for those who have achieved so much in the steel industry?
    Mr. Ron Davies: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. I suspect that I know what the hon. Member for Caerphilly (Mr. Davies) is going to say and I should like to say it first. We do not want speeches at Question Time.
    Mr. Ron Davies: I was not going to say that.
    Mr. Edwards: I agree that it is deplorable that the Leader of the Opposition should apparently associate himself with a political strike which must be gravely damaging to jobs in industry generally.
    Mr. Foot: Does not the right hon. Gentleman understand that the Leader of the Opposition—together with every sensible person in this country—wants to see the dispute brought to an end under the proper procedures agreed under "Plan for Coal"? Does the right hon. Gentleman understand that his Government's breach of those procedures has led to the current serious situation? Before he rushes in with a reply, will he recall that he gave me some misleading replies three weeks ago and had to send me a letter of apology, which I received this morning? Apparently, we must go on educating him. We want a proper, negotiated settlement of the dispute, and the right hon. Gentleman ought to be doing something at least to try to achieve that.
    Mr. Edwards: I confirm that I wrote to the right hon. Gentleman and apologised for the fact that when I referred to Labour Governments I had forgotten that his career as a Minister had been so remarkably brief. I had not appreciated how much he wished to dissociate himself from the record of Labour Governments since he was elected to the House.
    The right hon. Gentleman knows perfectly well that all Labour Governments have recognised that pits had to be closed if they could not produce an economic and beneficial product. That is what the strike is about: the determination of the NCB to run a sensible, profitable and economic industry and not have it destroyed for political reasons.
    Mr. Coleman: If the Secretary of State and Conservative Members are so concerned about the health of the steel industry, why do they not put pressure on the Prime Minister to settle the coal dispute?
    Mr. Edwards: I must make it clear that no one in the Government will put any pressure on the management of the NCB that would allow decisions about the future of that industry and the viability of pits to be dictated by a political demagogue or anyone else.
    Mr. Ron Davies: If, as a result of the damage being done to the Welsh economy by the mining and docks disputes, the Government declare a state of emergency, will the Secretary of State ensure that troops are not used against miners in south Wales?
    Mr. Edwards: No such decisions have been taken, but I can tell the hon. Gentleman that the Government will carry out their obligations to the country as a whole and will take whatever steps may be needed.
    Mr. Harvey: Will my right hon. Friend give the House an assurance that, in view of the extreme intimidation and distress undergone by so many moderate miners in the dispute, and in view of the enormous courage shown by those miners, the Government have no plans to try to persuade the NCB to bring the dispute to a speedy conclusion that negates the essential principles on which the board is standing?
    Mr. Edwards: I confirm that that is exactly the position. It would be intolerable if the NCB's hands were tied when it had to decide whether pits had a future. It must not be bullied and bounced into that by inexcusable violence and intimidation.
    Mr. Barry Jones: Rather than adopting a sneering, hard-line approach, the right hon. Gentleman should be encouraging the Prime Minister to effect conciliation. Is it not in the Government's power to resolve the dispute speedily and to ensure a successful outcome to the dispute in this week's talks?
    Mr. Edwards: Mr. Scargill has refused to discuss the inclusion of the word "beneficial" when considering whether a pit has a future. If we cannot discuss whether a pit has a "beneficial" future, we are hardly in a position to talk seriously about conciliation.

    Derelict. Land
    Mr. Rowlandsasked the Secretary of State for Wales what estimate he has made of the amount of derelict land in Wales.
    Mr. Nicholas Edwards: The latest estimate by the Welsh Development Agency is that there are currently around 13,000 hectares of derelict land in Wales.
    Mr. Rowlands: Is the Secretary of State aware that the local authorities have submitted their priority schemes to the Welsh Development Agency and that they amount to more than £100 million? Is he further aware that if we carry on with the reduced budget levels it will take nearly 15 years to deal with those priority schemes? Will the right hon. Gentleman ensure that the agency does not make land reclamation something of a Cinderella programme?
    Mr. Edwards: There is no question of making land reclamation a Cinderella. The Welsh Development Agency has to assess its priorities. Expenditure in the current year, including expenditure on the land reclamation scheme that will probably take place in Cardiff, is likely to be of the order of £10·5 million, which is about the same level as it has been for the past year or two.

    Dairy Farmers
    Mr. Geraint Howellsasked the Secretary of State for Wales what extra plans he has to help dairy farmers in the county of Dyfed; and if he will make a statement.
    Mr. Nicholas Edwards: Dairy farmers in Dyfed, as elsewhere, will be helped by the measures we have already announced. The reserve set aside for hardship cases and the outgoers scheme will all help to ameliorate the effects of quotas on those most affected. In addition, dairy farmers in Dyfed will benefit from the extension of the less-favoured area.
    Mr. Howells: I am sure that the Secretary of State is well aware of the fact that many dairy farmers in Wales are in financial difficulties. As he is in charge of Welsh agriculture, may I seek to persuade him once again to go to Brussels to ensure that those dairy farmers are adequately compensated? Given that he went to Brussels to make sure of a good deal for the sheep farmers in Wales, can he tell the House and the Welsh agriculture industry why he should discriminate against the dairy industry?
    Mr. Edwards: As I pointed out in the Welsh Grand Committee, I learnt some lessons from that visit to Brussels. As the hon. Gentleman knows perfectly well, we have set aside 2·5 per cent. of quota to deal with hardship cases, and later this week the House will debate the rules
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    under which that quota will be administered. That will be the appropriate time for discussing the matter in further detail.
    Mr. Raffan: Is my right hon. Friend satisfied that applications for consideration as special cases will be processed rapidly? Will he ensure that if the local panels are inundated they will be increased or enlarged?
    Mr. Edwards: Claim forms will be issued to every dairy producer as soon as possible after the necessary regulations have been approved by the House. As I have said, those regulations are to be debated later this week. There will then be only five weeks in which those who consider themselves eligible can put in a claim. We intend to proceed with all possible haste and to have three panels within the Principality dealing with the claims as they come in.
    Mr. Alex Carlile: In considering milk quotas, why has the right hon. Gentleman not been prepared to address himself to the problems of the specialist dairy rearing sector? Many of that sector's members face virtual immediate bankruptcy, so why are they to receive no relief from the Government at this difficult time?
    Mr. Edwards: I have, of course, seen the letter that the hon. and learned Gentleman wrote on the subject, and, indeed, he mentioned the subject on Wednesday in the Welsh Grand Committee. We have acknowleged that there will be knock-on effects elsewhere in the industry, and that was one of the factors that we had to take into account when setting the total level of quota distribution and the scale of the leavers' scheme. We have no special measure with which to deal with the particular problems of those in the specialist dairy rearing sector.
    Mr. Roy Hughes: When will the Secretary of State realise that farmers throughout Wales are badly affected by the quota system and that that has ramifications for other industries and communities? Will he bear in mind that there is a feeling throughout the farming industry that this could well be the thin edge of the wedge, and that other farm products such as cereals may be next on the list?
    Mr. Edwards: Of course, as a Member of Parliament for Dyfed, I fully appreciate the effect of quotas and the damaging consequences for individuals. That is why we have listened carefully to the representations made. and why we are making several changes in the regulations to be debated in the House this week. I wish that the hon. Gentleman would make his position clear. When referring to the other products, is he arguing that there should be no cutback on the surpluses and the present expenditure an the CAP, or is he characteristically trying to have it both ways, and to get credit from the farmers while urging savings on the CAP?

    Labour Statistics
    Mr. Barry Jonesasked the Secretary of Stale for Wales how many people, unadjusted and inclusive of school leavers, are unemployed in Wales; and by what percentage unemployment has increased since May 1979.
    Mr. Nicholas Edwards: Last month there were 162,941 unemployed claimants in Wales. In May 1979 the estimated number of claimants was 77,177. That represents an increase of 111·1 per cent.
    Mr. Jones: Does not the prospect of water rationing in south Wales point to lay-offs and job losses? Why has the right hon. Gentleman been so laggardly and lackadaisical in his approach to the completion of the Wye-Usk water transfer scheme?
    Mr. Edwards: I am glad that on this occassion the hon. Member for Alyn and Deeside (Mr. Jones) is not so lost for words that he is unable to ask a supplementary question. I had hoped that he would welcome the fall in the number of unemployed by 5,858 since he last asked a similar question. We have made ample capital provision available to the Welsh water authority. It takes its own decisions on the planning of its capital programme.
    Sir Anthony Meyer: What contribution to the long-term and short-term employment prospects in Wales has been made by the Leader of the Opposition in his outright support of the miners' leader who seeks to destroy simultaneously the coal and steel industries in Wales?
    Mr. Edwards: I find it profoundly shocking that the leader of a major political party should associate himself with violence and intimidation and with a strike that can only do grave damage to jobs and add to unemployment.
    Mr. Abse: Is the Secretary of State not abusing the miners and failing to answer the Opposition's demands about the impact of water rationing that is about to come to south-east Wales? Will the Secretary of State acknowledge his personal culpability for failing to monitor works that could have been completed in south-east Wales, but for his neglect? Is the Secretary of State proud of having made an industrial waste out of south-east Wales? Is he about to add to his accolade by making southeast Wales into a Sahara?
    Mr. Edwards: We have spent about £75 million on improving the facilities for transporting water to the industrial areas of south-east Wales. I have no doubt that a water shortage would cause inconvenience, but it will create nothing like the damage and consequences caused by the strike which the hon. Gentleman and his hon. Friends are encouraging.

    Information Technology Companies
    Mr. Hoosonasked the Secretary of State for Wales whether he is satisfied that the Welsh educational system is providing the most desirable mix of well-qualified recruits to enable information technology companies to grow in Wales; and what consultations he plans with the employers and educational institutions most involved in this issue.
    Mr. Nicholas Edwards: I have had widespread consultations with employers and educational institutions and will continue to do so.
    Mr. Hooson: What specific steps have been taken to encourage the development of suitable courses in Wales?
    Mr. Edwards: In the advanced further education pool for specific information technology courses in 1983–84, £100,000 was made available to support four courses offering 30 degree places and 30 sub-degree places at higher education institutions in Wales. That figure was increased in 1984–85. In the non-advanced further education area, support grants are being introduced in 1985–86 to encourage the development of information technology courses.

    Overseas Companies (Job Creation)
    Mr. Gwilym Jonesasked the Secretary of State for Wales if he will estimate the number of jobs in Wales currently provided by overseas companies.
    Mr. Nicholas Edwards: The most recent estimates indicate that foreign-owned companies in Wales employ some 42,000 people.
    Mr. Jones: I welcome that answer and the considerable progress that my right hon. Friend has been able to achieve in attracting jobs from outside companies. Is he aware of the concern about the future of WlNvest?Can he make a statement about its future?
    Mr. Edwards: Some time ago the Government announced that they were reviewing their inward investment operations. Officials have prepared a report, which has not yet been considered by Ministers. When it has been considered we shall have something to say about it. WINvest has done, and is doing, valuable work and has dealt with a large number of applications in recent months.
    Mr. Rowlands: Surely the publicity about water rationing cannot be an attractive proposition to overseas companies coming to Wales. Will the Secretary of State give a categorical assurance that he will make a statement to the House before the recess about water rationing and its impact on industry in Wales?
    Mr. Edwards: If I think that there is anything to report to the House, further to what I have already told hon. Members, I shall consider doing so. Far more damaging for the prospects of inward investment than any temporary water shortage is the damage being done by the industrial disputes with which the Leader of the Opposition has associated himself.

    Council House Sales
    Mr. Knoxasked the Secretary of State for Wales how many council houses have been sold to sitting tenants in Wales since May 1979.
    Mr. Wyn Roberts: A total of 36,885 council dwellings were sold to sitting tenants in Wales between May 1979 and 31 March 1984. In addition, 1,796 dwellings were sold by the Cwmbran development corporation and Mid Wales Development.
    Mr. Knox: What effect does my hon. Friend think the Housing and Building Control Act 1984 will have on council house sales in Wales?
    Mr. Roberts: I am glad to tell my hon. Friend that it will have a promotional effect when it comes into force in August. It extends the right to buy to groups of tenants who do not benefit under the current arrangements. It increases the maximum discount to 60 per cent. and introduces the right to buy on a shared ownership basis. This will give even more people the opportunity to enjoy the basic security and satisfaction of home ownership.
    Mr. Roy Hughes: Does the Minister appreciate that the building and construction industry is concerned not so much with the sale of council houses as with the threat of a moratorium on local authority capital projects? Is he aware that Mr. Michael Manser, president of the Royal Institute of Building Architects, points out in a letter to me today that such a move would be highly detrimental to the industry and would increase unemployment.
    Mr. Roberts: My right hon. Friend the Secretary of State has already dealt with that matter during Question Time today. Last Wednesday I made a statement about the issue in the Welsh Grand Committee. We hope that about £200 million will be spent on housing in Wales during the current year.

  CHURCH COMMISSIONERS

    Clergy (Pay)
    Mr. Chapmanasked the hon. Member for Wokingham, as representing the Church Commissioners, what proportion of the Church Commissioners' expenditure last year went to ministerial pay, including national insurance contributions and pensions and housing for the clergy.
    The Second Church Estates Commissioner, Representing Church Commissioners (Sir William van Straubenzee): Ninety per cent.
    Mr. Chapman: That is a high figure, and I recognise that little expenditure of the Church Commissioners is on bureaucracy and administration. In the light of the appalling damage done to the south transept of York Minster, can my hon. Friend confirm that the Church Commissioners will use their good offices to ensure that our fine, ecclesiastical architectural heritage is properly insured against—if this is not too inappropriate a phrase—acts of God?
    Mr. Speaker: Order. That question did not have a great deal to do with pensions, housing and ministerial pay of the clergy.
    Sir William van Straubenzee: I am glad to say that the percentage of expenditure on administration is 6 per cent., which I think is acceptable. The Church Commissioners are not responsible for the sort of insurance mentioned by my hon. Friend. Any incumbent who now contemplates inviting the Bishop of Durham to preach will probably wish to look carefully at his insurance.
    Mr. Peter Bruinvels: Has my hon. Friend seen an article in today's Daily Telegraph, entitled "Pay vicars by what their flock will produce", and relating to a report from the Institute of Economic Affairs? Does that idea have some sympathy and support within the Church Commissioners? Obviously, market forces may be helpful. The clergy, for instance, could publish figures about any increases in membership and this would directly affect their final salary.
    Sir William van Straubenzee: I do not read the Daily Telegraph, but the article has been drawn to my attention. The essence of modern financing in the Church of England is that it is very much a responsibility of the laity. Therefore, I do not think that it is worth exploring the idea of paying clergy by results alone.
    Mr. John Mark Taylor: In the context of the resources of the Church of England, can my hon. Friend give any encouragement to those of my constituents who would like a Church of England secondary school in Solihull?
    Sir William van Straubenzee: I cannot answer the question on behalf of the Church Commissioners, because it is not their responsibility. If, personally, I can assist my hon. Friend in any way, :[hope that he will write to me.

    St. Alban's, Teddington
    Mr. Jesselasked the hon. Member for Wokingham, as representing the Church Commissioners, what information the Commissioners now have concerning the current position and the future prospects for the building of the redundant church of St. Alban's, Teddington.
    Sir William van Straubenzee: The London diocese has reported to the Commissioners that it has been unable to find a suitable alternative use for the redundant building. The alternative courses for consideration under the relevant statute are demolition of the building or preservation by the redundant churches fund.
    Mr. Jessel: Is there any prospect of the redundant churches fund finding the necessary money, as it would now cost more than £300,000 to make St. Alban's safe and sound? The expert advice was that the only viable way to produce such a fund would be through an office block, which was not wanted by those living nearby and, in any case, had been prevented by local authority decisions. Do the Commissioners accept that, in the end, demolition is the only likely course?
    Sir William van Straubenzee: I must be careful not to prejudge the issue in any way. The Commissioners must study the matter and take advice from their statutory advisers. There are two possible courses of action, and I cannot for one moment forecast which will be chosen.

    Clergy (Pay)
    Mr. Greenwayasked the hon. Member for Wokingham, as representing the Church Commissioners, what percentage of clergy stipends for the latest year for which figures are available were paid by direct lay giving compared with 10, 20 and 30 years ago; what cash figures are involved; and if he will make a statement.
    Sir William van Straubenzee: As the answer contains a number of figures, I will, with permission, circulate it in the Official Report. However, I can tell my hon. Friend that the proportion of lay giving for clergy stipends has risen from 25 per cent. in 1963–64 to 43 per cent. in 1983–84.
    Mr. Greenway: Are not those figures remarkable? Does my hon. Friend consider that the laity get value for money? If so, how does he measure that value?
    Sir William van Straubenzee: The figures are, I admit, remarkable. The proportion of giving by the laity will, so far as can be foreseen, continue to rise, particularly as standards rise in terms of pensions, stipends and housing. I would not want to enter into speculation as to how one measures those.
    Mr. Frank Field: The Commission and the laity are to be congratulated on raising the pay of the clergy. Does the hon. Gentleman consider that the current level of pay is either fair or adequate?
    Sir William van Straubenzee: It is a substantial improvement on anything in the past, taken in conjunction

    15
    with housing—with house, rents and outgoings being totally free, as they should be — but there is always room for improvement, and it is that which the laity is seeking to achieve.
    Mr. Stokes: Does my hon. Friend agree that the increase in the proportion paid by the laity is extremely gratifying? Is he aware that although some of us are frequent critics of the clergy, and of the higher clergy, we believe, nevertheless, that they do wonderful work for the pay they receive?
    Sir William van Straubenzee: That is right, and I am certain that financial consideration is the last thing that motivates the clergy.
    Mr. Peter Bruinvels: Does my hon. Friend attribute this remarkable turnround to more covenanting throughout the country and perhaps to the fact that the laity now has knowledge of where the money is going?
    Sir William van Straubenzee: I should like to think that the educative process undertaken by the Church Commissioners, in particular, is bearing fruit because, as my hon. Friend says, it is now possible for the laity to be far better informed than before. The use of covenanting is an important part of the process.
    Mr. Skinner rose—
    Mr. Speaker: If I call the hon. Member for Bolsover (Mr. Skinner) to ask a supplementary question, will he do me a favour and stick to the subject please?
    Mr. Skinner: It will make a novel change if hon. Members stick to the subject, Mr. Speaker.
    Does the hon. Member for Wokingham (Sir W. van Straubenzee) appreciate that when people are collecting money from the laity to finance the clergy, they come up against many other people making other collections? Is he aware that a problem which they are coming up against today, and why they are probably not collecting as much as they otherwise would, is that people all over the country, even in Finchley, are collecting money for the miners? They are collecting money hand over fist—
    Mr. Speaker: Order.
    Mr. Skinner: I am not quite done, Mr. Speaker.
    Is the hon. Gentleman further aware that if only the emphasis in church magazines was changed in support of the miners, the collections on behalf of the miners could stop and the amounts collected for the clergy would go up?
    Sir William van Straubenzee: On the whole, there is not much competition. My observation is that members of all churches have taken a balanced view of the matter and that, in particular, they have an abhorrence and horror of the kind of intimidation that they have been witnessing.
    Following are the figures:
    For 1983–84 the percentage of clergy stipends paid by the laity was 43 per cent. the cost to the parishioners being £32·7 million.
    In 1973–74, 10 years ago, the laity met £5·7 million or 23 per cent. of the cost of clergy stipends.
    In 1963–64, 20 years ago, the laity met £3·7 million or 25 per cent. of clergy stipends.
    No figures are available for 30 years ago.

  THE ARTS

    Victoria and Albert Museum
    Sir David Priceasked the Parliamentary Under-Secretary of State answering in respect of the Arts what
    16
    help the Government intend to give to the trustees of the Victoria and Albert museum to deal with the state of physical deterioration in the museum's buildings.
    The Parliamentary Under-Secretary of State for the Environment (Mr. William Waldegrave): The Victoria and Albert museum is receving a substantial share of the resources for the national museums' and galleries' building and maintenance programme in the current year. Provision for future years is being reviewed as part of the 1984 public expenditure survey.
    Sir David Price: Will my hon. Friend confirm that the present state of repair of the Victoria and Albert building has been classified by the Property Services Agency as desperate, that it will cost more than £25 million to put right and that, under the present financing arrangements, there is no way in which the trustees can raise that money without generous help from the taxpayer?
    Mr. Waldegrave: There is no question but that the answer to the latter part of my hon. Friend's question is yes — the taxpayer will have to help in this matter. Recently, the chairman of the trustees and the trustees met my right hon. and learned Friend the Chief Secretary. I know that the trustees are putting figures of £25 million or £26 million on the cost of what needs to be done. The seriousness of the position is well known to my right hon. and noble Friend the Minister for the Arts.
    Mr. Tony Banks: It is well known that the Victoria and Albert museum trustees wish to impose some form of charges for admission to the museum. Will the hon. Gentleman confirm that the British museum is actively considering admission charges? What sort of early warning mechanism is the Office of Arts and Libraries operating whereby it can say exactly which museums and art galleries are proposing to impose charges?
    Mr. Waldegrave: It is entirely up to the trustees of particular museums to come forward with schemes, if they choose to do so.
    Mr. Buchan: Does the Under-Secretary of State not realise that to a large extent those museums have been given the green light by the Office of the Minister for the Arts? Does the hon. Gentleman recall that the last time the Government tried to impose charges they were clobbered? That was done under the present Prime Minister. Will the hon. Gentleman remind the Prime Minister that we will not tolerate a retreat to private enterprise on this issue?
    Mr. Waldegrave: The policy has been the same for a number of years — if the trustees of collections have wanted to come forward with schemes, my right hon. and noble Friend the Minister for the Arts and his predecessors have agreed to look at the proposals.

    Royal Shakespeare Theatre
    Mr. Alan Howarthasked the Parliamentary Under-Secretary of State answering in respect of the Arts if the Minister for the Arts will assess the consequences for the future of the Royal Shakespeare theatre at Stratford-on-Avon of the proposed construction of a radio transmitter at Bearley.
    Mr. Waldegrave: My right hon. Friend the Secretary of State for the Environment is currently awaiting the inspector's report following the public local inquiry into

    17
    this proposal. I can, however, assure my hon. Friend that the views of the Royal Shakespeare company and others who have expressed concern and were represented at the public inquiry will be fully taken into account by my right hon. Friend before a decision is made.
    Mr. Howarth: I urge my hon. Friend to take seriously the considered statements by the joint artistic directors and the general manager of the Royal Shakespeare theatre that the effect of radio frequency interference and the proposed transmitter on computerised sound and lighting, box office systems and other sensitive electronic equipment at the theatre would mean that closure of the theatre was inevitable? Will my hon. Friend urge his right hon. and hon. Friends at the Department of the Environment to prevent the BBC and the Foreign and Commonwealth Office from perpetrating an act of vandalism which they and everyone else would come very much to regret?
    Mr. Waldegrave: I assure my hon. Friend that those considerations will be taken fully into account by my right hon. Friend the Secretary of State.
    Mr. Meadowcroft: What co-ordination exists between Government Department, to ensure that artistic considerations are properly supported when they go before inspectors at such inquiries?
    Mr. Waldegrave: I do not believe that any special arrangements are needed. Evidence that is relevant to such a planning inquiry will, of course, be put before that inquiry and before my right hon. Friend.
    Sir Dudley Smith: Is my hon. Friend aware that the proposed transmitter was roundly condemned on the BBC programme, "Start the Week", which came from Stratford this morning? Is my hon. Friend also aware that, in the interests of not only the Royal Shakespeare theatre but many people in south Warwickshire, he would be doing the country a great service if he persuaded the BBC and the Foreign and Commonwealth Office not to engage in what my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) rightly called "an act of vandalism"?
    Mr. Waldegrave: As this is a planning matter, I can go no further than to say that these matters will be drawn to the attention of my right hon. Friend the Secretary of State.

    East Midlands
    Mr. Jannerasked the Parliamentary Under-Secretary of State answering in respect of the Arts whether Her Majesty's Government will take steps to encourage the theatre in the east midlands.
    Mr. Waldegrave: My noble Friend is concerned to encourage theatre and other arts throughout the country, within the resources available.
    Mr. Janner: Do the resources available include the so-called "Glory of the Garden" development policy and, if so, will the Minister confirm that Leicester's brillaint but hard-pressed Haymarket theatre will qualify for both aspects of the grant—that to which it is entitled as of right and that which it will receive because it has always succeeded in raising a substantial proportion of what it needs from sources other than the Arts Council?
    Mr. Waldegrave: As the hon. and learned Gentleman is doubtless aware, the Haymarket receives a substantial
    18
    sum from the Arts Council—£323,000 at present—and, as I understand it, there is no proposal in the strategy document to change the relationship between the Arts Council and the Haymarket theatre.
    Mr. Hickmet: Is my hon. Friend aware that the opera house at Buxton, which is also used as a theatre, has been renovated in recent years? Is he further aware that the Buxton festival is now one of the most important regional festivals in Europe and that it has been starved of funds by the Arts Council? Accordingly, will my hon. Friend ask the chairman of the Arts Council to ensure that adequate funds are made available to the Buxton festival so that it can continue to put on world-class performances?
    Mr. Waldegrave: It is not for me or my noble Friend to make representations on behalf of particular companies. Companies must make their own representations to the Arts Council, whose duty it is to make the decisions.

    Opera and Ballet (Subsidised Tickets)
    Mr. Proctorasked the Parliamentary Under-Secretary of State answering in respect of the Arts what was the average public subsidy for each ticket sold for performances of opera and ballet in the United Kingdom in each of the last three years; and if he will make a statement.
    Mr. Waldegrave: Figures from the Arts Council for the years 1980–81 to 1982–83 are £14·7, £15 and £19 for opera, and £4·9, £6·1 and £6·5 for dance. Decisions about individual levels of subsidy are of course for the Arts Council, and not my noble Friend.
    Mr. Proctor: As one who opposes the subsidising of any goods or services, may I ask my hon. Friend to tell the House what the logic is of subsidising the rich in that way?
    Mr. Waldegrave: I believe that it is well understood in the House that it is impossible to maintain a major opera company without public subsidy. I hope my hon. Friend will welcome the fact that the new policy of the opera house is to make up to 40 per cent. of its tickets available at lower prices than in the past.
    Mr. Jim Callaghan: Is it the Government's intention to subsidise the Duccio "Crucifixion", which Manchester is trying to keep in this country?
    Mr. Waldegrave: My noble Friend has today announced an extension of a month in the stop order on the picture attributed to Duccio, but it is for the national heritage memorial fund to decide whether to make further funds available.

    Welsh Arts Council
    Mr. Wigleyasked the Parliamentary Under-Secretary of State answering in respect of the Arts when the Minister for the Arts last met the chairman of the Welsh Arts Council; and what subjects were discussed.
    Mr. Waldegrave: My noble Friend regularly meets the chairman of the Arts Council of Great Britain about matters of current concern. He does not have formal meetings on a regular basis with the chairman of the Welsh Arts Council, although informal meetings do take place.
    Mr. Wigley: Does the Minister feel it appropriate to have a meeting with the chairman of the Welsh Arts

    19
    Council in view of the difficulty that it has had with the development plan currently under consideration, because drama in Wales, particularly among small companies, will be hit hard by lack of resources? Will he seriously consider, with the chairman of the Welsh Arts Council, the availability of adequate resources to meet the needs of a bilingual community, and one which includes many areas of scattered population?
    Mr. Waldegrave: The considerations which the hon. Member mentions at the end of his question are taken into account by the Welsh Arts Council. I shall draw the hon. Gentleman's request for a meeting to my noble Friend's attention.

    Temba and CAST Theatre Companies
    Mr. Tony Banksasked the Parliamentary Under-Secretary of State answering in respect of the Arts what funds have been made available by the Arts Council to the 7:84, Temba and CAST theatre companies in the last year.
    Mr. Waldegrave: In 1983–84 the subsidies received by these three companies were £89,100, £69,300 and £45,540 respectively.
    Mr. Banks: Is it not a fact that, because of the representations made by various Ministers, the Arts Council has clearly, in its document "Glory of the Garden", set out to eliminate political theatre? Do not the figures that the Minister has given relate to political theatre? Would the Minister care to comment on the instructions issued by Westminster city council, which show clearly that it is placing political limitations on theatre grants, as it has said that it will not give grants to any theatre that does not come up to the political standards that it has set?
    Mr. Waldegrave: The answer to the second question is, no, as that is not a matter for me. The answer to the first question is that the hon. Gentleman has, not uncharacteristically, shot himself in the foot. He has
    20
    explained to us on many occasions how one could not stop political theatre in this country unless one were to stop the production of Shakespeare.

    Questions to Ministers
    3.30 pm
    Mr. Dafydd Wigley: On a point of order, Mr. Speaker. My point of order concerns Welsh Question Time, and the linking of six questions on the coal industry—that is 4, 7, 10, 11, 15 and 19. Although these were taken together, only three supplementary questions were taken, and therefore the debate on the coal industry was severely curtailed and it was impossible to hear all the opinions of the House. When the Secretary of State, or any other Minister, says at the beginning of answering a question that "with permission" he will group questions together, whose permission is he seeking, as the hon. Member for Ogmore (Mr. Powell) refused to give that permission?
    Mr. Speaker: Order. It is a courtesy to the House when a Minister says "with permission". It is entirely up to the Minister how questions are grouped. I think that the hon. Member will readily understand that if I called everyone who wished to speak on every question we would get through very few questions. I am concerned to ensure that as many hon. Members as possible have their questions reached.

    Ministerial Statement
    3.31 pm
    Mr. Chris Smith: On a point of order, Mr. Speaker. You will recall that I raised with you on Thursday and again on Friday morning the question of—
    Mr. Speaker: Order. I shall stop the hon. Gentleman there because I have written to him about this matter, and he should await my letter before he raises this point of order again.

Business of the House
3.32 pm
The Lord Privy Seal and the Leader of the House of Commons (Mr. John Biffen): With permission, Mr. Speaker, I should like to make a short statement about the business at the end on Wednesday.
The business will now be as follows:
Motions on the Dairy Produce Quotas Regulations and on the Dairy Produce Quotas (Definition of Base Year Revision Claims) Regulations.
It may be for the convenience of the House if it is proposed that the motions be taken together and that three hours be provided for the debate.
Mr. Peter Shore: This is an unexpected statement, and a bad one. Surely the Leader of the House is aware that when hon. Members saw on the Annunicator that there was to be a business statement they expected that the Government would take the opportunity to announce the rearrangement of business for a statement and a debate on the implications of the High Court's condemnation of the serious matter of the breaching of the rules of natural justice by the Government's failure to consult the employees of GCHQ, Cheltenham. When can we expect a debate, or if not a debate an early statement, on this most important matter?
Although we are in favour of additional time to debate these new, additional, ill-judged dairy produce quota regulations, the Leader of the House must know that they make it virtually impossible for any producer to apply for an additional milk quota because of bad weather in 1983. We shall have no chance between today, when the regulations are made, and Wednesday, when they are debated, to have the necessary consultations with the interests concerned. Will the Leader of the House reconsider this foolish decision to have a protracted, late-night debate on so important a subject?
Mr. Speaker: Order. The Leader of the House's statement is on the debate on Wednesday on milk quotas, and we cannot have a re-run of Thursdays' business questions. We have three other statements, applications under Standing Order No. 10 and an important debate to follow.
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I am on my feet. We cannot have a re-run of Thursdays' business questions.
Mr. Campbell-Savours: On a point of order, Mr. Speaker. I believe that we are discussing Wednesday's business. Therefore, would it not be in order to raise matters that could form part of Wednesday's business?
Mr. Speaker: That is exactly what I am saying.
Mr. Bowen Wells: Does my right hon. Friend's statement mean that on Wednesday we shall now debate the motions on the rate support grant supplementary reports for England and Wales? Are the milk quota debates in substitution for those debates, or not?
Mr. Biffen: They are additional.
Mr. Merlyn Rees: As the Leader of the House is rejigging the business for Wednesday, will he allow a little time at 3.30 pm for the
22
Prime Minister to make a statement? The right hon. Lady has addressed the House on many occasions about GCHQ. We now learn that the Government's action has been found to be unlawful. Therefore, it is important for the Government to come to the House and tell us their response to the judgment. The Leader of the House has only to say that he will go to the Prime Minister. He told us on the news at 1 pm yesterday that the right hon. Lady was very approachable. Will he approach her today and ask her to come to the House and make a statement?
Mr. Biffen: Perhaps, in the context of that generous question from the right hon. Gentleman, I could say that the text of the judgment concerning GCHQ has been available for only a very short time. It is currently being considered. Perhaps, in the circumstances, the matter might be considered through the usual channels.
Mr. Nicholas Budgen: Has there been a change of substance in regard to the milk quotas? Many of us who are anxious to see the reform of the common agricultural policy will want to know whether the distortion of the market mechanism is even worse than it was, or whether on balance we can support it because it is a slight reduction in the cost of the enormous surpluses.
Mr. Biffen: I shall not be drawn by my hon. Friend's ideology, but on Thursday I was urged by many, including the Leader of the Opposition, to offer more time for this topic. More time is being offered, and I should have expected a vote of thanks.
Mr. A. J. Beith: How did the Leader of the House come to discover a second set of milk regulations of which he had not been advised on Thursday? Was it a helpful way of finding time? If so, does he realise that he could simply have lengthened the time for the existing debate? Although we welcome the time that is being given, the second regulations created additional complications.
With regard to the right hon. Gentleman's prepared reply on the subject of GCHQ, will he undertake to make a statement later today on the Government's intentions?
Mr. Biffen: On the latter point, I have nothing to add to what I have said. On the former point, as the hon. Gentleman is closely identified with the dairy industry I should have thought that he would know that the question of the base years has caused great anxiety. Therefore, I am sure that he is delighted that the Ministry of Agriculture, Fisheries and Food has been able to bring forward the regulations so that they can be debated later this week.
Mr. Tony Marlow: As many right hon. and hon. Members will be considering their position with regard to the milk quota debate on Wednesday night, will my right hon. Friend confirm that if the motion falls on 'Wednesday night it will be impossible for the Government to bring in regulations before October, and that in the meantime the existing system for milk will continue to apply?
Mr. Biffen: That is precisely the kind of question which my right hon. Friend the Minister of Agriculture, Fisheries and Food will have more time to answer, now that he has three hours.
Mr. Willie W. Hamilton: Although the debate on Wednesday on the dairy industry is important,

23
does the Minister think, in the light of the Government's continued assertion that everybody must obey the rule of law, and in the light of the fact that the Government have now been declared by the High Court to be in breach of the law, that a debate on GCHQ would be infinitely more important than any other that is likely to take place?
Mr. Biffen: The hon. Gentleman will have heard my comments on the GCHQ judgment, and I do not think that I can helpfully add to them.
Mr. Daffyd Wigley: Will the Leader of the House confirm that both sets of regulations are subject to approval by both Houses of Parliament, in which case, if the other Chamber were to reject either of them, the Government would withdraw them and reconsider their position?
Mr. Biffen: I think that the hon. Gentleman is right in supposing that the regulations are subject to confirmation by both Houses, but I find it extraordinary that the Plaid Cymru, of all parties, should now be sneaking towards the House of Lords.
Mr. John Morris: I am encouraged by the right hon. Gentleman's statement on GCHQ, but will he bear in mind that the Government have been turned down not only by the High Court but by the International Labour Organisation?
Mr. Speaker: Order. The right hon. and learned Gentleman is doing what I ruled to be out of order. We should only ask the Leader of the House questions on his statement, which is about Wednesday's business.
Mr. Morris: I am asking the Leader of the House whether, in the course of Wednesday's business, in view of the importance of the matter, the debate or statement that we should have could cover not only the High Court's adverse decision, but that of the ILO.
Mr. Speaker: Order. The point is that the business for Wednesday was announced as being consideration of the rate support grant supplementary reports for England and Wales, and a motion on the dairy produce quotas regulations. What the Leader of the House has done is to extend the time for the milk debate.
Mr. Morris: With respect, Mr. Speaker, that is precisely my point. The business for Wednesday has been changed in one material respect—that of time. If that time is available, I consider that it could be better used for the consideration of this grave matter.
Mr. John Gorst: Further to that point of order, Mr. Speaker.
Mr. Greville Janner rose—
Mr. Speaker: Order. Raising points of order takes up the time of the House. I wish I knew what is in the hon. and learned Member's mind. He has been rising to put a question on this matter. I hope he is not trying to gain advantage by raising a point of order?
Mr. Janner: On a point of order, Mr. Speaker. The hon. Member for Hendon, North (Mr. Gorst) and I sit on the Select Committee on Employment, which meets on Wednesdays. The Select Committee came to the unanimous view that GCHQ—
Mr. Speaker: Order. This is exactly what I feared would happen if I called the hon. and learned Member. We are asking the Leader of the House questions on his statement about extending the time for the milk regulations debate.
Mr. Gorst: On a point of order, Mr. Speaker. May I associate myself with at least one aspect of the Opposition's attempt to raise this matter? The answer very much dictates whether one should raise the matter of GCHQ under Standing Order No. 10 or whether one should seek an opportunity on Wednesday during the slice of time under discussion. I put it to you, Mr. Speaker, that it might be possible for you to reconsider whether we raise the question of GCHQ—
Mr. Speaker: Order. It may be of interest to the House to know that I have a Standing Order No. 10 application on this subject and that it will be raised later today.
Mr. Tam Dalyell: Is the question of the milk regulations on Wednesday more important than the advice of the House of Commons on whether the Government should appeal on GCHQ?
Mr. Biffen: If I may address myself strictly to the business which I have placed before the House, I assure the hon. Gentleman that the milk regulations are very important indeed.
Mr. Teddy Taylor: In view of the continuing interest of my right hon. Friend in containing public expenditure, can he say whether the additional one and a half hours will enable the Government to make plain whether they are reconsidering compensating those who leave milk production, only to produce other items which are already in structural surplus and costly to the taxpayer?
Mr. Biffen: Those are matters which my right hon. Friend the Minister of Agriculture will wish to answer in the debate. He will now be able to do so at greater length.
Several Hon. Members rose—
Mr. Speaker: Order. We must move on.

Personal Pensions
3.43 pm
The Secretary of State for Social Services (Mr. Norman Fowler): With permission, Mr. Speaker, I should like to make a statement on personal pensions.
When I set up the inquiry into provision for retirement, I said that one of its first tasks would be a study of personal pensions. This followed proposals to enable people to arrange their own individual pension plans as an alternative to joining an employer's scheme or the state earnings-related scheme. Under the proposals, people would accumulate their own fund which they could take with them when they changed jobs.
Evidence on these proposals was taken at four public sessions of the inquiry, and I also received 1,700 submissions and letters. In addition, I commissioned market research which demonstrated a substantial potential demand for personal pensions. I am today publishing a short consultative document outlining the Government's proposals and next month will be publishing a longer document which will summarise the evidence received.
The Government believe that the demand for personal pensions can and should be met. We propose that all employees should be given a right to take a personal pension. They will be free to choose the pension arrangements that suit them best. This right will extend both to those who belong to employers' pension schemes and to those now in the state earnings-related scheme. Nearly half of the work force now belong to occupational schemes which are contracted out of the state earnings-related pension scheme. The Government recognise that such schemes play a vital part in pension provision. We have therefore devised a system that will sit alongside and not threaten employers' schemes.
The proposals would allow those opting for a personal pension to contract out of the state earnings-related scheme. A minimum contribution to their personal pension would be required to ensure that they provided themselves with an adequate income in retirement. Different arrangements would operate for people who already belong to compulsory contracted-out schemes and those who do not, but the common aim is to ensure that all those who choose a personal pension are treated alike while not adversely affecting the financial viability of occupational pension schemes. I hope that this approach will meet the worries of many of those pension interests which gave evidence to the inquiry.
The essence of the Government's proposals is freedom of choice and flexibility. By giving all employees the right to a pension that they can take with them, we shall remove another obstacle to job mobility. People must have as wide a range of choice as possible of bodies with whom they may place their personal pension investments. The consultative document suggests a range of these but recognises the need for an adequate framework of consumer protection. We shall aim to keep restrictions to a minimum, but there must be safeguards against, for example, misleading promotion.
The House will recognise that the proposals are far reaching and that all concerned with the provision of pensions will want to study and comment upon their detailed implications. That is why I have published them as a consultative document. I shall welcome all views that
26
are expressed over the next few months. These are vital issues, and before proceeding with any legislative measures we shall want to be sure that the legitimate interests of all those concerned are recognised.
I should make it clear that the general principles underlying the proposals for personal pensions are ones to which the Government are committed. We have already gone a long way towards improving the position of occupational pension scheme members. I have announced our intention to legislate to safeguard the pension rights of early leavers. I have published proposals to give them a statutory right to a transfer value and to give more information about their schemes. Personal pensions extend choice for members of schemes and will also provide a major new option for people who at present have no alternative to the state earnings-related pension scheme by allowing contracting-out on an individual basis.
The proposals that I am announcing today give people more choice in the way they save for their old age. They are aimed at giving everyone in work a new right—the right to choose a personal pension.
Mr. Michael Meacher: Is the right hon. Gentleman aware that these are potentially damaging and retrogressive proposals? Is he aware that that is perhaps not surprising as they come from such a politically loaded and unrepresentative committee which comprised five people? Unprecedentedly, it comprised two Ministers, a Right-wing economist, the chairman of the Life Offices Association and Mr. Mark Weinberg, the managing director of Hambro Life, who has a huge vested interest in the proposals to the extent that he is expected to become a millionaire as a result of them. We deplore the partisan bias in that committee which will make a killing for some people in the City and expose thousands of people to the pitfalls of a hard sell from insurance companies, which will be strongly against their long-term best interests.
Is the Secretary of State aware that "personal pensions" is simply a breezy new title for the old-fashioned money purchase schemes, which have been overwhelmingly rejected because of their major disadvantages? Personal pensions do not provide benefits that relate to earnings at or near retirement, which is what people want, and they throw risks on people who are least able to bear them. Moreover, they undermine the central principle of the pooling of risks against unforeseen events such as long-term illness or disability.
Is the Secretary of State aware that these proposals will, contrary to what he said, almost certainly undermine final salary schemes, which are overwhelmingly preferred as the best option; will destroy a structure that has taken 20 years to settle down; and will expose the pension industry to its greatest enemy — uncertainty — by throwing pensions back again into the political cauldron? The Opposition will not allow the partnership in Labour's state-earnings-related pension scheme of 1975—the best deal that the pensioner ever had—to be overturned in this way.
Apart from that decisive reason against the proposals, is the Secretary of State aware that they will not achieve the goals that the Government claim for them; they are not the best or the only means of solving the problem of early leavers; they will not reduce the power of the financial institutions, as the insurance companies will simply replace the pension funds as institutional investors; and

27
they will not create a right to personal wealth because an individual who decides to manage his own portfolio may well prove incompetent and lose his pension security? Is he aware that there are wholly inadequate safeguards against the hard-sell sharks, as can be seen from the current market for buy-out policies—they are sometimes called section 32 schemes—whose advertisements often do not make clear what is guaranteed and what is a projection on a highly optimistic basis?
Will the Secretary of State acknowledge that, although for some people there would be gains under the proposals, for large numbers of others the benefits would be reduced in an unfair and arbitrary way? Finally and above all, is he aware that pensions require consensus, which means the agreement of the Opposition, if the long lead-time of planning is not to be frustrated by political conflict? The Secretary of State will not get consensus if he confines his decisions to a packed and prejudiced committee such as this one.
Mr. Fowler: Even by the standards of the hon. Member for Oldham, West (Mr. Meacher) that was a ridiculously hysterical response. Once again he places his faith in the maximum of restrictions and the minimum of freedom. It should be pointed out to him that no one is being compelled to take a personal pension. We are giving people a choice. Every time we try to do that, the hon. Gentleman, speaking apparently for the Opposition, opposes it.
I remind the hon. Gentleman that the proposals will benefit about 11 million people who are not covered by occupational pension schemes. There are those in schemes who, as the Gallup poll showed, would prefer to make individual arrangements. There are those who want to change jobs frequently during their careers and want to make better pension arrangements. There are women in work. The proposals break down another barrier to job mobility.
As for endangering occupational pension schemes, the Government want further to encourage occupational schemes, not reduce them. We have therefore devised proposals that meet the demand for personal pensions without endangering existing occupational schemes. On consumer protection, I am making it clear in the document that we shall publish that we shall consult on that, on a cooling-off period and on all such issues.
The hon. Gentleman should not come to his silly and instant judgment on these proposals, especially on the bogus grounds that he presented to the House this afternoon.
Sir Geoffrey Finsberg: Is my right hon. Friend aware that some pension schemes are non-contributory? Will he assure us that no opportunity will be given for employees who have non-contributory schemes to get into this scheme and make transfers of portable pensions?
Mr. Fowler: We are proposing that the right to a personal pension should apply to everyone in all sorts of schemes, but I assure my hon. Friend that we shall listen carefully to all the points made about the schemes.
Mr. Michael Meadowcroft: The principle of portability is fine, but the question is whether,
28
on balance, it is a benefit to move towards opening a Pandora's box of street corner salesmen with the potential of exploiting the many individuals who cannot afford expert and objective advice. Does the Secretary of State agree that he must give much more attention to safeguards and must give guarantees to people, or the benefits will prove to be the freedom of the fox in the hen run.
Mr. Fowler: We shall do everything possible in the consultation period to discuss and consider sensible measures of consumer protection. The hon. Gentleman will agree that we do not want so many restrictions upon personal pensions that it makes their growth unviable; but given that, I entirely share his view that we should consider measures of consumer protection. I ask the hon. Gentleman to examine the market research that we have carried out, which shows that about 80 per cent. of those not covered by pension schemes are interested in personal pensions. The House should consider extending their rights as well as the existing rights of people who are already covered.
Mr. Peter Hordern: I congratulate my right hon. Friend on putting an end to the Victorian paternalistic system which allows an occupational pension to be paid in full only to those who have served a lifetime in one company. Is it not truly astonishing that the spokesman for the Opposition, the hon. Member for Oldham, West (Mr. Meacher), appears to align himself with the narrow, restrictive vested interests of the City, which are interested only in preserving full pension rights for a narrow minority of people who are covered by occupational pension schemes? When will my right hon. Friend introduce legislation to carry out this ambitious and hopeful scheme?
Mr. Fowler: I have, unfortunately, listened to the hon. Member for Oldham, West (Mr. Meacher) previously, and very little astonishes me about the views that he expresses. We propose that a personal pension — a pension that someone arranges for himself and can take with him when he changes jobs or becomes self-employed — shall become a right for employees. There should now be a consultation period on the proposals in the document. That will come at the end of November and proposals for legislation will follow it.
Mr. Brynmor John: The Secretary of State mentioned the 11 million people in the state pension scheme. How many of those does he believe will contract out of that scheme and take up personal pensions? He talked about safeguarding the occupational pension schemes. What steps will he take to safeguard the state income-related scheme? What protection will he afford to those who invest in personal pensions? Will it be a complete game of roulette, or does the right hon. Gentleman envisage a safety net?
Mr. Fowler: I envisage some consumer protection restrictions and some restrictions on the providers of personal pensions. As to any risk to the national insurance fund, when the hon. Gentleman has read the consultation document he will see that people with personal pensions will bear the investment risk themselves and the national insurance fund will not take up any of the shortfall on the guaranteed minimum pension. It is, of course, extremely difficult to forecast the demand, but the Gallup poll showed that about 80 per cent. of those not covered by

29
pension schemes were interested in personal pensions. The poll showed that there was a substantial demand for personal pensions from those in pension schemes and especially from those not covered by occupational pension schemes.
Mr. Roger Freeman: Is my right hon. Friend aware that his statement is warmly welcomed by Conservative Members, based as it is upon freedom of choice and upon encouraging individuals to make provision for their own pensions as well as relying on the state scheme? In the interests of a free and wide debate, will my right hon. Friend publish the report to the Minister on the scheme by the Occupational Pensions Board?
Mr. Fowler: I am grateful to my hon. Friend for his support, and I give him the assurance that the Occupational Pensions Board's report will be published. It will be published in the document that I shall be publishing, but if the board wants to publish it prior to that, it is entirely free to do so.
Mr. John Fraser: As the Government preside over a record number of bankruptcies, will the right hon. Gentleman confirm that an individual pension will be exempt from any claims by a trustee in bankruptcy and that, if the funds of the subscriber with an insurance company are put in jeopardy by the insolvency of that company, they too will be protected?
Mr. Fowler: Yes, I can give such assurances. Obviousy, we shall want to give that kind of protection.
Mr. Tim Eggar: Is my right hon. Friend aware that his statement will be widely welcomed. Is not the attitude of the hon. Member for Oldham (Mr. Meacher) extraordinary, because if his fears are well grounded no one will opt for portable pensions and, therefore, by definition he has nothing to worry about? Will my right hon. Friend also confirm that employers' contributions will be transferable into portable pensions?
Mr. Fowler: In reply to my hon. Friend's second point, personal pensions will be available as of right to all employees who should be able to contract out of the state earnings-related scheme. The test of contracting out should be based on the level of the contribution, not on the guarantee of benefit, and special arrangements will be made for schemes contracted out. My hon. Friend will find that the points he has raised are covered in the consultative document. I am grateful for his support.
Mr. Charles Kennedy: Will the Secretary of State further share with the House his views on how the shortfall will be met? If, as he said in his statement, he is anxious to increase job mobility, and if the shortfall is not assisted by Government support, is there not a danger that the opting out scheme will become a greater liability on employers and could result in a possible tax on jobs similar to the national insurance surcharge, which was abolished in this year's Budget?
Mr. Fowler: I do not think that it will remotely have that effect. Pension scheme costs should not go up as a result. Personal pensions will be contracted out of the state earnings-related scheme and will therefore benefit from a rebate of national insurance contributions. That rebate will go to the personal pension. Frankly, I do not believe that the dangers to which the hon. Gentleman alluded will come about.
Mr. Tim Smith: I welcome what my right hon. Friend has said, for the simple and important reason that it will increase choice, but what guarantees will there be for existing occupational pension schemes? Is there not a danger that some small schemes in particular may, in these circumstances and depending on conditions, feel that it is not worth continuing?
Mr. Fowler: I do not think that they will feel that, and I very much hope that they do not. We want to encourage further occupational schemes, not to reduce them. In the consultation document we have sought to devise proposals which will meet the demand for personal pensions without endangering existing occupational schemes. Clearly, I shall listen to what the National Association of Pension Funds and other pension interests have to say.
Mr. Denis Skinner: Is not the Government's avowed intention to ensure that those who rely on the state scheme will suffer once people begin to pull out at the top end? Cannot an analogy be drawn with what the Government, encouraged by their supporters, did to weaken the NHS by giving the so-called freedom of choice to buy into private medical insurance? Will not the net result be the same, and will not these proposals damage the state scheme? The only beneficiaries will he the insurance companies and about 50 of the Secretary of State's right hon. and hon. Friends who will line their pockets as a result of their association with those companies.
Mr. Fowler: No. That is about as silly as the comments of the hon. Member for Oldham, West (Mr. Meacher) — [HON. MEMBERS: "Not quite."] My hon. Friends correct me—not quite as silly.
The hon. Member for Bolsover (Mr. Skinner) is correct—we believe in giving the public choice. That is right, particularly when 11 million people are not covered by occupational pensions. The only logic of the hon. Gentleman's argument is a system under which both health and pensions should become a state monopoly. He is welcome to make that suggestion, but I doubt whether the public will support him.
Mr. Andrew Rowe (Mid-Kent): Does not my right hon. Friend agree that there are a range of reasons for supposing that the traditional pattern of earnings is likely to change and that many people will be earning much more in the middle of their careers than at the end? Does not this scheme provide the kind of flexibility or response that we all need?
Mr. Fowler: It should not be assumed that everyone wants to be a member of a final salary scheme, for the reasons that my hon. Friend has stated. We are setting out one further option.
Mr. Tony Banks: May I push the Secretary of State further on his reply to his hon. Friend the Member for Enfield, North (Mr. Eggar)? Will employers' contributions be transferred over with portable pensions?
Mr. Fowler: There will be no obligation on the employer to make a contribution, but there will be no restriction on him doing so if that is what he wants. The national insurance rebate will be transferred, but that is different.
Mr. Tim Yeo: Does my right lion. Friend agree that the success of personal portable pensions

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depends heavily on the continued availability of tax reliefs on contributions to those schemes? Will he bear that in mind in any discussions that he may have with his right hon. Friend the Chancellor before next year's Budget?
Mr. Fowler: Yes.
Mr. Michael Stern: I congratulate my right hon. Friend on the start of what is potentially the greatest increase in the freedom of an individual to control his own life since this Government introduced the legal right to buy council houses. I invite him to contrast the attitude of the hon. Member for Oldham, West (Mr. Meacher) with the Opposition's well-known regard for individual democracy at all levels, particularly in the Labour party.
Mr. Fowler: My hon. Friend is right. The personal pension proposals add to other reforms planned by the Government and protect the rights of early leavers, the right to transfer value and provision on disclosure. Taken together, these amount to some of the most substantial reforms in occupational private pensions over the last 20 or 30 years.
Mr. Tony Marlow: As I understand it, if someone is a member of a company pension scheme, he pays the money himself and the company pays some money into the fund on his behalf. If my right hon. Friend is saying that those who opt for the private pension will not get the contribution from the company, there is no real choice and they would be better to stay with the company.
Mr. Fowler: There is no obligation on the company to make a contribution, but what makes this different from, for example, section 226 schemes, is that people will benefit from the rebate of national insurance contributions. That will be a substantial step forward. I very much hope
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that some companies will decide that in the interests of employment policy they will want to make a contribution to personal pensions, but that will be a voluntary decision.
Mr. Meacher: Will the right hon. Gentleman answer three questions which he has dodged throughout these exchanges? What exactly is his guarantee that personal pensions will not threaten the occupational schemes? What safeguards will there be against the hard-sell sharks? What guarantee does he offer that no one on a contracted-out personal pension will end up below the poverty line on a supplementary pension?
Mr. Fowler: On the third point, by setting the minimum contribution we shall seek to ensure that that does not happen.
As I have said before, personal pensions will be contracted out of the state earnings-related scheme. They will therefore benefit from a rebate of national insurance contributions. The effect of the proposals set out in the consultation document will mean that at one and the same stage they will meet the demand for personal pensions without endangering the existing occupational scheme. For example, the rebate proposals mean that the scheme's finances will not be upset if the younger members leave the occupational scheme. The hon. Gentleman will have received a copy of the consultative document and will find the details set out there.
As for consumer protection, I have made it clear already that we shall consult further on that. In my view, such matters as cooling-off periods and exaggerated projections of return are factors in respect of which we shall want to safeguard the public. However, I find the approach of the hon. Member for Oldham, West quite extraordinary. It is clear that he is entirely opposed to the freedom of choice of the public even when it is demonstrated that half the working population are not covered by occupational pensions. Frankly, I think that the hon. Gentleman will live to regret the words that he has uttered today.

Dock Strike
4.10 pm
The Secretary of State for Transport (Mr. Nicholas Ridley): With permission, Mr. Speaker, I should like to make a statement about the clock strike.
Registered dockers are on strike at all ports in the dock labour scheme. Dockers are also on strike at the non-scheme ports of Montrose and Shoreham and, as regards freight traffic, at Dover, Felixstowe and Portsmouth. Ferry services for passengers, cars and coaches are continuing to operate.
As I told the House last week, the Transport and General Workers Union called the strike because of an alleged breach of the scheme by the British Steel Corporation at Immingham. Last Thursday, the National Dock Labour Board, under the procedures in the dock labour scheme itself, decided that the scheme had been breached. By the following day the British Steel Corporation had remedied the matter for the future to the satisfaction of the Immingham dockers.
Despite that, the union has not called off the strike. Discussions between the union and the National Association of Port Employers in the national joint council for the ports industry broke up on Friday evening without any agreement being reached. I understand that the union is insisting the NAPE should guarantee that there will be no breaches of the scheme in future. The port emloyers have reaffirmed their willingness to honour fully their obligations under the scheme and believe that alleged breaches of the scheme should continue to be determined by the dock labour boards under the statutory procedures.
It has been said that dockers fear that the Government intend to abolish the dock labour scheme. Let me make it absolutely clear that the Government have no plans to change or abolish the scheme. There is therefore now no reason whatsoever for the strike.
I understand that both the union and NAPE have now accepted invitations from ACAS to discuss the dispute. I wish them all success. This strike can only damage many jobs in the ports, and in other industries, too. It is not in the interests of dockers, their families, their fellow workers in other industries, or of the country.
Mr. John Prescott: The House will welcome the intervention by ACAS into this escalating docks dispute at scheme and non-scheme ports. Is the Secretary of State aware that I welcome his confirmation today, as I said in an intervention during his last statement, that there was a clear breach of the scheme in law by the British Steel Corporation at Immingham?
May I ask the right hon. Gentleman to repeat the substance of his interview on the radio programme "The World This Weekend", especially his inflammatory remarks about the use of troops?
Has the right hon. Gentleman taken the opportunity to discuss with representatives of the dock workers the contents of his speech on 12 April at the port workers' lunch, when he clearly expressed his sympathy with a call to abolish the scheme, which I warned him at the time would lead to industrial dispute? Is not he aware that his speech, along with his infamous 1978 Ridley plan specifically to dismantle the coal and dock industries, has contributed largely to the fears that have triggered off this dispute? The talk of troops by him now can only serve to inflame it.
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These fears can only make the job of ACAS much more difficult. Will the right hon. Gentleman say that he is now prepared, not only not to change the scheme, but to meet the dock workers to reassure them about the future of the scheme and of the docks in which they work?
Mr. Ridley: I am glad that the hon. Gentleman at least welcomes the intervention of ACAS and I hope that he wishes it well. However, the National Dock Labour Board found that there was a breach at Immingham. Now that the breach has been remedied by the employers, is the hon. Gentleman recommending the Transport and General Workers Union to send the dockers back, since the original cause of the strike has now been proved to be cured?
At no time over the weekend have I mentioned the word "troops". I repeat that the Government stand ready to take any action that eventually becomes necessary to make sure that the essential affairs of the country are kept running.
Since both this week and last week the Government have given undertakings that there are no plans for changing or abolishing the national dock labour scheme, that removes any excuse for the strike. Is the hon. Gentleman now prepared to advise the dockers to go back to work on the ground that they have been misled about the cause of the strike?
Mr. Michael Brown: As my right hon. Friend said, the original cause of the dispute has now been resolved and settled. While wishing ACAS well in its attempt to try to break the deadlock, may I ask my right hon. Friend to say what role ACAS can play, bearing in mind that this does not appear any longer to be an industrial dispute? Is it not a political dispute?
Mr. Ridley: There is a great difference of opinion between Mr. Scargill, who says that it is a political dispute in support of the miners, and the Transport and General Workers Union, which says that it is entirely to do with the national dock labour scheme. I hope that their discussions this morning have succeeded in sorting out that essential difference, because it seems to me that the unions owe it to the dockers to tell them what is the cause of the dispute.
Mr. Richard Wainwright: The Secretary of State has given a welcome assurance now that the Government have no plans to change the scheme. Is it the fact that ACAS, in its difficult task, will not be asked from any quarter to consider amendments to the existing national dock labour scheme?
Mr. Ridley: I cannot answer for what anyone says to ACAS. But only this House of Parliament can change the scheme. It would need the Government to propose legislation to the House before the scheme could be changed. In case anyone did not hear me on the last 20 occasions that I said it, I repeat that the Government have no plans to do that.
Sir Paul Bryan (Boothferry): Is my right hon. Friend aware that at Felixstowe and at Dover the dockers were given no choice before being ordered out on strike? Is not this a repetition of what happened in the coal dispute and yet further proof that these are purely political strikes and have nothing to do with the welfare or grievances of the workers?
Mr. Ridley: It is right that we should have enacted the legislation, which my right hon. Friend the Secretary of State for Employment is bringing to completion, ensuring

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that workers should be consulted in a secret ballot about whether they wish to go on strike. It is evidently plain that at no stage in the docks dispute have any workers been consulted in a secret ballot. Indeed, the evidence from Dover this morning about the nature of the vote is very disturbing.
Mr. Gavin Strang: When will the Government recognise that neither the Transport and General Workers Union nor the National Union of Mineworkers will be humiliated or defeated? How much damage will be done to the country's economy and social fabric before settlements are reached that reflect the legitimate aspirations of these workers to defend their jobs?
Mr. Ridley: I ask the hon. Gentleman, in turn, what are the aspirations of the Transport and General Workers Union? All its requests about this strike have now been shown either to be settled or to be groundless. Can the hon. Gentleman use his influence—since he says that he has it—to get the dockers to accept that they have been called out on strike on false pretences and that it is high time that they went back?
Mr. Robert Adley: We have just listened to a statement from my right hon. Friend the Secretary of State for Social Services about the rights of individuals with respect to pensions. Taking up the remarks of my hon. Friend the Member for Boothferry (Sir P. Bryan), may I remind my right hon. Friend that the House has a responsibility to see that individuals are not bullied and intimidated into taking strike action when they have no choice in the matter? Will my right hon. Friend share my utter contempt of a once great political party that will support any strike by anyone anywhere at any time regardless of the rights or wrongs of the issue involved?
Mr. Ridley: Both points made by my hon. Friend require to be taken seriously by the House. We owe it to all citizens, including those who are members of trade unions, to ensure that they are protected from harassment, intimidation and pressures of the sort that my hon. Friend described. I agree that when we have an Opposition who sink to the depths of supporting a strike that is as flimsy in origin and as unjustified as this one, we have a problem in our political system.
Mr. Kevin McNamara: Will the Secretary of State admit that the guilty party in the strike—the British Steel Corporation—is a major port employer, a member of the National Association of Port Employers and a signatory to the national dock labour scheme? It knew all the implications of its action when it decided to use non-registered labour at Immingham to unload ships.
Will the right hon. Gentleman also admit that the case going before ACAS is on a narrow point, merely asking for procedures to be adopted to prevent strikes arising in the future over the use of non-registered labour? If the right hon. Gentleman really wanted to settle matters today, he could say that not only are there no plans for changes, but that he and the Government have no intention of introducing any changes in the lifetime of this Parliament.
Mr. Ridley: There were two breaches of the dock labour scheme. The first was the one at Immingham to
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which the hon. Gentleman referred. The second was not using the procedures to sort out that alleged breach but instead calling the entire national dock labour force out on strike, before the procedures had been used. It takes two to make a bargain and the unions should stick to the terms of the dock labour scheme, just as much as the employers should.
On the hon. Gentleman's second point, I do not believe that it is possible to go further than to say that the Government have no plans. I cannot give a stronger undertaking than that, and I repeat it.
Mr. Richard Hickmet: Bearing in mind how events arose at Immingham, is not the strike demonstrated to be political by the fact that Mr. Connolly, the dockers' leader, informed the dockers at the ore terminal at Immingham that, notwithstanding the fact that they originally wanted to load ore to go to Scunthorpe, they would lose their cards, jobs and incomes if they did so? Consequently, they stopped working. Has not the strike been engineered by the docker's leaders, in support of Mr. Scargill and his efforts to defeat this democratically elected Government?
Mr. Ridley: Whatever happened at Immingham, I want to make it abundantly clear that that matter has been resolved. Both the unions and the employers at Immingham have come to an agreement that that grievance no longer exists. As it was the original cause of the strike and it has been removed, I defy any Labour Member to tell me what on earth is the reason for the strike.
Dr. Oonagh McDonald: Is the right hon. Gentleman aware that his failure to give a commitment that the Government have no plans to alter or abandon the dock workers' scheme during the lifetime of this Parliament may prolong the strike with damaging consequences for the economy and the docks, including my own at Tilbury? Why cannot the right hon. Gentleman utter the words "no plans to change … during the lifetime of this Parliament"?
Mr. Ridley: The hon. Lady knows full well that if the unions had been frightened on this point they could have asked the Government to discuss it either before or after the strike. Let me point out how absurd the position is. We have a strike based—if this is the reason—on stopping the Government doing something that they have said that they will not do. That is clearly an absurd position. It is no good trying to make a meal out of it; there is nothing there at all.
Mr. Michael Howard: Has my right hon. Friend had his attention drawn to reports of remarks, made after the so-called vote at Dover this morning, by Mr. Shaun Walsh, the freight shop steward at the eastern docks? He said, "We are not happy with this vote at all. It was two thirds against coming out and one third for. We want to run the port as we are running it now." Is it not disgraceful that the men who work at Dover, many of whom live in my constituency, were denied a ballot? Will my right hon. Friend condemn this latest attempt by the trade union leadership to run away from democracy and force its members to take action that they do not wish to take?
Mr. Ridley: I agree with my hon. and learned Friend and I believe that a proper secret ballot should have been

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held. I am sure that all hon. Members who are democrats will agree with us that it would have been better to have a proper ballot. In view of that sort of manipulation, the only redress lies in the dockers at Dover deciding for themselves what they want to do, making their own decision and going ahead with it.
Mr. Allan Roberts: Will the Secretary of State admit that the Government and the National Coal Board claimed that they had no plans to close pits that are now under threat? The Government's statement that they have no immediate plans to destroy the dock labour scheme is not adequate. The right hon. Gentleman needs to commit the Government for the lifetime of this Parliament.
If the right hon. Gentleman wants to help ACAS, will he give an undertaking that no coal will be brought through non-scheme ports from such countries as Jaruzelski's Poland and be handled by non-scheme labour to break the coal strike? Will the right hon. Gentleman withdraw the free market that he has introduced into port scheme development, which will destroy the scheme by the back door, as we predicted in the House three weeks ago?
Mr. Ridley: I intend to leave it to ACAS, which is independent and has the task of seeking to conciliate between the two sides and seeing whether they can find a solution. I do not intend to pre-empt the efforts of ACAS by giving any pledges of the sort that the hon. Gentleman seeks.
Mr. Mark Robinson: My right hon. Friend was right to mention the threat to jobs caused by the dispute. Once again, the steel workers at Llanwern find themselves in the firing line. Will my right hon. Friend give the House an assurance that if ACAS is unable to resolve the dispute the Government will take whatever steps are necessary to ensure essential supplies to industries that are affected?
Mr. Ridley: My hon. Friend is right to emphasise the threat to jobs. The jobs of some dockers will be at risk if the strike persists, but the jobs of many millions of their fellow workers and trade unionists in industries throughout the land will also be at risk. If any group is clearly identified as job wreckers, it is those who strike on such flimsy grounds as existed in this case.
Mr. Ian Wrigglesworth: Does the Secretary of State agree that it is in the overwhelming interests of everyone that the dispute be ended at the earliest possible opportunity? With that in mind, and now that ACAS has become involved, will the right hon. Gentleman and other Ministers refrain from making provocative statements so that ACAS can get on with the job of getting people back to work?
Mr. Ridley: I agree with the hon. Gentleman that the sooner the strike is ended, the better. We hope that ACAS will be able to bring about that conclusion. However, nothing that I or my right hon. Friends have said has been provocative. We have merely been trying to tell the truth to the nation and to the dockers.
Mr. Tim Rathbone: Will my right hon. Friend restate the Government's responsibility not only for those who wish to go back to work, but for all those who want to go to work anywhere in this country and rely on
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the economy for their pensions? Will he also restate the Government's commitment to lay contingency plans if they should be needed?
Mr. Ridley: I entirely confirm what my hon. Friend says, and that the Government are determined to maintain the right of those who wish to go to work to do so. I further confirm that the Government will take all necessary precautions and actions to protect the economic life, and the rest of the life, of this country.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to allow questions on the statement to continue for a further 10 minutes.
Mr. D. N. Campbell-Savours: Will the Secretary of State resist any request or demand for any change in the dock regulations from any person or organisation during the lifetime of this Parliament?
Mr. Ridley: I repeat that we have no plans to alter or abolish the dock labour scheme.
Mr. Ivan Lawrence: Is my right hon. Friend aware that just one of the companies in my constituency, Pirelli, will have to lay off between 1,200 and 1,400 people in two weeks' time unless it can clear its imports from the docks, that an important contract to provide tyres to Toyota is now at risk because it cannot export them, and that the Labour party's support for a bogus strike following upon its wholehearted support of the other bogus strike involving the mining industry shows to those in my constituency and the country at large just which party is the true party of unemployment in this land?
Mr. Ridley: How can Labour Members, who have protested their concern about unemployment year after year in this House, sit there mute, saying nothing in condemnation of the strike, when the jobs of my hon. and learned Friend's constituents and those of many other of my hon. Friends' constituents are at risk? Who are the job wreckers now? Who are the guilty men?
Mr. Jeff Rooker: Does the Secretary of State appreciate that he could not be accused of misleading the House in respect of the commitment that he has given about changing or abolishing the dock labour scheme even if there was such a proposal in the next Queen's Speech? In the nature of things, his words and commitments today can apply only to the present Session unless he gives a commitment that covers the lifetime of this Parliament.
Mr. Ridley: I fear that I must disabuse the hon. Gentleman. He should know that the next Queen's Speech is very far along the road to being drafted.
Mr. Christopher Chope: Does my right hon. Friend accept that he has probably bent over backwards to be patient and statesmanlike in his dealings over the dispute? Can he confirm that at this stage the employees, or trade union representatives, are still in breach of the terms and conditions of the national dock labour scheme?
Mr. Ridley: Yes, Sir. The grievous thing is that the strike was called because of an alleged breach, which turned out to be a breach, by the employers, but nobody ever suggested—
Mr. Peter Snape: It cannot be an alleged breach if it is a proven breach.
Mr. Ridley: I said that it was alleged to be a breach, and turned out to be one. When is the hon. Gentleman going to condemn the breach of the scheme which was involved in taking the men out on strike before the dispute had been put to the negotiating and conciliatory machinery?
Mr. Ron Leighton: Is the Secretary of State aware that his protestations at the Dispatch Box are pathetic? Is he further aware that he personally is the principal cause of the dispute in the docks? It was his hostile and injudicious remarks at the employers' lunch that put a question mark over the dock labour scheme. Moreover, is he aware that we have all read the so-called Ridley report, which advised the Government on how to take on the unions? In pursuit of that report, the Government have made the biggest botch-up of industrial relations to be seen in many of our political lifetimes. He is the guilty party.
Mr. Ridley: Before the strike began, my hon. Friend the Minister of State, Department of Employment, in a reply to a question, said:
"Whilst the operation of the dock labour scheme continues to be questioned, there are no plans to abolish it at present"—[Official Report, 2 July 1984; Vol. 63, c. 42.]
That is what I have said too.
Mr. John Townend: Will my right hon. Friend confirm that the Government will not allow themselves to be blackmailed by the dockers' trade union, that they will not allow trade unions to dictate what legislation should come before this House, and that if, in future, it is found to be in the national interest to change or abolish the national dock labour scheme, the Government will not feel restrained by today's statement?
Mr. Ridley: I confirm my hon. Friend's view about the need to protect the House with regard to passing such legislation as it sees fit, including legislation on trade unions. However, I fear that I must disappoint him by giving him the same answer that I have given to Opposition Members—that we have no plans to alter or abolish the dock labour scheme.
Mr. Tom Clarke: Does the Secretary of State realise that if he really wanted a solution to the problem he would have concentrated on the reference to ACAS and would not have made the controversial statements that he has been giving from the Dispatch Box? Trade unionists are worried about confidence, just as investors are about the value of the pound against the dollar. Trade unionists will not have confidence in this Government as long as 4 million people remain unemployed.
Mr. Ridley: Confidence will be restored if the dockers as well as the miners return te, work. I can think of no greater blessing or boon to our overseas competitors and of no greater opportunity for damaging this nation's economy than that offered by these two strikes, particularly as there seems to be no foundation for the dock strike.
Sir Kenneth Lewis: If the Transport and General Workers Union refuses, in its discussions with ACAS and the employers, to settle the dispute, the situation will become very serious. The people of this country will then see that the NUM and the TGWU are taking on not the Government but the country as a
40
whole. Will my right hon. Friend and, perhaps, the Prime Minister do something that they might be reluctant to do, but which will be very necessary, and call in the TUC to point out to it that there is great danger to the whole trade union movement if it does not get its people back to work and prevent a national catastrophe?
Mr. Ridley: My hon. Friend has rightly drawn attention to the risk to the country, but the two strikes are also putting the livelihoods and jobs of many of those unions' members at risk. The tragedy is that they were not consulted before the action was taken. There is no question about the Government calling in the TUC. It is self-evident, and must be so to the TUC, that the damage done to the trade union movement by those disputes is very great indeed.
Mr. Tam Dalyell: What contingency plans are there to supply fortress Falklands? Is the Secretary of State aware that I have been told by Mr. Derek Tedder of the National Union of Seamen at Avonmouth that no dispensation has been given, that the Romney sailed three hours before the strike started, and that it is extremely doubtful whether the next ship, the Orepesa, will sail? What do the Government intend to do? Is not it time to think of putting the £3 million a day which, according to The Sunday Times, is being spent on fortress Falklands into investment in the docks as well as many other things?
Mr. Ridley: I very much hope that essential ships for the Falklands and St. Helena will be allowed to sail, and that our essential exports and imports will also be allowed to move. However, I am glad to find one Opposition Member who appears to question the point and validity of the strikes.
Mr. Derek Conway: Is my right hon. Friend aware that a factory in my constituency gained an important export order that would create an additional 40 jobs in Shrewsbury, but that those jobs are now in jeopardy as a result of the dispute? Will he do whatever is possible to ensure that the public are aware that the real job wreckers are Opposition Members?
Mr. Ridley: I shall certainly do just that. Perhaps my hon. Friend would care to draw the plight of his constituents and the number of jobs at risk to the attention of the TGWU, in case its heart is softer than those of Opposition Members.
Mr. Tony Banks: Since the Secretary of State has not seen fit to give an assurance, can he say whether he stands by his earlier wish to make changes in the dock labour scheme?
Mr. Ridley: I have given my assurance, which included the words we shall not "change or abolish the scheme".
Mr. Matthew Parris: Since both sides have agreed to put the matter to ACAS, what is to stop a return to work while the ACAS report is awaited?
Mr. Ridley: The answer eludes me.
Mr. Prescott: Is the Secretary of State aware that his talks about ballots on this particular day comes a little hard when the courts have declared that the Government are guilty of an illegal act? The Secretary of State has not made clear his intentions for the dock labour scheme. He

41
says in his statement that he has "no plans" to abolish it, but is he aware that a number of employers have plans to change the scheme?
Can he assure the House that he does not intend to bring forward plans to the House during the life of this Parliament to change the national dock labour scheme? Is he aware that if he could give that assurance he would go a long way to making the matter clear within ACAS?
I have been asked whether I will encourage a return to work. Can the Secretary of State join me in endorsing the statement put out by the trade union at the breakdown of negotiations asking for a condemnation of future breaches of the dock labour scheme and accepting that non-registered labour can be employed on dock work only under the circumstances provided by the dock labour scheme 1967 and subject to prior agreement with the trade union? I fully endorse those words. Can the Secretary of State do the same? If he can, he will see the return of the dockers to work.
Mr. Ridley: The hon. Member for Kingston upon Hull, East (Mr. Prescott) knows that, whatever the port employers may say, the only way that the scheme can be changed is by legislation in this House. I have given a pledge that the Government have no plans to do that.
The hon. Gentleman mentioned the trade union's demand to alter the scheme. That is a matter—
Mr. Prescott: It is not a change in the scheme.
Mr. Ridley: Of course it is a change in the scheme.
Mr. Prescott: The right hon. Gentleman does not understand it.
Mr. Ridley: Of course I understand it. The unions are asking that they and they alone should decide how to classify dockwork and that is a threat to other people's jobs.—[HoN. MEMBERS: "No."] That is what the unions want.
Why did the unions not raise the matter before they went on strike? When did they seek to negotiate with the employers? They suddenly came up with the idea the moment that the Immingham dispute was shot from beneath them. The hon. Gentleman's exposition of his position is disgraceful. Why on earth cannot he get up and say that the strike should be finished and wrapped up, and that the men should go back to work?

Merrel Drug Company
4.43 pm
Mr. Jack Ashley: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the need for the Government to take action to restrict wherever possible the use of drugs supplied to the National Health Service by the Merrel drug company in view of that company's discrimination against the parents of children in Europe who may have suffered damage as a result of the use of the drug Debendox, compared with those parents so affected in the United States."
The matter is specific because the drug company has offered to pay £92 million to children in the United States who have claimed damages. The company has no intention of paying money to children in Britain who have made a similar claim. This outrageous discriminaion overlooks the fact that geography is irrelevant. The sole criterion for paying compensation for damage should be whether children have been damaged by the drug.
The matter is important because by this manoeuvre the Merrel drug company is trying to evade the legal consequences of using that drug. It now says that the drug was safe. It would say that, would it not? No company would pay £92 million without good reason. The proposed settlement is a £92 million surrender document. It is a surrender to powerful interests in the United States, who have felt for these children. The company has no intention of paying compensation to children in Britain. That is wrong and discriminatory.
The matter is urgent because Merrel should be told immediately that the British Parliament has no intention of accepting discrimination against British children. The Government should take immediate action. The Government have a powerful weapon, because they are major customers of the Merrel drug company and can advise British general practitioners to use drugs from other companies where possible.
I suggest a selective boycott of the Merrel company by the Government, using National Health Service purchasing powers, until this discrimination against British children is ended. The Government should fight for our children.
Mr. Speaker: The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the need for the Government to take action to restrict wherever possible the use of drugs supplied to the National Health Service by the Merrel drug company in view of that company's discrimination against the parents of children in Europe who may have suffered damage as a result of the use of the drug Debendox, compared with those parents so affected in the United States."
I listened carefully to what the right hon. Gentleman said, but I regret that I do not consider the matter to be appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.

Dock Strike
4.46 pm
Mr. Michael Brown: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 1Q, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the national dock strike."
The matter is specific because nearly all the main ports in Britain are strike-bound and no discharge of cargoes is taking place. The matter is important because now that the original cause of the dispute, which started at Immingham dock in my constituency, has been removed, the strike has escalated into a clear attempt by industrial means to challenge the democratic process. Dockers are now on strike for no reason.
The House will soon rise for the summer recess. There should, therefore, be an immediate opportunity for this serious matter to be debated. The implications of the strike and the reasons for its escalation have a direct bearing on the country's survival. The strike is now clearly designed to challenge the Government's authority, and has nothing whatsoever to do with the dispute which started at Immingham in my constituency.
Mr. Speaker: The hon. Member for Brigg and Cleethorpes (Mr. Brown) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the national dock strike."
I listened with care to what the hon. Gentleman said, but I regret that I do not consider that the matter is appropriate for discussion under Standing Order No. 10 and, therefore, I cannot submit his application to the House.

GCHQ, Cheltenham
4.49 pm
Dr. David Owen: I beg to ask leave to move the Adjournment of the House—
Mr. Tam Dalyell: On a point of order, Mr. Speaker. I believe that I was the first to give notice—
Mr. Speaker: Order. I do not know how the hon. Gentleman can know that.
Dr. Owen: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"Mr. Justice Glidewell's judgment that the ban on trade union membership for anyone working at GCHQ is invalid, of no effect and a breach of the rules of natural justice."
The matter is specific because, it relates only to GCHQ. It is important because in taking a decision without prior consultation on a matter that Mr. Justice Glidewell referred to as one of fundamental rights, the Prime Minister—as First Lord of the Treasury and, therefore, Minister responsible for the Civil Service — has acted unlawfully — an action without precedent and, in the words of the judgment, against the rules of natural justice. Never in our history has a British Prime Minister been found guilty in a British court of law and been placed in the dock on an issue that is, without doubt, without precedent in living memory.
The matter is urgent because the judgment was made after 12 o'clock today, so it was not possible to table a private notice question for answer by the Prime Minister. It is urgent also because it is an issue on which this House should take an opinion, preferably before the Government make up their minds whether to appeal. We have been told that the Government are urgently considering an appeal. I suspect that many hon. Members, on both sides of the House, want the opportunity to make a case for why the Government should not appeal and why they should re-enter negotiations to reach an accommodation with the unions about a no-strike and no-disruption agreement.
Many hon. Members have shown great interest in the matter and have given evidence to Mr. Justice Glidewell in written affidavits. As there has been no discussion in the House about GCHQ for many weeks, it is urgent that the House expresses its view on this vital matter.
Mr. Speaker: The right hon. Gentleman asks leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the decision by the High Court on the trade unions at GCHQ."
I listened with care to what the right hon. Gentleman said, but I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 10 and I cannot, therefore, submit his application to the House.
Mr. Dalyell: On a point of order, Mr. Speaker. Either before or after the right hon. Member for Plymouth, Devonport (Dr. Owen), I submitted an application on similar lines to those that he set out. I submit that he has not put the case properly. He did not emphasise the argument which must appeal to you—as a Speaker who has constantly said that he is concerned that the voice of

45
Parliament should be heard before and not after the event — about the crucial nature of the Government's statement that they may appeal.
The voice of the House of Commons should be heard before, and not after, any decision is made. By Wednesday, it will be too late. I am making an absolutely bona fide point of order. It is not a Johnny-come-lately submission. I asked questions about GCHQ on 18 December, long before the Foreign Secretary's statement. That is important because, in a sense, I feel that I was unwittingly partly responsible for the chain of events that followed—
Mr. Speaker: Order. What is the point of order for me?
Mr. Dalyell: In December I was told—
Mr. Speaker: Order. What is the point of order that the hon. Gentleman wishes to put to me? I am well aware of his considerable interest in and knowledge of this matter. He must put a point of order to me, or we must move on.
Mr. Dalyell: It is a point of importance, upon which the right hon. Member for Devonport did not touch. In mid-December I was told that GCHQ at Cheltenham had decoded the crucial orders to the Belgrano — [Interruption.]
Several Hon. Members rose—
Mr. Speaker: Order. I do not think that I want any help. I am answering a point of order. May I say to the hon. Gentleman and to other hon. Members that I listened exceedingly carefully to what the Leader of the House said in his business statement earlier this afternoon about the milk regulations debate on Wednesday, and to what he said about GCHQ. I believe he said that he was proposing to discuss the matter through the usual channels. If anything comes of those discussions I shall, of course, bear in mind the hon. Gentleman's interest in this matter. I cannot go beyond that this afternoon.
Mr. Peter Tapsell: The hon. Member for Linlithgow (Mr. Dalyell) twice this afternoon, in the hearing of the House, said that he had made an application under Standing Order No. 10, which clearly he was not granted. Have the rules of the House been changed? I have always understood that if an hon. Member applies for a Standing Order No. 10 debate, and that is not allowed by the Chair, it was strictly out of order ever to refer to it. Yet the hon. Member for Linlithgow has been allowed to make a submission on the subject that he wished to raise under Standing Order No. 10.
Mr. Speaker: Order. In fairness to the hon. Member for Linlithgow (Mr. Dalyell), it must be said that he submitted an application under Standing Order No. 10. and there is nothing wrong in his mentioning that. The news of the GCHQ judgment came after 12 o'clock, so there was no possibility of my considering a private notice question on the subject. The hon. Gentleman was within his rights to submit an application under Standing Order No. 10. It so happens that I had a further application from the right hon. Member for Plymouth, Devonport (Dr. Owen). The order in which the applications were received does not matter. It is a matter for the Chair. However, it is a fact that I heard from the right hon. Gentleman before I saw his written submission. Those are the facts.
Several Hon. Members rose—
Mr. Speaker: Order. No further points of order can arise on this matter.
Mr. Tapsell: Further to that point of order, Mr. Speaker. I do not pretend to be an expert on constitutional procedure, but I have sat in the House for a long time. With great respect, it appears that you have elaborated on what appears to be a new constitutional practice. If an hon. Member makes an application under Standing Order No. 10, will he now be allowed to refer to that and to ride on the tails of an application from another hon. Member? Does whether an hon. Member applies before or after 12 o'clock govern the matter? The rules appear to be in a state of flux.
Mr. Speaker: Order. The hon. Gentleman has been here long enough to know the rules. By way of explanation, I can tell the House that there was no opportunity before 12 o'clock for any submission to be made. The hon. Member for Linlithgow was within his rights to seek to make a further application under Standing Order No. 10. However, in the light of what I said to the right hon. Member for Devonport, I could not have accepted any submission from the hon. Member for Linlithgow. I allowed his point of order because he had made an application. Had there not been a previous application from the right hon. Member for Devonport, the hon. Member for Linlithgow would have been heard.
Several Hon. Members rose—
Mr. Speaker: Order. I do not need any help.
Mr. John Gorst: On a point of order, Mr. Speaker. With great respect, I do not wish to offer you help but to seek your advice. In view of your reference to the change of business announced by the Lord President of the Council, will you afford him an opportunity now to assure the House that no decision about an appeal will be made before the usual channels have discussed the matter?
Mr. Speaker: Order. The right hon. Gentleman is in the Chamber and has heard what I have heard.
Mr. Nigel Spearing: Further to that point of order, Mr. Speaker. I believe that the House, under Standing Order No. 10, has given you instructions to reach your conclusions without giving reasons — although occasionally people may hear things to indicate, and give some understanding of, your reasons. Is it not the case that, under Standing Order No. 10, the important phrase is "in time"?
The Leader of the House said that there may be some conversations between the usual channels about a debate on this matter. Through you, Mr. Speaker, I ask him for an undertaking from the Government that there will be no decision on the matter referred to by the hon. Member for Hendon, North (Mr. Gorst)—that is, a decision on an appeal — until and unless those conversations have concluded and there is a further opportunity for any hon. Member, possibly my hon. Friend the Member for Linlithgow (Mr. Dalyell), to raise an application under Standing Order No. 10 where the phrase "in time" can be applied by you accordingly.
Mr. Speaker: That is not a matter for me.
Dr. Owen: I rise on a different point of order, Mr. Speaker, and I seek your guidance on what the House can

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do in circumstances such as those which have arisen today. The House understands that the ruling on private notice questions is for the convenience of both Ministers and the House. However, there must be a capacity for the House to respond to events, particularly in respect of an announcement that is made after 12 o'clock and especially when there is in an announcement an indication that the Government already knew the judgment that was likely to be made.
I ask you, Mr. Speaker, to give us advice on what should be done, bearing in mind that the GCHQ issue on the last occasion was not discussed in the House for nearly eight weeks, that an application for the Adjournment of the House under Standing Order No. 10 was, within your discretion, refused and that the usual channels then conspired not to have a debate.
The reference today to the usual channels has caused some confusion on the Opposition Benches. As you know, Mr. Speaker, we are excluded from those talks. What is meant is a discussion between the Labour party and the Conservative party for the mutual convenience of themselves in the management of the House. That mutual convenience stopped a debate on GCHQ and other issues.
The other parties in the House also have rights. How else, on a really urgent matter of business, can we ensure—particularly on the Adjournment, because it is often easier for the House to form a view across the parties in such a forum and, as it were, by vote, to put a warning shot across the Government's bows—that we have a debate? What other procedures are open to us?
Mr. Speaker: It would have been necessary to have had the information before 12 o'clock for a private notice question to have been considered. The news did not come out until after 12 o'clock, so that there was no possibility of that happening. The remarks of the Leader of the House were made before the right hon. Member for Plymouth, Devonport (Mr. Owen) made his Standing Order No. 10
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application. I have no knowledge about whether conversations have or have not taken place, though I should be surprised if they had.
Mr. Peter Bruinvels: On a point of order, Mr. Speaker. I seek your guidance. Is it in order for one hon. Member to describe another as a "Tory scab" in the way that the hon. Member for Bolsover (Mr. Skinner) did—[Interruption.]—and is that not an unparliamentary expression?
The hon. Member for linlithgow (Mr. Dalyell) said that he had had difficulty hearing what the hon. Member for Plymouth, Devonport (Dr. Owen) said when making his Standing Order No. 10 application. Are you aware, Mr. Speaker, that it is difficult for hon. Members on these Benches to hear when there is continuous heckling from the hon. Member for Bolsover?
Mr. Speaker: The answer to the first part of that point of order is that personal abuse in this place should always be avoided. The answer to the second part is that interruptions from a sedentary position always disrupt our proceedings. I hope that they will not occur.
Mr. Dennis Skinner: On a simple point of order, Mr. Speaker. We listened with care to the way in which the Leader of the SDP tried to make his Standing Order No. 10 application. He did not explain it properly and my hon. Friend the Member for Linlithgow (Mr. Dalyell) had to do the job for him. It became apparent that there had been two Standing Order No. 10 applications. May I ask you, Mr. Speaker, at what time my hon. Friend the Member for Linlithgow made his application and at what time he was followed by the leader of the SDP making his application? May I also know why the leader of the SDP received preferential treatment over my hon. Friend?
Mr. Speaker: The application of the right hon. Member for Devonport was handed to me before I received that of the hon. Member for Linlithgow (Mr. Dalyell).

Investor Protection (Gower Report)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]
5.5 pm
The Secretary of State for Trade and Industry (Mr. Norman Tebbit): This debate provides an opportunity for the House to share its thoughts on developments in the wider debate on the financial services sector. We should not restrict ourselves to a narrow concept of "the City", which is an increasingly inadequate term to describe an array of services offered and sought in the wider financial markets throughout the world.
Nor should we be narrow-minded about investor protection, as though the investor's interest was in conflict with that of the market, its operators and other users. I hope to present my White Paper on the Government's policy towards these matters in the autumn, and I hope that it will be possible to bring forward a Bill in the 1985–86 Session. These issues have been widely discussed outside this House. I have given them a good deal of thought and have begun to reach some provisional conclusions, but before putting those to the House in the form of firm proposals, I think it right that I should listen to, and take account of, the views of the House, though I would be surprised if unanimity broke out on this issue today.
For many years these issues had been a rather non-controversial area, but in recent times a number of events have brought them to a greater prominence. First, there was the reference of the Stock Exchange practices to the Restrictive Practices Court; then, on 27 July last year, the announcement by my right hon. Friend the Member for Hertsmere (Mr. Parkinson) that the chairman of the Stock Exchange had put forward proposals which formed an adequate basis for legislation to withdraw the exchange from the ambit of the restrictive trade practices legislation; and then the publication, some six months later, of Professor Gower's proposals.
These events heaved a massive brick into the once tranquil waters of the City, sparking off a process of change and reform — both within the Stock Exchange and beyond it—more radical than the City has seen for many years, a long way from the so-called "sell out to the City" of which the ignorant and biased complained at the time.
For instance, the plans of the Stock Exchange for a new dealings system will demand new measures of investor protection. I have made plain the importance that I attach to this, and to meeting the December 1986 deadline. Hon. Members who follow these matters will doubtless raise them in detail during the debate. They will be aware that discussion continues about such issues as the publication of trading information.
This has been billed in some ways as a debate on Gower. It may go even wider than that. While views on Professor Gower's prescriptions may differ, I wish to pay tribute to him for providing what I think is a unique anatomy of one of the world's major financial centres.
For a while, it seemed that even informed opinion on what reforms were needed, and how they might be accomplished, was not merely divided but irretrievably fragmented. My impression is that the common ground is now reappearing.
The purpose of the debate is not for me to announce firm conclusions but to enable me to take account of the
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views expressed, though I will indicate the direction in which my thoughts are moving. A number of important responses to the Gower report have emphasised that my Department should remain the regulatory authority, and it has certainly shown itself as a competent regulatory authority. But I see my role and that of the Department in rather broader terms—not only to regulate the industry but to foster it.
My first objective is that the financial services sector should be able to provide services to British industry and commerce, to private investors and to Government in the most efficient and economical way, and in a way that is fully competitive internationally. We start with some tremendous assets: the happy accident of a geographical situation midway between the Americas and the far east, our long-established reputation for speed and ingenuity, not to mention our freedom — one established by deliberate policy of this Government — from onerous exchange controls.
I hope the House needs no reminding of the major importance of the City to private sector industry and commerce and to Government. It is in the City that my right hon. Friend the Chancellor funds the PSBR, that industry and commerce seek capital, that individuals and institutions invest savings, and whence, in addition, we received a net contribution to our balance of payments surplus in 1983 of an estimated £2·6 billion.
My second objective is to see the maximum freedom for market forces to stimulate competition and encourage innovation. In matters such as openness to newcomers and price competition, the financial services sector — and some other parts of the services sector—still have some catching up to do.
Thirdly, I would aim for a regulatory framework which is responsive to international developments and is not merely a cover for protectionism. The best firms—big and small—in the City are well aware of the need to stay ahead of our competitors lest business moves overseas.
My fourth concern is that the British financial services sector should be both competitive and a "clean" place in which to do business, and moreover that it is seen to be so. Our regulatory framework must command the confidence of users, both here and abroad. It does not take many scandals to sully the reputation of a multitude of decent traders. There can be no conflict of interests in this matter between producer or provider on the one hand and the customer on the other. Unless the markets command the confidence of potential customers, here and abroad, they will not attract the business they need to prosper and develop.
Finally, I want to achieve a regulatory framework which is clear enough to shape, but not yet so tight as to cramp the pattern of structural change in the City, but which has the resilience not to be simply overrun by events.
One danger of Government regulation is that it can have an ossifying effect. As the House knows, it is difficult to find time to keep the law up to date with a fast developing business world. The rules, therefore, must be robust enough to cope with developments in practice and technique. They must be broadly-based, so that they are appropriate for the whole range of dealings, from professionals-only dealings to dealings more generally.
Mr. Tam Dalyell: On page 45, Gower recommends:
"Recognised self-regulatory agencies should be empowered to apply to the courts for the issue of subpoenas to compel attendance of witnesses and production of documents required in connection with their disciplinary proceedings."
Does the right hon. Gentleman accept that crucial recommendation?
Mr. Tebbit: No; such matters will become clear in the White Paper. This is a debate in which I am seeking to set out the general thrust of my thinking. I shall listen to the views of the House before I come to firm conclusions. I am sure that that is the correct way in which to deal with the matter.
Mr. Dalyell rose—
Mr. Tebbit: The hon. Gentleman has had more than a fair share of the time of the House. I think that I should proceed with my speech so that other hon. Members have the opportunity to catch Mr. Deputy Speaker's eye.
So much for my objectives. How might they best be secured? I see market forces as the most potent weapon available, and I propose to rely on them to the maximum extent feasible. That extent is not easy to define, but I should set out at least some of the requirements for market forces to operate effectively to that end.
First, there should always be a high standard of disclosure. There can be no effective play of market forces without good market information. All the relevant facts must be exposed in a way that enables the potential client to compare like with like and draw the appropriate conclusions. If the investor draws the wrong conclusions, on the basis of fair disclosure—venturing all or part of his savings on an avowedly speculative and high-risk venture which fails for straightforward commercial reasons — he cannot look to any regulator for compensation for losses arising from his own misjudgments.
Secondly, it means a rigorous application of competition policy, tolerating practices which inhibit competition only in so far as they are essential to provide reasonable protection against malpractice.
Thirdly, it means vigorous enforcement of the criminal law, as expressed in existing statutes such as the Theft Act 1968 and in a simplified and clearer investment law.
I was pleased that my right hon. Friend the Chancellor of the Exchequer in his recent perceptive and wide-ranging speech to the Bow Group emphasised that point. The House will be aware that my powers under section 109 of the Companies Act 1967 will support a new standing fraud investigation group, reporting to the Attorney-General, staffed by people from my Department, the office of the Director of Public Prosecutions and the police. The existing procedures for trying complicated fraud cases are under review also by the Roskill committee. I look forward to its report in due course. I firmly believe that a sharp increase in the probability of conviction of fraudsters would strengthen the hand of the overwhelming majority of honest City businesses and improve the confidence of their customers.
Those three elements will in my view go a long way towards meeting the objectives that I have outlined today, but alone they will not do enough to give investors the necessary confidence. Caveat emptor and pursuit of swindlers alone cannot suffice in this area. I am certain
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that confidence cannot be achieved without supplementary measures aimed at making fraud and near fraud less likely to occur.
The orders signed over a year ago by my hon. Friend the Member for Reading, East (Sir G. Vaughan) to raise the standards required of licensed dealers in securities show the sort of things I have in mind by way of what I called "Supplementary Measures". For example, it is right that people in the investment business should be what are known as "fit and proper" persons. That implies, among other things, appropriate financial standing, relevant experience, and a background free from offences involving dishonesty. Similarly, we would expect to see business being conducted in a way that safeguarded the investor against malpractice. The ingredients might include separate client accounts, compensation, disclosure of interest in transactions for clients and the principle that in any conflict of interest the client's interest should be paramount.
We need to establish how best these and other appropriate conditions can be established. I should prefer the safeguards to be provided through institutions devised and largely administered by the financial services industry itself. I know that many Labour Members — who as Socialists support the centralist or corporatist approach—would no doubt rather see the Government in charge of every detail, even at the cost of a massive bureaucracy that would regulate the financial services sector to death. They should consider first the advantages of self-regulation. It means that practitioners, close to the intricacies of their various businesses, run their own affairs. Such self-regulatory agencies can enforce not just the letter, but the spirit, of their rules; and they will if we ensure that regulation is in their own best interests.
The agencies should be equipped to act quickly and flexibly and to pay for themselves, since the financial services industry and its users reap the benefits of a clean and healthy market.
Mr. Nicholas Budgen: My right hon. Friend said that he thought that his Department should be the main regulatory body. What role does he assign to the Bank of England in supervising those markets?
Mr. Tebbit: I think that my hon. Friend slightly misheard me. I said that my Department had a good record as a regulatory authority—it is a very competent one—not that it should look for a new empire. I know that the Governor of the Bank of England has no wish to add to the bank's formal regulatory responsibilities, and I am sure that he is right. I do not believe that there is a difference between my Department and the Governor on these issues.
Mr. Hugh Dykes: I appreciate that this is a preliminary debate, but there is an important point in connection with the Bank of England's plans to draw up a system for gilt-edged dealing, the Stock Exchange being responsible for the other dealing systems. Is there not a danger that in so doing, and switching jobbers and brokers to primary dealers and broker-dealers, it will create a closed shop, even unwittingly? Will my right hon. Friend give a pledge that that will be deliberately avoided?
Mr. Tebbit: I shall wait, if I may, to see the final conclusions that are reached on that point. The Bank of England is, of course, a not inconsiderable customer in the

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market. The fear that has been expressed is that if conclusions were reached about the way in which that market should be operated it might prejudice conclusions about the way in which other parts of the market, which might not have the same requirement, should operate. I am sure that the Stock Exchange Council is well aware of those considerations. I was much encouraged by the fact that in the last few days the council was able to make a unanimous report which bore on some of those problems.
Mr. Robert Sheldon: This is an important point. While I fully accept what the Secretary of State says about the value of self-regulating bodies, is it not essential that there should be some back-up provisions? That is the crucial aspect—whether it is the Bank of England or some other body.
Mr. Tebbit: The right hon. Gentleman has come to the point that I was about to make. Of course these self-regulatory arrangements need to be underpinned by statute while at the same time leaving a flexible operation that can adapt to changing business circumstances.
I believe that the institutions — the self-regulatory authorities as they have come to be known—should be relatively few in number and based on functions or types of business activity rather than on traditional patterns. They should include lay members, users as well as practitioners, to guard against the danger of them becoming closed shops or cosy clubs.
The House will be aware of the small advisory groups established with my blessing and that of my right hon. Friend the Chancellor of the Exchequer. One deals with insurance and is chaired by Mr. Fields, the chairman of the Life Offices Association, and the other is chaired by Mr. Jacomb of Kleinwort, Benson and is interested in the whole of the securities industry outside insurance. I hope that they will advise on workable systems of self-regulatory bodies for the investment and insurance industries.
While I await the advice with interest, I cannot necessarily be bound by it any more than I can be bound by that of the many other informed bodies and individuals who have been kind enough to offer advice. I hope that the Governor's group will help us to tackle some of the difficulties that a system of self-regulatory agencies would doubtless present. For example, how might such a system deal with the grey area; with overlapping functions; with diverse functions and potential conflict of interest? Who will regulate those firms or institutions—an increasing number, growing not least because of our action on the Stock Exchange—which do not fit straightforwardly into a single SRA? Should there be—this goes back to the point made by the right hon. Gentleman—as many have suggested, an intermediate or co-ordinating body to liaise between Government and the agencies?
We should need to resolve first whether such a body is neccessary and, secondly, if so, what form it should take. I am sure that hon. Members who take part in the debate will put their views on these complex matters on record.
I shall end by saying what I think about these matters at present. I have not yet come to my final conclusions, but I am inclined to the view that a number of self-regulatory authorities should be set up on a functional basis. There should be as few as possible and they should cover as much of the area as possible; and, though voluntary bodies, they should have statutory backing. If
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there were but one SRA — clearly most unlikely — it would need no "intermediate authority". It would be all things. It would, in effect, be a voluntary Securities and Exchange Commission. If there were to be a proliferation of SRAs, a co-ordinating body—the intermediate body—will be inevitable.
I sense a degree of movement of informed opinion in recent weeks towards toning down the ideas of the enthusiasts for a Securities and Exchange Commission and an acknowledgement of a possible role for an intermediate body among those who were formerly devoted to the system of first-tier SRAs alone. However, I am still prepared to listen to the arguments and to be convinced one way or the other. However we operate the system, it is clear that the SRAs will need to be seen to be responsive to the needs of the investors., as I have said, and not just to become cosy clubs regulating their own affairs for the benefit of their own members.
Mr. Jonathan Aitken: I fully understand and support my right hon. Friend's enthusiasm for these self-regulatory authorities, but will he take care to ensure that they have the necessary teeth to be seen to do the job properly? Is my right hon. Friend aware that the pattern of self-regulation set by Lloyd's of London—the last legislation from his Department—has resulted in circumstances that are akin to trying to clean out the Augean stables with a toothbrush? This is woefully inadequate, and much stronger powers are necessary if this side of the City is to be regulated properly.
Mr. Tebbit: I cannot agree with my hon. Friend's analogy of the clean-up exercise. The form and thrust of my speech must be plain, because once again someone has asked a question about the paragraph to which I propose to come.
Sir Anthony Grant: Before my right hon. Friend leaves that point—
Mr. Tebbit: I have not come to it.
Sir Anthony Grant: —and following the intervention by my hon. Friend the Member for Thanet, South (Mr. Aitken), is my right hon. Friend aware that the criticism, if criticism there be, of the regulations flowing from the Lloyd's Act 1982 are that they are too strenuous and too detailed, not that they are too weak?
Mr. Tebbit: I am not going to become involved in a discussion on the size of the toothbrush or the extent of the clearing-up exercise, but the SRAs will need power to discipline members, and there will need to be an effective appeal mechanism against expulsion or exclusion from the market, and powerful incentives for would-be traders to operate within rather than outside the SRAs.
I believe that it is right at this stage for the House to give its views, which I fear may not be unanimous, but I hope that at least we shall find some degree of unanimity on the future of the financial sector and upon its vital importance to the country. I hope that we shall find a reasonable degree of unanimity on the approach of the so-called SRAs. I should be particularly grateful for the views of hon. Members on whether an intermediate authority is needed and, if so, what sort of powers it should have and how it should be operated.
I am sure that, above all, we shall agree that the financial services sector must have a proper regulatory

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system. I hope that the debate will mark a further step towards a consensus on how the future might best be assured in relation to the regulatory systems.
Mr. Dykes: In the light of recent press reports, does my right hon. Friend fear that the process of reform and change of the Stock Exchange will be inevitably slowed down as a result of the recent council elections?
Mr. Tebbit: I am firmly of the opinion that the deadline of December 1986, which was entered into in the agreement between my right hon. Friend the Chancellor of the Exchequer and the Stock Exchange, must be met. Sir Nicholas Goodison was kind enough to make it plain to me recently that it is the view of the Stock Exchange Council that that deadline can be met.
5.29 pm
Mr. Peter Shore: I shall comment on the speech of the Secretary of State for Trade and Industry before putting to the House the tentative views of the Opposition.
First, I express my gratitude and, I believe, that of most hon. Members to Professor Gower for the quality of his report, the clarity of its analysis, the detail of his proposals, the methodical and comprehensive consultation with virtually all the interests involved and his remarkable industry in providing not merely a part I report, but shortly, and with the assistance of Sir Arthur Stainton, formerly the first parliamentary counsel, providing us with a part II Bill to implement his recommendations. This is a remarkable achievement and Professor Gower deserves the thanks of the House.
I make plain the great importance which the Opposition attach to the necessary protection of investors from, as Professor Gower succinctly put it,
"ignorant fools as well as from convicted crooks."
Wealth is still unevenly shared, but there has been a rapid growth of compulsory or quasi-compulsory saving, principally in the form of pension funds and the massive growth of owner-occupation, mortgage lending and building society accounts, together with the traditional taking out of life and industrial insurance policies. There can be no doubt that that means that millions of our fellow countrymen, many with quite modest incomes and savings, have a direct interest in effective investment protection and defence against financial fraudsters.
As to the approach of the Secretary of State, I shall not cavil at his prospective offer of a White Paper later in the autumn. It is right on the Adjournment—although we have had to wait for it—to have a fairly open debate. It makes good sense to hear what the House has to say, as there are many hon. Members on both sides of the House who have a great deal to contribute from their own direct experience. However, the right hon. Gentleman has missed something of an opportunity. He has underplayed his role, perhaps uncharacteristically — he is not normally accused of lacking in self-assertion—and has not given a sufficient lead in terms of the direction of his thinking. At this stage of the debate, the House and many outside would have welcomed that.
The right hon. Gentleman should not necessarily have reached conclusions, but he should have given the House a further steer. That is my judgment on his speech, and I should be surprised if it were not shared by a substantial
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number of people both in the House and outside. Later, I shall address two or three of the interesting and difficult questions with which the Gower report presents us.
Mr. Tebbit: The right hon. Gentleman must accept that if I had given anything beyond the steer that I have given, I should have specified the precise place at which I intended to arrive in my White Paper. That would have been the wrong way to approach this issue. This is a matter on which there are not partisan positions and no God-given solutions to the problems. We have to find the solutions in a constructive way.
Mr. Shore: This is not a matter of partisan division, but it is a matter of giving sufficient intellectual leadership and analysis to enable others more easily to formulate their views and to try to reach conclusions.
Common sense suggests, as the right hon. Gentleman suggested, that there will be sectors where the search for greater security and protection could conflict with the broad economic objective of internationally competitive and efficient markets. This conflict is more apparent than real, because nothing is more likely to damage long-term confidence in markets than situations where, through lack of regulation of investor protection, large-scale and continuing frauds are allowed to occur.
A balance has to be struck and we would be foolish if we did not recognise that the immediate reason for establishing the Gower investigation was the string of collapses of stockbrokers and investment managers, including such well-known names as Hedderwick, Sterling Gumbar Norton Warberg and Halliday Simpson, not to mention the still more serious defaults at Lloyd's that were revealed shortly afterwards. It was that that gave the impetus and occasion for this latest and most searching review of the legislation and machinery for investment protection.
The central purpose is made manifest in the terms of reference, set out in July 1981 by the right hon. Gentleman's predecessor but two, the present Leader of the House. The terms of reference were:

"(a) to consider statutory protection now required by (i) private and (ii) business investors in securities and other property …

(b) to consider the need for statutory control of dealers in securities, investment consultants and investment managers; and

(c) to advise on the need for new legislation."

It is important to remind ourselves of the main thrust of the Gower report, because recent ministerial speeches have tended to give investor protection a second place in the Government's approach to the securities market.
The Secretary of State for Trade and Industry broke an almost Trappist silence on the Gower report in a speech on 26 June, which he largely repeated today in the earlier part of his speech. In it, he outlined the main objectives of the change that he was seeking and said
"first, I am keen to see a financial services sector able to provide services to British industry and commerce, private investors and Government in the most efficient and most cost effective way and which is internationally competitive. That, beyond all else, must be our main objective."
That aim is very important but "beyond all else" — particularly in the context of this speech which was the Secretary of State's first response to the Gower report—must mean, and must have been intended to mean, above consideration for investor protection. That is a mistaken judgment. Adequate investor protection is crucial to the success of our financial services sector.

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Furthermore, I can find no evidence to support the view that those financial services that are under statutory control, for example, general and life insurance, are in any way, as a consequence of such control, lacking in efficiency and therefore in competitiveness. I see no reason to disagree with Professor Gower's conclusions when he states that unless proposals along the lines that he has advanced are implemented
"further serious scandals undermining public and international confidence are … inevitable."
He goes on to say, with the common sense that distinguishes the whole report, that
"if they were implemented, scandals would not be wholly prevented, but I believe that they would be fewer and that when they occurred less irremediable damage would be suffered."
We have to bear those obvious caveats in mind. We are seeking, not perfection, but a substantial improvement in the present regime.
As things now stand, we have an uneven and fragmented system for investment protection. Most of our main financial institutions are regulated by specific Acts of Parliament. Insurance companies are covered by recent legislation, such as the Acts of 1974, 1976, 1980 and 1981, and companies by the 1967 Act and the more recent 1980 Acts. Building societies have not been the subject of serious legislation for many years, while banks have been the subject of more recent legislation, in the form of the Banking Act 1979.
In addition, we have the Prevention of Fraud (Investments) Act 1958, which is of a general nature and seeks to deal with the dangers of irregularities and fraud over a wide area of financial services and markets. There are also a number of self-regulatory bodies or other agencies, with their own constitutions and rules of membership. The Stock Exchange is the most important of these, but the category also includes the take-over panel, the London Metal Exchange, the Gold Futures Exchange and the London International Financial Futures Exchange. There are also those markets—commodity markets come to mind—where self-regulation is either minimal or non-existent. There is a substantial range.
I do not think that many would be prepared to dispute Professor Gower's central conclusion—I am surprised that the right hon. Gentleman did not state this himself in fairly vigorous terms—that a new and more systematic regulatory system is now urgently required.
I mentioned earlier some of the cases which led to Professor Gower's appointment. He quotes in his report from the 1981 annual report of the Commissioner of the City of London police, who asserts that the problem
"stems from the inadequacy of legislation which exists for the purpose of protecting depositors and of controlling the activities of the companies in the business and handling funds on behalf of the investing public. The Acts have sought to control by registration and their failure arises from inadequacy in procedures for vetting applicants and for the lack of requirement for any controlling authority to exercise supervision over the trading of companies whose registration has been accepted. They"—
the Acts—
"are ineffective because they cannot control the dishonest companies whose activities they were intended to curtail."
The annual report of the Commissioner of the City of London police goes on:
"The result is that the Fraud Squad has been called upon to investigate the failure of investment companies whose financial difficulties could have been observed at a much earlier stage by a competent authority making standard supervisory checks, e.g.
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examinations of audited accounts. The problem is likely to remain with us until legislation, regulation and control is made more effective."
That has been the theme of successive annual reports of the City of London police.
The 1980 report of the City of London police described fraud as the
"growth industry of the 1970s",
and noted that it increased fivefold during that decade. The returns of the City of London police show that in 1980 its fraud squad had 150 cases tinder investigation, involving £30 million; at the end of 1981 it had 90 substantial cases, involving £54 million; at the end of 1982 it had 96 substantial cases, involving £100 million; and at the end of 1983 there were no fewer than 103 cases under investigation, involving £115 million.
Therefore, Professor Gower is right to find the present statutory protection inadequate, and I certainly endorse his first and central proposal that the Prevention of Fraud (Investment) Act 1958 should now be replaced by a new and more powerful Investor Protection Act. The present system of registration must be changed, and again I agree with Professor Gower's proposal that a new Act, with minor exceptions,
"would make it a criminal offence to carry on any type of investment business unless registered".
It is also important that registration should be with the Department of Trade and Industry or the commission, the rival merits of which I shall turn to later.
While Gower is entirely clear about the need for strengthening the basic investor protection statute, there is in his report—although, I think, not in his own mind—less clarity about the roles of self-regulation, of a Securities Commission and of the Department of Trade and Industry.
In Gower's first discussion document, published in January 1982, he made plain his preference then for a Securities Commission which would have executive, judicial and legislative powers over the whole spectrum of activities covered by the securities industry. While falling short of the scope of the American Securities and Exchange Commission — which I think, perhaps unnecessarily, strikes great terrors into many people in the City—nevertheless, it would be following down a path already well-trodden in Canada, Australia, New Zealand and Japan.
As Gower made plain in his January 1984 report—the one that we are discussing now — it was considerations of practical politics which moved him away from his own intellectual conviction and preference and to the advocacy of the Department of Trade and Industry as the principal statutory regulator. Gower discussed four possible options for undertaking that role — the Department of Trade and Industry, the Office of Fair Trading, the Bank of England, and the Securities Commission. I am sure that Gower was right not to recommend either the Office of Fair Trading or the Bank of England for the role. I think that he should have stuck to his own preference and advocated a Securities Commission. There are strong practical reasons for favouring that approach.
First, there is the usual problem—I say it with some experience of the Department concerned — of playing both a sponsoring and a regulatory role. I noted the stress which the Secretary of State put upon the sponsoring role

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for the financial services which he foresaw for the Department of Trade and Industry. However, the two functions do not sit easily together.
Secondly, the skills needed for effective regulation of the markets are of a high order and require men and women who are accustomed to moving with the pace of market events. The Department of Trade and Industry has had many excellent people in its companies and other divisions, but it gives the impression—I think it is the reality — of lumbering behind its fast-moving adversaries.
Thirdly, there is the very practical problem that such is the difference in rewards between Civil Service jobs and equivalent jobs in the City that there is a very high turnover of top personnel in the Department of Trade and Industry. It is a real problem. On top of that, there are limitations on numbers, or tardiness in response to increased work loads, which are a clear drawback.
In his report Gower gives a rather striking illustration of the difficulties of trying to undertake the task by having a beefed-up Department of Trade and Industry, or the appropriate divisions of it. At the top of page 21, he says that
"it has struck me as remarkable that in the relevant part of the Companies Legislation Division there is no post for a qualified lawyer or chartered accountant and that of 47 officials presently working in this area only four were in the division at the beginning of 1980."
That is a fairly damning indictment. I am not damning the Secretary of State. I am saying that that in a sense is often how Departments work. I know that a contrary argument is put—
Mr. Tim Smith: There is a simple answer. The legal advice is provided to the Department by the solicitor's branch, as the note in the report says, and the accountancy advice is provided by the accountancy services division of the Department.
Mr. Shore: I am certain that if we were to examine the history of the turnover of personnel in those two divisions, and if we were to look at the insurance division, we would find a similar movement of people and personnel to the kind that Gower described.
Mr. Tebbit: I should not want to pose in the role of mediator between the right hon. Gentleman and my hon. Friend the Member for Beaconsfield (Mr. Smith), but I think the right hon. Gentleman and I would probably agree that in reality the position is somewhere between the two stark ones outlined by Gower and by my hon. Friend. We have a very good legal division and a very good accountancy services division. The turnover is lower, particularly in the legal division, as the right hon. Gentleman knows from his experience. I am glad that the right hon. Gentleman does not damn me, because in doing so he would damn himself as well, as one of my predecessors.
Mr. Shore: Unless the position has changed enormously, the legal division is horribly overburdened with work. It was in my time, and I am sure it is still today.
Mr. Tebbit: No, just right.
Mr. Shore: Given what has been happening in regard to company collapses and the volume of cases involving fraud, I should be amazed if the division were on top of the work load that it now has.
It is my belief that most of the difficulties—I do not say all of them—which the Department of Trade and Industry has faced, and continues to face, would be overcome with an independent Securities Commission, although it would be a body, like the ECGD, which was responsible to the Secretary of State and, in its public reports, to this House. As Gower envisages, the commission would take the initiatives in proposing new regulations—although it would be for the Department and the House of Commons to approve them—and it would certainly be its responsibility to enforce all relevant regulations.
There is, of course, the closely related but separate question to which the right hon. Gentleman referred of dealing with fraud when particular cases have been identified. The present system is woefully inadequate. In relation to the magnitude of the task that they have to undertake, our fraud squads are pitifully undermanned. The length of the investigations is such that those involved have, long before the inspectors have identified their complex misdeeds, been able to leave the country and take most of their ill-gotten gains with them. Swiss bank accounts remain virtually impenetrable. I have noted the Chancellor's announcment of a new permanent fraud investigation group to be established in the department of the Director of Public Prosecutions early next year, and what he and his right hon. Friend the Secretary of State for Trade and Industry have had to say about the committee under the chairmanship of Lord Roskill, which is examining the conduct of serious fraud trials. There is much to do in that area, and we shall look forward to opportunities of debating these matters at a later stage when the proposals have become clearer.
Mr. Anthony Nelson: I should like to refer to the right hon. Gentleman's remarks about the structure of the commission, because we must understand exactly what the Opposition propose. Does he propose that there should be a commission over and above, and in addition to, self-regulatory agencies, or just that there should be a commission like the Securities Exchange Commission in the United States, with no self-regulating agencies, all the firms being directly supervised by the commission?
Mr. Shore: The only problem in dealing with the hon. Gentleman's question is in what order to do so, as I was just about to turn to the self-regulatory agencies, which are the other main instruments which Gower recognises for improved investor protection.
Mr. Gerald Bermingham: Before the right hon. Gentleman considers self-regulatory agencies, may I ask whether he agrees that the art will be in catching fraud before it commences, rather than—with Roskill—dealing with the fraud after it has been committed? That must be at the heart of the legislation.
Mr. Shore: I entirely agree with my hon. Friend. My remarks about the Roskill committee were in parentheses. We must address our minds to the problem of how to prevent fraud, rather than how to pursue more successfully — although that is important, too — those who have broken through the screening and the net.

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Self-regulatory agencies are inevitable and necessary for day-to-day regulations and to shoulder a substantial part of the enormous volume of work that regulation and invigilation requires. I doubt whether four such self-regulatory bodies — or even six — will be enough. However, that is another matter for more detailed discussion.
The main problems are, first, how to ensure that self-regulatory bodies are not primarily concerned simply with looking after themselves, but are turned directly upon the task of investor protection, and, secondly, who is to regulate the self-regulators.
In this context, the most important institution that we have to discuss is the Stock Exchange. The Stock Exchange has a long history of self-regulation, yet it was the failure and malpractice of a number of stockbroking firms which immediately preceded—if it did not lead to — the setting up of the Gower committee. The other danger, that the system of self-regulation could be a cover for a linked series of restricted practices, was the reason why the Stock Exchange rule book was referred to the Restrictive Trade Practices Court some years ago.
When we debated the Stock Exchange Bill on 22 November 1983, the right hon. Gentleman the Secretary of State went out of his way to praise the changes which, in the past few months, had taken place in the organisation of the Stock Exchange. He pointed out that lay members were now being appointed to the Council of the Stock Exchange; that a new membership appeals body had been set up; that non-members of the Stock Exchange would be able to serve as non-executive directors of limited corporate members of the exchange; and that minimum commissions were to be dismantled.
I do not wish to go over that debate again, except to remind the House that, for the Opposition at any rate, the virtue of having that Restrictive Trade Practices Court inquiry was to increase understanding of the major changes taking place in the Stock Exchange and to be able to discuss, in an informed way, the implications of those changes for investor protection.
The truth is that whether or not, under scrutiny, the system would have been justified, the previously established rules of the Stock Exchange provided a threefold defence for the investor. First, there was the system of minimum commissions. Secondly, there was the single capacity system, and, above all, the rule that required a stockbroker to act as an agent, not as a principal. Thirdly, there was the rule which forbade outside interests from acquiring a dominant stake in broking firms. Those were formidable barriers to conflicts of interests, and formidable guarantees for the investors.
Mr. Peter Tapsell: And compensation.
Mr. Shore: Yes, and compensation, which has been there throughout.
All that protection—except compensation—is to be swept away by 31 December 1986 and-as most of us suspect—at a substantially earlier date. However, what is to be put in its place remains obscure. What is clear, however, is that the new rules of the Stock Exchange are too important to be left entirely to the Stock Exchange Council itself. It is precisely such a function of examination and approval that an independent Securities Commission could be expected to undertake.
The task of regulating the self-regulators will be far better accomplished by a self-standing Securities
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Commission than it would be by either the Bank of England or by an attempt to revive the near-spectral Council for the Securities Industry. There may be some who think that that council could form an alternative to an independent Securities Commission. I refer them to pages 24 and 25 of the Gower report, and I should like to quote from the report's penultimate sentence on the matter. It says that
"there is a limit beyond which the relationship between Governmental regulation and self-regulation ceases to be a partnership and becomes a takeover. For the CSI to undertake the Statutory role envisaged for a commission would exceed that limit — in effect, would be a takeover of the CSI by the Government".
The case against that suggestion is cogently stated in those words.
The Governor of the Bank of England is awaiting the report of his recently-chosen 10-man council. The Stock Exchange is about to reveal the proposed rules of its new trading system. Those rules, incidentally, were not among the subjects of the discussion document put before council members in April. There are also the working groups to which the Secretary of State referred, covering insurance and the other markets. With so much going on, it is indeed right that we should wait — although, I trust, not for very much longer—for the White Paper, or perhaps the White Paper with green edges, to which the Secretary of State referred in his opening speech.
We need a White Paper which addresses itself at least to the questions that I have raised today, so that we can focus upon the proposals and problems that we have to overcome, and do so in a more concentrated way, well before the legislation is introduced.
5.59 pm
Mr. Peter Tapsell: I should begin by declaring an interest as I have tried to earn my living in various sectors of the City of London for the past 30 years. I am a member of the London Stock Exchange and a shareholder in the stockbroking firm for which I work.
I speak wholly and solely for myself. I do not know whether any of the 65 partners in my firm would agree with anything that I am about to say and I certainly do not speak for any wider group. As I have some serious reservations about what has happened in the City during the past 12 months and about what is projected to happen in the next couple of years, perhaps I should begin by saying what I favour and what I believe in. What I believe in can be summarised under seven headings. Perhaps I should add that I believe in them because they are in the national interest. I believe in fixed commissions, in single capacity dealing, in self-regulation, in the maintenance of the highest standards of business ethics and investor protection, in the giving of objective and independent investment advice to clients and in the preservation of the importance of the City of London as a great international financial centre under British ownership and British control.
The events that have stemmed from the agreement between the chairman of the London Stock Exchange and my right hon. Friend the Member for Hertsmere (Mr. Parkinson) about one year ago, which led immediately to the proposed abolition of fixed commissions, put my other six priorities at risk. No one who was present when my right hon. Friend the Member for Hertsmere announced his agreement, and certainly nobody who reads the debate in Hansard, could have believed that, only 12 months

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later, we should be discussing these matters in such a wholly transformed atmosphere. Even the Gower report now looks "old hat" as it discusses matters that would have been overtaken by events. Although the measured and reasonable presentation of my right hon. Friend the Secretary of State today would not have led one to guess it, everyone who reads a financial newspaper and anyone who enters a City luncheon room will know that the City is in a state of revolutionary flux and is deeply worried about its future.
In my speech on the Restrictive Trade Practices (Stock Exchange) Bill on 30 November last year, I said that I thought that the proposed abolition of fixed commissions would prove a great disaster for the City and Britain. That is still my view. There is not much point labouring that aspect now as it seems to be water under the bridge. I am afraid that I shall probably feel more strengthened in that view as the years go by and I shall not be surprised if it is eventually thought wise to reintroduce fixed commissions.
I do not believe that the whole of the rest of our financial system, which is well geared to the British national character, can work without some central lever on which everyone can depend. The analogies with the United States seem extremely far fetched. I have gone back and forth to Wall street for the past 25 years and I know the Japanese and German markets rather less well. They all have their strengths and weaknesses. The fact remains that the British system suits the British character and it has evolved because of that. People who think that it is possible suddenly to transform the London Stock Exchange and City institutions generally into an extension of Wall street do not understand this. It would be rather like turning the House of Commons into Congress or the Senate. Above all, anyone who claims to be a Tory should understand that a few academics, financial journalists, civil servants and politicians, who do not give the impression of having made great fortunes because of their profound feeling for financial markets, cannot suddenly reorganise an institution that has grown up over the centuries. Moreover, it has served the country extremely well and helped us to win every war from the time of Louis
Mr. Budgen: I am extremely attracted by my hon. Friend's argument. Will he explain why it is necessary for stockbroking firms to attract a great deal of capital to operate more efficiently? If one third of its share capital is bought for a vast sum by an outside institution, how does that add to a company's operating capital?
Mr. Tapsell: I do not want to give a great lecture on the workings of the City, but I shall try to answer my hon. Friend briefly. At present, stockbrokers deal as agents. Therefore, if someone telephones me and tells me to sell $100 million worth of United States bonds and invest them in yen bonds, I do not need much money to do so. I need only a telex machine or a telephone. It is the type of transaction that I or my colleagues do almost every day of the week, if not in that size. However, if we have to become principals, to run a book and to take into our own ownership that $100 million worth of bonds and perhaps hold it for a few days or weeks in the hope of finding a seller of Japanese bonds at the right price to match it, we need massive capital. The only way in which to get massive capital is from the banks which, to judge from the
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international monetary situation, are neither overflowing with money nor terribly secure. Nevertheless, they are anxious to put money into stockbroking firms. I entirely agree that the 29·9 per cent. will provide a wholly inadequate amount of capital for that task. That is why there is pressure to go up to 49 per cent. and even to 100 per cent. Therein lies the danger, as the big money is American, German and Japanese. Many leading stockbroking firms might either pass under foreign control or find that foreigners start new stockbroking operations in London. However, I do not want to be too distracted from the main thrust of my argument.
Mr. Tim Renton (Mid-Sussex): I entirely understand my hon. Friend's defence of the ancien régime in the Stock Exchange. As my brother has for many years been a partner in the same firm of stockbrokers as my hon. Friend, I am delighted to know—as I do—that it has been successful. Surely the growing dealings in leading British blue chips offshore, notably in New York in American depository receipts, is a clear sign that if nothing is done to the present system and unless more flexibility is added to it, there is a great danger of even leading British stockbroking firms such as my hon. Friend's losing out to other markets which are much more flexible.
Mr. Tapsell: It is my view and experience that the movement towards dealings in United Kingdom stocks on Wall street has been almost entirely due to stamp duty. The 2 per cent. stamp duty which, too late in the day, has now been reduced to 1 per cent. in the Budget made it impossible to compete in London. One therefore had to deal in New York. If we had not had to pay 2 per cent. stamp duty, the problem would not have arisen. Even 1 per cent. stamp duty makes a big difference. The price at which one deals in New York or London is almost identical but the Americans pocket the 1 per cent. difference.
The implications of the Parkinson-Goodison agreement, if I might use that colloquialism, were not understood at the time. If they had been, there would not have been this great drama of rapid change. It is astonishing that the full implications of abolishing fixed commissions were not understood at the time. When my old, dear and late friend John Davies was appointed Secretary of State for Trade and Industry in 1970 he found a group of civil servants who were keen to get rid of fixed commissions. He asked me to talk to him about it. I explained then that if fixed commissions were abolished, one would inevitably have to be abandon single-capacity dealing and everything which has flowed from it.
When Government Departments have an attractive idea on file, they try it on every Minister of any Government until they find a buyer. They eventually found a buyer in the present deputy leader of the Labour party, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). It is to be regretted that since 1974 successive Conservative Secretaries of State did not reverse his decision to put the matter to the Restrictive Trade Practices Court, which put the Stock Exchange into its unhappy position. It is to the credit of my right hon. Friend the Member for Hertsmere that he seized that nettle.
However, for the Stock Exchange and the City the damage had to a considerable extent been done. We now face a damage limitation operation. Let me spell out the knock-on effects of the abolition of fixed commissions.

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When one gets rid of fixed commissions, the tremendous drop in the incomes of stockbroking firms makes it virtually impossible to continue with single capacity. They must become market makers to make sufficient money to continue, and to become market makers they need enormous sums of capital
Dual capacity will create all the problems, as is evident. The irony is that during the last Session, having found many scandals in Lloyd's of London and having concluded after endless debates that they stemmed primarily from dual capacity, we imposed single capacity on Lloyd's to overcome scandals and fraud. Yet in this Session, although we still have a Conservative majority and Government, we are doing the opposite with the Stock Exchange. No Minister has attempted to explain why what was right for Lloyd's is wrong for the Stock Exchange.
I realise that Lloyd's and the Stock Exchange are not exactly analogous. Their business differs greatly. Yet the basic problem of dual capacity is the built-in conflict of interest. My experience in the City is that almost everyone is honest. During 30 years of dealing, usually through dealers, often in large amounts and usually on the telephone, I have been involved in only three disputes about settlement. Two of those were with overseas institutions. It is extremely rare in the City of London to meet anyone who is not as good as his word. Some speeches today seemed to suggest that the City was infested with crooks and fraudsters, who were all out to do each other down. In any barrel of apples there will be the odd rotten one. One must guard against that and protect the public from it. One should not give the impression that that is what it is all about. The crook in the City is extremely rare. He is usually found fairly quickly and punished severely.
With the breakdown of single capacity and the movement into dual capacity — I am sorry to say this because I believe in self-regulation—we shall be driven step by step to something close to a full-blooded Securities Exchange Commission. The proliferation of self-regulation agencies sounds fine in theory, but each time there is a scandal there will be an outcry in the press and the Labour party to the effect that the SRA is not sufficiently strong, must he strengthened and that there must be appeals from it. Meanwhile the prestige of the City will be impaired, the authority of the Bank of England will be undermined and great political credit will be lost by a Conservative Government and especially Treasury Ministers.
Much as I regret saying it, if we are to follow this road we should forget about the SRAs and opt for a full-blooded securities commission. Professor Gower was right in his original recommendation, given the fact that we are opting for dual capacity, which I do not advocate.
The SEC in Wall street has a staff of more than 2,000, a budget of more than $100 million a year. Enormously highly paid lawyers scramble over everything, and everybody. Practically no investment advice can be put on paper for fear of being sued. The thought of having to move into that world fills me with horror. I am astonished that a Conservative Government should take steps that will lead to the establishment of this vast new Government bureaucracy, which will greatly reduce the efficiency, earning power and competitiveness of the City of London.
The irony is that, having said that that would get rid of single capacity, all the allegedly best brains in the City have been summoned by the Government and the Bank of
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England to a committee to advise on building what are rather oddly called Chinese walls. They want to put us back into single capacity again while we are operating dual capacity. I do not know why Chinese walls are so called, but I have visited the Great Wall of China. It has this characteristic: It has never kept anybody in or out. It is merely an immensely big and long wall and every time a wave of invaders crossed it, the wall was made longer and bigger. That is exactly what will happen to the SRAs.
When President Nixon was taken to the Great Wall, he showed great respect. When his Chinese interpreter asked him what he thought of it, he reflected long and hard, and then said, "It is a great wall". I have not the smallest doubt that my right hon. and hon. Friends on the Treasury Bench will build a succession of great walls. I went on a bitterly cold day in January when the wind was howling across the wall and I had to hang on to my fur hat. I did not dare stop because various British statesmen, including the Prime Minister, had niches marking the points that they had reached. I was determined to get as far as they had before stopping. Otherwise I would have turned back. My interpreter said to me, "Mr. Tapsell, this bitter wind is the only free gift that China has ever had from Russia". I tell my right hon. Friend that a chill wind will blow across his Chinese walls to the Treasury during the next few years. I suspect that we shall lurch from scandal to scandal as a result of moving into dual capacity, particularly as it is to be internationalised.
The British tradition has been to act solely in the interests of the client. Since the abolition of single capacity in America, the American position has been to make "real" money by dealing on own account. Anything a client earns is subsidiary to that. The top people in any of the great American finance houses will confirm that they make all their big money by dealing in huge amounts as principals. The amount they receive in commission from their clients, which has been slashed to almost nothing, is derisory by comparison. I doubt whether that system will work here because even with an infusion of foreign capital I doubt whether we shall have the money to take enormous positions in foreign bonds and 24-hour trading.
Mr. Anthony Beaumont-Dark: I sympathise with that case. My hon. Friend makes a valid point about the SEC, the huge cost and the idea of protecting the investor. Does he agree that the facts show that there are more frauds on a much bigger scale than occurs in London, despite the Chinese wall? It may be why it is called the Chinese wall because everything can get over it.
Mr. Tapsell: I agree with my hon. Friend, who is an experienced stockbroker from a position slightly north of where I normally sit. I do not wish to be rude to our American friends because the standard of integrity of those whom I know is as high as anybody's. However, the fact is that the general standard of commercial ethics on Wall street is lower than that in the City of London. That is precisely why they need such an enormous paraphernalia of control.
As to the technical problems that will arise, it seems to be generally agreed that the market in the shares of smaller companies will be greatly reduced. Indeed, it will be difficult to find stockbroking firms that will wish to make a book in the shares of smaller companies. One of the strengths and glories of the London Stock Exchange has

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been the enormous range of shares in which one can deal; I am talking not about size, but about the number of companies whose shares are quoted, which is vastly greater than on Wall street or any other stock market. Since the Conservative party is supposed to believe above all in bringing forward smaller businesses, and that the economic resurgence and future of Britain depends upon the small developing business, to pursue policies that will make it much more difficult for the small business to get its shares quoted and traded on the Stock Exchange seems extraordinary. However, it is inherent in the policy.
That brings me to the wider liquidity problem of the market, and especially gilts. The gilt market is vitally important to every Government if they are to fund their debt. The general belief of the people to whom I have talked who deal in the gilt market is that dual capacity will greatly reduce the liquidity of that market. One of the biggest operators in building society gilts, who has an enormous portfolio of gilts, told me that at present he can expect to deal with absolute confidentiality and without moving the market in 25 million shorts at any time; his estimate is that when dual capacity is introduced he will be able to deal in no more than 5 million shorts in any one place. The market will be slower, less liquid and less confidential. I cannot imagine why that should be in the interests of the Government.
If I may be allowed to take a leaf out of the book of Lord Wilson of Rievaulx and quote myself for a moment—I do it simply to save time—speaking in France to the annual conference of the Association of International Bond Dealers on 17 May this year, I said this to 2,000 bond dealers from 26 countries — [Interruption.] I mention that because no one challenged what I am about to quote in the prolonged question time that followed. I said this to an audience of people who deal professionally in British bonds:
"To what extent will the British bond market go 'off-shore'? The proposed dismantling of the minimum commission and single capacity arrangements in Britain highlights the question. The British bond market is the third most liquid bond market in the world. It is a perfect new market for 24 hour traders. The large US and Japanese institutional bond dealers, with their massive trading resources, have the capacity to run huge 24 hour books in British bonds and to dominate the British bond market from their Tokyo and New York offices while Britain sleeps. Hitherto, they have been prevented from doing so by the minimum commission rules of the London Stock Exchange and by the fact that only the London Jobbers have access to the British 'Market', in the form of the Government Broker. No doubt the British Government has a plan ready for dealing with this new possibility, but it has yet to be revealed".
It has still to be revealed.
"Unless there is Governmental action, the capacity of the Bank of England to influence the British bond market may be reduced. The capacity of markets in other time zones to influence the British market will grow. I do not believe that any Government will wish to have as little influence over its domestic bond market as many of them at present have over their exchange rate"—
a point which has more force to it today than when I made it in May.
On technical grounds, whether one is dealing with equities or gilts, the case for dual capacity must still be made, and no one has attempted to make it. I do not say that I am necessarily right, and anyone who is dogmatic about such complex matters is a fool, but these questions must be seriously examined in public before decisions are taken that will influence the country enormously. The
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miners' strike, which naturally dominates our thinking, will be over in a few months, one hopes, and will be forgotten; but the decisions that we take during the next year about the organisation of the City of London will influence Britain's prosperity for a generation to come. The argument has not yet been fundamental enough.
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alex Fletcher): My hon. Friend has referred several times to the important decisions that are being made about the future of the financial services sector. Presumably the eloquent points that he is making to the House today — I am delighted to hear them—have already been made in the City and on the Stock Exchange, because he should be aware that that is where the decisions are being made.
Mr. Tapsell: With great respect to my hon. Friend, the decisions are not being made there. The Council of the Stock Exchange was unanimous in wishing to retain fixed commissions and single capacity dealing. It has been pushed into this position, and the Bank of England and Ministers have been leap-frogging each other since the Parkinson-Goodison agreement with public speeches announcing suddenly that dual capacity was here and here to stay. We never hear a speech that does not contain a sudden new announcement with which the Stock Exchange must live. It is untrue to say that the decisions have been taken as a result of market forces. They are being imposed upon the Stock Exchange and the City by politicians.
Mr. Alex Fletcher: The decision on dual capacity was essentially made by the Stock Exchange. Recently the House passed some EC orders and the Government deliberately and happily avoided making a decision on whether there should be single or dual capacity on the Stock Exchange, leaving that matter for the practitioners.
Mr. Tapsell: I do not wish to argue this matter with my hon. Friend, but everyone whom I know in the City believes that the changes are being imposed from outside. A specific example—I could give him many—is that the chairman of the Stock Exchange, for whom I have the highest regard and who has given magnificent leadership to the Stock Exchange, has been asked repeatedly by members of the Stock Exchange in public and in private who he does not fight harder for single capacity. Every time his answer is that the Bank of England has told him that it wanted dual capacity in the gilt market and he deduces that if there had to be dual capacity there it had to be introduced everywhere. If the chairman of the Stock Exchange continues to say that, I assume that it is true.
I do not believe that the drive for dual capacity originates in the Bank of England, which is much too wise a body to commit itself to that view. The drive for dual capacity comes from Ministers, and the Bank of England is merely passing on the view of the Department of Trade and Industry and the Treasury. I may be wrong about that, but I know that the chairman of the Stock Exchange—I am not repeating a private conversation—has said many times publicly and privately that the Bank of England wants dual capacity in the gilt market. It is no good the Minister saying that the Stock Exchange is making the running in this matter and is evolving the change; that is not the case.
I urge my right hon. and hon. Friends, when considering the future and the White Paper, not to become

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too caught up in the fashionable nostrum of the moment. As the House knows, I was sceptical about the claim that control of the money supply could solve all our problems between 1979 and 1981. I shall not rehearse all the arguments now, but there are some extraordinary nostrums. In the 1960s the fashionable thing was the industrial conglomerate. Now no one has a good word to say about the industrial conglomerate, but in the 1960s all the experts said that we should go for that. In the 1970s everyone said that we should go for consortium banks, but every such bank has been a failure and no one now believes that consortium banks are good.
Now we have reached the stage where the fashionable thing is for everyone to do everyone else's job. Only last week a Minister, or it may have been the Governor of the Bank of England, said that building societies would be free to turn themselves into banks or even stockbrokers. Because of this feeling that everybody can do everyone else's job, I could not understand why there was such an outcry when that unfortunate vet helped with an operation. It seemed to me wholly consistent with Government economic policy. Certainly in Lincolnshire the vets are very much better qualified to perform operations on human beings than the average building society manager is to run an equity portfolio. If we are to be honest, we should at least be consistent.
There has been a great deal of talk about capital. Of course that is important, but vastly more important than that is expertise, integrity and judgment. Those are in very short supply in the City as in politics and all other occupations. They cannot suddenly be produced by the wave of a wand. Lots of new conglomorate institutions playing around with hundreds of millions of extra dollars, yen and deutschmarks on the London market will be a disaster unless we have greatly improved the amount of expertise available to them.
We need only read of what happened to the Union Bank of Switzerland in the Eurodollar bond market recently to see how unwise it would be for the Halifax building society to be urged to move into that market next month—not that I have anything against the Halifax, which owns my house, but as a mortgagee I would prefer it to stick to the job at which it is expert.
I began with a reminiscence of a conversation with John Davies, and I wish to return to that period. I have probably been in the House and the City for far too long and have seen all this happen before. I have a strong sense of déjà vu about it.
When the Bank of England produced its Green Paper on "Competition and Credit Control" in 1971, the City press said how marvellous it all was, as did all my Right-wing friends who are now running the show. I was the only person who attacked the Green Paper publicly, which I did within three weeks of its publication. I received a letter from a very senior member of the Bank of England shortly afterwards expressing astonishment that someone with a City background and my experience should attack it. He said that the Green Paper was the thing that he was most honoured to have been connected with in his 40 years as a central banker, and he claimed that it would do wonderful things for Britain.
What I predicted in my speech on the Green Paper in 1971 is exactly what happened. It led to a massive increase in the money supply before anyone had heard of such a thing and before the statistics were much recorded. Ironically, the only three hon. Members who protested
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about the rising money supply in 1973 were the present Leader of the House, the present Lord Bruce-Gardyne and me.
Mr. Peter Hordern: My hon. Friend was all for it.
Mr. Tapsell: My hon. Friend is post-dating his remarks. If he looks at the speeches that I made in January and February 1973, of which I shall send him copies, he will see that I pointed to the dangerous rise in the money supply. But in 1973 Treasury Ministers were only just beginning to have the money supply figures put before them.
That is what was started by "Competition and Credit Control". It was followed by the property boom and the secondary banking crisis. That contributed as much as anything else to the destruction of that Conservative Administration.
I predict that if we now go forward with these policies, it will all end in tears—not only tears for the investor but tears for Ministers also.
6.35 pm
Mr. Doug Hoyle: I start from a different standpoint from the hon. Member for East Lindsey (Mr. Tapsell), to whom I listened with rapt attention. As vice-president of ASTMS it is obvious that I am interested in those who work in the financial institutions and in those with small savings.
The hon. Member for East Lindsey said that the Government were moving the Stock Exchange into an extraordinary world, but to many ordinary people with whom I deal the Stock Exchange is an extraordinary world.
We talk of protection for the ordinary person and protection for the investor, but the two are now synonymous because many ordinary people now have savings that require protection. That is one of the reasons why I and many of my Labour colleagues welcome the Gower report. It is long overdue, because many ordinary people and trade unionists seek to protect their future by the purchase of life and endowment policies.
One of the difficulties about such schemes is that at present they do not extend to offshore contracts. The recent collapse of Signal caused panic among brokers because it left people unprotected. Many large brokers have been prepared to pay out. Indeed, I understand that the British Insurance Brokers Association is now advising brokers that if they intend to participate in unprotected investments they must draw that fact to the attention of those on whose behalf they make such investments. That should have been done a long time ago.
Mr. Bermingham: Does my hon. Friend agree that it would be even better if BIBA went further and made the broker responsible for the bad advice that he gives, in that if a broker advises on the validity of a policy, especially one with an offhsore base, he should be liable to damages if the policy goes down?
Mr. Hoyle: I could not agree more. My hon. Friend makes an extremely good point with which I entirely agree. In certain cases brokers have met such a commitment, but on a purely voluntary basis. I agree that they ought to be responsible for bad investment, and the risk that they take with small investors' money.

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Unfortunately, because of the Government's policies, many workers are now becoming redundant. At the time it may seem as if they receive a large amount of redundancy, although to me it seems like a meagre amount. Many such people are now being advised on how to invest that money. In many cases such advice is sound, but in many other instances the advice is given by cheapskates and crooks or people who are running close to the wind. Consequently, some redundant workers have seen their redundancy pay vanish like snow overnight because of the bad investment advice that they have received. That in itself proves the need for protection.
Pension protection is also long overdue. That has been made even more urgent by today's disgraceful statement by the Secretary of State for Social Services that people will be able to make their own pension provision. Apparently they can remove their present pension and make their own provision. Unless protection is given to such people, when they reach retirement age they may find that they have no pension because they have made bad investments and have been taken like lambs to the slaughter by people against whom they have no protection.
For all these and other reasons I welcome the Gower proposals, with their emphasis on control, regulation and consumer protection. However, I part company from Gower when he suggests self-regulation because in my view, that is not good enough; indeed, in part of his analysis Professor Gower stresses the need for stronger and more powerful measures than self-regulation. In the kind of ocean in which people will be investing, which is infested by sharks and other predators, self-regulation on its own will not be effective.
The Government's agreement with Gower about self-regulation contrasts sharply with their attitude towards trade unions. They have brought in legislation to regulate the trade unions. That is another instance of the way in which the Government treat the interests of unions, which are there to protect workers, in one way, and take a different attitude towards the privileged and wealthy and their vested City interests.
If these institutions are left with a system of self-regulation, to whom will they be accountable? In my view that is not the way forward. The proper way forward is to establish a standing commission on a statutory basis which is responsible to Parliament. Its prime function should be that of consumer protection.
I instance as an example the legislation introduced by a Labour Government when they set up the Insurance Brokers Registration Council. It was done following the pressure of unions in the industry, such as my own. It was welcomed at the time, but it was not adequate to provide the necessary protection. It was found lacking because its powers were too few, its resources were insufficient and there were too many loopholes. People discovered that they could set themselves up as advisers and consultants and thus avoid the regulation that this body sought to impose. This has happened even in cases where the Insurance Brokers Registration Council has refused registration. The companies involved are still active. They have simply dropped the description "insurance broker" and they have become consultants and advisers. But whatever the nomenclature, if registration has been
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refused their operations should be stopped. I point that out to show how, although the council was a good idea, it lacked power.
In his original discussion document, Professor Gower talked of the lack of an appropriate framework for pension schemes, and this needs urgent consideration. A new pensions Act is required to replace our ancient trust laws. It is on those laws that our present pension scheme edifice rests. We need a new Act, and it ought to provide a stronger role for the Occupational Pensions Board. That board ought to register each scheme, and investment managers and others involved in pension schemes should be brought within a regulatory framework.
Finally, there has to be some form of statutory control over the investment industry. I think that this theme will run through the speeches of others of my hon. Friends. Protection must be given to the public in this way. It must be provided by a statutory commission which is responsible to Parliament.
The commission needs to be charged with the task of administering a new investors' Act. That is the way forward. If we go down that path intermediaries of all kinds, regardless of the views of the City, must be subject to licensing and control. What is more, if the intermediaries are the agents of companies, proper training must be provided in the future.
I do not believe that self-regulating professional agencies can provide the protection that is needed for the ordinary investor against the frauds, rogues and cheats who operate in this area. Protection is essential because investment is now envisaged over a wider area. Being drawn into the investment net, ordinary people will now be providing their own pension funds, which in my view is a very dangerous path to follow. Only Government control can provide adequate protection for the investor.
This is a very important debate and it is one which will show the contrast between the approaches of the two sides of the House. Looking across to the Government Benches, I see many hon. Members with interests which they admit freely. They will be arguing the case for the City, as the hon. Member for East Lindsey did so eloquently, although I notice that some of his hon. Friends dissented from his views. But the Government are now sailing the ship in a way which sooner or later will lead to statutory control rather than self-regulation. They may start with a form of self-regulation, but it will be found that it is not enough and that sooner rather than later statutory controls will have to be introduced. As my hon. Friend the Member for St. Helens, South (Mr. Bermingham) said, the real danger is that often it is too late: if possible, we want to try to protect the consumer against the fraud and not allow him to lose his money and look for some way of protecting him after the horse has left the stable.
There is only one way that we can go forward, in my view, and here I move away from the Gower report. We must have statutory control, regulated by Parliament. Only in that way can the small investor be adequately protected. We should not be overawed by City interests.
6.49 pm
Mr. Anthony Beaumont-Dark: This is a most interesting debate. I was fascinated by the contribution of my hon. Friend the Member for East Lindsey (Mr. Tapsell) who, like me, is a stockbroker, but

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who, unlike me, represents the very largest in the City, whereas I am by nature and size of much more modest means.
The problem that the City faces was shown, in a way, by an intervention by the Parliamentary Under-Secretary of State during my hon. Friend's speech. The Under-Secretary seems to think that the Stock Exchange is putting forward all these ideas because it believes that they are in the best interests of the City. But the Stock Exchange is as free in its negotiations as Czechoslovakia was in its negotiations with Germany in 1936. It has to accept the inevitable. If only Ministers would not think that when they become Ministers they must be seen to be doing something and that all change is for the good.
Investment protection should be meant to protect not stockbrokers and institutions, which are well able to look after themselves, but investors. Under the existing system, there is overriding protection for investors. Before pressure was put on the Stock Exchange it went further than any other institution that I know of to protect investors and to make sure that brokers are honest and that the compensation fund; even in the dreadful days of 1973–74, protected every investor. I know of no other institution whose members have to let their regulatory body walk through their doors, at a moment's notice, and examine any piece of paper in their offices. I believe that that is right, and the Stock Exchange implemented that system, not because it was forced to do so, but because it realised that it was the only way to retain the confidence of investors.
It has been said that we must compete, but I have never seen London have any problems in competing with other countries. In Japan, America, South Africa, South America and elsewhere the reputation of the British investment world is higher than that of the investment business of any other country.
There are problems with free commission. Big grocers, such as Sainsbury's, can get the biggest discounts, and the biggest investors will make sure that they are charged much less commission and get a better price for their shares. The small investor will get a worse price and will almost undoubtedly pay a higher commission. I do not call that good Conservative change.
The Secretary of State and his cohorts talk as if the end of 1986 is a sacrosanct date—like looking forward to the end of a great war—but I beg them not to hang the small and medium-sized investor on the great urgency that 1986 must be the date. The changes that must be made if the small and medium-sized investor is to be protected are so profound that the Government should perhaps aim for 1986, but they should not put a set date ahead of the protection and the needs of the small investor.
It is said that the changes will help competition. I have never heard such nonsense. We shall have ever bigger conglomerates swallowing up ever more people and we shall be left, not with a freer marker, but with a much narrower market. We will have six to eight people deciding, like great mandarins, what prices are, where shares are dealt, what they are worth, and so on. Companies will be owned, not by individual investors, but by a few huge conglomerates, most of which will be Japanese or American.
The Government will have to decide what they mean by "competition" and what they mean by "British". To say that we live in a free market and that anything goes, which is what the Secretary of State said—as though we were
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talking about a rummage sale at Marks and Spencer's—ignores the fact that the future of the City cannot be decided on the basis that everything is up for sale. We must have a British market and ensure that not everything is controlled from overseas. If we allow the City and our institutions and banks to come under foreign influence, who runs whom? It is important that much of the City and this country remains under British ownership.
Mr. Renton: My hon. Friend referred to the role of the small or private investor after the great changes have come about. Is it not at least noteworthy that in recent years the number of small and private investors has been falling in this country, but that between 1975, when minimum commission was abolished in New York, and 1981 the number of brokers diminished, but 28 per cent. more investors owned shares? The analogy with New York is not perfect, but surely that example shows that the changes will not necessarily be the death knell for the private investor, and may even be exactly the opposite.
Mr. Beaumont-Dark: I did not say that they would be the death knell, but I believe that they will be damaging. One of the differences between the Americans and us is that they have grown more prosperous since 1971, and the same cannot be said of this country.
If one believes that smaller companies have a big part to play—about 12,000 companies can be dealt with in this country—we must remember that if the market is closed into a few hands we shall be able to deal in fewer companies and that fewer companies are likely to get quotations for their shares. We shall head—some will approve of the move—towards banks and conglomerates controlling nearly every other company.
We shall not be allowed to turn back the clock. Anyone who thinks that we are talking about investment protection should ensure that the changes proposed are for the better. I do not believe that having a person acting for a buyer and a seller and acting as a principal will benefit the investor. He will be able to fix his price.
In spite of all the activities of the 2,000 people on the American Securities Exchange Commission, who crawl over everybody—the SEC costs $280 million a year to run—there are more frauds in America than there are on our Stock Exchange, which is run on a self-regulatory basis.
I wish to leave two thoughts with Ministers. First, are we really concerned about the small and medium-sized investor? If so, let us not look on 1986 as a set date. I hope that, instead of putting the date first, the Government will put the interests of investors first.
Secondly, I repeat the plea that I made in November. Will the Government give at least some thought to how the City is to be controlled? Does the Secretary of State think it a good idea that nearly all banks, insurance companies and brokers should be owned by the Japanese and the Americans? Does he care whether this country is controlled by overseas interests? If not, that is fair enough, but many hon. Members do care.
We do not want to resist change, but we do want to resist changes that will end up being a disaster for this country. If we are not careful, the events outlined by my hon. Friend the Member for East Lindsey could come about. People look at all the new ideas and say, "Aren't they marvellous?" Nearly every idea has been put forward as an improvement, but nearly every one has turned out

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to be highly dangerous. We all know what happened with the secondary banking crisis and with the consortium banks. It was thought to be a good idea to own something overseas, but I bet that the Midland bank wishes that it had never heard of Crocker. What good did that do? It only took money away from this country. I hope that my hon. Friend the Under-Secretary of State will not be too glib or laid back, because if he is, what will be left of the City and the small and medium-sized investors?
7 pm
Mr. Ian Wrigglesworth: This debate has been something of a rerun of our previous debate on the agreement between the chairman of the Stock Exchange and the former Secretary of State for Trade and Industry, and so far we have not concentrated sufficiently on the proposals contained in the Gower report. The agreement reached between those two inevitably has a profound impact on the City and has implications for the report's recommendations, but it is not central to that report, as it deals with many other parts of the City that are important but are not necessarily directly affected by the changes to the Stock Exchange.
I believe that the hon. Members for East Lindsey (Mr. Tapsell) and for Birmingham, Selly Oak (Mr. Beaumont-Dark) are misleading the House and the country in their rather reactionary approach to the reforms that are being introduced in the City. What has happened in the United States is not half as bleak and bad as they have made out. In The Economist of 14 July there is a very good report that demonstrates how in many respect, the market has flourished, consumers are better off and there are more investors on the Stock Exchange. Some of us happen to believe that it is time that the City, which has preached to the rest of the country about the need for competition, initiative and hard work, should undertake a little bit of that itself. I believe that the consumer will benefit from the increased competition that will result from these reforms.
However, as I believe the hon. Member for East Lindsey said, the agreement between the former Secretary of State and the chairman of the Stock Exchange was reached not to bring about the massive reforms now under way but to prevent them from taking place. I do not think that either he or the chairman of the Stock Exchange foresaw what would happen. I do not want to come between the hon. Member for East Lindsey and the Government Front Bench, but he should not blame the former Secretary of State for the agreement that he came to. He was probably trying to pursue the course that the hon. Gentleman wanted.
I echo the tribute paid to Professor Gower by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). It is one of the best reports that I have seen for a long time. I say that not only because of its thoroughness and the wisdom of many of its recommendations, but because, as we have often found, such reports are of no use unless they take account of the politics of the subject matter. I believe that Professor Gower has taken into account the politics of the City, the House and the country generally. He has produced a masterly compromise between self-regulation and the role of Government. I endorse that compromise, because unlike some, I believe that the issue is not just about investor protection.
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I join with those who have said that the City has a very good record of service to this country. Before the debate began, I checked on the way in which the City has developed over the past few years in terms of employment. Unlike many sectors of our economy, employment is a growth area in the City. I am sure that that will continue and, indeed, I hope that the City will continue to increase the employment opportunities that it offers for people in London and the south-east, with the spin-off that it has for other parts of the country. Thus, I do not want the City's operations to be damaged unnecessarily by new regulations.
The hon. Member for East Lindsey seemed almost to be against self-regulation, let alone state regulation. However, I should point out that Conservative Members sometimes hold up other countries as being great examples of free enterprise at work in all its glory, but they are much more regulated than the City will ever be under legislation at present on the statute book and under that proposed in the Gower report. I can think of two countries that are probably an archetypal example of that. The first is Hong Kong where, for much longer than in this country, there has been considerable legislation to control the operation of the Stock Exchange and to control the banking sphere. The second is the United States, where there has been much more regulation and, I think, too much. It is much too legalistic in its approach to these matters and gets tied up in hopeless knots, not only in this area, but in many others as well. It relies far too much on the law. There has been much more regulation in the United States than we have ever seen in this country, yet it has not prevented enterprise from flourishing, markets from developing or the economy from growing. Thus, although I do not want to go as far as the Americans have, Conservative Members should not suggest that legislation will necessarily gum up the works and stop the City developing.
I support the general thrust of the Gower report and should like to see the combined system of self-regulation under a statutory umbrella introduced. It is a right that we should have self-regulation, because it is much better to have the minimum regulation necessary to ensure that markets operate competitively and effectively, and that the interests of investors are assured. There are examples of that in certain parts of the City, but self-regulation should be extended to those areas in which it does not already exist.
With the provision for the appointment to self-regulatory agencies of representatives who are independent of the industry and representative of investors, we can ensure that that job is being done properly and adequately. I think it necessary that self-regulatory agencies should operate under an umbrella. The intermediary or co-ordinating body should not be the Department of Trade and Industry. Although some complimentary things have been said about that Department, I do not regard its history in these matters as being unstained. It has often not been as effective in policing our companies legislation as it might have been. In addition, given the constraints that exist on civil servants and Ministers, a Government Department is not the right sort of body to get its sticky fingers involved in supervising the City or, for that matter, very many other institutions. I should much prefer to see the commission suggested by Professor Gower being established independently of the Department and consisting of professionally qualified people who have experience, who

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can do the job effectively on behalf of the public and investors, and can report to the Government, acting as a check on the work of the self-regulatory agencies.
Mr. Bermingham: How could a self-regulatory agency possibly regulate, for example, the doorstep sale of small insurance policies? Gower envisages much more than merely the movement of stocks and shares on the Stock Exchange. Does not the hon. Gentleman agree that the solution may lie not in one answer but in a combination of self and statutory regulation?
Mr. Wrigglesworth: I agree with the hon. Gentleman. It is not adequate just to set up new machinery. Indeed, the report recommends several legislative changes relating to the insurance sector which that sector does not oppose. They are overdue, and the law needs clarification. I am not sure that the distinction between investment insurance and protection insurance is as clear as it should be.
There is a case for clarification in new legislation. We certainly need the new legislation suggested in the report, as well as the institutional framework to police it. I accept that whatever regulatory framework one sets up someone will always attempt to get round it. There is always one bad apple in the barrel. We must ensure that as far as possible we protect investors by establishing the legal, institutional and regulatory framework necessary.
I am pleased that we are not proposing that the Bank of England should take greater responsibilities in these spheres than it already has. The bank has not asked for that. It has been said that it is difficult for a sponsoring body to act as a regulatory body. I believe that the bank is already too heavily involved in regulating the City. I have resisted extending that over many years. It is just about possible to justify the bank supervising the banking sphere because of its close connections, but I even have doubts about that. The bank has a specific role, central to the City's affairs, which makes it a customer, sponsor and spokesman for the City. That is inappropriate to the role of protecting the investor. I endorse the view that the Bank of England should not be given greater responsibilities in these spheres.
It is necessary for the City to accept the changes that are taking place. I have found in conversations with people involved in different industries in the City that there is a marked divide between the younger and newer people, and the longer established institutions and individuals in the City.
I am pleased that the hon. Member for East Lindsey was here to put the view of those who are resisting change, but I do not think that he claimed to speak for the whole of the City. I am sorry that we are not hearing the views of those on the Opposition side of the House who want to abolish the City.—[HON. MEMBERS: "Where are they?"] That is a good question. The only Opposition Members here are Labour's friends of the City rather than Labour's opponents of the City. I regret that. I can see that we shall not be given the views of hon. Members who represent Liverpool, Coventry or some parts of London who take a different view.
The report is a good compromise between self-regulation, voluntarism and a statutory framework. I hope that the Government will accept the recommendations and will not seek to give the Department of Trade and Industry statutory responsibility for supervising the self-regulatory agencies, but that they will give the responsibility to a
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commission which is at arms length from the Department and which can perform the job for investors more effectively than civil servants in a Government Department.
7.14 pm
Mr. Peter Hordern: I declare an interest. I was a member of the Stock Exchange for many years and I am now a member of Lloyd's and a director of investment trust companies. I have been interested in the City all my working life.
I enjoyed enormously the speech by my hon. Friend the Member for East Lindsey (Mr. Tapsell). It was most entertaining, but it sounded like a long lament for lost, or perhaps losing, days. Profound changes have taken place perhaps rather too quickly. It is most unlikely that they will be reversed. We have to think in terms of the present position and what might be done. I agree that Gower, who reported in January this year, is already out of date. If Gower knew the present position, he would have overcome his doubts about having a supervisory authority such as a Securities and Exchange Commission.
At the beginning of the report Gower states that regulation in the interests of investor protection
"should be no greater than is necessary to protect reasonable people from being made fools of."
That is as far as one can reasonably go. Every investor should be able to deal with the City without the risk of falling foul of people who are more anxious to get business done than to give good advice. That is an important consideration.
Gower also said that self-regulating agencies would not secure freedom from the competition provisions in the treaty of Rome. Perhaps the Minister will tell us the exact position under the treaty of Rome and whether self-regulatory agencies will be sufficient. Will self-regulation be sufficient to give the investor the protection that he deserves? The changes have come about because of the change from agent to principal. It is a most important distinction. When a stockbroker acts for his client, he does so as an agent. His client knows that he is solely responsible for him. The stockbroker will give advice to his client, undeterred by any other considerations. It is beyond unerstanding to believe that the quality of advice which will in future be given by financial advisers will not be rather different from that which has obtained for many years.
If one is part of a large financial conglomerate, however well-intentioned one might be, one is bound to be influenced by the scale of wares that one has to sell in that financial conglomerate. The nature of the distinction between agents and principal is important to grasp. The responsibility of an agent is plain and well understood. It has worked well for many years.
I agree that the passing of the agent is to be lamented. We must now address our attention to what might take its place in the future. It has gone, not because of the abolition of minimum commissions, as so many people say, but because of the Government's need to sell their gilt-edged securities more efficiently. The reason for that is that the sale of Government securities and the transaction of business in Government securities is handled by two firms of jobbers. I have the greatest respect for both the firms. I have no doubt that they can carry on the business of selling Government stocks for a long time.

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But the whole weight of placing Government funds on the market presently rests on a rather narrow base. It does not surprise me that the handling of Government debt will now be carried out by principals acting as they do on Wall street and forming a much wider and more broadly-based market. It is logical that if that happens in the gilt-edged market it should also happen in equities. However much we may object to the process, that will happen.
Mr. Alan Howarth: Does my hon. Friend agree that, if that is the reason, it is a rather odd reason, coming at a time when the Government's intention is to reduce the public sector borrowing requirement or even, over the horizon, to dispose of it? Therefore, if their requirements in funding diminish, why should they want a completely different system?
Mr. Hordern: I only wish that my hon. Friend were right, but I fear that such prognostications have been made before. Whoever handles Government debt will be as busily employed in future as he has been in the past. I like to think that he will be no more busily employed, and those of us who believe in the importance of Government debt and monetary control—and have done for much longer than my hon. Friend the Member for East Lindsey—hope that the new arrangements will be more than adequate and will not be too sorely tested.
There are practical questions involved. Because of the change from agent to principal, the client's interest will not be uppermost—it will be the success of the financial organisation and anyone who works within it. It is easy to observe the enormous rewards that are being offered in the City for responsible jobs — yet those jobs are no different in scope from being a bookie on a racecourse.
For every foreign exchange dealer who succeeds, because of the operation of the markets there is certain to be someone who fails. Substantial sums are being offered to foreign exchange dealers, a great deal of blood will be spilt over unsuccessful deals and many people will be dismissed. That is entirely a matter for them, but the increased investment in the financial institutions means that large results will be expected and short cuts will be taken. I am concerned that the investor should not be the victim of those short cuts.
We must consider whether the self-regulatory agencies are sufficient protection for the outside investor. My right hon. Friend the Secretary of State said that he was thinking about four or five such agencies to cover most of the aspects of the City. It would be a good idea if lay people were appointed to those bodies. I understand that the insurance body will have an ombudsman to whom those feeling aggrieved about their treatment can apply for redress. Even so, the self-regulatory bodies will be composed of people who know the business well and work in it.
Anyone who has looked at and experienced the operation of the Law Society and the protection of solicitors will know that that body is not always anxious to deal quickly with complaints about solicitors. I do not think that the primary objective of the self-regulatory agencies will be the protection of the client—it will be to promote the objectives of its industry and to ensure that the market operates properly.
Those are desirable objectives, but it is important in legislation to have primarily in mind the protection of the
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investor. I doubt whether the forming of self-regulatory agencies will be sufficient to guarantee the proper protection of the investor.
Should the Department act as guardian of the investor? For all the reasons expressed by the right hon. Member for Bethnal Green and Stepney (Mr. Shore), I do not think that the Department is the right instrument. It does excellent work, but it cannot keep up with the fast and fleet footwork in the City. Therefore, I have reached the reluctant conclusion that we need an umbrella organisation. It does not matter what that is called — whether the SEC or anything else. I do not wish it to be as cumbersome an instrument as the SEC in the United States. I am sure that an umbrella organisation is required to which an aggrieved investor can appeal if he feels that the self-regulatory agencies have not given him sufficient protection.
What would be the nature of the task of such an organisation? It must have rights that are set out in legislation. For example, it should have the right to investigate any complaint, and have sufficient powers to do so. I also believe that the self-regulatory agencies should have the right to examine members' accounts whenever they wish to do so. It is not sufficient to say that, because members of the Council of the Stock Exchange have never had the right to examine members' accounts, lay members should not have that right if they so wish. The changes that have taken place have been rapid and important, and we must keep in mind the protection of the investor.
An umbrella organisation should have the power not only to investigate complaints but to pass on to the Director of Public Prosecutions any case that it believes has transgressed the law. I was attracted by the suggestion in the Gower report of composing a new form of commercial court. The treatment of fraud, the length of time taken to bring prosecutions to court and the number of frauds that take place are a disgrace. A special court could deal with commercial wrong-doers. The judge could be assisted by two lay people with commercial backgrounds and expertise to deal summarily with those who have broken the law. What is currently happening is a disgrace, especially the number of cases that are dropped because of the difficulty of persuading a jury of intricate financial frauds. I hope that when my hon. Friend the Under-Secretary replies he will consider—
Mr. Bermingham: I listened with interest to what the hon. Gentleman said about fraud trials. I appreciate that Roskill has not yet reported. Does he agree that the fundamental basis of any fraud is that it is a criminal offence and should be prosecuted as a criminal offence in a criminal court? If we accept that, the fastest way to obtain a prosecution is to give the supervisory board the right to prosecute.
Mr. Hordern: I would not be averse to that suggestion.
Mr. Budgen: It might be better to have a specially qualified jury rather than a special court. There is a danger that if someone were acquitted by a special court the public would not have confidence in that court.
Mr. Hordern: I am grateful to my hon. Friend for that suggestion. It was one that I had not considered. I was discussing the recommendations in the Gower report. No doubt my hon. Friend will enlarge on his suggestion in his contribution.

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Self-regulating agencies and some form of umbrella organisation are not the only forms of protection that are needed. There should be transparency in dealings, and interest should always be declared at every stage. It might be worth considering going beyond that, with the publication and registration of member firms' assets. Some banks do it automatically, with advertisements showing the size of their assets compared with the deposits that they have. The public has a right to know the net worth of any financial organisation with which it is dealing. The compensation fund should continue to exist in each of the different markets An ombudsman should be appointed to each of the self-regulating agencies and those SRAs should have lay members.
The publication of the White Paper will be an important event in the control of investment in the City in a fast-moving situation. Though many of my friends in the City do not believe it necessary, I believe that, on balance, there should be an umbrella organisation to supervise all the operations in the different markets of the City, and I hope that my right hon. Friend will take note of what is being said in this debate.
7.32 pm
Mr. Stuart Bell: It is a pleasure to speak following the hon. Member for Horsham (Mr. Hordern). I listened with interest to his objective view about the need for an umbrella organisation.
The hon. Member for Stockton, South (Mr. Wrigglesworth) said that no hon. Member was present from the Labour party who wished to abolish the City. That subject can perhaps be left for another debate on another occasion. While I have no pecuniary interest in what we are discussing, I should put on record the fact that I am a member of Lloyd's.
I have been reading a book about the City of London in the late 1950s and 1960s. The book, by Charles Gordon, is being serialised in The Sunday Times. That takes me back to a world I knew when a young man working in the City. I worked there as a typist, not as an employee of the distinguished firm which is represented by the hon. Member for East Lindsey (Mr. Tapsell). I worked in the City in the days of the bank rate trauma of 1957 and the inquiry that followed. I recall the stock market falling like a stone, waiting on the likes of Charles Clore to pick it up from the floor. I saw it picked up at later times by the British Motor Corporation and by Peninsular and Oriental.
Those days have a bearing on this debate because the world I then knew in the City was a world of bowler hats and rolled umbrellas. In that world, jobs went to placemen by appointment under the old boys' network. That world did not recognise merit other than the merit of selling short or quietly buying shares in a company, and then announcing a takeover bid and selling the shares as the price soared. I recollect one transaction involving a company owned by Charles Clore in which Mr. Clore justified the sale of shares in a rising market by saying that he wished to keep the price down.
To be sure, that world existed prior to the introduction of capital gains tax. Indeed, the transactions to which I have referred brought that tax about. It was a world, however, which the hon. Members for East Lindsey and for Birmingham, Selly Oak (Mr. Beaumont-Dark) will remember because it was a world of "My word is my bond".
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When the bowler hats and umbrellas went, so, too, did the philosophy of one's word being one's bond. The pirates turned professional. Even the professionals now accept the need for regulation. There was a touch of inevitability in the remarks of the hon. Member for East Lindsey; the day had to come when we should end up with a full-blooded securities commission.
The question which preoccupies hon. Members in all parts of the House is whether there is self-regulation or regulation by Government fiat, edict or legislation. We welcome the open approach of the Secretary of State in stating his intention to publish a White Paper in the autumn, followed by legislation in the 1986–87 Session.
The real dilemma for the Government is whether they go the whole hog with a securities commission or let the City get on with it by way of self-regulating bodies. II is a genuine dilemma, well recognised by the City, which acts in some ways as though it were a race against both time and the Government. That view is justified by some of the remarks that have been made in this debate and by some comments in the weekend press.
My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) referred to the fact that 10 wise men had been appointed by the Governor of the Bank of England, and they would suggest an overall regulatory structure for the City of London and that they would have their plans ready by the end of the month. We note that the top insurance bodies met for the second time last Thursday to try to find a way of policing insurance salesmen and intermediaries. We all also note that tomorrow the Stock Exchange will describe in detail its plans to replace jobbers and brokers with competing market makers.
All of that suggests to me that it is being done to show the Government that the City is prepared to have some kind of self-regulation, but that it should be what it says and does not require outside interference. That reminds me of the Council for the Securities Industry, which was set up in 1978 as part of the City's defensive response to the Labour proposals of 1974 for greater statutory regulation. The City is now seeking, through its institutions, to preempt Government action by its own measures.
Much depends on the reasoning behind the self-regulation. The Labour party has long taken the view—it did so in a statement at the first party conference which I attended in 1975 — that industrial and economic planning must be supported by a coherent framework of financial planning. We have long been interested in—and we are not entirely satisfied that we have achieved it. despite many statements to the contrary, including one made by the Financial Secretary to the Treasury last week during the Report stage of the Finance Bill—increasing industrial investment.
We do not believe that economic equality is likely to be brought about by our becoming a share-owning democracy. We believe in a fundamental and irreversible shift in the balance of wealth and power to workers and their families, but that will hardly come about through the Stock Exchange.
We must also take into account the fact that share ownership is heavily concentrated in the hands of a few. Some years ago the Stock Exchange admitted that fewer than 5 per cent. of the adult population invested their money in shares. I doubt whether the position has changed dramatically since then. The market is in the hands of institutions, with market analysts and people who work

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with computers and international telephones having open lines to other markets of the world. As often as not, the little investor is the last one on to a rising share and the last one out when it falls.
In the view of my hon. Friends and I, it is hardly likely that self-regulation will help that investor. Indeed, there is running through the Gower report a thread which is as much a part of England as rain is to cricket. It is that a fool and his money are soon parted and that there should be no investor protection for that sort of person. Gower said that the degree of regulation should be no greater than is necessary to protect reasonable people from being made fools of. That sentiment was echoed more strongly by the Secretary of State when he said that in a speculative high risk venture, which fails for straightforward commercial reasons, an investor cannot look to any recovery of losses arising from his own misjudgments. In short, if the private investor is fool enough to buy when the market value is high and sell when it is low, so be it. That principle would hardly merit much worth in what the Prime Minister would like to see—a share-owning democracy.
With interest rates increasing by two percentage points in a day and shares falling like a stone, it is not surprising that the instinct of the working man is to move away from rather than towards the stock market. Those working for ICI in the Teesside area — the hon. Member for Stockton, South knows of this—who participate in its shares schemes take the first available opportunity to sell their shares, regardless of the Prime Minister's exhortations. They are living proof that the country as a whole is not particularly worried about the concept of a share-owning democracy. It hardly augurs well for those who believe in a share-owning democracy to let it be too widely known that such a democracy is built on the premise that a fool and his money are soon parted, but that amateur investors are welcome and, indeed, invited so long as they leave their money behind when they go.
Self-regulation may provide a framework for the professionals in the City, who will always do well from their dealings. The Gower report will assist them in their professionalism, but an inter-related structure of self-regulatory agencies, backed by statute and supervised by the Department of Trade and Industry or a standing commission, will hardly assist the amateur punter. I am reminded of the Punch cartoon in which a man wishing to commit suicide will do so if it kills him. Similarly, if some people insist on pitting their money against the skill and expertise of professionals, all their savings in the bank will not help them.
We have not finished with the dilemma in which the Government find themselves — whether to have a securities commission or self-regulating bodies. A securities commission would have to deal with the mystique of the City, which has its own way of doing things. The hon. Member for East Lindsey said that the financial centre of the City is typically English and cannot be compared with the stock exchanges of Wall street and Japan. The City has habits and customs which go back hundreds of years and cannot be easily regulated by outside bodies. Those customs include the concept of fiduciary relationships, of agent and principal, and of gentlemen's agreements, which might not raise conflicts of interest between gentlemen but might well raise the eyebrow of a judge in a court of law. The Secretary of
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State referred to the concept of caveat emptor, and made a salutary statement when he said that in a conflict of interest the clients' interest should be paramount.
Regularisation and regulation of such complexities in the City might kill the very markets that the Government are seeking to protect, making the investor feel less rather more secure, so that no move is made but that it has with it an accompanying writ. Hon. Members have referred to the possible benefits to solicitors, barristers and others in the legal profession from any additional complexities in the City. Lawyers rather than investors might benefit from a securities commission that does not know what it is about. We have heard a great deal of the securities commission set up in the United States in 1934 by President Roosevelt when there was no self-regulation. We have heard about its cost and how bureaucratic it was. The Gower report suggested a securities commission along the lines not of the one in the United States but of those in Canada and Australia. Professor Gower sought to point out the dangers to which I have referred and how to avoid the complexities and difficulties that any self-regulating body would discover.
The dangers and avoidance measures associated with a securities commission might apply equally to a self-standing commission, but its rules would not impose restrictions on competition greater than would be necessary for the protection of investors and the orderly conduct of the business or market. The Secretary of State said that the regulations could have an ossifying effect on the City.
My hon. Friend the Member for Warrington, North (Mr. Hoyle) referred to "predators". I believe that the world is full of predators and that, sooner or later, all good things must come to an end. Just as the bowler hat and umbrella and the concept of "my word is my bond" have gone from the City so, too, have the standards of integrity which the nation has a right to expect from its financial market place—not in all cases, but in sufficient cases for the Government to have inspired this report.
Mr. Bermingham: Does my hon. Friend not agree with me that there is a distinction between discipline and a code of conduct, which would be self-regulation, and the legality and illegality of the deed carried out, which could be regulated by statute? The distinction between the two should be made clear. That distinction has been and still is important in the City.
Mr. Bell: I agree with my hon. Friend's concept of a self-regulating body, the courts and certain criminal aspects. We are dealing with a structure, which the Labour party would like to see, within which the Department of Trade and Industry eventually has full responsibility with a self-standing commission. Below that level there is a series of self-regulating bodies.
Financial collapse always accompanies economic collapse, as we have seen from 1929 in the United States, through to the collapse of the second mortgage specialists and the secondary banks in 1974–75, to which the hon. Member for Selly Oak referred. The hon. Member for East Lindsey made an excellent dissertation on how that collapse occurred because of the Government's legislation and documentation in 1971 on competition and credit control. That led to a massive increase in the money supply and, therefore, to the bust of 1973.
Those of us with knowledge of the City will recall 17 December 1973 when credit controls were ruthlessly

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imposed by the Chancellor of the Exchequer, leading to the collapse of the second mortgage specialists and the secondary banks. In 1981 a series of City brokerage firms collapsed. Those collapses led to the Secretary of State for Trade and Industry undertaking the review that we are debating.
The Opposition have no interest in financial, let alone economic, collapse. What has happened before can happen again — to an even greater extent if the Government persist in believing that the market is a law unto itself and does not need to be overviewed in the national interest. That market does not operate on what is real; it operates on what it perceives to be real, and because of the power of the market, such perceptions become self-fulfilling prophecies.
The fact that the Government are seeking at present to talk themselves out of a financial crisis will be of no consolation to people who see the markets talking themselves into one, and coming pretty close to demanding by their actions a series of public expenditure cuts, beginning with local authority capital spending cuts, to satisfy the markets' version of reality.
The Labour Opposition have not entirely abandoned hope of ever seizing again the commanding heights of the economy and requiring for that purpose an appropriately regulated City of London. We believe, therefore, in a securities commission with executive, judicial and delegated legislative powers, as described by my right hon. Friend the Member for Bethnal Green and Stepney. Those executive, judicial and delegated legislative powers would cover the whole of the securities industry.
Professor Gower has rightly pointed out that we would not be alone in that. I have already referred to the United States securities commission and similar institutions which have been set up in Canada and Australia. There are, of course, similar institutions in France and Belgium, our Common Market partners. That does not mean that we should abandon the present self-regulatory bodies—the Stock Exchange Council, the Panel on Take-Overs and Mergers or the Council for the Securities Industry. We recognise that there are enormous practical difficulties in bringing the diverse investing institutions and markets under direct statutory regulation.
The Labour party has accepted—its own report of the financial institutions study group says so—that it would be exceedingly difficult to define different activities tightly enough to ensure that those activities were separated to eliminate conflict of interest, and that the interpretation of the statutes and their application in particular cases would be constantly open to challenge in the courts.
My impression, as I read the Gower report, was that Professor Gower was dying to say that there should be a self-standing commission. In his recommendation, he consistently holds back from saying so forthrightly, contenting himself with a wink and a nod, possibly because he was not clear what the Government wanted. The Secretary of State was sufficiently opaque as to what the Government want. We hope that if there is opaqueness in relation to what the Secretary of State is thinking, he will rely upon the House to assist him in that thinking, and that this debate will be a constructive and worthwhile contribution to what happens to the securities industry of the City of London.
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If Professor Gower were bold enough to widen his remit, not just to advise on the need for new legislation, but to prepare it, he should also have been more forthright in saying that he wished to have a securities commission.
It is difficult to see how the Council for the Securities Industry could retain its role as an umbrella and co-ordinating body of self-regulating agencies if a self-standing commission with a responsibility to the Department of Trade and Industry is to be set up.
Should the CSI be expanded along the lines recommended by Professor Gower, there may never be a self-standing commission. That would be detrimental to the City as a whole and detrimental to those markets which are not covered by the CSI and which may not have any satisfactory self-regulating bodies of their own. We know that at present the CSI is made up of users and practitioners of the securities industry. The professor has perceived that danger because he has declared that all the rules would be less vital if it were decided to establish a self-standing commission.
Mr. Shore: There is an ambiguity in what Gower says on that point. It is important to be clear that he is not recommending that the CSI should be revived and strengthened as a substitute for what was clearly his preference — a securities commission. He should be acquitted of that charge, although, in a curious way—because he is also thinking of what is acceptable to the Government as distinct from what is desirable—he refers to it again later.
Mr. Bell: I am grateful to my right hon. Friend for that intervention. I was seeking to say that should the CSI be expanded along the lines that Professor Gower recommends, there might never be a self-standing commission. Those were, my views of the likely consequences of strengthening the CSI rather than going whole hog for a securities commission. While I acquit Professor Gower, I take upon myself the responsibility of saying that I fear that that might be an unforeseen consequence of his recommendations.
In his report Professor Gower has drawn attention to the Wilson committee's criticism of the CSI, that it should strengthen its administrative infrastructure. Gower has described its principal organisational handicaps. He surmises that those handicaps will become more severe under the new regulatory structure. We therefore come to the point that my right hon. Friend assisted me with: whether by strengthening the CSI we somehow interpolate that as a new type of securities commission—a self-standing commission. I believe that that would be second best. If I may change metaphors, should the Government put the cart before the horse, we may end up with a strengthened CSI falling short of the full self-standing commission and, consequently, we would never have the self-standing commission for which I believe Professor Gower yearns and which has the support of the Opposition.
It is important that a Labour view on Labour documentation and thoroughness of investigation into the workings of the City should be put on record with the remarks that we have heard from my right hon. Friend. I wish that I could believe that the Secretary of State will pay more than lip service to the Gower report and not leave the City of London to regulate itself. I hope that he will grasp the nettle of a thorough, tough-minded securities

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commission; that he will not leave the City of London in the hands of the professionals—the old boys on the same old-boy network, where scandals, when they arise, can be hushed up; where the losses can be swept under the carpet or into a Bank of England lifeboat; where money will continue to make money at the ultimate expense of the nation in increased bank rates, mortgage rates, reduced investment in manufacturing industry, losing rather than creating jobs, a world of money not a world of industry; and where, if there are fingers to be burnt, they will be those of the investing public. I am sure that Professor Gower did not have that in mind. It is not what the Opposition have in mind and I hope that it is not what the Secretary of State has in mind.
7.58 pm
Mr. Anthony Nelson: I regret that, unlike some of my colleagues, I cannot start my speech with a declaration of some enormous shareholding in a profitable firm of stockbrokers I rise with some temerity as one of the first non-stockbrokers to speak from the Conservative Benches. However, I take no little interest in investor protection, and as one who submitted evidence to Professor Gower I hope that I may have something to contribute.
I listened with interest to the speech of the hon. Member for Middlesbrough (Mr. Bell), who seemed to exemplify the ideals about which he was preaching. He engaged in the familiar rhetoric of demanding an irreversible shift in wealth towards the working people, and reminded us that he started as a typist and is now a member of Lloyd's. If that is what he means by such a shift, that is the sort of property and asset-owning democracy which I, too, would like to encourage.
As the hon. Gentleman's speech progressed, he appeared to fall more between the views of his right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) and those of his hon. Friend the Member for Warrington, North (Mr. Hoyle) than he was prepared to admit. There appears to be a difference of opinion between Labour Members, which it is important to recognise and clarify. Some, like the right hon. Member for Bethnal Green and Stepney, believe, as I do, in a supervisory commission, with continued existence of self-regulating agencies under it. There are others—I do not know whether this was the body of the representation made by the Labour party in its document to Professor Gower—such as the hon. Member for Warrington, North who believe in all the paraphernalia of a full statutory commission, an abandonment of self-regulatory agencies interposed between the two, and full legalistic control.
I was surprised that the hon. Member for Warrington, North stopped there. I thought that he would go on to suggest the nationalisation of stockbrokers, but as so many banks seem to be taking over stockbrokers, and as the Labour party is still committed to the nationalisation of banks, he may regard that as a fait accompli.
The speech of the hon. Member for Warrington, North and that of my hon. Friend the Member for East Lindsey (Mr. Tapsell) marked the extreme parameters of this debate. My hon. Friend engaged in a valiant rearguard action for the City, but times have changed, and it behoves
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us to consider much more carefully the need for greater protection of investors, a phrase which barely passed his lips in a speech of not inconsiderable length.
It is important to use this opportuntiy of debate to impress on my right hon. and hon. Friends on the Front Bench that there is a case, as my hon. Friend the Member for Horsham (Mr. Hordern) has made out, for some umbrella or supervisory body between the Department and the market with the self-regulating agencies. I should like to nudge my right hon. Friend the Secretary of State a little further down the line than I sensed his draft blueprint for the future regulation of investment would take him. He seemed to feel that at this stage he had to be persuaded that there was a case for such an intermediary body and that his judgment on whether to introduce it or propose it would depend on the number of self-regulatory agencies in existence. This was not the main criterion which Professor Gower intended in chapter 3 of his report when deciding whether there should be an intermediary commission or whether these powers should be invested in the Department of Trade and Industry.
If we are not to introduce such an intermediary body and are to rely on self-regulatory agencies, which are not themselves uncharted territory, for the Council of the Stock Exchange already exists, we are dealing with little more than the status quo. There will be no change in the present circumstances. We already have such self-regulatory agencies, and, apart from a securities Act which will update and amend the worst provisions of the prevention of fraud legislation, in all other respects the City will be broadly left as it is in terms of self-regulatory and investment markets. That will not be adequate.
This debate provides an important opportunity for the House to influence the future framework and regulation of the securities market. It is more essential that we do so today, when so many changes are taking place in the market, than when Professor Gower's review was commissioned back in 1981 following scandals involving Norton Warberg and other licensed security dealers, in which many people lost a large part of their savings.
The report is a valuable contribution to this debate, and I agree with much of the analysis and many of the detailed recommendations in it. However, it is not a Green Paper and I do not agree with the proposed advisory framework of relying on self-regulatory agencies, with a large gap between them and the supervisory powers of the Department of Trade and Industry. That is a minimalist approach, and the thrust of my right hon. Friend's speech was also minimalist, in terms of reform of the present system of self-regulation.
We need a new framework which, in striking the balance between the need for more adequate regulation and the need to preserve a significant amount of caveat emptor, will improve significantly the protection of investors and deter some of the worst malpractices which we have seen recently, and may see at an even worse level in the years to come.
In political terms, I sense that Parliament will not be satisfied with a framework of legislation which is minimalist and which, to all intents and purposes, preserves the existing system. Already we have seen, apart from the extremes of opinion to which I referred earlier, something which I hope will not be regarded as the politics of consent. That is some sort of middle consensus on both sides of the House—certainly from the hon. Member for Stockton, South (Mr. Wrigglesworth) representing the

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SDP and my hon. Friend the Member for Horsham—concerned with the need for such greater regulation and a supervisory body. The arrival of financial supermarkets, the growing incidence and complexity of fraud cases, the consequences of uncovered positions in a bear market and the impact of current amalgamations on the interest of small investors will all require a more comprehensive and formal system of registration than we have now.
My right hon. Friend the Secretary of State also said that he felt that a supervisory body such as that which I would favour would not be necessary if the number of self-regulatory agencies was relatively small. I put it to him that in the evolution of the City it will not be possible to rely on a small or large number of self-regulatory agencies alone to police and to ensure common standards of propriety in the organisation of these financial and capital markets.
I can give an example. It is now current practice for major merchant banks to have, not only a dealing room which engages direct in the stock market through passing instructions to brokers, not only a dealing room which engages direct with other dealing rooms in other banks in the passing of instructions between principles, and so provide their own market, and not only an investment division which looks after advisory and non-discretionary portfolios on behalf of other people, but an underwriting department and a corporate finance department and, increasingly, shareholdings — minority and possibly majority in the course of time—in stockbroker and stock jobbing firms.
It is not enough to say and to hope that each of those aspects of one bank will be treated at arm's length and that each of those aspects, whether it is the dealing room, the corporate room or something else, can be channelled into different self-regulatory agencies, such as the Acceptance Houses Committee in the case of the merchant bank, or the Council of the Stock Exchange in the case of the investment dealing activities.
I can tell the House what the reality is from my experience. Everyone in the City knows that, despite the formal attempt to treat these activities at arm's length, the underwriting stock gets shoved on to the investment department, to be placed among the shareholders there. There is principal dealing by the dealers in the dealing room and by the managers in the investment division as well. All these divisions are mixed up together, and the same standards of propriety should apply to them all.
It is essential that, even if there are self-regulatory agencies which represent all these divisions, there is a supervisory body which can insist on the highest standards of behaviour and ensure that the interests of investors are more adequately protected. Therefore, a securities Act is needed which, as well as amending many unsatisfactory provisions of the Prevention of Fraud (Investments) Act, will recognise the supervisory commission. I do not care if that is a beefed-up CSI or a new statutory body, because the difference is purely one of nomenclature.
It is also essential that such a commission be recognised in law and made responsible for overseeing and co-ordinating the activities of the self-regulating agencies beneath it. The chairman of the commission—this is an important point—would be appointed by the Secretary of State for Trade and Industry and not by the Governor of the Bank of England. The chairman of the Council for the Securities Industry—the record of incisiveness and
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leadership of the present chairman in the City leaves a great deal to be desired—is appointed by the Governor of the Bank of England.
My right hon. and hon. Friends will be aware that there is increasing suspicion in all parts of the House as to the involvement of the Bank of-England not in matters which are purely monetary or to do with placing the Government's debt, but in making qualitative judgments about the equity markets in which they should not be involved. Even though such an appointment as chairman would be made by the Secretary of State, he would be required to liaise and consult very closely with the Governor of the Bank of England on matters of mutual concern, such as, most obviously, the gilts market. They would have a common interest in policing that market and ensuring its efficiency.
It should be an offence to carry on business in securities unless registered with a self-regulatory agency which is represented on the supervisory commission. There should be no option, as Professor Gower recommends, for individual firms or SRAs to register direct with the Department of Trade and Industry. They should register with and be part of a self-regulatory agency and subscribe to its standards, or they should not be in the business at all.
Such a framework would be a considerable advance on the minimalist option put forward by Professor Gower and, I fear, currently being entertained by the Department of Trade and Industry. On the other hand, it would not amount to setting up a Securities and Exchange Commission such as has been established in the United States, as much of the supervisory and regulatory work would continue to be conducted through the SRAs.
It is a matter for the House and the Committee which considers any securities Bill to judge — it is a very important judgment — the balance of responsibilities between the supervisory commission and the SRAs. I am sure that there will be differences of view across the Floor of the House on that matter, but I believe that if we fail to institute such a commission we shall hasten the day when the full paraphernalia of a legal Securities and Exchange Commission will be demanded. I hope that my right hon. and hon. Friends have not set their minds against independent supervision and tougher regulation.
It would be an error of judgment to underestimate the scandals that may occur in the future. It would also be a mistake to assume that continuation of the status quo will be acceptable to this House, to investors or the public, or that total self-regulation is in some sense inherently desirable. Lest it be thought — I refer these remarks particularly to my right hon. Friend the Secretary of State — that greater regulation offends the free market philosopher, it is worth pointing out that the whole purpose of such a framework would be to ensure that the investment markets are, indeed, free and fair.
The worst sorts of activity in recent years, such as dawn raids mounted at short notice, and covert build-ups of shareholdings, have acted to the detriment of a free and fair market, because they have denied many people the opportunity to sell their stock at a certain price, and have sought to use the market mechanisms for wholly improper purposes. If we can regulate that sort of activity we may end up with a freer and fairer market — the sort of market to which my right hon. Friend ought to aspire and to which, if his words this afternoon are to be taken literally, he does indeed aspire.

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The danger of limited reform is that insufficient account will be taken of the protection of investors. Too often the existing self-regulatory bodies are concerned with establishing working arrangements between investment firms which will avoid criticism, fraud or pecuniary loss. What is needed is a new commission which will orient its objectives and policies more overtly towards the interests of investors whom the market is there to serve. The danger of inadequate reform is that it will hasten the imposition of the full legal paraphernalia of an SEC, which would not be in the interests of the City of London or of investors.
The City and the Government should draw lessons from the Lloyd's Act and recognise that the writing is on the wall for the present system of unfettered self-regulation and that, if a full Securities and Exchange Commission is to be averted, a comprehensive and more adequate framework of supervision will need to replace the existing system.
8.14 pm
Mr. Gerald Bermingham: I agree with much of what has been said in the debate, from whichever side of the House it has come, but I am worried that the debate has tended to become too concentrated on the stock market, the Stock Exchange and the dealing in securities on that Stock Exchange. I would not diminish in any way the role which the stock market has to play in our financial institutions, but it is not the only field in which investment and investment securities are dealt with. Indeed, the Gower report ranged over a far wider and broader scope than the stock market.
There has been the odd scandal on the Stock Exchange, but in the past 100 years or so the rule of "My word is my bond" has been the rule of the Stock Exchange. In my dealings with many people in the market over many years I have always found that to be the case. Indeed, the House should recognise that the Stock Exchange has kept to that principle for a long time. Let us not begin by rushing in and assuming that all is wrong. Let us for once start at the other end and ask ourselves what is the objective that we seek to achieve.
During the speech of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) I suggested to him that the object must surely be to prevent fraud rather than, through Roskill and others, to seek to cope with fraud once it has occurred. How do we prevent fraud? How do we prevent ordinary people from being taken for a ride? It is not often that an institution is taken for a ride. It is usually Mrs. Smith, with her £500 life savings, or Mr. Brown, with his redundancy money, as my hon. Friend the Member for Warrington, North (Mr. Hoyle) rightly said. Who takes them for a ride? It is not a stockbroker, but invariably a door-to-door salesman who comes along with the Bernie Cornfield type of insurance policy and tells the householder how to get rich quickly—"Pay £1,000 a year and in 20 years you will have £300,000 back." Unfortunately, people fall for it.
The lure of fool's gold is as old as time. Mr. Smith puts down his £1,000 and in the third year he finds that the offshore fund has decamped from one offshore site to another offshore site. I was about to say, Mr. Deputy Speaker, that the poor man has not a hope in hell. Certainly that is often where the door-to-door salesmen deserve to be sent in such cases, because the householder
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has not a hope of getting back a penny of his investment. We have seen such frauds on many occasions in the past 20 years, and Gower was equally aiming at that sort of mischief.
If we start with the question, "How do we protect the man in the street?", we have to ask ourselves whether the ways in which certain of our institutions—not the large national ones, but those on the fringe—are currently constructed, controlled and regulated are satisfactory. The answer, regrettably, must be no.
The forms of investment range from buying shares through a stockbroker to trading in options, the metal markets, the gold market, various other forms of insurance market, option contracts, and so on. I agree with what the hon. Member for Chichester (Mr. Nelson) said about large trading houses. The reality is that there is no way in which we can persuade a company that part of the building should be regulated by one division and part of it by another. That just will not happen. The reality is that the people whom we permit to deal, trade, sell or advise in respect of various different types of investment contract have themselves to be regulated by some appropriate body.
That regulatory body must supervise—in much the same way as the British Medical Association, the Law. Society and the Bar Council—the terms and conditions on which people can enter the profession, for want of a better word. We must begin with the regulation of the conduct of persons who trade or deal in these matters. We must get the regulations right. We must ensure that the regulatory bodies have teeth to enforce the rules. That is where the crunch comes. We must, for example, make it a criminal offence to deal in any security without the appropriate licence.
Having reached that point, we have to ask ourselves the next question: how do we control the bodies that regulate? Regulation is concerned with discipline and codes of conduct. It does not necessarily involve itself with the law, or the question of what is or is not legal. Those two concepts are very different, but in discussing the Stock Exchange today there has been a tendency for hon. Members to mix them up. The idea of a Stock Exchange with its disciplinary body and its own code of conduct is fine, but some of us are talking about the legality or illegality of acts which can or cannot be carried out. There is a distinction, and we must not allow future legislation to blur that distinction.
I believe that the question of what should or should not be legal should be laid down by Parliament, and that there should be a separate commission whose duty it is to look after the regulatory bodies as they deal with each separate field of investment. At the end of the day, I do not necessarily want to see a large, octupus-like creature with tentacles everywhere. I want to see a clearly defined form of criminal law—an amendment of the Prevention of Frauds (Investment) Act, which is long overdue. We need to enable unlicensed dealers who deal in certain set ways to be prosecuted, and we need to ensure that the prosecution is speedy. If there were a Securities Commission—whatever it was called—with power to initiate prosecution, just as the police force can initiate prosecution, there would be speedy prosecutions and that would be a good thing.
The basic problem would, however, remain. I have already referred to it, with reference to Lord Roskill. We would be dealing with the result of the fraud. The way to avoid fraud is to ensure that those who deal in these

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matters are properly regulated and supervised. 'There should be proper training and grounds for admission. People should know what they are doing, and the public should be able to trust them.
I should like to utter a cri de coeur on the question of advisers. It is an open secret that a lawyer who gives one the wrong advice can be sued. A stockbroker who gives the wrong advice can also be sued, as the Nicholson case showed many years ago. It should also be possible to sue an insurance broker or agent who gives one rotten advice. I see the Parliamentary Under-Secretary nodding in agreement. The key lies in training and in the supervision of the way in which the particular interest groups conduct and control the affairs of their members. The ultimate sanction should be the liability to answer for one's mistakes.
The Gower committee was formed in 1981 and reported in 1983. The world has moved on a long way between 1981 and 1983. We should approach the question of investor protection with the aim of ensuring that those who deal in the various investment markets are rightly trained, rightly controlled, and ultimately answerable personally for their mistakes. If we balance that objective with a commission to supervise the bodies which control the various groups, and give that commission the right to prosecute people for stepping outside the rules, we might give greater protection to those who seek to invest their savings in our own country. If this House could achieve that, we would make a great contribution to people's security.
8.25 pm
Sir Anthony Grant: The hon. Member for St. Helens, South (Mr. Bermingham) has made an interesting speech. I shall not follow it, except in pointing out that, as a lawyer, the hon. Gentleman must know that it is possible to sue in negligence anyone who owes the duty of care, including stockbrokers and insurance brokers as well as lawyers and accountants. I have myself known such cases. We want to achieve a state of affairs where that does not need to be done, and people do not have to engage in the complexities of litigation.
I agreed with the right hon. Member for Bethnal Green and Stepney (Mr. Shore) that the Gower report is a remarkably able document. It is one of the best reports that we have seen. Professor Gower is to be congratulated. I do not, however, agree that the Government should commit themselves more firmly at this stage. This is not the right moment for commitment. I do not expect my hon. Friend to give any Government commitment today, other than to say that the Government have listened to the debate and will produce a White Paper—and that they will heed my remarks and those of hon. Members with whom I agree, and will disregard the remarks with which I do not agree.
The debate must be seen against a background of three factors. First, the City of London and its great institutions are vital to our economy. They have kept our economic ship afloat by their contribution to our invisible earnings for many years. Secondly, wider share ownership throughout the community is vital. Many years ago, I was a member of the wider share ownership council, with my late and much lamented colleague, Viscount Macmillan. We believed that it was in the public interest that the ownership of shares should be spread more widely.
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The Opposition prattle about the need for a redistribution of wealth. The spread of the ownership of shares is one of the most important features of such a redistribution, and should be achieved not just indirectly through insurance polices, pension funds or trade unions but directly by participation through investment in the private sector. That is—or should be—in accordance with the Government's philosophy. In addition to spreading home ownership more widely, we should spread the ownership of British and other industries. I hope that the Government will seek to turn more earners into owners.
Thirdly, although the overwhelming majority of people operating in the City are honest and honourable men, there are opportunities for large-scale fraud of which a minority can take advantage. I agree with the hon. Member for St. Helens, South that for the vast majority of brokers and others operating in the City, the slogan "my word is my bond" applies, as it always has. However, there are scandals, and those who suffer by them may be tempted to comment "When a man says 'my word is my bond', one would be well advised to ask for his bond." It is essential that the City should have a good reputation. The City and the Government have an obligation to ensure that confidence exists, at home and abroad, in our institutions.
I am in the presence of many distinguished stockbrokers. There is my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), my hon. Friend the Member for East Lindsey (Mr. Tapsell) and my hon. Friend the Member for Horsham (Mr. Hordern). In such company, I must tiptoe delicately when discussing Stock Exchange matters.
There seemed to be rather higher hopes for abolition of fixed commission than were justified. Some time ago I used to belong to the legal profession in which there was a tremendous hullabaloo about abolition of scale fees, such as for conveyancing. We were told that everything would be marvellous and that the customer and the consumer would benefit when scale fees were abolished. I do not think that there was any noticeable reduction in fees—indeed, they probably increased—but there was a great deal of uncertainty. There is an enormous advantage in having certainty, in knowing where one stands, what the commission will be and what the fee will be. I do not know whether abolition of fixed commission forced the need for dual capacity.
I was responsible for taking the Lloyd's Bill through the House. I recall that one major feature that was called for in the reform of Lloyd's was divestment, to separate the underwriting capacity from the brokering capacity. That was regarded as essential to fair dealing and the need for it to be seen that dealing was fair. I remember some distinguished stockbrokers saying, or writing in the press, that it was right to separate underwriting from brokering. We did so with loud approval from the public and, as far as I am aware, stockbrokers. Now the move is in another direction. Events have overtaken us and we are told that dual capacity is to come in.
Whatever decision the Government take, they should not neglect the interests of smaller brokers. When he agreed to the original deal, the smaller broker did not understand that dual capacity was to emerge. He is embarrassed about that and fears that he will be squeezed out by the great monoliths—the Bank of England, the big institutions and foreign companies. I make that plea to my hon. Friend the Minister as the smaller broker is

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synonymous with the smaller investor. The Stock Exchange has today sent me a simple booklet entitled "An Introduction to the Buying and Selling of Shares." It is written in such simple language as to be offensive to some of my hon. Friends, but even I can understand it. It is clear that the Stock Exchange has in mind the need to encourage small private investors. I congratulate it on that.
Mr. Tom Sackville: Does my hon. Friend agree that the over-the-counter houses need some encouragement especially as, for example, shares quoted on the OTC are not allowed as collateral by banks and because we have the new threat of cowboy stockbrokers cold calling from Holland much the same market of private investors that the OTC is trying to appeal to?
Sir Anthony Grant: I do not pretend to be an expert on this matter. No doubt my hon. Friend is right. He has made his point.
I was pleased to see in the Gower report a reference to investment clubs. They are not to come within the purview of regulations, except in so far as they have a professional adviser. It is sad that investment clubs have fallen a little by the wayside. They started in the 1960s amid great enthusiasm and excitement. They were social and educational just as much as they were about making money. Indeed, they sometimes lost money but they provided knowledge of what was going on. I know that one such club comprised shop floor workers. They looked at the Financial Times each day even more avidly than they looked at the Daily Mirror. If they did that now, they would probably have a better idea of what is going on from the financial point of view. It is unfortunate that successive Governments, through their financial policies, have worked against investment clubs.
As to insurance, I declare an interest in Bowrings, which is a large firm of brokers, and it should be remembered that I took the Lloyd's Bill through the House. That Bill was concerned with Lloyd's internal matters. No outside policy holder suffered the loss of 1p as a result of the scandals that emerged in Lloyd's. The swindle was entirely internal. When I took that Bill through, some of my hon. Friends told me that it was too draconian. I am now told that it is only a toothbrush to clear out a stable. I have heard from Lloyd's that the measures that the new council is taking and the new powers that it is putting through have gone a long way to regulate the market and to restore confidence in Lloyd's, especially overseas and, in particular, in America. Rivals are only too keen to seize on a scandal to use it to their own advantage. I am told that the new regime is having a valuable effect and that Lloyd's is regaining its international reputation.
The Gower report refers to insurance, which should be studied carefully. I am aware that the British Insurance Association is conscious of the need for the highest possible standards if insurance is to be developed. As the hon. Member for St. Helens, South said, it is possible for fast-talking people to persuade rather simple and naive people to take out policies that they do not want. In general, however, the United Kingdom is under-insured as compared with many other western countries. Nothing should be done to inhibit the extension of proper and responsible insurance, which is a valuable bulwark against misfortune.
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I saw in The Times a reference to the need for some control over clients' money. It is now 18 years since I introduced a private Member's Bill which dealt with clients' money accounts. It never got past Second Reading but there was widespread support for it. I could never understand why lawyers who held clients' money had to put it in a separate account and to account for the interest whereas estate agents, stockbrokers and others did not. I hope that that might be included in any legislation that the Government introduce.
As to how we might achieve what we want, by instinct I prefer self-regulation to Government regulation. It has proved much more sensible and effective. I was interested in the possibility of self-regulating agencies but I have listened carefully to what my hon. Friends the Members for Chichester (Mr. Nelson) and for Horsham have said about there being a danger of a self-regulation agency becoming no more than a trade association which looks after the interests only of its members. I should like some form of self-standing commission, but I am sure that the Department of Trade and Industry is not the right body to do the regulation. I served for four years in that Department—before the time of my right hon. Friend the present Secretary of State and the right hon. Member for Bethnal Green and Stepney.
The civil servants in the Department of Trade and Industry were the finest, most dedicated, most honourable and most intelligent in the world, let alone Britain. The system, however, is not geared to policing so dynamic and varied an activity as private investment. The hard work of the lawyers in that Department has been referred to. The hard work is not on advising on or dealing with frauds and scandals but with advising on the mass of legislation that successive Governments have put through. The Department is too slow and ponderous, and tends to shut the stable door after the horse has bolted. When it moves into action, it is rather like a steamroller being used to crush the ants in the strawberry bed. What we really need in the City garden is a swift, efficient and selective weedkiller that will not inhibit the principal dynamic growth. I shall not pursue these analogies further because I might get into grave difficulties. I am against the Department being involved. There should be some form of self-standing commission with statutory backing. It might be necessary for the Government to find out how Lloyd's has worked and where it has gone wrong.
Professor Gower and the House throw the ball back into the Government's court. We look forward with interest to the White Paper and ultimately to the legislation. I only hope that Ministers will have in the forefront of their minds the need to maintain the City and its institutions as the leading body in the financial world in Britain's interest, and at the same time the need not to neglect to spread share ownership widely throughout the community and to recognise the needs of the small man. Without that wider share ownership, the foundations of free enterprise and a free society will fail.
8.40 pm
Mr. Tam Dalyell: The hon. Member for Cambridgeshire, South-West (Sir A. Grant) told us that we would learn more about the happenings in the Daily Mirror from the Financial Times than from the Daily Mirror. I spent the weekend in Scotland defending Bob Maxwell in relation to the Sunday Mail and the Daily Record, and,

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whatever view one takes about that, the power of the City institutions cannot be in doubt. The Maxwell-Mirror episode underlines that.
I hope that I can be forgiven for saying that life in the House has been less picturesque than it was when Bob Maxwell was the Member for Buckingham. Hon. Members who remember that time will recall how he entertained us. There is more good in him than bad. He is one of the few men to have created an industry for the development of scientific literature, which has given wealth and jobs to his fellow countrymen.
I received at three days' notice an invitation to friends in the City to meet Professor Gower, and so had to read his report quickly before going to Sheppards and Chase. It revealed how well written it was. I congratulate Professor Gower on his clarity and on the extremely good English in which he presents this complex document. The Minister has worked hard on the subject and will appreciate, as much as other hon. Members, Professor Gower's work.
There is a delicate balance between self-regulation and statutory control. Like other hon. Members, I tiptoe with trepidation into the affairs of the City of London, but my view is that the protection of investors should be a matter for a commission. The running of the markets—I do not mind which of my colleagues hears this—is best left to the professionals who make the day-to-day judgments. I am not sure that tampering with the running of the markets will do us much good in the medium or long term.
However, the trouble is that there is a new type of integrated financial service group, which combines functions that used to be separate. There are potential conflicts of interest within the new institutions where there were few conflicts of interest before. I agree strongly with the hon. Member for Chichester (Mr. Nelson) and my hon. Friend the Member for St. Helens, South (Mr. Bermingham) that there are conflicts of interest which cannot be resolved by different departments of one company.
Some hours ago I interrupted the Secretary of Slate to ask a question. I repeat it now. On page 45, paragraph 5, recommendation (b) of the Gower report states:
"Recognised self-regulatory agencies should be empowered to apply to the courts for the issue of subpoenas to compel attendance of witnesses and production of documents required in connection with their disciplinary proceedings."
The Government may not have made up their mind, but there are crucial questions, and this is one, about which we are entitled to know their thinking. If they do not accept that recommendation, it will lead to all sorts of other problems.
The financial markets are becoming increasingly fragmented. Ten years ago private investors would seldom get involved, for example, in commodity markets or financial futures, but now it is different. The business of investment is no longer confined to City banks and to a comparatively few brokers. For that and other reasons, we need some sort of commission. On top of that we have increasingly international markets. Self-regulation may be all right when it applies to a small group of firms with similar interests and a major commitment to the activity being regulated, but it is far less satisfactory if it attempts to cover diversified giants with customers and shareholders in other markets and other countries.
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When the Minister replies—he has applied his mind in great detail to the subject—I hope that he will tell us about the new developments which can come under the generic heading of,
"the internationalising of the markets."
I wonder whether it is possible to draft rules that are tight enough to protect investors, and flexible enough to encourage desirable competition? I listened carefully to the opening statement of the Secretary of State and I think that he said that it was a question of how the back-up to such rules would be provided.
On the question of whether there should be an overall supervisory function within the Board of Trade—I do not mind saying this as a Socialist because I believe it to be true—there should be constraints from politicians. Inevitably the function cannot be detached from Government Departments, and, therefore, political decision making. That subject may not lend itself to what will inevitably be seen, justifiably or unjustifiably, as direct political control.
On the Prevention of Fraud (Investments) Act 1958, which should be brought up to date — whether there should be an intermediary authority is another matter—I come down strongly on the side of a securities commission. The American securities commission does not seem to be the bee's knees. Nevertheless, I am on the side of a securities commission rather than of the Department of Trade and Industry. I am not criticising Department of Trade and Industry civil servants, but a sponsoring role does not go easily with the regulatory role. As my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said, the two formulas do not sit easily together. I do not think that it is a question of slavishness in the DTI but of whether or not it is a job for civil servants. I do not believe that it is.
Other hon. Members wish to speak, but we would fail in our duty if we did not ask about commodity markets. That is an important part of the Gower report. Page 38, recommendation (c), is crucial. It states:
"Contracts for commodity or financial futures or options and life insurance contracts should be included within the definition of investments."
The Government must have a view on that recommendation, and I ask whether they accept it.
I entered the House of Commons at a time when an influential Back-Bench Member of the Macmillan Government was the late Sir Henry d'Avigdor-Goldsmid. He was a bullion broker and I used to listen to him talking about the bullion markets. What is the attitude of the Government in the 1980s to the role of the bullion and metal markets in relation to what we should be doing for developing countries?
This is neither the time nor the place to go into detail, but that point brings me to what I regard as an important question, although it may be one for the Leader of the House rather than for the Minister. We shall have a Bill in 1986. May I make a constructive suggestion: that the Standing Committee on that Bill be appointed at the beginning of the Session and that in November and December it should have the opportunity to operate, as it is empowered to do, like a Select Committee and should hear witnesses not only from the City but from elsewhere. Although the hon. Member for East Lindsey and several other hon. Members obviously know a great deal about the subject, most hon. Members are untutored in such matters. If hon. Members are to do a serious job—it is important

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that they do—there should be an opportunity in the early autumn to ask questions of those in the City and outside it who can answer on such matters.
Then I suggest a respite and that the Bill goes into normal Standing Committee in March, April or May. I emphasise the importance of the suggestion and I ask the Minister whether he is sympathetic to the idea of a Scrutiny Committee considering the issues as soon as Parliament returns after the summer recess in 1985 and then returning to the subject when its members are better informed.
The hon. Member for Stockton, South (Mr. Wrigglesworth) jibed that the Labour party was represented this evening by what he called the Labour friends of the City. I have never indulged in blanket attacks on the City of London and I am not greatly impressed by them, but, having said that, as a Labour Member of Parliament I wish to make a plea to the City in general. I represent an area which the Minister knows well and which has tremendous industrial problems at Bathgate. Some of those problems are questions of bridging finance and tiding over finance for the heart of British manufacturing industry. If companies such as the North British Steel Company are not helped to tide over what many of us believe are their temporary problems—they have reinvested in the foundry industry — on fairly favourable terms, firms are bound to go under. It will mean the deindustrialisation of the country, because if Britain is to be an industrial country it needs a foundry industry.
I say to the City: for goodness sake, look at what is happening in the north and do what you can, if only in your own medium and long-term interests, to make it possible for firms such as the North British Steel Company to carry on their technical expertise and to continue in the casting industry. I am talking about one of the three or four most modern foundries in Europe being in difficulty. The City has responsibilities. Some of us will not jibe or sneer at City institutions or attack them in general terms, but the condition for that is that the City must help industry in these difficult times to ensure that we have a manufacturing base, which is to our mutual advantage.
Mr. Hoyle: Pleas to the City are no good when trying to obtain finance for industry, and City institutions have been reluctant to invest in industry, especially if the investment must be long term. Britain has slipped behind in new technology. Some of it is now coming forward, but it has taken a long time and we have succeeded only where the Government have invested money. If the City was acting in the national interest, it would have invested in such industries.
Mr. Dalyell: I promised to sit down at 8.55 pm, so I simply register the fact that, as always, my hon. Friend has made an important point.
8.55 pm
Mr. Tim Renton (Mid-Sussex): I agree with the suggestion of the hon. Member for Linlithgow (Mr. Dalyell) about how the Financial Services Bill might be tackled in the 1985–86 Session, and it would be helpful if my hon. Friend the Minister would take that suggestion on board. Like other hon. Members from both sides of the House, I declare an interest in this matter. I started work
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in the City exactly 30 years ago in the shipping department of a firm of international merchants and commodity brokers. Despite being a graduate, my starting salary was the princely sum of £300 a year—a sum that many foreign exchange dealers or stockbrokers now earn in a day. I spent a pleasant 20 years with that firm and in the 10 years since I have beeen a member of Parliament I have been fortunate to maintain a working connection with the City as a name at Lloyd's and as a consultant to a firm of stockbrokers. I say "fortunate" purposely because we have every reason to be proud of the City. Despite the occasional scandals, which we all deeply regret, the City is one of the most successful parts of "GB Ltd.", and it is worth remembering that during the past year net private sector invisible earnings were more than £4 billion, compared with £1 billion 10 years ago.
But, as the hon. Member for Linlithgow said, Parliament is untutored in City matters. That does not apply to my expert colleagues who have spoken this evening and who are clearly very knowledgeable, but it applies to the vast majority of our colleagues. Although it is only four stops on the tube from Mansion House to Westminster, there is an ocean of ignorance between those four stops.
In The Economist an inset to the article that has already been mentioned in the debate was headed,
"To some, the City will always be a mystery."
That is certainly true of Parliament and of civil servants, the most recent example being the affair of Enterprise Oil and RTZ. RTZ saw an opportunity fairly and legally within the terms of the prospectus, and it tried to take advantage of that opportunity. It did so with about £200 million of its shareholders' money at a time when stock markets were falling and there was an oil glut. However, it believed that the assets of Enterprise Oil were worth more than the investors and their professional advisers believed at the time. That is not much of a crime, yet from some of the comments made one would have thought that it came into the category of at least a misdemeanour.
RTZ was advised in this matter by the house of Rothschild. Lord Rothschild repeated on radio last week the famous story of his ancestor Nathan Rothschild who, by virtue of having special couriers and his own ships, received advice of the British success at Waterloo 24 hours before anyone else did. According to Lord Rothschild, Nathan first went to No. 10 Downing Street to tell the Prime Minister, Lord Liverpool, of this success but was told by the butler that his Lordship was asleep and could not be woken up. So he went on to the Stock Exchange, bought all the Government consols that he could find and made a very handsome profit.
The difference between Rothschilds two weeks ago and Nathan in 1815 was simply that on this occasion they did not bother to warn the Department of Energy in advance about what they intended to do, but in each case what they did emphasised the remarks by Keynes about the animal spirits of business men. Apart from being a leading economist, Keynes was pretty good as a business man, as the present wealth of Kings College, Cambridge, bears witness.
Mr. Anthony Beaumont-Dark rose—
Mr. Renton: I hope that my hon. Friend will forgive me if I do not give way, but one of my hon. Friends wishes to speak after me and I want to allow him time to do so.

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Keynes had animal spirits himself. In fact, the animal spirits of business men are more easily indulged when dealing with money—be it investment advice, insurance policies, life insurance, pension schemes and so on—than when dealing with drop forgings or printed textiles. It is precisely because of those animal spirits and the speed and vivacity with which the City moves that it is totally impossible for any Minister of the Crown of any party, or for his civil servants, to be responsible for the day-to-day policing of the City. They will always be left behind, and left gasping.
I regret to say that insider trading is the most blatant recent example. I worked a good deal with my right hon. Friend the Member for Hertsmere (Mr. Parkinson), both in opposition and immediately when we were in government, on trying to find a definition of insider trading which would be declared a criminal offence, and would be workable. The Labour Government were working on that in 1978–79, but their suggestion was dropped in the 1979 election. We further amended it and it was incorporated in the Companies Act 1980.
Insider trading was then a defined criminal offence. But I am told that, as a result, far less is now being done to chase up insider trading and to bring those who indulge in it to book than happened previously when it was not a criminal offence and was policed simply by the Stock Exchange. That is a clear example of where self-regulation is often more effective in practice than statutory law.
In saying that, I have absolutely no doubt that regulation is needed, and must govern the largest and most successful firms as well as the smallest and most insignificant. If the City has had a fault in recent years it has been that the successful giants have got away with things that it was impossible for the minnows to get away with.
On balance—and picking up the phrase of one of my hon. Friends that the Gower report was masterly in compromise — I go along with the suggestion that a number of self-regulatory agencies should report to an umbrella organisation. Whether that umbrella organization should be a commission or intermediate body or son of CSI remains to be revealed, but it will be needed.
Who precisely will man this umbrella organisation? Clearly it must do a lot better and be more effective than the CSI. That point was well made in The Economist last week, when it said:
"In an increasingly competitive environment, the City can ill afford to second its best brains to police the City … Good financiers are good at making money, not poring over appeals from hapless licensed dealers. Bad financiers are likely to be bad at both."
That point must be taken on board by the Government in considering the framework of future legislation.
It is clear that before the Government decide on their legislation the committees appointed by the Governor of the bank will report back to the Bank of England. I am sure that the thrust of their suggestions will centre around what is practicable and workable within the City. Clearly the self-regulatory agencies must not just be trade associations. If they are, they will very quickly become cartels again. They must be genuine policemen and innovators and therefore must embrace users and consumers and lay people as well as the professionals. Apart from that I urge my hon. Friend not to think of creating a massive quango with too many powers that will not be effective at the end of the day.
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My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) asked whether these changes were likely to lead to a diminution of private and small investors in the stock market. I hope very much that they do not, and I am encouraged to see that another part of the article in The Economist takes as its title the theme "Personal investors might stage a come-back". It emphasises that private investment has flourished in Wall street since minimum commissions were abolished and since all the changes of 1975.
We are all agreed about the vital need for protection for the investor. I am much less worried about the large investor. I am sure that he is capable of taking care of himself. If he is done once, he will not trade with that primary dealer or investment bank again. He will move his business. But the small investor must worry us all. In future years I can see the small investor going into Barclays bank, being able to get Stock Exchange prices on a VDU screen over the counter and immediately deciding, on the bank manager's recommendation, to buy 100 ICI. He may not even have to go to his bank. He may do it on a VDU screen in his own home. All that is potentially exciting, but the man has to be able to ascertain that the price quoted by his bank manager and at which he deals is a fair and decent one at the time. For that reason I support the view that there will have to be a last trade tape showing both the volume and time of dealing. In that way anyone who wants to bother to check back will be able to discover what was the going rate at the time of his deal.
That takes up the point made by other hon. Members that there must be full transparency of interest and prices at a time when we move into dual or even triple capacity within the City financial institutions.
I greatly enjoyed the speech by my hon. Friend the Member for East Lindsey (Mr. Tapsell), even if I did not agree with all of it. He asked whether these changes were necessary. I have the feeling that if the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) had not originally referred the Stock Exchange to the Restrictive Practices Court five years ago it is possible that over the intervening five years the Stock Exchange would have changed itself slowly, step by step, and we would not have this great revolution which is upon us now.
The effect of that case being referred to the court was that nothing happened on the Stock Exchange for five years. Then my right hon. Friend the Member for Hertsmere in effect pulled the stopper out of the bottle in July last year. The genie came out and thereafter no one knew precisely where it would go or how fast. The genie is now firmly out of the bottle. It cannot be put back, even by the Labour party. That being so, I end on two cautionary notes in which I give some support to my hon. Friend the Member for East Lindsey.
Size really is not everything. Looking back over the history of the past 20 years, we see that from textiles and breweries to the steel industries disasters have flowed from mergers. It has been the disappearance of small specialist firms in all those industries that we now come greatly to regret. The Schumacher view that small is beautiful can apply just as much to the financial services industry as we now realise it does to manufacturing industry generally. We must not forget that.
Secondly, there is a great danger of foreign domination because of the vast capital size of some of those who will be allowed in as primary dealers. It is worth remembering that American Express has a market capitalisation of four

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times that of the United Kingdom's six biggest quoted merchant banks put together. Salomon Brothers reported in its most recent annual report open positions amounting to $20 billion—the approximate equivalent of our public sector borrowing requirement for two whole years.
When the Americans and Japanese are allowed in as primary dealers it is essential that the capital requirements should be adequate, but they should be limited to what is necessary, there must be limits on trading ratios to capital and there should be not only a Chinese wall, but a positive iron curtain to prevent capital from being moved from the parent company to the trading subsidiary. That will ensure that everyone who starts as a primary dealer is on genuinely equal terms.
I am not a protectionist — if London is to be an international financial centre it must indeed be international—but I do not want the market dominated by Americans and Japanese in 10 years' time, as has happened with silicon chips and video recorders. We have to think through very carefully what is happening and get it right rather than wonder in 10 years' time why we did it at all.
9.11 pm
Mr. Tom Sackville: I have about three and a half minutes to remind the House of one strong sector of the City which has not been mentioned, but which may be affected by the proposed measure. It is the Eurobond market, of which London is clearly the centre.
May I quote some figures to demonstrate the importance of that market? Last year about $48 billion of new bonds were issued, and $28 billion of Eurobonds were issued in the first five months of this year. Likewise, in the traded secondary market, over $30 billion passed through the clearing system last week alone. About three quarters of that involved London-based houses.
We are discussing, not necessarily protection for the sake of the investor, but rather the protection of the investor to maintain confidence in a sector which is extremely important to London. Its earnings run into hundreds of millions of pounds, it provides much employment and it attracts enormous investment from overseas.
The Eurobond market illustrates the fact that self-regulation must be the way forward. The famous fraud of only a couple of weeks ago, which was perpetrated by one trade selling bonds to a dummy company at the other end of the world at or near the lower end of the daily trading spread and later selling at the higher end to an accomplice in another house, could not have been investigated effectively by anyone except the professionals in the industry. Outside bodies would not know where to start.
On the other hand, there are considerable dangers of over-regulation in the Eurobond market. The most that is needed is an expert body which can investigate quickly and cleanly and act quickly to bar or suspend individuals or firms and arbitrate in any disputes. In the current scandal the two institutions have agreed to arbitration, but they might not have done.
Whatever body is set up, I ask Ministers to remember that it must not frighten the Eurobond market away from London. The important thing to remember is that New York has failed to replace London as the centre of the Eurobond market, not just because of the United States'
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withholding tax, but mainly because of the fear of over-regulation and of interference by the Securities and Exchange Commission. Even if the United States' withholding tax was removed, as threatened, there is no reason to suppose that New York would attract a great volume of that market unless we failed to heed the lessons and made the mistake of going for a full-blooded SEC, which would then do great damage to the market.
Therefore, I believe that London can, and will, remain the clear centre of the Eurobond market, with all the benefits that accrue to this country as a result.
9.15 pm
Mr. Bryan Gould: At the beginning of what already promises to be another bad week for the Government, it is a pleasure to commend them on something for a change. They are to be congratulated on having arranged this debate before decisions have been made and minds have been made up. As a result, we have been rewarded with a very useful debate. A wide range of opinions have been expressed by Back Benchers, and that range has been perhaps a little surprisingly wide on the part of Conservative Members. An even more surprising fact is that the debate outside this House, as represented by participants on the Government Front Bench, has expressed an even wider range of views. On the one hand, the Chancellor—no doubt on the prompting of the Bank of England—has clearly said that he favours a self-standing commission, and, on the other, the Under-Secretary of State has gone on record equally clearly—and perhaps even more clearly—as saying that he is not in favour of a self-standing commission, and that his Department should do the job. The Secretary of State has neatly straddled the two by saying nothing.
Mr. Tebbit: Will the hon. Gentleman quote the section of the speech by my right hon. Friend the Chancellor of the Exchequer in which there is such a firm diversion from the views of my hon. Friend the Under-Secretary of State? We are all looking at shades of opinion, and sooner or later we shall come up with consensus.
Mr. Gould: We are all accustomed to leading politicians expressing themselves in somewhat veiled terms, but in his speech to the Bow Group just a fortnight ago the Chancellor of the Exchequer said:
"If anything, developments in the markets since Gower have perhaps strengthened the case for some kind of umbrella body."
That is very much in contrast to the remarks of the Under-Secretary of State. In interviews with Financial Weekly, he has gone on record as saying that he is firmly opposed to umbrella bodies, and sees no case for anything other than four self-regulatory agencies and the Department of Trade and Industry. However, the Secretary of State is tempting me to anticipate a later part of my speech.
This debate takes place against a background of substantial change in the City. But we must be careful to ensure that those changes are not allowed to overshadow the original purpose of the Gower report. In essence, it is about investor protection. It was prompted by a series of scandals in the City, such as the collapse of Norton Warburg, where many savers lost their savings. It arose because the City failed first to regulate efficiently, and secondly to punish efficiently when the regulation failed.
Mr. Tapsell: The hon. Gentleman must exclude the Stock Exchange from his censures. Neither a lack of regulation nor a lack of punishment existed there.
Mr. Gould: One of the weaknesses of this debate has been that it has concentrated almost exclusively on the Stock Exchange. The Gower report, of course, deals with many other institutions. Indeed, the problems thrown up by lack of effective regulation and enforcement in many of them prompted the setting up of the Gower committee. Of course, those failures not only damaged the interests of investors but, as many hon. Members have pointed out, they damaged the City's reputation. Unfortunately, as the hon. Member for Bolton, West (Mr. Sackville) mentioned, those days are far from behind us. Even now, we are in the midst of a new rash of frauds in the Eurobond market.
In his report, Professor Gower set out to put the City's house in order. It is essential that that should be done if the City is to prosper. We must not forget that fundamental issue. I join others who have paid tribute to Professor Gower for the tremendous job that he has done. We accept his fundamental and central recommendation that a new investor protection Act should regulate these matters.
Professor Gower's general case for regulation by statute is accepted by Ministers. Apparently even they now recognise that competition alone cannot be the answer to all the problems. That is a welcome recognition—one might even call it a conversion. We wait with interest to see how far it is extended to other spheres.
Competition and regulation should not be regarded as being mutually exclusive. Some unease is felt at the prospect of competition being excluded because of regulations, if that means that restrictive practices are allowed to flourish. If there is to be some restriction of competition, it is even more important to have clear, statutory safeguards for the investor and consumer.
The fundamental concern of the Gower report is overshadowed by the tremendous pace of change which has begun in the City. The change is astonishing. It was unleashed, I believe unwittingly, by exempting the Stock Exchange from restrictive practices litigation. It is ironic that that decision — which I believe was designed to forestall and inhibit change—has allowed that change to roar ahead. The hole in the dyke has become a total breach in the wall. I know that the Secretary of State argues otherwise. There is no harm if he wishes to keep peddling an improbable story, but no one in the City believes what he has to say.
The problems which Professor Gower addressed take place in a context in which minimum competition is to go, at least by the end of 1986, when single capacity is to go and the 29·9 per cent. rule about outside ownership is to go. We are now in the era of comprehensive financial institutions, offering the full range of financial services. Many people call them financial supermarkets. That means that the old institutional safeguards have gone. The City is now to be peopled—one might say invaded—by brash newcomers and outsiders. The old conventions will go. The old cosy, clubby atmosphere will go. The City is now freewheeling. It is spinning in a maelstrom of change and is in many senses out of control.
At this time, when the City needs the maximum certainty, assurance and guidance from the Secretary of State and his colleagues to meet the challenge from foreign institutions, the Secretary of State is failing the City. The institutions themselves are simply not capable of working out the right answers. The Stock Exchange Green Paper is a witness to the mess into which it can put itself. I see
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no prospect of all the conflicting interests in the various parts of the City being able to work their own way through this difficult and changing situation.
What structure should we aim at? It is almost universally agreed that a major role can be played by self-regulation. No one wants detailed, day-to-day administration by bureaucrats. However, we should not lose sight of the fact that self-regulation is a privilege to be earned and justified. The trouble with self-regulation—I am not alone in believing this—is that it is fatally easy for it to be regarded as a means of identifying, perhaps unwittingly, the wider public interest with the promotion of one's own self-interest. We cannot allow that to develop because the record of self-regulation inspires little confidence. If the Secretary of State would like to tell me whether he is satisfied with the record of the City's scandals and frauds during the past three years, I shall gladly give way.
Mr. Tebbit: I shall be happy to do so. Of course I am not satisfied—if I were, I would not be proposing any changes. I shall draw the hon. Gentleman's remarks to the attention of my right hon. Friend the Secretary of State for Employment.
Mr. Gould: The Secretary of State's remarks are so opaque and subtle that their true significance escapes me.
The record of the City inspires little confidence. No other institution with a record as bad as the City's—which we could detail if we so wished — would be accorded further latitude. The changes put a premium on the clearest and most effective regulation. That is in the interests of the City, as well as in the interests of everyone else.
Professor Gower says that the fault has been not that of self-regulation, but self-regulation not subject to effective surveillance. The central question—accepting that self-regulation will be given a further trial—is who should monitor and supervise that? Gower identifies two major options. He dismissed the Office of Fair Trading and the Bank of England. The two major options are the Department of Trade and Industry and a self-standing commission. Clearly, the professor preferred a self-standing commission. For practical and political considerations, he suggests in his report a supervisory role for the DTI.
There is little doubt that subsequent events—even subsequent to the publication of the report — have immensely strengthened the case for a self-standing commission. We do not need to speculate too outrageously to conclude that Professor Gower, if given the opportunity to write another report — and and we look forward to the second volume—would strengthen his preference for a self-standing commission. The Director General of Fair Trading has reached a similar view.
Even more surprising is the shift of view in the Conservative party, and also within the City. The Chancellor of the Exchequer has said that he is in favour of a commission. Virtually all Conservative hon. Members have accepted the case for such a commission—
Mr. Tebbit: No.
Mr. Gould: The right hon. Gentleman was not present, and does not know what his hon. Friends said.
Mr. Tebbit rose—
Mr. Gould: No, I shall not give way. I invite the right hon. Gentleman to read Hansard to confirm what I have said.
What is surprising is the shift of opinion in the City. Many of those to whom I have spoken have reached the view that there is an increasingly strong case for a commission. The more intelligent people in the City recognise that, in this new position, there is a major job to be done. There is a crying need for proper regulation if investor protection is to be properly established and if confidence in the City is to be maintained and promoted. It is doubful whether the DTI could do the job—not because of the abilities of those who staff the Department, but because it is inappropriate to the role of civil servants. They lack the necessary expertise; there is too rapid a turnover of staff at senior level; it is difficult for one Department both to sponsor and to regulate; there is evidence that sponsoring Departments are too easily colonised by those whom they try to regulate, and the supervision that might be expected from a Government Department might on the one hand be too remote and on the other too heavy—it would be applied at the wrong time, in the wrong way and on the wrong issues.
Mr. Nicholas Baker: The hon. Gentleman starts from the premise that self-regulation is a privilege, as he said a short while ago. I suggest that he is wrong about that because self-regulation can be justified only in the public interest. If he thinks that it is a privilege, he may come to the wrong conclusion.
Mr. Gould: When we consider that in the past year or two scandals have cost investors tens of millions of pounds, yet those concerned have still gone unpunished, it is clear that continuing self-regulation, though desirable, has to be regarded as a privilege which must be justified. However, the hon. Gentleman intervened some minutes after I had dealt with that point, and I do not wish to retrace my steps.
I now come to the case for a self-standing commission. In addition to having the great merit of being in line with the Labour party's long-held view on these matters, a self-standing commission would offer a body with which the City could identify, could develop a relationship, in which it would have confidence and which would be staffed by people who knew and understood the City.
It has always seemed to me remarkable—at least initially, when this debate began some months ago—that so many of those who, generally speaking, opposed central bureaucratic control wanted supervision by the DTI, whereas the Labour party, which is often accused of having exactly that desire, was the party propounding the idea of a self-standing commission.
Such a commission would deal far more easily than would a Government Department with comparable bodies in other countries. It is not insignificant that many other countries have taken that course. The commission would also be the most obvious, certainly the best fitted, body to undertake the pre-vetting of prospectuses, one of the important tasks identified by Professor Gower.
Mr. Nelson: The hon. Gentleman appears to be trying to persuade the House that everybody is coming round to a position long held by the Labour party. The position put earlier by his right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) was a marked departure from the line held traditionally by the Labour party and
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expounded earlier in the debate by the hon. Member for Warrington, North (Mr. Hoyle). That was that there should be only an SEC with full legal powers and many firms controlled by it. The right hon. Member for Bethnal Green and Stepney—in a significant departure which the hon. Gentleman should endorse, if he believes it—said that not only should there be that commission, but that there should be self-regulating agencies with considerable autonomy of control over the firms represented on it.
Mr. Gould: I am glad that I allowed the hon. Gentleman to intervene because obviously I failed to make clear what I said earlier, which was that, like my right hon. Friend the Member for Bethnal Green and Stepney, and like the Labour party for a considerable time—perhaps the hon. Member for Chichester (Mr. Nelson) has been reading outdated documents—I am in favour of a role for self-regulatory agencies. We think it essential, however, that there should be adequate monitoring and supervision and that that can be done effectively only by a self-standing commission. We go further and say that that commission must have adequate powers not just to monitor but to investigate and, in the end, to enforce. Rather like the SEC, it should have the power to ask for injunctions and to compel disgorgement.
Much of the opposition which initially arose to the concept of a self-standing commission was based on horror stories about the American SEC. It was regarded as a highly bureaucratic, lawyer-ridden body. There are now many other models, perhaps more congenial ones, and the Ontario Securities Commission is one. We have become, as it were, sufficiently mature not to be mesmerised by stories about an SEC which has, no doubt, in any case, improved its procedures.
We need clear guidance from Ministers about the way in which they are thinking. At least the Chancellor, though not as clearly or in as much detail as one might have wished, gave an inkling of the way in which his mind is moving. We did not get that from the Secretary of State today.
In the end, it does not much matter in which way a commission is set up; if it does, it is premature to consider that question now. I do not mind if it is the son of CSI or something else, provided that it has a statutory framework in which to operate. The decision on the nature of the commission will determine other major questions, such as the number, nature and powers of the self-regulatory agencies. Without a commission, there is a case for a small number of self-regulatory agencies because they would need to have substantial powers and great responsibilities. It would be wrong to load those powers and responsibilities on to such voluntary bodies.
With so few self-regulatory agencies there would be too great a degree of compression. Too many smaller interests in the City would feel that their interests would be submerged. It should be possible to have sufficient self-regulating agencies so that virtually every firm in the City can register through one of them. Ideally, we should try to avoid direct registration and supervision of individual firms.
We do not, however, want too many self-regulatory agencies, for the reasons given by some Conservative Members. If there were too many, they would become simple trade associations. There is a powerful case for identifying and organising self-regulatory agencies on a

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functional rather than institutional basis, because the dividing lines between City institutions are becoming increasingly blurred.
My preference is for between four and a dozen self-regulatory agencies. The more there are, the greater the need for a commission to supervise them.
Major practical problems still remain to be addressed. Only two or three of the self-regulatory agencies which are likely to be recommended currently exist. Great problems lie ahead in establishing such agencies and getting them functioning in the time available. We cannot expect City institutions with their clear sectional interests to arrive at the right solutions to those questions.
There are other uncertainties, some of which might be partly resolved by the Stock Exchange paper, which is to be published tomorrow. I quickly enter one caveat—I am disturbed at the apparent resistance which will be expressed in that paper to the principle of transparency. I agree with the hon. Member for Mid-Sussex (Mr. Renton) that we want the greatest possible disclosure which modern technology offers. That is the essence of clear and effective regulation. We need also a mechanism for ensuring that the City will not be completely dominated by huge institutions. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) made that point, and a recent opinion poll conducted in the City bears him out. About 62 per cent. of all brokers in the City believe that private investors will pay more and receive less protection because of these changes. About 52 per cent. of them—this bears out what the hon. Member for East Lindsey (Mr. Tapsell) said — are opposed to the abolition of single capacity.
That leads me to a substantial point. One of the great dangers facing us in this rapidly changing city is the foreign domination of our major financial institutions. One of the major objectives of this enormous change is to produce vast international financial conglomerates. I am afraid that, unless we have talked about this issue in advance and have mechanisms in place to deal with it, we shall one day wake up too late and find not only that the foreign earnings and all the other advantages brought to us by the City have gone, because they have been repatriated elsewhere, but that the extremely delicate relationship of the Bank of England with the mechanisms that enable it to fund the borrowing requirement to sell the goods have suddenly passed under the control of institutions that have no relationship with the Bank of England.
A Labour Government would refuse to follow the present Government's sorry example during the past week or two and would seek to follow an independent fiscal and interest rate policy. We would not wish that objective to be jeopardised by allowing our financial institutions to be part of a vast international money market in which the interests of the British Government were of no concern.
We have had a useful debate, but we have reached the point when we need clear guidance from Ministers. The stakes are enormous, as the hon. Member for East Lindsey said. We all have a substantial interest in an efficient, profitable and competitive City. The pace of change and the forces which are now ranged against the City in terms of international competition mean that, even if we take all the right decisions, the odds are not as high as they should be in favour of the City maintaining its pre-eminent position. We cannot afford to be complacent. We need to make the right decisions. They are a precondition to ensure that the City continues to survive and prosper. We needed
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clear intellectual analysis and guidance from the Secretary of State as to where his political mind was leading him. We did not receive it. We now look to the Under-Secretary to remedy that omission.
9.40 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alex Fletcher): This has been an interesting and worthwhile debate, and I believe that the House has agreed that it is taking place at the right time in view of the changes that are occurring in the City of London and elsewhere. My right hon. Friend and I are glad to have had the opportunity to consult the House.
The speech of the hon. Member for Dagenham (Mr. Gould) was remarkable. At a time of radical change in the City, he was extremely conservative. At a time of need for radical change in the trade union movement, he was silent, like the rest of his colleagues.
We are talking about the need for investor and consumer protection in the City and in financial services, but I am bound to say that it is high time that we had protection for the members of trade unions, let alone those who have suffered from the breakdown of services, which happens all too frequently.
In thanking the House for its contribution to the debate, I should like to add my thanks to Professor Jim Gower for the excellent report that he has presented to the House and the country, and for the stimulus that it has given to this debate and to the wider ranging debate that is taking place in the City and elsewhere.
The next step in the development of the Government's proposals will be the advice of the Governor of the Bank of England's advisory group, which we expect to be available within a few weeks. That should show how far the securities industry can deliver the kind of institutional structure for which we are looking to provide what my right hon. Friend called supplementary measures to maintain appropriate conduct of business rules and thereby ensure that the system is equipped with preventive as well as retributive teeth.
Unless the system includes arrangements designed to nip fraud in the bud, if it does no more than punish the malefactor after the event, it will not command the confidence of the investor at home or overseas. Unless the financial services sector is clean, and is seen to be clean, it will find itself short of customers. There is sufficient and growing international competition to ensure that that is the case.
The Governor's group will also influence our thinking on whether some kind of intermediary body is necessary and, if so, what form it might take. At the same time, we expect to be receiving and considering the life insurance industry's response to my invitation to put forward by the end of August proposals for a possible self-regulatory body to cover the selling of life insurance and related products, such as unit trusts, by intermediaries and other salesmen. Although a feature of today's debate has been that not a great deal has been said about the insurance sector, I am sure the House will agree that the arrangements made there are equally important in the reorganisation that is taking place. We shall consider the proposals of the insurance group against the views that have been outlined today.
We want to see what the industry can agree to deliver before settling the Government's plans. I remind the House that our intention is to publish a White Paper in the autumn.
Mr. Bermingham: Will the Minister confirm that in those reviews the Government will impress upon the insurance industry the need for full disclosure and liability?
Mr. Fletcher: I agree with what the hon. Gentleman says, and with what the hon. Member for Dagenham said on the same subject. Disclosure is a fundamental part of investor protection.
Before responding to particular points, I shall briefly recapitulate the approach set out by my right hon. Friend the Secretary of State. The extent to which we envisage relying on market forces has been variously criticised as naive, a fraudster's charter and an inadequate response to mischiefs of the sort that brought about Professor Gower's report. To some extent, we have asked for this by sharing our ideas with the House while they are still at the formative stage. I think that the House has, however, accepted that this debate has been worth while, so that the Government can benefit from the views that have been expressed today.
Our plans are still incomplete, and deliberately so, for the reasons that we have given. However, I put it to hon. Gentlemen who have questioned our general approach that there are few forces as powerful as market forces. The rider that we attach to this — disclosure — and the vigorous enforcement of the criminal law and the availability of instruments of competition policy will, in combination, give market forces a firm push in the right direction. I doubt whether a bureaucratic straitjacket can achieve any set of objectives more efficiently and effectively than market forces properly channelled. Market forces are the most powerful weapon for the protection of the investor, but they are not our only one. We recognise the need for conduct of business rules to make it more difficult for malpractices to occur in the first place.
We would prefer such measures to be administered largely by the financial sector itself, but with statutory backing. We believe that this will be the most efficient and cost effective approach. Some hon. Members, such as my hon. Friends the Members for Chichester (Mr. Nelson) and for Mid-Sussex (Mr. Renton), have asked what my right hon. Friend and I envisage when we speak of self-regulation. Let me try to explain briefly what it does not mean. It does not mean amateur arrangements in the City. It does not mean, with respect, the Salvation Army in the City, or some group of self-appointed City vigilantes. Nor does it mean the present system of SRAs, some of which operate effectively in the City. Self-regulatory agencies must not be cosy clubs operating simply for the benefit of their members. They should be bodies underpinned by statute, with their fundamental rules of conduct set by the Government. That is the basis on which we consider self-regulatory agencies in the various discussions and debates that are taking place.
Mr. Renton: When my hon. Friend uses the words "underpinned by statute", will he consider the suggestion that self-regulatory agencies, either individually or through the organisation if there is to be one, should report annually to the Secretary of State on how they have discharged their duties, and such reports should be laid before Parliament and debated briefly, if necessary?
Mr. Fletcher: That may be. We wish to underpin by statute because, in operating in a particular sector or in the
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City generally, the SRAs would require authority from a statute to make sure that the business of the financial sector was conducted responsibly. In return for that authority, the House may look for some annual report or some other such action.
The right hon. Member for Bethnal Green and Stepney (Mr. Shore) criticised my right hon. Friend the Secretary of State for insufficient steer, but having promised to steer himself said only that we should have a commission. That was all, apart from an interesting resume of the Gower report. I was surprised that he ignored the importance of competition in protecting the interests of the investor. I was also surprised that he supported the separation of sponsorship of the financial sector and its regulation, because the two are not incompatible.
Mr. Shore: The hon. Gentleman has explained his position on SRAs. What does he think about having an independent Securities Commission? Does he think that there should be such a body? If not, why not? Who is to regulate the self-regulators? Does he think that it can be done by the Department of Trade and Industry, or does he think that it requires an expert commission with statutory powers?
Mr. Fletcher: Those are matters which my right hon. Friend will decide in preparing the White Paper. We want an effective regulatory body with the minimum of bureaucracy. I do not believe that it has to come directly from Government. I hope that the benefit of the experience of the City and City practitioners will be evident in such a body. If it were underpinned by statute, it might work very effectively. We are not choosing between, on the one hand, some amateur body and, on the other, a Government quango. We might find, in the typically British way, some method whereby voluntary arrangements, as I have said several times, can be underpinned by statute.
My hon. Friend the Member for East Lindsey (Mr. Tapsell) made an important and lively contribution to the debate. I think that the House generally enjoyed it, respecting his experience in these matters. In an intervention, I tried to point out to my hon. Friend that it was the Stock Exchange, and not the Government, that ruled on the question of single capacity. Despite the fears which my hon. Friend properly expressed in an earlier debate concerning foreign takeovers and foreign companies, they are not ruling today in the City. City firms themselves decided the extent of foreign ownership.
The Government's interests are largely confined to the efficiency of the market, to fair competition and to investor protection. I was a little surprised—perhaps I should not have been — that my hon. Friend, as a practitioner in the City, was so strongly critical of so many of the decisions made by his colleagues and contemporaries in the City with regard to the changes that are taking place. I am sure that my hon. Friend has deployed his arguments equally forcefully in the City. He drew a comparison with Lloyd's but he agreed that there was only a superficial resemblance between the activities and business taking place in Lloyd's and those taking place on the floor of the Stock Exchange. I think that the House generally appreciates and understands that.
I was glad to hear my hon. Friend's outspoken criticism of an SEC. He seems to feel that it is inevitable, given the course that we are at present treading. I would encourage him not to be so fearful and to think that it is not

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necessarily inevitable. There are ways and means — which I hope the House will support later—whereby, as I said to the right hon. Member for Bethnal Green and Stepney, practitioners can still manage their own affairs in the City in a responsible way with the necessary backing and support of the Government.
I agree with my hon. Friend's fears about bureaucracy and constant legal wrangles, and the fact that business cannot be conducted in some parts of the world—not least in the United States—without a team of lawyers representing each side of the negotiations. It is important, in designing a new system for the City, to maintain the informal and reputable way in which business is conducted and the good reputation of the City as a whole.
My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) was rightly concerned about the small and medium investor, but, as was pointed out to him, the present system has not exactly increased the number of small private investors. I believe that increased competition among brokers themselves is the way to ensure that the poor performance is reversed. As my hon. Friend the Member for Mid-Sussex said in an intervention, brokers will respond positively to the new competitive conditions that are being brought about. He mentioned December 1986. We believe that that date can be met without any penalty being imposed on investors or anyone else in the City.
The answer to the point about foreign takeovers is that the City remains essentially British, without any special Government protection. My hon. Friend the Member for Mid-Sussex expressed fears about this some months ago. He will agree that, in that respect at least, things have gone well since then. He and my hon. Friend the Member for East Lindsey seemed to suggest that the Stock Exchange was being dragged screaming into the changes that are taking place. The Stock Exchange was anxious to make changes in the London market, but was becoming increasingly inhibited by the fact that the case was before the Restrictive Practices Court. The Stock Exchange accepted the Government's proposals for abandoning fixed commissions and introducing competition into its own affairs and the affairs of the City in general. Thai was what sparked off the changes.
Mr. Shore: Did the hon. Gentleman say, "the Government's proposals"? They were the Stock Exchange's proposals.
Mr. Fletcher: I understand the right hon. Gentleman's allusion. The Stock Exchange was glad to be released from the restrictive trade practices case so that it could undertake the changes that have now taken place in the City.
In answer to my hon. Friend the Member for Selly Oak, I say that I cannot believe that the City, which thrives on competition and is enthusiastic about competition for
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everyone else, does not believe that competition is to its own advantage too. Competition is good for the financial services industry and for the investor.
Mr. Beaumont-Dark: Is my hon. Friend saying that the City is afraid of competition? He has deliberately missed my point, which is that the great financial conglomerates will lessen competition rather than widen it. How can it be good for competition that fewer people should be doing business?
Mr. Fletcher: I believe that there will be more business to be done, and that many alert stockbrokers will take advantage of the greater degree of competition open to them.
The hon. Member for Stockton, South (Mr. Wrigglesworth) criticised the DTI. He seemed to forget that the Department is bound by the Prevention of Fraud (Investment) Act 1958, which we all agree needs to be thoroughly revised. I hope that that revision will be an important part of the financial services Bill which we hope to introduce in the 1985–86 Session. The hon. Gentleman, too, called for a commission. It is odd that those who are most critical of the Government are usually the first to demand more government every time a new problem arises.
I am sorry that I did not hear much of the speech of my hon. Friend the Member for Horsham (Mr. Hordern). He referred to the position of self-regulatory bodies under the Treaty of Rome. There is not much reference in EEC documents to transactions such as this. However, in terms of competition policy, we would be subject to Brussels. The position would resemble that of domestic competition policy. I agree with my hon. Friend the Member for Horsham that, when the Government have to depend on only two firms of jobbers, the base is too narrow. That is an area in which we are likely to see a change.
My hon. Friend asked whether self-regulatory agencies would be sufficient to protect investors. My view is that there is no point in having self-regulatory agencies unless they can—and are seen to—protect the interests of the investor. That is the main feature of their task. My hon. Friend is thinking of an independent agency operating at arm's lengh. He did not ask for a commission as such. There is a difference between an independent agency managed by practitioners and a bureaucratic quango.
Mr. Hordern: If the Secretary of State does not set up some umbrella organisations as well as the self-regulating agencies, there will be some ugly problems on his desk.
Mr. Fletcher: I think my hon. Friend will agree that, from time to time, we have sufficient problems without inviting more. I am sure that his advice is given with much experience and wisdom and, if it is right, my hon. Friend the Secretary of State will pay a great deal of attention to it, as I shall. I am grateful to my hon. Friend for his contribution to the debate.
It being Ten o'clock the motion for the Adjournment of the House lapsed, without Question put.

Value Added Tax
10 pm
Mr. Jeff Rooker: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Value Added Tax (General) (Amendment) (No. 2) Regulations 1984 (S.I., 1984, No. 929), dated 5th July 1984, a copy of which was laid before this House on 6th July, be annulled.
It is somewhat remarkable, although understandable, that the Opposition have had to lay a prayer under the negative procedure to enable Parliament to debate about £1·2 billion which was a central part of the Chancellor's Budget statement. Were it not for this debate, the House would have had no chance to debate the change, any of the problems and uncertainties that surround it and such a large sum of money.
I do not propose to go through the details of the regulations—that is the Minister's job. I merely want to ask him a few questions. As far as I am aware, the Government are following the correct legal procedure. I say that because the Leader of the House left one of his constituents with the impression in May that these matters were being dealt with in the Finance Bill. I suspect that many people have looked in vain in the Finance Bill for this part of the Chancellor's Budget statement.
I wish to ask the Minister some questions because of speculation surrounding the background to the change. Is there still any argument between Customs and Excise and the clearing banks about the terms of the guarantees required for those who import into Britain and who will be required to pay VAT between six and eight weeks earlier than would otherwise be the case? I do not intend to divert the Minister on to other areas of policy but is he confident that there will be no blockages at the ports from 1 October when the new scheme takes effect? There has been much discussion about that in the media, especially in regard to Dover which is represented by the Chief Secretary to the Treasury. Does any trading organisation have any outstanding inquiries or queries with the Government? Are any meetings between the Government and trading organisations regarding implementation of the order still on the agenda? Have any steps been taken to protect exports from Britain if there are blockages at the ports because imports have been held up? Exports are not affected by the order but could be affected by physical difficulties in the docks. Such difficulties should be foreseen and planned for.
I did not expect to have to raise my next questions but it has been put to me by some of my right hon. and hon. Friends. Are any special arrangements due to be made to cope with the problems of importers who must pay VAT at the ports on objects that arrive and have an unknown value? I refer to objects that have been imported for auction with a view to being exported shortly afterwards. There will obviously be some difficulty in levying VAT on such objects. I assume that the Minister will give us the latest with regard to the 14th draft directive of the EEC on harmonisation of VAT at the ports. As I understand it, if an agreement could have been reached in the EEC, the Government might not have pursued this course of action in the regulations. Much to my surprise I have also discovered that there is a seventh VAT directive on works
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of art, which may or may not be affected by the operation of the regulations. That probably also relates to my previous question about objects of unknown value at the point of import.
The Opposition do not oppose the regulations, and any sign to the contrary was simply a misunderstanding. It is clear from the Chancellor of the Exchequer's Budget statement that importers have in general been obtaining an easement in cash flow, which could be taken as an importers' handout at the expense of domestic producers because they have not been required to pay VAT for up to 11 weeks after the importation of the goods involved. That does not apply to domestic producers. It is unsatisfactory, especially in a nation that is sinking under a tide of imports. The Chancellor of the Exchequer is right to attempt to equalise treatment, and there can be no argument about that.
The Chancellor's problem—this matter will affect the House and the nation next year—is that he used the once-and-for-all bonus of £1·2 billion that arose from moving forward the date for payment of VAT. He will gain that only for one year. He used that money in his Budget judgment for the PSBR calculations. That clearly means that next year he must find the same sum again from another source, either on a once-and-for-all basis or on a recurring basis, even to maintain the status quo of the PSBR, public expenditure and taxation. It is a target that he must reach. I do not know where he will find that money, and I do not expect the Minister to tell us, but I shall venture a suggestion.
Clearly it is on public record that the Government do not intend to maintain the existing regime of VAT indefinitely. That intention is in letters written by Ministers. It is also on public record that the Chancellor briefed the Sunday press after the Budget and, like a child sucking up to its mother, the press sucked it all in and wrote it down. It is clear that the Chancellor intended to spread the burden of VAT, either through a two-tier rate or by extending VAT to areas such as public transport, construction and fuel. That is clear from the press reports of 18 and 19 March 1984.
About a week after the Budget the Chancellor said in a radio broadcast:
"We are free to do what we think is right but I have no plans to move in that direction."
He was talking about the fact that the Conservative Government between 1979 and 1983 were pledged not to put VAT on food, fuel, housing and transport, but that no such pledge was given in 1983. Clearly one way in which the Chancellor could scoop up £1 billion-plus is by extending VAT.
I invite the Minister at least to tell the House some of the ways in which the Chancellor could make up the shortfall that will occur because the regulations involve a large sum on a once-and-for-all basis. To try to run the economy on such a piecemeal basis, where such a large sum is involved, is unacceptable.
I said at the outset that I accept the legality of our formalities and that we must debate this Opposition prayer. Although the procedure which allows the Customs and Excise to make their own regulations is all right, there is an argument for "capping" the money. Where a regulation can affect our economy to such a great extent — it could be more than £1 billion — the original legislation should be amended so that this can be done only by affirmative order. It should not be possible for the

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Customs and Excise to issue regulations that could have such a devastating effect, equivalent to more than a penny in the pound on income tax, in such a way that the House of Commons cannot debate the matter. They could issue regulations when the Government cannot find time to debate a prayer. I hope that Ministers will bear that in mind when drafting the clauses for next year's Finance Brill.
10.11 pm
Mr. Toby Jessel: I am second to none in supporting the ending of the postponed accounting of value added tax. It has made possible many other tax reductions in the Finance Bill. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) referred to the effect of the change on articles of unknown value, such as works of art for auction, and I ask my hon. Friend the Minister whether the Government will consider the way in which the proposed measure could affect the business of fine art auctioneers in London such as Sothebys and Christies.
London is one of the great arts capitals of the world. I speak not only of museums, art galleries, architecture, the stage, concert halls, opera and ballet—thus bringing in both visual and performing arts—but of our fine arts auction houses. Those parts of London's heritage comprise a network of art and of tradition that is very important to Britain. It is a priceless national asset which should be treasured and fostered. If we damage one strand we can damage all of them, because visitors to Britain derive much pleasure, enjoyment and interest from those activities, which in turn can generate their spending on other parts of London's heritage.
The fine art auction houses are in a highly competitive business. London is in sharp competition with New York, Geneva and increasingly with venues in the far east and other parts of the world where articles of art and history are auctioned. If international sellers can easily choose to go elsewhere because they do not like London — they are free to do so—marginal factors can tip the balance and affect their choice, and those effects can snowball. Many art objects that are sold in London have been imported for sale only to be re-exported if they are brought by foreigners, and deferred VAT would straddle that time interval, which is typically two or three months and can be as much as four. If those people must pay VAT where they did not have to pay it previously, although they can reclaim it on export, the cost of interest in the meantime must be financed by someone. That is bound to increase the overall cost of the operation and to undermine London's position as a centre of the international art market.
The amounts involved are not huge from the point of view of Government revenue. I have not attempted to work our the figure and I do not know whether the Minister of State has sought to do so. However, at a rough guess, I believe that it amounts to probably less than £2 million a year, and might even be less than £1 million, for the whole of the art market. That is not large in terms of Government revenue, but by sheer nuisance value it could in the long run significantly damage the prosperity and earning capacity of the British fine art auction market. Such damage would, I suggest, be out of all proportion to the marginal increase in revenue that the Government might receive.
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I ask the Minister to consider whether he and the board of Customs and Excise can find some way of solving this difficulty.
Sir Peter Mills: I share exactly my hon. Friend's views and believe that something must be done. Is not the simple answer a delay of payment of VAT until these things are actually sold and exported?
Mr. Jessel: I am grateful to my hon. Friend. That is what happens at present, because the tax is, and has been, deferred, but that is now in jeopardy because of the change proposed in the Budget. I warmly agree with my hon. Friend and am grateful for his intervention. In view of that added weight, I hope that my hon. Friend the Minister will carefully consider this matter.
10.16 pm
Mr. Ian Wrigglesworth: I do not seek to oppose the regulations, but I wish to draw attention to some anxieties about them that have been expressed to me. Before doing so, I support what the hon. Member for Birmingham, Perry Barr (Mr. Rooker) said about placing a limit on the size of funds covered by regulations of this sort. We are talking about substantial sums of money. There seems to be a case, which should at least be considered — possibly at the time of the next Finance Bill — for a change in the way in which we deal with matters of this sort.
I do not wish to oppose these measures because they introduce equalising treatment for exports and imports, and clearly it is to the advantage of our economy that we should be on all fours with other countries.
I wish to express anxiety about the immediate impact that the introduction of these regulations will have. They will affect small importers, of whom there are many, whose cash flow will be hit considerably and who may find it difficult to get the guarantees necessary from the banks to sustain the burden placed on them by this change. Many small importing firms engaged in quite legitimate business will, I believe, be hit hard by the imposition of these regulations later in the year. I should be grateful if the Minister can assure us that he has their plight in minds, and I shall be interested to learn of the ways in which he feels he can help people in these difficulties.
The hon. Member for Perry Barr spoke of the possibility of some congestion at Dover. That could happen at other ports if goods are delayed through the deferment of VAT no longer taking place, and consequently it may take some time for companies to raise the funds. Indeed, they may possibly not pick up the goods at all. That may be so in a small minority of cases, but considerable fears have been expressed that this may lead to delays and congestion. I should be grateful if the Minister could reassure us on that point.
Both those things may combine to cause considerable difficulties for manufacturing businesses, as well as art and auctioneering businesses, which import raw materials and parts and whose supplies could be interrupted by the introduction of these regulations. I should like to think that the Government had borne these worries in mind in drafting and introducing the regulations. I should be grateful if the Minister could give some assurances about them.
10.20 pm
Mr. George Walden: I support what my hon. Friend the Member for Twickenham (Mr. Jessel)

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said. I agree with the economic logic of this measure, but if logic is pushed too far and is too pure it gives rise to anomalies, and there has been an anomaly in respect of the art market.
The philosophy of the measure is to give equal VAT treatment to imports and domestic sales, but the effect on the art market will be precisely the opposite. If, for example, an exhibition is mounted here of pictures that are imported, in future the VAT will have to be paid at the moment of importation. Probably only a few of those pictures will be sold—I seem to remember that even Cézanne and Matisse were not immediate sell-outs—and the rest will go back abroad. During the long interval an extended loan will be made to Her Majesty's Customs and Excise. No worthier body for such a loan could be imagined, but it is hard on the people financing that loan.
My point is essentially the same as that of my hon. Friend the Member for Twickenham. This is a self-evident anomaly which I hope it is not too late to correct.
10.22 pm
Mr. Archy Kirkwood: I intervene on the basis of the implementation of the instrument rather than its principle. The arguments about the principle have long since been made and are past. The change has been visited upon us. But I wonder what steps the Government took, subject to the obvious constraints of Budget secrecy and the difficulties that that produces, of trying to consult the trade about the effects of the change made by the Chancellor of the Exchequer.
I am worried about the combination of the congestion plus the higher costs involved, and perhaps I can tempt the Minister to say how the position has changed now that interest rates have altered since the decision was taken. All these together may be considered as some sort of non-tariff barrier on imports. If that happens and if the congestion is as bad as some of the worst estimates suggest, that will be bad for trade generally.
I am told that the Government have received about 22,000 applications for delaying payments to the 15th of the following month. If that is true, they will have to process an application every two minutes to be ready for 1 October in a sensible way. There are 50,000 firms involved, and the effects will be felt most drastically by the small companies involved, which have to pay these higher rates and cope with the additional bureaucracy.
I reinforce what was said earlier about the Government's position under the 14th VAT directive. Does it mean that the old system, which is technically the system that has been adopted by the EEC, is out of the window for all time? It is right to ask the Government for their long-term views and what they think about the 14th directive now that this change has been made.
If my information is right, 60 per cent. of our trade is with the EEC and 70 per cent. of that is what is known in the trade as "innocent" consignments. VAT is waived on these consignments. Customs officers will now have to check their "innocence", their guarantees and their security if VAT is to be paid. That must involve the Customs and Excise in a great deal of additional work.
An EEC report in 1981 on difficulties encountered in international traffic stipulated that the collection of VAT under the new system led to more border delays than anything else, while directive No. 83/643 on procedures
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and formalities at Community borders asked for customs formalities to be kept to the minimum. It seems that the changes that we are discussing will do nothing to assist that. I am certainly worried about the knock-on effect on exports if ports are clogged up.
If the Government are to make any sense of the regulations, much more effort is needed to ensure that companies are aware of the effect of the change, so that the majority have their papers in order to minimise the delay. The Chancellor of the Exchequer should use his influence to ensure that the banks take as relaxed a view as possible in trying to help small clients with their cash flow problems. He should also consider, when special cases can be made, waiving the requirement to guarantee cheques to pay VAT.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) was right to ask about how we will deal in future with regulations involving vast sums of money. This procedure is inadequate. We should look at that for the future.
Having studied the 1980 order that the regulations amend, I think that there is an irrefutable case for the consolidation of some of these regulations. The 1980 order is a pig's breakfast. Will the Government give us some idea of what they expect to happen when the scheme is implemented and what is to happen to the principle of the 14th EC directive?
10.26 pm
Mr. Patrick Cormack: My hon. Friend the Minister of State, Treasury will be relieved to know that I do not intend to make a long speech. We have been round the VAT course regularly recently, but I wish to support my hon. Friends the Members for Twickenham (Mr. Jessel) and for Buckingham (Mr. Walden).
My hon. Friend the Member for Buckingham said that there was a certain logic in the regulations. Unfortunately, logic and common sense do not always go hand in hand, and the regulations are a good example of that.
My hon. Friend the Member for Twickenham made a point that should not be lightly dismissed when he spoke of London being the centre of the world art market. There is considerable anxiety, particularly in our major auction houses, about the implications of the regulations. I hope that my hon. Friend the Minister of State will pay proper regard to the impeccably sensible suggestion made by my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) in a brief but trenchant and telling intervention. If the Minister meets that point, he will go far to allay the fears raised in recent days.
10.28 pm
Mr. D. N. Campbell-Savours: I shall be brief and I apologise for not having been here earlier, but I was otherwise engaged.
Representations have been made to me about the implementation of the regulations. I supported the proposal in the regulations, particularly as I have had some experience of clearing goods through Dover. However, I understand that at the time of the Budget it was not clear, particularly to clearing agents in Dover, what effect the proposal might have.
I am informed that much confusion is expected by clearing agents and hauliers and that hauliers are worried that if there are inaccuracies in the documentation,

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particularly the VAT entry submissions, landing officers may decide to hold up vehicles, which may stand idle at Dover at a cost of about £120 a day.
I refer particularly to Dover because at that port there are many trailer units accompanied by tractors. There is no driver or tractor accompanying most commercial goods cleared by Customs, but much of the trade through Dover comprises tractor-accompanied containers on trailers.
Perhaps the Minister will address himself specifically to the problems of the small agent. Mr. Richard Pelts, the manager of the Anglo Overseas Transport Company, which has an office in Dover's eastern dock, spoke about a complication that would arise over a guarantee and said:
"Even if we do provide guarantees for all our customers, we could still get caught up in delays, not of our making."
Of course, that view is also expressed by many clearing agents in Dover, as well as by many hauliers.
Some weeks ago, an article appeared in the Financial Times under the headline,
"Taxing Times at the Ports".
It was written by Mr. Andrew Taylor, and its opening paragraphs set out simply and clearly the general view of those who use the facilities at Dover. He said:
"Britain's bustling south east and east coast ports could face chaos and confusion this autumn. Lorries may be held up for many hours and imports delayed as a result of the Chancellor's plans to raise an extra £1·2 billion in VAT payments by the end of the financial year. The warning is made by Mr. Jonathan Sloggett, chief executive of the Dover Harbour Board, which runs one of Britains busiest ports handling billions of pounds of trade each year with the Continent. Mr. Sloggett warns that changes in the way in which VAT on imports is to be collected—to be introduced on 1 October—will seriously disrupt traffic in key ports like Dover and threaten the future of hundreds of small import businesses"
In the same article there is a reference to the problems faced by small agents who find difficulty in raising the required bank guarantees to cover the VAT liabilities of the firms for which they act as hauliers. The House deserved to be given an undertaking that all those businesses, particularly in Dover, will be fully protected through the introduction of this arrangement. Even now there are still people who are confused and concerned about the implications of this scheme. There is a feeling that the larger freight agents, who are in a position to raise the necessary bank guarantees, are in a better position than those who are not as well-heeled or whose trade references are not so substantially backed by assets.
Therefore, we need some undertaking that the smaller hauliers and freight agents will be thoroughly protected and that the larger operators will not be able to benefit from Government legislation at the cost of the smaller ones.
10.33 pm
The Minister of State, Treasury (Mr. Barney Hayhoe): I thank hon. Members for having given a general welcome to the regulations. As a Member of Parliament rather than as a member of the Government I share the concern expressed about the procedures being followed. However, according to legal advice, we are following those procedures absolutely correctly. As hon. Members will realise, I questioned whether we were proceeding in the right way, and I was assured, on the legal advice available, that we were proceeding in the only proper way under the law.
However, I think it only appropriate to draw the attention of my right hon. Friend the Leader of the House
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to the points made about the procedure, and whether it is appropriate that such a significant sum—£1·2 billion—should be raised by regulations. They have been properly laid in accordance with the law of the land, and are subject to a negative resolution of the House, but I shall make that point to my right hon. Friend the Leader of the House. It is obviously not a matter for me to decide, but it may well be a matter for the Select Committee on Procedure.
This is the formal way in which we implement what the Chancellor said in his Budget statement about the change in the arrangements for VAT of imports. The change received a broad welcome in all parts of the House since it was thought wrong to continue to allow British industry to be at a competitive disadvantage because our fellow members of the European Community would not implement the 14th directive and operate a postponed accounting system throughout the Community. We ought to convince our fellow members that this was the best way were were supported in our stand by the Commission, but we failed to achieve success. It seemed right, therefore, to make the change.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked whether the problems between the Customs and Excise and the clearing banks over the terms of the guarantee had been solved. At the meeting on 5 July all outstanding points were dealt with to the satisfaction of both parties. The form of the guarantee presently available, when it is reprinted, will contain miniscule alterations. All concerned accept that it is satisfactory. No further delay should occur because of the uncertainty about the form of guarantee, although banks may be unwilling to give guarantees for other reasons. I hope that the substantial number of applications for guarantees — totalling not 20,000 but 30,000—will be processed at goodly speed.
Several hon. Members mentioned worries about hold-ups at the ports. Particular reference was made to Dover and to comments by the person running the Dover harbour board. I do not wish to introduce a note of controversy into the debate, but whatever the difficulties flowing from this measure, they are as nothing compared with the difficulties flowing from the strike that is stopping the movement of freight and therefore damaging—
Mr. Campbell-Savours: Will the hon. Gentleman give way?
Mr. Hayhoe: No. One must put these matters in perspective. Those who are affected by the present ban on freight and the blockage of freight through Dover are the people referred to in the discussions that we have had tonight.
Mr. Campbell-Savours: Does the Minister accept that advance clearance can be obtained for freight held tip abroad—a facility available, at Dover—and that there should be no delay in documentation?
Mr. Hayhoe: I do not know whether that applies to what I was saying. Little additional documentation is required and little, if any, physical checking for the majority of import entries. More customs staff are deployed to help with that small additional paperwork and about 100 additional staff are being deployed to help implementation.
Customs planning is based on the need to keep traffic flowing smoothly. The main delaying factor is likely to be

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the failure of importers and agents to establish either adequate deferment guarantees or to make funds available quickly. If importers meet those obligations, the delays should be minimal.
There has been widespread consultation between the Customs and all interests. There have been about a dozen seminars in London, Brighton, Bristol, Southampton, Manchester, Gateshead, Glasgow, Canterbury and so on. A widespread series of meetings has been held so that all the detailed points could be discussed. Those meetings have gone well, and many of the worries have been dissipated. I hope that there will be a smooth transition in bringing in the new system. On the inter-relation with exports, the port managements, in co-operation with Customs, will do everything possible to ensure that any delays for traffic coming into Britain will not affect traffic going out.
I was asked about meetings with trade organisations. I have already referred to the seminars. I have read in the press that people want to see me and I have just received a letter from the British Importers Confederation, making a specific request for a meeting. I have readily agreed to a meeting with trade interests.
The point that has exercised the minds of a number of my hon. Friends—including those for Twickenham (Mr. Jessel), for Torridge and Devon, West (Sir P. Mills) and for Buckingham (Mr. Walden)—has been the special problems of the art world. A substantial number of hon. Members will have received representations on that point. I have had consultations with some of those affected. Officials are already discussing the difficulties with the various trade interests, to seek solutions that overcome their difficulties without undermining the Chancellor's Budget expectations. It was no part of the Chancellor's Budget to erode or undermine the position of the British art market as the centre of, the auctioneering efforts. I know that some hon. Members are worried about the bloodstock industry, where similar considerations apply. All those matters are being discussed, and I hope that we can find ways to overcome the difficulties.
I was grateful for the general support of the hon. Member for Stockton, South (Mr. Wrigglesworth). He referred to the problems of small importers. The Customs are holding discussions. However, £1·2 billion is being raised by the changed provisions, and that cannot be raised without some additional burden being shared by those having to meet that substantial sum. There is no magic about it—it will be that amount of money coming to the Government earlier than they would otherwise expect. I would not wish to pretend otherwise.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) referred to background. There have been long discussions. In 1980, a careful look was taken at the whole position, and at that time the decision was against going ahead. In 1983, the NEDC concerned with the knitting industry made a powerful case both in public and in the NEDC in favour of the changes. There have been discussions in the NEDC and elsewhere, and the Chancellor took those into account in reaching his judgment. Of course, the Chancellor did not involve the NEDC or those who make representations either way in his decision—it was a decision made by him on the basis referred to in the House.
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I was asked about the long-term position of the Government. I reiterate what the Chancellor said in his Budget statement, that we still support the 14th directive. We would like to see the postponed accounting system, which we now have, continued. If the miracle occurred and our partners in the Community all made the change before 1 October, there would be no difficulty in the Government taking the necessary action, as the Chancellor said he would. But that is living in a world of fantasy, because we know that that will not happen. However, if at a later stage, we or others can persuade the Community to move to the postponed accounting system, the Chancellor has made it clear that he would be prepared to tell the House that we should revert to the arrangement.
Mr. Rooker: Regarding the importation of goods for the art world, while we are grateful for the Minister's remarks, may I remind him that it is four months since the Budget? I find it remarkable that, based on the representations that I have received and my knowledge of the matter, this matter, has just arisen. There was no mention in press notice No. 895 issued on Budget day, that this change would be made by order; one assumed that it would be made as part of the Finance Bill. However, the final sentence of the press notice read:
"There will be consultation with representations of trade bodies affected in due course."
Did not the Government think of the art world at that time? Or has the art world come to the Government? It seems odd that such an important industry should be in this position four months after the Budget.
Mr. Hayhoe: I am not entirely clear about the timing, but the first representations that I received directly from the art world were in the course of the last few weeks. I am aware that documents have been circulated, but perhaps they were concerned with other major events. As for the bloodstock industry, which I said was a related matter, it reacted and discussions will take place. I hope we shall find ways of resolving these problems. It is clear that the whole House wishes, if it is at all possible, to find a way to resolve the issue so as not to damage the art market interest and the associated interests that go with it.
Mr. Cormack: Will my hon. Friend not say "if it is at all possible," because it is possible?
Mr. Hayhoe: I will not be tempted by my hon. Friend, who tries it on quite regularly, and gets roughly the same response each time. I hope that he will accept that I have gone a considerable way to indicating where my thoughts lie in the matter. I hope that officials, with good will, can find the appropriate solution.
Mr. Rooker: I beg to ask leave to withdraw the motion.
Motion, by leave, wihdrawn.

Statutory Instruments, &c.
10.43 pm
Mr. Deputy Speaker (Mr. Ernest Armstrong): With the leave of the House, I shall put motions Nos. 3 to 6 on the Order Paper formally.
Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments, &c.).

Statutory Instruments, &c.
  INTERNATIONAL IMMUNITIES AND PRIVILEGES
  That the draft International Tropical Timber Organization (Legal Capacities) Order 1984, which was laid before this House on 18th June, be approved.—[Mr. Lang.]
  EDUCATION
  That the draft Education Support Grants Regulations 1984, which were laid before this House on 22nd June, be approved.—[Mr. Lang.]
  CONSUMER PROTECTION
  That the draft Pedal Bicycles (Safety) (Amendment) Regulations 1984, which were laid before this House on 22nd June, be approved.—[Mr. Lang.]

  COMPANIES
  That the draft Companies Acts (Pre-Consolidation Amendments) (No. 2) Order 1984, which was laid before this House on 25th June, be approved.—[Mr. Lang.]
  Question agreed to.

Appointment of Bishops Measure
10.49 pm
Mr. Deputy Speaker (Mr. Ernest Armstrong): We now come to the Church of England (General Synod) (Measures).
Mr. J. Enoch Powell: I beg leave to raise with you, Mr. Deputy Speaker, a point of order of which I have given notice to the Chair and of which, I believe, the Leader of the House is aware.
The House will see from the Order Paper that this instrument requires the Queen's consent, which is, of course, given on the advice of Ministers. The Queen's consent is normally associated with Government measures and, in that connection, would be taken for granted. However, it is from time to time made available to enable a debate to take place on something which is not a Government measure. But that occurs in circumstances where, if the proposal should eventually go through other stages, the Government would be in a position, were it contrary to Government policy, to prevent it at some stage from passing.
In these respects, I submit to you, Mr. Deputy Speaker, that this instrument is peculiar because it is, I take it, not a Government measure. Moreover, it emanates from an assembly in which, unlike this assembly, the Government enjoy neither a majority nor decisive influence. If the motion to be moved is passed by the House and the other place, the measure will be presented automatically for Royal Assent. In that sense, this is the last as well as the first opportunity that the House has for expressing an opinion on it and that the Government have of exercising any influence which they wish to bring to bear.
In those circumstances, Mr. Deputy Speaker, I submit that it might naturally be assumed from the Queen's consent being made available that the measure enjoys the Government's support and approval. If that is not the case, I submit to you, Mr. Deputy Speaker, and to the Leader of the House that the Government owe it to the House to make it clear, before the debate commences, whether that is the case.
The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): On a point of order, Mr. Deputy Speaker. I should like to help the House and express my appreciation to the right hon. Member for South Down (Mr. Powell) for raising this point. To remove doubt, I confirm my understanding that the signification by a Privy Councillor of the Queen's consent to a motion does not necessarily imply the Government's support for the measure.
Mr. J. Enoch Powell: Further to that point of order, Mr. Deputy Speaker. I am obliged to the Lord Privy Seal for what he said. There was, however, a note of ambiguity in his remarks when he said that the signification does "riot necessarily" convey the Government's support. I believe that the House would assume from the exchange that has just occurred, and in the absence of any specific statement from the right hon. Gentleman, that this is not a measure to which the Government are a party or on which the Government, as a Government, have a view.
Mr. Biffen indicated assent.
Mr. Powell: I am glad to see the right hon. Gentleman's assent.
Mr. Biffen: I am happy to confirm that view.
Queen's consent, on behalf of the Crown, signified.
10.52 pm
The Second Church Estates Commissioner, Representing Church Commissioners (Sir William van Straubenzee): I beg to move,
That the Appointment of Bishops Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
In the present circumstances, it is important for me to start by stressing what this Measure is not about. I draw upon the 188th report of the Ecclesiastical Committee reporting to both Houses of Parliament. On page 3 the Committee states:
"The Ecclesiastical Committee draw attention to the fact that the Measure in no way affects the legal position whereby all bishops are appointed by the Crown. What it does is to change the procedure that has to be followed for the purpose of carrying Crown's appointments into effect".
I stress that this Measure is not concerned with sifting of names, the making up of lists, the presentation of names to the Prime Minister and the advice tendered to the Sovereign. All that takes place before this Measure starts to operate. That appointment having been made, rightly and respectfully vested in the Sovereign, we must consider the present procedure.
The present procedure is laid down by the Appointment of Bishops Act 1533. It is none the worse for being an old Act. It is one in a series, as many of my hon. Friends will remember, whereby the King in Parliament ousted the Pope. In 1534 the Act provided two methods by which a bishop might be elected. In the first, the Crown gives the dean and chapter licence to elect but couples it with a letter telling them whom to elect. In the second, the Crown issues letters patent to the archbishop of the province asking him to consecrate the chosen man.
The first method — the "election" method — is normally used for filling the diocesan bishoprics. There has never been a case in which the request to elect has been refused. That is not surprising. I am sure that hon. Members have read, among others, the evidence of Professor McClean, given to the Ecclesiastical Committee. It is a new and helpful innovation that such evidence is now available to all hon. Members before they reach a decision. What was brought out was that this system has never been a free election. It has always been controlled by the Crown, the Papacy, or both.
Until the House so enacted in the late 1960s—when the appropriate penalties were abolished—a refusing chapter was subject to the pains of praemunire, which I understand to be, although not personally, painful and unpleasant in terms of one's personal possessions. It is therefore not surprising that no dean and greater chapter refused the request of the Sovereign so to elect.
Dr. Brian Mawhinney: Were there occasions when the dean and chapter, before agreeing with the recommendation, satisfied themselves that the prospective bishop believed the tenets of the Christian belief?
Sir William van Straubenzee: Assuming for a moment that the dean and chapter were presented with a candidate whom they believed did not believe the tenets of the Christian faith, there is no example in all the years that I have surveyed in which any such dean and greater
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chapter have refused to elect such a man. If it is believed that this method of election is an effective defence against such a man, it has proved completely ineffective for a long time. Those who look upon it as a great bulwark and defence do not, it seems to me, have much to lean on.
I move to the second method set out in the Act. The 1534 Act simply says that the archbishop is to confirm the election. The truth is that if the dean and greater chapter refuse to act in the first place, the Crown would simply use the second method and say that the archbishop is to confirm the election. The Act does not lay down the procedures now followed. They are known to have existed in their present form at least by the reign of Charles II, but they have force only by way of prevention, and not by way of an Act of Parliament.
This measure abolishes election, and, to judge by certain current events, allows the more effective method to be used. The measure abolishes what I think, without the use of extreme language, I can call the farce of election. It leaves confirmation as the only method, and in that way—to make a serious point—it develops the historic thread, going back to the system of confirmation. At the same time, the Measure strengthens and improves it by setting out the procedures, removes it from a purely legal ceremony described in evidence which I am sure hon. Members on both sides of the House have read, removes it from the substantial fees payable to the legal luminaries concerned, and removes it from a ceremony conducted by the vicar-general.
Mr. William Powell: What would be the position if the archbishop refused to confirm under the letters patent?
Sir William van Straubenzee: The real strength in the archbishops of the two provinces, in the event of their ever being pushed to a point of being presented with elections which were wholly unacceptable, lies in the power of consecrating or not consecrating. The measure removes the appointment from a purely legal ceremony centred on the Vicar-General—who is a legal officer—and in which substantial fees are payable, to one conducted by the archbishop of the province, which is essentially a pastoral occasion, the details of which are set out in the Measure for all hon. Members to see. It still retains the historic thread of the confirmation, which is of great antiquity.
The House would not wish me to go in detail into every clause of the order, but the House expects any person introducing a measure such as this to at least—
Mr. Harry Greenway: It is important for my hon. Friend to make clear to the House in what circumstances he thinks that an archbishop might refuse to consecrate.
Sir William van Straubenzee: I do not think that I can be asked to speculate on the conditions on which so serious an occasion as the refusal to consecrate a man or, possibly in future a woman, might—[HON. MEMBERS: "No."]—I have to keep the sexual options open. I cannot speculate, and cannot be reasonably expected to do so. It is true that up to now this has not happened, but in the event of real pressure for an unsuitable person—
Mr. Peter Bruinvels: Name him.
Sir William van Straubenzee: —it is best for the archbishop not to consecrate. It is a very serious right that

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is vested in him. [Interruption.] I do not think that I can reasonably be asked to speculate as to names or as to the degree of participation. We must all hope, surely, that such a situation does not—
Several Hon. Members rose—
Sir William van Straubenzee: Several of my hon. Friends are leaping up and down. There is plenty of time, and I give way first to my hon. Friend the Member for Leicester, East (Mr. Bruinvels).
Mr. Peter Bruinvels: Will my hon. Friend try to explain to me the one point about which I am uncertain? [Interruption.] Suppose that, after the consecration in any particular diocese of a suffragan bishop, he transfers to a new diocese as a full bishop. Surely the archbishop would not then be able to stop the consecration from going ahead, because the man has already been consecrated, and one is left then only with the enthronement.
Sir William van Straubenzee: There is no question then, of course, of a consecration—that is perfectly true—but, with great respect to my hon. Friend, who follows these matters very carefully, the enthronement has no legal significance whatever. It is increasingly a ceremony of great importance to the diocese in question, because it is a ceremony of welcome, but in the legal order of matters it has no importance as such. I hope that I have answered my hon. Friend's question.
Mr. William Powell: Is not the reason why there has so far been no refusal of consecration that it is the act of election which actually vests the new diocesan with the powers which he is to exercise as diocesan? By abolishing election the archbishops will be put into the position of deciding whether or not the man should have the powers which the Crown wishes him to have.
Sir William van Straubenzee: I think that that is not necessarily the case. There has been historically—I go back many years — an occasion when, as is now generally known from the biographies and so on, which we can all read, the archbishops of the time seriously considered whether a man should be consecrated. They gave the matter very careful thought.
Several Hon. Members rose—
Sir William van Straubenzee: We have plenty of time. I am simply saying that on that occasion, having given the matter careful thought, they did not decide to refuse or to withhold the right of consecration. [Interruption.] I am simply reporting to the House, I hope fairly, that it has never actually been witheld.
Several Hon. Members rose—
Sir William van Straubenzee: There is a queue. I give way to my hon. Friend.
Mr. Greenway: My hon. Friend referred to "real" pressure and said that the archbishops "might" refuse. That is a most important phrase. What does it mean? Does it mean that the sort of pressure that was mounted against the Bishop of Durham—rightly, in my opinion—would be "real" pressure and would be accepted by the Archbishop of York as a suitable ground upon which to refuse to consecrate?
Sir William van Straubenzee: With respect, I think that this is an occasion on which we have to have trust in
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the men concerned as being persons of sufficient stature, and who, if faced, in circumstances which I profoundly hope would never occur—[Interruption.] I would regard it as a very sad day for the state and the Church of England. I am asked whether faced with a name that was totally unsuitable, they would actually refuse the right of consecration. I really do not think that in fairness I can be asked to seek to put clothing over this skeleton to any greater extent than I have done.
Mr. Nicholas Budgen: Is not election an act of authority cloaked in the appearance of democracy? Does that not conform with the ambiguity of many institutions in our constitution and should not be lightly dismissed as a mere farce?
Sir William van Straubenzee: I am grateful to my hon. Friend for helping me with my argument. He does not often do that. He used the word "cloaked" in democracy. With his unerring eye, he has gone to the centre of the point. It is just cloaked.
Mr. Budgen: What is wrong with it?
Sir William van Straubenzee: What is wrong with it is that, if I might put it bluntly, it is a farce.
Mr. Budgen: No.
Sir William van Straubenzee: Well, that might be the sort of democracy that appeals to my hon. Friend, but to most of us it is unacceptable. I am simply saying that it is better to rest on the second alternative of an ancient and honoured act, which is that of confirmation which this Measure, if the House so approves, as I trust it will, will develop and be introduced in the second half of the 20th century.
Mr. John Butterfill: There is one matter that puzzles me in clause 1(3), where it refers to
"before the consecration or, if there is no consecration, before the enthronement".
Does the measure envisage the possibility of there not being consecration.
Sir William van Straubenzee: It must, because it is perfectly possible for a bishop who has been properly consecrated to be moved to another diocese. The present diocesan Bishop of Oxford was moved from another diocesan post. In the senior bishoprics that happens quite frequently. The measure must so provide. My hon. Friend gives me the opportunity to explain the clauses briefly, because I think that the House will soon weary of my voice—[HON. MEMBERS: "No."]—even if I do not.
The clauses are explained in general terms on page 6 of the report. I hope that hon. Members see the wide terms of clause 1. I draw attention to the importance of the date for appointment being recorded — because it affects Parliament—as it determines the date on which those so appointed by formal appointment will be called to another place. I hope that clause 1(5) appeals to the majority who believe that all lawyers are grossly overpaid and which
"Excludes the prescription of a fee for any specific duty imposed on a legal officer by virtue of this Measure."
This process, which I have ventured—I hope not unfairly — to summarise for the House, has been tolerated. It could be argued that, until now, there has been some form of safeguard, however shadowy, against a harmful appointment being made by an unfettered Prime Minister, yet, as I have shown, no chapter has refused to

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elect and archbishops have never refused to consecrate. However, it was still felt that there was a measure of long-stop.
The final objections were swept away in 1977 when the party leaders agreed to new arrangements for the appointment of bishops. I shall not go into them in detail, but they come into effect regardless of this Measure. The House knows that two names are submitted to the Prime Minister upon certain understandings. That happens before this Measure or the 1534 legislation comes into effect.
Sir John Wells: I wish to ask my hon. Friend two questions. First, he referred to the 1977 understanding between the leaders of the parties. That is clearly like the usual channels, and a matter for the Patronage Secretary. It does not have the force of law. The gossip of three worthy gentlemen is not the force of law.
Secondly, my hon. Friend made great play of saving lawyers' fees. Is this the first of a new series of Measures which the Synod is bringing forward to save us humble people in the pews from paying fees to lawyers when a new rector or vicar is appointed?
Sir William van Straubenzee: Yes, provided I survive, I shall bring in a further measure with further relief in that respect. We must see how we get on. I must be careful, because we have a long way to go yet.
My hon. Friend and I were in the House during the period in question. He may recollect, as I certainly do, that all three party leaders took the consultation exceedingly seriously. I cannot believe that a Conservative Member could contemplate that the Prime Minister, then the Leader of the Opposition, would agree to such a change without the most careful thought and widespread consultation, which she certainly undertook. I willingly concede that the same applied to the leaders of the other parties.
This is a constitutional matter, which was carefully and thoughtfully considered by the leaders involved. It is in operation, but it works only before either the present law or, if the House approves it, this change in the law, comes into effect.
My final duty is to call the House's attention to the fact that this was carefully debated. The voting figures in the General Synod are set out in the report. They are overwhelming and show that the small number who opposed the Measure did so because they thought it should go further.
I am grateful for the fact that at such a late hour the House has turned out in such large numbers to consider a matter which some, though none of us, may consider to be a matter of detail. It will be greatly appreciated by the Church of England. I hope that on hearing my advocacy the House will feel on consideration that it is a matter to which it can give its approval.
11.19 pm
Mr. J. Enoch Powell: The Second Church Estates Commissioner said several times during his speech that there is plenty of time. To the scandal of the House, there is not. More than one third of the time which our Standing Orders allow for discussing this measure has already elapsed, for we have, in our unwisdom, decided to treat measures which are sent to us by another assembly for a single consideration as though
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they were Statutory Instruments made by virtue of Acts passed by this House and another place. So I shall be as brief as I can.
It can come as no surprise to the authors of this measure that it seems unlikely to be welcomed whole-heartedly by the House this evening. Both formally and informally, the strong objections of instinct and of reason which were felt to such a Measure were conveyed in time to those who framed and passed it. I am not the only person in the Chamber to whom this appears to be an act of wanton vandalism—an act which illustrates the gulf between the General Synod and the ordinary feelings of the general public, and the gulf between the bureaucracy of the Church and the nature and historical sense of the Church of England.
Since at least the early middle ages, bishops in the Catholic Church have been elected by the chapter, whether it be a monastic or a secular chapter, of the cathedral church from which they take their names: but of course their appointment has been of deep interest to the lay authority. The relationship between the two processes was, and in a sense still is, an unsolved dilemma—the claim of the Church to elect freely its own and the claim of the lay authority that those displeasing or resistant to it should not be placed in positions of prominence.
At the English Reformation we solved this problem in a typically English way that has proved satisfactory for close upon five centuries. It was to combine the two methods side by side—to combine the congé d'élire under the Great Seal with the Letters Missive prescribing the required name. If any hon. Member believes that I am unserious in describing that as a solution, I remind the House that the solution by the Church of England of a much deeper, more painful, and ultimately insoluble conflict, was resolved in the Elizabethan prayer book by putting the two alternative interpretations side by side.
This measure would destroy that. It would destroy that settlement, if one wishes so to call it. It would wipe the memory of it from our statute book and uproot it from the history of the Church of England. So we naturally turn—and we have cause to be specially grateful for the work of the Ecclesiastical Committee and the evidence which it has laid before the House — to the reasons advanced for it. The professor who is vice-chairman of the House of Laity said:
"I think quite seriously the Doctrine of the Holy Spirit receives more attention in the church now than perhaps it did in times past."
That is remakable statement in the year 1984—is it not?—that the doctrine of the Holy Spirit is now taken more seriously than it has been at any time during the past four and a half centuries in the Church of England. The professor went on:
"I think people see this as offensive, frankly, that it should go on."
I mean no jocularity, but for 450 years no transept has been struck by lightning during the continuance of a procedure whereby the Holy Spirit was invoked on the deliberations of dean and chapter who nevertheless had to obey the Letter Missive. I say that what is a ludicrous travesty is to pretend that after 450 years there is an illumination today which enables us to see absurdities where those who went before us saw only wisdom—a wisdom which is part of the wisdom which sustains the Church of England.

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If that were all that there was in the measure, I should be content to treat it as a piece of frivolous meddling and request my colleagues to tell the Synod not to trouble the House with legislation of so little moment. Unfortunately, it is clear from the evidence submitted to the Ecclesiastical Committee that there is a very serious purpose and a very dangerous context to this measure. It is a purpose and a context which repudiates the sentence which the Second Church Commissioner quite rightly emphasised from the report of the Ecclesiastical Committee, which said:
"the measure in no way affects the legal position whereby all bishops are appointed by the Crown."
I must trouble the House with one other quotation—from the evidence of the Bishop of Rochester. It is his reference on page 11 to the change which had taken place. He said that the overriding feeling was that we wanted a practice that was consistent
"with the fact that Mr. Callaghan, when he was Prime Minister, and Mrs. Thatcher, when she was Leader of the Opposition, and the then Leader of the Liberal party agreed to a change of practice in the appointment of bishops—a far-reaching change, the first change really since 1533. It was the fact that elected representatives of the laity as well as the clergy were to take part in the nomination of those from whom the Prime Minister would make the recommendation to the Crown which so altered the balance as to show up what many have felt for a long time was the offensiveness of the Dean and Chapter's bogus election."
So now we know what we are dealing with. The General Synod is saying, "We have an election of bishops now. We have a new sort of election of bishops, invented in 1977. We have an election carried out by elected representatives, lay and clerical. Therefore, as the Church of England is now in a non-bogus sense electing its bishops, let us sweep away the manner of election and appointment of bishops which was laid down in 1533."
This is not an end. This is a beginning. This is the General Synod saying to the House of Commons, "We now have an internal election in the Church of England which throws up the persons whom the Crown will have to appoint as bishops. Let us therefore acknowledge that we have gone far to reducing to unreality the proposition that patronage in the Church of England is lay and the bishops are nominated and appointed by the Crown."
So the anxiety—here it is in the evidence—to sweep away the historical form was prompted by the determination of the General Synod to carry the Church of England further and further towards a system of internal self-government.
It is possible to have an internally self-governed church in this country, but it will not be the national church, it will not be the Church of England. The church is the Church of England because of royal supremacy, because there is royal—and that is to say, lay—supremacy. It is for that reason that it is the church of the people and the church of the nation, and can never be converted into a mere sect or a private, self-managing corporation.
Therefore there is a symbolism and more than symbolism in the measure. I offer to the House the suggestion, and I believe that the House should offer to the General Synod the warning: "Do not imagine that you can destroy forms in the Church of England without also destroying substance. More than that, do not imagine that you can reduce to nugatory proportions the reality of the royal supremacy without undermining the foundations of the Church of England itself. Take heed what you do." I hope that the House will make it clear to the General Synod that the measure does not have its approval.
11.31 pm
Sir Peter Mills: The House has every right to discuss these matters. I strongly support the right hon. Member for South Down (Mr.Powell); the House should be the long stop, and it has proved wise in the past to have a long stop. The House must continue that role.
I am glad that so many hon. Members are present. That is usually the case when we have such debates, and long may it continue. The established Church cannot have it both ways and it would do well to heed what we say tonight.
It is not a question whether one is a member of the Anglican Church. It is the duty of Parliament to have a say in these matters. I must declare an interest. I was converted to the Anglican faith about 42 years ago. I am a diocesan reader in the Church of England and I love it very much. I want the link between the Church and the state to continue. It would be a sad day for the faith and for our Christian heritage if we lost that link.
It is no good the Synod or the Church saying that if Parliament decides on these matters and goes against their wishes, that will separate us even more. They cannot have it both ways.
Not much has been said about clause 1(4) which lays down what is required of an incoming archbishop or bishop. It says:
"On the occasion of the reception and recording of a nomination the person nominated shall"
do various things, including
"give his consent to be archbishop or bishop … take the oath of allegiance"
—that is an interesting requirement in the light of recent events—
"be vested with the spiritualities."
It is important that the bishop or archbishop should know what is required of him. I remind the House of the scriptures, especially the first book of Timothy, chapter III, which spells out what is required of a bishop:
"This is a true saying, If a man desire the office of a bishop, he desireth a good work. A bishop then must be blameless, the husband of one wife, vigilant, sober, of good behaviour, given to hospitality, apt to teach; Not given to wine"
—that is an interesting requirement—
"no striker, not greedy of filthy lucre; but patient, not a brawler, not covetous;"
It is interesting to note that it goes to mention:
"Holding the mystery of the faith in a pure conscience."
A requirement of a bishop is to hold to the faith. It continues:
"For they that have the office … and great boldness in the faith which is in Christ Jesus."
It is extremely important that we remember the conditions that were laid down in the original Church of what is required of a bishop.
There is a great unease among the members of the Church of England at what is taking place. They are disquieted and there is real concern. The Church needs to consider carefully what is required of an incoming bishop or archbishop.
I humbly suggest that there are two things that are required as we see in holy scripture. First, it is essential that the faith should be maintained. Any weakening of the faith in respect of the Virgin Birth and the ressurection is something which is as terrible to contemplate as the future of the Church of England. Secondly, we need bishops who

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have a pastoral vision. We need more and more pastors in the Church of England. I hope that that will be noted by the Synod.
Dr. Mawhinney: Peterborough will have the next bishop to be appointed, as the present bishop has announced his retirement. I understand that Peterborough is the next in line. Will my hon. Friend accept from me that in expressing the two things that are needed in the Church of England he has expressed clearly and succinctly my desire for the appointment of the new bishop and, I believe, the overwhelming desire of the majority of my constituents?
Sir Peter Mills: I agree with my hon. Friend. Appointments will have to be made for Peterborough, Exeter and Winchester. I hope that the Synod will listen to the House on these matters. It is extremely important that it should.
I am glad to have had the opportunity of making a short speech in this debate. These are crucial matters for the future of the Church of England and do not let anyone say that we should not be concerned with them. We must, and beware if we do not.
11.37 pm
Sir John Biggs-Davison: I am obliged to my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) for reminding the House that, whatever our beliefs, we have a duty to examine this measure, which is to abolish things which are nearly as old as Westminster hall. The measure has been brought to us late at night with a minimum of information, although I pay tribute to the exposition of my hon. Friend the Member for Wokingham (Sir W. van Straubenzee), for a scandalously short debate.
The Church of England has a new system of elected diocesan committees electing people to the Crown Appointments Commission, which makes the actual nomination. When the new system was introduced I remember the then Dean of St. Paul's writing to The Times on 8 November to say that a major weakness lay in the absence of rules laying down how the diocesan representatives would be selected. In the event, the non-synodical layman was eliminated and the diocesan representatives were reduced from five to four. Many will have noticed the letter that appeared in yesterday's Sunday Telegraph from the Rev. J. D. Brown, vicar of Westhampnett, Chichester, in which he stated:
"The ordinary clergy and laity"—
he is speaking of the new system—
"in the dioceses have little say in the choice of their bishops, who are in danger of becoming a self-perpetuating clique."
There have been earlier moves for the abolition of the congé d'élire from the time of Edward VI. In 1965, the measure was defeated by substantial majorities in the Church Assembly. This time, few voted against the Measure. But the hon. Member for Birkenhead (Mr. Field), who was on the committee, may have been right when he suggested that
"the elect, the vanguard of the Church, find it offensive"—
that is the system that it is proposed to abolish—
"not … the person in the pew."
My experience in the Roman Catholic Church is that the voice of a synod, a national pastoral congress or something of the kind is not necessarily the voice of the people of God.
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In committee, Mr. Pattinson put the hon. Member for Birkenhead in his place by using the words, "this sort of flummery". But when a peer is introduced in the other place, a Privy Councillor kisses hands with another "sort of flummery".
Are we being asked to do away with a mere legal formality? As my hon. Friend the Member for Wokingham said, the penalty of Praemunire is not available, and has not been since 1967. But even when that penalty was available, not all canons or even deans felt intimidated. Although it has been said that someone nominated has never been turned down in such a way, I believe that in 1733 the Crown was forced to withdraw a nomination to the See of Gloucester as a result of the stand made by the dean and chapter. There are better known cases, of which hon. Members will be aware. However, I shall not detain the House by referring to them.
In conclusion, the form of election that it is proposed to abolish amounts to more than flummery. As has been said by my hon. Friend the Member for Wokingham it is not "a great bulwark". He called it "a shadowy safeguard", and so, indeed, it has usually proved to be, but who knows what, in unforseeable circumstances, a future dean and chapter might do? I submit that the case for abolition has not been made out.
11.42 pm
Mr. Patrick Cormack: In introducing this measure, my hon. Friend the Member for Wokingham (Sir W. van Straubenzee) treated the House to his customary display of lucid exposition, but I thought that he treated the subject less seriously than it merited. Time and again he used the word "farce", and said that we were abolishing a farce.
However, we are debating something far more significant and important than a farce. We are talking about what has been called a shadowy safeguard. It is, nevertheless, a safeguard. Many of us are extremely concerned about many of the trends in the established Church of England. It is the established Church of England, and so long as it remains so, it is not only the right but the duty of hon. Members of all political persuasions and creeds to take an intelligent and constructive interest in the way in which it conducts its affairs. That is why I was particularly glad to hear the brief but extremely telling speech of my hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison). He is a Roman Catholic, and we all know him to be a devout Christian and a man who takes his duties towards the established Church extremely seriously. That was borne out in a letter that he wrote to The Daily Telegraph about a fortnight ago.
It would be dishonest to pretend that we are not all conscious of recent events. All hon. Members who take an interest in such affairs will have been profoundly concerned by much of what was said by the Bishop-elect of Durham and those who took part in the debate as to whether he should be consecrated.
Mr. David Crouch: He is extremely wise.
Mr. Cormack: He may be wise, but I do not believe that it is wrong for me or for any other hon. Member to ask whether a man is best equipped to convert and to lead—to be the pastor to whom my hon. Friend the Member

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for Torridge and Devon, West (Sir P. Mills) referred—if he professes agnosticism on some of the main tenets of the Christian faith.
My hon. Friend, the Member for Canterbury (Mr. Crouch) may mutter about being "extremely wise", but he might be extremely wise if he listened for a moment or two. The service of consecration is much in our minds — the service of consecration which the Bishop of Durham and every other bishop has to go through. Although I noticed a new liturgy in York when the Bishop was consecrated, I prefer to take my stand from "The Book of Common Prayer". I confess that the debate that we had on the worship and doctrine Measure about 10 years ago was one of the best and most constructive debates in which I have taken part in the House of Commons.
When a bishop is consecrated according to "The Book of Common Prayer", he is asked:
"Be you ready, with all faithful diligence, to banish and drive away all erroneous and strange doctrine contrary to God's Word; and both privately and openly to call upon and encourage others to the same? … Will you deny all ungodliness and worldly lusts and live soberly, righteously and godly in this present world …?"
He is also asked:
"Will you be faithful in ordaining, sending, or laying hands upon others?"
Is it surprising that a man, wise as a professor of theology perhaps, who expresses doubt as to the truth of the Virgin Birth and the fact of the Ressurection—and we have heard that—should be questioned about whether he is the sort of man best equipped to lead the Church of England in the dark and difficult days of the 1980s?
I may be asked what that has to do with this measure, but in the opinion of the House it has quite a lot to do with it. The whole manner and method of the appointment of bishops, the manner in which the leaders of our established Church of England are set upon their course of leadership is touched upon by this Measure.
It might be a trifling thing, and the abolition of a farce, but those of us who sit on the Ecclesiastical Committee are sometimes a little perturbed about the arrogance—I use the word advisedly and deliberately—of the Synod of the Church of England, when it comes to consider the role of Parliament because in effect it says, "If you question the wisdom of what we are doing in Synod, you are moving us towards disestablishment." That threat is implicit, time and again, in what is said to the Ecclesiastical Committee. Yet that committee, a unique body composed of Members of both Houses, has a duty, which we sometimes shirk for fear of a confrontation. I do not seek confrontation. I would not welcome it. I would be reluctant to disturb the delicate balance between Parliament and Synod.
Yet, a balance presupposes that there are two sides, and that one side should not always be up and the other down. I regret that there are friends in the Synod who treat Parliament as though it were a dead letter. I hope that, tonight, Parliament will show carefully and deliberately, but very determinedly, that it is not a dead letter—that those of us who are members of the Anglican Church, and others, are concerned, perturbed and worried. It may be the sweeping away of a measure 450 years old that has something of the semblance of a farce, but for many of us it is far more than that—it is the erosion of part of the delicate and precious fabric of the Elizabethan settlement. That is what it is all about.
Mr. Jerry Wiggin: I took part in the worship and doctrine Measure debate, and I agree
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with my hon. Friend in his judgment of the importance of that debate. But one of the distressing features of the debate—and my hon. Friend and I were sitting on the Opposition Benches — was the appearance of the Government Chief Whip and the arrival of many hon. Members who had not attended the debate, when it came to the vote. While I am sure that the presence of no fewer than four members of the Whips Office is coincidental, I think that my hon. Friend will agree that this debate should be treated as being free from party—
Mr. Deputy Speaker: Order. We are discussing the mechanics and procedures of election. If the hon. Gentleman follows this road, we shall get away from the debate.
Mr. Cormack: Of my charity, I assume no more than interest on the part of every hon. Member present. I was much reassured—as I am sure everyone was—by the reply given by my right hon. Friend the Leader of the House to the telling, important and apposite point raised by the right hon. Member for South Down (Mr. Powell).
11.52 pm
Mr. Stuart Bell: I feel somewhat modest in rising at this stage of the debate, following upon the remarks of the hon. Member for Staffordshire, South (Mr. Cormack) and on the lucid, cogent and racy speech of the right hon. Member for South Down (Mr. Powell), who has sought to place this short debate in the context of the Church, the state, and the fact that we have an established Church whose Synod may take a different view from Parliament on its role.
I found the remarks of the right hon. Member for South Down most serious. He spoke of frivolous meddling and of bishops being appointed by the Crown, and he used the word "logic". As I listened to him, I thought of President Pompidou, some years ago" speaking in France, where there is a separation of church and state. When he was asked a question about the church, he said, "I am riot responsible for the church, thank God."
We in the House are responsible for the church to the extent that we have an established church. Hon. Members have made that point clear. It is nothing short of remarkable that, at this hour on a Monday night, we should be listening to a serious and enlightened debate on the making of minor and consequential amendments to sections 3 and 4 of the Appointment of Bishops Act 1533. I shall not take issue with the hon. Member for Wokingham (Sir W. van Straubenzee) on whether the Act was passed in 1533 or 1534. It will be of interest to have a peep in the Commons Library and read the original Act, written in old English. We would come across the ancient Act with modem words inserted into it.
Even at this hour of the evening, I could intrigue the House with an interesting and novel description of how the Act was passed, but I shall decline from doing that.
Once this instrument is approved tonight, if it is approved, there will be a commingling of the old and the new text—there will be, so to speak, new wine in old bottles—and as an example of how quickly Parliament can act when it wishes, it is useful to remind ourselves that these changes were first proposed in the time of Lord John Russell's Administration.
I humbly suggest—I say "humbly" in view of the learned speeches to which we have listened tonight—

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that there is nothing in this measure that would have prevented a professor of theology from becoming the Bishop of Durham. Indeed, the Church missed its opportunity to impose a veto, for reasons of doctrinal purity, at the end of the last century. Now, the only refusal available to the dean and chapter would be on the ground that the bishop was not the man he said he was, not in theological but in physical terms. But even if that turned out to be the case, it would be too late to prevent his appointment. Even were the dean and chapter to fail in their duty and not elect, the appointment would go ahead pursuant to a letter patent rather than a letter missive.
There was some discussion earlier of the purpose of the consecration and the various ceremonies. Reference was made to parts of the ceremony for the election of a bishop, including the announcement, the consecration and the enthronement. Before those stages, however, comes the legal ceremony in which the validity of the election is confirmed in the court of the vicar general of the relevant province. Thus, even if there was no consecration, that would not prevent the election of a bishop.
Much has been said about the professor of theology who has risen to become the Bishop of Durham. The choice has been made and while this House takes, and expresses, an interest in such matters, I am sure that now that the Bishop of Durham has been elected, the House will follow his progress with interest and will be disposed to his success. I shall be content if he goes as far as one of his illustrious predecessors, Dr. Ramsay, who not only had the honour of confirming me into the Church, but of proceeding to the Archibishopric first of York and then of Canterbury.
The measure comes before the House with the overwhelming support of the General Synod legislative committee. I am sure that the General Synod will take into account the views of the hon. Member for Staffordshire, South (Mr. Cormack) and the strong feelings that other hon. Members have expressed on the various issues involved. It also comes with the support of the House of Bishops, the House of Clergy and the House of Laity.
Being removed from the 1533 Act is the notional election by the dean and chapter, and the confirmation of the election, of the bishop or archibishop in the court of the vicar general of the relevant province. I often feel that it is pity that we cannot simply transmit that which is being repealed directly into the constitution of the Labour party. The system set forth in 1533 provided for the election of a bishop by a letter missive from the Crown. Those who gathered for the election, often numbering about 40, were obliged to nominate the person named in the missive, and if they failed to do so, the person was appointed by a letter patent.
As that provision is apparently redundant to the Church, it would be useful in assisting Labour hon. Members to be reselected, and I commend that procedure. Conservative hon. Members will see that my right hon. and hon. Friends are all here to support me. Older hands will recall the advice of a Leader of the House to a new hon. Member. "Those are my enemies on the Benches opposite," said the new hon. Member. "No," replied the Leader. "Those are your parliamentary colleagues opposite. Your enemies are behind and around you." I am in a fortunate position on these Benches tonight.
The debate is an unforeseen consequence of the Crown Appointments Commission and the vacancy in see
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committees. When the Church had little say in who its bishops might be — that right of appointment being reserved for the Crown—it may be that there was a sense of participation, albeit empty, which brought the clergy together and gave it a feeling of having a say in its affairs.
Since the system has changed since 1977, the procedures must change with it. The state has given an undertaking that no person will be appointed as a bishop who has not been nominated by the Church in that procedure. The hon. Member for Wokingham referred to the change in 1977. The cost to the Church, of the present procedures is 500 guineas per appointment. The hon. Gentleman not only touched on that point but struck fear into the ecclesiastical bar by suggesting that he had another measure in the pipeline. I cannot remember when the guinea ceased to be legal tender—if it has ever done so—but it must be many years since payments were made in guineas. Many years ago, when I was a freelance newspaper reporter, I was paid in guineas. We are witnessing nothing short of the dismantling of a certain legal bureaucracy within the Church which sprung from the workings of the 1533 Act and which has been enjoyed ever since by lawyers and bureaucrats.
Reference has been made in the committee to disgruntlement, dissatisfaction and disquiet in the Church about this form of non-election, especially as the Holy Spirit was invoked to give guidance in the choice. That dissatisfaction was amply revealed in the votes of those participating in the debate in the General Synod. Even when votes were cast — the hon. Member for Wokingham touched on this point — they were cast because the measure did not go sufficiently far. One day it will be interesting to learn why the measure did not go far enough and what additional reforms were felt to be required in an Act already 450 years old. I am hardly likely to find that out tonight or tomorrow. Suffice it to say that 43 deans and chapter have gone along with this measure, and therefore it must be considered as one that meets with their approval.
I congratulate the parliamentary draftsmen on so skilfully and artfully taking out sections 3 and 4 of the Appointment of Bishops Act as they relate to the dean and chapter of the cathedral of the vacant see and inserting a new text, in modern English, which has the effect of bringing those sections up to date but without in any way repealing the statute. As someone who sat through 59 sittings of the Police and Criminal Evidence Bill and 150 hours of the Finance (No. 2) Bill, I commend the draftsmen for their brevity.
As I understand it, the full powers of the House and the other place will be limited by section 4(3), which declares:
"This Measure shall come into force on such day as the Archbishops of Canterbury and York may jointly appoint."
I trust, however, that once the measure has the full approval of Parliament, those archbishops will not unduly delay its implementation. We are told that some five bishops per year are appointed in accordance with the 1533 statute, and that the figure may be as low as three. I should feel happier if the archbishops took note of the fact that the Opposition would welcome an early enactment of the measure, so that what has been described as the "flummery" of the old system is not prolonged unduly.
I am sure that it will give pleasure to hon. Members to know that the Labour party has no intention of dividing the House on this issue.
12.4 am
Rev. Ian Paisley: The hon. Member for Torridge and Devon, West (Sir P. Mills) drew the attention of the House to a portion of holy scripture that Paul wrote to Timothy. There is a parallel passage in Titus, and one of the characteristics and qualifications of a bishop is
"Holding fast the faithful word as he hath been taught, that he may be able by sound doctrine both to exhort and convince the gainsayers."
The hon. Member for Staffordshire, South (Mr. Cormack) underlined a point that was in many of our minds about the recent election and consecration of the new Bishop of Durham.
The Church of England has declared itself on the mystery of the faith in its fine 39 Articles. I should like to put on record what those articles say about two important fundamentals of the Christian faith—the deity of our Saviour and his bodily resurrection. Article 2 says:
"Of the Word or Son of God, which was made very Man. The Son, which is the Word of the Father, begotten from everlasting of the Father, the very and eternal God, and of one substance with the Father, took Man's nature in the womb of the blessed Virgin, of her substance: so that two whole and perfect Natures, that is to say, the Godhead and Manhood, were joined together in one Person, never to be divided, whereof is one Christ, very God, and very Man; who truly suffered, was crucified, dead, and buried, to reconcile his Father to us, and to be a sacrifice, not only for original guilt, but also for all actual sins of men."
"Of the resurrection of Christ."
article 4 says:
"Christ did truly rise again from death, and took again his body, with flesh, bones, and all things appertaining to the perfection of Man's nature; wherewith he ascended into Heaven, and there sitteth, until he return to judge all Men at the last day."
There can be no clearer definition of the cardinal doctrines of the faith than those precious words. I say that as one who is not a member of the Church of England, as the House is aware. The Church of England has no jurisdiction where I come from, because the Church of Ireland was disestablished by the House.
The House has done well to put on record the sorrow of heart at an attack on the person of our Lord Jesus Christ and those important doctrines.
Those are matters that interest the whole nation and many nonconformists are anxious that the Church of England should retain those great distinctive doctrines of the Christian faith. I should like to speak further, but I am aware that many of my colleagues want to get to their feet, and I wish to hear the reply.
12.9 am
Viscount Cranborne: As always, the House should be extremely grateful to my hon. Friend the Member for Wokingham (Sir W. van Straubenzee), as he introduces, year after year, yet more extraordinary effulgences from the Synod of the Church of England. However, the House should be even more grateful to the Ecclesiastical Committee, whose 188th report is before us because, as the right hon. Member for South Down (Mr.Powell) so rightly pointed out, the real nature of the Measure before us becomes very clear in the evidence given to that committee on 10 April.
Professor McClean gives three interesting reasons for this measure. The House might like to note the order in which those reasons were given. The first was, on page 7, that he regarded this method of election as "quite outmoded". That has been said about partiotism a
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thousand times over God knows how many years, and as soon as anybody starts talking about something being outmoded in the context of the Church of England. I reach for the spoons. There is no doubt that in the past few years the number of acts of vandalism committed by the Church of England in the holy name of fashion is extraordinary. I have only to refer my hon. Friend the Member for Wokingham to a rather enjoyable debate that the House was good enough to allow the last Parliament over the massacre of the Prayer Book to make him see what I mean.
The second reason given for the proposed change was that it was
"wasteful of both time and money".
That may be so, but it is interesting how much time and money are being spent on the Measure tonight, keeping us all up late at night, because of the sums of money that the Church of England regards as important. I am the last person to decry so outmoded an expression of value as 500 guineas. We regret the passing of the guinea, but it is interesting that the good professor is able to use the word "outmoded" and then, with a perfectly straight face, use guineas as a measure of expense. It must be clear that if we are considering a procedure that is both wasteful of time and money, we should ask ourselves whether the balance of expense is against those who are proposing this Measure, rather than against those who are opposing it.
The nub of the matter, and of the point raised by the right hon. Member for South Down, comes in the third reason. The method of election is, says the good professor,
"in some respects wrong in principle."
What does he mean? Again, we must be indebted to the proceedings of the Ecclesiastical Committee. Under cross-examination from the hon. Member for Birkenhead (Mr. Field), who has taken a consistent interest in these matters, on page 10, Mr. Pattinson among other things, finally comes clean over what is meant by that phrase. He says:
"The invocation of the Holy Spirit in relation to guidance for a choice where there was no choice struck people as offensive."
In effect, Mr. Pattinson and Mr. McClean are talking about a church that derives its authority not from the historical Elizabethan compromise of 1559 and before but from within itself and from the democratic will of its members.
This is a view that is taken by the churchmen of all denominations other than the Church of England and the Roman Catholic Church, particularly Protestant denominations in the United States of America—that is their privilege. However, we have here a clear tendency for the Church of England to go that way.
The reason why I oppose the measure is clear. We are talking about evidence of a new explanation, in the 20th century as to the source from which the authority of the Church of England is derived. It is a question not of democracy but of authority. The right hon. Member for South Down put it much better that I can put it. He said clearly—and I agree with him—that the basis of the stability of the Church of England over the last 450 years or so has been the compromise between Church and state—the compromise about where authority comes from in the state, and the stream of authority to the Church, on the spiritual side, from the priesthood. That compromise was hard-won, it was elegant, and it has lasted. We are seeing here an attack on the basic authority of the Church of England. Whatever my hon. Friend the Member for Wokingham may say, it is simply not good enough to substitute the 1977 settlement for what was done in 1533.

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If my hon. Friend agrees with me—and I suspect, sadly, that he does not — that this is a matter of authority, is it right to rely, for authority in the Church of England, exclusively on the recommendations of the report of a committee submitted to the Prime Minister? If that is the basis of the safeguards, surely this sort of matter becomes more important rather than less. Much as I respect my hon. Friend in every way, I cannot go down the path that he advocates, which is purely one of undermining the basis of the settlement and stability of the Church of England, which has been established ever since the 16th century.
12.16 am
Sir William van Straubenzee: The requirements of the House are such—and I make no complaint of it—that I have only single minutes in which to respond to the debate. Therefore, hon. Members in all parts of the House will, I hope, acquit me of discourtesy if I cannot in that time answer every point. The procedures of the House are not within my control; I am their prisoner.
No hon. Member of this House has heard me complain that there should be taking part in our debates those whose allegiance is not to the Church of England. No one has ever heard me make that complaint. It is a totally and absolutely proper exercise of the duties of hon. Members of this House—whatever their religious allegiances or lack of religious allegiances—to take part. I am the last to make any complaint about that.
Nobody has heard me complain or threaten that if the measure is not approved tonight, it will inevitably lead to the disestablishment of the Church of England. [Interruption.] That was put forward as an argument earlier, as though it were a threat. I must, with respect, deal with that alleged threat. I have never uttered it, it is not my view, and I take no exception whatever to a different point of view from mine being expressed, nor do I think that it is in any way an improper thing to do.
If there are—and plainly the debate reveals that there are—hon. Members who are anxious about the way in which the appointment of men to the bishoprics of the Church of England is working, this measure, with great respect, is not the method by which to express that anxiety, because it comes into operation only after that system has operated. For example, in the see of Durham, which has been referred to by some but not by me, the present systems operated. The Dean and Greater Chapter of
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Durham elected the present bishop of Durham. If the system gives the safeguards that some especially my hon. Friends, think that it gives, we can see from recent days that that is demonstrably not the case. If there be hon. Members who are anxious about the operation of the system, perhaps I might say that I am most willingly at their disposal as a channel to ensure that their anxieties are understood. I shall most willingly do so in the inquiry and the investigation that are afoot. It is important that the views of hon. Members are known and I am happy to be the channel through which those views are known.
I have done my best and I can do no more to commend the measure to the House. It would be regrettable if this House, having entrusted to the Synod since 1919 the delegated legislation, should, on a narrow point, refuse assent—but the matter must now be put to the free vote of this honourable House.
Question put:—
The House divided: Ayes 17, Noes 32.

Division No. 410]

[12.21 am

AYES

Alton, David

Rhodes James, Robert

Brooke, Mon Peter

Taylor, John (Solihull)

Buck, Sir Antony

Thompson, Donald (Calder V)

Clarke, Rt Hon K. (Rushcliffe)

Waller, Gary

Cope, John

Wardle, C. (Bexhill)

Crouch, David

Wrigglesworth, Ian

Dover, Den

Garel-Jones, Tristan

Tellers for the Ayes:

Hunt, David (Wirral)

Sir William van Straubenzee and Mr. Christopher Murphy.

Lester, Jim

Neubert, Michael

NOES

Aitken, Jonathan

Mawhinney, Dr Brian

Baldry, Anthony

Mills, Sir Peter (West Devon)

Beith, A. J.

Nicholls, Patrick

Biggs-Davison, Sir John

Norris, Steven

Bowden, Gerald (Dulwich)

Paisley, Rev Ian

Brown, M. (Brigg & Cl'thpes)

Percival, Rt Hon Sir Ian

Bruinvels, Peter

Porter, Barry

Budgen, Nick

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

Burt, Alistair

Soames, Hon Nicholas

Carlisle, John (N Luton)

Stevens, Lewis (Nuneaton)

Cash, William

Thompson, Patrick (N'ich N)

Cormack, Patrick

Warren, Kenneth

Cranborne, Viscount

Wells, Sir John (Maidstone)

Greenway, Harry

Wood, Timothy

Hargreaves, Kenneth

Lightbown, David

Tellers for the Noes:

Lilley, Peter

Mr. William Powell and Mr. Jerry Wiggin.

Lloyd, Peter, (Fareham)

Question accordingly negatived.

Heart Disease
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Douglas Hogg.]
12.32 am
Mr. Jonathan Aitken: With this debate the House moves away from the episcopal saving of souls towards the medical saving of lives, for the prevention of heart disease is a most important health issue which, until recently, has been tragically neglected by public opinion, by large parts of the food industry and by the Government Departments which should be most interested in it. The results of that neglect show in a series of deeply disturbing statistics, which prove that not only is heart disease the biggest killer in Britain but that, with the possible exception of Finland, Britain leads the world as the country with the highest incidence of heart disease, deaths from heart attacks and strokes.
To enlarge on those statistics, each year approximately 250,000 British people die of cardio-vascular disease, of whom 175,000 die specifically of coronary heart disease. In plain language, that means that heart attacks and strokes cause 40 per cent. of all male deaths and 38 per cent. of all female deaths. The nearest rival as a cause of death is cancer, representing 24 per cent. of male and 21 per cent. of female deaths. Among men who have the misfortune to die under the age of 65, 30,000 a year, or one man in every 11, are killed by heart attacks—again, by far the biggest cause of death in that age group.
That loss of life and the disability which often precedes it become even more unacceptable as the realisation grows that many deaths from heart disease are preventable. One need only consider some international comparisons to understand that there seems to be a peculiar, if not downright sinister, local dimension to the heart disease problem, which makes Britain the heart attack capital of the world.
For example, why should the British heart disease figures be six times higher than Japan's or two and a half times higher than Italy's, and significantly higher than those of any other European country? Why should the British total of heart attack deaths have remained at their present high levels for the past 20 years, while during the same period in such countries as the United States of America and Australia there has been a steep decline, showing an overall fall in heart attack deaths of more than 25 per cent. per annum? If we in Britain had seen anything like the Australian or American decline in heart disease we should have approximately 45,000 fewer heart attack fatalities a year. So why has not it happened?
The answers to some of those questions can be found in the growing consensus of expert medical opinion, whose reports confirm a clear link between our national pattern of diet and our record of heart disease. Over the past 10 years or so there have been studies from more than 20 expert medical committees, the most notable being the Royal College of Physicians' report in 1976, the NACNE report in 1983 and the Canterbury conference report in 1984. All confirm the thesis that heart disease can be prevented on a substantial scale by following some simple basic rules of diet and lifestyle. The Canterbury report, for example, estimated that 40,000 heart attack deaths a year can he prevented. Other experts have put the preventable deaths figure at estimates ranging from 25,000 to 75,000 a year.
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All this evidence about the preventability of heart disease has been mounting for some considerable time. In some quarters the Government have been criticised for the apparent inertia of their response. For example, the recent best-selling book "The food scandal" by Geoffrey Canon and Caroline Walker is, as the title suggests, an attack on what the authors consider to be officialdom's scandalous reluctance to implement the recommendations of NACNE and other reports.
The Government's policy so far could be described as waiting for COMA, a report of the DHSS committee on medical aspects of food policy. Although waiting for COMA has seemed to some observers almost as interminable a process as "Waiting for Godot", by a piece of fortuitous timing the COMA report was finally published some four days after I was lucky enough to secure this Adjournment debate in Mr. Speaker's ballot. So tonight is the first parliamentary opportunity to debate COMA and to hear the Government's response to it.
The COMA report is a cautious but authoritative document. In broad terms it confirms the statistical evidence outlined earlier in my speech. It supports the thesis that heart disease and diet are linked. Although it avoids estimating the figure of heart disease deaths that could be prevented each year, COMA believes that several important policy changes are necessary towards Britain's food and dietary patterns. It asserts that these changes would be likely to reduce our present high levels of heart disease if they encouraged people to eat less fat, less salt and no more sugars than at present.
Perhaps the most important recommendations of COMA are those which tackle the much neglected subject of food labelling. Having identified the excessive intake of fat and fatty acids as the principal villain in heart disease, COMA argues strongly in section 2.4 that all manufactured foods should be clearly marked with a simple labelling code warning the public when the fat content is high. In addition, COMA insists that the contents of manufactured foods must be clearly labelled with percentage by weight figures of their various ingredients, including fat, salts and sugars.
I take the view that it is a serious criticism of both the food industry and the Government that manufactured foods are not already labelled with the sort of minimum nutritional information that gives the public the opportunity to know which foods may increase the risk of heart disease and which foods are best for healthy eating. We need a policy of full disclosure on food labelling.
To illustrate my point, I ask my hon. Friend the Parliamentary Under-Secretary to reflect for a moment on the differences in contents labelling between a pair of socks and a packet of sausages. I have here a pair of socks. They are well labelled, as the law requires. They say clearly how much of the socks are made of fibre, where they were made, how to wash them, and what their exact contents are. They are 80 per cent. cotton, 20 per cent. nylon, they were made in Hong Kong, they should be washed in warm water and given a minimum spin—all information which is very helpful and informative.
I also have with me a packet of sausages, and the labelling might be described as a highly edited version of the contents. There is a long list of such contents as colour, spices, salt, sodium and so on, but there is no mention of the quantities involved. Rather puzzlingly, there is also no

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mention of fat, though even an O-level chemist such as myself could easily discern a large quantity of killer fat in these sausages.
I hope that my hon. Friend the Under-Secretary of State for Health and Social Security, who is to reply, will note the sharp contrast between the labelling required by law for an ordinary pair of socks and the misleading labelling of a packet of sausages and many other foodstuffs. I press my hon. Friend to tell us when and how he expects to bring in regulations that will impose adequate food labelling on the food industry.
My hon. Friend will not have an easy task, because he is sure to encounter resistance from vested interests such as some sections of the food industry, its lobbyists and its marketing organisations. We have only to look at the advertising activities of the Milk Marketing Board, whose motto might as well be, "Fat is good for you", and then look at section 5:4 of the COMA report which says the exact opposite, to realise what an uphill struggle a labelling change, warning of the dangers of excessive fat intake, will be.
I hope that my hon. Friend will not fall back on the old clichés about voluntary discussion and self-regulation. He must take power under section 7 of the Food and Drugs Act 1955. He has the opportunity to do so, and I hope that the Government will impose mandatory regulations as soon as possible.
When my hon. Friend brings in the reform of food labelling, he will need to seek the full co-operation of the Ministry of Agriculture. That should be easily forthcoming, because the British fanner has nothing to fear and much to gain if our national dietary habits change in the direction signposted by COMA. On the other hand, the milk lakes and butter mountains produced by the EC are likely to perpetuate high rates of heart disease if they are consumed. I hope that COMA' s support for reforming that aspect of the common agricultural policy will be noted by the Government.
If reforming the CAP seems a distant target, let me come closer to home. I hope that my hon. Friend the Under-Secretary will take on board the enormous savings that could be made in the National Health Service and other departmental budgets if some of the ideas set out in COMA were implemented. The costs of heart disease are astronomical, not only in human terms, such as bereavements, disability and anxiety, but in pure economic terms. No one has begun to measure the costs of premature deaths and retirements or absences from work because of heart disease-induced sickness. However, we can estimate that the rising cost to the NHS of treating heart disease is now running at about £350 million a year.
For example, in my constituency, the Canterbury-Thanet health district fills about 22 per cent. of its acute beds in local hospitals with heart patients. In Thanet and every other health district, substantial savings could be made if we could only achieve the levels of heart disease prevention that prevail in many other countries.
My only purpose tonight is to argue for a shift in emphasis by the Government towards a campaign for heart disease prevention. I believe that a revolution in food labelling is the most important step in that campaign, but it must be accompanied by a major educational effort, in schools, in the media, among doctors and in Government and Parliament. I hope that my hon. Friend will not neglect
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the leaders in the campaign so far — the Coronary Prevention Group, which currently receives a derisory grant of only £3,000 a year from the Government, compared with the £750,000 given to other worthy organisations, such as the Royal Society for the Prevention of Accidents, for their worthy work in preventing important, but numerically less significant causes of death.
Much should be done to convince the public that far too many British people are digging their graves with their teeth and needlessly increasing their risk of heart disease and heart attacks. I recognise that no Government can prevent people from eating foolishly if they choose to do so, but Governments can ensure that those who wish to eat wisely are not made fools of either by nutritional ignorance or by misleading food labelling. The medical experts have given their judgment, COMA has reported and I hope that my hon. Friend will rise to the challenge by starting the campaign for heart disease prevention.
12.45 am
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. John Patten): I rise to welcome this important debate which has been initiated by my hon. Friend the Member for Thanet, South (Mr. Aitken), who has shown a characteristic interest in heart disease prevention. My hon. Friend the Member for Swindon (Mr. Coombs), who is also greatly interested in these issues, is decorating the somewhat sparsely inhabited Benches when comparison is made to the previous debate on the appointment of bishops when 40 to 50 right hon. and hon. Members were present.
My hon. Friend the Member for Thanet, South has given us some of the facts on coronary heart disease and it is worth while recapitulating one or two of them. In 1982, the most recent year for which we have figures, coronary heart disease claimed over 155,000 lives in England and Wales, a quarter of all deaths. An increasing proportion of victims are under 65 years and many are in their 40s and 50s. Coronary heart disease is the commonest cause of death among middle-aged men. That means, as my hon. Friend said, an enormous toll of human suffering from disabling illness and bereavement. It means also the loss of about 30 million working days a year in England alone. There are at any one time about 7,000 National Health Service beds in use by patients with heart disease and my hon. Friend can speculate on the considerable cost of those beds and the cost to the NHS.
It is important for us all to realise that we do not know, in the House or in the scientific community, all the causes of coronary heart disease; it would be foolish to pretend otherwise. However, we know that in many instances its onset can be delayed or prevented, or the prognosis can be improved, by changes towards a generally healthier lifestyle. I shall refer to three ways in which a healthier lifestyle can help to prevent the onset of coronary heart disease, two of which my hon. Friend did not deal with at any great length. I hope that he will forgive me for mentioning them. One cause of coronary heart disease is smoking and another is hypertension. I appreciate that diet was the main theme of my hon. Friend's speech.
Cigarette smoking is known to be a major cause of coronary heart disease. The Royal College of Physicians, in its latest report entitled "Health or Smoking", estimates that smoking is responsible for 20 per cent. of all deaths

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from heart disease. That is over 30,000 deaths a year in England and Wales alone. Many of those deaths will be among people in early middle years of life.
An important part of our strategy for the prevention of the onset of early heart disease must be to discourage smoking and to present the necessary information in a non-nannying way so that we draw attention to the risks that attach to smoking. The Health Education Council, which the Government fund, is active in alerting the public to the dangers of smoking. Earlier in the year I announced to the House that we are giving the HEC an additional £500,000 to spend on anti-smoking campaigns, bringing its total spending on smoking education and information in 1983–84 to about £2·5 million. That is money that is well spent. The Government are maintaining their own efforts to discourage smoking, especially among young people.
As far as we can see at the moment, hypertension, or high blood pressure, is perhaps second in importance to smoking as a risk factor for coronary heart disease. People with blood pressure in the top 20 per cent. of the range are about twice as likely to develop coronary disease as those whose blood pressure is in the bottom 20 per cent. Hypertension could well reduce the life expectancy of a 35-year-old by 40 per cent. or more. In turn a number of factors may lead to hypertension, including obesity and, in particular, diet and its salt content.
That leads me neatly on to trying to answer the points raised by my hon. Friend the Member for Thanet, South about diet, the COMA report and the Government's initial reactions to it. One of its key recommendations was that individuals should try to lessen their salt intake, either directly or indirectly, from manufactured products. That may make a considerable contribution towards lessening hypertension or high blood pressure. We greatly welcome the report of the expert panel of the committee on medical aspects of food policy, which was published last week. It considers the significance of the relationship between nutrition and cardio-vascular disease.
As my hon. Friend has said, the report contains several important recommendations for Government, food producers, for the food processing, retailing and wholesaling industries, for medical practitioners and, in particular, for the public. As he said, the report is based on the best possible scientific evidence available. It is significant that among the membership of the panel that produced that report are such distinguished medical experts as Professor James, who chaired the NACNE working party, and Professor Rose, who chaired the important World Health Organisation working party that produced another report on diet. All the medical experts, under the excellent chairmanship of Professor Philip Randle — who is distinguished not only for being a Fellow of the Royal Society but also for being, at 6 ft 9½ in, the tallest practising professor in any British university—have produced a report to which the Government must respond.
My hon. Friend asked me how we would respond. The report came into our hands on 15 June, and by any standards in Government, we produced and published it quite quickly. I was personally committed to its rapid publication, and my right hon. Friend the Secretary of State and I made sure that it was published as quickly as possible. However, we are now faced with a twofold task. First, we must consult all interested bodies about its contents, and secondly, we must translate its contents into
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a form that the public can readily understand. I have no scientific training, and I found some parts of it, with its formulae and scientific terms, hard to understand.
However, my right hon. Friend the Secretary of State has asked the British Nutrition Foundation and the Health Education Council to ask their joint advisory committee on nutrition education—now to be called JACNE—to turn the advice from the report into practical guidance which the average consumer who is interested in the relationship between diet arid a more healthy lifestyle, and in the prevention, among other things, of coronary heart disease, can readily understand.
We have already sent copies of the report to several interested bodies, including, very importantly, the Royal College of Physicians and the British Cardiac Society. We must consult all the bodies involved as quickly as possible about the implications of the report before we can take any further decisions about the report's interesting suggestion that we should have a regular series of reviews about the relationships between diet and cardio-vascular disease.
I am sure that it is a mistake to publish such reports only once every 10 years. The pace of knowledge is changing so much that we need more up-to-date evidence provided in a more up-to-date way.
I have been asked to give the Government's view on one of the issues which stems from the report—the right of the consumer to know as much about the fat content of a packet of sausages as is already known about the contents of a pair of stockings. His point is well made and the Government recognise it. That is why some weeks ago, in advance of the receipt of the report, the DHSS and the Ministry of Agriculture, Fisheries and Food began consultations with the food industry about the prospects for the realistic fat content labelling of foodstuffs so that the package of sausages that my hon. Friend showed to the House can have an adequate label that people can understand.
When I look at lists of food contents I find it hard to relate them to anything that I understand. We must ensure, when and if—I hope that it is when rather than if—fat labelling is introduced that the consumer can readily understand the information on the label.
My hon. Friend is doubtful about the willingness of some food manufacturers to introduce such labelling, but I was reassured at the weekend to see that one or two large dairy products firms had inserted large advertisements in newspapers pushing low-fat cheese and other products, relating their advertising campaign to the report. That shows that the food industry realises how consumers, Government and medical opinion will mould demand, but that it is able to appreciate marketing opportunities.
The British farming industry and the food processing industry have nothing to fear from the report's recommendations. It simply means change, not decline. In that context I am pleased to see the warm welcome given to the report by my right hon. Friend the Minister of Agriculture, Fisheries and Food and other Ministers. That should not be overlooked.
The family doctor has an important role when tackling diet, hypertension and smoking. The GP and the practice nurse are in the front line when helping to prevent coronary heart disease. All the advice in the world from Ministers, books and articles will be no substitute for the individual advice by doctors or nurses to an individual. No one national diet or menu is right for every individual. The structure and tradition of general medicine in Britain is

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well suited to anticipatory care. The GP will see at least once in five years about 90 per cent. of all the patients registered with him.
Increasingly, GPs — certainly those in my constituency—when they see their patients, especially the middle-aged, are taking the trouble to record blood pressure and to identify those most at risk from heart disease. They can then advise them on how to reduce risk, and to provide treatment. Part of that will be concerned not only with smoking but with important issues of diet and the need to reduce the intake of saturated fats, salt and too
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much sugar. I acknowledge the valuable part played by the Royal College of General Practitioners in encouraging GPs to take a more practical approach to the prevention of heart disease.
I thank my hon. Friend for raising this important point. We cannot escape the fact that, unless we can convince the public to change their lifestyles and to think more about the way in which they live, we shall not be successful in reducing the appalling rate of heart disease. That is why I am so grateful to my hon. Friend for raising the subject tonight.
Question put and agreed to.
Adjourned accordingly at one minute past One o'clock.